By Matthew Cunningham
Since we here at RedCounty.com welcome reasonable discussion and varied viewpoints – rather than shouting down dissenters — OC Treasurer Chriss Street requested we publish his op-ed on the OC Fair grounds question:
Preserving OC’s Greatest Park
The overwhelming sentiment expressed at the town hall meeting hosted by Assemblyman Van Tran and Assemblyman Jose Solorio regarding the OC Fair is that the residents of Costa Mesa and Orange County want (1) the Fair to continue operating “as is” and (2) that any sale of the land should be done in a transparent manner. The people have given their elected officials their marching orders; if we fail to rise to the occasion we may forever lose the real “Great Park.”
The Costa Mesa City Council and community organizations are working hard to ensure local control by pressing forward with an initiative to lock in the current zoning. Considering this prime piece of real estate might be worth significantly more as a planned community of 30 story condominiums than as a vital link to our heritage, the Council’s concerns that a new owner would attempt to commercially develop the property are well founded. By locking in fairground zoning, Costa Mesa’s leaders discourage bids by politically connected developers looking to flip the property for a quick buck. It also ensures that the property is priced and sold as a Fair
In the current depressed economic climate, the Fair conservatively generates roughly $2.5 million in annual net revenue, down from $5 million a few years ago. As our local economy improves, it is probable the Fair will return to these previous numbers.
The two most likely local Fair buyers are the County and the City of Costa Mesa. The question is, how either, or both, of these entities would consummate such a transaction.
By analyzing how much debt the property can conservatively support, it is possible to establish a reasonable ball park price for the Fair. Current market conditions dictate that it would cost a government entity roughly $750k in annual debt service to finance every $10 million borrowed. Considering the cost of borrowing and the Fair’s revenues, the property can conservatively support $25 million in borrowing, making this a reasonable asking price for the Fair.
This simple mathematic analysis demonstrates that purchasing the Fair would not be prohibitively expensive for a local government even in these cash strapped times. Costa Mesa and the County should independently or collectively consider forming a Joint Powers Agreement (JPA) to issue self supporting bonds for the purchase and operation of the Fair.
In establishing the JPA, these local governments could agree to create a new 7 member Fair Board composed of three citizens appointed by the City, two citizens appointed by the Chair of the Board of Supervisors, the elected County Treasurer and the elected County Auditor-Controller. This structure ensures all stakeholders are adequately represented and all meetings are conducted with public transparency.
Last December I proposed, and the Board of Supervisors approved, a set of investment guidelines that permits the Treasurer’s office to purchase bonds from any Orange County government entity. If the proposed JPA were to issue bonds on a conservative basis, the Treasurer’s office is ready and willing to make an investment in our community. Given the numbers described above, this would be a sound financial purchase, and a tremendous investment in the County’s future.