Finances

Restricting Public Comments & Hiring a Private Investigator on February 2019 OC Fair Board Meeting Agenda but No Action on State Audit

Cow Question (2)

 

The agenda for the Thursday,  February 28, 2019, OC Fair Board (aka Orange County Fair and Event Center, OCFEC, 32nd District Agricultural Association) meeting has been published.  The Board meets at 9 AM at the Administration Building off Arlington Drive. If  you cannot make the meeting, please email comments to the Board Directors using the emails at the end of this post.

Agenda available here Download 19_02_February_Agenda1

Complete agenda packet available here https://ocfair.com/publicmeetings/board-of-directors-meeting-february-28-2019/

Refusing Action on State Audit Which Found Employee Paid to Not Show Up for Work 

No action can be taken by the Board regarding the 2016 state audit which found an employee paid over $70,000 to not show up for work for approximately eight months because the matter has been agendized as "Information Only" notwithstanding either the seriousness of the matter or the multiple requests by the public for action to resolve the issues which permitted this to occur. The same management are in place now as were during 2016 when the deal went down.  The Board refuses to take action to address the underlying issues which allowed these actions to occur. Download CDFA Unredacted 2016 Audit

Restricting Public Comments

New restrictions on public comment are in place for the February 2019 meeting. The new policy called a "Statement of Meeting Decorum" limits what can be said during public and agenda item comment:

[. . .] To encourage and respect all views, The OC Fair & Event Center requests that members of the public not engage in personal attacks, profanity, obscenity, hateful or abusive language, physical violence or threatening behavior. Furthermore, and to further the purposes of the Act, members of the public are requested to direct their comments directly to the Board of Directors as a whole.

It is clear that enforcement of these restrictions will violate the law. The U.S. Supreme Court specifically ruled in 1971 in Cohen v. California that governments cannot restrict speech in the interest of public decorum.  Download Cohen v. California 403 US 15

Hiring a Private Investigator

Over $58,000 was spent with private investigation firm Morley Group during 2018 without either a contract being brought forward to the Board or an explanation given of why a private investigator needed to be hired.  Morley Group is being given another no bid contract SA -051-19YR (agendized in the Standard Agreements file as "professional services" in an attempt to conceal the true nature of the contract) for $49,000 for the period from February to July 2019.  There is no need for the Morley Group contract as the OC Fairgrounds can request the Orange County Sheriff's Department, Costa Mesa Police Department, California Highway Patrol and/or other state investigative services to conduct investigations.  

Board Director Nick Berardino requested hiring an outside performance auditor and presented a report at the May 2018 Board meeting.  Download Performance Auditor Request Board Directors requested action to move ahead on a performance auditor while staff have not followed up on the request. Now is the time to bring in an outside performance auditor and request the State Auditor for assistance. If there is money for a private investigator, there is money for a performance auditor. Maybe the performance auditor can find out why the private investigator was hired and report back.

Video Recording of Meetings

Board meetings are held on Thursday mornings at 9 AM, when few people can attend.  Board intent was to look into both live streaming and recording of meetings for later playback, but the agenda says "video recording." Staff and at least one Board Director have used the specific wording of an agenda item to throttle the intentions of Board Directors on prior matters.  A push needs to be made to have live streaming of meetings and archiving of meeting records despite wishes of staff and some Board Directors to the contrary. 

Increasing Oversight of Requests for Proposals and Capital Projects

A number of surprises in requests for proposals (RFP's) and capital projects have come to light in the past few months. Several examples are:

  • Staff entered into a legally binding storm water management plan (SWMP) with the State Regional Water Quality Control Board (SRWQCB) in 2016, spent over $80,0000 on storm water consulting services, received a notice of violation for allowing runoff water from operations to enter the storm drain during 2018, and failed to let the Board know what was going on. Members of the public let the Board know about the SWMP in late 2018.
  • Nature and scope of the effort undertaken by staff to rebrand the property was unknown to several Board Directors and the public until October 2018 at which time the contract was in place and work had been started.  Staff had written the scope of work without Board or public input. The contract left out the Equestrian Center and tilted the process towards becoming an events and entertainment center.
  • Staff publicly stated that the much needed sound wall for the Action Sports Arena (ASA) was not planned to be built despite appearing in the budget for several years. Estimated costs of the sound wall are around $1 million, which is a small portion of the over $50 million in cash reserves. Staff had been leading on the Board and neighbors about building the Action Sports Arena sound wall.

