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The Prescott Daily Courier | Prescott, Arizona

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5/6/2013 10:31:00 PM
CENTER OF ATTENTION: CFD is official owner of PV Events Center
Courier file
At the August 2005 groundbreaking of the event center, PV Town Manager Larry Tarkowski, Bill Fain, Lew Rees, Brad Fain and Wayne H. Davis faced off. A development agreement granted ownership of the building to a town CFD.
Courier file
At the August 2005 groundbreaking of the event center, PV Town Manager Larry Tarkowski, Bill Fain, Lew Rees, Brad Fain and Wayne H. Davis faced off. A development agreement granted ownership of the building to a town CFD.

This is the third installment in a series of articles on the financial status of the Prescott Valley Convention and Events Center.

PRESCOTT VALLEY - When it comes to the success of the Tim's Toyota Center, local developer Brad Fain said his family's company has an interest, but no outright ownership.

"People think we own the building, but it is owned by the community," Fain said. "We contributed the land to the project."

While the Fain Signature Group sees the center as a vital anchor to the downtown district - in which the company has a stake - Fain said its involvement stops there.

"We have a vested interest in seeing it succeed," Fain said of the arena that serves as the home to the Arizona Sundogs hockey team. "Our stake is the same as the community's stake."

That is because the building is public property, he maintains. "It is owned by a Community Facilities District (CFD), and the Town Council sits as the board of the CFD," Fain said. "So the building is really owned by the public."

The four-party development agreement that preceded the development of the Events Center corroborates that, stating that the center would "be conveyed to a new communities facilities district to be formed by the town (the Entertainment Center Community Facilities District)."

That conveyance was scheduled to take place "promptly after the PVCEC (Prescott Valley Convention Events Center) financing is obtained."

Rent or payment to the community facilities district for the building "shall be equal to one dollar per year, plus payment of all expenses of the PVCEC and all debt service payable under the PVCEC financing," the agreement added.

Town officials agree that the Entertainment Center Community Facilities District officially owns building.

That was done, they say, for three reasons: to hold title to the building and the site; to enter into the PVCEC agreement with the developer; and to establish necessary facilities regulations.

Long-term partnership

The Town of Prescott Valley and the Fain Signature Group have entered many development agreements through the years, and the agreement for the Events Center built on an existing one.

In the late 1990s/early 2000s, the two entities had partnered on the initial phases of the entertainment district, which included the Harkins Theater.

The earlier agreement had committed a 1-percent sales tax reimbursement to the Fains.

To help make the Events Center project happen, Fain said, "We would defer our 1-percent, to be applied to the building."

That is the revenue that makes up the Fain Escrow Account, which is obligated toward the Event Center's debt service, along with several other sources.

In the healthier economic climate of the mid-2000s, Fain said, "There was a good chance that we would get that back."

A section in the development agreement titled "Fain reimbursement obligations" refers to that possibility, noting that the reimbursement would be capped at $13.8 million.

Although Fain said the company is "still hopeful" about the reimbursement, he said the recession had changed the outlook. "We didn't plan for such an event for the last three, four, five years," he said of the recession.

Prescott Valley Management Services Director Bill Kauppi explained that, like the town's share of sales tax, the Fain money was to be put aside in the event the Events Center did not generate adequate revenue for the debt service.

"Hopefully, we wouldn't have to touch Fain's 1 percent," Kauppi said. "The facility was supposed to generate adequate revenues for a significant portion of the debt service."

But for the past three or four years, the center has been losing money, and has contributed no net revenue to the debt service. As a result, the town and Fain sales tax revenue has been going to pay off the debt.

Inter-related roles

Just as the Fain Signature Group has no ownership in the building, Fain said it is not directly involved with the management.

"Our job is outside the building," he said. "Our role was to build the parking lots."

The development agreement put the management of the building in the hands of Global Entertainment.

While Global provides regular reports to the Fain Signature Group "as a courtesy," Fain said the Fain company is not involved in the day-to-day operations.

Still, he has some ideas about how the center could shore up its revenues.

"I think what it's lacking are two to four signature events a year that the public would embrace," Fain said. "They need the diversity of music and the diversity of entertainment."

Also tying the Fains to the Event Center is their part-ownership in the Arizona Sundogs team.

It was that involvement that had Fain, along with marketing and public relations director Lew Rees, Sundogs general manager Chris Presson, and Sundogs team captain Jason Morgan, go up in a scissor-lift this past week to promote sales of Sundogs' season tickets.

They reached their 300-ticket goal in five days, and Fain and Rees said this week that the effort not only helped to expand ticket sales, but it also broadened the exposure of the Prescott Valley team.

