MOORLACH UPDATE — OC Fair — March 18, 2010

We received a letter yesterday from the Department of General Services stating that they rejected all of the bids.  Thank you, very much, Gov. Schwarzenegger.  That’s the good news.

The bad news is that the Governor still wants to sell the fairgrounds.  His logic?  He doesn’t believe the state should be in the real estate business.  Say what?

Doesn’t every business make the decision of whether it is more fiscally prudent to own versus rent?

And what real estate should the state own?  Just beaches and parks?  Some logic.

It looks like several media outlets received their story from City News wire service.  We have the FOX Los Angeles, the Los Angeles Independent and Los Angeles Wave, and NBC Los Angeles articles below.  There was also coverage on the nightly television news programs.

The main goal of stopping the sale has been achieved.  We’ll have to wait and see what happens during the remainder of this year while Mr. Logical is still in office.

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State Still Looking To Sell OC Fairgrounds

Seven bids to buy facility rejected.

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City News

Posted by: Scott Coppersmith / myFOXla.com

Costa Mesa – State officials said today they have rejected seven bids to buy the Orange County Fairgrounds and will go back to the drawing board to find a way to sell the facility to help ease the state’s drastic budget shortfall.

The state Department of General Services notified the governor that the bids from private companies, and a government consortium, "are not in the best interests of the citizens of California."

Director Ronald L. Dietrich told his boss, Gov. Arnold Schwarzenegger, that "the department will go forward to explore alternative means to promptly achieve" the goal of selling the 150-acre property, a huge parcel in the center of the heavily urbanized area of Costa Mesa, near Newport Beach and Fountain Valley.

The property was at one time valued at $230 million, but property values have plummeted since then. The top bid for the land earlier this year was $56.5 million.

The seven bidders included a partnership between Orange County and the city of Costa Mesa, which submitted an opening bid of $6.5 million. Orange County Supervisor John Moorlach had said he was authorized to bid in person up to $40 million for the land, but dropped out of a bidding session when Craig Realty made the top bid.

Costa Mesa officials are moving ahead with a ballot measure — which could go before voters in June — that would lock in the property’s zoning and make it nearly impossible to put homes, offices or any other type of development on the fairgrounds site.

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State rejects bid for Orange County Fairgrounds

By WIRE SERVICES

 

COSTA MESA — State officials Wednesday rejected a $56.5-million bid from a Newport Beach real estate group to buy the Orange County Fairgrounds and will seek other ways to sell the 150 acres in Costa Mesa.

Craig Realty Group outbid six other entities when the state held an auction for the property in January, but the $56.5 million the firm offered for the fairgrounds wasn’t enough for state officials, said Mike Naple, a spokesman for Gov. Arnold Schwarzenegger.

The Department of General Services, which held the auction and was in charge of selling the fairgrounds, rejected the other bids as well, including one that came from a partnership between Orange County and Costa Mesa.

"Please be advised that after careful consideration, today I have decided to reject all of the bids,” said Ronald Diedrich, acting director of Department of General Services.

"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. 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.”

It wasn’t immediately clear what alternatives state officials will consider. Naple did not elaborate.

"The governor remains committed to selling the fairgrounds because he believes the state shouldn’t be in the real estate business,” Naple said. "The current bids were rejected because they are not in the best interest of the taxpayer. The state is in the process of exploring other alternatives.”

The sale faced many obstacles thrown up by local political leaders. The local political opposition was largely bipartisan as Assemblymen Jose Solorio, D-Anaheim, and Van Tran, R-Costa Mesa, worked on legislation to block the sale and the Costa Mesa City Council locked in zoning for the property so that it could not be developed for anything other than its current use.

"We knew from the beginning that the process was not designed to garner the highest bid, and the local community didn’t want the fairgrounds sold at all,” Solorio said. "This is good news for the state, Costa Mesa, and all Orange County residents who enjoy the OC Fairgrounds.”

Costa Mesa also decided to let voters in June approve restricting the zoning for the fairgrounds to its current use.

Costa Mesa Mayor Allan Mansoor warned the opponents of the sale to not drop their guard.

"I think it’s great news, but I still want to emphasize the public needs to stay on top of this,” Mansoor said. "It’s because of all their efforts that this has succeeded. Everyone has called the governor and their legislators, but there are still a lot of unknowns as to the ultimate disposition of the fair.

