Dispute over ownership of Aztec Speedway drags on
AZTEC — Car racing just got underway for this year's season at the Aztec Speedway, but a dispute over the lease on the property drags on.
A pair of ongoing lawsuits, originally filed in district court in 2010 by the American Legion Post 9 in Aztec, sought to regain control over the track's lease, which is administered by the state's Land Office in Santa Fe.
L.C. Kesterson, commander of the legion and a longtime sprint-car racer, says the track's lease was illegally and unfairly taken from the legion's control by the previous Commissioner of Public Lands, Patrick Lyons, shortly before his second term expired at the end of 2010. Ray Powell, the current commissioner, assumed the post on Jan. 1, 2011.
The $5 million lawsuit names Powell as a defendant.
American Legion Post 9 veterans constructed the oval race track on a 40-acre parcel of land south of town in 1949 after they returned home from service in World War II.
Though the state owns the land, the veterans group, which formed in 1919, ran races at the speedway for more than 60 years, sending in lease payments every five years and maintaining insurance for the track.
The last lease the legion held expired in October 2009, and that's when the legion's troubles began.
According to Kesterson, the legion at that time sent in a lease payment for another five years. But in November 2009, the state alerted the legion the lease renewal would not be awarded. Instead, the lease was offered for public bid.
In spring 2010, the State Land Office reversed itself and offered the legion a lease under the condition the legion sublease to a company called Hamilton Racing.
Kesterson said the legion sublet the property to Hamilton Racing in 2009 but terminated the agreement after a single season. Kesterson said the legion was unhappy with the Hamilton Racing's management and did not want to sublease the property to the company again. Hamilton Racing is also named as a defendant in the lawsuit.
By May 2010, the State Land Office advised the legion it would open the bidding process, and, if any entity other than the legion was awarded the lease, the legion would be compensated for the value of improvements its members made at the track over the course of its leases.
In June, a new business lease was awarded to Micon Land. The company is owned by Jason Sandel, former Farmington city counselor and executive vice president at Aztec Well, which is located adjacent to the Aztec Speedway on Legion Road.
"After the 2009 season was over, we canceled (Hamilton Racing's) lease. We sent the state a payment for $6,800, and they cashed the check and kept the money," said Kesterson, 68. "Overnight, Sandel had it. He paid $250,000 to the state for the improvements. The state got the money. And we got kicked off the track."
Kesterson feels improvements the legion made at the track were grossly undervalued. Kesterson said they were worth $1.5 million.
"It's just a mess," said Jane Kesterson, L.C. Kesterson's wife and the legion's secretary. "We're supposed to get a court date. We were never paid for track improvements. We're trying to get the track back, but it's pretty hard to fight against Sandel and others with deep pockets. It's hard to get justice."
Though he's named as a defendant in the suit, Powell said he knows little about the case and referred questions about it to Land Office General Counsel Harry Relkin.
"We are allowed by state constitution to administer leases for up to five years, and that's the lease that the American Legion Post 9 had," Relkin said in a phone interview Friday. "It appears that another entity called Micon Land LLC made an application to obtain a longer lease. I cannot find anything in the file where (then commissioner) Lyons notified the Legion Post to alert them of (losing the bid)."
Relkin said any lease the office has that exceeds five years must go to a public bid.
"It appears that was done right at the end of Lyons' term," he said. "A sealed bid on the last day, and the only bid received was from Micon. The lease was awarded the next day, Lyons' last day of office. I can find no record of a courtesy letter from the office to the Legion. If we made a business decision, we'd notify as many people as we could to ensure enough potential money for kids and schools. Overall, it appears that the law was followed."
Relkin said the Land Office's present administration would have done things differently.
"In a situation like this, we would aggressively communicate with them to let them know if a bidding process were to take place, which doesn't appear to be the case here," Relkin said. "When you're the landlord, you're in the business of treating your lessee — and, by extension, the public — fairly. The higher the bid, the better the racetrack will pay. Being open and transparent is good in principle is good and right to do, but it's also good business. Fair to say, this is not how Commissioner Powell would have proceeded with this process."
For his part, Sandel stands by the years he has had the lease for the track. He said he would like to add more variety to the entertainment offered there, including live music. Last year, he brought one of his favorite bands, blues-rockers Blues Traveler, to the Aztec Speedway for a concert.
He also praised the manager he hired to run the track, Mike Tenski. Sandel called him "a guy that loves racing, that loves the sport and is totally dedicated to making it work."
"He dedicates an enormous time and effort to make the track run, safely and for fans," Sandel said of Tenski. "The track hasn't seen this kind of investment of care and love ever."
Sandel said he took over the track primarily as an investment in the community.
"(The legion) allowed the lease to expire. Why they did, I have no idea," Sandel said. "The State Land Office did what they were supposed to do, and we bid on it. We very much operate it as a community service and invested a large amount of money, built a brand new, 10,000 square-foot concession stand, did a lot of dirt work. We're lucky if the operations pay for themselves. It's not a profitable enterprise, but the track has been a mainstay in the community for 50 years, like Aztec Well."
He added: "If you talk to a number of people, I would hope you would hear that the track is better run and invested in. My hope is for people to have a smile on their face and come out and enjoy some fast, family fun, the slogan for the track. Supermodified cars or the best band on the face of the planet — we just want people to be happy about the place they live and get excited to have great entertainment options available in our backyard."
As the lawsuit continues, L.C. Kesterson remains hopeful the legion will regain ownership of the track his veterans organization started.
"They're trying to run us out of money, as this thing goes on and on," he said. "We want the track. Even though we're suing for $5 million, we don't want the $5 million. We want the track."
Until then, Kesterson is keeping busy tuning up his sprint car. He plans to return to the Speedway in July to enjoy the thrill of hitting top speeds of 80 mph on the dirt oval at a race.
"As of now, it is up to the judge," Relkin said. "We're a ways off from a trial. It's unfortunate that it did not get worked out in a more collaborative way before the bid was awarded. It does not appear there will be any resolution to this matter any time soon."