Report 2016-106 Recommendation 5 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 #5 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 a revised rent calculation formula that factors in revenue from all of the association's activities, including its hotel and conference center, as well as revenue from its subsidiaries' activities at the Fairplex. This revised rent calculation formula should require the association either to pay the county an agreed-upon fixed amount, adjusted periodically for inflation, or to pay the county both a fixed amount every year and a percentage of the total gross revenue that the association earns at the Fairplex.
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.
- Completion Date: September 2021
California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented
Los Angeles County has provided the amendment to the contract with the Fair Association, which includes an updated rent calculation and an updated definition of gross revenues that include hotel room revenues and resort fees.
Annual Follow-Up Agency Response From January 2020
County's proposal regarding a revised rent structure is being evaluated by the Association. Amendment should be completed by the end of calendar year 2020.
- Estimated Completion Date: 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 retained an economic consulting company which is advising the County on the appropriate rent calculation formula to use for a proposed amendment. County is evaluating different revenue models.
- Estimated Completion Date: TBD
California State Auditor's Assessment of Annual Follow-Up Status: Pending
1-Year Agency Response
The County has begun negotiations with LACFA on a lease amendment that will include a revised rent calculation formula. The County is seeking a consultant to advise on the appropriate calculations.
ANTICIPATED COMPLETION DATE: TDB- the County's ability to successfully implement this recommendation is dependent on LACFA cooperation
- Estimated Completion Date: TBD
- Response Date: November 2017
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 commence negotiations for a possible lease amendment that would include a revised rent calculation formula.
Anticipated Completion Date: TDB- the County's ability to successfully implement this recommendation is dependent on LACFA cooperation.
- Estimated Completion Date: TBD
- Response Date: May 2017
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.
- Estimated Completion Date: April 2017
- Response Date: January 2017
California State Auditor's Assessment of 60-Day Status: Pending
All Recommendations in 2016-106
Agency responses received are posted verbatim.