March 22, 2012 News » Cover Story

Buddy system 

The city's doubling down on public-private partnerships. And as history shows, they are a gamble

They were supposed to save the city.

But not just save it; save it without sacrificing any of Colorado Springs' treasured conservative principles. Save it without a tax increase, without an expansion of government, without any debt, and without a dreaded "fee."

We speak, of course, of the public-private partnership.

Long sainted by right-wingers as an answer to dwindling government services, the concept was given new life by City Council in late 2009, when the recession bottomed out the budget and left many key city assets facing closure. Suddenly, the city's pools and four community centers were test cases.

"The only other option we had at the time was to close everything," Council President Pro Tem Jan Martin remembers. "So partnerships were something worth considering to keep the facilities open."

When the dust settled in April 2010, two community centers and three pools were in partnerships. Each was unique.

Westside Community Center was handed over to Westside Community Center, LLC., a charity of a nonprofit arm of Woodmen Valley Chapel, which promised to run the center in a secular capacity.

Meadows Park Community Center remained partially city-funded and under city control, but began raising much of its funding from a broad-based group of private and nonprofit partners.

Colorado Springs Recreation Center, Wilson Ranch Pool and Portal Pool were contracted to a private company, Swim Colorado Inc.

Two years later, one of those celebrated partnerships has fallen apart, but the march toward privatization continues, both in the form of smaller, little-heralded achievements and big takeovers. Even parks may soon be on the table.

Mayor Steve Bach, committed to never raising taxes and eyeing a plummeting 10-year economic forecast, already has warned some city assets that public funding in 2013 is unlikely. That means that many valuable governmental entities will be grasping for something, anything, that can keep the doors open.

"I need to step forward and ask people to help us," the mayor says. "And I'm getting a lot of good reaction."

But the past two years have taught Colorado Springs to think more about pragmatism and compromise than snap-your-fingers salvation.

Drip, drip, dropped

In October 2011, the city voided its contract with Swim Colorado. The company's owner, Kevin Dessart, cried foul. To this day, it's tough to get a city employee to comment on what happened, other than to say that Dessart broke his contract.

City Attorney Chris Melcher says the city fears legal action. Dessart says he doesn't plan to sue; he just wants an explanation.

To him and his wife Tina, it's like a betrayal, a cold dismissal of nearly two years spent turning around three city pools that had hemorrhaged money while under city control.

Kevin Dessart describes courting customers, ironing out business plans, working late shifts to accommodate the crowds, and even scrubbing years of scum from walls and floors. He's been left with no pools, a basement full of now-useless equipment, and about $150,000 in debt.

"What kills me is — what happens now is, it was painted as a failure," he says. "But when you really look at it, it's a success. A year and a half, two years is not a long time to turn around a decade of money being lost. ... I mean, somebody told me, 'Don't feel bad about this.' I don't feel bad about this. I know what we've done is a success. I know it works."

And Dessart has his supporters. Trade magazine Aquatics International named Dessart one of its "Next Gen Power 25" leaders in its February 2012 issue for his work on the pools — even as it noted that the partnership had collapsed. In mid-October, USA Swimming had sent a letter to Dessart, applauding his work and stating that in 40-plus years of pool operations, the organization has discovered it takes two years to turn pools around, and three to approach profitability.

Dessart was well on his way, it seemed. Wilson and Portal pools turned a profit in 2011, together bringing in more than $42,000. The Colorado Springs Recreation Center, meanwhile, lost $22,000.

Under city control in 2008, the three pools lost more than $678,000 total.

Katie Ivacic says she used the Recreation Center for a yoga class for herself and swimming lessons for her 5-year-old daughter. "The people working were amazing," Ivacic says in an e-mail of Dessart and company. "Very helpful and friendly."

Richard Rowe, another Rec Center user, says "[Dessart] made people feel welcome." Staff helped him with his fitness questions, more programs were offered, and equipment, particularly a previously broken-down hot tub, was kept in good repair.

Notably, Dessart didn't hike basic fees too much. An adult day pass to any of the pools was $8, cheaper for kids and seniors. (City-run Cottonwood Creek Recreation Center charges $7.50 for adult admission.) Other services, however, were pricier. Swim lessons, in particular, cost $80 under Swim Colorado. The city charges as little as $25.

But it was not overall profitability or disagreements over fees that ultimately sank the Swim Colorado partnership.

It was utility bills.

