Meeting Presentations

What Johnson Consulting Didn't Tell You About the OC Fairgrounds Master Site Plan Bond Financing Plans

A Master Site Plan proposal for the OC Fairgrounds (also called Orange County Fair and Event Center or OCFEC) created by a team of Johnson Consulting, HPI Architecture, and landscape architects SWA relies upon a $170 million bond issue to fund projects including doubling the size of the Administration Building, moving the Main Entrance about 200 ft closer to the 55 Freeway, demolishing the Equestrian Center, and reviving a parking garage next to a residential neighborhood cancelled in 2015 after loud neighborhood opposition, among other changes. The $170 million bond funding proposal was glossed over in two slides which are deficient in material facts, at the most charitable. As you consider these matters, remember that over a quarter of a million dollars has been paid to the consultants to create this work product in addition to countless hours of staff and Board Directors involved with the Master Site Plan process.

OCFEC was founded in 1949 by a grant of land from the former Santa Ana Army Air Base (SAAAB) for use as a public park, fairground, and recreation. Download the deed and most recent title report  

Since 1949, construction has been financed without going into debt. This has allowed OCFEC to weather economic problems better than other fairgrounds.  For unknown and unclear reasons, Johnson Consulting, HPI Architecture, and SWA propose a high priced set of projects of little real value which could bankrupt OCFEC or force a major change in operations while causing long term and irreversible harm to the surrounding residential neighborhoods. This process cost over a quarter of a million dollars in consultant fees, uncounted staff time, and took over a year to conduct.  More scrutiny is needed of what has transpired before the Master Site Plan process can move ahead. 

The two slides about bond finacing presented by Johnson Consulting, HPI Architecture and SWA follow and can be downloaded here  Download Financials_CHJC-OCFEC-Board-Presentation-April-2018

Balance Sheet Bond Slides_Board-Presentation-April-2018

Phases Bond Slides_Board-Presentation-April-2018

Bond Payments are Missing from the Financial Projections

The phased build out of the Master Site Plan proposal takes more than a decade and relies on $170 million in bond financing. No analysis of the impacts of bond financing or supporting information is presented in the April 2018 proposal. The hard consequences of the massive debt issue are ignored, at the most charitable. Payments for the bonds are missing from the financial projections prepared by the consultants.  Estimated payments on a one time capital infusion of $170 million at 6% is about $15 million per year for 30 years.  Johnson Consulting, HPI Architecture, and SWA slides show project phases being paid for and revenues generated by the phases but do not show the $15 million per year deduction needed to pay for the $170 million in bond debt.  

When asked about this during the April 2018 Board meeting, representatives from Johnson Consulting seemed surprised that this was an issue. 

 

Nearly Half a Billion Dollars Paid Out to Build What Amounts to Parking Lots

Interest more than doubles the $170 million bond to $450 million (30 years X $15 million/year = $450 million). Paying nearly half a billion dollars to build what amounts to a few more parking places is insane. This proposal was a non-starter and should have been shredded instead of being brought forward. 

 

Project Locked In & Cannot Be Changed Under Bond Financing

Bond financing locks in a project once the bonds are underwritten. The underwriting process sets the cash flows which must be obtained to maintain solvency and to meet debt covenants entered into as part of the bond underwriting process. It is difficult if not impossible to change a project once the bonds are sold. A future Board would face a high if not impossible hurdle to changing a project funded by bonds.  Representatives from Johnson Consulting did not mention this during the April 2018 Board meeting and it is not clear if OCFEC Directors understand that bond financing locks in a project. 

 

No Good Choices Come from $170 Million in Bonds: Bankrupt OCFEC or Quadruple Annual Revenues to Pay Debt Service 

Annual payments on the $170 million bond issue are $15 million per year for 30 years at 6%. Each and every year a $15 million check needs to be written to pay off the debt of building what amounts to parking lots. Current OCFEC operations have revenues of around $45 million per year and around 10% in net proceeds in 2017 which is about $4.5 million. How is that going to pencil out? 

Choose to Declare Bankruptcy: Once the $15 million annual debt payment starts, current reserves of about $45 million only last a few years until an over $10 million deficit occurs each year because the $4.5 million in annual net proceeds is not enough to pay the $15 million in debt payment.  At that point, OCFEC faces long term insolvency of their own making. A private company could declare bankruptcy to restructure the debt but it is not clear what happens to a state agency which becomes bankrupt caused by actions of the state agency.

