CG News

Click here to edit subtitle

SPORTS WORLD

Explanations, comments, questions during CGPI/Sports World study session

(Posted Aug. 10, 2016)


The complete list of talking points is HERE



The hour-plus City Council study session Monday night on the Casa Grande Performance Institute/Grande Sports World situation brought explanations from City Manager Larry Rains, an updated financial sheet and questions and comments from the council.

Formal action cannot be taken during a study session. Following the session, the council went into executive, or private, session to discuss how it wishes city management to proceed in the situation. Such closed sessions are allowed under state law when getting advice from an attorney or discussing a legal situation, but any decision has to take place in an open session.

“My thought from the outset was that we would do this study session this evening to really begin to provide the entire council with the history of the project, provide some facts and really overall just outline the operational performance and financial performance of the Casa Grande Performance Institute as it relates the lease agreements,” Rains said.

“As the mayor and council is aware, we can’t take any action (tonight). Really, this is just a fact finding opportunity for the mayor and council and for staff to provide some details based on some of the questions that recently been asked and some of the speculation that has been out there in the community.”

Mayor Bob Jackson said, “At the end of the day, we are going to direct our city manager where we think he needs to go, provide him some options to do that. If we do that in an open session and everybody knows what we’re going to go talk to them about, it kind of cuts his legs out from underneath him. Ultimately, any decisions that are made will be done in an open public session. We will make no decisions at all in the executive session.”


The link to the complete Arizona state statute regarding executive sessions is HERE


Rains ran through several of the talking points listed in his presentation:

RAINS: 

“As the mayor and council and the community knows, we went through an extreme growth period of about 2004/2005 through about 2008 and really what we began to see was that the demand by many of our youth leagues, particularly soccer and football, really was putting a burden on our existing infrastructure. And for those on the council and in the community at that point in time, you recognized that the soccer league that is run by the Boys and Girls Clubs was beginning to bust at the seams and you had the football league about to restart in Casa Grande and at one point in time there was some estimate we were serving anywhere between 1,600 to 2,000 kids in those two programs. And at that particular time, we were trying to accommodate both of those organizations right at Carr McNatt Park on the old Cougar football stadium and it was really beginning to be a stressful scenario.

And so there was some discussions at that point in time by the city about building some level of multiuse fields at either Ed Hooper Park or the Linden property. At that particular time, the discussion was somewhere in the vicinity of four would be likely be rightly sized to our demand and with the potential to expand to six to really deal with any of the future growth that may occur.”

Rains said a decision by the high school district that groups would have to pay to use their fields led many to want to use city facilities instead.

“That had an tremendous impact on the policy decisions and the decisions to make to construct these fields,” he said. “If you remember, at that point in time our local school districts had established a policy that they had to pay to utilize the fields for play at the high school and so what we saw is that the football program, particularly, was having a difficult time trying to find a place to actually meet the needs of their organization.

“Obviously, that is one of the things that has changed in today’s environment. The schools have changed their policy and so what we find is where we had really a sizable demand as we started down the road with this project and up until two or three years thereafter, we have found that since the schools have lifted that particular policy that a lot of the organizations are going back and playing at those respective high schools.”


The cost of building local fields

“Staff has attempted to quantify what the city-operated fields might look like, or complex might look like,” Rains said.

“When you’re looking back in hindsight it is somewhat difficult to set an exact number, but what we’re trying to do for the mayor and council this evening is provide what I would consider to be a basis for what constructing four to six fields from a cost perspective, we might be issuing a bond and what we might be servicing in debt and then the actual operating costs.

“Depending on how many fields we built, four to six, depending on where we built those, there’s a sizable amount of infrastructure that needs to be put in to service the facilities.

“We’ve estimated that we would be spending more than $4 million to $7.5 million on building four to six fields. The annual debt service for that on a 20-year note with a fixed interest rate would be anywhere between $400,000 to $550,000 a year that we would be expending.

“If the city were at that point in time operating and maintaining those particular fields, based on the analysis that was conducted several months ago, we would be looking at anywhere between $500,000 and $700,000 annually for the ongoing costs of what I consider to be operational costs. When you simply paid the annual debt service and the maintenance cost you’re looking at anywhere between $900,000 to $1.2 million.”


RAINS:

“At the time we were having the discussion about the construction of these multiuse fields, we were approached by Francisco Grande and the principals there about the potential of a what I would consider to be a lease agreement that would ultimately end up in a scenario by where the city would construct the facility and they (Francisco Grande) would ultimately operate and maintain that facility.

“At the time we started construction of the facility, there were components that we were using that we based our decisions on.

“There was the academy, which is being operated out there in the Grande Sports World, and then we had the United Football League that was a venture at that time, both looking for a facility, and our models were established around that.

“Some of the other opportunities that were being offered by Grande Sports World were to bring an international flair to the community. I think we’ve seen some of that.” 


RAINS:

“As we commenced that project in April and May, ultimately the mayor and council had given the authority to the city manager (then Jim Thompson, who retired Aug. 7) for a $20 million project, and what that $20 million project ultimately up financing were a football fields/soccer fields, ultimately a multiuse, a 59,000-square-foot clubhouse and fitness area, four locker room and classroom space on site. There are therapy centers that were designed as a component there in between those particular locker rooms and hot and cold plunge pools that are there for the athletes.

“You’ll see if you’ve been to the facility there’s a fair amount of work that was done outside of those in just the parking areas and the amenities that are necessary to provide a complex of that nature to provide services to the students as well as to our local residents.”


RAINS:

“The original financial projections really had a variety. Really, what the approach was by staff at that time, the recommendation was that the city would bring $500,000 to the table out of our 2/10s of a percent recreation sales tax. That was approximately a half of what we were collecting at that time. The other $400,000 to $500,000 would be used for other capital improvements (around the city), and we have done so since that point.

“What we did was we leveraged the relationships with the academy and the potential relationship with UFL to ultimately generate a revenue stream that would offset the expenses at that particular site.

“If you want to take it on just a practical perspective, the thought was we need fields, this would be our share for our local use, this would be our contribution for our local use.

“The upside to the project was that ultimately, if in fact everything came to fruition and that the academy and the UFL performed as they had expected, we would ultimately up with a $20-million complex without any of the financial burden of it being placed on the taxpayers.”


RAINS:

“Ultimately, again, the document was crafted under the perspective that Grande Sports World would be operating and maintained. So they in fact handled the scheduling, the days to day maintenance out there and the upkeep, that’s their responsibility.

“So the potential of having that type of capacity in their business and to ultimately generate revenues they have some level of control under the revenue generating events, the right to schedule all the uses and activities of the sports complex.”


RAINS:

“There are really two primary benchmarks in the form of the terms that were written to benefit the city.

“The first was the 10-year review. The $7 million guaranteed minimum that was scheduled to be paid as collateral by the Francisco Grande tower.”

(CG NEWS NOTE: The Francisco Grande collateral is the tower building, not the entire resort complex.)

“The second component is that once that 10-year mark is passed, the city no longer has access to that collateral. 

“If we continue to move down the path of the use agreement, we would lose that provision. But the provision, this 5.10 provision, which basically says that if we come to 2020 and the rents have not been a million dollars and we’re not anticipating that the rents are going to be a million dollars, then we ultimately can go out and try to find another user that could lease some space if the capacity exists. This was written as the second, what I would consider to be for the second 10-year of the agreement as a protection clause for the city.”


RAINS:

“I think if anybody’s been out there, you’ll see that they do a very good job of doing that. The fields were constructed to what I would consider to be some of the highest quality fields. And from day one, we’ve had dialogue with Grande Sports World and they certainly have adhered to maintaining those fields to really at the highest level. And we see that by some of the uses that they’re able to bring in, with major league soccer and some of the other lacrosse options that they bring in. The conditions of those fields really drive the users to Casa Grande and the nice thing about that at the end of the day is that our local youths have the opportunity to use that.”


RAINS:

“We do have an exhibit that really guides the scheduling. And while at this particular time there’s not been any issues out there, the schedule half was written in order to ensure that Grande Sports World had the opportunity to maximize the revenues out there, obviously benefits both them as well as the city.

“And secondarily, that we have the option to have some level of field access for the programs that we wanted to have out there at the facility.”


RAINS: 

“I can tell you that they have made those payments on a quarterly basis since the onset.

“This particular provision, I think there’s been some questions, perhaps some misunderstandings of this provision when numbers begin to be discussed.

“CGPI has in fact met the obligation outlined in this particular section.

“They also are obligated for some level of electric lights payment based on their use. Again, they’ve made those payments.

“And the city does have a provision in there that we can audit if we elect to do so.

“Continuing in the particular provision of the agreement, we begin to talk about the guaranteed minimum rental and it becomes an important provision for all of us to consider as we outline this particular project and the agreement.

“The guaranteed minimum rental is really a protection clause for the city for the first 10 years. And in the agreement, CGPI agreed to pay, establish a guaranteed minimum rent of $7 million. They pledged the tower as collateral against that. And ultimately what that does is it serves as a backstop for the rent payments that were projected to be made, that we project our overall proforma against.

“And so at year 10, ultimately what we’ll do is we’ll assess and evaluate the rents that they’ve paid to us and we’ll apply that along with two other provisions, credits that are due to CGPI as well as total amount of fees charged by the city for other generating events that would be credited against that $7 million.

“But at June 30, 2020, ultimately the city would at that point would have the ability to shore up — for lack of better words — the difference between what had been paid to the city in rents versus the $7 million guaranteed.”


RAINS:

“The current city debt that’s outstanding, we had two tax bonds, Series A and Series B.

“One was the tax-exempt bond and one was a taxable bond.

“We traditionally issue tax-exempt bonds, but because of the business use of that particular facility, a portion of those bonds ultimately ended up being taxable.

“We have an outstanding balance of our tax-exempt bonds of $7,175,000 and $11,625,000 on taxable.

“Again, we are servicing that debt annually.”


RAINS:

“The city utilizes two individual funds to account for the transactions. We have an operational account that’s going to cover the operational cots and we have a debt service fund.