Board Directors have requested to have input and oversight over how public money is spent on contracting and capital projects.  This is a good thing. 

Relocating A4 Skyhawk from Orange County Civic Center to OC Fairgrounds

Plans are being made to relocate the A4 Skyhawk currently located in the plaza at the Orange County Civic Center to the OC Fairgrounds and to place the plane near Heroes Hall Veterans Museum which would allow the plane to be used as part of the museum. Watchful eyes of the public are needed to insure that staff don't create an obstacle to this project. This is a great project. Are there other historic items which could be moved to the OC Fairgrounds?

Contact the OC Fair Board

Chair Robert Ruiz rruiz@ocfairboard.com

Vice Chair Sandra Cervantes scervantes@ocfairboard.com

Ashleigh Aitken aaitken@ocfairboard.com

Barbara Bagneris bbagneris@ocfairboard.com

Doug La Belle dlabelle@ocfairboard.com

Andreas Meyer ameyer@ocfairboard.com

Gerardo Mouet gmouet@ocfairboard.com

Newton Pham npham@ocfairboard.com

Natalie Rubalcava-Garcia nrubalcavagarcia@ocfairboard.com


State Audit of Orange County Fair and Event Center Uncovers Employee Paid to Not Show Up for Work

Toilet Paper (2)

 

This post is available as PDF. Download 2016 Audit Accountability Handout

An unredacted copy of the 2016 audit report is available. The audit was conducted by the California Department of Food and Agriculture (CDFA) which is the parent agency of the OC Fairgrounds (aka Orange County Fair and Event Center, OCFEC, 32nd District Agricultural Association or 32nd DAA). Download CDFA Unredacted 2016 Audit

An audit of the 32nd District Agricultural Association (32nd DAA) which operates the Orange County Fair and Event Center (OCFEC) and conducts the annual OC Fair uncovered that the 32nd DAA paid a former employee over $74,000 in wages and benefits after she stopped working for the 32nd DAA in 2016. The audit report concluded that the 32nd DAA “overpaid the employee for work that was not performed and therefore may be considered a gift of public funds”, which is prohibited by the California Constitution. Auditors recommended that while attempts should be made to recoup the funds paid, it was unlikely that the funds could be recovered from the former employee. The 32nd DAA contends that the payments were made to incentivize an employee who allegedly created a hostile work environment to leave the 32ndDAA, although no explanation has been offered as to why the employee was so incentivized and not simply terminated for creating such an environment

CEO Kathy Kramer was aware of the issues raised in the audit which included a failure to update contracting procedures to remain in compliance with statute in May 2018. The May 2018 32nd DAA Board of Directors (Board) meeting agenda included enacting new policies and procedures regarding the issues regarding contracting procedures but made no mention of payment of the over $74,000 to a no-show employee.

The public remained unaware of the audit until late 2018 when CEO Kramer placed Vice President of Finance Adam Carleton on administrative leave. Mr. Carleton is the fifth VP of Finance under CEO Kramer since her arrival at the OC Fairgrounds four years ago. Mr. Carleton alleges he was placed on administrative leave as part of the effort to conceal the audit findings of payment to an employee to not show up for work. Mr. Carleton made the public aware of the existence and findings of the audit. CEO Kramer has not offered any other reason for placing Mr. Carleton on leave, but simply denies it was for this reason. No actions have been taken relating to other senior members of the executive management team including Vice President of Operations Ken Karns and Vice President of Business Development Michele Richards despite serious problems at the Fairgrounds including critical health and safety violations going uncorrected for more than a year and the booking of controversial events which have led to problems up to, and including, a riot at the Fairgrounds.

