Real Estate

Gilbert taxpayers’ Big League nightmare

(Source: EastValleyTribune): Jim Walsh and Srianthi Perera

Big League Dreams looked like a game-winning, grand-slam home run for Gilbert when it opened in 2008, with fields reminiscent of Fenway Park and Yankee Stadium drawing baseball and soccer tournaments and serving as a major tourist attraction.

Instead, Big League Dreams has struck out for taxpayers, with the town shutting down the facility as a safety hazard on July 7 while lawyers battle over millions of dollars in a contentious pair of lawsuits and countersuits.

Even before the cases go to trial, the big losers appear to be taxpayers as well as baseball and soccer players unable to use the padlocked facility – whose walls could collapse, according to the town.

 The unplanned closure took players by surprise. The venue’s cost has taken taxpayers for a ride.

“I’m surprised how suddenly everything happened without any communication from Big League Dreams on what was going on,” said Tyler Hudgins of Gilbert, who has played soccer at the venue’s indoor fieldhouse for nearly a decade.

“We were planning to have a game on Friday evening and all of a sudden I saw on Facebook that Big League Dreams was shutting down,” he added. “The team lead had to call them and reach out to get information.”

Hudgins said it was “a shock to everybody.”

“I saw some players complaining on social media because they had paid for the new season that was coming up. Now, they are having to figure out reimbursements and all that stuff,” he added.

Meanwhile, town taxpayers are shelling out $3.7 million per year in debt service alone on the once-promising facility.

For construction, Gilbert floated $37 million in bonds, which are to be paid off in fiscal 2020-21; when the bond interest is added through the last payment in 2021, the cost will have ballooned to $53 million.

And millions more in costly repairs are looming.

Big dreams, costly reality

Big League Dreams has become nothing like the marquee attraction and significant economic engine that then-members of the Town Council touted.

In court filings, Big League Dreams appears the winner in a lopsided public-private partnership that not only has left taxpayers on the hook for millions of dollars in repairs but also has failed to deliver millions more in promised revenue.

Those documents show:

  • While Big League Dreams has generated $28 million in gross revenues since the park opened in 2008, the town has received only $990,000 in revenue during the same period. Before it opened, Big League Dreams projected that Gilbert would receive $1.4 million in direct benefit annually.
  • Two years ago, Gilbert won a $13.5 million settled with the company that built the stadium over major structural defects that the town said will cost more than $19 million to fix.
  • Gilbert spent about $42 million to build the turnkey project, although the initial projection was $22 million.
  • Gilbert also paid Big League Dreams a $400,000 licensing fee to use their replica stadium images and another $640,000 fee for construction consulting services.

Citing breach of contract and several other allegations, Gilbert has accused Big League Dreams of failing to maintain the park adequately.

Now, it wants to terminate a 2005 maintenance and operations agreement, essentially ending its partnership with Big League Dreams. The 30-year contract expires in 2038.

“We’re obviously hoping that doesn’t happen,” said Chuck Jelloian, a Big League Dreams spokesman. “We just found out a couple of days ago that we were shut down. We are scrambling to do everything we can do things the right way.”

Jelloian said he is seeking meetings with Gilbert town officials and hopes to work out a solution. He said Gilbert has refused to meet with Big League Dreams so far and that the company wants the park re-opened.

“We are going to try to negotiate with the city and try to figure this stuff out,” Jelloian said.

Maricopa County Superior Court Judge Christopher Whitten on Wednesday ordered both parties into mediation to settle the dispute – a standard practice in civil suits.

He also refused to order the venue reopened.

Walls could collapse, town says

The mediation likely would also address whether the park will remain closed or whether it can be reopened while Gilbert embarks on an $11.6-million renovation project.

Gilbert already has paid $2 million to correct construction flaws, according to the town’s suit against Big League Dreams. The town won a $13.5 million settlement from M.A. Mortenson Co., which built the facility.

The town said in a statement that the additional, more extensive structural repairs will be financed with the proceeds from the Mortenson settlement, with the park scheduled to re-open in early 2019.

“During the course of the design planning phase for park repairs, additional safety issues with the structural integrity of the outfield aesthetic grandstands were discovered which has necessitated the immediate closure of the park, out of an abundance of caution for the safety of park users,” the statement said.

