Raceway slated for auction block
| Wednesday, Apr 01 2009 06:14 PM
Last Updated Thursday, Apr 02 2009 08:28 PM
Images
The Kern River Raceway off Enos Lane, just west of Interstate 5, in late 2008.
The unfinished racetrack west of Bakersfield is scheduled for a foreclosure auction next week.
In the meantime, Kern River Raceway's developers are scrambling to find a bridge loan or other option -- including a possible reorganization bankruptcy as a last resort -- to prevent foreclosure.
"We've made it this far," said Tim Elrod, chief financial officer for Destefani Farms. Members of the Destefani family, longtime Bakersfield farmers, are the NASCAR track's primary developers.
The foreclosure auction, slated for April 9, involves a $4.5 million loan made about a year ago by a group of private investors. The loan defaulted in December.
More than $5 million is owed including interest and fees, the auction notice said.
If the lenders were to foreclose on the nearly 500 acres securing the loan -- the 83-acre track site and surrounding almond orchards southwest of the junction of Interstate 5 and Enos Lane -- construction firms who've built much of the half-mile oval track, grandstands, lighting and other amenities could be squeezed out of claims for some $7.7 million in unpaid work.
Last fall, in a similar situation, a group of construction companies and a secondary lender teamed up to force the McAllister Ranch project into involuntary bankruptcy just before a lender would have foreclosed on it.
Elrod said he's not aware of any efforts by construction firms to force the raceway into involuntary bankruptcy.
But he and the Destefanis -- primarily Alan, Melvin and Janel, loan papers indicate -- are preparing for every possibility.
"Obviously, nobody wants to be in a Chapter 11," he said, referring to a reorganization bankruptcy. "But that is an option."
It's not in anyone's best interests to allow the property to foreclose, and even the lender doesn't want the unfinished project, he said.
Finding a way to finish the track would make it "exponentially" more valuable, he said.
The raceway broke ground in February 2007. At the time, the Collins family, which owned the now-demolished Mesa Marin Raceway, was heavily involved.
But the Collinses, who have no ownership interest and made no financial investment in the track, have been out of the picture since fall.
"We ran out of funds to pay them," Elrod said, adding he hadn't spoken with them since about September.
"We're pulling for it," said Larry Collins, son of patriarch Marion Collins, in a voicemail message, "just like thousands of people in our area and the racing industry."
The track is near enough to completion that "it's just a matter of bringing the financing together," Collins said.
Elrod said a potential buyer has been lurking on the sidelines for some time.
As the clock ticks down, proponents are racing to nail down one of the options.
"We've got a week," he said.