"I’m certainly willing to work with the state, but the ball is in their court in terms of putting something forward that the citizens of Orange County can accept.”

Orange County Supervisor John Moorlach praised the decision and said it is possible Orange County would join with Costa Mesa to try to buy the property if the price is right.

"We’ve never foreclosed on that, but that would certainly do it if the dollar amounts are feasible,” Moorlach said.     

The governor’s office had anticipated bids of $96 million to $180 million, Solorio said in January.

The joint bid between Orange County and Costa Mesa was for $6.5 million. Moorlach, whose district includes Costa Mesa, said he was authorized to bid up to $40 million.

Moorlach doubted the state could fetch a higher price than the Craig Realty bid.

"I don’t know if [the governor is] going to do any better at another auction in this economy,” Moorlach said.

There was no immediate response to messages left with Craig Realty seeking comment.

Most county leaders opposed the sale of the fairgrounds, though many supported it when lawmakers included the auction in budget-balancing legislation last summer.

Moorlach was among those doing a reversal because, like the others, he thought there were assurances the property would remain as is, the home of the annual fair, equestrian center and a weekend marketplace.

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Rejected: Bids for OC Fairgrounds

By JONATHAN LLOYD

City News Service / NBC Los Angeles

The Orange County Fairgrounds will remain under state ownership… for now.

State officials said they have rejected seven bids to buy the fairgrounds. That means it’s back to the drawing board.

Officials still need to find a way to sell the facility to help ease the state’s drastic budget  shortfall.

"My initial thoughts are, Wow, thank you for listening Mr. Governor and thanks to all residents and businesses who asked the governor to do the right thing and reject all the bids," Katrina Foley, a Costa Mesa councilwoman, told the OC Register. "We’re still not out of the woods yet. We have to figure out what’s next. At least we are that much closer to a solution that’s going to be in the best interest of Orange County and Costa Mesa."

The state Department of General Services notified the governor that the  bids from private companies, and a government consortium, "are not in the best  interests of the citizens of California."

Director Ronald L. Dietrich told his boss, Gov. Arnold Schwarzenegger,  that "the department will go forward to explore alternative means to promptly  achieve" the goal of selling the 150-acre property, a huge parcel in the  center of the heavily urbanized area of Costa Mesa, near Newport Beach and  Fountain Valley.

The property was at one time valued at $230 million, but property values  have plummeted since then. The top bid for the land earlier this year was  $56.5 million.

The seven bidders included a partnership between Orange County and the  city of Costa Mesa, which submitted an opening bid of $6.5 million. Orange  County Supervisor John Moorlach had said he was authorized to bid in person up  to $40 million for the land, but dropped out of a bidding session when Craig  Realty made the top bid.

Costa Mesa officials are moving ahead with a ballot measure — which  could go before voters in June — that would lock in the property’s zoning and  make it nearly impossible to put homes, offices or any other type of  development on the fairgrounds site. 

FIVE-YEAR LOOK BACKS

March 18

1995

St. Patrick’s Day was very surreal.  Board of Supervisor’s Chairman Gaddi Vasquez called early in the morning and asked if I would like to attend a special Board meeting and be sworn in.  I agreed.  The media was there in droves.  It was one of those rare paparazzi moments where cameras and microphones were everywhere.  My wife attended, but she was gardening when I called.  She brought our youngest but didn’t have time to pull the two older ones out of school.  My folks were able to come.  Here are a few articles to describe the event.

The first article, This Time, Moorlach Is Elected UnanimouslyRecovery: Supervisors lavish praise on accountant who forecast debacle, give him one-year term as O.C. treasurer,” was by none other than Jodi Wilgoren of the LA Times, the first Times reporter to cover my campaign a year earlier. 

Childhood friends Dave and Karin Eernisse called me later that evening, while I was at my firm’s office, putting notes on every client file for my partners to complete the assignments, and asked “would you like to see the printing press at the LA Times building in Costa Mesa?  Tomorrow’s edition has your photo on the cover.”

I had a wonderful tour and it was quite an experience to see my photo blazing by multiple times in the middle of the night.

Here is the LA Times piece in full:

After a year that took him from dissident doomsayer to glorified prophet about the fate of the county’s high-flying investment pool, John M.W. Moorlach of Costa Mesa was named Orange County treasurer-tax collector Friday by an enthusiastic, unanimous vote of the Board of Supervisors.