Choose to Quadruple Annual Revenues to Avoid Bankruptcy: Quadrupling annual revenues from $45 million to about $180 million can produce annual net proceeds of $18 million, if everything goes just right. Annual revenues of $180 million pay the annual debt bill due but do not provide enough cash flow to re-build depleted cash reserves. Going to five (5) times annual revenues which is about $225 million per year allows debt to be paid and reserves to be re-built.

Achieving annual revenues of at least $180 million will bring heavy year round use of OCFEC such as that experienced by the residential neighborhoods during the annual OC Fair. Traffic will clog public streets, lights and noise will continue into the night every night of the year and it is unclear if the drive to book events for the sake of booking events will be kicked into hyperdrive to make more money to stay solvent. Who knows what events will be booked to make at least $180 million a year in revenues.

The current buildings may not be enough to bring in $180 million in annual revenues. New buildings may be needed to have more events to make the minimum required $180 million in annual revenue. New buildings will need new debt financing because OCFEC does not have significant reserves at this time because OCFEC is barely keeping up with what they owe. More debt needs more revenue and the debt death spiral of OCFEC becomes obvious. OCFEC destroys College Park, Mesa del Mar, and Vanguard neighborhoods along with themselves with self-created problems arising from their greed.

Johnson Consulting, HPI and SWA did not discuss the financially destructive nature of the proposal brought forward by their firms.  The Public is owed answers from Johnson Consulting, HPI and SWA regarding these matters. 

 

Bond Financing Proposal Shows Why Audits of Fairgrounds Operations are Needed

The April 2018 Master Site Plan should have never seen the light of day and was treated like a homework assignment that had to be handed in to be checked off in a grade book.  Consultants and staff handed in their homework and expected a star sticker in return but were met with well earbed negative responses and hard questions regarding the plans. Over a quarter of a million dollars has been paid to consultants who did not seem to notice that their proposal would offer OCFEC a choice between bankruptcy or destroying OCFEC along with the quality of life in the surrounding neighborhoods. Board Directors who wanted to press forward on the Master Site Plan process without having a workable, buildable plan which is supported by the Public in hand are not serving the interests of the Public who own OCFEC and whom the Directors represent.  

A Board Director who touts her financial credentials did not question the impact of the bond payments on OCFEC solvency and wanted to hurry the process along for the sake of moving things along. A Director such as this is not needed and may find themselves to be happier outside the scrutiny of the Public and with more free time to use as they choose. We thank you for your service and wish you well on your future endeavors. 

 

What Needs to Happen to Regain Public Trust
Work on the Master Site Plan needs to stop.  An audit of the Master Site Plan process is needed to find out where the money went, how two sets of Master Site Plan proposals which were not acceptable to the Public and destroy the nature of  OCFEC were brought forward and who could benefit from these proposal, among other questions to be answered. 

The Voice of OC has joined Director Nick Berardino in calling for a performance auditor to be hired at OCFEC to aid in staff oversight. Empowering a performance auditor is supported. Hiring a performance auditor is money well spent and needs to happen as soon as possible.

  

Contact Information to Follow Up on Issues

Contact the Fair Board 

Chair Barbara Bagneris bbagneris@ocfairboard.com
Vice Chair Robert Ruiz rruiz@ocfairboard.com
Newton Pham npham@ocfairboard.com
Sandra Cervantes scervantes@ocfairboard.com
Stan Tkaczyk stkaczyk@ocfairboard.com
Doug La Belle dlabelle@ocfairboard.com
Gerardo Mouet gmouet@ocfairboard.com
Ashleigh Aitken aaitken@ocfairboard.com
Nick Berardino nberardino@ocfairboard.com

Contact CEO Kathy Kramer kramer@ocfair.com

Contact VP of Operations Ken Karns  kkarns@ocfair.com

Contact the Governor's Appointments Secretary Mona Pasquil Rogers at mona.pasquil@gov.ca.gov to discuss OCFEC Director performance issues. Fair Board Directors are appointed by the Governor and may be removed for cause by the Governor at any time. (Cal. Food & Agriculture Code § 3959-3960.)

Contact Parent State Agency OCFEC is a state agency under the California Department of Food and Agriculture (CDFA)  because OCFEC is a state run county fair created to support California agriculture. Please refer to as OCFEC as the 32nd District Agricultural Association (32nd DAA) when dealing with the state.

