Despite previous ownership group's debts, Bartow officials still feel confident about sports complex development

TOO BIG TO FAIL? County remains optimistic about LakePoint's future

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Several years ago, the management of LakePoint Land, LLC — the owners of the $1 billion LakePoint Sporting Community complex in Emerson — came to Bartow County officials with a proposition.

Hoteliers and other prospective business partners felt shaky about the complex's ability to draw guests during the fall and winter. LakePoint Land's response was a proposal to build a roughly 170,000-square-foot facility for basketball, volleyball, track and other sports — in short, an indoor space that would guarantee traffic 365 days a year. 

Bartow County Administrator Peter Olson recalled their pitch. "It would bring our interest rate down a lot," he said, "and the indoor pavilion will help generate year-round traffic, which makes the whole thing more viable."

They strengthened their bid with a feasibility study extolling the project, which ultimately would become known as the Champions Center, as a can't-lose financial investment — one that would easily generate $10 million in annual revenue.

The Development Authority of Bartow County signed off on a $36 million bond to finance construction. Almost three years later, however, the facility hasn't lived up to its lofty economic expectations — indeed, the county expects the venue to generate just $2.5 million in 2018.

And the county remains on the hook for expenses — per Olson, to the tune of $6 million.

"We backed the bonds on the indoor pavilion — the county loaned its credit to that and the performance hasn't exactly been what was forecasted," he said. "We're having to kick in some money on the debt services over the next five years ... we've reached an agreement with Rimrock, the current operators, that they're going to ramp our contribution requirements down, from about $2.5 million this year to about $500,000 five years out."

Bartow County Commissioner Steve Taylor said that was a risk the county was well aware of heading into the deal. 

"We knew going in that the county might have been in a position where we would have to supplement payments for the first few years, so we're not surprised, really, that's happened," he said. "Of course, we would've liked to have seen it go the other way."

Olson said there were several contributors to LakePoint Land's overly optimistic revenue projections, including some erroneous return-on-investment estimates for sponsorships.

"The feasibility study suggested, for example, that LakePoint would be able to capture all the gate fees," he said. "In reality, when you get a tournament from Under Armour or Adidas or Nike, those companies want the gate fee."

Still, Olson said it's a wise investment for the county, which would get reimbursed when and if the Champions Center is sold. 

"So it's really more of a loan than a commitment," he said. "If you think over the next five or six years if that [entire] project will generate $500 million of economic impact for the region, a $6 million loan towards it isn't a very big commitment."

Even with its financial underperformance, Olson said the Champions Center is anything but a failure. He said the facility will be booked 47 out of 52 weekends this year and will account for roughly 300,000 of the complex's estimated 1.1 million annual guests.

"The goal is to try and develop more weekday traffic," he said. "And also to build the LakePoint brand to where you don't have to have an Under Armour tournament for basketball."

But if Champions Center revenue continues to disappoint, he said the county does have a "nuclear option," so to speak. 

"If their performance isn't satisfactory, we'd have the option of pulling the management of the facility from them and doing something different," he said. "That's not our preference — we think there's a lot of synergy with [Rimrock] managing it, so our interests are aligned. They want to see the indoor pavilion do well and we want to see the indoor pavilion do well."

Outside of Rimrock completely walking away from the project, however, Taylor said he can't think of a scenario that would necessitate a county takeover of the facility. 

"Rimrock's got way too much invested in LakePoint for that to ever happen," he said. "We anticipate being out of this in four to five years, and the county to be paid back fully."

As The Daily Tribune News reported in early April, California hedge fund manager Rimrock Capital Management, LLC has taken over operations of LakePoint from its original owners, LakePoint Land, LLC. Rimrock has brought in Atlanta firm GlassRatner Advisory & Capital Group, LLC to assist them with financial restructuring and workouts.

"Rimrock has been the primary capital source for LakePoint for the last five years and in 2016 the LakePoint assets transferred to Rimrock," said GlassRatner Senior Managing Director Dan Berman. "We've been working hard at doing the things that will set LakePoint up for sustained, long-term success. We're funding operations, making additional investments and evaluating new initiatives to enhance the overall offerings. We believe our involvement further strengthens LakePoint and gives it a strong financial foundation."

A LakePoint Sporting Community representative said the organization's current CFO, Bob Zurcher, was unavailable for comment.

"People keep asking, 'Did LakePoint go bankrupt?'" Olson said. "No, LakePoint is going through a restructuring. ... Basically, they're converting their debt to equity, so it's going to clean up the balance sheet. They're taking over to try and maximize their return on investment. But as part of their negotiations with us, they're going to invest at least an additional $10 million in the property, because they see the value there."

