Assmeblymembers Solorio and Tran [...]]]> A recent blog post on OC Progressive noted that due to a provision in federal law, the state might not get anything for the sale of the fairgrounds.  Thanks to the Federal Property and Administrative Services Act of 1949, if the fairgrounds are sold to a developer, the property reverts to the U.S. Government.

Assmeblymembers Solorio and Tran should be made aware of this information in tomorrow’s public hearing.

November 2, 2009

While the state cuts services for the disabled, the owners of a company that provides vocational help for them have made more than $7 million in five years.

Edward Dawson started his business from scratch in 1978. He and his wife, Marcia, built it into a $63-million-a-year enterprise with offices throughout [...]]]> Article Source
By Alan Zarembo

November 2, 2009

While the state cuts services for the disabled, the owners of a company that provides vocational help for them have made more than $7 million in five years.

Edward Dawson started his business from scratch in 1978. He and his wife, Marcia, built it into a $63-million-a-year enterprise with offices throughout California.

The couple, who earned more than $7 million in salary and deferred compensation in the last five years, now own a villa overlooking the beach in Palos Verdes and other real estate worth millions of dollars.

Theirs is a classic tale of entrepreneurial success — except their wealth comes from running a nonprofit that is sustained by taxpayer dollars.

The company, Social Vocational Services, provides job training, life skills instruction and group housing for people with developmental disabilities — an industry that relies on low-wage workers and government handouts.

The Dawsons made their millions while navigating the murky boundaries of nonprofit law. By definition, nonprofit companies exist for the public good. Federal law says that executive pay must be “reasonable” — a vague standard that regulators and watchdogs say essentially allows nonprofits to set their own limits.

While the state is slashing the budget for the developmentally disabled, it places no ceiling on how much executives like the Dawsons can earn. In addition to their pay, they collect more than $700,000 a year for renting properties to SVS, including a San Francisco condominium for their own use.

Their financial practices were unusual enough to prompt an investigation by the state attorney general in 2000 into whether SVS’ board of directors was placing the Dawsons’ personal gain above the nonprofit’s public mission.

But after the investigation ended in 2004 with a confidential settlement — obtained last month by The Times through the Public Records Act — the board gave them raises. Over the next four years, Edward Dawson’s salary as chief executive jumped from $368,508 to $872,311.

Determining what constitutes “reasonable” compensation under the law can come down to a debate among experts.

“These cases are often challenging to prosecute because there is no bright line for what constitutes reasonable compensation,” said Belinda Johns, head of the charitable trusts section of the California attorney general’s office.

Pushing for stricter rules on nonprofit executive pay, Sen. Charles E. Grassley (R-Iowa) recently told the Senate Finance Committee that boards have “rubber-stamped compensation packages which they know to be unreasonable.”

Earlier, SVS was among five nonprofits nationwide singled out in a 2005 report on employment programs for the disabled by the U.S. Senate’s Commission on Health, Education, Labor and Pensions.

The commission found their executives benefited from excessive compensation, lavish perks or self-dealing — conducting business with one’s own company.

But the law is also open to interpretation on self-dealing. It’s allowed if the board considers other options and finds them less beneficial to the company.

“If you have good lawyering and you are very brazen, you can work around things,” said Jim Fishman, a law professor at Pace University in New York.

Frances Hill, a law professor at the University of Miami who reviewed the 2004 settlement for The Times, called the agreement “insufficient” because it left the Dawsons too much room to keep enriching themselves.

The Dawsons did not return calls seeking comment and refused to see a reporter who visited their headquarters in Torrance. SVS board members could not be reached.

A lawyer for SVS, Savery Nash, said the Dawsons believe they should be compensated as if they worked in the private sector, an idea now embraced by many nonprofits, notably hospitals and arts organizations.

Nash also defended the rental arrangements and other side deals, saying that Edward Dawson has always provided the nonprofit a bargain and is entitled to a return on his investments.

“All along he has been sticking his neck out for the company,” Nash said.

::

Edward Dawson was a 31-year-old graduate student at UCLA when he found a way to combine his interests in developmental disabilities and real estate. SVS began as a series of group homes.

By the time he got his doctorate in education in 1982, his company was adding programs for clients and vans to transport them.

Most of the money came from the state — and still does.