"We exceeded our goal on community outreach and media coverage," Fain said. "I don't think anybody expected international coverage."

The gambit ended up getting broad coverage in Phoenix, Canada, and England, Fain and Rees said.

Fain sees the effort as helping to "bring the team and the community together." He added: "What you saw there was part of a bigger effort."

Related Stories:
• PV Event Center: Lawsuit pits investors against town, developers
• Prescott Valley Events Center seeks formula to increase profits
• Unpaid debt adds up for Prescott Valley Event Center

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Reader Comments

Posted: Thursday, May 09, 2013
Article comment by: @ @ another local guy

I think by Mall the poster meant the ED. I think the poster meant that just as Harkins tanked Wehrenberg, if the old theatre closer to Prescott is modernized and re-opened then it will tank Harkins which is showing its age no matter how they decorate the outside. Who cares about the exterior?

@Simple Solution may have it right: the CFD can simply raise it's taxes to pay more. If so, FSG will pay more. But I'd go along with @ALG and guess that FSG will pay money to settle the lawsuit at some point because unless the Pee Wee center gets more revenue or the ED gets more revenue the bonds will never, ever be paid off since the Pee Wee center goes deeper and deeper into debt. The bondholders will pursue this a long, long time.

Maybe the Courier can start a blogger pool for guesses on who and when the first suggestion for all of PV to contribute to the Pee Wee bonds will be made.

Posted: Wednesday, May 08, 2013
Article comment by: @ @ Another Local Guy

Notice lately that Harkins is refurbishing? You're not very observant. The entire exterior has been in the process for weeks now.

The PV area that you call the "mall" is doing very well and consists of one store that is the highest grossing of its kind in Arizona.

I don't think too many people will take your "predictions" too seriously.

Posted: Wednesday, May 08, 2013
Article comment by: GRUNDO How about Getting Skoog in the Picture

Love that picture accompying the article. Now where in the dickins is that out of control dumptruck?

Posted: Wednesday, May 08, 2013
Article comment by: Simple Solution: Property tax on CFD

Since Fain owns 90% of the land in the Community Facility District--Fain can pay the increased tax. That's what Tarkowski and the council did at Stoneridge so it must be fair. Good for the goose, good for Fain.

Posted: Wednesday, May 08, 2013
Article comment by: Mr Maverick

Building a hockey rink in the desert makes a lot of sense. LOL And then they wonder why it failed.

Posted: Wednesday, May 08, 2013
Article comment by: resham mann

You would think someone would show them the correct way to hold a hockey stick. It's downright embarrassing looking at them.

Posted: Tuesday, May 07, 2013
Article comment by: What's Next?

Can't wait to see what article is next in this series. Are you going to highlight the custodial staff and what method they use to clean the commode?

Posted: Tuesday, May 07, 2013
Article comment by: Unnecessary Library

With all the ranting about the arena, why hasn't anyone brought up the ridiculous expenditure that the town made when they built the new ugly library? In this day and age of technology to spend over $25,000,000.00 on a library is ridiculous!
Maybe instead of blaming a generational family that has given countless acres of land FOR FREE to this town in order to even have a "town" people should look in the mirror and decide to become involved in who you are electing to run this town and who they are hiring to staff the town, they are the ones making these types of decisions!

Posted: Tuesday, May 07, 2013
Article comment by: @ Another Local Guy

You miss the point. The Fains have nothing at risk. PV has to pay the bonds. The Fains do not. That is at the heart of this problem. Lots of people at the time pointed out the folly of this deal at the time. Just as lots of people pointed out the folly of Prescott's deal to bring in Gateway Mall. Now, both PV's ED (thank you, Bob Dole) and Mall are simply waiting to be plowed under by the latest and greatest. At some points FSG (my prediction only, YMMV) will pony up $ to settle the bond holder lawsuits. Harkins will eventually go the way of Wehrenberg unless PV gives them money to refurbish. I wonder if anyone knows when the Garcia lease ends?

Posted: Tuesday, May 07, 2013
Article comment by: are you kidding perks?

Not only do they get perks, but they get a box suite with all the alcohol they need. Hence........oh wait, let's not go there........AND they get loud mouth Lew throwing tee shirts into their box all the time. I watched a young kid stand at Lews feet one night asking for a tee shirt and he threw the last one into his box instead of giving it to the kid. Someone lit up Lew in the stands but that didnt change the fact that he gave it to his boys.......the perks for them are unlimited. Sad but true!!!!

