By Cecilia Chan, GSN Managing Editor
Gilbert has turned down local businessman Jamie Hamzeh’s proposal to run the indoor soccer pavilion at the beleaguered Elliot District Park – and he says officials are gambling with tax dollars.
Although Hamzeh guarantees a return for the town without further burdening taxpayers, town officials decided to pass on Hamzeh’s bid and opted to take operations in-house – saying they can do it more cheaply and realize a bigger profit.
Hamzeh begs to differ.
“The public needs to know that they would rather risk the taxpayers’ money than take a guarantee, which I am willing to offer,” said Hamzeh, adding:
“Gilbert believes that they will make more money from one soccer field than they will from eight baseball fields, which is impossible. I’m trying to help them realize that before they make a big mistake like with Big League Dreams in the past.”
The town issued a request for proposals on June 25 for the operation of the pavilion and/or the batting cages at the 272-acre park near Powell and Elliot roads as it tries to recover from the Big League Dreams debacle.
Gilbert is in litigation with Big League Dreams, which oversaw the park since its opening in January 2008.
Almost from the beginning, it has been a nightmare for the town, which had to sue the company that built it for millions of dollars in structural defects.
Since then, Gilbert has claimed that Big League Dreams failed to perform adequate maintenance, creating the need for millions of dollars more in repairs.
Things came to a head last year when the town abruptly shut down the park with the 20,000-square-foot pavilion, eight scaled-down replicas of famous ball fields that includes Fenway Park, Wrigley Field and D-Back Stadium and other amenities.
Officials cited the immediate need to fix what they said were significant safety issues and blamed Big League Dreams. The park is expected to re-open in February.
The town’s request for proposal called for a ground lease for the site for up to 20 years with up to two 10-year options and for the lessee to pay for any improvements and ongoing maintenance and operations costs during the lease.
Hamzeh, who owns a pizzeria business with two locations in Gilbert and four others in the East Valley called Geno’s Giant Slice, appeared before Town Council to present his story after his bid was rejected.
He had lined up a management team that included a 2016 Arizona Youth Soccer Coach of the Year and an assistant coach of Arizona Arsenal youth soccer team.
Under Hamzeh’s lease proposal, Gilbert would receive $15,000 a month for $180,000 a year.
It also includes revenue sharing to be paid quarterly – 3 percent to the town for revenue of $500,000 to $700,000; 5 percent for revenue of $700,001 to $1 million and 7 percent for revenue over $1 million.
The Gilbert resident’s proposal included $609,600 in upgrades to the pavilion funded by him and improvements such as removal and replacement of the soccer field, additional fire sprinklers, new seating, painting and signs.
The proposal also showed the schedule for various types of league play and the anticipated revenue from them.
“I know that I can be profitable in this venture, so the numbers will pan out,” said Hamzeh, who played collegiate soccer at Arizona State University and was a patron at the pavilion when it was under Big League Dreams.
Parks and Recreation Director Robert Carmona said the town received two bids, Hamzeh’s and AZ Grip-N-Rip’s in Queen Creek for operating the batting cages.
“The town decided not to move forward with either of the proposals and operate both internally,” Carmona said.
He said staff reviewed and scored Hazmeh’s proposal and decided it was in the town’s best interest to keep operations in-house.
“It didn’t appear to offer a variety of activities to the community,” Carmona said. “The complex is more than a soccer complex. I think it allows itself to host lots of different indoor rec programs, different turf sports, flag football, tournament rentals and youth programs and we do lots of toddler sports classes and things of that nature.”
Carmona said the estimated annual cost for the town to operate the pavilion is $142,000, with anticipated revenue from that facility of $558,000 a year.
Hamzeh calls that revenue estimate “highly inflated and highly unrealistic.”
“Gilbert believes that they will make more money from one soccer field than they will from eight baseball fields, which is impossible,” Hamzeh said.
Carmona stands by the estimate.
While the pavilion is referred to as a soccer venue, Gilbert’s vision is to use it for other indoor field sports, summer camps, special events and recreational programs, Carmona said.
“The town does operate recreational centers and things of that nature, so we feel comfortable that the market is out there,” he said. “We are currently doing it at other facilities.”
With the town operating the pavilion, in its first year it would see $221,000 in revenue after taking out the $142,000 annual operating costs and $195,000 for one-time improvement costs, according to Carmona.
Net revenue for the town over 10 years is estimated at nearly $4 million.
If Gilbert were to go with Hamzeh’s proposal, the town would net between $195,000 to $221,000 annually and over 10 years, $2 million to $2.5 million total, he said.
Before the park opened, Big League Dreams projected Gilbert would receive $1.4 million in direct benefit annually.
Since the opening in 2008, the company generated $28 million in gross revenues but gave the town $990,000 during the same period, according to court documents in the legal case between Big League Dreams and Gilbert.
Carmona declined to comment on Big League Dreams given the two entities are still in litigation.
Carmona said one-time capital improvement projects for the pavilion will include a new playing field and interior and exterior paint estimated at $195,000.
There will be no new seating or additional fire sprinklers because what is there now meets town code, he added. New kitchen equipment for the snack bar as proposed by Hamzeh will be handled through a concessionaire contract, Carmona said.
Under the Elliot District Park draft business plan, the town’s takeover of operations for the entire park except for two restaurants and a concession stand will cost $2.3 million a year – $1.3 million for staff and $950,000 for maintenance and programming.
The plan anticipated the town will see $1.2 million in revenue – $769,000 from programs, $280,000 from tournament and field rental fees for the baseball/softball fields, $65,000 from restaurant and concession contracts and $36,000 from the batting cages.
Because the expected revenue will fall short of expenses, it means taxpayers will have to subsidize the park to the tune of $1.1 million annually.
Councilmen Victor Petersen and Jared Taylor in August expressed doubts that operating the park in-house would save taxpayers money.
The town’s plan does include additional revenues that could be realized, such as the potential of sponsorships and gate fees for promoter-run tournaments, which could boost the town’s cost recovery from 51 percent to as high as 71 percent.
“As the facility develops and the programs continue, the department expects the facility to be operating at a 65 percent to 75 percent cost recovery, while most municipal parks operate with a 25 percent to 30 percent cost recovery,” Carmona said.
Taxpayers are already on the hook for $37 million in bonds the town floated to build the park, shelling out $3.7 million per year in debt service, which is expected to be paid off in fiscal year 2020-21.
“I want to give Gilbert something no one else has, an elite field with premier coaching, but it was turned down,” Hamzeh said. “They turned it down to make a couple of bucks that in my opinion is not realistic.”