City commissioners say the city erred in processing Rock Chalk Park payment

An approximately $1 million payment for disputed Rock Chalk Park infrastructure bills is creating confusion and a new round of questions about whether the unique public-private partnership behind the sports complex is lacking in transparency.

The payment — first approved by city commissioners on Tuesday night and then rescinded by the city manager on Wednesday morning — represented one of the final financial matters related to the Rock Chalk Park project. Commissioners on Wednesday expressed confusion about why information about the final payment wasn’t made more available to the public, which has questioned the finances of the project for months now.

“We clearly screwed up,” City Commissioner Jeremy Farmer said. “All the people who are frustrated about the lack of transparency about this project have just been given an infinite amount of ammunition because we aren’t finishing strong. We’re limping across the finish line.”

At issue is approximately $1.09 million worth of payments for legal fees, interest expenses and other “soft costs” that a development group led by Lawrence businessman Thomas Fritzel is seeking to be reimbursed for as part of the Rock Chalk project.

Commissioners had paid the bulk of the infrastructure costs in November but withheld a little more than $1 million worth of “soft costs” that they questioned. City staff members were directed to create a report on the costs and provide it to commissioners before the payment was made. City Manager David Corliss created the report but took the unusual step of providing the report directly to city commissioners rather than posting it on the city’s agenda, which is widely available to the public and closely watched by the media. Corliss did post the report on a single page of the city’s website prior to the meeting, but he acknowledged it would have been difficult for any member of the public to know it was there because the city did not take any steps to notify the public that the report was available.

The Journal-World only became aware that the payment was on the city’s list of claims to be approved because a reporter noticed in the City Hall crowd a representative from Kansas University Endowment, the other partner in the public-private partnership. That caused the reporter to question whether a Rock Chalk Park item was being put before the commission. The reporter was told by Corliss that the final Rock Chalk payment was before the commission under the category of “approve all claims.” There was no mention in the agenda that the previously questioned Rock Chalk claims were part of those weekly claims to be paid, and the agenda didn’t include Corliss’ report explaining the Rock Chalk claims.

On Wednesday, city commissioners said they had failed to notice that the report wasn’t a part of the agenda. All five commissioners interviewed Tuesday and Wednesday said they weren’t aware that the report hadn’t been made easily available to the public.

“I didn’t know that had happened until I read the newspaper,” said City Commissioner Bob Schumm. “I was not very happy about that. We are trying to keep everything in the public’s eyes on this.”

On Wednesday, Corliss said he simply made a mistake and that the Rock Chalk Park issue should have been a regular agenda item for the commission to consider. Mayor Mike Amyx — who has been a critic of the Rock Chalk Park project — also said he erred by not recognizing how the report was being presented. Amyx allowed the Rock Chalk Park claims to be voted on Tuesday, but he voted against paying the claims. The other four commissioners voted in favor of paying the claims.

On Wednesday morning, Corliss, after consultation with the mayor, directed city staff to not process the check for the Rock Chalk Park payment. The payment issue will be an item for discussion and vote at Tuesday’s City Commission meeting.

That will give members of the public time to review Corliss’ report on the subject. It did find that the development group led by Fritzel was asking for about $157,000 in reimbursements that the city did not find to be appropriate. Among those findings were:

• Corliss is recommending that the amount of interest expenses the city reimburses on the project be reduced by about $107,000. Corliss said he found that the development group, Bliss Sports II, was seeking reimbursement expenses for about two months worth of interest expenses that accrued prior to the city having signed an agreement with the company. Corliss also found that the company was seeking reimbursement for some interest expenses related to infrastructure improvements that had not been approved by the city.

• Corliss also recommends the amount of legal fees reimbursed to the company be reduced by about $50,000. Corliss said he found that Bliss was seeking reimbursement for legal fees for about $23,000 worth of legal expenses that accrued before city commissioners even began talking about locating Rock Chalk Park at its current location. Corliss also found that the company was seeking reimbursement for about a year’s worth of legal fees that accrued after the key legal document in the project — the development agreement — already had been completed.

• The report states neither the city nor its other partner, KU Endowment, was able to get itemized billings from Bliss II’s law firm, Kansas City-based Polsinelli. Without the itemized statements, the city was unable to determine the hourly rate that was being charged to Bliss. Corliss said he asked for the records but was unsuccessful in obtaining them.

• In total, the city paid for $1.09 million of the $1.37 million in soft costs that Bliss Sports II said it was due to be reimbursed. Of the $1.09 million, the city used about $90,000 in general taxpayer funds to pay the bills and used a $1 million grant the city was awarded by Bill Self’s Assists Foundation to pay for the remainder. The city would have been obligated under the development agreement to pay for more of the soft costs, except the $1.09 million amount brought the city to its previously negotiated maximum spending cap on the project.

City Commissioner Terry Riordan said he generally was satisfied with the findings of Corliss’ report but was unhappy with how the report was released to the public.

“I was comfortable with the answers, but I wasn’t comfortable with the process of it,” Riordan said.