Under the Lanterman Act of 1969, people with mental retardation and other developmental disabilities are guaranteed a wide range of state-funded services. Money flows through a network of 21 regional centers, themselves nonprofits, which then contract with providers, including SVS.

Marcia Dawson, who has a mentally retarded son, was a caseworker at Harbor Regional Center in Torrance before she met her husband. They married in 1984. As the nonprofit grew, the Dawsons bought more homes, then leased them to SVS.

By the end of the 1990s, SVS had grown into a $32-million-a-year business.

In 1999, the Dawsons arranged to sell SVS to not sure you kno Inc., a for-profit company headquartered in Kentucky. Such a sale requires the attorney general’s approval.

The deal fell apart, but only after the interest of the attorney general had been piqued, said Nash, the SVS attorney.

The investigation focused on the Dawsons’ compensation and a van rental company, according to the settlement agreement, which detailed the state’s concerns.

Tax filings show that SVS was paying up to $1.8 million a year to rent vans from Glynhart Corp., a for-profit company owned by the Dawsons.

Glynhart had no employees or other customers. SVS paid for maintenance, gas and drivers.

The state also raised questions about whether the SVS board of directors had properly vetted the Dawsons’ pay packages and other business deals.

But it was far from an open-and-shut case. Past board members said in interviews with The Times that the van deals were approved only after comparing what outsiders would have charged.

Nancy Bloch, a former SVS board member whose adult son is a client, said the directors also followed proper legal procedures when setting the Dawsons’ salaries. “If they were paid $5 million, it’d be worth it,” she added. “It takes everything to run it. This man has a PhD.”

The investigation eventually became a negotiation. In the resulting settlement, the Dawsons paid nothing.

Instead, an insurance policy that covered the board for inadvertent fiduciary missteps reimbursed the nonprofit $175,000.

Edward Dawson agreed to stop renting vans to SVS, and the board agreed that the Dawsons’ total compensation would not exceed the 90th percentile of executives at similarly sized nonprofits.

In the months leading up to the settlement, the Dawsons collected $1.5 million in deferred compensation, a figure that brought their total pay for the year to $2.2 million.

It made 2004 their best year ever.

::

In the wake of the settlement, the Dawsons continued to prosper.

They sold the van rental company to SVS for $1.9 million. The price, former directors said, was based on outside offers.

They went on to start a new company, Torrance Commercial Properties, which bought SVS’ headquarters for $2.3 million. Then the for-profit firm began collecting rent for it and three other properties from the nonprofit. Last year’s tax filings show the rent totaled $626,664.

The Dawsons also receive $84,000 a year in rent from SVS for a San Francisco apartment. Tax filings say they use it when traveling on business.

Nash said the Dawsons collect fair rents for their properties.

In addition to his salary, Edward Dawson also receives $50,300 a year for running Glynhart, the van company he sold, according to 2008 tax documents. His wife makes $606,862 as chief financial officer at SVS.

Those salaries are far outside the norm for similarly sized nonprofits, calling into question whether SVS is complying with the 90th percentile requirement of the settlement agreement.

Charity Navigator, a watchdog group in Washington that tracks salaries of 5,500 nonprofits across the country, generated data showing that among charities with budgets between $50 million and $75 million, the average pay for chief executives was $331,000.

The 90th percentile was $531,000.

A Times review of tax filings could not find any California nonprofits serving the disabled that paid their executives more than Edward Dawson earns.

The next highest paid chief executive — with $540,126 in salary and benefits — runs Pride Industries, which is based in Rocklin, Calif., and has a budget twice that of SVS.

Bill Nikkel and other former board members said that after the 2004 settlement, the board hired a consultant who presented survey data showing that the Dawsons deserved raises.

Officials at both the state Department of Developmental Services and the regional centers said it is not their place to question the Dawsons’ salaries. Providers for the disabled are paid a standardized rate per client.

“We’re not paying SVS differently than other vendors,” said Robert Riddick, the executive director of the Central Valley Regional Center in Fresno. “We have not gone in and said to folks, ‘What’s your salary?’ ” he said.

But several experts questioned how SVS was able to pay its executives so much more than its competitors, many of whom are suffering from state budget woes.