CDFA Secretary Karen Ross 916-654-0433 secretary.ross@cdfa.ca.gov

Fairs and Exhibitions (F&E) are under the Marketing Services Division. 

F&E Branch Chief John Quiroz 916-900-5025 john.quiroz@cdfa.ca.gov


Can the Fairgrounds Put More Information About How They Operate on Their Website?

Chicken Scooter Question (2)

Yes, the Fairgrounds could put more information about how they operate on their website. Plans to begin to post more information about operations on the Fairgrounds website were mentioned during a meeting for the 2018 budget. No specifics have been presented as to the types of information to be posted or the changes to be made. Keep asking for more information about Fairgrounds operations to be posted.


April 2018 OC Fairgrounds Master Site Plan Concept and Proposed Phasing Released

The OC Fairgrounds (Orange County Fair and Event Center aka OCFEC) has released the draft of the process for the Master Site Plan and draft proposal with phasing of costs. Problematic elements featured in the prior Master Site Plan proposal such as demolition of the recently constructed Main Mall and construction of massive convention center buildings have been removed from the proposal. The proposed phasing of the construction is:

Phase I - Expand Administration Building at a cost of $22.9 million.
Phase II - Replace livestock barn, upgrade Action Sports Arena & equestrian facilities relocation and upgrade at a cost of $21.8 million.
Phase III - Repurpose current equestrian center space at a cost of $16.1 million.
Phase IV - Build new education center and upgrade Centennial Farm at a cost of $27.4 million.
Phase V - Install perimeter fence at a cost of $9.4 million. 
Phase VI- Relocate Main Entrance to align with Main Mall at a cost of $50.8 million. 
Phase VII - Build parking garage and bridge to OCC at corner of Fairview Road and Arlington Drive. 
 
A draft proposal is posted to be considered at the April 2018 Board meeting and is available for download here.  Download CHJC-OCFEC-Board-Presentation-April-2018-FINAL-DRAFT_040218
 
The constraints placed on the proposal included:
  •  No negative impact on the annual fair

  • Engage the OC Marketplace ownership on proposed changes

  • Review parking and engage Orange Coast College in parking opportunities

  • Insure education facility needs are reviewed

  • Re-visit community opportunities

  • Review Equestrian Center and Equine opportunities

The Master Site Plan Process Milestones to date are:

  1. Early to mid-2016 developed a Request for Proposal (RFP) to find a Master Site Planning (MSP) consultant

  2. Awarded a consulting contract to Johnson Consulting November 2016

  3. First quarter of 2017 information gathering

  4. January 2017 OCFEC Board of Directors stakeholder meeting

  5. March 2017 OCFEC staff stakeholder meeting

  6. April 2017 on grounds partners stakeholder meeting

  7. May 2017 facility users stakeholder meeting

  8. June 2017 Community partners stakeholder meeting

  9. June 2017 Town Hall public meeting

  10. September Board of Directors workshop

  11. Late 2017 early 2018 Develop CEQA consultant RFP

The next steps are:

  1. April 2018 Board of Directors workshop – work towards finalizing draft MSP concept

  2. Date, TBD, (Evening, May 2018) hold public meeting to present the draft MSP concept

  3. April 2018 award CEQA consultant contract

  4. Over the next several months work through the CEQA process


Community-Centered Alternatives to Consider for OC Fairgrounds Master Site Plan

During May 2017, a group of residents met with OC Fairgrounds (Orange County Fair and Event Center aka OCFEC) staff and presented their ideas for how to improve the OCFEC during the Master Site Plan process. The complete presentation is available here  Download Community Master Plan Executive May 17

 Highlights from the presentation are follow.

Proposals center on the Community, Agricultural, Recreational, Educational Space and Programming (CARES Space and Programming). This is a community-centered series of alternatives. These are reasonable and feasible alternatives which maintain current programming while allowing for increased use by both the community and revenue generating groups.

CARES_Community Master Plan Executive May 17 (1)

Alternative 1 is to remodel and improve existing structures which are currently in use. 

Alt1 Community Master Plan Executive May 17 (1)

The next 4 alternatives create green space by relocating parking to a parking structure behind the billboard at the corner of Newport Blvd and Fair Drive. A legal settlement with the City of Costa Mesa limits occupancy outside of the annual OC Fair to about 25,000 persons, which is about the number served by the current number of parking places. No new parking spaces need to be added because of the cap on occupancy. However, parking can be relocated to create open space and make the OC Fairgrounds feel more like a fairground and less like a huddle of buildings hiding in the back of a huge parking lot. 