There is a runaway administration which is trying to operate without oversight and transparency which has placed the safety of the public and financial health of the 32nd DAA at risk. Among these are:

  • Reports from the State Fire Marshal in 2016 and 2018 contained numerous violations which required correction, with many of the issues identified in the 2016 report remaining uncorrected in the 2018 report.
  • A culinary program for high school students was conducted in a kitchen where the fire suppression system was rendered effectively non-functional.
  • CEO Kramer and VP Karns signed off on over $250,000 invoices for the master site plan without receiving the deliverable items.
  • The Fairground was cited for violations of storm water discharge regulations by authorities after an inspection triggered by their washing of animal waste into the storm water system.

CEO Kramer and the management of the Orange County Fairground attempts to operate the facility with a lack of transparency that verges on outright opacity.

  • The Fairgrounds management regularly fails to provide documents requested under the California Public Records Act for months after the requests (rather than the 10 days found in the law) and makes no effort to work with requesters to streamline this process, as required by law.
  • The Fairgrounds management worked with contractors to develop a master site plan which ignored public input and proposed demolition of the Equestrian Center to create an RV park despite the Board and public expressing the need to keep the Equestrian Center, but which captured most of the wish list given to the contractors by Fairground VP Karns prior to gathering input from the public or the Board.
  • Management made a further attempt to reduce the size of the Equestrian Center to provide more space for shipping containers by misleading the Board that a parking lot adjacent to the Equestrian Center would be used for storage and did not state the Equestrian Center was targeted to become a storage area.
  • Management spent nearly $100,000 with a contractor to generate a Storm WaterManagement Plan that legally committed the Fairgrounds to certain actions without ever raising the contracts or the plans to the attention of the 32nd DAA Board that was appointed by the Governor to oversee the Fairgrounds.
  • Recently, management attempted to use state funds to pay for travel by CEO Kramer, VP Karns and VP Richards to Texas despite the ban on travel to Texas using state money due to discrimination by Texas against the LGBTQ community.

The 32nd DAA Board fails to effectively oversee the Fairgrounds, despite being charged with the authority to “manage the affairs of the association” (Food and Agriculture Code §3965(b)). The senior management of the OC Fairgrounds has convinced a number of members of the Board that they are “merely volunteers,” have only an advisory role and should not weigh in on the actions of Fairgrounds Management. These “captured” Board members facilitate the actions of Fairgrounds management, stymie the efforts of other Board Members to do their appointed job, and refuse to meet with members of the public regarding management of the 32nd DAA. Board members are well rewarded by Fairgrounds management with free catered gourmet dinners, free tickets for front row seats to headliner concerts, and free trips to meet with trade association lobbyists in addition to staff providing assistance with furthering the social lives of Board members using state funds.

About the 32nd DAA

The 32nd District Agricultural Association (32nd DAA) was formed after WW II by the state and made responsible for conducting the Orange County Fair which had been held since 1890 by private organizations. A portion of the former Santa Ana Army Air Base was purchased by the state to be utilized by the 32nd DAA. The approximately 150 acre property is currently owned and operated by the state and staffed by civil service employees and state contractors. Annual revenues of the 32nd DAA are over $48 million with operating expenses of about $39 million and cash reserves of about $50 million. The 32nd DAA uses the names “Orange County Fair and Event Center” and “OCFEC” to conduct business. A nine member Board of Directors appointed by the governor oversees the management of the property. California Department of Food and Agriculture Fairs and Expositions Branch under the Division of Marketing Services is the parent agency of the 32nd DAA.

About the Equestrian Center

The Equestrian Center at the Orange County Fair and Event Center is owned by the state and operated by a private company and features eight barns with stalls and offices and five riding arenas. Programs include therapeutic riding, Pony Club to children to learn horsemanship, OC Vaulting featuring gymnastics performed on horses, in addition to riding lessons for jumping, hunting, eventing, and English riding, among other styles. The Equestrian Center is open to the public.