Taylor said he's quite impressed by what he's seen out of Rimrock so far.

"It looks like it's going to be a smooth transition," he said. "This ownership doesn't have a debt — that's a positive, really, in my book."

Olson said Rimrock doesn't plan on sticking with LakePoint for the long haul. But then again, he said neither did the complex's original ownership group.

"Obviously, their management strategy is to build up the visitors, build up the value of the whole proposition and at some point — and this was the same strategy with the original developers — somebody comes in and buys it out and takes it over," he said. "Ultimately, this is an investment firm ... their business isn't the operation of sports facilities [but] they're getting into that business to maximize their value in this investment. They have an exit strategy of some time frame, but I don't know exactly what that is."

Berman, however, says that is not the case. 

"We're not planning for an exit," he said."We already have invested millions of dollars in both LakePoint and surrounding land, and we plan to continue to invest ... we're anticipating 10 percent growth in 2018." 

Olson described his experiences working alongside Rimrock.

"They are extremely professional and experienced and just doing an enormous amount of due diligence to study their options," he said. "You could say the original LakePoint guys had a great vision, but they didn't quite, maybe, devote as much energy to thinking about the financing of it as they should have, because they obviously got into a position where the debt got too heavy for them." 

Rimrock has inherited the same tax abatement plan that LakePoint Land received — a 10-year arrangement with a 10 percent year-over-year increase. But there are some caveats.

"They had a structure in place that gave them a sliding scale tax abatement for any property that stayed in the original ownership of LakePoint Land, or they're at least a 20 percent member of," Olson said. "So a lot of the property has gone out of their hands, like the Chick-fil-A property … once those guys sell a property to some other operator, then there's no tax abatement on that."

Olson said the tax abatement agreement ends in 2028.

"They've mentioned trying to reopen it, but we haven't had any detailed discussions about that," he said. "This is about the last year to start and get 10 years. If they start five years from the end, they'll immediately be at 50 percent ... if you build something in 2025, you wouldn't get 10 years from there, you'd get two years and the two years wouldn't be at zero and 10 percent, they'd be at 80 percent and 90 percent."

Any parcel formerly owned by LakePoint Land (or subsequently, by Rimrock) that has been sold to another entity is taxed at market value. Olson estimated the current tax digest at and around LakePoint to be about $35 million. 

"The Rimrock folks, basically, they mostly own the north campus now," he said. "They're in the position of the developer … so they're still in control of making sure the look is consistent and that the developments are consistent with the master plan."

Berman said he doesn't anticipate any of LakePoint's holdings changing hands anytime soon. 

"Rimrock does not have plans to sell any LakePoint assets it owns," he said. "Rimrock plans to continue developing LakePoint. In the past year, we purchased additional acreage and are making investments around the project. We are a committed investor and owner and have the talent and capital to grow and sustain LakePoint."

As for that master plan, Olson said Rimrock's vision for the complex doesn't differ too much from that of the property's original owner.

"They see the sports theme as a good theme, and they are just trying to decide what would be the best way to deploy additional capital to increase the value of the whole project and drive up the traffic," he said. "They're trying to attract national-level developers to get involved with the hotels and retail. There were some projects they were about to pull the trigger on, but they exercised their right of first refusal because they wanted to get a higher quality product then I guess what was being proposed."

Taylor said he speaks with Rimrock representatives regularly. However, at this point, he said he's not quite sure what their long-term vision for the development may be.

"They have told us they are committed to the master plan," he said. "They're in the business to make money and if it's not exactly the master plan, maybe it will be something even better."

As for future development plans, Berman said Rimrock is committed to "elevating LakePoint in all respects."

"The vision for LakePoint is to be the premier travel sports vacation destination," he said. "And consistent with our institutional mindset of growing LakePoint in a thoughtful way, through analysis and success-based investing." 

A road leading to LakePoint's northern campus is expected to be completed in 14 months. That project will connect Old Allatoona Road to Red Top Mountain Road and open up several new developable parcels in the process.

"We anticipate additional development may begin alongside this project," Berman said.

The county, Olson said, is not contributing any funding to that project. While it's still too early to determine what sort of developments may arise, Olson said he wouldn't be surprised to see an assortment of non-sports related projects crop up — including potential "live-work-play" mixed-use developments a la Avalon in Alpharetta.

"They're not exactly bound to keep it exactly the same master plan the original developers worked on for the next five years, so if they decide something slightly different is more appropriate and more profitable, I would expect that's what we're going to see," he said.

Berman said Rimrock wants the northern campus to maintain a "stay and play" mindset, with "multiple and varied" dining, lodging and entertainment options.

