Fritzel breaks silence on proposed Rock Chalk Park deal, says he won’t profit from the KU sports complex
Lawrence developer Thomas Fritzel broke his silence Friday about his role in the proposed $50 million Rock Chalk Park sports complex development in northwest Lawrence, promising that his company won’t profit from the project he’s building with Kansas University.
“We’re doing it because we love the community,” Fritzel said in an interview. “We’re not doing it because we’re getting good publicity. You can cross that off as a reason.”
For the first time, the developer discussed in detail the complex financing and ownership of the project, which is a partnership between Fritzel, the Kansas University Endowment Association and Kansas Athletics, the university’s athletics department. Among other things, he said he will be paid $1.3 million per year in lease payments by the university over the next 30 years for use of the facility. The university would take ownership of the facility after 50 years.
“We’re a financing mechanism for the University of Kansas, just cut and dry,” Fritzel said of his role.
The Rock Chalk Park complex — which would include a track and field stadium, soccer field and softball stadium –would be adjacent to a proposed $25 million, city-owned recreation center and youth fieldhouse. The project is proposed for vacant ground northeast of the Sixth Street and South Lawrence Trafficway interchange.
On Friday afternoon, Fritzel said he will produce signed documents that show the not-for-profit Kansas Athletics Corp. will hold all of the rights to operate and generate revenue from the facilities.
“It will be run just like Allen Fieldhouse, 100 percent like Allen Fieldhouse,” Fritzel said. “The important thing is Kansas Athletics controls everything.”
Fritzel’s comments came as political pressure on the project intensified after City Hall officials announced that the development likely will request a 10-year property tax abatement in order to move forward.
City Manager David Corliss said it appears a property tax abatement will be a requested part of the package because the proposed public-private partnership between Kansas University and Fritzel likely won’t meet the state’s standard for an automatic property tax exemption that is given to state-owned facilities, such as Allen Fieldhouse or Memorial Stadium.
The reason the project is not likely to qualify for the exemption is because a private, for-profit entity controlled by Fritzel — Bliss Sports — will own the facilities and lease them back to KU. The private ownership, which voids any property tax exemption, raised questions about whether Fritzel could use the private entity to profit from the sports complex.
In the interview Friday afternoon, Fritzel also provided other details about agreements that are being negotiated among Bliss Sports, Kansas University Endowment and KU Athletics. They include:
• Kansas Athletics will pay Fritzel’s Bliss Sports $1.3 million each year for 30 years as part of a lease that will give KU full use of the track and field stadium, the soccer field, softball stadium and other amenities in the park. The 30-year agreement will produce $39 million in payments to Bliss. KU officials have estimated the value of the proposed facilities to be about $50 million.
• The payments to Bliss Sports will last for 30 years, but Bliss Sports will own the facilities for 50 years. At that point, ownership of the facilities will transfer to either Kansas University Endowment Association or KU Athletics. The property the facilities will sit on will be owned by KU Endowment. The Endowment Association has created a separated limited liability company — called RCP LLC — to own the property on its behalf.
• Fritzel confirmed that if any non-KU events are held at the facility, Kansas Athletics — not Bliss Sports — will collect any facility rental fees or other type of charges associated with using the property. When asked if the $1.3 million per year lease payments were the only revenue that Bliss Sports would receive from the project, Fritzel said: “Yeah, if you want to call that revenue, sure.”
• Fritzel said he and his wife, Dru, are the only owners of Bliss Sports. Questions have arisen why Fritzel is providing the financing through a for-profit company as opposed to a not-for-profit foundation that he previously had established. He said the only reason is because tax and financial professionals he had hired had advised him to do it this way.
“I have been told not do it that way (a foundation) by the people who I pay to make good decisions,” Fritzel said.
Fritzel — who has multiple business interests in Lawrence, including The Eldridge Hotel and The Oread hotel — said he hopes the sports complex will attract non-KU events to the community. “If you want the city to continue to prosper, then we had better do things to make people want to come to our community to enjoy the University of Kansas, the city of Lawrence and our amenities here because we don’t have a lot to offer at this point,” Fritzel said “We can do so much more.”
Local leaders have mentioned using the new sports complex as the venue for possible bids for the Junior Olympics, the U.S. Special Olympics, the Kansas High School Track and Field Championships and other events. Fritzel said Bliss Sports’ ownership of the property won’t allow him to directly profit from any such events.
City commissioners acknowledged Friday that they had not previously seen many of the details about the proposed agreements between Bliss Sports and the KU entities. But they said they were pleased with what they had learned.
City Commissioner Mike Dever said he now has a better understanding of how the sports complex would be run and that it would be done so in a way that the public could have confidence in.
Mayor Bob Schumm said Friday’s details were consistent with what he had heard of the relationship between Bliss and KU. He said he believes Fritzel’s offer to finance the project is particularly attractive to KU Athletics because it is trying to prepare for major spending projects at Memorial Stadium and Allen Fieldhouse.
“They are trying to structure this in a way so that is an affordable amount of money each year so that they can get to some other projects,” Schumm said. “Memorial Stadium and the fieldhouse will take a great deal of money, I believe.”
Fritzel said he would provide copies of the signed agreements between Bliss and the KU entities to the Journal-World and the City Commission so that they can be viewed by the public.
“I want to be open,” Fritzel said. “There is nothing to hide here.”
When those agreements will be completed, however, isn’t certain. But Fritzel said his timeline is “real quick.”
City commissioners in mid-February are scheduled to make a final decision on a separate but related project: the $25 million recreation center and youth fieldhouse.
That project would be on about 25 acres of ground that is adjacent to the KU facilities and that KU Endowment will provide to the city. As part of the land transfer deal, KU Endowment is insisting that it build the recreation facility to the city’s specifications. The city then will make a one-time payment not to exceed $25 million to KU Endowment, giving the city outright ownership of the land and the recreation center.
Fritzel — who also is an executive with Lawrence-based Gene Fritzel Construction Co. — is involved in that deal because he has provided the assurances to KU Endowment that he can deliver the project for $25 million or less.
The project is scheduled to go through a bid process, but it will deviate from the city’s standard open bidding procedures. At least two other companies — in addition to a Fritzel entity — will be invited by KU Endowment to bid on the rec center project. But Fritzel will have a chance to match their bids at the end of the process.
City officials have not yet committed to the recreation center or the bidding process, but they will be asked to do so once formal agreements between KU Endowment and the city are crafted. Those agreements are expected to be done by mid-February.
— City reporter Chad Lawhorn can be reached at 832-6362. Follow him at Twitter.com/clawhorn_ljw