"While it has been a long and difficult road en route to this day, I want to commend you for your patience and enduring desire to serve the people of Orange County," Board Chairman Gaddi H. Vasquez told Moorlach, 39, after each of the five supervisors lavished him with praise.

"It would have been easy for you to have just walked away from it all, but you didn’t. Instead, you stand here today ready to accept a challenge," Vasquez said.

Moorlach, who lost a bitterly fought campaign to unseat longtime Treasurer Robert L. Citron in last June’s local elections, will serve just one year before voters will be called upon to elect a new treasurer in March, 1996.

It was during that campaign last June that Moorlach made his first public pronouncements about the risky nature of Citron’s investment strategies and warned that the county-run investment pool had already suffered more than $1.2 billion in losses.

On Friday, the ebullient accountant vowed to start work immediately to restore confidence in the beleaguered treasurer’s office, promising to release a 100-day plan as early as next week, and to follow up with a clear investment policy and monthly written updates on the status of the investment pool.

"Now it’s time to rock ‘n’ roll. Now it’s time to work. Let’s get this thing moving," Moorlach said. "I guess you can win by losing. It has been a long, strange journey," he added.

As Moorlach was winning appointment to the position he had openly sought for months, Wall Street delivered another blow to the embattled county: Standard & Poor’s rating agency announced that it would consider a proposed rollover of $1.275 billion in county bonds coming due this summer as a default.

Orange County Chief Executive Officer William J. Popejoy announced a plan Thursday to extend the term of the bonds for another year at the same interest rate in order to avoid default, but Standard & Poor’s said Friday that even if individual bondholders accept the plan, it would hurt the county’s credit rating over the long haul.

At the same time, the rating agency lauded Popejoy’s recommendation earlier this week that the Board of Supervisors place a half-cent hike in the sales tax on the ballot for a special election this June.

"In S & P’s opinion this is a positive step toward developing a plausible work-out plan given the county’s significant budgetary and debt service payment gaps," the agency said in a statement.

Meanwhile in Orange County, Popejoy had more bad news for the county’s work force, saying that even more layoffs would be necessary to accommodate the supervisors’ recommendations for next year’s budget cutbacks.

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Last week, Popejoy presented a proposal to slash 41% from the county’s general fund, laying off 1,040 employees and eliminating 563 other vacant job positions.

During three days of budget hearings this week, the supervisors balked at several proposals affecting the Social Services Agency, the Sheriff’s Department and the Probation Department, sending Popejoy back to find other areas to chop.

"I can almost guarantee you," Popejoy said Friday, "wherever you cut elsewhere, there will be unhappy people elsewhere."

After a week of grim news about the state of the budget, the supervisors held their first cheerful meeting in months to name Moorlach to the post from which Citron resigned in disgrace Dec. 4, two days before the county’s unprecedented bankruptcy filing.

The 5-0 appointment came amid widespread criticism of the board’s selection process.

The Orange County Business Council, the Orange County Grand Jury, the president of the California Assn. of County Treasurer-Tax Collectors, Popejoy, interim county Treasurer Thomas E. Daxon, Wall Street bankers and other observers of the county’s ongoing financial saga had all urged the board to postpone filling the position until it could conduct a national search for the best-qualified candidate.

Instead, the board asked its newly formed oversight committee to conduct a confirmation hearing, after which they approved Moorlach’s appointment 4-1 Thursday night.

Sen. Lucy Killea (I-San Diego), co-chair of the state Senate panel investigating the Orange County bankruptcy, said Friday that she still thinks the Board of Supervisors erred by not conducting a nationwide search.

"This has the look of an insider deal and that’s what they have to get away from," Killea said. "Perception is part of being in public office, and I don’t think the perception on this one is good."

But the supervisors, Republicans all, showed no hesitation Friday in appointing the unsuccessful Republican candidate to fill the position of Citron, the only Democrat who continued to win a countywide elective office in Orange County in recent years.

"You have certainly earned the respect of all of us who have known you through this ordeal," said Supervisor Marian Bergeson, who rushed to second his nomination even before Supervisor Jim Silva had a chance to make the motion.

Moorlach, who had joked about being late for the oversight committee hearing the night before, arrived nearly half an hour early for his day in the sun Friday.

From the moment he emerged from his car outside the county’s Hall of Administration, Moorlach was greeted by supporters who showered him with congratulations even before the vote that made his appointment official.

