Recent social media posts and comments at candidate forums have Utah Motorsports Park officials concerned the community doesn’t understand the nature of their agreement with Tooele County to manage the facility.
Alan Wilson, vice chairman of the UMC’s board of directors, and Willem Geyer, UMC general manager, met with the Transcript Bulletin for two hours Wednesday.
UMC is registered as a corporation by the state of Utah. Its parent company, Mitime Investment and Development Group, is wholly owned by billionaire Li Shufu of Hangzhou, China, according to Wilson.
Wilson describes Shufu as a Chinese capitalist. Shufu founded Zhejiang Geely Holding Group in 1986. It is an international manufacturer of cars, motorcycles, engines and transmissions.
Geely purchased Volvo from Ford Motor Company for $1.8 billion in 2010, and is currently building a Volvo factory in South Carolina.
Wilson’s first concern stems from a lawsuit that overturned Mitime’s purchase of the former Miller Motorsports Park property from Tooele County.
“One of our concerns is that some people think that the judge ruled against us, and then the county went ahead and hired us to run the facility anyway,” Wilson said. “The judge never found fault with UMC.”
The judge Wilson referred to is 3rd District Court Judge Robert Adkins.
In an oral ruling issued in December 2015, Adkins said he was setting aside the sale of the former Miller Motorsports Park to Mitime because the fair market vaue of the property was more than the $20 million offered by Mitime, according to Tooele County Attorney Scott Broadhead.
Adkins’ ruling came at the end of court proceedings on a complaint filed by Center Point Management, a Wyoming limited liability corporation led by Las Vegas real estate developer Andrew Cartwright.
Center Point Management offered $22.5 million for the racetrack while Mitime Investment offered $20 million.
In the complaint, Center Point alleged that the sale of Miller Motorsports Park by Tooele County to Mitime Investment was unlawful because county commissioners turned down Center Point’s higher offer.
On the second day of the trial, Center Point upped its offer to $28.1 million, the same as the county-assessed value for tax purposes of the property.
In his written ruling issued in January 2016, Adkins rejected the $9 million value placed on the property by an independent appraiser for the county after the sale to Mitime. He ruled that fair market value of the property is the highest offer by a legitimate buyer.
“We were surprised,” said Tooele County Commission Chairman Wade Bitner. “We did what we believed was lawful and in the best interest of the county.”
Bitner added that Mitime’s proposal to invest substantially in the property, including upgrades, new racing facilities, a hotel, a manufacturing center, and a tourism center, made it the best offer for the county.
After reading Adkins’ ruling, county commissioners decided they wanted to have new independent appraisals completed on the property as well as revise county code covering disposition of property to reflect current state law.
The process of appraisal and complying with requirements for public hearings prior to a new sale was expected to take months, according to Bitner.
“We don’t expect to get the results of the appraisals back until the end of May,” Bitner said.
In the meantime, the county commission wanted to keep the racetrack open for the 2016 season to maintain the value of the property, keep local jobs, and maintain the positive impact on community businesses, he said.
For that reason the county turned to UMC to manage the property for the county.
“UMC was ready to go,” Bitner said. “They had events scheduled and they had been negotiating with tenants.”
Bitner is careful to point out that UMC is not leasing the property, but has been hired by the county to manage the property.
As such, the agreement calls for the county to pay UMC, at the end of the agreement, 1 percent of actual cash receipts derived from the property as a management fee.
The county will receive any profit or be responsible for any operating loss at the end of the agreement. The Miller Group readily admitted that the motorsports park lost money.
While UMC is running the track with fewer personnel and reducing as many costs as possible, UMC officials expect they too will lose money in the first year of running the racetrack.
However, Geyer and Wilson dispute local rumors that the racetrack had an annual operating loss of up to $11 million. Wilson was the designer and the original manager of Miller Motorsports Park.
The UMC operating budget for 2016, approved by the county commission, shows a $3 million operating loss at the end of 2016, Geyer said.
According to the management agreement, the county maintains oversight of the fiscal aspects of the motorsports park, Geyer added.
In March, when county commissioners revised their purchasing procedures to exempt UMC from requirements for competitive bids on certain small purchases, Bitner explained that the change did not exempt UMC from county oversight.
“UMC will follow the same approval process for purchases as county departments,” he said. “The competitive bid process has been exempted because the purchasing process never anticipated that the county would own and operate the racetrack.”
Commissioner Shawn Milne, as the commissioner over UMC, reviews all of UMC’s expenses on a regular basis, while all three commissioners review and approve UMC’s books each month, according to Bitner.
In addition to covering the anticipated $3 million operating loss, the county will also reimburse UMC for capital assets it has had to purchase to run the Motorsports Park.
“I’m not finding fault with the Millers,” Wilson said. “But in accordance with their agreement, they took everything they could before they left.”
Office furniture like desks, chairs, and filing cabinets were gone. Control panels for lights and sound systems were removed.
UMC had to purchase new computers and software for ticket sales, according to Wilson.
Geyer said he expects to spend $1 million to outfit the kitchen in the former clubhouse with equipment.
UMC spent $400,000 in upfront expenses, plus they estimate another $3 million in other operating assets.
The county approves all of the asset purchases, Geyer said.
That brings the county’s total bill to $6.4 million for operating losses, capital assets, and startup costs in addition to the 1 percent of proceeds for the management fee.
“We’ve taken a lot of heat for it,” said Bitner. “But it’s worth it. The value and the sales price would have been reduced by more than $6 million if we had just shut the place down. When you shut a place like a racetrack down, you lose employees, tenants, and events. Then when you open it back up, they all don’t come back.”
Without an operating track, the county would be left with nothing but land and buildings to sell, instead of a functioning business, according to Bitner.
In addition, the value of the operating assets increase the value of the track, Bitner said.
The agreement allows the racetrack to stay open, using the cash flow of UMC to pay for operating and capital expenses, Wilson said.
“The county can then reimburse those expenses from the proceeds of the sale,” he said.
The language of the one-year agreement describes the relationships between UMC and the county. It specifies that it is not a partnership or a lease. The agreement does not confer upon UMC any rights, privileges or preferences in the future sale of the property.
“Whether we end up buying the track or not is not relevant right now,” Wilson said. “We are here because we want to keep the facility running for the county and for the community.”