The indoor soccer facility planned for Grand Park Sports Campus in Westfield will be built and financed by a private developer, but city officials are proposing to pay for the $25 million project through a publicly funded long-term lease.
The Westfield City Council is expected to consider an agreement Monday that calls for the city to pay Holladay Properties nearly $2 million annually for five years, with payments gradually increasing for another two decades. The deal also requires Westfield to cover all facility operating expenses.
The city plans to sublease the space to multiple tenants—draft agreements are in hand for three users, Deputy Mayor Todd Burtron said—and then use rental income to pay the bills.
Burtron said financial projections prepared by an independent accounting firm show Westfield should have as much as $500,000 a year left over to reinvest in the facility after satisfying its obligations.
“And that’s with no sponsorships or naming rights or even [operating at] full capacity,” he said.
About 11,000 square feet of the 380,000-square-foot facility would remain available even after finalizing deals with prospective tenants including Indiana Sports Properties—which would manage field activities—and food-service provider Jonathan Byrd’s, he said.
After construction is complete, the city could (and likely will) extract Holladay from the deal, taking over payments to the lender. That would lower annual costs to about $1.7 million, Burtron said.
Still, it’s a complicated arrangement that has some observers up in arms.
Former Westfield Town Council member Ron Thomas posted a lengthy missive regarding the deal on the Westfield Chatter Facebook page this week, encouraging residents to share their thoughts with city leaders during a hearing Monday.
He said the public has been misled about the indoor facility, announced with much fanfare at Grand Park’s grand opening this summer. Although the project was described in a news release as a “partnership” between the city and Holladay Properties, the public contribution was not made clear at the time.
“For me, this isn't a political issue,” Thomas wrote in an email to IBJ. “This is about telling the truth to the community and making decisions based on that truth.”
Continuing to spend public money without a guaranteed revenue source to offset the expense will saddle taxpayers “with a lot of financial exposure,” he wrote.
Burtron said the indoor soccer facility has always been part of the plan for Grand Park, the city’s 400-acre, $45 million-plus bet on youth sports. Westfield is hoping to attract private investors who want a piece of the booming industry that delivered more 830,000 visitors to the complex during its first summer.
But many businesses—including hotels and restaurants—want to see ongoing activity at the park before making a financial commitment. Developers of the Cambria Suites planned for the neighboring Grand Park Village commercial area, for example, pulled the trigger on that project after two indoor facilities were announced.
The city said the $6 million Grand Park Fieldhouse basketball-volleyball facility is being developed without any public assistance.
“We need year-round functionality,” Burtron said. “The [soccer facility] lease agreement is a vehicle to get this project out of the ground.”
The partnership with Holladay allows the city to benefit from “the utility of the private sector in a way that otherwise, as a straightforward municipal project on our own, we could not use,” he told the council at its Oct. 13 meeting.
Such advantages include a lower interest rate, a better negotiating position with contractors, and the ability to proceed without setting aside (and paying interest on) a debt-service reserve, Burtron said.
He acknowledged that proceeding with the lease carries a certain amount of risk for the city, but said the alternative could have consequences, too.
“The risk of not doing it also has to be considered,” Burtron said. “I feel confident we have looked at this in every way, shape and form, and the [necessary] financial performance is very achievable.”