About Friends and Neighbors of the Orange County Fairgrounds

Friends and Neighbors of the Orange County Fairgrounds (FANOCF) is a 501(c)(3) non-profit corporation which was formed to foster and support the operation of the Orange County Fairgrounds so as to benefit the interests of the neighboring residents and the public. FANOCF strives “For a Fair and Fairgrounds that is for, and of, Orange County”. FANOCF advocates for uses of the OCFEC property which prioritizes the needs of Orange County residents for educational, agricultural, and community based programming.

Contact the OC Fair Board

Chair Robert Ruiz rruiz@ocfairboard.com

Vice Chair Sandra Cervantes scervantes@ocfairboard.com

Ashleigh Aitken aaitken@ocfairboard.com

Barbara Bagneris bbagneris@ocfairboard.com

Doug La Belle dlabelle@ocfairboard.com

Andreas Meyer ameyer@ocfairboard.com

Gerardo Mouet gmouet@ocfairboard.com

Newton Pham npham@ocfairboard.com

Natalie Rubalcava-Garcia nrubalcavagarcia@ocfairboard.com

 


September 2018 Fair Board Meeting Agenda Packet Posted

Check It Out (1)

The full agenda packet with the contracts has been posted. Choose the “September 27, 2018” meeting to access the files. Please share with others who are interested.
https://ocfair.com/public-information/public-meetings/

Master Site Plan Process (See 18_09_Staff_Reports_A_J1)
The plan is to hold one (1) public meeting in October and finalize the Master Site Plan in November.

Equestrian Center and Facility Wide Infrastructure Analysis (See 18_09_Staff_Reports_A_J1)
The proposal is to analyze the infrastructure of the Equestrian Center and then sometime in 2019 to analyze the infrastructure of the bulk of the Fairgrounds. An analysis of infrastructure needs to be done before the Master Site Plan is created in order to determine infrastructure which needs to be updated or replaced. The Fairgrounds has $55 million in reserves, so money is not the problem. Staff is considering using the Equestrian Center for storage space. See “Long Term Storage Solutions.”

Sales Tax Collection and Remittance to City (See 18_09_Staff_Reports_A_J1)
Fairgrounds staff take the position that a City business license is not required. Fairgrounds staff discuss sales tax and point out contract language requiring reporting of sales tax but does not state that Fairgrounds staff will be active in having sales properly reported to allow money to earned in the City to be returned to the City. Should the City implement a gate tax, a per drink tax, and/or a parking tax to receive revenue from the Fairgrounds?

Long Term Storage Solutions (See 18_09_Staff_Reports_A_J1)
Solutions for long term storage are needed. Offsite storage space can be rented for about $100K per year or a Butler building could be constructed or the Equestrian Center space could be used for storage.

New Safety and Security Board Policy (See 18_09_Staff_Reports_A_J1)
The proposed policy is:
Draft Policy 2.12

The CEO will not operate without safety and security planning, procedures and training for the protection of the Association, the staff and guests.

1. Operate without an Incident Command Procedure/Emergency Preparedness Plan, reviewed by appropriate governmental agencies, and communicated to key staff, vendors and production personnel.

To this end;

A. The CEO will schedule a security meeting with the appropriate security partner representatives and two policy representatives from the Board of Directors prior to the start of the annual OC Fair and once in the approximate mid-point of the annual OC Fair.

The CEO will ensure the continued development and delivery of Security, Health and Safety training annually for staff and management of the OC Fair & Event Center.

The CEO will ensure the annual budget supports continuing investment in technology and equipment for Security, Health and Safety.

The CEO will ensure the ongoing investment in staff/management continuing education in Security, Health and Safety for the advancement of procedures and best practices.

The CEO will ensure risk management facility inspections are conducted regularly and corrections are made in a timely manner.

 

Approval of Travel Request to San Antonio, TX (See 18_09_Staff_Reports_A_J1)
State travel is prohibited to states such as Texas which discriminate against same sex couples or their families or on the basis of sexual orientation, gender identity, or gender expression. The proposed trip is to the annual International Association of Fairs and Expositions (IAFE) allegedly for training. CEO Kramer is making a presentation on “How to Market Your Facilities” and “Creating Community Giveback Programs on Your Fairgrounds with Any Budget”. Ken Karns is presenting in a panel on “Fairgrounds Master Planning - Developing a Vision.” This is an unneeded trip at Public expense and does little to benefit the Public.