“Included in the rent payment are all three of the revenue streams that I’ve talked about, from the rent to the utility reimbursement to both the lighting and the irrigation.

“What we have included on this particular spreadsheet are the funds that I mentioned. 

“First of all, what we consider the CGPI operational fund. As you can see, what we’re using this fund to account are two things: the revenues, the income streams, that are paid by CGPI on a quarterly basis and we are also including all of the operational costs that we are obligated to under the facilities lease and use agreement (FLUA).

“Early on, as you can tell, starting in fiscal years 10 and 11 as we were starting out the evaluation of the fund,  you can see the fund balance was not anywhere near what we would have liked it to be.

“Ultimately, what we’ve seen is an uptick in the revenue streams that has been paid. What you’ll see is that the revenues that are being generated out at CGPI are essentially covering the operational costs to the city. And we’ve estimated some level, just for the purpose of the discussion, some level of ongoing revenue streams as well as expense out of that.

“But ultimately at year 10, which is our first benchmark, you’ll see that we’re ultimately in a scenario where the fund balance is in a positive. 

“If you move down to the next component for that spreadsheet you’ll see that account for the debt services fund. And ultimately the debt service fund is primarily established to simply account for the debt payments that are made every year. So what we’ve done is we’ve taken the amortization and modeled the debt service payments. We’ve applied the $500,000 payment out of the 2/10th of a percent sales tax. Again, that was something that the council had a commitment for at the onset. And then as you can see we’ve got a transfer in from the General Fund that has been consistent since year one.

“Ultimately, what we’re dealing with there is that we ultimately are obligated under the terms of those bonds to be responsible and by ourself having to move the money out of the General Fund in order to service that debt.

“Obviously, the optimal goal at that point would have been that we would have had additional revenues which would have lessened the amount of impact to the General Fund, but because those are not transpiring at this particular time that obligation falls back upon the General Fund.

“The important component of that is that it is still a city asset.

“The next section of the spread sheet is the proforma. We traditionally rely on that, that’s where the estimated revenues or rents paid are outlined.

“But I think the more important component is the proforma versus the actual. As you can see, that rent paid to the city just simply rolls down when we actually compare that to what the projected rent goal was. The shortfall ultimately ends up getting applied against the General Fund, number one, and number two we’re tracking that against the guaranteed maximum rent.

“And so at this particular time we have gone out at the direction of council and have had an appraisal done on the tower, the collateral piece. The appraised value of that facility is $3.75 million. So there I compare what the value of that particular asset is versus what the unpaid portion of the guaranteed maximum rent.

“Obviously, there are some assumptions in that. As you can see, I was very conservative in establishing those assumptions, simple taking an average of what’s been paid.

“I did have an opportunity to discuss earlier today some of the upcoming events as well as some of the current discussions that are happening with other users, with both Mr. Ron Burks and Tim Alai, who are here tonight. They certainly have been working hard and have what I would consider to be several projects or prospects that may influence not only the rents paid but obviously would impact the difference to the guaranteed minimum.

“Staff has fielded several questions about the scenario. Obviously, while no doubt the best intentions on the part of all the parties when we went into this particular project, the fact is that financially it has not done quite as well as what everyone had hoped.”

Mayor Bob Jackson asked why 2015 showed a jump in the rental fees.

Rains responded that, “It’s really two-fold. At that particular time, we were working through the reimbursement for electrical costs and in the FLUA there is what I would consider to be a very complicated formula that has to be applied. We were working through that particular formula and having a fair amount of discussions with Mr. Alai about how those applied from their perspective, so we ultimately ended up seeing two years worth of payments made in one fiscal year.”

Rains also added a clarification about the financials chart.

“We are servicing the debt at 20 years,” he said. “And so at 20 years we ultimately will have paid off that particular debt, and obviously driving down the expenses.We didn’t go out that far with this analysis simply because we focused on the first 10-year benchmark.”


RAINS:

“Over the past several months, several have asked what the options might be. There’s likely several options. I guess what I would say is there’s pros and cons to every option we have, quite frankly.”

• Continue operations

“Obviously, I would tell you that based on discussions that I’ve had with Grande Sports World and by city staff, at least my belief is that things are going to improve out there. Grande Sports World is doing some really fantastic things to bring people and users to that facility. And quite frankly, I think the city can do a better job at finding programming and/or other alternatives out there, as well.” 

• An amendment

“In my discussions with Mr. Burks and Mr. Alai today I can tell you that they certainly discussed a willingness to sit down and have some discussions and evaluate various options that might be beneficial to both parties.

“There is the potential to terminate the FLUA, and while that is something that likely be somewhat difficult, it may in fact be the worst-case scenario, because ultimately what we find ourself dealing with is a scenario where we’re then obligated to handle the operations out there, as well. We would also have a scenario where we would likely be looking for a wastewater treatment, as well.”

• Dispose of facility

“We’ve talked in the past about the potential of disposal if anybody would be interested in acquiring the facility. Again, I don’t know what options. It’s certainly something that may not be what I would consider to be a immediate resolve scenario.”


Comments and questions from the council

Lisa Fitzgibbons 

(She was not on the council at the time the original agreement was approved.)

“I think it’s a great asset, I think it’s a great facility for the community,” she said. “But of course the numbers are a concern to a lot of people.

“When we talk about the guarantee, if we decide to do nothing at this time and the guarantee is up in 2020 we still have that collateral, which is just the tower building. We have the appraisal at this time ($3.75 million) but we don’t know what it’s going to be in three or four years. So at that point, we could seek the tower.”

Rains responded that, “Obviously, our hope would be it won’t be a number that’s greater. Our preference would be that the revenue streams would have been picked up and we wouldn’t be taking any type of collateral.”

Fitzgibbons said she would like to see a list of what CGPI/Sports World is attempting to do to improve the amount of rental payments.

Rains responded that, “I’ve been more involved in discussions with them over the last couple of months and they have shared with me a list of projects and proposals that they’re entertaining at this particular time. Some of those are somewhat confidential in nature, but I can tell you that they’re currently working on as many as five to six, even more than that, proposals from organizations, from a variety of sports, in an attempt to bring them to Grande Sports World in Casa Grande.”

Fitzgibbons, referring to Rains’ comment that the city could be doing more for programming, said, “They have their activities going on out there, so to what extent can we get involved in that?”

Rains’ response was, “I will tell you that there’s excess capacity that’s going unused every day out there. And while we have seen a shift primarily by the youth football leagues back to the high schools for their activities, there are several other programs from football to soccer, the adult soccer leagues, those types of things that the city, at least in my opinion, can work with those organizations to have them utilize that facility versus some of the other facilities. And some of that has to do with some of these organizations would prefer not to pay a fee, as an example. And so they end up going to a facility that they’re not having to pay for versus something that they do.

“In my mind, what we need to do as a staff is we need to do our due diligence and have those discussions with the leagues and better understand what it is and why it is that they’re electing to go other places.

“I understand the schools’ decisions personally and why they’ve done what they’ve done, but you just never know when one of those organizations decide they’re not going to allow it. We may be back in the same scenario. 

“I think it’s really just hitting a reset button — for lack of better words — and spending some time understanding the use patterns by our various groups, as well as evaluating where and how we might be able to find additional programming to put out there.”

Rains noted that the Boys and Girls Clubs has been using the Sports World facility since its inception “and has been really, quite frankly the only tenant from the city’s perspective in the last couple of years.”


Mary Kortsen

“It’s a great location,” Kortsen said. “I remember when the Francisco Grande had the hot air balloons and I know that was revenue generating.

“Who is primarily responsible for booking programs? Is there an opportunity for getting together with the Francisco Grande for say, such as get a hot air balloon, very successful. Is there some collaboration there? Are we doing it, or should we be doing that?”

Rains responded, “We’re meeting on a routine basis to talk about what type of scheduling is transpiring out there. In fact, the FLUA requires us to do that, although it’s been a little less formal than what the FLUA requires, simply because of the relationship that we’ve got with Mr. Alai.

“Ultimately, our Parks and Recreation Department has discussions with members of the Grande Sports World staff on a routine basis regarding the actual scheduling.

“I wouldn’t say that we’ve had a lot of discussion pertaining to programming, but it’s something that we certainly can do.”

Kortsen, noting that football leagues are using high school fields rather than Carr McNatt Park, asked, “What about maybe delaying Carr McNatt improvements? We’re going to be putting $2 million to Carr McNatt improvements and the main emphasis on those improvements are fields. If we have fields that are sitting out there, and that was my whole incentive, in the first place, was this creation of fields. Maybe we just go ahead and use that instead and delay the Carr McNatt improvements.”

Kortsen also asked if the Grande Sports World building is available for events. Yes, Rains replied.


Ralph Varela

“It seems that 2020 is a very important benchmark, in terms of the $7 million,” Varela said.

“We’re in 2016, I think even if we’re implementing new programs and so forth I’m not sure by the time we got established and began to generate income that there’s going to be real substantial return on investment by 2020.

“In regards to that, is there a general agreement that that $7 million or whatever is going to be paid to the city?”

Rains responded that, “The agreement requires that it serves as the standby, the standby agreement under terms.

And so we’ve got the tower collateralized at this particular time.

“Obviously, our preference would be that we reach that $7 million threshold through rent paid and not have to worry about having the dialogue on the tower and ultimately what would be transpiring with that.

“In the discussions with Mr. Burks and Mr. Alai today, we did have some very general discussions but nothing significant at this particular time. It would be something, at least from my perspective under my new tenure here, that I want to become more familiar and be able to have some better answers for the council on how we’re going to handle that when we come to that particular time in the agreement.”

Even with the best of numbers, the time is relatively short, Varela said.

“And you could be right,” Rains responded. “In fairness, I will tell that I put together this document in advance of the discussions. Just kind of hearing some of the potential problems, that could certainly influence the estimates that we’ve established here for tonight.”


Matt Herman

“People say you use these fields only a couple days out of the year,” Herman said. “We do, but we use a lot of hours on those fields, a lot of kids are there for a lot of hours, lot of families are there for a lot of hours. I’m looking a kid hours, because that’s the business we’re in with Parks and Rec here, trying to do that.

