Steamboat Springs City Council rejects additional funding request for pickleball center as local officials slam facility manager

Feb 19, 2024

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Last week, Steamboat Springs City Council turned away a request for more tax money by the contractor in charge of building the city’s pickleball center.

The contractor, Court Sports For Life Foundation, was seeking nearly $460,000 more to complete tasks assigned under a contract approved in June 2022.

The city agreed then to provide as much as $500,000 toward the project, specifically for the replacement of the membrane, which functions as the “skin” of the building.

“With regard to the membrane that we thought was going to cost $500,000-$520,000, it now looks to cost over $900,000,” CS4L Board of Directors president Stephen Modzelewski said.

Modzelewski told City Council on Tuesday that the contractor was not asking for that increased cost of the membrane but, instead, wanted funds to repair insulation of that part of the facility.

“The only thing we’re asking for is the additional $50,000, (on) which the city has presumably earned interest over the two years from mid-2022, when we could have taken those funds to do the membrane project, to mid-2024,” he said. “The other thing that we’re asking for is the insulation, the funds needed to repair that insulation.”

Modzelewski, a professional investment manager, explained that CS4L finalized the agreement with the city even though it learned about the necessity of allocating additional funds to the facility’s insulation before that penultimate step occurred.

“That was something that we did not know when we originally negotiated the amendment to the contract,” he said. “We found out about it in the middle of the process, right as we were about to go before council to get that first amendment approved.”

“We decided we’ll just agree with it as to the $500,000,” Modzelewski continued. “We were assured by city staff that we could come back to make the request for the insulation.”

CS4L has also maintained that, in addition to insulation upgrades that are part and parcel of the building’s fabric cover, it is not responsible for an array of other costs related to the project.

A presentation from city staff shown to council indicated that among the upgrades and repairs for which CS4L denies liability — and which have not yet been completed — are $50,000 for electricity infrastructure fixes; $200,000 for HVAC system, boilers and air handler improvement; $65,000 for indoor court resurfacing; $150,000 for lighting replacement; and $150,000 for locker room installation.

City attorney Dan Foote insisted that CS4L agreed to pay those costs.

“The city is not responsible for any of these maintenance costs that CS4L is asserting that we are responsible for,” Foote said.

Discord over who should bear the project’s cost was not the only point of contention before City Council on Tuesday.

Parks and Recreation Director Angela Cosby suggested that denial of CS4L’s request would not only be consistent with the agreement, but essential to maintaining funding parity among competing demands. The Parks and Recreation Department argued that CS4L has not kept its promises, including to comply with the city’s Climate Action Plan.

Several council members noted that they see the Pickleball and Tennis Center project as having been a troubled undertaking.

Council President Robin Crossan said the contract had been “negated” by CS4L’s handling of it, while district 2 representative Joella West was even more critical.

“I am aghast at the property management so far,” West said. “Management has failed in so many ways to do what the city expected.”

Council member Dakotah McGinlay lamented the damaged business relationship between the city and CS4L.

“There’s a loss of trust and I don’t know how we regain that trust,” McGinlay said.

Council did agree to allow CS4L to increase the debt-equity ratio under the contract from 30-70 to 40-60. That change will presumably permit the contractor to borrow the funds necessary to accomplish its obligations.

Council members also signaled a willingness to impose more demanding performance expectations on CS4L.

Foote asked council to mandate that CS4L meet fundraising requirements before phase two of the project begins and allow the city to issue a “stop work” order if the contractor falls out of compliance as the second phase moves ahead.

City staff also argued for amended provisions that would give the city more freedom to terminate or decline to renew the lease. The current agreement essentially obligates Steamboat Springs to a second 20-year lease term.

Foote said his suggested changes would also clarify the contractor’s maintenance obligations.

“We have a $1.1 million disagreement as to what the maintenance obligations are,” Foote said.

Approval of the modified equity-to-debt ratio means that CS4L is likely to meet the fundraising expectations of the deal.

Phase two of the pickleball and tennis center project was expected to begin in August. Components will include installation of a steel building over the pickleball courts and construction of both a welcome center and viewing mezzanine.

During the first phase CS4L added 12 pickleball courts on a concrete slab, along with four tennis courts and expanded the parking lot by 24 spaces.

Steamboat Springs first entered into a contract with CS4L to lease and maintain the pickleball and tennis facility, and to expand it in December 2020.

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