Rate freezes have been in effect for several years, and as a result, some providers have reduced their staffs or cut pay. Amid protests this year, the Legislature trimmed state spending on regional centers by $334 million, or roughly 12%, though the number of clients has been rising.

Catherine Blakemore, executive director of Disability Rights California, an advocacy group, said, “People with developmental disabilities are going to have a much harder time getting the services they need.”

alan.zarembo@latimes.com

Researcher Maloy Moore contributed to this report.

By Tom Johnson

There’s a stink in town that’s bringing me some discomfort, and it’s not that skunk I was trying to catch a couple of years back.

It’s worse.

The fact is, the stench is coming from right in the center of town; to be exact, it’s the Orange County Fair & Events Center Board of [...]]]> Article Source

By Tom Johnson

There’s a stink in town that’s bringing me some discomfort, and it’s not that skunk I was trying to catch a couple of years back.

It’s worse.

The fact is, the stench is coming from right in the center of town; to be exact, it’s the Orange County Fair & Events Center Board of Directors and its management team.

Something tells me that we’re all about to uncover a number of real issues facing a group of people that over the years have been a part of a fairly sleepy little board.

Lawsuits are one part. Four former employees who recently departed have all retained the same counsel and lawsuits are a comin’. Rumor has it that the case is so solid that the attorneys involved have taken the case on a 100% contingency. Time will tell.

Part two, it’s become evident that fair management does not seem to care about their current partners and vendors. Some examples: several meetings ago, regular fair vendors, many of whom have been with the fair for years, lined up in rage to complain about unfair, last-minute raises in rent that were shoved on them by management. As the complaints mounted, even the fair board members seemed outraged and overturned the unfair price hikes (some as high as 62% increases) by requesting immediate refunds.

The next meeting brought more complaints and pleas from vendors. The management team and board again didn’t seem to listen. Instead, casting aside the Orange County Marketplace and its vendors, it allowed the Barrett-Jackson car auction (a worthy event, by the way) to take place the last week on June—a week, incidentally, that just happens to be the biggest week of Marketplace’s year.

I’m excited about the Barrett-Jackson event. But for the OC Fair to cast aside its partner that continually, year-after-year, accounts for its biggest revenue stream seems, well, wrong.

Now, the board will argue that Barrett-Jackson could account for some $275,000 in revenue. What they stop short of saying is, first, there’s no guarantee. Second, the fair is required to make improvements in its facilities that could run $150,000. And lastly, by canceling the Marketplace that week, the fair foregoes its normal revenue of $50,000.

So at the end, other than strained relations, what really is the upside?

The real answer would be to have Barrett-Jackson and the Marketplace share the grounds that weekend and have them both put their best foot forward. The end result would be what’s in the fairgrounds best interest. This would seem like the classic win-win. At this month’s fair board meeting, Barrett-Jackson seemed to indicate this compromise could work. But it hasn’t happened.

And it doesn’t end there.

The Orange County Fair and Events Foundation, which includes six of the eight current board members, plans to try and buy the fairgrounds. Talk about conflicts of interest.

I’ve talked to some legal experts who say what those six board members are doing could be illegal. (Really, how could politically appointed board members turn around and form a nonprofit, whose very goal is to purchase the property they were appointed to safeguard?) Even the Orange County Board of Supervisors thinks the arrangement is hinky and is looking to buy the property to keep it public.

This whole deal appears to be steeped in political favoritism. Former state Sen. Dick Ackerman’s name is often associated with the group, which plans on meeting behind closed doors. The OC fairgrounds is the only one in the state that has been put up for sale. Why? Who’s behind the big push to sell off the property?

In journalism school, one of the first rules of reporting is to follow the money. Who benefits from the sale of the fairgrounds? Here’s one thought: if fully developed, the 150 acres in the heart of Orange County, adjacent to three freeways, would be a goldmine for its owners.

But, you say, the city of Costa Mesa is going to restrict the zoning so it stays a fairgrounds. Well, in the long-term, council members get changed out (and one fair board member, David Ellis, specializes in getting locals elected), financial pressures come to bear, and zoning restrictions disappear.

We go to the fair for the rides. And now, it looks like one of the wildest rides in the fair’s history is just around the corner. It’s probably safer standing off to the side and watching.

But we’re getting on. The public deserves someone on this ride.