“Are we using it  as much as we could? Absolutely not. Would I like to see some more? Yes. If we voted again today, would we do it? With what we know now, easy to go back and look. The fact is, we are where we are at this point. 

“I’m more of a positive guy, so I want to thank you. The biggest thing to me, too, is the fields out there. You quantified it tonight at $900,000 to $1.25 million a year. We’re kind of in that ballpark with what we’ve got.

“Another important thing to remember is this is an asset that the city of Casa Grande owns and is intending to own. It’s not something we’re renting, it’s not something that we’re giving away. It is an asset.

“But again, are we utilizing it fully? Probably not. But when we went to this agreement, previous management (Thompson) entered into the agreement on our behalf because that’s how we voted as council. We have a new leader now (Rains). It’s going to be tough to get to where we want to be, but let’s see what we can do. I’m hoping.

“A great use of that facility and exposure to Casa Grande, because we are in the best location in Arizona. I just can’t believe that we don’t have more activities here from Phoenix and Tucson.  But I think we have more than people realize out there, because I see a lot of traffic.”

Herman also pointed out that the Casa Grande Youth Commission has used the Sports World building for retreats and has stayed at the hotel.

“The important thing to remember is we need to utilize this,” he continued, “because the best way to increase your business volume is to increase revenue. Our goal at this point is to increase the revenue out there.

“The other thing, I’m not a big fan of these reports that, well, the Super Bowl brought this many million. That’s hard to quantify. I know it hasn’t brought us as much as (hoped) but we do have a lot of hotels and hotel rooms in this city that I’ve seen are attributed to the things we have out there.

“Is it $3 million worth? No. But it’s something that we wouldn’t have before. And it’s going to affect everyone in town.

“What we need to do is just move forward, get to the bottom line, because the important part here is the financial for the city of Casa Grande.

“Would I have voted this is it would break the city of Casa Grande? No. Is this something that could bankrupt the city? It’s not.

“Again, it’s not ideal at all, but our bond rating has increased since issuing these bonds, so that goes to tell you that it’s not the worst thing. It’s not the best, and we just need to get more of our heads together and work on it and see what we can do to either modify this agreement, go on with it or see what we can do to help ourselves out of this.”


Karl Montoya

“I think on our part we could do a lot better job of controlling our own destiny out there,” Montoya said. “The idle time needs to be held to a minimum. We had that at Paul Mason, as well, just one person renting for the day. It sat there empty at night. It’s like, why can’t you have people day and night? I think programming is a must. It’s like a summer home. You don’t spend all your time out there, but if you’re able to afford it, careful to pay for it, it serves a great need, which it does.

“And so, I look at it as positive, as well, and look at it as the spinoff of go ask the hotels what that’s done for them, ask Francisco Grande. And you get your 2 percent (sales tax) on top of that, as well. It’s helped a lot of people throughout with an industry that might need a little help. I look at it that way.

“One event out there is the cross country event. That thing’s packed. People coming to that just to run a cross country event out there, that’s the kind of the stuff that you need to probably go out and advertise, Phoenix and Tucson, and say, hey, let’s have more events. 

“The fields, they’re pristine. Go out there and walk on them. Look at Carr McNatt now that the kids aren’t running on it constantly. There used to be cattle trails through there, now they’re green grass. What price is that to say, look, maybe that’s kept Carr McNatt alive a little bit longer, just by not having all that traffic on it. 

“The other side of that, Larry, that you didn’t mention is what’s the price of the facility as being appraised today? We have pristine fields on land that probably the value is going to go up and keep going up. Look at the racetrack that’s three miles just to the south of it. That doesn’t hurt.

“At the end, it’s maybe speculation, but that’s what a lot of people do. What’s that piece of land going to be worth in 20 years from now? Maybe it’s some of the cheapest dirt we ever bought. Somebody else is taking care of it for us. 

“There’s a lot of different ways to look at this. I’ve got more questions behind the doors (of exec session) than I do up front, but that’s going to pay. We need to look at it. I know it’s not exactly what we wanted to or signed up for, but I think working with the tenant I think we get a lot closer than we are today. I think it’s great to have this discussion, but I don’t think it’s a disaster any way.” 


Dick Powell

“This is deja vu,” Powell said. “This is about like it was six years ago when six people (on the council) thought it was a really good idea and I thought it was not a good idea. Lisa was not on the council at that point in time. 

“Does anybody sitting here think we’ve got got $1.3 million or $6.3 million worth of taxpayers’ money out of that at this point in time? That’s what we’ve spent, does anybody think we’ve got that? I sure don’t. I can’t see it. That’s what we’ve spent out there so far, and we’re six years into it and we’re going way over the amount as we go forward. 

“What happened is six years ago, the United Football League came in and lit up the place, everybody got really excited.

“And I’m going to call out our former city manager (Jim Thompson, retired Aug. 7). “If he was here, I’d say the same thing.

“Jim, in my mind, gambled with city funds in saying that was going to be a go, it was worth putting $20 million in it. If they’d stayed and everything worked out it would have worked out OK. It didn’t, it fell. And the peripheral things that were done were thought of later. The whole thing, really, was supposed to generate money based on that football team, which didn’t last.

“So we’re stuck with this property and right now, as I say, we’re $10.3 million into it and they’ve paid $1.3 million in rent, if my figures are pretty close to what they’ve paid in rent over the six-year period. So that’s a net loss right now of about $9 million. 

“And we’re talking really big money here. What could we have done with our recreation program with $10 million, or just taking that $3 million that we’re spending from the recreation fund and putting it right now out there? Every year is a $500,000 increment. What could we have done with that?

“The scary thing is everybody here that has this kind of butterflies and flowers idea of what we’re going to be facing going forward, I think it’s completely wrong. It gets worse. At the 20-year point, we could well be in over $40 million. That’s big money, $40 million is huge. 

“If the thing goes 20 more years, you just kind of double that, so it could be $80 million.

“And we’re talking about taxpayers’ money. If we’re supposed to be careful about anything, it’s taxpayers’ money. It’s not your money, it belongs to the taxpayers and they pay it in and I don’t think anybody up here thinks we got our value of it. It’s a big balance, it’s $11 million.

“I think that we really need to look at getting out of this contract or selling it somehow, because we just can’t stand it. This is taking too much money. 

“The contract that was drawn up should be used in a business school as the worst way in the world to draw up a contract if you’re on the part of the city. Now Ron did a great job. He came in here with a contract, our city manager bit and went through it. And it’s probably the worst contract you’ll ever read.

“But we’re stuck with it unless we get out of it.

“So I’m of the opinion that we need to try to get out of this contract or sell it to somebody and go on our certain way, because it doesn’t get better.”


Mayor Bob Jackson

“I agree with what several of the councilmen have said, that there’s two pieces to this puzzle,” Jackson said. “There’s a revenue side and an expense side. Certainly, there’s things that we probably haven’t done, should have done to have enhanced that revenue side. I don’t disagree with Dick, but by the same token, what’s done is done, we’ve got to be looking forward in terms of where we go from here and what are our viable options, because some may not have worked as well as well as we think they might work, and that’s really the discussion hopefully we’ll have in a few minutes (during executive session).

“One of the questions I did have, Larry, and I know we’ve talked about this off and on, there’s a provision in here that we could audit the CGPI. Have we ever done that?”

No, Rains responded.

Jackson asked if there are any intentions of doing that.

Rains responded, “We’ve discussed at staff and quite frankly we elected to postpone until we’ve had some additional dialogue. I guess my thought is that I’m not sure what the audit is going to produce, I believe they’re paying what they’re supposed to paying, likely would not produce any fair amount of revenues.”

Jackson said, “I won’t dispute Dick’s numbers at all. I do think that there is value as Matt has pointed out in terms of having fields we would have built anyway, not having that obligation to maintain them. Certainly, that doesn’t close the gap, I’m smart enough to know that, but I do think there has been some value. There is some value out there that we’ve gotten out of that.”


Final council questions, comments

Varela, noting that the original selling points listed favored pricing and scholarships for Casa Grande residents, asked if there is a list of how much as been awarded.

Rains responded that, “I don’t know that we have a specific list, but they have continued to provide scholarships and have various programming out there for our local students to take part in.”

Powell said another thing the city has to look at is that during the second 10 years of the agreement, the city is responsible for all capital maintenance at the Sports World complex.

“That’s when we start getting into those kind of issues,” he said. “It’s going to get more expensive for us maintenance-wise as we go along. 

“The audit you spoke of, we get an audit (of the city) every year. I really don’t know that we shouldn’t do an audit there every year, if our city does. I think it’s a good idea.”

Fitzgibbons said, “I understand your point, Dick. Of course, the numbers are a little disconcerting, but they do add value. There’s people all over the country and the world, people that come to our community. Maybe it’s not $4 million in benefits, but it is a great, great facility. 

“It’s really tough. I know we had to come up with some ideas. That’s why I would really like to see what their plans are. I hope they understand how concerned the citizens are and councilmen that want to make this successful, I really do. My kids lived out there when they were in the soccer. If we’re going to have to build fields to accommodate these kids, we really have to look at those numbers.”

Powell responded that, “And you’re right, but the amount of time that (local) soccer gets to use it is 11 days a year. Did you know that? Eleven days a year, that’s all. And they don’t get to practice out there. We don’t have practice fields, we’ve talked about where the kids are going to play. We don’t have practice fields. And if they had to they could play like they used to on the practice fields, but we can’t go out there and use those practice fields. 

“With the college moving in there (ASU Tech Prep high school) and taking up so much more space inside of that thing, it’s going to be really hard to use it. The educational process has the top priority and the Francisco Grande basically sets the usage of it. So it just hasn’t worked out where it’s been able to be used by our kids. I know some that went and thought they could and got run off. For 11 days a year out of a million dollars a year, that’s $11 million right now.”

Fitzgibbons asked how much the city would receive from the 7 percent of revenues paid by CGPI/Sports World from the high school lease.

“We were estimating that the revenues in year one would be in the $70,000 range,” Rains responded.


