Report 2016-106 Recommendation 8 Responses

Report 2016-106: Los Angeles County: Weak Oversight of Its Lease With the Los Angeles County Fair Association Has Likely Cost Millions of Dollars in Revenue (Release Date: November 2016)

Recommendation #8 To: Los Angeles County

To protect its interests and maximize its future revenue, the county should strongly consider ensuring that any potential amendment to the lease includes terms that require the association to provide the county with any subleases it wishes to enter, even those subleases that do not exceed 10 years. The terms should also require the association to provide the county with approval over other agreements that could affect the rent calculation, including the association's hotel management agreement and its amendments.

Annual Follow-Up Agency Response From November 2021

County and Fair Association have executed Amendment No. 6 to the Lease that addresses this issue. Will send a copy of the amendment to the e-mail address set forth below.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The Amendment to the Lease requires the Fair Association to submit to the Los Angeles County all subleases (and all assignments, amendments and/or other modifications) that the Fair Association enters into no later than 30 days prior to the effective date. It also requires that Los Angeles County review and approve any Hotel Operating Agreements.

Annual Follow-Up Agency Response From January 2020

County's proposal regarding a revised rent structure and revised subleasing requirements is being evaluated by the Association. Amendment should be completed by the end of calendar year 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2018

County has been and continues to actively negotiate with LACFCA on the proposed amendment. The County intends to revisit LACFA's subleasing requirements as part of the amendment negotiations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

The County continues to have dialogue with LACFA on the proposed amendment. The County intends to revisit the Fairplex's subleasing obligations as part of the amendment negotiations.

ANTICIPATED COMPLETION DATE: TBD- the County's ability to successfully implement this recommendation is dependent on LACFA cooperation.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

The County has begun dialogue with the new leadership at the LACFA in an effort to reach agreement on the direction that this potential amendment will take. The County's objective is to protect its interests and maximize its future revenue while ensuring that all terms and conditions of a proposed agreement are transparent.

Anticipated Completion Date: TDB- the County's ability to successfully implement this recommendation is dependent on LACFA cooperation.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The County acknowledges and agrees with this recommendation and will consider it when preparing to negotiate a potential amendment to the current ground lease and operating agreement. The County's ability to successfully implement this recommendation is dependent on LACFA cooperation.

Anticipated Completion Date to draft proposed agreements: March 30, 2017; Completion date for reaching agreement with the Fair Association remains TBD.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2016-106

Agency responses received are posted verbatim.