Tom Johnson is co-publisher of the Newport-Mesa Daily Voice.

The minute the state heard the City of Costa Mesa had voted to make it harder to develop the Fairgrounds, it fired off a letter to Mayor Allan Mansoor and the rest of the City Council telling it to back off.

Back off? Mansoor immediately told city staff to prepare documents that would allow the [...]]]> Article Source

The minute the state heard the City of Costa Mesa had voted to make it harder to develop the Fairgrounds, it fired off a letter to Mayor Allan Mansoor and the rest of the City Council telling it to back off.

Back off? Mansoor immediately told city staff to prepare documents that would allow the City Council to vote to make it even harder.

The battle is joined!

Watching not so quietly from the sidelines are at least four other interested entities, any of which at any time could be forced to pick a side: The County of Orange, which has emerged as a potential Fairgrounds buyer; the Fair Board; the nonprofit group comprised of several Fair Board members that wants to buy it; and the grassroots Save the Fair group launched by Jim Righeimer.

Every government-affairs, environmental and land-use lawyer in the region should be mending nets. The fishing is about to get extraordinarily good.

To recap: The state this month put the Fairgrounds up for sale. The city last Tuesday voted to create a Specific Plan that would make it harder – though hardly impossible – for the new buyer to do anything other than what’s being done there now. The state’s letter, dated three days after that vote, asks the city to “thoroughly consider the state and local economic ramifications” of adopting the Specific Plan. If the city proceeds, the letter threatens, “the state will consider whatever options may be available to preserve the Fairgrounds’ value.”

Mansoor immediately turned to city staff and asked it to pull together the Monahan-Righeimer Plan with all haste and bring it to the council. This would put before city voters the option of embedding into law the Fairgrounds-only land use in such a way that it would take another vote of the citizenry to ever undo it.

Mansoor told me he’s not opposed to the state or the nonprofit owning the property, but said that if a fairgrounds-only use cannot be ensured, “perhaps it’s best if the sale is called off.” Mansoor, of course, doesn’t have the power to make the state call it off, but he and the council can sure make it unappealing.

The provision in the Food and Agriculture Code that specifically authorizes the sale of O.C. Fairgrounds – and only the O.C. Fairgrounds – says the state Department of General Services “may” sell it. Meaning the governor or anyone he designates can stop the sale; it won’t require an act of the Legislature.

As for damage to any perceived commercial value, I’d say that has already occurred by virtue of all the controversy surrounding the site.

Mansoor told me Tuesday that he expects the council to discuss the option of putting the land-use issue on the ballot directly – rather than requiring signature-gathering – as early as Tuesday night, although it might not be ready to actually vote on it yet. The city attorney, you’ll recall, has been skeptical.

Mansoor has every reason to ride this thing for all its worth. He’s running for Van Tran’s seat in the Assembly, and while he doesn’t have an opponent yet, there’s always the chance he’ll get one.

To the average voter, his name is most closely associated with anti-illegal-immigration issues, including his attempt to have Costa Mesa police become the first in the U.S. to be able to enforce federal immigration laws. Not a bad thing for an O.C. Republican, but taking on a populist issue like the Fairgrounds would help him, especially in the inland part of the 68th District, where a serious opponent is most likely to emerge.

I mentioned in my last column about the fairgrounds that former reporter Jean Pasco has made her biggest personal foray into politics yet, urging the City Council to put a fairgrounds-protection measure on the ballot. That was last week.

We all knew her husband, well-known Costa Mesa veterinarian Joel Pasco, had been battling inoperable cancer, but it seemed as though things might be looking up. Then he died Saturday while on a fishing trip with a friend.

“Joel was a rascal and had so many friends in so many places — pets, wildlife, bonsai,” Jean says, alluding to Joel’s collection of 3,000 miniature trees. “He cast a wide net. I thought we had more time but, as one friend said, he made a graceful exit. We should all be so fortunate.”

Mickadeit writes Mon.-Fri. Contact him at 714-796-4994 or fmickadeit@ocregister.com

Supervisors set up committee to examine the possibility of acquiring fairgrounds in a closed session.

By Mona ShadiaUpdated: Tuesday, October 27, 2009 11:36 PM PDT There are 2 comment(s)

The Orange County Board of Supervisors announced Tuesday that the county will explore the prospect of buying the Orange County Fairgrounds.