Checks and Contracts:
Cash and cash equivalent reserves are over $55 million. See 18_09_Financial-Packet_Aug


Fragomen, Del Rey, Bernsen & Loewy, LLP is an immigration law firm which was previously engaged to process VP of Operations Ken Karns NAFTA TN clearance and H-1B work visa. Fragomen was paid $5,800.00 on June 7, 2018, using check 84090. See 18_09_Financial-Packet_Aug


Ray Cammack Shows (RCS) which operates the carnival and midway was paid $7,535,495.71 for the 23 day run of the 2018 OC Fair. This money leaves Orange County and does not return. See 18_09_Financial-Packet_Aug Electronic Payments Summary August 2018


Straub Distributing / Anheuser-Busch paid $156,712.00 in sponsorship fees. See contract SA-272-18SP in 18_09_Standard_Agreements1

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
Doug La Belle dlabelle@ocfairboard.com
Gerardo Mouet gmouet@ocfairboard.com
Ashleigh Aitken aaitken@ocfairboard.com

Contact CEO Kathy Kramer kramer@ocfair.com

Contact VP of Operations Ken Karns  kkarns@ocfair.com

Contact VP of Business Development Michele Richards mrichards@ocfair.com


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


Why Doesn't the Fair Board Clean Up Messes Made by Executive Management & Staff?

Toilet Paper (2)

The letter posted below was sent to the OC Fairgrounds (aka Orange County Fair and Event Center or OCFEC) in February 2018 after Executive Management and the Board worked together to conceal information regarding a bid protest in which allegation were made regarding misconduct.  Concealment of the bid protest documents and other troubling questionable actions since 2015 raise questions such as:

  • What motivates these actions?
  • Who benefits from these actions?
  • What are the benefits received from these actions?
  • What do Board members gain by not fixing problems brought to their attention?

Here's the letter:

I am in receipt of the letter dated February 1, 2018, from the 32nd District Agricultural Association (32nd DAA) responding to my request of January 22, 2018, made under the California Public Records Act (Cal. Gov. Code §6250, et seq.). Yet again, the 32nd DAA has refused to produce documents in a timely manner which are known to be in their possession.

This refusal, which I have specifically addressed in a separate letter, is part of a series of dubious and suspect actions by the 32nd DAA, including efforts to hide its questionable activities, a pattern which started in, at least, 2015. These problematic actions or efforts to hide those actions have included:

Embarking on a complicated scheme to manipulate the bidding, contracting and financial systems by, without rational basis, revising the long-standing way in whichthe contract for Independent Sound Monitoring was structured and thus creating artificially high rates for those services, which are required to comply with multiple legal settlements and City of Costa Mesa noise limits:

During 2016, Executive Management worked with a consultant to alter the costs, terms and budget of the Independent Sound Monitoring services. This had the effect of artificially inflating rates by over 100% above what had been charged in the past for these same services. The artificially inflated rates garnered complaints from event promoters billed for the services about the sudden rate increase. Executive Management who had originated the contract changes that caused the rate increase used the rate increase to effectively terminate the long-standing and successful procedures and relationship with the existing Independent Sound Monitor. Executive Management then appointed an unqualified Sound Monitor, who was under direct control of Executive Management, to supersede the Independent Sound Monitor. The new unqualified Sound Monitor allowed promoters to conduct events unchecked, which was the apparent ultimate goal of Executive Management. This resulted in violation of multiple legal settlements and City noise standards by Fairgrounds events.

Eliminating, in 2016, the authority of the Independent Sound Monitor to require and enforce changes needed to bring sound systems into compliance with multiple legal settlements and City noise limits. This despite the fact that the professional sound monitor is required in legal settlements to which the Fairgrounds is a signator.