Inside the board hearing room, where he sat hastily writing the comments he would make to the supervisors within minutes, Moorlach was continually interrupted by friends and strangers who wanted to shake his hand.

A Republican activist who for 18 years has done tax work, Moorlach earned only 40% of the vote when he launched the first electoral challenge Citron had faced in more than two decades. And when many of his predictions about problems in the investment pool came true last fall, Moorlach was catapulted into an instant celebrity.

Cars sported bumper stickers reading "Don’t blame me, I voted for Moorlach," and the accountant became the hottest name on the speakers’ circuit for local conservative clubs.

"I’m not going to say I’m the perfect candidate for the job–I’m not that arrogant," Moorlach told the board Friday. "We need to restore confidence in this office, not only on Wall Street but here, locally, on Main Street."

Moorlach named as his "bosses" the taxpayers, the board and Popejoy, and said he would start work Monday.

"First I’d like to see what my office looks like and get to know the employees," Moorlach quipped. Later, when asked whether he would be paid the $104,000 salary that Citron had commanded, Moorlach said he had never even negotiated salary or benefits.

He said he remains unsure whether he will seek a full four-year term in the election next March, and said he has not yet decided whether to take a leave of absence or sell his interest in the Costa Mesa firm where he is a partner.

During a question-and-answer session before the board’s vote, Moorlach said he would:

* Soon issue an investment policy statement and draft a written job description for himself;

* Pursue Popejoy’s suggestion of finding private firms to manage the investment pool the county runs for itself and local schools, cities and special districts;

* Issue monthly written statements describing the activity in the investment pool–using market values for the securities–for the board, pool participants and the public;

* Consider expanding the Treasurer’s Oversight Committee from five members to 12; and

Echoing themes from his failed campaign, Moorlach repeatedly promised complete disclosure, striving to paint a difference between his plans and the practices of his predecessor, Citron.

"There’s not going to be anything secretive or highly complex that only certain people can explain," he said. "Let’s make it very vanilla, very understandable. Nothing exotic. Let’s make it a kids’ formula."

Moorlach’s wife, Trina, his 4-year-old son, Daniel, and his parents, Kent and Rita Moorlach of Buena Park, joined him at the meeting and were formally introduced.

The new treasurer’s parents said the months since the bankruptcy have been both exciting and exhausting for their son, and noted that the coming weeks are likely to be no different.

"It’s going to be a big challenge for him, a big job," Rita Moorlach said. "But he can do it. As a young kid, he was already making his own little math problems–for fun. This is going to be difficult, but he really has a heart for Orange County. He really wants to help."

Times staff writers Rebecca Trounson in Santa Ana and Eric Bailey in Sacramento contributed to this report.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Profile: John M.W. Moorlach

Full name: Johannes Meindert Willem Moorlach

Age: 39

Hometown: Groningen, the Netherlands

Moved to Orange County: 1960, when he was 4; grew up in Cypress and Buena Park

Residence: Costa Mesa

Family: Married to Trina; three children: Sarah, 12; C.J., 10, and Daniel, 4

Education: Bachelor’s degree in business administration, Cal State Long Beach, 1977

Resume: Certified public accountant and certified financial planner; vice president of Balser, Horowitz, Frank and Wakeling–an accounting firm–and administrative partner of its Costa Mesa office

Attitude: "Now it’s time to rock ‘n’ roll. Now it’s time to work. Let’s get this thing moving."

Source: John M.W. Moorlach

Researched by REBECCA TROUNSON / Los Angeles Times

Bloomberg News Service’s wire piece was titled “Losing Candidate Named Orange County Treasurer—Accountant had warned of high risks.”

                “What a journey,” said Moorlach yesterday.  “I don’t need the job.  I work for the best CPA firm in the country.  It’s not like I’m unhappy here.  It’s going to be very difficult to say good-by.”

The Associated Press article by E. Scott Reckard had an interesting title in the San Diego Union-Tribune:  “Orange loser now a winner – CPA who failed at the ballot becomes the new treasurer.” 

                Supervisor James Silva said Moorlach never attacked Citron personally, only his high-risk investment strategies.  And since the Dec. 6 bankruptcy filing, “Never once did I hear him say, ‘I told you so.’”

2005

Rich Saskal of The Bond Buyer provided an update on our bankruptcy debt refinancing in “First Rehab, Then Refund – Call Date Nears for Orange County Recovery Debt.”  I was mentioned in the middle and at the conclusion of Saskal’s piece.

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