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The Prescott Daily Courier | Prescott, Arizona

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4/6/2012 10:00:00 PM
Feds reject Yavapai Downs bid; future of track uncertain
Les Stukenberg/The Daily CourierGary Miller made a $3.25 million bid for the Yavapai Downs horse racetrack at a bankruptcy auction, but the U.S. Department of Agriculture rejected it. The USDA has final say on the track sale price because it still holds $14.7 million in loans on the facilities.
Les Stukenberg/The Daily Courier
Gary Miller made a $3.25 million bid for the Yavapai Downs horse racetrack at a bankruptcy auction, but the U.S. Department of Agriculture rejected it. The USDA has final say on the track sale price because it still holds $14.7 million in loans on the facilities.
Joanna Dodder Nellans
The Daily Courier

The United States Department of Agriculture late Friday afternoon rejected the $3.25 million bid for the Yavapai Downs horse racetrack that was submitted by Gary Miller at a bankruptcy auction Tuesday.

"I was shocked and saddened," said Miller, who just resigned as president of the Arizona Horseman's Benevolent & Protective Association (HBPA). "It is not a good day for racing.

"My personal opinion is, you won't have racing at Yavapai this year."

The track traditionally opens for the season on Memorial Day Weekend.

Miller had previously stated he probably wouldn't get horses running by then, but he hoped to get the track open sometime this summer.

"I still remain very confident that I could have opened up the track this year," Miller said.

Arizona HBPA Executive Director Tom Metzen echoed Miller's comments.

"We're devastated," Metzen said. "Our people were so excited about coming back there. I don't know what the government was thinking."

Horsemen have to reserve stalls for summer racing now, Metzen said, so they're likely to give up on waiting for Yavapai Downs and go somewhere else.

"If this thing is closed another year, they might as well take a stick of dynamite and blow it up," Metzen added.

The Yavapai County Farm & Agriculture Association filed for bankruptcy last July while failing to operate its summer 2011 races.

The U.S. Department of Agriculture (USDA) has final say on the track sale price because it still holds $14.7 million in loans on the track facilities in Prescott Valley. The facilities include a one-mile horse racetrack, the 93,328-square-foot grandstands, about 860 horse stalls and a neighboring car racetrack.

The USDA filed a notice in federal bankruptcy court at 4:15 p.m. Friday that said it rejected Miller's bid and it would now negotiate with the "back-up" bidder Joe Davis, a Texas horseman. Davis capped his bidding Tuesday at $3 million. Two other bidders didn't break the $2 million mark.

The USDA will negotiate with Davis through 5 p.m. Thursday, then decide if it will accept or reject Davis' offer, said Dianna Jennings, public affairs officer for the USDA in Arizona.

Miller said he isn't happy about the USDA going to the second bidder after he already won during Tuesday's bidding.

Miller said USDA officials called him to a meeting Thursday night and said his $3.25 million bid was too low. He offered an extra $250,000 but they said they needed much more, he related.

Miller said he thought he already paid too much.

"There's a considerable amount of work that has to be done to get that thing open," he said.

Metzen agreed.

"The USDA has its head in the sand if it thinks this thing is going to sell for more" than Miller's offer, said Metzen, who has a half-century of experience in the U.S. racing industry.

USDA Rural Development originally loaned the Yavapai County Fair Association about half the money it needed to build a new $22 million track in Prescott Valley in 2001 to replace the shorter track in Prescott. The summer racing meet in the Prescott area has been operating since 1960, and horse racing here dates back to territorial days.

When the YCFA was having trouble paying back the loan, it agreed to create a new group called the Farm & Ag Association with a new board of directors so it could get another USDA loan. That 2009 loan package added up to $13.6 million, including what the track still owed on the previous loan.

"Who made a bad decision on the loan in the first place?" Miller said. "They want me to pay for their bad decision."

The USDA decision to reject his offer will hurt hundreds of potential employees and horsemen, as well as the Turf Paradise racetrack in Phoenix, Miller said. And it hurts the Prescott area, Metzen added.

"I thought that was part of the (federal government) program these days, to put people back to work," Metzen said.

Putting people to work is the whole purpose behind the USDA's Community Facilities loans under the Rural Development program, Jennings said.

