Hola John,

You can use "ocurrió" here as well; it would be grammatically correct but the most natural use in this specific sentence if we follow the story a bit would be the imperfect "ocurría". Bear in mind that the previous sentence to this is: "...y había actividades diversas, por ejemplo bailes de antifaces, pasacalles y fuegos artificiales." This is describing the background, it is saying what "was happening". It would be more natural then to follow with "Todo ocurría al mismo tiempo." (Everything was happening at the same time.) 

We've changed the English from "Everything happened" to "Everything was happening" so this last translation gives more the idea of a background information, making the imperfect a more suitable tense.

 I hope this helps.

Saludos,

Inma