Water Fights: The (Un)pleasant Story Behind the Second Marina at Lake Pleasant Regional Park
Lake Pleasant Regional Park is a perfect place to cool down, relax and escape life's worries -- unless you run a business there.
In that case, life on the lake isn't always as pleasant as its name might suggest.
Maricopa County Supervisor Mary Rose Wilcox recently raised concerns about a deal that was forged with the owners of Scorpion Bay Marina, one of the lake's two marinas, because they hired Bill Scalzo.
Scalzo is the former county park director who gave Lake Pleasant Marina Partners (owners of Scorpion Bay) a deal that requires they only kick back to Maricopa County about 2.8 percent of all the money they rake in during the year.
It's a sweet deal because in Arizona and across the country, marina operators typically pay a franchise fee that is closer to 7 percent.
Scalzo's employment with the marina caught the attention of Supervisor Wilcox.
"I recently received information that our former parks director Bill Scalzo is now representing Lake Pleasant Marina Partners regarding Scorpion Bay," she wrote in a March letter to R.J. Cardin, the current county parks director.
She was concerned because in December 2005, when the county awarded the contract to Marina Partners, Scalzo blocked protests from other marina owners who weren't pleased with the county's marina deal.
Wilcox told Cardin that she had been "very apprehensive" about approving the contract.
Cardin told Wilcox that the parks department had "became aware of [Scalzo's] involvement in early 2010, and conflict of interest concerns were raised by us to county legal counsel." However, to the best of my knowledge, he represented Mr. Mike Pretasky, a member of Lake Pleasant Marina Partners, LLP only in matters pertaining to future permitting and development that would fall under the jurisdiction of the City of Peoria."
Scalzo told New Times that his contract with Lake Pleasant Marina Partners was brief, adding that he didn't really have anything to do with the contract awarded to Scorpion Bay in 2005.
County staff put the deal together, he said.
That isn't how a former employee with the Bureau of Reclamation, the federal agency that has jurisdiction over Lake Pleasant, remembers it.
"When [Scalzo] says he didn't know anything about it or wasn't involved, that's just not true," said Bill Miles, a former recreation management specialist with the Bureau. "He knew about it from Day One."
The Bureau was part of the process as the county worked to develop that second marina.
One of the protesters that Scalzo blocked was David Maule-Ffinch, a member of Pensus Group, the parent company of Pleasant Harbor Marina.
He is paying the Maricopa Water District (which owns the portion of land where he built Pleasant Harbor) about 7 percent for the privilege of a waterfront business on Lake Pleasant.
Maule-Ffinch offered to give the county roughly the same rate of return if he was allowed to build the second marina, but he was turned down repeatedly by county park officials.
Not only were his bids rebuffed starting in 1993, but by the time the county rolled out proposals in 2003 and 2005, the park officials made sure he couldn't bid at all -- by adding a clause prohibiting anyone with an existing business near the lake from participating.
That language was included in the RFP despite protests from Miles, who was overseeing parts of the project.In a 2002 e-mail, he wrote to a Maricopa County administrator that the version of the marina RFP that was approved by the Bureau was not the same one released to the public, citing that it contained an exclusionary clause that the Bureau of Reclamation hasn't approved.
"Directives and guidelines for concession contracting in federal lands have been developed to ensure fair competition before and during the RFP and contracting processes," Miles wrote. "Therefore, I would recommend the County issue a RFP addendum and change ... back to the [BOR] approved version."
Not long after that, Miles was removed from the marina project.
Scalzo started soliciting proposals for a second marina in 1993, after the county lost a legal battle to block the Maricopa Water District -- which owned land on the southeast end of the lake -- from opening its own marina.
The Water District's victory gave way to Pleasant Harbor Marina, a privately-owned marina that has been open to the public since September 1993. Business on the lake blossomed, and marina owner David Maule-Ffinch opened 640 wet slips and 750 dry slips for boat owners to park their watercraft, retail shops, The Village Store and Azul Boutique, the Waterfront Grille, a full-service restaurant, a bar and (it's worth noting) restrooms with granite counter tops.
Déjà vu for Scalzo? He had just left the City of Toledo, where he worked as the Director of Natural Resources. There, he had been responsible for finding a concessionaire to develop the International Park site on the Muamee River. Scalzo found a developer for the waterfront project, but they pulled out and accepted a competing offer on the other side of the river. When Scalzo left Toledo in 1992, the site remained undeveloped.
