Scottsdale Independent

City awarded $50K in legal fees defending Stuart TPC Scottsdale allegations, suit

The Waste Management Phoenix Open, known as “The Greatest and Greenest Show on Grass,” is the best-attended golf tournament in the world and has gained legendary status for being the most unique stop on the PGA TOUR. (File photo)

Editor’s note: an earlier version of this story was published prior to Mr. Stuart responding to a request for comment. His comments have been added below.

Maricopa County Superior Court has awarded the city of Scottsdale $49,845.30 in legal fees stemming from its defense of a lawsuit filed by two local residents challenging construction costs for improvements made to TPC Scottsdale.

In summer 2014, Mark Stuart, along with resident John Washington, filed a lawsuit in Superior Court alleging financial arrangements surrounding TPC Scottsdale improvements made two years prior to the 2015 PGA Tour stop in Scottsdale were in violation of state statue, among other claims.

“The city believed strongly from the beginning that using city funds to improve a city asset so vital to the city’s tourism industry was clearly within our legal authority and now the court has agreed,” said Scottsdale Public Affairs Director Kelly Corsette in a Feb. 6 statement to the Independent.

“Defending against this suit, however, has cost taxpayers a substantial sum of money, and we are gratified that the court has also awarded the city compensation to help offset those costs.”

Mark Stuart

Mr. Stuart says the ruling was done “under a veil of secrecy” and is an unprecedented ruling.

“Yes, under a veil of secrecy, never before seen in Arizona, the judge issued a ruling in which he argued that Scottsdale taxpayers should be stuck with more than $50 million in guaranteed losses because of  corrupt deals by former city employees and elected officials,” he said in a Feb. 8 statement to the Independent.

“A courageous Scottsdale citizen, Tom Giller, filed a motion to unseal the trial records. This was denied by the Judge, because the public does not have right to know how public money is being spent in Scottsdale.”

Mr. Stuart says he is seeking another trial.

“We are asking the court for a new trial for a variety of reasons including misconduct by the city attorney and some of the city’s witnesses,” he said.  “We will most likely have a new trial.”

Last November, Maricopa County Superior Court Judge Daniel J. Kiley dismissed the case brought against the city of Scottsdale by Mr. Stuart, who falsely accused the municipality of violating the state’s gift clause and the municipality’s own anti-subsidy provisions.

The case was originally dismissed Wednesday, Nov. 1, 2017, at Maricopa County Superior Court, 201 W. Jefferson St. On Tuesday, Jan. 23, the court awarded the city nearly $50,000 in restitution for taxpayer dollars used to defend the allegations against the city.

In the original filing of the case, both Mr. Stuart and Mr. Washington filed suit against the city claiming the TPC Scottsdale arrangement violated the Arizona Constitution and Scottsdale City Charter.

However, Mr. Washington was no longer listed as a defendant in the 2017 Superior Court dismissal ruling, records show. It appears legal fees will be paid solely by Mr. Stuart who did not accept an offer for judgment on this in October 2017.

In his January 2018 ruling, Judge Daniel J. Kiley explains legal precedence puts legal fess associated with expert witness fees and taxable court costs on the plaintiff. In this case that number is $49,845.30.

“A party who rejects an offer, but does not obtain a more favorable judgment must, pay as a sanction … the offeror’s reasonable expert witness fees and double the taxable costs … incurred after the offer date,” Judge Kiley said in his final judgment citing Arizona case law.

Mark Stuart at a 2017 Scottsdale City Council moments before being removed. (Screen Shot)

The case reloaded

TPC Scottsdale is at 17020 N. Hayden Road, and has been leased by the city of Scottsdale since 1986 through a land use agreement between the municipality and the United States Bureau of Reclamation, court records show.

TPC Scottsdale is home to the annual Waste Management Phoenix Open, which is widely regarded as one of the most well-attended golf events on planet Earth, and has just wrapped up its annual event in north Scottsdale.

Records crowds and unprecedented TV and social media presence were on-hand just last weekend at TPC Scottsdale. (File photo)

In 1984, the municipality entered into a longterm lease and management agreement with TPC Scottsdale, which is the Tournament Players Club network of golf courses operated by the PGA Tour.

Under the provisions of that agreement the city would construct two 18-hole public golf courses and related amenities and lease them to TPC, which was to “operate and oversee” the property “as a golf facility open to the general public” and to “maintain the golf facility in first-class operating condition,” the 2017 Superior Court ruling states.

Initial tenets of the lease agreement with TPC Scottsdale called for annual rent payments equal to 10 percent of “golf course income” and 2 percent of total sales income, the ruling states.

The city of Scottsdale receives about $900,000 annually in rent payments and the original cost of golf course construction was about $14 million, court records show.

Several amendments have occurred to the original agreement between municipality and golf course operator spurring nearly $13 million in improvements done at the course site by TPC Scottsdale.

But a sixth amendment to the original lease and management agreement that occurred in December 2012, records show, required the city of Scottsdale to conduct up to $15 million worth of improvements at the golf course site.

Subsequent Scottsdale City Council approval of the capital improvements to be used with tax dollars stipulated, “the city will obtain an extended PGA tour event guarantee, a national television guarantee, and an increased percentage of golf revenue payments,” the ruling states.

In a report sponsored by the PGA, it was determined the national television coverage carried a value of $15.9 million, according to a study conducted by a company titled, “Repucom,” records show.

Through Scottsdale City Council approval, the municipality financed $15 million with a voter-approved bond issuance in 2015 with work completed sometime in 2015, court records show.

Mr. Stuart made what have now been found to be false claims Scottsdale was in violation of Article 9, Section 7 of the Arizona Constitution and Article I, Section 3 of the Scottsdale City Charter.

The Maricopa County Superior Court disagreed.