A TopGolf driving range in Allen, Texas. Image courtesy TopGolf
The deal to bring the high-tech driving range TopGolf to the city-owned The Lakes at El Segundo golf facility has hit a snag.
The City Council earlier this month agreed to reexamine the financials of the proposed new golf range after TopGolf’s local partner, CenterCal, failed to execute its end of the contract. CenterCal, a development company based in El Segundo, did not sign a contract tentatively agreed upon last November that was expected to be a routine, 30 to 45 day exercise in due diligence.
“At this point in time, CenterCal has not executed the agreement and returned it to us,” City Manager Greg Carpenter told the council at its August 5 meeting.
The Council found itself in the unusual position of discussing contract negotiations in public, open session. An opponent of the TopGolf project, attorney and Manhattan Beach resident Debra Geist, last October accused the council of state open-government violations and filed a cease and desist order seeking to prevent the council from further discussing the matter in closed session. Rather than fighting the order, the city simply deferred the matter, as negotiations at the point had appeared to be concluded.
City Attorney Mark Hensley told the council it could move the negotiations back into closed session but would need to notify Geist, a process that would take six weeks. In the meantime, he said CenterCal’s non-action has left the matter in a fog.
“Where we are right now is we are uncertain if the process is moving forward, or when it is moving forward,” Hensley said.
The agreement had been nearly two years in the making and had been through an extensive process that involved more than two dozen council, commission, and task force meetings.
TopGolf is a Texas-based company expanding throughout the nation. Its concept involves a patented, high-tech reinvention of the traditional driving range. TopGolf uses microchip-embedded balls and field sensors to make a driving range into a game that tracks every shot a golfer makes. Additionally, TopGolf facilities include a social component, with as many as six players able to play together while being served food and drinks in a high-end lounge-style environment and an adjoining corporate meeting facility.
But that entertainment component left many longtime Lakes supporters with the belief that their beloved hometown driving range would be rendered unrecognizable and unaffordable. In November, however, TopGolf appeared to have made it through those political hurdles, including vocal opposition from users of the current, decidedly lo-tech driving range.
The company won approval from the City Council to build a $20 million golfing entertainment facility. The city sought to generate more income from its financially underperforming driving range. Now the process may be returning to square one.
“There is no agreement at the moment,” Hensley said. “Council can decide it no longer wants the agreement.”
Such a decision seems entirely possible. Council approved the original agreement in a contentious 3-2 vote, with Councilman Carl Jacobson and then-Councilwoman and current Mayor Suzanne Fuentes opposing the deal. Former mayor Bill Fisher, a TopGolf supporter, has since been ousted. Councilman Mike Dugan, one of the most outspoken opponents of the project, defeated Fisher in May’s election.
Dugan, a former Chevron executive, has performed an extensive analysis of the deal and said last week that the city’s financial assumptions were wildly incorrect. He said that counter to projections that TopGolf would bring in up to $400,000 for city coffers, revenue would be at most $50,000 and likely even lose money.
“At the November 4 meeting, the ex-mayor told me I was wrong,” Dugan said. “Council told me I was wrong. But it looks as though I was not wrong with my numbers…We have a deal that is going to lose and cost the city several million dollars during the life of the project.”
Councilman Dave Atkinson, who early in the meeting delivered an impassioned defense of the TopGolf deal, said he was open to seeing Dugan’s financial analysis of the deal.
“I am all for more discussion – I mean, if we don’t have the right data,” Atkinson said.
Councilwoman Marie Fellhauer, who also supported the TopGolf project, expressed disappointment that the decision had been based on possibly inaccurate information.
“As any leader, you are relying on certain people to give you information,” Fellhauer said. “If that information was incorrect, or in any way inaccurate, we ought to look at it.”
In the end, the council chose a dual track, voting to issue notice of a closed session on the matter and to receive a full presentation of Dugan’s financial analysis of the deal at its next meeting. Dugan opposed any further closed sessions on the matter. Atkinson said whatever happens, the city has to find a way to get closure on what has been a long, divisive process.
“We need to get the numbers, and put it to bed one way or the other,” Atkinson said.
Correction: An earlier version of this article incorrectly stated that no representatives from CenterCal or TopGolf were at the Aug. 5 El Segundo City Council meeting. Two CenterCal representatives were present and spoke to the issue. Easy Reader apologizes for the inaccuracy.