In a closed session Tuesday, the supervisors established [...]]]> Source Article

Supervisors set up committee to examine the possibility of acquiring fairgrounds in a closed session.

By Mona ShadiaUpdated: Tuesday, October 27, 2009 11:36 PM PDT
There are 2 comment(s)

The Orange County Board of Supervisors announced Tuesday that the county will explore the prospect of buying the Orange County Fairgrounds.

In a closed session Tuesday, the supervisors established an ad hoc committee to look at a purchase, Supervisor John Moorlach said.

He and fellow Supervisor Bill Campbell will comprise the committee, said Moorlach, whose 2nd District covers Costa Mesa, Newport Beach and Huntington Beach.

The state announced earlier this month that it is putting the 150-acre fairgrounds in Costa Mesa up for sale. The deadline for potential buyers to submit bids is Jan. 8.

Meanwhile, the Costa Mesa City Council wants the newly formed Orange County Fair and Event Center Foundation, a nonprofit looking to raise money to buy the fairgrounds, to provide paperwork and more details on its activities before the city can appoint two non-elected citizens to the foundation’s board.

In an Oct. 20 letter, the city asked the foundation to provide it with at least five documents, including bylaws and articles of incorporation, as well as any plans to do with financial planning for acquiring the fairgrounds, and any changes to the site’s proposed operation. In addition, the city is asking the foundation to hand over copies of agreements and contracts into which it has entered since its establishment.

“…As a government entity, the city of Costa Mesa has an obligation to the public to insure that our participation in the foundation is completely transparent and fully compliant with applicable state and federal law,” states the letter from Mayor Allan Mansoor. “As a matter of public policy, our participation is the public’s participation, and as a consequence, we must act in an informed, open fashion.”

The foundation’s board has yet to respond to the letter, but foundation board Chairwoman Kristina Dodge said the trustees are working on a response.

“Everything they asked for was very standard, and we have that stuff readily available and we will be responding,” she said.

Dodge, who is also the chairwoman for the O.C. Fair and Event Center Board of Directors, noted that the foundation has yet to enter into any agreements.

The foundation’s board comprises six members who were also appointed by Gov. Arnold Schwarzenegger to serve on the Orange County Fair & Event Center Board of Directors, the fairgrounds’ governing body.

A private meeting among the board members to talk about the foundation has raised questions about whether they violated the Bagley-Keene Open Meeting Act, a provision in the California Constitution that requires members of a state board to notify the public about any of its meetings.

The foundation, which officially formed Oct. 7, has asked Costa Mesa and Orange County to each appoint two people to serve on the foundation’s board.

The 10 members then are expected to appoint an 11th member.

Mansoor’s letter, which was addressed to Dodge, also seeks clarity on some questions, including how exactly most of the foundation’s board members will be selected, and why elected city officials would be blocked from being appointed.

“It would be helpful to understand why elected officials were singled out for exclusion from participation on the board,” Mansoor wrote.

“I personally do not have any predisposition regarding these appointments, but asking the City Council to make two appointments to represent the city yet exclude elected officials needs clarification.”

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Official with Department of General Services says city’s approach toward sale could scare off potential buyers.

By Mona Shadia Updated: Monday, October 26, 2009 10:40 PM PDT There are 14 comment(s) View Comments

The state has sent Costa Mesa a strongly worded letter asking city officials to reconsider a plan to restrict future uses [...]]]> Plans for land use irk state

Official with Department of General Services says city’s approach toward sale could scare off potential buyers.

By Mona Shadia
Updated: Monday, October 26, 2009 10:40 PM PDT
There are 14 comment(s) View Comments

The state has sent Costa Mesa a strongly worded letter asking city officials to reconsider a plan to restrict future uses of the Orange County Fairgrounds solely for fair and noncommercial development purposes.

The Department of General Services, the state agency authorized to sell off the fairgrounds, sent Mayor Allan Mansoor and the City Council a letter Friday, expressing Sacramento’s alarm that a Specific Plan being ironed out by the city could scare off potential buyers of the 150-acre state-owned property in Costa Mesa.

