Field of Dreams
When Westfield built Grand Park, the city hoped the sports facility would be a hit with developers. But two years later, debt—not hotels and restaurants—surrounds the campus.
In baseball terms, Westfield was behind in the count. By 2007, the city’s neighbors in the southern half of Hamilton County already had established themselves. Carmel boasted a posh reputation and a burgeoning arts-and-design district. Fishers had affordable housing and great schools. Noblesville featured a historic downtown with a trove of local businesses. Westfield was growing, but it lacked an identity.
That year, the city brought together a committee of tourism officials and citizens, who came up with the idea of a sports complex that would attract acres of shops, restaurants, and hotels. Developers pitched sites. Local sports groups suggested facilities for baseball, tennis, and soccer. City officials promised new businesses and tourists. They even tried to trademark the moniker “Family Sports Capital of America.” Finally, seven years later, a sleepy swath of farmland transformed into a youth sports destination.
When the Grand Park Sports Campus opened in June 2014 on 191st Street, it introduced nearly 60 outdoor fields. In terms of visitors, Grand Park was an instant hit. In 2015 alone, the place drew nearly a million out-of-towners, amounting to a $148 million economic impact on the larger area. And those numbers are expected to be even higher in 2016 with the addition of two indoor sports facilities that will attract outsiders and their wallets year-round. Hamilton County tourism officials say Grand Park has brought so many visitors during the summer months that county hotels are overflowing. In fact, the influx has caused the Hamilton County Convention and Visitors Bureau to adjust its marketing strategy to promote the area as a fall destination, so visitors have a better chance of booking rooms.
But there’s a problem, and it could be a big one: Those numbers aren’t necessarily translating into dollars for Westfield. The city has lost money on the sports park over the last two years, and the facility closed 2015 with an operating deficit. Westfield also has to pay the multimillion-dollar bill for the park’s construction, and to do that, it’s relying on commercial development that hasn’t yet come to the empty fields that surround the grounds. Most of the visitors are staying and spending elsewhere.
Taxpayers weren’t anticipating having to finance the park, but as hotels, restaurants, and shops that would have paid for it have been slow to move to Westfield, that’s looking more and more likely. “If it’s a project that you expect to break even, developers make it happen,” says Justin Ross, an associate professor at Indiana University whose area of expertise is local government finance. His worry, based on research in other places, is that taxpayers may end up on the hook—like it or not.
Until Grand Park came to Westfield, the city of 35,000 didn’t really have a major attraction. A quiet mix of small businesses and churches comprises its downtown. Most of the denser development sits a few miles south along 146th Street near the U.S. 31 exit, where the Clay Terrace outdoor mall beckons shoppers to Carmel. Westfield hoped a sports complex would change that.
Taxpayers weren’t anticipating having to finance the park, but that’s looking more and more likely.
Today, Grand Park sprawls along 191st Street. Signs with arrows help guide visitors down roads that wind through farmland and end in parking lots and sports fields. The park includes 26 baseball and softball diamonds, and 31 multipurpose fields for soccer, lacrosse, and football. There are also two indoor recreational facilities. The Grand Park Events Center, which will house three indoor soccer fields, a restaurant, and office space, is scheduled to open next month. The privately owned Jonathan Byrd’s Fieldhouse, which has volleyball and basketball courts, opened in January.
Despite the park’s impressive size, the city never expected the facility to make much money. Westfield officials say Grand Park’s indoor and outdoor fields are supposed to be revenue-neutral; their primary purpose is to attract development to the area that surrounds the park. “The overarching goal was to develop an industry for Westfield in order to diversify the tax base,” Westfield Mayor Andy Cook said in a written statement.
Cook declined multiple interview requests through city spokesperson Erin Murphy. In an email, Murphy said the city hoped Grand Park would be “celebrated,” not investigated. In his statement, though, Cook said that Governor Mike Pence’s selection of the sports complex as the site of a March announcement about road funding was “a testament to the success of Grand Park.”
