WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
April 28, 2005
TRANSMITTED VIA EDGAR:
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Securities and Exchange Commission
Division of Corporation Finance
Office of Mergers and Acquisitions
450 Fifth Street, N.W.
Washington, D.C. 20549-0305
Attention: Steven Jacobs, Branch Chief
Re: HomeFed Corporation
Form 10-K for the year ended December 31, 2004
File No. 001-10153
Ladies and Gentlemen:
We are writing on behalf of our client, HomeFed Corporation
("HomeFed"), to respond to the comments of the Staff set forth in the letter
dated April 20, 2005 with respect to the above-referenced Form 10-K. For your
convenience, the paragraph numbering of the responses below corresponds to the
numbering in the comment letter.
Form 10-K for the year ended December 31, 2004
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Financial Statements and Notes
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Note 1- Summary of Significant Accounting Policies, pages F-8 to F-10
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Provision for Environmental Remediation, page F-9
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1. We understand from your disclosure the environmental liability
relates to 30 acres of undeveloped land. Additionally, your response to our
comment indicates you tested the recoverability of $143,000 in book value for
the "affected parcel". In a supplemental response, please explain your basis for
determining this parcel to be the lowest level for which impairment is to be
evaluated. In your response, address how the environmental liability is
independent from cash flows of Otay Land Company, LLC. Additionally, please
advise us of the assumptions used in determining the recoverability of book
value of the affected parcel if the entire environmental liability is limited to
cash flows of this parcel. If the liability is not isolated to the cash flows of
this parcel, advise us of your impairment evaluation with respect to the total
carrying value of Otay Land.
The Company's Otay Ranch land is comprised of four relatively large parcels that
are not contiguous. Each of these parcels has been subdivided into several
sub-parcels, one of which includes the affected land. The Company believes it
has the ability to sell land from the unaffected areas even if the affected
parcel has not been remediated. The Company does not believe that the
remediation status of the affected land will in any way impact the cash flows it
can receive from the sale of the unaffected land. In addition, the Company can
sell the affected parcel separately from all other Otay land. Since the future
cash flows from the affected parcel are identifiable and largely independent
from the future cash flows that can be generated from other Otay land, the
Company concluded that this parcel represented the lowest level for the
impairment evaluation.
The Company expects it will provide the funds for the environmental remediation
from the available cash resources at the parent company. The impairment
evaluation of the affected parcel did not assume that the funds to complete the
environmental remediation would be less than the cash flow to be received from
the eventual sale of the affected parcel. However, the Company's projection of
future net cash flows from the sale of all of its Otay land (estimated to be
over $150 million) is well in excess of the sum of the carrying value of all of
the Otay land and the environmental liability. Therefore the Company has
concluded that there is no impairment with respect to the total carrying value
of Otay land.
2. Please provide the acknowledgments regarding the Company's
responsibilities requested in our comment letter dated April 8, 2005.
The statement from the Company requested in the April 8, 2005 comment letter is
attached hereto as Exhibit A.
If the Staff has any additional questions or comments, kindly contact
the undersigned at (212) 310-8528.
Very truly yours,
/s/ Andrea A. Bernstein
cc: Erin N. Ruhe
HomeFed Corporation
1903 Wright Place
Suite 220
Carlsbad, California 92008
Securities and Exchange Commission
Division of Corporation Finance
Office of Mergers and Acquisitions
450 Fifth Street, N.W.
Washington, D.C. 20549-0305
Please be advised that HomeFed Corporation (the "Company") hereby acknowledges
that (i) the Company is responsible for the adequacy and accuracy of the
disclosure in its filings with the Commission; (ii) the staff comments or
changes to disclosure in response to the staff comments do not foreclose the
Commission from taking any action with respect to the filings with the
Commission; and (iii) the Company may not assert staff comments as a defense in
any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Dated: April 28, 2005
HOMEFED CORPORATION
By: /s/ Erin N. Ruhe
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Name: Erin N. Ruhe
Title: Vice President, Treasurer and
Controller