Archive for Monday, May 27, 2013

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.

May 27, 2013


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.


leftylucky 4 years, 12 months ago

Dru Fritzel's father (John Stewart) is the financier of this project for KU endowment. He is the largest stockholder of intrust bank and a director. That is why intrust bank is so involved in this project. 2010, intrust lost 40 million on investments in HAwaii. Think your money is safe? How many intrust lackeys are pushing this project? Stewart also was chair emeritus of the endowment? Major donor to Kansas Athletics Inc, and the Bill Self assists foundation. Hard not to see a conflict of interest.

David Klamet 4 years, 12 months ago

This is another "Look at us" project, "see how cool we are!". What percentage of the population does this benefit? Is that even important?

If Lawrence wants to make the national news, the city should scrap this and start a project to bring fiber internet to Lawrence. If Lawrence wants to be one of the first, it has to be now. Other cities will be jumping on the bandwagon soon.

Even then, it might still be years before Lawrence gets fiber.

Message to Lawrence: "New library, new sports park, but still you won't have the classy image that those other cities that see the future will have."

People will say: "Isn't Lawrence so quaint?"

Full disclosure: I don't live in Lawrence, but I live close enough to benefit as a local tech job that would become much more likely if this city became on of the tech leaders in the area.

Citizens in Lawrence would benefit, businesses would benefit from people with money to spend from high(er) paying tech jobs, even developers might benefit (guess you can't have everything).

bidrigging101 4 years, 12 months ago

"Apparently no laws have been broken" ..... Apparently many laws have been pushed, pulled, and twisted. We will never know if any laws have actually been broken until there is legal action between the parties involved (Fritzel, KU Athletics, Inc. KUED, and the City of Lawrence) or an outsider files one.

This may be the straw that broke the camels back.

true_patriot 4 years, 12 months ago

I couldn't bear to read it. This is the most egregious theft of tax payer money yet. Did they mention that the unnamed developer stiffed nearby Geary county out of millions of dollars in revenue and saddled them with massive debt that nearly broke them? For that alone he should have been disbarred from even bidding on this process, on either side. But what happened ... He misled the city and the public about the fact that we will be helping share the risk of his private investment which will get first dibs on event scheduling and parking ahead of the city and public's needs for the next literally half a century.

Then, KU Endowment dug their heels in and decided to stick with him, and the city followed suit by giving the bid for that side of the project to him. And the dollars per acre being spent is beyond all reason. Horrible business decision by the city on behalf of the taxpayers. Only Mike Amyx had the business sense and the balls to just talk openly and honestly about it and then vote for the taxpayer rather than dole out more developer welfare in these tough economic times.

When the developers come to suckle at the public teat the city forks over our money right and left (a second half-million in welfare to the Compton project downtown just last week!) but when mom and pop stores on Mass St can't afford the rent or people line up for blocks when there is a free dental clinic (hmm, what could that possibly tell us about where we need to focus our priorities?) then the desire to lend a helping hand just dries up and disappears.

lawrencereporter 4 years, 11 months ago

PURE FICTION the public has been mis-lead that the Rock Chalk Park project is a
KU-City partnership..... Consider this

The city taxpayers will buy a 26 acre lot for $784,000+ from RCP L.C. An entity currently owned by KU Endowment.

The city taxpayers will pay for and give free to Thomas Fritzel (for a minimum of 50 years) all sewers, water lines, storm drainage, streets, driveways, parking lots, etc.... On his leased 57 acre lot.

The city will allow his company a 10% profit on a no-bid contract to construct said infrastructure for his benefit.

In addition Fritzel is to get 100% tax abatement for 10 years, no sales tax on construction materials, no permits and development fees, and up to 40 million dollars in I.R.B. financing. All of these public gifts simply reduce his costs for the improvements he is leasing to KU Athletics. A great deal curtesy of city taxpayers.

This is the so called KU-City partnership that Schumm, Dever, Corliss, Fritzel, Zenger, Surferling et all have promoted and mislead the public about for months.


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