Elk Grove's Aquatics Center Could Cost $50 Million, Private Partner Unable To Secure Financing

September 7, 2014 | When the Elk Grove City Council receives an update on the proposed aquatics center this Wednesday night, they wi...

September 7, 2014 |

When the Elk Grove City Council receives an update on the proposed aquatics center this Wednesday night, they will hear a sobering report on the failures of their private sector partner, P3 International.

While the staff update will cover initial design elements for the proposed combination competitive swimming center and water amusement park, the more crucial information is how the city's private sector partner has not met the terms of the agreement with the city. P3, which was awarded a $700,000 contract last October to conduct a feasibility and arrange for financing, is reportedly in breach of their contract.

According to the staff report, since P3 is unable to line up financing, they are requesting that the city provide all the financing for the entire facility, which is estimated to be $50 million. Under the current agreement, the city was to provide the land and $14 million, while P3 would provide a facility service provider, facility designs and securing financing.

The staff report says that "the Developer (P3) has not delivered the financing plan, nor has the Developer obtained, or identified, any verifiable source of private financing for the Project, despite extensive discussions and multiple attempts to develop agreeable terms, Furthermore, the Developer’s estimated job costing for the Project significantly exceeds the Developer’s desired level of financing. Therefore, the Developer requests that the City finance the gap and assume the risk of Project cost overruns; this request is in addition to the City’s contributions of the land and $14 million toward Project costs. In addition to the City financing the gap, the Developer requests the City finance the full cost of the Competitive Aquatics Facility, estimated at approximately $17 million, which is at least $3 million more than the original scope of the City’s cash contribution, and further requests that the City assume all operating risk of the Competitive Aquatics Facility beyond a predetermined, and unspecified, amount."

The aquatics center, which has been a pillar of Mayor Gary Davis' agenda to transform Elk Grove into a major international tourist destination, has tepid support from at least two fellow council members, Steve Detrick and Pat Hume. Both have publicly said they would support the proposal only if it is cost neutral to taxpayers. 

The staff reports recommends that the council proceed with only the competitive portion of the facility and terminate its agreement with P3 noting without the water amusement park, a public-private partnership is unneeded. It was also said that the competitive facility would operate at an estimated annual loss of $150,000 to $375,000.  

Wednesday night's meeting starts at 6 p.m.

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Anonymous said...

Aaah, that's no hill for a climber. Aquatics $50 M., MLS $100 M., Animal Shelter $45 M. Just float a Revenue Bond and we're in business with banners flying and wayfinding signs to guide the thousands to the city of dreams.

We're a ballsy or maybe some would say "crazy" city. Got anything to sell..even an idea and they'll borrow the money and buy it.

Connie said...

Here's my question to City Attorney Jon Hobbs: Since we paid P3 $700,00 for a feasibility study for project and plans they said were "feasible," but now aren't "feasible" because they can't secure the funding, do we get our money back?

Anonymous said...

Bet they forgot to add that little clause in the contract. Petty cash, bite the bullet and move on.....don't forget to put his check in the mail though.

Our first alert should have been when there were no other takers on the RFP except P3. A company in doing research on appeared to have no Aquatics experience.

Sarah Johnson said...

If they had no Aquatics experience, then that is yet another FAIL on the part of City Staff and City Council. Ask the right questions you guys!

Anonymous said...


Just another example of money being thrown down the drain.

$750,000 thrown down the toilet to join the $500,000 flushed on the Octopus Civic Center design project.

How much money has been spent by the city? This is like a dog chasing its tail.

I am flabbergasted by the "fiscal prowess" of the powers that be.

I knew the scream park would be a big flop without having to spend 3/4 of a million dollars on it.

Drano said...

Let's not forget all the separation packages too.

Anonymous said...

Another epic failure at the hands of Gary Davis! It was Davis who pulled a classic bait and switch the very night the youth sports complex was to be approved when he suddenly had another idea instead for an aquatics center. Light bulb moment my A$$! Davis must really think we are all stupid.

I can hardly wait to hear Davis’s excuse at the next council meeting.

Anonymous said...

What has Ms. Gill and the management delivered other then the ice rink?

lynn said...

Ms Gill did not come up with the ice rink plan...she did that money loosing event at the direction of council. She receives 99% of her direction from council...of course one day she will be the fall person..this will come when the city is bankrupt.

Anonymous said...

I'm pleased to see the aquatics complex moving forward w/o the water park. But it remains to be seen if this will be too large of a money suck for the city to sustain.

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