Grande Sports World/ASU Preparatory Academy questions still unanswered

(Posted July 10, 2016)


(Scroll down page for earlier stories and financial charts.)



Although it has been announced that ASU Preparatory Academy will begin operating next month at Grande Sports World and open houses have been scheduled, no word has come from Casa Grande officials on whether the ASU/Grande sublease will be approved by the city.

No announcement has been made about how much income that sublease would bring to the city.

The Sports World facility is owned by Casa Grande, with the operators pledged to pay the city 7 percent of income. So far, the payments are far behind.

According to a financial sheet as part of the presentation before the City Council during a study session last Oct. 19, for calendar year 2015 the payments should have totaled $1,178,000. The actual payment received totals $209,396, or $968,604 less than promised. At that time, payments were $2,781,375 behind since the beginning of the agreement.

Grande Sports World and the school appeared before the Planning and Zoning Commission during the June meeting to request a conditional use permit for the school. That was granted, but left unanswered the question of how much the lease would cost and how much the city could expect to receive.

(Scroll down to that story.)

When that direct question was asked from the audience, Tim Alai, general manager of Grande Sports Academy and Grande Sports World, did not give a direct answer.

“As far as the arrangement between ourselves and the city, people use the word debt and and the word rent, but actually the formation of the agreement is revenue shared,” he said. “We pay 7 percent of every dollar that is contributed to the either the building or the fields.

“As far as the amount of debt or rent, it’s not the actual basis, it’s a portion of revenue, so 7 percent is paid to the city.” 

CG News asked City Manager Jim Thompson where a copy of the lease could be obtained find out how much  that 7 percent would be.

His response, in its entirety, was:

“The agreement is between Grande Sports World and ASU. We will get in accordance with the FLUA 7 percent of all revenue generated which is the original agreement between the city and Grande Sports World.”

Councilman Dick Powell has brought up the issue during three City Council meetings, contending that the council has to approve the Sports World/ASU sublease.

During the July 5 meeting, he said, “I had mentioned last time, I will just mention in passing again, is I had Sylvia Mejia (the charter school director) come into my store and she said I’m doing the advance PR on the school, the ASU.

“And I said, you know, we haven’t been approached, we don’t know a thing on council, and we’re the ones that have to approve it.

“So I think she got with (Deputy City Manager Larry Rains) and I think that’s going to go through the process with the council. The city has to approve it. You can’t bind a future council and since we have (City Manager Thompson) sign six years ago, I’m hoping we’ll be able to get Larry to sign for us during this time.”

Rains, contacted by CG News, said, “the sublease agreement is between Grande Sports World and ASU charter.  The city is not part of that agreement. There is a clause in the master lease which specifies that a sublease requires the city’s consent, which is traditionally done administratively. 

“I am working with them now to ensure that the sublease documents include a provision that results in the city receiving the 7 percent of the gross revenues as a result of the use of the facility.” 

Still unanswered is whether Grande Sports World followed the requirements of the master agreement with Casa Grande Performance Institute/Grande Sports World with the city.

One section of that agreement reads:

6.8  CGPI Right to Enter into Subleases. CGPI shall have the right to sublease all or a portion of this FLUA, provided, however, CGPI must first obtain City's written consent. Any sublease without City's prior written consent shall be voidable at City's election. CGPI shall notify City in writing of CGPI's intent to enter into a sublease, the name of the proposed sub lessee, information concerning the financial responsibility of the proposed sub lessee and the terms of the proposed subletting, and City shall within fifteen (15) days of receipt of such written notice, deliver to CGPI the City's (A) consent to such proposed sub lessee and the terms of the proposed subletting; (B) refusal of such consent; or (C) request for additional information, in which event the City shall have fifteen (15) days after receipt of the information in which to respond as provided in (A) or (B). City's failure to refuse consent within the timelines set forth above shall be deemed to be consent to the proposed sub lessee and terms of the proposed subletting.”

The question is, if Councilman Powell is correct in saying the City Council knew nothing about the sublease, did Grande Sports World not follow the agreement or did city management not inform the council.

There has been little publicity about the situation.

The Casa Grande Dispatch story about P&Z approval of the conditional use permit for the school did not mention the financial questions, nor did a lengthy story about the school in the Sunday, July 10, edition. There has been no mention in the Dispatch about Powell’s contentions during City Council meetings.


No answer on how charter school lease would help with lagging payments

(Posted June 5, 2016)


The school staff report is HERE


Scroll down page for earlier stories detailing the situation with the sports complex being unable to meet projected repayments to the city.



Approval of a conditional use permit for a charter high school at Grande Sports World left the question of how much the lease for ASU Preparatory Academy will be and what impact that amount will have on the lagging payments by GSW to the city, which owns the building.

According to the presentation before the Casa Grande Planning and Zoning Commission during Thursday night’s meeting, the school, affiliated with, but not owned by, Arizona State University, will use 16 existing classrooms in the Casa Grande Performance Institute/Grande Sports World complex on Gila Bend Highway just east of Francisco Grande Resort, operating under a five-year lease. The goal is 300 students each year, with 150 the first year, broken down as 90 from the area and 60 who are enrolled in the soccer academy at GSW.

As written, Grande Sports World was to make payments to the city that would eventually cover the $20 million project that includes eight multi use fields and the 59,000-square-foot training facility featuring a weight training/exercise area, therapy center, classrooms, four complete locker rooms and a series of meeting rooms.

That has not happened.

According to a financial sheet as part of the presentation before the City Council during a study session last Oct. 19, for calendar year 2015 the payments should have totaled $1,178,000. The actual payment received totals $209,396, or $968,604 less than projected. At that time, payments were $2,781,375 behind since the beginning of the agreement.

As Councilman Dick Powell has pointed out, that means the city has to draw on its taxpayers supported General Fund to make up the difference so that bond payments can be made.

No mention was made of how much income the school would bring until Debra Shaw-Rhodes, who was in the audience, posed the question.

“I’m very happy to see that Grande Sports World is doing something to help to take care of the debt,” she said. 

“My concern is, as they take on this ASU school how much of that are they going to make payments to the city? 

They have not been paying their debt to our city and they’re millions of dollars in debt and it’s just growing.”

Shaw-Rhodes is a member of the city’s Board of Adjustment, but was speaking for herself.

Commission Chairman Mike Henderson, noting that the lease agreement is something negotiated with the city manager, said he would ask Planning and Development Director Paul Tice for a brief explanation.

“I understand that,” Shaw-Rhodes responded. “But I also know that whenever we’re trying to take care of the debt we just need to talk about and get it out there so people think about it. I understand it, I’m trying to get it in the minutes.”

The agenda item was about a conditional use permit, not finances, Tice told the commission.

“The financial arrangement regarding the lease really is irrelevant to the land use decision before the board tonight,” he said. “We have separate review criteria, the terms of the lease really are kind of irrelevant to your decision.

“I agree with the speaker that it’s very important to the community, but not necessarily to this land use decision.

“As to the terms and the payment, frankly I’m not privy to that information, so I can’t even share it with you.

“But I’m assuming that between the City Manager’s Office and Francisco Grande and the ASU Preparatory Academy they have discussed the financial arrangements. That would, I assume, also would be public record once that arrangement has been made. I don’t know at this time what the status is.

“There surely can be a public inquiry, public records request, and then the public information will be released.”


(CG News has asked City Manager Jim Thompson for that information.)


Tim Alai, general manager of Grande Sports Academy and Grande Sports World, also gave no direct answer on how much money the charter school lease would bring.

“As far as the arrangement between ourselves and the city, people use the word debt and and the word rent, but actually the formation of the agreement is revenue shared,” he said. “We pay 7 percent of every dollar that is contributed to the either the building or the fields.

“As far as the amount of debt or rent, it’s not the actual basis, it’s a portion of revenue, so 7 percent is paid to the city.”

During the October study session, city Finance Director Doug Sandstrom pointed out that, “by June 30, 2020, at least $7 million of cumulative rents would have been paid to the city of Casa Grande. If that $7-million accumulative rent was not paid, CGPI would have to pay the city the difference within 30 days.

"So within 30 days of June 30, 2020, if they have not paid us $7 million they would have to either pay us the $7 million or in lieu of that they pledged the security of the Francisco Grande resort. We have a non-recourse first deed of trust, so we would be able to foreclose on the hotel if they did not meet that guaranteed minimum rental payment.

"In the first five years of the agreement we've got the actual payments totaling $642,00. Over that first five years, the shortfall of what they thought they were going to get and what they actually got and paid to the city was $2,781,375."

Alai acknowledged the $7 million figure, saying it is understandably a concern for the community.

“We understand the financial requirements,” he said. “The terms of the rent and the payments is a function of revenue.”

However, Alai added, the Francisco Grande owners have been there since 1986 and have 135 employees, including himself for 26 years.

“The facility of the Francisco Grande and the golf courses, the 500 acres surrounding it, 100 percent debt free,” he said.

“They’re fully committed to the needs of the community. We provide a lot of different donations and services to the community.

“Also, we maintain the fields and we also have arrangements to reduce the costs of the operation of the building, and so forth. The Boys and Girls Clubs uses the fields for their soccer season. Also, we’ve had Mission Heights, we’ve had small groups. We’ve the Casa Grande Youth Commission and it’s also available for anyone in the city.”

The commission approval of the charter school conditional use permit was unanimous, with members Brett Benedict and Fred Tucker absent.


Powell statements on Grande Sports World/Performance Institute and rec center  

(Posted Feb. 12, 2016)


City Councilman Dick Powell posted these statements today following innuendoes, rumors, conspiracy theories and general inaccuracies on social media about the proposed recreation center and a suggestion that it could be at Grande Sports World, just east of Francisco Grande, which is also the subject of controversy because its payments to the city are not being made as agreed:


I want to address and attempt to enlighten residents regarding some of the issues raised regarding the recreation center:

• The original bond issue gave the City Council permission to build a recreation center, when, where and if they decided it appropriate 

• Please put aside the recreation center conspiracy suspicions, they do not exist nor will they.