 

Engaging in a scheme to subsidize event promoter costs by billing event promoters less than the full amount of services provided and writing off the outstanding balance to a secret account approved by Executive Management from 2016 onward.Scheduling of events known to be dangerous and the subsequent hiding the financial impacts of those dangerous events:

In spring of 2016, Executive Management scheduled a rally for the Donald Trump campaign despite the fact that such events had led to problems at previous locations and the campaign was already notorious for not paying its bills and costs it incurred. Executive Management concealed their actions for several weeks and sprung the event on the Board and Public less than two days prior the event. Executive Management signed the contract without requiring adequate security and law enforcement staff to be paid for by the event promoter. The event ended in a riot which required hundreds of law enforcement staff to contain the riot.

A Board member and Executive Management have engaged in backroom dealing to have the taxpayers of Orange County pay a law enforcement bill from 2016, which exceeded $125,000, which resulted from an event that foreseeably ended in a riot that endangered the homes and businesses surrounding the 32nd DAA property. Executive Management and the Board stalled, obfuscated, and flatly refused to answer questions regarding payment of the bill from the fall of 2016 until the spring of 2017.

 

Engaging in dangerous and hazardous building practices and a multi-year coverup of structural deficiencies which put members of the public at risk:

Executive Management, with the support of Board members, evaded building construction standards including plan check, structural analysis and building inspection by a licensed building inspector during the construction of the nearly 50 ton Workers Memorial by designating the project as an art project rather than a construction project. An unlicensed contractor was permitted to erect the structure using methods which created structural deficiencies which rendered the structure unsafe to be around before the project was completed.

Structural deficiencies in the nearly 50 ton Workers Memorial were concealed for over a year after the structural deficiencies were discovered prior to the opening of the 2015 OC Fair. Executive Management delayed installation of fencing adequate to protect the Public from the collapsing structure until early 2016. Guests at the 2015 OC Fair were put at risk due to the placement of seating next to the structurally unsound memorial without being notified of, or protected from, the hazards. During early 2017, after the state of the memorial finally became known to the public, the collapsing structure was, finally, demolished and rebuilt by a licensed contractor.

 

Turning a blind eye to, or enabling, apparent conflicts of interest involving Board members:

A Board member management was granted oversight and responsibility for direction of a project which could benefit his employer and allowed by the Board to steer the project in a manner which is likely to benefit his employer.

The Board has allowed two Board members who are officers of a private non-profit corporation to solicit and receive donations from vendors and contractors of the 32nd DAA and to use facilities provided by the 32nd DAA vendor for the benefit of the private corporations other donors and members.

 

Compensating, through back-door methods, Board members who are supposed to be serving on the Board without compensation:

State resources have been utilized to fund private catered parties for Board members, their families, friends, nannies, and business associates. Over $60,000 is spent in a 23 day period on gourmet catered meals for private dinners held during the OC Fair. The private catered dinners feature a private bathroom costing over $14,000 for the run of the OC Fair and lavish décor paid for using public money. Countless hours of unaccounted staff time go into the planning and execution of the events. Board members receive free tickets to the best seats in the Pacific Amphitheatre, Action Sports Arena, and The Hangar, including receiving tickets to simultaneous events and more than one event on a given day. Board members have a Board Concierge who is paid staff member assigned to manage the tickets and dinners of Board members.

 

Engaging in and supporting suspect hiring paid for with state funds:

When the position of Vice President of Operations was filled, Executive Management may have made material misrepresentations to the U.S. Customs and Immigration Service regarding the nature and duration of the employment of the position. In 2016, senior management of the Fairgrounds may have made misrepresentations to USCIS regarding the nature and duration of the work for which Mr. Ken Karns was hired including possibly asserting at certain points that he was hired as a temporary management consultant. Additionally, legal costs to obtain two separate USCIS clearances for this individual were paid for by the 32ndDAA. The Board has been made aware of these actions and has refused to act.

