City audit: LV Sportspark in big trouble

Erin Neff

Monday, Aug. 14, 2000 | 11:13 a.m.

City auditors claim they were denied access to operational records from the beleaguered Las Vegas Sportspark but still found evidence to suggest the public-private recreation facility is headed for financial disaster, according to a draft audit report.

An audit to be presented to the City Council on Wednesday is expected to claim Sportspark owes $5 million this month alone to its lender and has been negligent in its property taxes.

The audit also uncovered public records showing three separate liens by contractors totaling $170,000.

Philip Cheng, a senior internal auditor, wrote in the draft report that the city was "denied access to information related to the operation of Sportspark and related financial records."

Cheng's findings fly in the face of statements made last month by Sportspark partner Don Schlesinger, who pledged to open the books.

But Schlesinger, who has taken a leave of absence from Sportspark, claims the highly critical draft report is not the whole story.

"I suspect that the report in its final version does not say that we denied them access," Schlesinger said.

Schlesinger, a 36 percent owner of Sportspark's private interest, said he "took an indefinite leave" because he did not agree with the management decisions made by majority owner Linda Fernandez.

However, he declined to discuss his specific concerns, stating: "That is an internal company matter. It is not necessarily at this stage a public concern."

City Councilwoman Lynette Boggs McDonald said the city is left "in a holding pattern" because it still doesn't know the complete financial picture of its private sector partners.

"There are a lot of unknowns yet to be answered," she said.

The council called for an audit of the 1-year-old facility last month when reports surfaced about the possible sale of the private-sector portion of the deal to another operator.

Sportspark opened in May 1999 on 18 acres at Vegas Drive and Rampart Boulevard. The facility includes ice and roller hockey rinks, a snack bar, an arcade, a pro shop and softball fields.

The city partnered with Schlesinger for a 50-year agreement. Sportspark leased the Bureau of Land Management land from the city.

Under the deal, Sportspark pays $277 an acre at the start of the 50 years on a gradually-increasing scale. Near the end of the agreement, Sportspark would pay $1,111 an acre.

The audit alleges Sportspark breached its contract with the city because it changed fees at the facility without city approval and failed to notify the city of an additional financial partner.

Sportspark never notified the city when Larry Scheffler became a minority partner. Schlesinger said recently that Scheffler, a former Henderson City Councilman, is a 6-percent owner.

But Scheffler's position raises concerns because City Councilman Michael McDonald works for Scheffler at Las Vegas Color Graphics. Scheffler's business partner is Fernandez.

Neither Fernandez nor Scheffler could be reached for comment this morning.

Schlesinger disputes the auditor's findings in the draft report, claiming the construction liens are "in dispute and in litigation."

Sportspark also disagreed with the assessment made on the property by the Clark County Assessor's Office, and claims it owes no taxes.

"We do not own the land, the city owns the land," Schlesinger said.

Personal property taxes of $2,400 will be paid when they are due Aug. 28, he added.

But Schlesinger would not discuss Sportspark's apparent problem with its lender, saying only: "We are working with the lender."

Boggs McDonald is not convinced, and said the city could take over the facility, but officials would prefer selling the private sector end to another investor.

The members of the Lowden family, who recently sold the Santa Fe hotel casino, have expressed interest but are leery of investing until more financial data is known, Boggs McDonald said.

"There are so many unknowns that you can't make an intelligent decision," said Boggs McDonald, whose ward includes Sportspark. "We don't know what the liabilities are."