• The original lease agreement with the Casa Grande Performance Institute was based on the presence of the United Football League which was supposed to produce enough revenue to pay the annual bond payments for the complex plus debt service. The league was an utter failure! The lessee was to make payments from gross revenue but without the UFL, revenues were negatively affected. 

• The city has been making the lease/bond payments with city funds because the Performance Institute only produces about 11 percent of the required bond payments.

• The project is not a public/private partnership or joint venture, because article 13.9 specifically prohibits that and declares the relationship is landlord/tenant or licensor/licensee. 

• The city has, in effect, been paying out public funds to the tune of $5.7 million through 2015 for a private sector business and allocates an additional $500,000 per year out of the recreation tax.

• I am the one who has advocated the Grande site for the recreation center, and only me

• The agreement stipulates that the Grande must pay a total of $7 million by mid-2020 or forfeit one single building, the Tower building only, and from that point forward, they would not be responsible to collateralize or commit any specific payment amount toward the $2 million per year average over the second 10 years. 

• Casa Grande’s debt obligation is: The 20-year C.G. Performance Center + Debt Service — $ 31.7 million; The 20-year total from the recreation tax — $10 million; public safety retirement deficit $35.7; for a total of $77.4 million and if we spend $25 Million, including debt service on our recreation center – the combined debt is $102 million!

• If we were able to agree to let the Grande keep their hotel and the city receive back the 58,000-square-feet building, the eight performance fields on 50 acres (that we will pay for anyway) it would be wonderful if we were able to incorporate the Performance Center into an asset used by the city.

• I feel we are really short changing our community to settle for 10 acres (for the proposed recreation center) in a residential cul-de-sac that prohibits field lights after dark and has no room for expansion. We’ve been told to not expect anything like Maricopa’s Community Center but a smaller one like Apache Junction’s. This is small town thinking folks!


DISCLAIMER: All the above represents Dick Powell’s opinion only and not City Council or the city of Casa Grande in any way.


City continues to wrestle with Grande Sports World money pit, the future

(Posted Jan. 29, 2016)


Scroll down on this page for reports, with documents, on the Performance Institute/Grande Sports World problems from an October 2015 study session and a May 2015 Parks and Recreation Advisory Board meeting.



A City Council study session on the community recreation center is set for 6 p.m., Monday, Feb. 1, at City Hall, 510 E. Florence Blvd.

The posted agenda lists it as "Presentation and discussion regarding recreation community services programming report."

No supporting documents or reports have been posted.



Because of the continued inability of Grande Sports World to make its payments to the city, the argument has been raised that perhaps the city should just take back the whole operation, using the location for the proposed community recreation center.

A counter argument raised is that there are other costs involved in that operation, so look carefully before you leap.

During a Jan. 19 City Council study session for an overview of Casa Grande's financial outlook, Finance Director Doug Sandstrom said the remaining principal of the $11.625 million bond issue for the Casa Grande Performance Institute is $8.155 million, with the city paying $1,238,115 a year in principal and interest. Sandstrom said $500,000 of that is from the half-cent recreation/economic development sales tax, with the rest coming from the taxpayer supported city General Fund.

Those bonds were issued after a City Council action, not voter approval.

The original concept in creating the parent Performance Institute on acreage just to the east of Francisco Grande resort was that Grande Sports World operators would be bringing in enough money producing activities for them to be able to repay the city. 

That hasn't happened for a variety of reasons.

Originally, the United Football League was supposed to make the Performance Institute operation its training headquarters, bringing in large amounts of money. The UFL later folded. Efforts by the Grande Sports World operators to bring in other major attractions have failed.

Also failing is the ability to meet the payments to the city.

The chart at the left, handed out during an October study session, shows the arrears at that time.

During that study session, Sandstrom said, "The agreement calls for guaranteed minimum rental payments.

"And what that was, was that by June 30, 2020, at least $7 million of cumulative rents would have been paid to the city of Casa Grande. If that $7-million accumulative rent was not paid to us, CGPI would have to pay the city the difference within 30 days.

"So within 30 days of June 30, 2020 if they have not paid us $7 million they would have to either pay us the $7 million or in lieu of that they pledged the security of the Francisco Grande resort. We have a non-recourse first deed of trust, so we would be able to foreclose on the hotel if they did not meet that guaranteed minimum rental payment.

"In the first five years of the agreement we've got the actual payments totaling $642,00. Over that first five years, the shortfall of what they thought they were going to get and what they actually got and paid to the city was $2,781,375."

During this month's financial study session, Councilman Dick Powell said, "Revenue bonds and the city funding of one-half million annually from the recreational tax collection just out of taxpayers is a total of over $43 million in 15 years from now.

"The inability of the Institute to generate sufficient profits to make required payments annually isn't going to get any better. They are just as much a victim of the United Football League as the city is.

"We need to work together to stop bleeding without jeopardizing Francisco Grande to get this elephant off the city's back."

Powell said the city debt will continue to mount, looking at more than $70 million, if the Sports World payments continue to be in arrears.

"And how long can we go?" Powell asked. "If we go the whole course, it's going to be very disastrous, so I think we really, really need to address that in the short term.

"I know we're going to get together and talk more about this (during a Feb. 10 council budget retreat), but that's got to be a priority, is decide what we're going to to do about that."

Powell then threw out his alternative proposal.

"If there was an opportunity to either sell or include the Institute property within the city's planning it would fit the bill with the 58,000-square-foot building and 50 acres of land being considered for the community center," he said.

"It would cost taxpayers less by far in secondary tax increases than our current proposed location," on Peart Road between Cottonwood Lane and Kortsen Road.

The Grande Sports World complex includes eight multi use fields and the 59,000-square-foot training facility featuring a weight training/exercise area, therapy center, classrooms, four complete locker rooms and a series of meeting rooms.

Mayor Bob Jackson said that during next month's budget retreat the problem needs to be discussed but there also needs to be consideration of side issues.

"I think one of the things that would help when we get ready to talk about this," he said, "is we also run eight or nine soccer fields out there. And we can argue how many days a year they're used, but if we go back to where we were when we started this, part of the plan had been we needed fields for our soccer programs.

"And whatever we do — just food for thought, just like Dick says — whatever we end up doing on the 10th, if we decide we're going do something with the Performance Institute we need to either decide if we're going to stop those programs because we don't have capacity on the current fields.

"If we were to not have access to those fields, where would we replace those programs at? Because if we're going to have to replace those similar fields someplace else, what have we gained?

"And I guess I would like to see what the split is between the building and the fields so that we get a better handle on how much of that was stuff we would have spent for our own recreation programs going back six years ago or five years ago, whenever we did that."

Powell responded that, "Those fields are either going to belong to the city or the Performance Institute. And if they can't pay, which they haven't been paying, the city takes them back and we have all that that we had to offer."

Jackson said the council needs to know the actual use of the fields.

At present, Boys and Girls Clubs director Matt Lehmberg said, the club uses fields eight Saturdays a year for its soccer program. Soccer training is done at other city locations.

"If we were take that program over, how many of those fields would we need if we were going to take it over?" Jackson asked.

"And conversely, there's a maintenance agreement we have with Francisco Grande that they pay the maintenance cost of that, so we're going to absorb that maintenance cost, as well.

"We need to know what those numbers are, so when we start talking about it we have all that stuff in front of us."

During the October study session, a chart showed the estimated annual maintenance cost to Francisco Grande of $589,244.

Powell said the $500,000 a year from the recreation sales tax "would go a long way toward maintaining the fields."



Powell statement on Facebook amplifies on his views

(Posted Jan. 29, 2016)


Following a sketchy story in the Casa Grande Dispatch (HERE) about Grande Sports World/Performance Institute/community recreation center comments during a Jan. 19 council study session, City Councilman Dick Powell posted this amplification of his views on Facebook on Jan. 25:


To start this conversation off, I would first like to let you all know that there are work sessions, had by council, that happen outside of council meetings. They are open to the public, but are not televised unfortunately. I would love to see the work sessions publicized on television and the city’s website, to allow you all to see the discussions and in depth analysis that goes into projects such as the rec center. 

Transparency is so vital to keeping the lines of communication open and to keep voters informed. 

The following statements are mine alone, and discuss further the information behind the article in the Sunday Dispatch. 

• In 2010, the city of Casa Grande and the Francisco Grande joined into an agreement for the city to purchase 50 acres and build a 58,000-square-foot building and practice fields for the United Football League, referred to as the Casa Grande Performance Institute. The Francisco Grande would make annual rent payments equal to the yearly amount of money owed for revenue bonds from their operation of the training center.                                                     • Most city bonding is done with general obligation bonds where the city alone pays off the bonds that voters must approve in advance. The funds are generated by secondary property tax increases. 

• Revenue Bonds are designed to apply the revenues derived from the project to pay for bond debt without cost to the voters. No approval was deemed necessary from voters for the Performance Institute project.

• Unfortunately, the United Football League was mostly hype and disappeared. The city and the Francisco Grande were both victims!

• The performa developed never came to fruition and the Grande was unable to make the payments forecast. The city in the first five years has taken out over $5 million from the city General Fund to make bond payments. 

• The General Fund is an operational taxpayer fund that pays for personnel, equipment, infrastructure, employee raises, new hires and basic needs of the community.

• The city also pays the performance institute $500,000 a year for operational cost out of the city recreation tax.

• It’s estimated that over the next 15 years over $28 million will be due to repay the revenue bonds and another $7.5 million for operations. In total, the cost is over $43 million.

• It would certainly be my preference to sit down with the Grande and dissolve the original agreement, leaving them with the Grande and the city with the sports center. 

• The Grande put their hotel and only the property it sits on as collateral for not making a $7 million payment by 2020. If they forfeit, the city is certainly not able to manage it and likely employees would lose their jobs.

• The present plan and location for the community center is on 10 acres and can’t use outdoor night lighting for activities. The 10-acre property isn’t nearly big enough to grow with the community. When we ask the public to pay $27 million (my guess with debt service) worth of G.O.bonds through your secondary property tax assessment, it needs to be done right.