The Downs employed about 300 people each summer alongside hundreds of trainers, jockeys and assistants.

USDA officials in Washington, D.C. and Arizona were involved in the decision to reject Miller's offer, Jennings said.

Leonard Gradillas, community programs manager for USDA Rural Development in Arizona, has been here more than a quarter-century and never seen a large Community Facilities loan recipient go bankrupt, Jennings said.

"This is a very, very rare event," she said.

Related Stories:
• Editorial: Track decision leaves us all 'shocked and saddened'


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Reader Comments

Posted: Tuesday, April 10, 2012
Article comment by: Citizen Joe

Maybe we could get some hand-me-out money from Obama, turn it in to a night club, wait...it already got hand-me-out money from the government and it failed. Indoor/outdoor shooting range would be good. Maybe we could all pool our money together to make that happen....wait our money was already taken and used there..I give up and so should the people trying to keep this thing alive.

Posted: Sunday, April 08, 2012
Article comment by: Travis Seymour

Transform the facility into a factory assembling buggy whips! Makes as much sense as having a racetrack.

Posted: Sunday, April 08, 2012
Article comment by: Jay Jay

Why isn't the Board of Supervisors in handcuffs right now? They're most to blame for this fiasco!

Posted: Sunday, April 08, 2012
Article comment by: Larry t

To: David Nystrom, Dewey-Humboldt, AZ commet of (This was another example of our government getting involved in private enterprise.) Then why are you asking the town of Dewey/humboldt to give money and lease a building for a museum. Talk about flip flop.


Posted: Sunday, April 08, 2012
Article comment by: Fains made their Money so someone profited

Lest we forget those that made money on this move. Gherald Brownlow and the Fains conspired to move this to the current location and they were the ones to profit!! Do placing blame for the failure should begin and end with those two-

Posted: Sunday, April 08, 2012
Article comment by: Jobs For Who

For those you you bemoaning the job loss, let's be clear. If you are not a trainer, most of the jobs at Yavapai go to illegal aliens, with the approval of Az.Dept. of Racing. They issue "owner" licenses to these people and they work under these licenses because to obtain a grooms license they must prove they are in the country legally. ADOR is well aware of the process just as they are aware of the drug problem at the tracks, so when you wish for the track's return, also wish for house cleaning at ADOR to protect the America's who want jobs and the welfare of the horses.

Posted: Sunday, April 08, 2012
Article comment by: Fair Racing

To all those that think racing should return to the old Prescott Downs - let it go. There is NO Prescott Downs! It is gone - torn downs. Get out from behind your computers and take a drive down Fair Street. There are no barns, no racetrack - nothing! Just the old grandstand, a rodeo arena and a and a couple of old barns for storage.

Even if there was a a racetrack to go back to, one would hear the screaming again, from the area around the racetrack - restaurants, supermarkets and homes - about the flies, mosquitoes, the noise and the haphazard parking - because there was no parking.

How quickly people forget how dangerous the old Downs was. The sharp turns that had horses and riders going through the fence and over the hill to the pavement below because they were going to fast to make the turn. The fact that the track surface was dirt laid over granite and everytime it rained, first it was a gooey mess then if the rain continued the dirt washed away and it was hard as a rock. The loose horses that would get out the gates and run through traffic.

I liked the old Down's too, but it had no room for expansion. It was surrounded by town. The track had to move to a larger, safer facility. That the new track was badly run - was it ever! But it was people that ran it into the ground - not the location.

An item is only worth what someone will pay for it. Accept the bid and get it into private hands - not the government's and if it fails it won't cost the taxpayer. Celebrate the jobs that will be there and the money it brings to the community.


Posted: Sunday, April 08, 2012
Article comment by: K Dogg

Mrs. Fisher,G. Spiker, and the Grundy's screwed that place up... safe to say Yavaipai Downs is done for... :(

Posted: Sunday, April 08, 2012
Article comment by: Hokas Pokas

Has anybody learned from this? This is what you get when you have government involved in rural development, urban development, suburban development, land development, solar development . . . This mess was caused by big government, Republican or Democrat, doesn't matter, doing things it should not be doing. Period. You know who always winds up paying the bill.

Posted: Sunday, April 08, 2012
Article comment by: The Letter?

