The business park near San Luis Obispo County Regional Airport is set for public auction Feb. 11
A 68-acre business park along Highway 227 near San Luis Obispo County Regional Airport — under development since 1999 but with only one building completed — is on the verge of foreclosure.
Pacific Capital Bank, parent company of San Luis Obispo’s First Bank, says East Airport Development LLC owes the lender almost $11 million that it borrowed as a construction loan, according to court filings.
The property is scheduled for public auction Feb. 11 outside the entrance to the San Luis Obispo County Courthouse at 976 Osos St. in San Luis Obispo.
East Airport Development’s partners are two brothers, Jim and Angelo Morabito — who also own Paul’s Dry Cleaners of San Luis Obispo — developer John Kuden, building contractor Rob Burke and attorney Neil Tardiff.
Although the property was successfully subdivided into 26 lots and has completed its infrastructure of roads, curbs and gutters, only one building stands on the 68 acres.
Donnie Walter, of Walter Brothers, owns that parcel and built the offices for the state’s Department of Industrial Relations offices. It is not part of the property now being foreclosed on.
The rest of the business park property — also known as Tract 2368, and valued at one time at more than $22 million — was pledged to the bank as collateral for the nearly $10.9 million now owed.
The partners also personally guaranteed the loans, according to Pacific Capital Bank, which filed a complaint against the partners for breach of guaranty. Burke owes an estimated $3.2 million; Tardiff $1.1 million; Kuden $1.061 million; and the Morabitos, almost $2.5 million each, according to the bank’s lawsuit.
The original loan was due January 2008, but was refinanced to extend the loan to July 9, 2009, the filings state.
Burke asked the court for a preliminary injunction to stop the foreclosure. But San Luis Obispo Superior Court Judge Barry LaBarbera denied the motion Jan. 12, saying “real estate development is inherently speculative,” according to LaBarbera’s written denial.
The Morabitos also filed a lawsuit in 2008 against Kuden and Tardiff, which included allegations of breach of agreement and intentional and negligent misrepresentation.
Part of the issue, they allege, is that Kuden and Tardiff failed to complete the project in a reasonably timely manner, according to their lawsuit.
“All the things the county imposed on us slowed us down, but so many things went wrong,” Angelo Morabito said. “What toppled it over finally was our economy — and all the banks going out. Even if we could find a buyer — and we’ve had offers — the buyer can’t find money.”
Kuden referred questions to Tardiff, who along with Burke, could not be reached for comment.
— Melanie Cleveland
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