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Ghost Town Image Lingers in Borrego : Failure of Commercial Complex to Open Has Tongues Wagging

July 29, 1986|GORDON SMITH

BORREGO SPRINGS — This was the summer when Borrego Springs was supposed to come alive.

That's what a lot of residents were saying in November, when a $7.2-million commercial center called Overland Junction was nearing completion.

Even the project's critics--who joked that its Western-style architecture was out of place in the desert--agreed that the center's bar and restaurant, its 44-room motel, its Laundromat and its 144 spaces for recreational vehicles would be welcome additions to Borrego Springs.

But the facility--described by Borrego Springs Chamber of Commerce President Ray Innocenti as a "crucial building block" in the town's plans to become a year-round resort--is still not open.

Possible Default

Instead, it looms starkly out of the desert scrub at the foot of Montezuma Grade, one of the main entrances to town, its buildings 90% complete but 100% empty. The project might be close to defaulting on its bank loans, and it still needs $1.5 million to buy furniture, fixtures and equipment to fill the buildings' innards, according to a source familiar with the project.

Construction crews haven't been seen for seven months, the former construction supervisor and his trailer-office have disappeared from the site, and at least two subcontractors have filed liens against the developer, the Borrego Development Co. of San Marcos, for work they have completed but have not been paid for.

However, Chuck Noble, vice president of Borrego Development Co. and son of company president C.W. Noble, insisted that Overland Junction is far from being dead.

A construction loan from the Denver office of the United Savings Bank of Wyoming was to be paid off and converted to a long-term loan by Imperial Bank when the project was completed, Noble said.

"What happened is that Imperial Bank withdrew from their commitment, leaving us with a big problem," he said. "Essentially, we've had to reorganize all of our financing."

Other Firm Backed Out

When Imperial withdrew, Noble said, the company that was to have leased furniture, fixtures and equipment to Overland Junction also backed out, leaving the Borrego Development Co. without any means to finish the project's interior.

But Noble was adamant that a new lender has agreed to provide long-term financing as of Sept. 1.

Noble declined to identify the new lender, saying only that it is a San Francisco company, that the financing agreement is "firm" and that it includes an arrangement for the furniture, fixtures and equipment to be provided "either through a leasing company or a a direct loan, whichever we prefer."

"They want us to open (during) a time of year when business will be good, that's why they want us to wait until September," he said of the new lender. "Most of the subcontractors have been very understanding."

One subcontractor who is no longer understanding is Colleen Copeland, part owner of Mission Roofing Co. in Escondido. Copeland said her company contracted for $53,000 worth of roofing work for Overland Junction and has filed a lien for the final $9,050 payment.

"The Borrego Development Co. kept telling us the money should be there, . . . and we even gave them a 60-day extension (for payment of the final $9,050) because they were supposedly going to get a new loan. That was in April, and since then we haven't heard anything from them," she said.

"We were a little leery of the contract in the first place, because it took them a long time to get a loan. After we bid the job, it took (Borrego Development) a full year to let the contracts, and that generally doesn't happen."

'Considerable' Owed

Buddy Meeks, owner of B&J Landscaping in Borrego Springs, confirmed that he also has filed a lien "for a considerable sum" against Borrego Development Co.

But Meeks expressed confidence that he will be paid in September for the grading equipment and landscaping he provided for Overland Junction.

"I talk to Noble a lot. . . . I don't blame them for not opening during the summer. They'd just lose money if they opened now," he said.

A source close to the lender said that Borrego Springs Bank--whose chairman and chief executive is the Chamber's Innocenti--has also extended a letter of credit for $106,000 on behalf of Overland Junction, payable to San Diego County for street improvements surrounding the project. But the letter is 100% collateralized by the construction lender, the United Savings Bank of Wyoming.

Overland Junction is "a classic case of a developer and his son being undercapitalized," the source added.

Meanwhile, the failure of Overland Junction to open after public announcements were made last fall has left many residents of this tightly knit town of 2,000 disappointed and confused.

'Everyone Was Excited'

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