Alternatives include moving the main entrance to Newport Blvd and making the needed changes to make traffic move quickly off the 55 Fwy and into the parking lots. Stacking traffic waiting to park or making cars turn onto Fair Drive and then onto Fairview Road or even onto Arlington Drive to park should be eliminated because OCFEC has more than enough space to stack cars waiting to park on their property and not on City streets. 

Walking paths are included in the Alternatives to connect the Arlington Drive trail with the interior of the property to provide recreation the the community and to aid in pedestrian flow inside the property.

Alt 2 Community Master Plan Executive May 17 (1)

Unlike the Master Site Plan proposals brought forward by Johnson Consulting, the open space was supposed to be open space with grass or plants and not trees in a parking lot as proposed in the proposals from Chicago based Johnson Consulting. The alternatives also maintain the current footprint of the annual OC Fair. 

Alt 3 Community Master Plan Executive May 17 (1)

Alt 4 Community Master Plan Executive May 17 (1)

Alt 5 Community Master Plan Executive May 17 (1)

What are your ideas for a new Master Site Plan for the OCFEC?

 


Take a Day Off Work to Attend Master Site Plan Reveal on April 26, 2018

 

Bullhorn Meeting (1)

The Master Site Plan selection will be revealed on Thursday, April 26, 2018, Download Master Site Plan Notice _February_Board_Packet during a meeting which starts at 9 AM when most people have work, school, or other commitments. Despite repeated asks for evening meetings, the Fair Board chooses to meet at a time when it is hard for people to attend their meetings. The meeting time is by the choice of the Fair Board and nothing in statute says the Fair Board must meet during the day. Oversight of the planning was done by a member of the building trades whose employer can benefit from the project. 

The proposed schedule is:

9:00 a.m. – 10:30 a.m. Agenda items 1-9 (including Call to Order through Governance Process, workshop/training to be last governance item)

10:30 a.m. – 10:45 a.m. Short recess for room re-set (if necessary)

10:45 a.m. – 12:30 p.m.  Workshop/Training to commence

12:30 p.m. – 12:40 p.m. Short recess as boxed lunches are delivered for Board of Directors and members of the public

12:40 p.m. – 2:00 p.m. Workshop/Training to continue through working lunch

2:00 p.m. – 2:15 p.m. Wrap up of final Agenda items (Board of Directors Matters of Information and Adjournment)

The Fair Board does not stream or make video recordings of their meetings. This is another choice made by the Fair Board.  With over $40 million in cash and cash equivalent reserves Download Financials_February_Board_Packet, there is no shortage of resources.

The Fair Board is expected to present plans to begin the process of creating a convention and expo center with year round, daily, heavy use. As the process is being led by CEO Kathy Kramer who worked on the $600 million remodel of the Phoenix Convention Center  with the assistance of VP of Operations Ken Karns who helped to convert Western Fair in London, Ontario, Canada to a year round entertainment and expo center and CEO Kramer celebrated a $1 million sales month in December 2017 Download Million Dollar December_January_Board_Transcript, the project will have major impacts on Costa Mesa. The remodel of the Phoenix Convention Center triggered development of hotels and an entertainment district

 

Contact Fair Board Directors Added May 3, 2018

Chair Barbara Bagneris bbagneris@ocfairboard.com
Vice Chair Robert Ruiz rruiz@ocfairboard.com
Ashleigh Aitken aaitken@ocfairboard.com
Nick Berardino nberardino@ocfairboard.com
Sandra Cervantes scervantes@ocfairboard.com
Doug La Belle dlabelle@ocfairboard.com
Gerardo Mouet gmouet@ocfairboard.com
Newton Pham npham@ocfairboard.com
Stan Tkaczyk stkaczyk@ocfairboard.com

Contact CEO Kathy Kramer  

kkramer@ocfair.com 

714-708-1510

Contact VP of Operations Ken Karns

kkarns@ocfair.com

714-708-1552

 

 

 

 

 

 

 

 


Proposed Convention and Expo Building Blocks in Centennial Farm

 

While the Fair Board claims that agriculture is a primary focus of the OC Fairgrounds, actions don't support those claims.  New Master Site Plan proposals show a new 40,000 sq ft "Educational Meeting Center" with a 20.000 sq ft ballroom being built behind Centennial Farm. 

