Questions may linger about the financial merit of SportsQuest, the planned $250 million sports complex off Genito Road that's getting a helping hand from taxpayers. But officials from Chesterfield County maintain that the project's a sound business proposal on solid ground.
Apparently they didn't always think so. E-mail correspondence between county economic development officials, SportsQuest's chief executive, Steve Burton, and an official with Shaw Industries, the contractor providing turf fields for the first phase of the project, reveal it nearly fell apart last month.
In the weeks leading up to Chesterfield County's stroking a $4.3 million check to Burton to help jump-start the project with a 20-year lease, county officials and Burton engaged in combative exchanges about finances and terms of the deal, according to e-mails obtained by Style Weekly through a Freedom of Information Act request.
The e-mails contradict the sunny public-relations campaign the county and SportsQuest have mounted as a project generating 500 new jobs and millions of dollars in tax revenue — a glowing economic development victory in recessionary times.
Garrett Hart, the county's development manager of new business, told the Chesterfield Board of Supervisors on May 26 that SportsQuest's Burton had “enough money to complete the project.
“Burton has shared with us his sources of funds, as well as the expenses for the project,” Hart told the board. “He showed us his methods of financing, and his private investors. Those sheets balance.”
In e-mails between Hart and Burton a little more than a week later, however, those balance sheets had a $30-million hole. Hart sent Burton a tersely worded e-mail June 4 questioning SportsQuest's ability to secure $30 million in federal stimulus bonds. Hart wrote that Burton clearly wasn't in a position to float the bonds by June 15, which was the federal deadline at the time, nor had he requested an extension.
Hart writes: “At this point, we do not believe this can happen, so the financial information that supports the Performance Agreement is incorrect and without the bond funds we do not see you being in the position to fulfill your commitment to the full project of $100 million in three years.”
Burton responds that the deal is complex, and that the $30 million in bonds aren't necessary to fulfill a key portion of the deal related to a $2 million performance grant tied to SportsQuest's investing $80 million and creating 500 jobs. Burton shoots back to Hart: “a last second denial of the $2MM would not only serve up a lob for a crushing public blow to SportsQuest which is not only undeserved, but would be an act of bad faith given our historic discussions / commitments.”
Burton requested an extension from the county and state on June 11 for the $30-million bond allocation, and SportsQuest's bond underwriter, Anderson & Strudwick, submitted a support letter to the state June 15. The bonds now must be sold by October.
But issues remain. The county was able to negotiate an agreement that secures its $4.3 million investment with a lien on the property until the fields are complete. As for the larger project's financing, Hart expresses concerns that Burton isn't taking the issue seriously and hasn't submitted the prerequisite proof — including a detailed financial audit and market feasibility study — that the bonds will sell.
“It may not concern you that you are going to sign an agreement with us committing to create $100 million in capital investment with no financing in place but it does concern us,” Hart writes to Burton on June 4.
Reached by phone Monday, Hart stands by his comments to the board May 26, explaining that his assessment of Burton's finances assumed SportQuest would be able to sell the $30 million in bond allocations. Hart says the county received the support letter from Burton's bond underwriter, but Hart doesn't know the status of his feasibility study.
Burton says SportsQuest is “deeply engaged in the process of the bond transaction. We've talked with actual buyers of the bonds, and are in the midst of providing those materials.”
In previous interviews, Burton told Style that he had the capital and millions of dollars in revenues to develop SportsQuest without the county's investment. In February, Burton said he had $50 million in financial commitments from investors and other revenue streams. His project was so flush with cash, Burton said at the time, that the first phase of the project — including the 17 turf fields, an amphitheater and now a senior center — would be constructed with “zero debt.”
But the e-mails show Burton desperately needed the county's $4.3 million to finance the project. “Shaw's decision not to fund further draws until the county closing has placed our project at risk for fall opening,” Burton says in an e-mail to Hart on June 24, referring to Shaw's commitment to provide $15 million in artificial turf for the 17 fields. “The net would likely be a divorce between [SportsQuest] and the county, which would be at best difficult to manage in today's difficult political climate.”
On Monday, Burton says a Style reporter was taking the e-mails out of context. Burton says he needed the cash upfront because SportsQuest sped up the timeline for constructing the first phase, primarily the 17 turf fields, due to Chesterfield's planned use for the them. Otherwise, he says, SportsQuest wouldn't build all 17 fields right away. “We would have phased at a different pace, the fields,” he says.
Shaw, however, was clearly uncomfortable with the arrangement.
Chuck Dobbins, director of corporate assets for Shaw Industries, which is installing $15 million in turf, sent Hart an urgent e-mail in late June threatening to stop construction on the fields if the county didn't close on the $4.3 million agreement with Burton by June 30.
“If the signing does not occur by Wednesday of this week (June 30), delivery of the project will be in severe peril,” Dobbins writes to Hart on June 28. “We are not in a position to commit the additional funds necessary to keep the project on track until the final documents are signed and there is a definitive commitment for funding.”
Officials at Shaw didn't return calls seeking comment by press time. Hart says Shaw didn't receive any of the $4.3 million, and was concerned about the status of the overall project. “None of it went to Shaw,” Hart says of the $4.3 million. “They were trying to make sure [SportsQuest] had enough money.”
Burton says the overall project was never in question, and that Shaw's threat to pull the plug related only to the county's commitment. Delays pushed the closing to July 12, and the county announced in a news release that the deal had been signed July 14. Just 12 days earlier, however, Shaw had nearly pulled the plug.
“For your information, we are sending [Burton] a notice today related to our rights due to the failure to close by June 30,” Dobbins writes to Chesterfield's Hart in an e-mail July 2. “I really need these issues resolved this morning so that I can avoid needing to completely stop the project.”