• If the city and the Grande terminate their present agreement, there are 50 acres with eight playing fields and a 58,000-square-foot building that would fit the long range plans and opportunities of a city community recreation center and we own it. It wouldn’t require nearly as much to retrofit the interior as to start from bare ground. This would be a way to have a bigger building on a much bigger property. Room for tennis, pickle ball, aquatic program free standing, football, soccer, basketball, etc. for much less money.

• We are presently using taxpayer funding to pay off obligations for a private sector business. What benefit does the city enjoy? The Boys and Girls Clubs soccer teams aren’t allowed to practice there but are allowed to use three fields for games 11 days per year. In 2015, the city paid the Performance Institute’s bill of $ 1,085,500 plus $500,000 operational, for a total of $ 1,135,500. That equals a rental cost of $103,227 per day!!!

• We need to stop our small town thinking regarding the Grande being too far out of town. The community opened up the new high school (now City Hall) in 1921. Arizona had only been a state for nine years and the building was impressive. I asked two old timers that had attended the school in 1921 what the community along the rail road thought about the new building. They thought it was too far out of town.

• I have put this idea forward believing, in the long run, it’s the best idea for longevity and by far the least expensive for the taxpayer. Casa Grande is going to grow in all four directions and where in town center can you find 50 acres for sale? People drive regularly to Ak Chin because it’s entertaining. We can do the same thing in Casa Grande. Let’s do it right!


The Grande Sports World 'money pit' problem



Council must decide what
to do about lagging
payments, increasing deficit

(Posted Oct. 25, 2015)


Scroll to next story on page for a report from the Parks and Recreation Board meeting in May, covering much of what was discussed during the City Council's Oct. 19 study session.


The payments schedule is HERE


A financial handout from Councilman Dick Powell is HERE


The presentation to the council is HERE



The City Council continues to wrestle with the problems of a money drain from the Casa Grande Performance Institute, also known as Grande Sports World, located just to the east of the Francisco Grande resort hotel.

As written, Grande Sports World was to make rent payments to the city that would eventually cover the $20 million project that includes eight multi use fields and the 59,000-square-foot training facility featuring a weight training/exercise area, therapy center, classrooms, four complete locker rooms and a series of meeting rooms.

That has not happened.

According to a financial sheet as part of the presentation before the council during a study session on Oct. 19, for calendar year 2015 the payments should have totaled $1,178,000. The actual payments received totals $209,396, or $968,604 less than promised. The payments are $2,781,375 behind since the beginning of the agreement.

As Councilman Dick Powell has pointed out, that means the city has to draw on its General Fund to make up the difference so that bond payments can be made.

The situation is far different from the rosy financial predictions made when the city agreed to the contract with the CGPI/Sports World backers, who had said the operation would be home to the United Football League, an operation that would draw in more than enough money to make all rent and other payments. Backers included Francisco Grande Resort, which put that complex up as collateral during the first 10 years of the bond payments.

The UFL folded, leaving CGPI to attempt to bring in other operations. So far, a soccer operation has started, but promises of a golf academy run by Nick Faldo never happened, hopes for lacrosse and tennis operations have not happened.

As was pointed out during a Parks and Recreation Board meeting in May, the agreement between the city and CGPI was based on financial projections from the UFL operation. After the UFL folded, a new financial performa based on lesser operations was not drawn up and the agreement was not rewritten.

The original agreement was approved by City Council action (with Councilman Dick Powell opposed), not a public bond vote.

Study sessions are to hear presentations and discuss issues. No formal action can be taken until the matter is put on a future agenda.


Both Community Services director Bill Schwind and Finance Director Doug Sandstrom made presentations to the council during the study session.


Financials

The sports complex was completed in late 2009, triggering the agreement and the payments schedule.

"Overall, the project when we started was a $20-million project," Sandstrom told the council. "There was about $18.8 million of debt, with the remainder of the funding coming from construction sales tax and development impact fees. That debt has an annual debt service of about $1.58 million. It fluctuates slightly year to year.

"The intent of the debt service was that it would be paid $500,000 from our existing 0.02 percent recreational sales tax, projected CGPI rentals, that's the rentals that we would get from the use of the facility from CGPI academy and all their activities, and then in the early years there would be some sort of General Fund subsidies until those rents got to a point that they would exceed the cost of the debt service and then they would be paid back from those rents.

"The rents revenue when we talk about that in relation to CGPI, it is composed of 7 percent of the gross revenues generated by the Performance Institute, by the academy.

"It has standard exclusions. When I say standard, they're pretty much what you would see in any agreement. Anything that they have to reimburse to the city is not included as the gross revenue. Any taxes that they collect, so when they sell something that has a sales tax they're going to collect sales tax, that sales tax portion is not included as part of it. Any refunds they issue. They specifically exclude any revenue from Francisco Grande golf course or the hotel. They're separate from CGPI. So it's very standard types of things that are excluded from that gross revenue calculation.

"And then on an annual basis it's adjusted from utility costs, based on where they are in relation to the target rents.

"Other expenses that we have out there on an annual basis include field light usage and pump station electricity. And those are reimbursed by CGPI on a 100 percent basis. We send them a copy of the electricity bill for the pump station electricity, they in turn pay use back for that. And for field lights usage they give us a usage by hour and then we apply a rate to that and then they reimburse us for that. We bill those quarterly."

The agreement calls for guaranteed minimum rental payments.

"And what that was," Sandstrom continued, "was that by June 30, 2020, at least $7 million of cumulative rents would have been paid to the city of Casa Grande. If that $7-million accumulative rent was not paid to us, CGPI would have to pay the city the difference within 30 days.

"So within 30 days of June 30, 2020 if they have not paid us $7 million they would have to either pay us the $7 million or in lieu of that they pledged the security of the Francisco Grande resort. We have a non-recourse first deed of trust, so we would be able to foreclose on the hotel if they did not meet that guaranteed minimum rental payment.

"In the first five years of the agreement we've got the actual payments totaling $642,00. Over that first five years, the shortfall of what they thought they were going to get and what they actually got and paid to the city was $2,781,375."


Facility use

Usage at the academy is split between Grande Sports World and city organizations, along with some special events such as the Nike-sponsored cross country run.

"Fifty one percent of the time out there on the fields basically it's dedicated to academy use," Schwind said. "There are other community groups both from the adult sector and youth sector that do use that facility on a regular basis. The Boys and Girls Clubs has a pretty extensive soccer program that uses the facility on Saturdays during the day. 

"What we've calculated over the course of the history of this facility is over 8,000 hours of light have been generated out there as far as us turning the lights on for them to use that facility in the evening. And that's fairly substantial as far as serving the local community, per se, and utilizing some of the facilities that are out there.

We figure there's three or four hours an evening that basically lights can be used; in the summertime a little less because it stays light longer. But on an evening type basis it does get used quite substantially.

"We were looking at the percentage of opportunity that's out there, and from the 8,000 hours (of light) that were used we're capturing about 20 percent of opportunity time. So there is about an 80 percent chance for growth for additional evening use out there.

"From a perspective of field need, I think when this complex was being thought about being built, obviously if you look at the 8,000 hours and the number of people that are utilizing that facility they would be playing somewhere (else) in town. And with the limited amount of facilities that we do have, this is providing pretty recreational service or opportunities for them that we really like to take advantage of."

One advantage to the agreement, Schwind said, is that CGPI is responsible for maintenance of the 21 acres of playing fields, not the city.

"Again," he continued, "those are very high quality of fields, sand-based football, soccer fields that do take a lot of tender care to maintain them at the level that they are. When you're hosting World Cup Soccer and the athletes in the spring time, they don't play on your everyday fields. These fields have to be kept in a very, very high quality condition and it is expensive to do that.

"Based on some information that we've pulled from the National Recreation & Parks Association, to maintain fields of that quality you're looking at about $27,000 an acre ($27,242), which equates to annual cost of just under $600,000 a year ($589,244).

"Throw in some parking lot maintenance and some lighting costs ($21,373 a year) and that type of thing and we're looking at close to $600,000 a year that we would have to be putting out if those fields were under city maintenance and city operation."

Expanded uses

"Where we go and what we try to do now," Schwind said, "is obviously maximize city use by evaluating program needs. We meet quarterly with a lot of the user groups in town trying to figure out what their needs are, where they're playing and when they can play and how we can grow the program from a community recreation side to regional recreation opportunities, statewide recreational opportunities, speaking with the Arizona Interscholastic Association trying to bring statewide soccer tournaments here, regional tournaments here. The facility is there and should be and could be used.

"I just think a little bit of marketing and getting some further word out would help us grow that program. And then work with our partners out at CGPI to grow the academy and their various sports models that they use to put their (financial) performa together to meet the income projections."


Marketing

Councilman Matt Herman has questions about what marketing is actually being done.

"I seem to remember that when we went into this that CGPI was going to do that marketing," he said. "How are they marketing that program? Are we doing a lot of the marketing for it, how does that work right now?"

Schwind responded that, "The marketing that I see is basically through our web page and our social media. CGPI is very active in their marketing. I mean, they go nationally, recruiting not only the athletes to serve, to work and reside there and perform in the academy. In their travels around the country, in the nation, playing in nationally recognized tournaments, Casa Grande's very well represented there. From newspaper stories that we've seen getting Casa Grande ink around the country is very positive. 

"And I think that in all of the years that this academy has been operating I think they're hitting 100 percent as far as placement for these individuals that participate in the academy, to either sign college scholarships contracts and/or professional contracts with soccer, as well as European soccer leagues. 

"So from a marketing perspective it's almost worldwide. I couldn't tell you financially how much they invest in that, but what they do I think nationally in getting the academy and Casa Grande recognized is pretty extensive."


Five-year plan

Councilman Ralph Varela said there has been talk that CGPI has a five-year plan to deal with the missed payment amounts to the city. 

"Has there been discussion on what that five-year plan looks like?" he asked.

City Manager Jim Thompson responded that, "There has been some discussions with the ownership of CGPI as to what that plan will look like. It would probably be best to hold an executive (closed) session because it would be discussion around the contract itself and negotiations regarding that, plus the information we have is probably of a confidential nature. So really, probably a different discussion at a different point to have an exec situation to discuss specifically about the possibility of changes."