Is it true the Miller group or HBPA told all perspective bidders/buyers not to bother because they, (HBPA) would NOT agree to a contract with them? Therefore making potential bidders/buyers not want to bother? Is that what was in the "letter?" Someone telling of that situation and that they withdrew their bid BECAUSE of that "threat?" Would that not be interfering in the auction process? Just asking. If the USDA saw that letter, maybe it entered into their rejection somehow.

Posted: Sunday, April 08, 2012
Article comment by: saw it in color

We need to see what that letter delivered to Judge Baum the day before the auction says. It was delivered by a group that stated they withdrew their bid in Feb. They stated at the auction they felt the Judge was being misled and lied to by? ???

Posted: Saturday, April 07, 2012
Article comment by: Common Senzi

I say we divide it up into 1,000,000 pieces and give it back to the tax payers. Everyone in the county gets a square foot.



Posted: Saturday, April 07, 2012
Article comment by: It's all about the money

The money from the USDA went to bundle three other loans into one with a lower interest rate. The original loan was for 22 million in 1999 to build the property. The USDA loan was like a refinance that you get when interest rates drop. That money did not just disappear. In the ten years since Yavapai Downs opened, they paid around 8 million on the original loans. That is about right for a 30-year note. I agree that the operation was not run efficiently, but look at all of the other businesses that are closed due to the current recession. So do we wait until horse racing rebounds to find a buyer, or take what is being offered?

Posted: Saturday, April 07, 2012
Article comment by: to David Nystrom

I didn't hear you in Phoenix bidding. The court must have missed that higher bid that YOU put in. The USDA must want to be in the horse racing business since they don't seem to be in a hurry to sell the place.

Posted: Saturday, April 07, 2012
Article comment by: tired of it all

Level this thing, uncover the Indian ruins and make it a State Park!! I have to admit, I love NOT hearing the car races anymore. So much for noise control!


Posted: Saturday, April 07, 2012
Article comment by: Tom C

You can always bring allegations or complaints of government malfeasance to the attention of the USDA Office of Inspector General or the House Government Oversight Committee. I think you are correct...the government should not be "going to the next bidder" for more money...USDA is not being transparent. Sorry they lost $14M, but they need to get people back to work...

Posted: Saturday, April 07, 2012
Article comment by: Ludvig Von

Go to mexico and see what a country with no social programs looks like. Is that what all of you right wing crazies want???

Posted: Saturday, April 07, 2012
Article comment by: Curious George

So does this mean that if the Feds don't ever except anyones offer then it will just sit there and grow weeds? That makes no sense to me. What happens to the people that have money due in the bankruptcy, such as the concessioners that are owed money?

Posted: Saturday, April 07, 2012
Article comment by: jeri smith-fornara

It is not surprising that the USDA rejected the bid, which would have left taxpayers just plain holding the bag for many millions.

As Thanks USDA and Status of Lawsuit point out, many properties in a similar situation are being held rather than sold at auction, awaiting an upturn in the market. As is also stated, USDA may know something about the high bidder which would disqualify him in their eyes.

The Board of Supervisors and the track board cannot escape responsibility for creating this mess. The whole project was foolish. The track should never have been moved from Prescott. There was no serious financial analysis undertaken or the move would not have been made. Initially the track board and managers outrageously tried to blame the county assessor for the collapse. It is they who are responsible. Shame on those who are trying to shift blame elsewhere.


Posted: Saturday, April 07, 2012
Article comment by: Mingus Mountain Mike

I for one am glad the USDA rejected the offer. Taking an 11 million dollar loss in unacceptable. The Gov. needs to investigate ... and see where the money went.
As for the high bidder, did he even have the resources to get the place up and running or were the horse trainers going to be stranded again like last year?
The entire process has been very covert, one of the prospective bidders pointed that out in court so who is to say what is going on.


Posted: Saturday, April 07, 2012
Article comment by: The fruits of our labor

"I thought that was part of the (federal government) program these days, to put people back to work," Metzen said.
“Putting people to work is the whole purpose behind the USDA's Community Facilities loans under the Rural Development program, Jennings said.”