But Grand Park is proving to be a costly economic-development tool. The park has yet to break even. Westfield owns the outdoor fields, but it allows sports groups to run them and take a portion of the field-use fees. In 2014, the park brought in about $1.2 million and its costs exceeded $1.6 million. In 2015, the park grossed nearly $1.8 million and its expenses totaled just under $1.9 million. The city also paid about $50 million to build the outdoor fields, Grand Park spokesperson Michelle Krcmery said in an email. Westfield took out a $45 million bond to help cover some of the costs. That bond will be repaid using property tax revenue from new development surrounding the park, whenever it comes.
The Grand Park Events Center is being built by Holladay Properties, which Westfield will have to give $53 million in lease payments over the next 25 years. And there are more costs. Westfield has been leasing 203 acres of the sports campus and plans to buy the land in the next two years. The city will pay around $32,500 per acre, bringing the total to nearly $6.6 million. The park also borrowed $6 million from the city council in 2014 after issues arose with turf installation.
Normally, visitor spending would offset some of those costs. Youth sports teams and their families spent nearly $97.2 million in 2015, and that number is expected to grow to more than $104 million this year, according to a Grand Park economic-impact report commissioned by the city. However, much of the 2015 visitor spending probably didn’t occur in Westfield. The park’s 1 million visitors last year spent an average of $97.39 per person, but only 77 cents of that could be attributed to onsite purchases at the park. The other $96.62 accounted for food, lodging, retail, entertainment, and transportation purchases that happened elsewhere. Currently, Westfield has only one hotel (a Holiday Inn Express whose address says Carmel), so most teams that need to stay overnight have to find rooms outside the city.
There’s another potential concern for the park’s bottom line, too: It turns out that Westfield’s idea to tap into the youth sports market isn’t as unique as the city initially thought. Two more sports complexes could open soon in Indiana, one in the same county. An indoor sports campus has been proposed for the northeast side of Fishers. Although the company behind the project has struggled to secure financing, the plan includes a 4,200- to 6,000-seat arena that could accommodate hockey, volleyball, basketball, and wrestling, as well as concerts, according to information provided by the city of Fishers. And another large sports complex is under construction in Portage, where it may open later this year. The privately funded Sport Resort will include a mix of indoor and outdoor fields, courts for basketball and volleyball, and a track. Tony Czapla, managing director of Sport Resort, said the parent company plans to build eight to 10 of these facilities across the country, with at least 800 miles between each location to avoid competition. Grand Park is only about 150 miles from the Sport Resort in Portage, but Czapla expects the overlap will be minimal. “Is it competition? Well, yeah, kind of sort of,” Czapla says. “I think we will compete for some tournaments, but we don’t think it’s going to be a knock-down, drag-out. Tournaments are going to go and look at the amenities and determine who fits their program the best, and that’s who they’ll go to.”
According to Westfield city-council president Chuck Lehman, there’s no reason to worry about Grand Park’s future. “I couldn’t imagine any business that would expect to be profitable on day one,” he says. Lehman assures residents that the city’s finances are sound, and he thinks the benefits of Grand Park will outweigh the costs. The financial numbers are only one part of the equation, he contends. “If we’re afraid of risk or we have to make a payment, does that mean we don’t do that?” he says. “No, that means you take as little risk as you possibly can, but at the end of the day, there’s still risk involved. I don’t know how you can do anything with zero debt.”
But others are concerned that the city could end up in trouble. City councillor Cindy Spoljaric often offers the lone dissenting vote on Grand Park spending. She supports the idea of the facility, but the funding sometimes makes her nervous. The council doesn’t have enough information about the park and where the money is going, Spoljaric says. For example, of the $6 million the council loaned the park in 2014, about half was supposed to go toward resolving the turf issue. She’s still not sure how the park used the rest of the money, and there was no proposed plan for the park to pay the city back. “The agreement basically says, as money becomes available, we’ll get paid back,” Spoljaric says.