Aspirational_CentralCampus_Sept 17 Board

The "Educational Meeting Center" is a meeting and conference center with a fancy name.  The ballroom will be used for conventions, tradeshows, meetings, and other events.  This is not a school building and there are no plans to open a school of the arts which will use the classrooms and ballroom on a daily basis for arts education, rehearsals, and performances. 

Space for expanding Centennial Farm would be lost to the "Educational Meeting Center".  Expect the building to be two or more stories tall and to dominate the landscape with bulk and mass. A building of the size and location shown can cast shadows on Centennial Farm, which can harm the agriculture exhibits. 

While claims are made that agriculture is important, the Master Site Plan proposals show making money by becoming a convention and expo center is more important than agriculture, and that harming the agriculture mission is okay if there is money to be made. 

 


Three Master Site Plan Proposals to Make the OC Fairgrounds into a Convention & Expo Center

In September 2017, at the Fair Board meeting at 9 AM on a Thursday, when the majority of residents are at work or at school, the Fair Board presented three Master Site Plan proposals which move the OC Fairgrounds away from being a fairground and into being a convention center. This is a map of what we have now at the OC Fairgrounds:

Existing Facilities_Sept 17 Board

The least the Fair Board wants to build includes doubling the size of the Administration building and adding a 50,000 sq ft "Ag-Expo Hall".  Adding an expo hall which is about the size of a football field and which will be two or more stories tall is a lot of building to add, especially when the Fairgrounds can't rent out the space they already have. The Ag-Expo Hall may have the word "Ag" short for agriculture in the name, but this is whitewash and this 50,000 sq ft expo building is for convention and exposition use. 

The view of the entire site for Concept 1: "Minimal":

Minimal_Sept 17 Board

Close up of the Main Mall area for Concept 1: "Minimal":

Minimal_CentralCampus_Sept 17 Board

And here is what needs to be demolished to make Concept 1: "Minimal" work:

Minimal_Demolition_Sept 17 Board

A second proposal has the 50,000 sq ft expo building, which can grow to 125,000 sq ft. That is a building two or more stories high and about one to two and a half football fields in size.  A  40,000 sq ft "Educational Meeting Center" with a 20,000 sq ft ballroom is proposed behind Centennial Farm. There are no plans for an arts school at the Fairgrounds which would use the "Educational Meeting Center" for education. This building is another convention and expo building with a fancy name to distract you from what is being done. 

The view of the entire site for Concept 2: "Aspirational":

Aspirational_Sept 17 Board

A close up of the Main Mall for Concept 2: "Aspirational":

Aspirational_CentralCampus_Sept 17 Board

And what must be demolished to build Concept 2: "Aspirational":

Aspirational_Demolition_Sept 17 Board

There is more to be done in Concept 3: "Bold" which has the 40,000 sq ft building behind Centennial Farm, an expo hall between 75,000 sq ft and 150,000 sq ft, and a wind turbine farm  (WTF) in the parking lot next to Newport Blvd. The WTF extends along Newport Blvd to Fair Dr.  This proposal has between 115,000 sq ft to 190,000 sq ft of new buildings, which is about two and a half to nearly four football fields of space. It is not clear why all of  this new space is needed because much of the space currently at the Fairgrounds sits unused much of the time. No member of the Public asked for the WTF, but the Board wants the WTF. If the Board didn't want this plan, why would the Board direct this plan to be drawn, right?

The entire site for Concept 3: "Bold":

Bold_Sept 17 Board

Close up of the Main Mall for Concepts 3: "Bold":

Bold_CentralCampus_Sept 17 Board

And what needs to be demolished to construct Concept 3: "Bold" with the WTF:

Bold_Demolition_Sept 17 Board

The whole presentation at the September 2017 Board meeting is here in two parts because the files are large:

Download Sept 17 Board Master Site Plan Presentation Part-1

Download Sept 17 Board Master Site Plan Presentation Part-2

 

The Board has refused to provide the Public, who own the Orange County Fairgrounds, with substantive information about what is being done on the Master Site Plan since the September 2017 presentation of these proposals. Work continues to move the Master Site Plan forward, to flesh out concepts and to figure out how much money the Fairgrounds is going to make from these plans, but the Fair Board only states that they are meeting in backrooms to make decisions which the Fair Board refuses to let the Public participate in the process or to see what is being done to the property the Public owns.