On Oct. 27, Westfield took another substantial step forward with its Grand Park Sports Complex as the city council approved to back a $53 million lease on a new indoor soccer facility. The measure passed 6-1 with councilor Cindy Spoljaric casting the lone dissenting vote.
“We’ve spent an awful lot of money in Grand Park and that concerns me,” Spoljaric said. “We don’t have the full accounting yet and that concerns me … I’d like to see it built privately.”
The $25.7 million facility, which with interest will cost $53 million, will be developed by Holladay Properties and leased to the city for the next 25 years. Mayor Andy Cook said the city will use funds collected from subleased building tenants to pay the annual rent, which starts at $1.97 million and escalates every five years. If tenant payments aren’t enough, the city and its taxpayers may be left footing the remaining bill; however, Cook said that risk is small.
“Projected revenues exceed operating costs,” he said.
Deputy Mayor Todd Burtron said the city has three potential tenants in the process of finalizing deals including Indiana Soccer Association, Indiana Sports Properties and Jonathan Byrd’s restaurant. He said 8,000 square feet is still available in the building.
“There is much marketplace demand for this product,” he said. “A sports science organization wants in.”
The 372,000-square-foot facility will house three full-size professional soccer fields that can be used for recreational play and competitive play for all field sports. The building will also have office space, locker rooms, meeting rooms and a restaurant focused on family dining. It will be built between Parking Lot C and 191st Street.
When the project was first announced at Grand Park’s opening on June 20, original costs were $20 million. Officials said the price tag rose because plans changed to improve the facility and incorporate new features.
“We created no new debt building Grand Park,” Cook said.
Burtron said partnering with Holladay Properties provided the city three options it wouldn’t have if it built the facility itself, including a lower interest rate and not having a $2 million government-mandated reserve fund. Burtron said Westfield also would have been required to pick the lowest bidder, which caused problems with the outdoor facility and cost the city an additional $4 million to fix.
“It also doesn’t tie-up a specific revenue stream. We can use any available revenues or pull from all TIF districts,” Burtron said.
As previously reported, Westfield also has an option to buy the building outright after it opens in November 2015. Cook said it’s in the best interest of the city to control the cash flow and scheduling of the indoor and outdoor events at Grand Park.
“We will take them out at the council’s discretion,” Cook said.
The need
Mark Anderson of Indiana Fire Juniors said the club sends all of its players to the eastside of Indianapolis to train at an indoor facility from 5 to 9 p.m. Monday through Friday and all-day on the weekend.
“It still doesn’t meet all of our needs,” he said, “and the timeslots used are not family friendly. A complex like this will take care of all of this.”
Indiana Soccer Executive Director Dave Guthrie said the organization has 60,000 members and a large portion live within 35 minutes of Grand Park.
“The problem we have is connecting the fall season to spring season,” he said, adding the Olympic development squad has interest to add to the economic impact of Grand Park. “It willl do its best to make sure it not just fills it but overflows it.”
Hamilton County Tourism Executive Director Brenda Myers said the county has always had a reputation with competitive youth sports regionally but the addition of Grand Park has increased the range to nationally. Myers said hotel occupancy is up 9 percent since the sports complex opened.
“The weekend occupancy is 74 percent April to August. Sports played a huge part in that,” she said. “Hamilton County will have 900 more hotel rooms in the next three years. That’s 325,000 room night to sell annually.”
Myers said January through March are the weakest months of the year for tourism and having a year-round facility will provide more income to local merchants and businesses.
“I can’t stress enough the economic impact of sports in Hamilton County,” she said.
Murray Clark, board president of the Indiana Soccer Association, said U.S. Soccer committed to hosting a regional tournament with 14 states in 2016 before a single game had been played at Grand Park.
“That’s 10,000 bed nights in 2016 already committed,” he said. “This facility completes the project out there. It’s world class as designed. There will not be a nice facility of its kind in the country if it’s built.”
The debate
While most backed the project, a few residents voiced their concerns.
“I’m here because I don’t trust you guys after hearing this was private (funding) and now it’s not,” said Ron Thomas. “Is it sustainable to build this and double the money (debt)?”
Westfield resident Jeff Harpe said the project is a potential liability for the city which could mean Westfield could be residentially rich but municipally poor.
“We should be looking at who’s paying for it,” he said. “It’s an unfunded liability. It’s funded by hope – hope people come, hope development comes.”
Councilor Rob Stokes said the risk was something the city needed to do.
“If you wait for a guarantee you’ll never make any moves,” he said. “It would be nice if some private individual came in with $25 million and built this thing right out of the ground. It would be great, but that hasn’t happened. We are taking these steps to make it happen. The risk is acceptable and will pay off in the long run. I am sure of that.”
Councilor Chuck Lehman said he was skeptical until he closely examined the numbers.
“I dug to the bottom. The deeper I dug the more confident I got,” he said. “At the end of the day we put together a quality plan. The biggest risk is to do nothing. Without any risk, we’re just going to be another somebody hoping something might come our way.”
The council briefly discussed the option of tabling its decision two weeks to let the public vet the finances but ultimately decided that night was the time to act.
“Would I like to wait and vote on this in two week, yes,” councilor Steve Hoover said. “It’s not going to change my mind.”
Tabling the lease would have caused potential delays in finalizing the three sublease agreements according to Burtron. It also would cause stress on Holladay’s construction timetable.
“The windows are very, very narrow in getting any kind of construction as winter is approaching,” said Chris Wilkes, senior vice president of Holladay Properties and Westfield resident. “You lose two weeks, you often lose four months … We have a 30 to 45 day process starting Nov. 1. If we wait too long we’ll have to shut the site down and come back in spring.”
Lease cost
Base rent for each lease year is:
Years 1 to 5: $1,970,000 annually ($9.85M total)
Years 6 to 10: $2,045,000 annually ($10.225M total)
Years 11 to 15: $2,120,000 annually ($10.6M total)
Years 16 to 20: $2,195,000 annually ($10.975M total)
Years 21 to 25: $2,270,000 annually ($11.35M total)
Deal terms
Holladay Properties will obtain a loan (at a lower rate than the city could receive) and sign Westfield as the tenant. The city would be responsible for paying off the loan and for operating expenses in an annual lease payment. Westfield would sign subleases, which would pay an estimated $2.4 million to $2.5 million annually, which would be used to pay the lease. Officials said the remaining funds would be reinvested in Grand Park. The city plans to pay Holladay approximately $485,000 to take ownership when the building is complete in November 2015.