"We're proud of the master-planned look at LakePoint. We've created a fun and unique destination for families," he said. "We serve an important purpose for travel leagues and college scouting and we hope to retain that spirit throughout the sporting complex."   

To date, Olson said Rimrock has invested at least $55 million into the complex.

"They control the covenants and they have design review, so even if it's a property that's not in their hands, you can't just say 'I'm going to do what I want,'" he said. "You're still under their master declaration that they control."

When asked if Rimrock has contemplated pursuing government funding or other public subsidies for future LakePoint development, Berman simply stated "Rimrock's involvement puts LakePoint in a strong financial position and ensures sustained long-term success for the overall development."

Although the county has made some direct financial investments into the property in the past — the county development authority put $1 million into a 2011 project to relocate Highway 293 and contributed about $650,000 in debt services last year — Olson said Bartow has no plans to allocate any more county dollars for LakePoint development.

That's a point Taylor reiterated loud and clear. 

"There will be no more county backing of bonds, so to speak, in the future as far as LakePoint goes," he said.

That's not to say the county is apprehensive about moving forward with LakePoint development, however. With reports indicating the complex is adding approximately $100 million in economic impacts to the region each year — not to mention the fact local food, bar and hotel revenue is up 80 percent over the last five years — Olson said the economic vitality of Bartow is undoubtedly linked to the financial well-being of LakePoint.

"There's a strong management team in there now and our interests are aligned," he said. "LakePoint has been a success ... I think it'll continue to develop and do well."

Taylor likewise said the development's success is pivotal for Bartow's economic future. 

"I would never say it's too big to fail, but I will say it's very important for tourism in Bartow County," he said. "People come to LakePoint, they spend a weekend, they spend their money in Bartow County shops, of course, they rent hotel rooms ... the LakePoint effect, it's just good for overall business in the total county."

Then there are the parcels on the sprawling, 1,400-acre campus that aren't owned by Rimrock — such as the spot that would've been the site of a 100,000-square-foot Bass Pro Shops Outpost.

"They offered a pretty good abatement to Bass Pro if they would build a store, but that never happened," Olson said. "They've decided they don't want to do another store, but they've still hung on to the 14 acres they purchased. I know the developers have talked to them about other concepts — maybe a themed hotel, maybe outdoor ... rope, archery, firing ranges, that kind of thing."

As for the fate of the site that was originally planned to be the location of the $750 million Avatron theme park, Olson said Atlanta-based Jacoby Development — the masterminds behind the $3 billion Atlantic Station and the $100 million Porsche Cars North American headquarters on the premises of Aerotropolis Atlanta — has made it known they want a piece of the action.

In fact, Jacoby has already announced plans for a proposed multi-use development there — Villages at Red Top, which, according to their blueprints, would include 2,000 residential units and as much as 1 million square feet of commercial and retail.

Olson, however, said Jacoby's announcement might be a tad premature.

"Jim Jacoby's been talking about kind of a mixed-use over there that would have a music-themed downtown," he said. "We've had preliminary discussions with him and he's a big plan visionary kind of guy. He's talking about potentially doing things on Lake Allatoona and having a giant development out there … but nothing concrete's been nailed down."

Considering the location is just 30 miles away from Atlanta, Olson recognizes the county is sitting on prime real estate. And even if the Jacoby development never comes to fruition, he said he doesn't expect the site to lay dormant for very long.

"You can't find big tracts of land like that," Olson said. "You can't find 700, 800, 900 acres of undeveloped land anywhere inside the perimeter, and really, anywhere like Cobb County."

The results of this month's primary elections could greatly impact the future of economic development in Bartow County — with massive implications, obviously, for prospective expansions in and around Emerson.

Voters have the ability to authorize the county to create tax-allocation districts (TADs) — specially-designated areas where increased property tax revenue can be put in tax-free bonds to finance redevelopment projects.

It's a funding strategy that's been used to get many large-scale metro-Atlanta projects off the ground, including the aforementioned Atlantic Station development. 

"There will be no tax abatements with the TAD. The people that locate inside the TAD will be paying their full freight as far as ad valorem tax or property taxes," Taylor said. "The amount that's generated from that property tax, over and above what's generated now, goes into a pot, and that money is spent on roads, water and sewer, which will eventually become public infrastructure — so it will be either a Bartow County asset or a City of Emerson asset." 

But under no circumstances, Taylor said, would money gathered by local TADs be used to subsidize developers in and around the LakePoint area.

"The TAD money can never be put into the developers' pocket," he said. "But what it will do is, once the streets, sewer and water is put in, it will help develop that property, which right now, is just a big mining pit."