“Adopting this Specific Plan will severely restrict the future land uses available to potential buyers,” Teresa Bierer, the department’s acting deputy director, wrote in the letter. “We are concerned that the fairgrounds’ commercial value will be negatively affected by preparing and adopting the Specific Plan. While we are, of course, sensitive to local matters, we also need to be sensitive to the economic consequences that could result from this action. We also need to carry out the Legislature’s direction to ‘obtain the highest, most certain’ return from the sale of the fairgrounds.

“…If the city moves forward with the Specific Plan and the fairgrounds’ value is diminished, the state will consider whatever options may be available to preserve the fairgrounds’ value,” Bierer’s letter continues.

Councilwoman Katrina Foley interpreted this last excerpt as “a threat of litigation from the state.”

“All I know is our City Council is unanimous in supporting the property remaining a fairground,” she said. “The politicians who were lobbying to sell the property are going to have to be accountable to the people.”

The state put the fairgrounds up for sale earlier this month after former state Sen. Dick Ackerman lobbied state lawmakers on behalf of the fairgrounds’ board of directors to have the property’s sale listed in the state’s budget.

The deadline for potential buyers to submit their bids is Jan. 8.

On Oct. 20, the City Council directed staff to develop a Specific Plan.

The plan is expected to be finished in early January, in time for the bidding deadline.

At the meeting, City Manager Allan Roeder said his staff was looking into the legality of putting the fairgrounds issue up for a referendum.

Mansoor reiterated his and the council’s request to look into the legal matter after receiving the letter Monday.

“I’m increasingly skeptical of what’s going on in general, and if there are no guarantees in place to keep the fairgrounds as it is, perhaps the best thing to do is take it off the market,” Mansoor said.

A legal opinion on whether restricting the fairgrounds’ use through a ballot initiative will be presented at the Nov. 3 council meeting, Roeder said.

“It’s disheartening, to say the very least, to get this letter at this point and suggest as though DGS have never heard that the city was insistent on keeping the grounds as a fair and exposition center,” he said.

COSTA MESA – A state official has warned city leaders that “the State will consider whatever options may be available to preserve the Fairgrounds value” if the city [...]]]> State Official Warn Costa Mesa on Fairgrounds Restrictions
Approving a specific plan could affect the property’s commercial value, according to official.
By ELLYN PAK
The Orange County Register
Comments 20| Recommend 3

COSTA MESA – A state official has warned city leaders that “the State will consider whatever options may be available to preserve the Fairgrounds value” if the city adopts a specific plan that diminishes the up-for-sale site’s commercial value.

Teresa Bierer, acting deputy director of the state Department of General Services’ Real Estate Services Division, wrote in a letter to the mayor and City Council that adopting a specific plan would “severely restrict the future land uses available to potential buyers.”

Last week, the City Council directed its staffers to create a specific plan that could place a tighter framework on the 150-acre property. The plan would emphasize the city’s designation of the property as fairgrounds and further restrict what a new owner could do with the site.

“Here’s the bottom line: As I said before, I’m increasingly skeptical that they’re looking out for our best interest and the interest of the taxpayer,” said Mayor Allan Mansoor.

“We want guarantees from the state or whoever buys the property that not only the fair remains but the Marketplace and the Equestrian Center and other various types of uses remain in Orange County and the fairgrounds,” he added.

The city’s general plan designates the property as fairgrounds, and a specific plan would provide further information about the property, potentially spelling out the amount of building square footage and parking spaces allowed, duration of the fair and other development standards.

“It’s not zoned (for commercial use),” Mansoor said. “We want to make it clear not to change the zoning. We feel there’s an important need to move forward with a specific plan.”

The cash-strapped state officially put the property on the auction block earlier this month. The property is being sold as-is, meaning the long-term preservation of the fairgrounds’ uses at the site is not a condition of sale.

The state has previously valued the site at anywhere from $96 million to $180 million, though those estimates were based on various zoning designations. The property could be appraised much lower since it is zoned by the city for its use as a fairground.

Mansoor has asked city staff to expedite its research into whether the city’s zoning of the property as fairgrounds could be locked in permanently by voters next year and bring it back to the City Council for a vote.

It could take the city between four to six months to draw up a specific plan, according to the city. The state hopes to have a contract in place to sell the property by April and complete the sale by the fall of 2010.

Contact the writer: 949-553-2936 or epak@ocregister.com