“Shortcomings with the wall anchoring system have made the walls susceptible to collapse – especially in windy conditions,” it continued. “With the imminent start of monsoon season, Gilbert is acting to protect the safety of our citizens.”

Robert Grasso, Gilbert’s attorney in the case, said that while the town is willing to discuss the financial issues, it remains steadfast in the decision to protect public safety by closing the park.

“The last thing that the town wants is for a child at the park to get injured,’’ he said, noting the town could be held liable if it allowed the park to remain open after finding structural defects and someone was hurt.

The replica stadiums depict images of eight iconic Major League Baseball venues, including Fenway Park, Yankee Stadium and Wrigley Field. The stadiums include images on walls that simulate grandstands packed with fans.

Although the park has drawn hundreds of thousands of children and parents to baseball tournaments, the facility has been mired in a long list of controversies stemming from the construction deficiencies and the town’s relationship with Big League Dreams.

The partnership began badly and gradually degenerated.

In the first dispute, Gilbert didn’t receive the company’s first profit-share until a year later than expected because of a technicality in the contract.

Then, an injury to a visitor resulted in the discovery of the flawed construction and the separate suit between Gilbert and Mortenson.

But even that settlement failed to solve all the issues with the ballpark. Gilbert says in the suit that the actual cost of repairs is about $19 million, adding that some of the damage is related to Big League Dreams’ failure to maintain the complex.

The issue hasn’t gone unnoticed by users.

 “When you go in there, you can tell, there’re things that are just falling apart,” Hudgins said. “I don’t think there’s any safety hazard per se in the soccer field. But just overall, you can tell, there’s just not a plan for maintenance or keeping up with it.”

Venue operators claim losses

Before approving the project, the then-members of the Town Council said it could fund the construction of a big-draw recreation complex, but not the $500,000 annual maintenance it would require.

So, it entered into a public-private partnership to provide recreation facilities to residents. None of the Town Council members, who were in office when the project was being developed from 2005-2007, are in office now. The town manager at the time also is gone.

In its suit against Gilbert, the Big League Dreams accuses the town of failing to compensate its business losses caused by the flawed construction, estimating losses of nearly $149,000.

“The itemized losses provided by Big League Dreams to Gilbert did not account for the total losses likely suffered by Big League Dreams, as the difficulties in operating during construction led to disruption of various leagues, unhappy customers and the loss of repeat business,” according to the company’s suit.

“Gilbert breached the duties of loyalty and honesty it owed to Big League Dreams by using settlement funds attributed to Big League Dreams for its own purposes,” the suit also says, accusing officials of “refusing to meet to resolve the existing issues and those reasonably and foreseeably anticipated in the future.”

Gilbert refused to compensate Big League Dreams.

Big League Dreams says it has “requested on multiple occasions that Gilbert implement a rotational closure … which would allow Big League Dreams to continue business operations, and avoid employee terminations but Gilbert has refused such requests.”

The town contends that such a rotation plan would take 2½ to three years to complete and would cost an additional $5 million to $8 million.

It also blames Big League Dreams for abusing the park, contending its flawed design exacerbated the construction defects.

“Town’s experts have identified over $4 million in repairs attributed to damage caused by Big League Dreams Gilbert or as the result of Big League Dreams’ flawed design concept,” the suit alleges.

While the repairs are being done, the town will be short eight baseball fields and one soccer field until 2019.

Not that it made much of a dent in town residents’ own recreation needs: most players who use the venue belong to leagues around the country and access to residents is limited.

By agreement, paid admission is required for anyone using the venue except before 4 p.m. weekdays, when practice or “pick up” games are allowed.

The facility is frequently “under maintenance” at these times, thereby reducing the availability, according to a sports field needs assessment the town completed in 2015.

That assessment found Gilbert already short of one baseball field, four softball fields and one soccer field.

The study indicated that by 2035, the town would need seven more baseball fields, eight softball fields and 13 soccer fields to meet the demands of a projected 325,000 population.

“Even though I don’t agree personally agree with the overspending on Big League Dreams and the things that happened with it, it’s actually a great facility that a lot of players come and play at,” Hudgins said. “There’s a lot of activity that goes on there; it’s kind of sad that it’s going to be shut down until 2019.”