Daily Pilot:

California s Department of General Services, the state agency tasked with selling off the Orange County Fairgrounds, has rejected all seven bids on the 150-acre property in Costa Mesa, including the winning $56.5 million bid placed at auction by Craig Realty Group of Newport Beach.

"Please be advised that afer careful consideration, today I have decided to reject all of the bids," Ronald L. Diedrich, the department s acting director, wrote in a letter to Gov. Arnold Schwarzenegger, dated March 17, a copy of which was released Wednesday.

"The offers contained in those bids are not in the best interest of the citizens of California because they do not obtain the highest and most certain return for the state," Diedrich s letter continued. "I continue to fully share your commitment to selling the fairgrounds and the department will go forward to explore alternative means to promptly achieve that goal."

More to come.

- Mona Shadia

Daily Pilot:

The Costa Mesa City Council gave American Fairs and Festivals first priority in negotiating an agreement to operate the Orange County Fairgrounds if the state accepts the city’s offer of $96 million.

American Fairs and Festivals is proposing to operate the fairgrounds for the city and assume responsibility of its debt.

Costa Mesa’s No. 2 choice is Facilities Management West.

The City Council voted 3 to 1 in favor of giving American Fairs the first priority following a closed session meeting to discuss the purchase.

Mayor Allan Mansoor, citing unanswered questions and concerns, voted against the recommendation, and Councilman Eric Bever, who in an April 26 open letter to the council backed out of supporting the city’s purchase, was absent, after reportedly leaving the closed session meeting before it ended.

American Fairs, which entered into a partnership with Advanced Real Estate Services, the group that offered the state $56 million in January for the fairgrounds, is a newly formed company made up of fairgrounds vendors and stakeholders, including Tel Phil Enterprises Inc., which runs the Orange County Market Place.

In January, during the live auction the state held to sell the fairgrounds, Tel Phil, offered a protest bid of $1,000.

American Fairs is offering to run the fairgrounds and assume responsibility of financing its debt, while keeping the city as the sole owner of the property.

Through American Fairs, the city is offering 20%, or $19.2 million, in prepaid interest as a down payment and about $5.5 million a year in mortgage payments for 40 years.

In order to afford the payments of the property, American Fairs plans to enhance the operations of the fairgrounds, said Fred Armendariz, who represent the group.

Details on how American Fairs plans to operate the fairgrounds will pan out as it negotiates with the city.

While racing to come up with a proposal to buy the state-owned property, Costa Mesa reached out to four of the groups that initially offered to buy the fairgrounds: Advanced and Tel Phil are part of American Fairs; Facilities Management West, which offered $55 million for the fairgrounds in January; and Craig Realty Group, the Newport Beach-based outlet developer that won the fairgrounds auction with a $56.5 million bid.

Craig Realty recently dropped out of negotiations with the city.

Mansoor, who has in the past supported the city’s efforts to buy and preserve the fairgrounds, said the state’s time constraints is limiting the city’s options and ability to come up with a thorough plan.

“We’re being asked to go forward with a proposal and we don’t know where the money is going to come from to finance this and that concerns me,” he said.

Mansoor, who said he continues to support the city’s efforts, added he has other concerns about the process, but would not provide details.