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Sussex debates $1.5 million loan for sports center

Council has yet to finalize zero-interest deal
December 10, 2017

Story Location:
Sand Hill Road
Georgetown, DE
United States

After a spirited debate, Sussex County Council agreed to a memorandum of understanding with the Sussex Sports Foundation that could lead to a $1.5 million zero-interest loan from the county for a new sports complex in Georgetown.

The foundation had requested a $1.5 million grant to help toward construction of the $4 million Sussex County Sports Complex in Georgetown off Route 9 along Sand Hill Road.

“You will still have the final contract to be drafted and voted on,” County Administrator Todd Lawson told council during the Dec. 5 meeting. “This is very little commitment at this time. The terms will be spelled out in the contract for a second vote.”

He said loan terms would reflect comments made by councilmembers during the meeting.

Lawson said county staff took Councilman George Cole's idea for a loan instead of a grant and vetted it. “This provides more security for the county; it's a significant amount of money,” Lawson said. “The foundation would have preferred a grant, but they will accept a loan with the terms outlined.”

Terms, as proposed by Lawson, include no payments for the first five years and no payments if the complex loses money with no time limit on the number of years the loan can be extended.

Foundation officers have also asked county officials to consider taking ownership of the complex and its programs after five years of operation. The complex is within Georgetown town limits.

“The bigger question that has to be asked is does county council want to get involved in the parks and recreation business. That's the bottom line,” said Councilman Rob Arlett, R-Frankford. “I support moving forward with the MOU to get more details, but I have grave concerns.”

Arlett suggested council take a step back and establish a working group to get input from parks and recreation stakeholders from throughout the county, not just Georgetown.

“Are we reacting to an ask or should we respond for planning for the long term?” Arlett asked.

In the 4-1 vote, Councilman Sam Wilson, R-Georgetown, voted against the proposal.

“Why are we involved in this?” he asked. “Why are we giving Georgetown money? Why not give other towns money? We have to be careful.”

Wilson was also concerned about competition with other sports and recreation programs already in place.

Cole and Arlett expressed concern that there was no time limit on how many years the loan could be extended.

They also asked what would happen if the foundation did not need all of the county funds. “Can we do $1 million and they can come back to us if more money is needed?” Arlett asked.

Lawson said it's assumed the foundation would count the total amount in its capital budget.

“It would be like a construction mortgage and could only be used for construction, not as contingency,” county attorney Everett Moore said.

Councilman I.G. Burton, R-Lewes, said county officials should look seriously at public-private partnerships such as the proposed sports complex. “It has merit on economic development as much as it has on parks and recreation,” he said. “The devil is in the details.”

Foundation member Joe Schell has donated 57 acres of land for the complex, which will contain eight grass playing fields, eight pickleball courts, 350 parking spaces, a restroom facility and a 3.1-mile trail.

Lawson said the foundation's financial plan includes raising $2.5 million in private funds and the $1.5 million loan from the county.

The project received preliminary site-plan approval in October from Georgetown officials. Foundation Vice President Bobby Horsey said construction could start in February or March. The grass would be planted in June and July with construction concluding in late summer or fall 2018. Since the grass needs time to mature, play will not occur until spring 2019.

Administrator presents possible terms

Lawson laid out the following possible terms for a loan:

• Foundation raises and spends the first $1.5 million.

• County funds would be made available after the first $1.5 million with the county processing payments after invoices are presented for work completed in $100,000 increments up to $1.5 million.

• 40-year loan at zero percent interest, $37,500 per year.

• No payments due the first five years.

• Payments made only in years without losses and when the foundation’s contingency fund is at $400,000. Terms of the loan would be extended each year a payment is not received.

• County places a lien on the property.

• Loan is forgiven if the county takes over the property.

• Annual audits required.

• Foundation board would be responsible for operating facility with the county having two members on the board including the county administrator or finance director and a councilman.

• After five years, county officials have the option to take over the facility and operations.

• Contract to be drafted, presented and voted on by county council.

Lawson said county council's decision allows staff to proceed toward a path to draw up a contract. “We will have a legal presentation to make to you so you can make a good decision,” he said. He said it may take several weeks before the matter will be placed back on an agenda.

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