I think I’ve spotted the flaw in the Yavapai Downs horse racing plan. Apparently it was approved as a jobs program, rather than an actual horseracing business. Perhaps next time we should just take the roughly 12 million taxpayer dollars that has evidently evaporated from this deal, find 300 deserving people and cut them each a check for $40,000. Tax-free of course. I’m dutitfully completing my income tax returns this weekend. I”m trying to stay upbeat, but it’s awfully hard..


Posted: Saturday, April 07, 2012
Article comment by: David Nystrom, Dewey-Humboldt, AZ

This was another example of our government getting involved in private enterprise. This time, the USDA (of all government functions) believing it should invest in a race track. A fool and his money are soon parted. Thankfully, USDA has gotten the message and not accepted this low bid, for which the new owners would probably come looking for another government loan to keep it alive. In business, cut your losses and move on.

Posted: Saturday, April 07, 2012
Article comment by: J. M. Isdell

Let’s see now. Prior to Joey K. Davis’ unexpected, late leap into the mix with a bid, the “winning” bidder was all but considered a foregone conclusion dating back to the original stated closing date in late December with the anticipated bid amount probably somewhere between two and three million. There were a handful of tire kickers, but ultimately only one that from the outset had seemed willing to invest his own money into the belief that his acumen could potentially transform this dilapidated liability into an asset for the community, the industry, and hopefully the investor.

When Mr. Miller states, “They want me to pay for their bad decision”, he underscores the confounding nature of this process. I find it unfathomable that the U.S.D.A. expected a greater bid than that which they received. In fact, I have to imagine that they were mildly surprised that it yielded one that large given the evolution of this ordeal over the last ten months. If nearly every interested (person) on the backside of Turf Paradise had an idea of what the final bid was likely to be and many were surprised that a man would risk more than thirty-seven cents on that mess, it seems implausible that the bid caught the U.S.D.A. off-guard.

Why did we need to wait until the last minute of the forty-eight hour period to have this decision rendered? Why the dog and pony show that dragged on for months and wasted valuable time, money, and the faith of the parties involved if this was to be the outcome?

If the goal was to actually sell this albatross as a racetrack property, any bid greater than or equal to one shiny penny should have been deemed a windfall. Any man, woman, or escaped asylum patient willing to invest his own money and belief in his own ability to overcome the Berlin Wall of obstacles standing in the way of eventually being able to deem this exercise an investment worth making should be lauded as a hero, a visionary, or a glutton for punishment.

Whichever the case may be, the U.S.D.A.’s decision to retain the property begs more than a few questions that go to the motivation for such a decision. Surely it can’t be as petty as saving face on a decision by a federal entity to make a poor business investment. I think that we’ve all come to expect nothing more from such entities. So just what is the alternative that they have in mind? Who wins and who loses with this decision and who may have influenced the decision if we are to believe that the forty-eight hour period was one of true deliberation? The third phase of this sordid misadventure may actually be more interesting and revealing than its predecessors.


Posted: Saturday, April 07, 2012
Article comment by: Lyle Sentiss

Move the fairgrounds back to Prescott and quit screwing around.!!

Prescott is dying as a result of pulling its heart out in the name of greed and a misplaced sense of progress.

The only conversation we should be having is how quickly Yavapai County can move all its junk off the Prescott fairgrounds and how long it will take to upgrade the facility overall.

This has been a fiasco of the first order. I say the USDA can keep the boondoggle in Jackass Acres, and the rest of us can get back to enjoying rodeos, fairs, carnivals, and other outdoor activities at the Prescott fairgrounds again.

Meanwhile, perhaps the feds can keep Prescott Downs, and give $500 million to a solar powered conglomerate (i.e. make work projects for socialist Obamanauts) and they can all ride the little (natural gas & electric powered) bus out to the middle of nowhere and work on their African Drumming skills.

I personally feel the primary educational requirement to work at this new Green Energy plant should be a PhD in Pre-Natal Women Studies or Algae Pond Husbandry.


Posted: Saturday, April 07, 2012
Article comment by: Like I said only yesterday.

It doesn't matter what it is, even a misplaced, mismanaged, dollar-drained race track, the comments of the right wing, Tea Party, ultraconservative, local Republicans will somehow link it to politics and finally to the president. Just utterly amazing and unbelievable and foolish. What exactly would Mr. Romney do?


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