Posted: Tuesday, May 07, 2013
Article comment by: Poor Planning

This article and comments reinforce that we need a recall of our elected officials and reorganization of our plan for the arena. With the eminent bond repayment looming over us and the pathetic goal to sell 300 season tickets in a 5000 capacity arena as a positive mark. I only ask why we continue on? Clearly it would be less expensive to close this facility and wait for another group to take it over. Just business sense alone should be to cut our losses unless Brad Fain is actually not telling the truth about their involvement. Either way it seems pointless to even discuss this issue in a town that truly is controlled by a small few. It is time for the puppets to go and take away the control of the puppet master...

Posted: Tuesday, May 07, 2013
Article comment by: Lee S

Hey, If the town owns it that's kind of like the fans owning the Packers in Green Bay.
Let's court a professional football team for the area.
Maybe someone like Giants or Raiders would want to move here!!

Posted: Tuesday, May 07, 2013
Article comment by: Ludwig Schmeerwurst Just a matter of time

If you can't dazzle them with brillance , baffle them with B.S. Well, looks like another cloud of confusion has been stoked up and sent the way of the low informed Pee Vee'er. Me?, I'm a waiting a federal investigation and the lawsuits a coming. Sure would hate to be a bandy legged Rolex Rancher or one of his Chicken Headed kids.

Posted: Tuesday, May 07, 2013
Article comment by: Government Bailouts

Small town crony capitalism at it's best.

Washington DC sets the example, and state and local governments follow their lead. A boondoggle that will suck the town dry for decades.

Posted: Tuesday, May 07, 2013
Article comment by: Another Local Guy

Amazing how hindsight is 20/20, and how easy it is to blame the Fains and town council who took a calculated risk to bring the event center here. The reality is that very few people saw the economic downturn coming and those that did, had no idea how bad it would actually be. There are towns across this country that developed similar facilities and are now heavily indebted. Take a look at Glendale's stadium. For myself, I have enrolled my kids in the great hockey program, try to make a few Sundog games when I can afford it, and look forward to better economic times in the future. Hopefully they will be sooner rather than later, thanks to the entertainment district being an overall draw to the area vs. having nothing to provide area concerts, sporting events, etc.

Posted: Tuesday, May 07, 2013
Article comment by: bob grant

It says volumes about the Fain business acumen ,they did not see the financial collapse coming ,The rest of us did,Two wars,banks and stock market behaving like sailors on their first shore leave in six months.Is the a way to elect a mng ment committee .to listen to the community as it appears at this time City folks only listen to themselves.

Posted: Tuesday, May 07, 2013
Article comment by: Mr. Public

Since the building is "owned" by the "public" and I am part of the "public" I demand free or discounted tickets to all events held in "my" building. That should just about take care of it for me. I'm sure the Fains get these perks....

Posted: Tuesday, May 07, 2013
Article comment by: Scare Crow

Pay no attention to the man behind the curtain.

Posted: Tuesday, May 07, 2013
Article comment by: Tom Steele

This installment almost makes me feel sorry for the Fains in the development of the PV Event Center, LLC. However, as written in the development agreement, there were over 12 Million "give backs" from the town not the 3 Million in contributions that we on the council were told by Brad Fain two weeks before the vote. And the section of the pre-annexation agreement ( states, Not withstanding Subsection above, the town shall also be responsible for designing and construction a new parking spaces immediately to the north and east of the MPEC which are a part of the MPEC Parking Areas by the date on which a material portion of the MPEC is scheduled for business. These spaces shall be built on Fain property and shall become fixtures thereto, with ownership thereof being retained by Fain.
The final development agreement speaks throughout the Fain Signature group would pay and the town would reimburse for these costs beyond the event center itself. The agreement also noted at the end of all payments of obligation the property would belong to the Fain Signature Group or it's assignee. This requires the town as a part of the CFD to honor this agreement even though the FSG were to sell it's interest to another party. Note also, the mayor and council in December 2006, agreed to guarantee all 35 Million in bond payments which included the event center at 23.4 Million and the parking, lighting and landscaping and infrastructure improvements.

Posted: Tuesday, May 07, 2013
Article comment by: local guy

This whole mess stinks to high heaven. Sounds like the town committed our sales tax dollars to not only paying for the hockey rink but also to private developers. Now, all involved are variously telling us what a good deal it was supposed to be or running from it like rats leaving the sinking ship. Reminds me of the horse track debacle. This deal is going to get a lot worse before it gets better- maybe public servants spending tax payer money like this should be sent packing? It appears to be all about covering their collective back sides, now.

Posted: Tuesday, May 07, 2013
Article comment by: Free Events

Since we as the Town own it and it is Our tax dollars paying it off. All PV residents should get any event free. I know it is not going to happen but since we are paying for a expensive white elephant we might as well get something for it.

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