Sportsplex USA and Poway reach settlement over lease billing error

The City of Poway has reached an agreement with Sportsplex USA, which has agreed to pay nearly $42,000 of the approximately $66,000 it was undercharged for six years under its land lease with the city.

Since 1994, Sportsplex USA has operated a public/private recreational sports facility on a 15-acre parcel it leases from the city in the Poway Business Park.

Under its lease, the company pays Poway a flat rate — $48,000 each year — plus a percentage of its annual gross revenues. The underbilling began in 2010, when the revenue payments were set to increase from 7 percent a year to 8 percent. The uptick didn’t kick in and the company continued paying the 7 percent and the city didn’t notice.

The error was finally caught in early 2016 after the city did a review of all its contracts in response to another, more costly billing error involving $800,000 of lost revenue for city water used by Pomerado Hospital.

The city and the Sportsplex officials have been in negotiations for more than a year and a lawsuit was never filed. At one time, mayor Steve Vaus publicly said Sportsplex needed to pay everything it owed the city, but City Manager Tina White this week said the statute of limitations would have restricted how much the city could have recovered to only three or four years of underbilled payments had the matter gone to court.

Vaus this week said all is copacetic.

“It’s good to have this issue behind us,” he said. “They’ve been a great partner in the past and I look forward to continuing a mutually beneficial relationship in the future.”

The Sportsplex USA lease generates roughly $100,000 in city revenue each year.

“Sometimes these things take time to get everybody seeing the facts the same way,” Vaus said in response to why it has taken so long to reach a settlement. “We finally had a meeting of the minds.”

The amount of money Sportsplex will pay is considerably more than had been agreed to earlier. In June of 2016, then-Poway City Manger Dan Singer had agreed to a settlement of about $16,000 but failed to tell the City Council, not only about the negotiations with Sportsplex but also anything about the billing error. Part of that agreement was that $10,000 would go toward the Tony Gwynn Memorial that has since been erected at Lake Poway.

The memorial was paid for strictly through donated funds and Vaus was furious that money that otherwise would have gone into the city’s general fund had been earmarked for a statute of Gwynn.

When the members of the council heard about how they had been kept in the dark, several expressed disbelief. Singer resigned from his job about a month later after the council voted not to renew his contract.

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jharry.jones@sduniontribune.com; 760/529-4931; Twitter: @jharryjones

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