Editorial: Too good?

After seeing the results of competitive bidding to build a new city recreation center, Kansas University officials may be taking a second look at their financial arrangements on Rock Chalk Park.

The public is awash in numbers related to the Rock Chalk Park deal, so perhaps it’s time to step back and isolate the various components.

First, there’s the city part. Its ostensible value, according to the original project cost estimates, was $31 million, for land, construction of facilities including the rec center, parking and infrastructure. The city was to get this at a not-to-exceed price tag of $25 million. Then the bids for the rec center itself came in at $10.5 million, or nearly 50 percent below some estimates, with lower commodity-oriented prices cited as a major explanation by the city’s architects. Now the city is signaling that it does not expect to pay more than $21.6 million for its share of the entire project.

The second piece of the project is the Kansas University part, which is to include an Olympic-grade track and field stadium with seating for up to 10,000 people, a 2,500-seat soccer field, a softball stadium that would seat 2,500, and a 25,000-square-foot training area for softball, plus multiple parking lots. Initially, a figure of $50 million was tied to those facilities, which were to be constructed and leased to KU for 30 years, at $1.3 million per year. (KU still won’t own the property at the end of 30 years; ownership will not transfer until after 50 years, and apparently there could be lease payments in years 31 through 50.)

The city is gaining clarity about its total costs but is still waiting on the contractor and the KU Endowment Association for firm numbers on the no-bid infrastructure costs. The City Commission has said it won’t sign a construction contract until it has them.

A story in the current KU Alumni Association magazine extols the project, saying “Two different studies estimated the total cost for KU’s facilities in excess of $50 million,” although the builder agreed to construct it for $39 million. However, the actual figures for KU are not yet clear. It will be interesting to know what they are and, if they are as significantly under estimates as the city’s portion of the project, whether the various margins, fees and lease arrangements will be scaled back to reflect the newer, lower, numbers.

But without open bidding for the infrastructure or KU facilities, per the arrangement among the parties, who knows what is likely to happen? It’s obvious, however, that city officials and commissioners bought into this concept with only Commissioner Mike Amyx questioning the sleight-of-hand actions.

What must leaders at the KU Athletics Department now think of the deal they made?

The only party that seems to be having some reservations or second-thoughts on the deal is the KU Endowment Association, which acquired the land after receiving a gift and now owns that property through a separate LLC. Endowment officials have not signed the final development agreement on their part of the arrangement, apparently pending resolution of infrastructure costs and the management fee involved.

The professional and familial relationships between and among the builder, the developer, the endowment board and the athletics department all raise questions in the public’s mind, compounded because the developer is an officer of the construction company that submitted the low bid for the city rec center. “We’re doing it because we love the community,” the developer assured everyone in January. “We’re a financing mechanism for the University of Kansas, cut and dry” he said.

Apparently no laws have been broken but certain city officials, certain city commissioners, officials in the KU Athletics Department and some in the KU Endowment Association should be embarrassed by the way they bought into a project that seemed almost too good to be true.

It was, and is, too good to be true.