It’s simply too early to tell if Grand Park is a good investment, according to John Ketzenberger, president of the Indiana Fiscal Policy Institute, a nonprofit that analyzes issues related to government spending. “It’s a high-risk, high-reward situation,” he says. “It seems they’ve embarked on a very complex and risky plan that, if it works, will position Westfield very favorably going forward. If it doesn’t, it will leave Westfield with a very difficult fiscal situation.”
Ultimately, developers will decide the park’s worth.
When Westfield built Grand Park, the city added sidewalks and roads to prepare the area for all the commercial development it hoped would spring up around the project. But except for the Wellbrooke assisted-living facility and a lot of signs touting available acreage, that infrastructure currently leads to empty fields.
Grand Park’s ability to attract development will determine the city’s ability to pay the debt on it without dipping into current taxpayer money. Westfield plans to use tax-increment financing (TIF)—property tax money from new development—to help pay the $45 million bond on the park. The TIF district that supports Grand Park covers the land at the site of the park, as well as land adjacent to the intersection of State Road 32 and U.S. 31, and part of downtown Westfield. Those TIF areas also are being used to support the city’s downtown project, Grand Junction, so getting enough development to fund both is crucial. To pay off the park, the TIF areas will need to attract about $220 million in new assessed valuation, Westfield chief of staff Todd Burtron says. Jonathan Byrd’s Fieldhouse brought about $9 million in new assessed valuation, and the city is waiting to see how much a cluster of new retail along State Road 32 will add.
“Development is coming,” says councillor Spoljaric. “It’s probably not coming at the rate we would have hoped for.”
Spoljaric and Lehman are optimistic that 2016 will be a big year for hotel construction. Three are reportedly on their way: a Cambria Suites, a Hampton Inn, and a hotel developed by Jonathan Byrd’s. In addition to providing much-needed rooms in Hamilton County and adding $60 million in new assessed valuation, the hotels will help ensure some visitors spend money in Westfield when they come to Grand Park.
Westfield hopes new retail will help solve some of the problem, too. Henke Development Group is trying to lure developers to 220 acres south of the park that will become Grand Park Village, a mix of shops, restaurants, and offices. A lake covers about 15 acres, and nearly 24 acres are already spoken for, so about 181 acres are open and waiting for business. “There’s a lot of interest in the area,” says Brad Henke, who helps handle marketing and land development for his family’s company. “I think it will go pretty quick.”
The Cambria Suites was scheduled to break ground this spring, and construction on a shopping center near Grand Park developed by the Greenwalt Corporation was supposed to begin soon after. But as of publication, the project remained stalled. “We need leases signed before we can go forward,” says Aaron Greenwalt, a member of the company. Grand Park was one of the reasons Greenwalt chose to build another shopping center a few miles south along State Road 32, but the existing traffic along 32 helped that project come together faster than the shopping center at Grand Park. Greenwalt expects more developers to head north now that the indoor facilities promise year-round visitors. “For the park, we were waiting for it to get up and running,” he says. “It was just a little bit too early before.”
In the next few years, Grand Park may find a way to break even. The city is trying to sell naming rights to the park, which could bring in $400,000 to $500,000 a year. And the trickle of development that’s slated for Westfield this year could lead to the deluge that was originally expected. Hamilton County tourism officials even hired an outside consultant to explore the possibility of attracting sports-research facilities and equipment manufacturers.
But Ross, the IU expert on local government finance, isn’t convinced that development will cover the debt. “Even when you have TIFs, that doesn’t mean that the government is off the hook,” he says. “If the money in the TIF account isn’t enough to pay the bonds, [tax money could be used]. Nothing is free.” He adds that the park could still be worth taxpayers’ money, though, noting that many municipal services, including public safety, don’t pay for themselves. But he says taxpayers should keep an eye on the project’s costs and think about what they’re comfortable paying. “If my city is considering these things,” Ross says, “I ignore the story that I’m not going to have to pay for it.”