Bettplex developer Doug Kratz – signing emails "frustrated" and demanding city legal staff rather than his attorneys draft revisions for an amended development agreement – stands to get an additional $1 million subsidy from city taxpayers for his sports complex.
The amended development agreement – scheduled for consideration by the city council Tuesday (March 5) – increases the city's cap to pay for streets, sewers, sidewalks and storm water infrastructure at the sports complex from $3.78 million to $4.65 million.
Council members already have been briefed by City Administrator Decker Ploehn on the revised agreement in private 3-on-3 meetings in order to avoid public discussion of the proposed revisions and not run afoul of state Open Meeting law.
Bettendorf.com obtained the proposed revisions to the development agreement, along with emails exchanged between Kratz and city officials, under a Freedom of Information (FOI) request.
At a point in email exchanges, Kratz's insistence on having the city legal staff handle his proposed changes to the development agreement triggered a rebuke from Ploehn: "Chris (City Attorney Chris Curran) is not your lawyer and cannot be drafting more comments for your review ethically without having your attorneys review," Ploehn wrote in his reply to a Kratz email. "He is trying to protect the cities (sic) interest not your interest. That is his job.
"We have been trying to do this assuming that Joe and Dick (Lane & Waterman attorneys Joe Judge and Richard Davidson) are reviewing it as well," Ploehn wrote. "Remember we have $1 million overrun on the storm sewer which has caused some consternation on our end. We are all trying to pull in the same direction and I think it's better if we speak on the phone versus email."
Ploehn's email came after Kratz wrote him stating: "I'm not spending money on something that is so simple to correct. Thus far, have asked Dick (of Lane & Waterman) to do nothing with regards to this matter."
Kratz is seeking to avoid any financial liabilities associated with the cost overruns for the sports complex infrastructure built and paid for by the city. That work was capped under the current development agreement at $3.87 million.
The city, however, has already paid far more than that amount, prompting Kratz and the city to begin the process to amend the agreement to reflect the much higher costs.
In addition to boosting the city subsidies of the project to $4.65 million, Kratz has asked for an additional $185,000 "economic development grant" to "aid in the expansion of the Bettplex project, which may include additional parking or acreage for the Bettplex project." The city also is agreeing to pay an additional $35,000 for sports complex walkways.
Under both the current and amended agreement, the city gives the developer (Middle Road and 80 LLC owned by the other Bettplex developer Kevin Koellner) a first option to acquire a 10-acre parcel owned by the city next to the sports complex for $600,000. The city already has had the property rezoned for commercial use on behalf of the developer, but has yet to finalize the transaction and receive the $600,000 purchase amount.
The Bettplex recently was awarded $2.5 million in sales tax rebates over a 10-year period from the State of Iowa. Under the amended agreement, Kratz would pass along to the city 20 percent of that amount, or a total of $500,000 over the 10-year period.
In an email to city officials Feb. 25, Kratz outlined specially what he wanted done in the revised agreement and told Ploehn he was "offended" by the city "worrying about less than $600,000 of cost overruns. . . when I had to personally deal with over $3 million of cost overruns (mostly due to soil stabilization)?"
His email laid out terms of the revised agreement in terse bullet points similar to an order to a subordinate rather than between two equal parties negotiating an acceptable compromise:
"Item 3. Just eliminate any language that indicates that the Bettplex has any contingent liabilities. With the Bettplex being awarded the sales tax credit from the state, it no longer is on the hook for any monies owed the city other than 20 percent of what it collects from the state in sales tax credit. End of story. As an aside, can you imagine how offended I am to have the city worrying about less than $600,000 of cost overruns (and maybe not even that dollar amount if certain other city infrastructure commitments come in under what was originally budgeted, not to mention the monies coming in from a portion of future sales tax credits) when I had to personally deal with over $3 million of cost overruns (mostly due to soil stabilization)? Once the sales tax credits were approved by the state, all bets were off as to any other contingent liabilities due the city from the Bettplex with regards to infrastructure cost overruns."
"Item 7. Just state what Decker (city administrator) and I agreed to. . . $185,000 tied to the purchase (by the Bettplex) of land adjacent to its current holdings of land bound by Middle Road and Forest Grove Road. Alternatively, you can insert language stating that the $185,000 will be granted to the Bettplex when Middle & 80 (the LLC owned by Kevin Koellner) acquires from the city a certain parcel of land (put in legal description) along Forest Grove Road, said acquisition to occur on or before________."
