Final bill for Rock Chalk Park infrastructure comes due; city to pay more than 90 percent of total

City may want more info about Rock Chalk expenses

City officials will be asked to approve $10.45 million in payments for infrastructure work at Rock Chalk Park at their Tuesday evening meeting, but it is not yet clear whether the city has all the information it needs to cut the check.

City Manager David Corliss confirmed the city does not have some basic information, such as the amount of the loan the private entity led by Lawrence businessman Thomas Fritzel took out with Emprise Bank for the project. The loan amount could be important because the city is obligated to pay the interest and loan fees that Fritzel’s Bliss Sports II has incurred during the construction of the infrastructure.

The city has been told the interest and fees total $607,725. But without knowing the loan amount or even the interest rate of the loan, the city has little information to determine whether the loan costs are within market norms.

As part of its decision to allow the Rock Chalk Park infrastructure to be built without a bid, the city promised to do a line-by-line review of submitted costs to ensure they were within market norms.

Corliss also confirmed that the Kansas University Endowment Association — which is a partner in the project because it owns much of the land at the Rock Chalk Park site — did not conduct an audit of the expenses incurred by Bliss Sports II. The city had expected such an audit to be done and had told endowment officials that it would like a copy of the audit when completed.

Corliss said he was not sure why the audit wasn’t completed. He said both the audit and more information about the loan with Bliss Sports II would have been helpful in conducting the city’s review of costs.

An attempt to reach a representative of Kansas University Endowment Association was not successful on Friday afternoon.

Mayor Mike Amyx, who has voted against the Rock Chalk Park project, said he’s not sure the city will be ready to approve the payment Tuesday.

“I plan on spending most of the weekend looking at these numbers,” Amyx said. “We need to make sure everything is exactly as it needs to be before we make any payments.”

Commissioners meet at 6:35 p.m. Tuesday.

Here’s one score at the new Rock Chalk Park sports complex in northwest Lawrence: 90 to 1.

The final bill has arrived for all the shared roads, parking lots, utilities and other infrastructure at the Rock Chalk Park sports complex, and the numbers confirm city taxpayers are picking up a little more than 90 percent of the costs for the infrastructure, while the private partner in the project is scheduled to pay for a little more than 1 percent of the total.

On Friday, one of the chief champions of the complex, which is north of the Sixth Street and George Williams Way intersection, said he’s still pleased with the deal the city struck.

“We were going to have to give concessions because that is how partnerships work,” City Commissioner Mike Dever said. “In order to make the project happen, we took some unconventional steps, but we also protected ourselves by not paying for more than we could afford.”

The new numbers show the total infrastructure costs at Rock Chalk Park were $11.59 million. At their Tuesday evening meeting, commissioners will vote to pay $10.45 million of that total. Bliss Sports II, the private entity led by Lawrence businessman Thomas Fritzel, will pay $145,835. The remaining $1 million will be paid by the city of Lawrence using a donation from Kansas University Coach Bill Self’s Assists Foundation.

The numbers are largely what city officials have expected for the better part of a year. But the numbers are far different than what was anticipated when commissioners were first convinced by Fritzel to consider the project in 2012.

Back in 2012, the city anticipated it would pay about $5 million for infrastructure at the project. It anticipated it would pay about $20 million for its 181,000-square-foot recreation center, which is part of the Rock Chalk complex. Fritzel offered a guarantee that the city would not pay more than $25 million for the entire project. City officials also were told that the total value of all the facilities — the recreation center and the infrastructure to support it — would total about $33 million.

The $8 million difference between the two numbers was characterized by city officials as an act of philanthropy from the Fritzel entity to the community. The idea that the city was getting a $33 million value for $25 million was cited often by city officials as justification for deviating from the city’s normal bidding process.

As originally proposed, none of the project was scheduled to be competitively bid. But after members of the public objected, it was decided the recreation center portion of the project would be bid, although the infrastructure portion would not.

When bids for the recreation center came in about $8 million less than what city officials had anticipated, the complexion of the deal began to change. Suddenly the city was paying just $10.5 million for the recreation center. But after a brief renegotiation, the city was still obligated to pay a total of $22.5 million to be a part of the public-private partnership. The end result is that the city ended up paying for a far larger portion of the infrastructure costs than originally anticipated. The infrastructure, such as roads and parking lots, serve both the city-owned recreation center and the track, softball and soccer stadiums that are owned by Fritzel’s group, which in turn leases the facilities to Kansas University.

City Manager David Corliss on Friday said the surprisingly low bid for the recreation center is the key point at which time the structure of the deal changed for the city.

“This project is very unique,” Corliss said. “This arrangement was our price for participation out there. I think it is a wonderful project for the community and KU. But there is a reason why we like to bid projects.”

Both Dever and Corliss said city officials tried to convince officials with the Kansas University Endowment Association to allow the infrastructure portion of the project to also be bid. But endowment, which owns the majority of the land at the site, refused to go through a bidding process. They wanted to hand-select the contractor for any infrastructure that would serve the stadiums, Dever said.

Attempts to reach Fritzel and a representative with Kansas University Endowment were not successful Friday.

Corliss said it became clear that the only way the city could determine whether KU Endowment would budge from its position was for the city to walk away from the deal.

“We had to make a decision of whether we wanted to do something very unique, or whether we wanted to walk away and probably build something a little smaller with less synergy with KU, or not build anything at all,” Corliss said. “That was the decision that was squarely before the commission.”

Dever said he thinks the deal with Fritzel’s group was still a good one, and he went so far as to say that he thought Fritzel’s group still provided a philanthropic gift to the community. A Fritzel company — Gene Fritzel Construction Co. — ultimately won the low bid for the recreation center. Dever is convinced that Fritzel bid the recreation center at a cheap rate, which resulted in the city getting a good deal for the center. Several other contractors, however, also bid the project at a price very nearly matching Fritzel’s. Fritzel won the bid by just $280,000.

“I think we have a product that exceeds what we paid for it,” Dever said.

Corliss said he still believes in the worth of the project, but said he’s not sure he would describe Bliss as having provided any philanthropy as once was envisioned.

“We do think we got a good bargain on the building,” Corliss said. “I think you can say that we think for every dollar we spent, we received appropriate value. That is probably not philanthropy to us (the city.) There may be some philanthropy to KU involved.”