An informal deal between Scottsdale’s Water Resources Department and a swanky northern Scottsdale golf club has caused headaches for officials after the club threatened to sue to recoup over $1 million it invested in infrastructure on the city’s behalf.
According to a City Council memo, Scottsdale National Golf Club constructed a waterline for the city while it was already building required street improvements near the club, an exclusive 45-hole development owned by GoDaddy billionaire and Scottsdale resident Bob Parsons.
Scottsdale National had previously agreed to pay for road improvements as part of an aggressive expansion of its courses and other on-site amenities spearheaded by Parsons after he purchased the club in 2013.
Scottsdale Transportation Director Paul Basha told the Progress last year that the golf club was funding and constructing street widening along Rio Verde Drive from 116th to 122nd streets.
The club had previously come to an agreement with the city to pay for improvements to just the north half of Rio Verde Drive near the club.
However, when it became clear the city would not have the funds to complete the widening of the entirety of Rio Verde for some time, the club approached the city about funding and constructing all of the improvements, including widening and roundabouts, itself.
City staff then approached the club about constructing a waterline the city already planned to build as well – with city reimbursement.
“When possible, we try to do underground utility work concurrent with other work, so the streets are not constantly being torn up and construction restrictions to the public are minimized – such is the case here,” according to a city statement provided to the Progress.
“The golf club agreed to install the waterline on our behalf, for which they would be reimbursed. However, city staff at the time did not communicate clearly about what procurement processes the golf club would need to comply with so they could be reimbursed by the city for the work they did on the city’s behalf,” the city’s statement read.
A notice of claim submitted to the city by the club states that following the discussions, “an agreement was reached whereby Scottsdale National Golf Club would design and construct, entirely at their own cost, the 16-inch potable water transmission line … In exchange, the city of Scottsdale agreed to reimburse Scottsdale National Golf Club for all design and construction costs association with this transmission line.”
The letter states that agreement primarily took place between club representatives and Scottsdale Water Resources employees Doug Mann and Ron Dolan.
Both Mann and Dolan have since retired, according to the city.
However, the city staff and golf club failed to follow proper procurement protocols, which led the city to deny the golf club’s reimbursement request. The city’s statement said that “staff did require the golf club to get competitive bids on the work, but they did not conduct that solicitation via competitive sealed bidding as our procurement code dictates.”
According to the letter with the notice of claim, construction on the line began in fall 2016 and was completed in 2018, and the club’s contractor had previously submitted preliminary cost information for the project.
However, the procurement irregularities led the city to deny reimbursement, leading to the claim.
“Because our process was not followed to the letter we could not simply reimburse them for the work without violating our own procurement rules,” the city statement read.
According to the City Council Memo, “Scottsdale National submitted a request for reimbursement to the Water Resources Division and concerns were raised regarding whether the informal agreement made by Water Resources staff was sufficient to authorize such reimbursement. Consequently, the City initially denied reimbursement to Scottsdale National.”
The city stated that “Instead, they were instructed to seek reimbursement by submitting a claim against the city, thus the item on Monday’s council agenda.”
In a roundabout way, payment for the waterline will go before the City Council on April 15. Council will consider a $1,423,081 settlement – the full amount of the claim – to resolve the issue.
According to the City Council Memo, the costs for this project were already anticipated by the city and, if approved, the funds for the settlement will come from the Water Department’s budget.