He arrived in Maricopa County, started working to build a marina for the county, and again, he is beaten to the punch.
It set the stage for a contentious relationships between Maricopa Water District, Maule-Ffinch and Scalzo as evident in 15 years worth of failed attempts to open a second marina at Lake Pleasant Regional Park.
New Times asked Scalzo why the RFP was issued again and again, even though there were experienced bidders (like the owners of the profitable Pleasant Harbor Marina) offering to pay a 7 percent franchise fee.
He reiterated that he hadn't been involved with the details, that he was busy with other roles in the county and that's why he hired good staff.
Miles sensed something far different.
"He wanted Pleasant Harbor Marina people out of the picture, no matter what," he said. "I truly believe that."
Maule-Ffinch bid on the very first proposal the county issued in 1993 for a company to build and operate their desired second marina. He offered to pay 7.1 percent of his gross revenues. Two other applicant offered less, but when county park officials called for "final offers," one applicant's bid jumped form 5 percent to 7.3 percent.
Scalzo was ready to hand them the bid, but negotiations fell apart.
Maule-Ffinch got a letter from Scalzo in 1994 telling him that the applicant with the highest bid backed out, leaving Maule-Ffinch's company, The Pensus Group, as the highest bidder. But, instead of giving Pensus the deal, Scalzo said the county was going to start the process from scratch.
In 1998, the county sent out another round of request for marina proposals. Maule-Ffinch, again offered the same 7.1 percent of his revenues. It was the highest bid, and only one of two offers. Instead of accepting Maule-Ffinch's offer, the county again scrapped its request for proposals.
Again in 2003, the county put out a request for marina proposals, only this time they made sure that Maule-Ffinch couldn't apply. They built into their guidelines an ''anti-competition clause" that prevented anyone with commercial interest near the lake from bidding for the marina.
No one responded.
In 2005, the county puts out yet another request for a marina operator, and it also excluded Pensus Group from applying.
The county got one bite, and that was from Lake Pleasant Partners, who offered a graduated fee scale, where the county gets 2 percent of the first $3.5 million in revenues, 2.5 percent of the next million the company brings in, 3 percent of the next $1.5 million and 4 percent of any revenue between $6 million and $8 million.
It was no surprise that other marina owners weren't interested in the county's offer given its terms: 1)Whoever built the marina could not mortgage it in any way, not even to finance the project. 2)The successful bidder would have to turn ownership of the marina to the county -- without any compensation -- at the end of a 35-year lease.
Who would bid for the opportunity to invest millions into a marina only to walk away empty-handed after 35 years?
Perhaps someone who knew those weren't really the real terms?
After the county awarded Lake Pleasant Partners the contract to build and operate the marina, the terms changed drastically.
The county gave the developers the right to mortgage whatever they wanted in connection with the marina and, instead of handing over the marina keys to the county at the end of the lease, the county was now on the hook to buy the marina at 90 percent of its market value.
Bryan Church, the owner of Bartlett Lake Marina, didn't even submit a bid when the saw the county's initial terms.
Neither the county's back-room approach nor the final deal that Lake Pleasant Partners got sat well with other marina owners
Church wrote in a court document that he would have likely bid had he " known that the county would be willing to negotiate, in private and without notice to potential bidders."
The county awarded Lake Pleasant Marina Partners the contract to build Scorpion Bay Marina in December 2005, and the marina was supposed to open by January 2007. It didn't open until May 2008, and then closed almost immediately because it didn't have the right permits. It opened again six months later.
County officials touted keeping Maule-Ffinch and anyone else with a business near the lake as a way to prevent a monopoly. With a monopoly, the public's best interests wouldn't be served, they argued.
But consider this:
If avoiding a monopoly was so important, why wasn't that language included in the first request for marina proposals the county issued? Or in the second, third or fourth?
If the public's best interest is the priority, why would the county agree to such a low franchise fee for Scorpion Bay Marina? Even if it's loaded on the back end, where the county gets a bump to 9 percent starting the 21st year of the contract, it still seems like a steady 7 percent would yield higher revenues.
If Scorpion Bay Marina earns about $8 million in gross revenues a year, they would hand over to the county about $9.2 million over the life of the 35-year contract.
Had the county accepted Maule-Ffinch's 7.1 percent bid, its coffers would have swelled with $19.88 million -- that's almost $11 million more over that 35-year period.
The lost revenues don't exactly serve the public's best interests.