 

Attempting to increase revenues by evading legal agreements with the apparent support and encouragement of Board members:

Legally binding environmental mitigation measures and a 2012 legal settlement were ignored in order to increase revenues from the 2017 OC Fair by planned increases in seating capacity at the Pacific Amphitheatre. When confronted with documentary evidence of these actions during a Board meeting, Board members and Executive management denied the actions, accused members of the public who raised the issue of fabrication, and encouraged staff in the room to join the denialand disparagement which was taking place. After pressing the matter, an agreement was reached which resulted in compliance with the terms of the mitigation measures and legal settlement. Attempts to obtain information regarding the decision made to undertake this course of action were obstructed and continue to be obstructed, including blatant and obvious evasion and delay in response to reasonable public records requests.

This pattern and practice of bad behavior is costly and detrimental to the financial health and reputation of the 32nd DAA, but is reflective of a culture in which secrecy, confidentiality and a resistance to full disclosure to the public is reflexive and endemic. This latest attempt to hide the details of the bid protest of the proposed contract award to Ticketmaster are not going to work because facts of what happened and how it happened will be revealed. Concealing problems and attempting to contort the facts does not work and makes the problem worse.

I implore the Board to embrace openness and transparency, even if this means that changes in 32nd DAA leadership may be needed. If the fact that you've been appointed as stewards of the public in overseeing the 32nd DAA is insufficient motive to do this, then the long term financial and reputational risks to the 32nd DAA from this behavior should be more than enough incentive.

 

 

 


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


Over 111 Day Wait for Answers About OC Fair Board Expenses & Still No Answers

2017 OC Fair Aerial View Cropped

The 2018 budget for the OC Fairgrounds was discussed and approved in November 2017.  Budget questions were emailed to CEO Kathy Kramer a few days before the meeting and were not answered. The same questions were asked during the November 2017 Board meeting when the 2018 budget was discussed and were not answered.  Attempts to follow up to receive answers to questions about expenditure of public money have been met with obstructionism.  OC Fair Board Directors are supposed to be serving without compensation and it is unclear why these expenses are needed.

During 2016 and 2017, OC Fair Board Directors received free nightly catered gourmet dinners for themselves and their families; free concert and admission tickets for themselves and their families including tickets to more than one event per day; use of a private bathroom costing over $14,000 for the 23 day run of the OC Fair; and use of a public employee tasked with being the Board Concierge to coordinate tickets, dinners, and guest lists for Directors. The OC Fairgrounds can't answer public records requests but has enough staff to give the Board a Concierge to manage their busy days of free dinners and free tickets. Executive Management, including those who are responsible for overseeing public records requests, are also recipients of the free nightly catered gourmet dinners and concert tickets. 

CEO Kathy Kramer appears to have the support of  the Directors (Ashleigh Aitken, Barbara Bagneris, Nick Berardino, Sandra Cervantes, Doug La Belle, Gerardo Mouet, Newton Pham, Robert Ruiz, Stan Tkaczyk) in keeping this information under wraps as no Director answered the question at the November 2017 Board meeting and no Director has compelled release of the information after being made aware of stonewalling on the part of staff.

What Was Asked & Not Answered

Note: The account numbers refer to line items in the 2018 budget.

Regarding account 5150 Directors Expense budgeted at $11,597, what are the activities, personnel, and other items paid for with this money?

Regarding account 5155 Directors Meeting Expense budgeted at $12,300, what are the activities, personnel, and other items paid for with this money?

What is the budgeted amount in 2018 for the nightly catered Board/Business Development dinners held during the OC Fair? What is the budgeted amount in 2018 for Board Concierge services? What is the cost in 2018 of the complimentary parking and OC Fair tickets given to the dinner guests?

Will private bathroom facilities in the Board/Business Development dinner area be provided in 2018? What is the justification for these facilities given that the dinner attendees walk past a bathroom on their way into the event?

Has there been consideration of replacing the area used for the nightly Board/Business Development dinners with a revenue generating activity such as space rentals to concessionaires and vendors or creating a restaurant open to the Public? The restaurant would allow OC Fair patrons to dine on the same food as the 32nd DAA Board members while generating revenue for the 32nd DAA.

What are the costs including face value of tickets and staff time to fill orders associated with Directors and their families receiving complimentary tickets to the events held in the Pacific Amphitheatre, The Hangar, and Action Sports Arena in 2018?