Under state law, closed executive sessions are allowed for discussion of financial (including contracts) and personnel matters.

The CGPI has attempted to add other sports operations over the years, Thompson said.

"If you recall," he continued, "the golf was near and then something transpired there and scenario didn't come to fruition. Obviously, lacrosse and tennis were the other two components that were in the original performa budget that they provided. None of those areas have been added to date. All they have added is soccer, which was about 20 percent of their expected revenue stream.

"There was a fifth component, which was physical therapy and some others. There has been an individual, or a company, added out there of recent that is performing physical therapy and that's why we see somewhat of the increase in the revenue stream, as well as the changes in the fee structure.

"The first year and a half or two years that they did the program out there they offered an inordinate amount of scholarships to bring in some of the youths and start the program up. Every year, we see less and less scholarships being offered to the students and more of the paying type customer utilizing the facility.

"So, there has been some changes in their modeling and their business plan.

"But, again, it falls short. Falls short that they haven't added the other sports, either. 

"When we look at the numbers and what they're generating, they're getting pretty close in 2015 as to the 20 percent mark for which they should have been hitting in soccer in the program. So they're closer on soccer, they just haven't added the other components to generate that additional revenue associated with their original performas that they provided."

Varela also asked if CGPI is "getting to a point where they're more being able to better crystalize what the intent is in terms of what it's going to look like, will get up to those numbers?"

Thompson responded that, "I believe so, at least in two of those categories, and those two categories would be probably on the golf side and more so on the tennis side. The tennis side would take a pretty good capital infusion on two parts: one, for dormitories, because they'd need to add additional dormitories, and number two, the construction of tennis facilities out there. And I would suspect that probably by mid December we should have a definite timeline associated with those, but we don't have that today as to what those dates would be.

"We've had scenarios where they're going to look at bringing in lacrosse and then it doesn't come to fruition other than some major tournaments. And I think those who have gone out to the major tournaments have seen the amount of people that come into the community and usage associated with all our hotels during those tournament times.

"But they have not instituted or brought on line a full program. I think lacrosse was the last one they wished to look at adding, just because of the maintenance associated with the fields. That sport seems to tear up the fields to a much greater than that of soccer. I think they're cognizant and concerned about bringing that sport on prior to bringing some of the others on, having different clientele than what soccer has. It seems to be a different social demographic associated with those players and the amount that they're willing to pay for academy type performance and some of the scenarios that they have out there."


Reevaluation?

Varela wanted to know if the CGPI performa will be reevaluation during future discussions.

"Actually not," Thompson answered. "There wouldn't be any revisions, it would just be probably a change on the rec payment side. Probably increases as those components are added. But I don't know how substantial those would be, short of adding additional dormitory space for the occupants of the academy.


A hard step

Varela said that based on the payments history so far, "for them to be able to get to where they need to be by 2020, that's going to take a real substantial jump and if some of these programs are in the developmental stage it's just going to be real hard."

Thompson agreed.

"We concur," he said. "I think that's part of the reason for the discussion this evening. But I think more so that even if they were to see substantial jumps you're still going to have the shortfall of $7 million. 

"Have we have discussions regarding altering the agreement or deal with issues like that? Yes, but one thing that continues to present itself is that that 2020 amount is $7 million and obviously is that we're not moving off of that. And so that kind of hampers any ability to further those discussions, because our position is we want that guarantee in and any shortfall associated in year 10 they would have to make up that difference or we would have an asset (Francisco Grande) for which we're in first position on to take over and either sell or market … or otherwise deal with it accordingly at that point. And we've started to look at our options associated with that, as well."


Powell opposition

Councilman Dick Powell was the only council member to vote against the original agreement.

"Well, I'll tell you," he said, "I think you can take a pig and put fancy dress and ribbons on it, but underneath it's still a pig and this whole deal is not a good deal.

"And I was the one that did not vote for it to begin with. We had a terrible deal. We were gambling on a football league. The bride we took to the dance was the UFL. And it was a bomb. Three years and it was gone, disappeared, left a lot of people holding the bucket. I think that it's gone downhill basically ever since."

Powell said he is unhappy that the city has to dig into the General Fund to cover payments that are not the amount promised.

With the latest CGPI payment of $200,293, Powell said, the city has so for had to cover a CGPI shortfall of $4,629,414.

(He updated his handout after seeing the latest figures during the presentation.)

"That's money out of our General Fund," he said. "We've got a group of department heads sitting here and employees from the city and that money could be going to the city instead of going out there and down a money hole, in my opinion.

"I think the original performa was based on the United Football League, I know it was. And if it had worked, I think we'd be fine. I think the way they had planned to bring in everybody, and nobody voted on it thinking anything other than the football was going to be successful, and it didn't prove to be that way. 

"But sometimes there comes a time to check your cards and fold if they're not good ones.

"The city in 2009 bought 50 acres for a 59,000-square-foot training center, built six grass and two synthetic turf fields. The city would build it, the Francisco Grande would operate and UFL would provide significant year around use. That was a pretty good plan had the league panned out. It did not. I think it was a complete bust, they disappeared, they left a lot of people holding the bucket. And I think the Francisco Grande was just as much a victim as we were for what happened out there."

As part of the original agreement, the Francisco Grande complex was put up as collateral for the agreement.

If it comes to a point where the city has to foreclose on Francisco Grande if the $7 million required payment is not met in 2020, would that be just the hotel or the entire Francisco Grande complex, Powell asked Sandstrom.

Sandstrom responded that, "It was a non-recourse first deed on the Francisco Grande Resort. Exactly what that entailed, I don't know."

Powell continued that, "I don't either but I do know that if you want to go ahead five more years and this doesn't work. which of you want to go out there and tell the employees they're fired because the city doesn't know how to run the place?

"And this is an iconic community asset that's been there for years, Francisco Grande. Giants used to train there. I mean, this is something we can't afford to let fail as a community.

"And I don't see how they can do it. The Francisco Grande is just not going to be able, with what they're operating with right now, to generate the kind of money to meet the needs that they're going to have to. They're going to have to have $7,154,000 generated between now and 2020."

Powell said he does not know what that equity in the Francisco Grande resort would be worth.

"Are we the least bit covered by the equity they may have or not?" he asked. "I really don't want to know that because I don't want us to try to take it from them."

Mayor Bob Jackson said that the equity question is a point that will have to be discussed when the council goes over the whole issue during an upcoming financial retreat session.

He said that, "One of the concerns I do have — and I will express that I have absolutely no basis for it — but I remember when we started these discussions with the Francisco Grande seven, eight years ago they were concerned about their long term viability. They looked at the Performance Institute concept as a way they could make the hotel more financially stable. So if we pull that component out — and I agree, Dick, it's an iconic place — what kind of unintended consequences would that have?" 

"And so maybe the direction to give Jim (Thompson) and his staff is as we get ready to talk about this at a retreat, let's look at all those options, put them all on the table. At least that way, we can have the discussion, have the information sitting in front of us."

Councilman Karl Montoya said the entire financial picture, including possible foreclosure on Francisco Grande needs to be explored further, but also pointed out that there is value for the city in the present CGPI complex.

"It's not like we're going to spend $30 million and have nothing at the end of the day," he said. "We're going to have a park, we're going to have something. I don't want to distract from what Mr. Powell said, but the thing is that at the end of the day it's not like we spent all this money and we're left with zero."

Sandstrom agreed.

"Correct," he said. "Even if we take the Francisco Grande hotel out of it as the backstop of it, we have the Performance Institute itself, the buildings, plus the fields and everything that Bill went over that is made up out there. And that's something that would be owned by the city and is ours for community use and our use. So that is something that is an asset."

Montoya asked if Sandstrom had a estimate of the value in dollars. Sandstrom said he did not.

"I think that would be very important to get and to look at," Montoya said, "because it's part of the equation at the end of this. At the end of the day, we end up with a regional park on the west side of town, for what's that worth. It may be worth 10 times the money down the road, so that's something to look at as well."


Scrap it?

The whole agreement needs to be scrapped, Powell said.

"I think basically that the present agreement isn't working for either party," he continued, "and I don't feel the facility can generate sufficient capital to meet the performa.

"Let's sit down with Francisco Grande and scrap the present agreement and market the CGPI for sale, lease or to be absorbed by another city use.

"We're just throwing good money after bad right now. They're not going to do it. And kicking this down five more years to a City Council that's sitting then that doesn't include most of us is not fair."

Powell said it also bothers him that while the agreement has the Francisco Grande for collateral during the first 10 years, that safeguard disappears during the second 10, "which to me makes no sense."

There could be other uses for the CGPI complex, Powell said.

"I think right now is the time where we need to look at it," he continued. "I think there's other uses it could be put to in our city. I think it's got plenty of acreage. There's a lot of things that could be done," perhaps even  consideration as the site of the proposed community recreation center.

"I mean, there's some things we need to look at on what we're doing instead of saying this is good for the kids. The Boys and Girls Clubs uses it 14 days a year. And they use about half the fields, they use about four of the fields. We could have built those fields out at the rodeo grounds, which were planned originally, on the land the city owned and had a whole lot cheaper situation. But that's not the case right now.

"We were talking about looking at getting our financial house order and I think that's one thing we really have to look at hard.

"One of the first he (Sandstrom) told me as financial director is this is a big money hole. And I believe you. It is and we shouldn't let it go on. It affects affects our taxpayers, it affects our General Fund and our ability to do things for our employees and our city and we need to end this. We try to get rid of that agreement. They're not going to make it, it's not going to do them any good. And go our separate ways.

"That's my opinion. I want to say I'm not attacking anybody at all, whatsoever. I just think that when you have a bad situation in the city you need to step up and address it and say what's the best thing we can do with it, how to we settle this and move forward. And I think that's where we are right now."

Montoya said, "I think Mr. Powell's totally right, we need to sit down, and not that we want to but we may have to look at being the marketers of it. I think Francisco Grande and the Performance Institute, some of their stuff hasn't come to fruition so I think we have to have a meeting with them and say, hey, look, what plan is going to come up, where are we going to go from this? 

