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Sepulveda Situation Complex

August 25, 2000|TOM LAMARRE

Officials for Family Golf Centers, which operate the pro shop and driving range at Sepulveda Golf Complex in Encino, claim they are set to begin a $1.67 million renovation of the facilities next month.

Other affected parties are not so sure Family Golf, which is involved in Chapter 11 bankruptcy proceedings, is willing or able to undertake the project.

"I have some real questions and concerns," said Leroy Chase, vice president of the Los Angeles Board Recreation and Parks Commissioners. "They are on the verge of going under and they are going to start a capital improvement project? It just doesn't make sense to me.

"If everything is legit and they can do these capital improvements, I'm all for it. But you have to wonder. I've never heard of a company in Chapter 11 starting an expansion project. I have to wonder if the courts will allow it."

The City of Los Angeles has expedited issuing of the permits for the construction in an effort to see if Family Golf can follow through.

The project, which has been in the planning stage for more than five years, includes demolishing and rebuilding the existing pro shop and driving range, which will be an 80-stall, doubled-decked facility.

"We're very close to picking up plans from the Dept. of Building and Safety," said Bill Shickler, vice president of West Coast operations for Family Golf in El Segundo. "That's the last approval we need. We already have them from the Army Corps of Engineers [which must approve any construction in the Sepulveda Basin] and the Dept. of Recreation and Parks.

"We plan to start sometime in September. We are receiving bids from contractors now. We've been in advance of every deadline we've ever had on this project. We're proceeding with construction of this facility."

Shickler said funds for the project will come from a $15 million debtor in possession loan Family Golf Centers procured after filing for bankruptcy protection.

That's another matter of contention.

"Based on what I've read on the Internet, that money is to be used for operating and staffing of their current facilities," Chase said. "We have to determine if Family Golf is allowed to use this money for capital improvements.

"That's why I suggested to the board that we hire a bankruptcy attorney to protect the city's interests. We want him to look at all the documents and see if this money can be used for this project."

The Board of Recreation and Parks recently approved hiring of a bankruptcy attorney and it is expected to be approved by the City Council soon.

Linda Barth, senior analyst for the Dept. of Recreation and Parks, said an attorney will be hired from the firm of Danning, Gill, Diamond and Kollitz.

"I agree there are questions," Barth said. "That's why we are obtaining the services of a bankruptcy attorney. It will allow us to understand the situation more fully. Then we will look at all the issues and all the options.

"We know the golfers are concerned and we share those concerns. But we have a level of confidence that the project will continue to move forward. Family Golf has assured us they are going to start work in mid-September and we look forward to them getting these improvements done."

Family Golf, which had been operating the Sepulveda complex where the Encino and Balboa golf courses are located, was awarded the permanent concession in September, 1998, and the contract was signed with the Dept. of Recreation and Parks last November.

During that time, reports of Family Golf's financial problems began to surface on the Internet and the financial pages.

"During the review process, [Family Golf's] financials checked out OK," said Ron Kraus, director of administrative services for the Dept. of Recreation and Parks. "We performed a standard investigation and there were no problems.

"We were aware of some financial problems before the contract was signed, but we saw nothing of a magnitude that would preclude our board from signing the contract. There was some debt refinancing, but they had not filed for bankruptcy. There was nothing to legally prevent the signing of the contract."

Family Golf Centers filed for bankruptcy last May 4 and missed its monthly rent payment of approximately $50,000 with the Dept. of Recreation and Parks but has made its payments since then. The April payment remains outstanding.

Michael Bernbock of Ready Golf Centers in Burbank was not surprised.

"I'm somewhat jaded because I've been fighting this for three years and I came in second place [in bidding on the Sepulveda concession to Family Golf]," Bernbock said. "But I told the City Council and the Dept. of Recreation and Parks not to sign a contract with Family Golf unless they checked into their financial situation. I told them this company is a financial liability. Nobody checked.

"They can't get this job done, I'll bet the farm on it. I'd like to have the contract at Sepulveda, sure. But I live in Sherman Oaks and I play golf there. I'd like to see this done and done right for the community."

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