Will Directors be able to receive tickets to more than one event in the Pacific Amphitheatre, The Hangar, and Action Sports Arena per day in 2018? What is the face value of the tickets received from attending more than one event per day in the Pacific Amphitheatre, The Hangar and Action Sports Arena?

Will the Executive Management Team be gifting themselves complimentary tickets to the Pacific Amphitheatre, The Hangar, and Action Sports Arena in 2018? What is the face value of the tickets gifted to the Executive Management Team?

Has there been consideration of relocating Directors from the premium pit seats to less expensive seats and placing all of the pit seats on sale to increase revenue for the 32nd DAA? This move would generate revenue for the 32nd DAA while reigning in costs.

Contacting the OC Fairgrounds

Public records requests can be submitted to cpra@ocfair.com

CEO Kathy Kramer can be reached at kkramer@ocfair.com

Board Director Email Addresses 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

 

 

 

 


Record Breaking 2017 Revenues & Cash Reserves at OC Fairgrounds

32nd DAA Historic Revenue Chart

As the books on 2017 are closed, the financial achievements of the OC Fairgrounds (also known as the 32nd District Agricultural Association or 32nd DAA)  in Costa Mesa, CA, become clear with record breaking revenues of $46,218,579, up by over $2 million from 2016 revenues of $44,085,055. Operating expenses increased from $32,913,281 in 2016 to $36,284,118, but the operation was still highly profitable. An all time high in cash and cash equivalent reserves came in at $43,577,495. A summary follows and detailed financial statements are available for download. 

Download Financials_HistoricalFebruary_Board_Packet

All figures are end of period. 

  2017 2016
Cash & Cash Equivalent $43,577,495 $38,206,988
     
Total OC Fairgrounds Produced Event Revenue     $35,075,050   $34,203,177
Total Year Rental Revenue     $10,592,999 $9,567,324
Total Non-Operating Revenue     $550,531 $314,554
Total Revenue     $46,218,579 $44,085,055
     
Total Operating Expenses      $36,284,118  $32,913,281
Profits   $9,934,461 $11,171,774

Where Can I Get a Copy of the 2018 OC Fairgrounds Budget?

Porta Pottie Question (2)

You can get a copy of the 2018 OC Fairgrounds budget here.   Download 2018 Fairgrounds Budget

Revenues are shown in ($) while expenditures are shown as regular figures. Slides from the budget presentation are first, then the line item budget.

These are a couple of line items people have had questions about:

#4220 $3,721,500 in alcohol revenue at the OC Fair. This is the commission received on alcohol sales. Actual alcohol sales are estimated to be $9.3 million for 23 day OC Fair.

#4385 Camping Revenue $96,500 is paid by the carnival workers, vendors, concessionaires, and others exhibiting at the Fairgrounds who camp on site in trailers and RVs.

#4370, #4710, #4711 Parking revenues total $5,189,413 which is more revenue than #4355 Performance Admissions Revenue (Pac Amp, The Hangar, Action Sports Arena.)

#5101 Orange County Sheriff - Director Berardino directed Executive Management to reduce the $776,860 in the budget.

#5475 PR/Manager Functions $115,449 is the budgeted amount for the private nightly catered gourmet dinners for Fair Board members, their families, Executive Management, and business associates. The amount increased by nearly $7,000 from last year, but that's okay. It's the Sheriff's bill that needs to be cut.

Email your budget questions to CEO Kathy Kramer at kkramer@ocfair.com

 

Does the OC Fairgrounds Make Enough Money to Add Agricultural Programs and Facilities?

Cow Sign Question (2)

Yes. The OC Fairgrounds has more than enough money now to increase agricultural programming, building new agriculture facilities, increase community programs, and lower rates to allow community groups to use the facilities. November 2017 financials show year to date revenues of $44,948,460 with operating expenses of $34,501,492 which is a profit of $10,446,968 or 23.2%.

The November 2017 financial statements are here  Download Financials_17_12_December_Board_Packet