"You're right, we can't wait any longer. We've got to make some plans today and say, hey, look, we're going to start plugging in our numbers and see what we can do, because the numbers are definitely too low."

Councilman Matt Herman said that when the proposal was first made to the city, the CGPI backers "had a great plan, had a great business plan. Didn't work out. They were supposed to be capitalized, I think, for four or five years on the UFL side, obviously that didn't pan out. It's very unfortunate, but something we've got deal with, addressing now, these five years in, because we're a good enough, strong enough city with staff and everything that we can figure this out. We know it's not going to take us down as a city by any means, but we've got to find a good way to deal with this."

Mayor Jackson added that, "Often times I just tell people it's helpful to kind of take a step back and look at where we were then and then look forward. And I do think that there were multiple components that were going to happen out there and the only one that's really happened is the soccer component.

"We can say, well, what would have happened if … It doesn't make any difference. We're here today moving forward on what's going to happen. And as Jim said, hopefully we'll get some information from the Grande on what's going on."

From the May 2015 meeting of the Parks and Recreation Advisory board

(Posted May 10, 2015)


The city's description of Grande Sports World is HERE.


Grande Sports World's own description is HERE.


The sheet showing losses in rent payments is HERE.


Another financial sheet is HERE.


Budget stats are HERE.



Fear of the Casa Grande Performance Institute, or Grande Sports World, becoming a continuing money pit is apparently one reason for reluctance of the City Council to go ahead with construction of a community recreation center.

The money to build the center is there, approved by voters in 2006, but a continuing reluctance has been how to come up with the money for its yearly operation.

Looking back at how many years the city subsidized the money losing golf course, the council was hesitant to put another subsidy onto the taxpayers.

(The golf course, under a professional management contract, turned a profit last year.)

That leaves Grade Sports World, which was projected to make far more than enough money to pay off the bond amounts to build it. 

The initial ballyhoo was that the $20-million project next to Francisco Grande hotel, would be home to the United Football League and other organizations. The deal with the UFL, already in trouble at the time, fell through, morphing the operation into Grande Sports World/Performance Institute, opened in 2010.

According to a summary handed out during the May 6 Parks and Recreation Board meeting, the projected rent payments by Grande Sports World/Performance Institute between fiscal years 2011 and 2014 should have been 

$2,246,000.

The actual payments were $433,228.

That's $1,812,772 in the hole.

That leaves the city having to cover most of the operational costs.

For the 2015 fiscal year, the city stats show transfer of $1,085,500 from the General Fund and $500,000 from the 2 percent sales tax for recreation. The recreation tax has been used for bond repayment.

Community Services Director Bill Schwind told the board that his department had made a presentation to the City Council on the proposed recreation center, including operational costs. The council wanted to see some additional information about the building, which was put together for a later presentation, he said.

"Another subject that came up during the process as we move forward into the budget," Schwind said, "was that the council asked us to provide some information on the overall operational expenditures and cost recovery relative to the Grande Sports World to see how much subsidy was being required out there. That was presented at the budget meeting last Friday by our finance director and deputy city manager."

A summary sheet was handed out to the board.

"If you've never seen the original pro forma from the Grand Sports World," Schwind said, "it was designed and built on a package that it was for an upcoming football program (UFL) as well as tennis and some other sports that were being proposed out there from an operational perspective, and over the course of time that obviously didn't transpire. The pro forma was never really adjusted to reflect that, and so the numbers that were being projected from a revenue perspective from there they're not seeing.

"The way the contract was written is that their rent payment is 7 percent of the revenue that they were going to generate and that was going to help offset debt payment and operational costs that it takes to run that facility.

"With their revenue coming in less than projected, it affects that 7 percent, so the numbers that we are receiving on an annual basis are much lower.

"So basically, in essence, they were supposed to be getting a million a year. We're not reaching that. At the end of 10 years they owe us $10 million. And they've got the (Francisco Grande) hotel up as collateral."

The agreement for the hotel as collateral ends in 2020.

Board member Garrett Powell asked, "What is our subsidy that we're paying? I think it's important to know that."

It's basically the $500,000 yearly for debt payment plus the difference between projected rent payments and the actual amount received, Schwind replied.

"The Performance Institute, or the Grande Sports World, however you want to say it, it is what it is," he continued. "It was an agreement that was done awhile ago and this is kind of like the outcome of where we are today.

"They are responsible for making up the difference, but they have a few years to catch up and a lot of money to catch up, based on this current pro forma.

"They talked about bringing a golf institute in, which would generate a sizable amount of money. I'm not sure where that is. I know (Nick) Faldo was involved for a little while but I think he withdrew and I think they're trying to get some folks involved as far as that goes.

"I can't really speak as to what their economic development proposal for a long range plan is. 

"And so that's where we are at.

"There's a lot of ways to look at this thing, but unfortunately the General Fund is having to deal with this issue."

Board member Donna McBride said her perspective is that the average person doesn't know about the separate issues involved.

"We have people in our community that are asking, we passed this (rec center) bond and where's this facility we're waiting on?" she said. "And then you have funding issues like this.

"They're looking at it, well, of course, because they spent too much money on this (Grande Sports World) and now it's falling apart.

"And that's not the city's fault as far as the image, but I think something needs to be done so that it doesn't bring your department down. Because it does."

Powell said questions he hears include "how much more are we willing (to pay), what are we paying out here already, what are we going to be paying for the new rec center, what are we paying for the Francisco Grande facility.

"And the Francisco Grande facility, I know I've people say -- and quite a few people -- that's a lot of money that we've spent. Think about all the things we could have done to the local parks system for the amount of money that we've spent for something all the way out by Stanfield."

McBride basically agreed.

"The people that I'm talking to look at it as all the money was put into this and now even though we wanted this (rec center) they're saying there's not money to do that," she said.

"We know that there's money set aside for this, but some citizens don't. All they know is it's not there."

Schwind said, "Where we sit today, obviously, is the city's proposing a balanced budget. This deficit and this underwriting of this current operation that's going on out there is accounted for.

"The problem we face is we do have the $16 million available to build a rec center. It's the operational side that the council is a little bit scared of."

Schwind told the board that the proposal his department put together included moving the city recreation staff to the center once it is built. There would be no additional cost or subsidy from the General Fund, he added.

"Now, it's one thing to say that," he added, "because I think five or six or seven years ago they probably said the same thing about this (Grande Sports World).

"So I don't know if there's a trust factor or a 'what-if' factor. There's no guarantee that we are going to bring in the amount of memberships and daily users and classes and programs that we are projecting to offer at the rec center.

"We were very, very conservative in what we're presenting, and presented, and so really we've taking some good operational models that exist in the world today.

"We looked at the Apache Junction, Chandler, Glendale, Phoenix, Boys and Girls Clubs, Salvation Army facilities and really have refined their operational costs, their staffing costs, their programming, things that they do to kind of see what they're really averaging as far as bringing in, as far as people goes, and that kind of thing.

"But, again, this is a unique environment, as every community is, and so if we hit our mark, terrific; if we don't hit our mark, then what?

"And I think that's the question that council wants answered is the 'then what?'

"Are there fallback measures currently? Yeah, I think we've got a bed tax fund that generates about 500 grand a year that is dedicated for youth services that the General Fund is currently using. That could be dedicated to potential subsidy to help this (rec center) building along.

"But, quite frankly, I think we're standing on a position that we think that the pro forma that we've put together is fairly solid. I don't we're really too far off as far as making our mark.

"And so really it's going to come down to a little bit of political wherewithal and some direction from the City Council as to whether to move forward or not.

"There's a lot of ways to look at this (Grande Sports World), but I think it should be looked at completely separate from a rec center.

"We can talk about this until 'til the cows come home, but there are ways to fix this problem, just like we fixed the golf course."

Powell said that the sheet showing a rent deficit so far of $1.8 million is "a huge problem, let's be honest. That's a lot of money that we're subsidizing, that's an unbelievable problem."

There's another way the situation could be looked at, Schwind replied.

"Just for the sake of understanding," he said, "we as a department need recreational space, right? Fields, rec centers and that type of thing.

"If (the city) were to get a new park somewhere, anywhere, that had six fields on it, playing space for six fields (as are at Grande Sports World), it would cost us money to build and to buy the bond for that project and it would also cost us money to operate, right?

"If you look at it from a parks perspective, we really have six new soccer fields (at Grande Sports World) that we could call our own and if we went out there and built that a year or so ago, that $500,000 payment that is being made on debt retirement we would have that anyway.

"And the operational cost, however many people to maintain six ball fields to that level, pay the lighting bill fertilizer and everything associated with taking care of six new fields, there would be a cost to that, as well."

As Powell saw it, "I absolutely understand what you're saying, we can do all these wonderful things we're talking about, but we can do them here in town where people can get to them.

"Now, if we're being honest, too, how much of the year are actually Casa Grande residents using that facility? It's probably three months."

The use is not enough, Schwind said, "but it is our job to steer them out that way and we're trying to do that with the football groups and that type of thing. They are terrific facilities to use.

"Now, what I would recommend personally is take a look at the delta of what's not needed? Did we need that building? No. Should the Grande Sports World be 100 percent responsible for that building? Absolutely."

That is the 58,000-square-foot main building at the complex, which Schwind said is basically a training center, having classrooms, training rooms, exercise equipment, locker room on each corner. The number of locker rooms is because original projections for the United Football League said room for four teams was needed.

McBride agreed with Powell that the whole thing involves a lot of money.

"And," she continued, "I agree that, yes, if we had to build those six fields and all that money, but the fact is we didn't. The fact is we have another agreement with them. And the fact is there's money that's owed. That's the bottom line. As a citizen if we did that, we'd been foreclosed on."

Schwind replied, "You're exactly right. And it is playing into this department trying to get a community center built."

Powell said, "Which isn't fair at all. It isn't fair to you guys if you guys make that decision, but as a taxpayer if you're looking at it, you're like, wow, we're already subsidizing this facility out there, how much more?

"I know you put a great plan together to make people at ease that they're not going to have subsidize a whole other facility for a large amount of money, too. I think that's what would scare people. As a conservative, financially, it would scare me. I'm concerned. It's a lot of money."