5-31-2024 2:13pm

Rocket City Fun Center Update and What to Do Next?

Chris Edwards Editor

The Alamogordo City Commission had an extensive discussion around the Rocket city Fun Center on Tuesday. A report and guidance from staff for the Rocket City Family Fun Center Alamogordo transpired with city manager, Rick Holden providing information and seeking guidance.

The facility is in potential litigation and thus there could not be any discussion concerning the status of the potential litigation or Mr. Chun individually at all due to the ongoing dispute. Mr. Chun led the company that was the former lease holder of this city owner property.

Thus the conversation focused on future planning when and if the dispute and or litigation is resolved.

Mr Holden explained to the commission that they “need to provide staff some guidance so that the staff can work to resolve, that building we own out there and where we are going with it, and what’s going to happen to it next.”

Mr. Holden explained there are 3 options on the table once they get past potential litigation on how to move forward:

1. Sell the Building Outright - the city had it appraised. It appraised for more than the city owes on it. If sold that would then allow the proceeds to be used to pay off the bonds that are outstanding which are $5.2 Million.

2. The city could lease the building out to someone else to operate as a fun center similar to the last transaction. That would require a process of RFP’s and the city would have to layout guidelines of what is expected of the operation.

3. The less preferred option by Mr. Holden would be for the city to run a fun center. That would require the city to create another department, probably within Park and Recreation.

There may be some other options to consider but above was the primary per Mr. Holden. He continued that he has no idea, when they will be free of litigation to go after this at 100% but he would like a plan to be ready to move when the time availed itself.

He explained if they chose to go step 2 they could begin planning for an RFP and drafting some options for consideration within framework given. If they are interested in the city running it they could lay out a plan for that, if they moved to sell it then they can begin the legal work needed to make that happen after the litigation is settled.

Mr. Holden went on to address the ballot language around the bond that was passed to pay for the project of the Rocket City Fun Center. Stephanie Hernandez, Ast. City Manager joined the discussion.

There has been much discussion that the citizens voted for bowling alley, there was literature around the bond that said it could be this, it could be that, but the actual verbiage on the ballot stated that voters were “to approve a recreation center, the specific verbiage was that bond could be issued for the purpose of building, beautifying, improving, acquiring, constructing, equipping, and improving land and building for public parks, and related recreation facilities, project includes a public recreation center to be located at site 8 Mesa Verde Village.”

Mrs. Hernandez mentioned in addition to the appraisal there was a rental appraisal and “there is no more $2,000 a month. The rent appraisal per square foot was from $9.00 to $12.00 or $315,000 a year or up to $26,500 per month. Taking the rate down to 75% of appraisal due to market conditions still makes the rent around $20,000 per month. I’d rent was reduced to 25% of value then rent would still be around $7,000 a month.”

Mrs. Hernandez was concerned with an operator being capitalized to operate such a large rent expense thus there was a recommendation that if the property is sent to RFP there be two, one for the restaurant operator and one for the recreational facility.

And if it were to be brought in internal then clear direction of what does that look like? There was little appetite for the city to run the facility.

Commissioner Rardin opposed any discussion of breaking up a RFP and said Brunswick was interested until a local business owner dissuaded them from coming to Alamogordo. He then explained Brunswick is excellent operator and has the finances to do a deal here.

The fact is Brunswick completed its exit from the bowling business with the sale of the bowling equipment and products division to BlueArc Capital Management, a private investment firm based in Atlanta, Georgia. BlueArc completed the acquisition with investments from Gladstone Investment Corporation, a publicly traded business development company in McLean, Virginia, and Capitala Finance Corp., a business development company in Charlotte, North Carolina. On November 15, 2019, Brunswick acquired Ebonite International and all of its bowling product brands. The PBA and Brunswick assets now owned by Bowlero which has been involved in controversy and litigation in recent years.

By 2017 the company was facing further scrutiny and more than 50 lawsuits from former employees at various company locations who claimed to have been terminated for their appearance.
More recently the bowling business had consolidated and rebranded Bowlero with nationwide revenues have increased 7.0% to $337.7 million versus the prior year. They have no locations in New Mexico with one in Phoenix. They typically operate in large urban centers.

City manager Rick Holden asked “if the commission would consider just selling the building?” and Mrs. Hernandez said “it would help the city’s debt capacity.”
The public perception was that it would be a recreational center concept which is not really what transpired.

The commission guidance per Nick Paul’s recommendation was to speak with some major commercial brokers that specialize in this type or property or transaction and see what the interest might be and the reality of selling at the level to pay off the bond.

Additionally the direction was to draft some potential RFP’s for consideration to see if there is interest from another operator.
City management will be back with further information at a future meeting for cleaner considerations.

The facility history has been embroiled in controversy since it was first planned.

A bond measure approving the project was voted down by Alamogordo residents then approved two years later by voters for a family fun center. Construction began in December 2016, with City officials selecting Downtown Venture Corp. and its President Jay Chun to manage the facility in August 2017.

In addition to the near $6 Million in bond money provided by the taxpayers the taxpayers also provided $1.5 Million in LEDA money. The City of Alamogordo provided Downtown Venture Corp. with $1.5 million in LEDA funds in August 2017 to make upgrades to the facility.

In September 2018, the New Mexico State Auditor's Office sent a 12-page letter to Alamogordo city officials outlining alleged violations of state and city statutes throughout the development of Rocket City.

City officials issued a press release in early October of 2018 outlining “steps to ensure taxpayer money is safeguarded and the citizens are served best,” including reviewing the ways in which the City undertakes construction projects, reviewing local LEDA ordinances, and drafting an ordinance that clarifies how LEDA dollars can be spent.

Mr Holden went on to tell the commission several individuals and groups have expressed interest in the building and they would report back at a future meeting after researching a potential sales and or the RFP option.