Early in the contract, Swim Colorado reported that a significant leak in Wilson Ranch pool was swallowing money, and that an aging and inefficient water heater at Colorado Springs Recreation Center was eating up energy. As owner of the buildings, the city was responsible for big-ticket maintenance.

The city fixed a leak at Wilson in 2010, though it never replaced the Rec Center's water heater. While the issue of who was responsible for what charges was worked out, the city paid the utilities bills on the pools.

In March 2011, Dessart and the city signed an agreement for Swim Colorado to repay the city its share of the costs, agreed to be $125,538.02. Dessart would pay monthly, starting with a $1,000 bill in May 2011 and increasing his payment by $1,000 monthly until July 2012, when the bill would be $15,000. A final August 2012 payment of $5,538.02 would wrap up the ordeal.

Dessart wasn't able to pay according to that schedule. But he cites complications: Wilson was still leaking — apparently there was more than one hole — and wasn't fixed until the end of the season in 2011, and Dessart never got a line of credit he was counting on to cover costs. He defaulted in October.

But it wasn't fair for the city to terminate his contract, he says; the Utilities repayment plan specifically stated, "The parties agree to restructure this agreement, if necessary, contingent upon the outcome of the Letter of Credit currently being pursued by the Concessionaire, and only if the Letter of Credit is not approved."

"I just wanted to get to that point where I don't rely on city dollars," Dessart says. "I never wanted to rely on city dollars, because this is what happens when you rely on city dollars: When things get tight, it goes away."

Dessart notified the city in September that he might have to close the Recreation Center to make ends meet. Eventually, he submitted three alternative plans to rework his contract and resolve the utilities debt. Each offered the city perks, and sought a cure for the utilities bills, whether from a subsidy, a longer payment schedule or a trade-off.

At most, Swim Colorado wanted $150,000 toward future utilities bills, and its current debt excused. Other proposals were much less costly. But the city turned down each offer and provided no remedy of its own.

"They never came back and said, 'Hey, how about we do this?'" Dessart says.

He has his suspicions about why things went down as they did. E-mails reveal that in the spring and summer of 2011, the city was working on a public-private partnership to open Monument Valley Pool.

Dessart's contract included a "right of first refusal," meaning he had first dibs on city pools. He attempted to exercise that right in order to run any programs at Monument Valley, should the pool open. That deal eventually fell through, but not before the situation irked some in city government.

"Quite frankly, I'm needing you to strongly consider the removal of provisions 2.6.2 G and H," City Procurement Services Manager Curt DeCapite wrote Dessart on Aug. 3. "These clauses give you the right of first refusal to provide programming and pool management. When the contract was written these were beneficial for both parties. As time has progressed we feel a modification to the agreement is needed."

Dessart, of course, responded as most people would when asked to give something up with neither a reward offered nor punishment threatened. He said no.

Plan Y

Steve Cox, the city's chief of economic vitality and innovation, doesn't have a lot to say about the now-defunct partnership. But, in a broader sense, Cox says the city has to embrace the bad with the good to be innovative.

"We need to be able to try things," he says, "and even fail."

With the pools, the city is already trying again. Bach and City Council have endorsed a plan to turn over all but one of the city's aquatics resources to the YMCA of the Pikes Peak Region in April. The Y will run Cottonwood Creek Recreation Center, the Aquatics and Fitness Center at Memorial Park, Portal Pool, Wilson Ranch Pool, Monument Valley Pool and Prospect Lake Beach. Valley Hi's pool will remain closed under the deal for competitive reasons.

The pools will still be owned by the city, and the Y will strive to keep fees affordable, offering financial assistance when needed. The March 13 Council vote was 8-0.

"The city tried to run the pools," Councilor Angela Dougan said that day, as though appealing to naysayers in the audience. "They didn't succeed. Another smaller businessman tried to lead two pools, and he wasn't able to succeed."

Dessart, of course, feels differently, and not just because he actually managed three pools. Especially since the Y's agreement includes a $425,000 annual city subsidy, plus any extra it may require to break even.

"I just feel like I got stabbed in the back again," Dessart says. "They're really looking at over $400,000 to the Y? Holy crap. That's a lot of money. I mean, we made two of those pools profitable; they didn't need any money from the city."

Martin, too, noted early on that the subsidy was "a lot of money," and that Council was still waiting for a full report on what sunk the Dessart arrangement. (Council did get an explanation in closed executive session on March 12.) At the same time, she said, the Y was the only option being presented to open the pools, and added, "Everything I know about the Y, and their ability to manage facilities, is all positive."

In its first year, the Y subsidy isn't expected to exceed $632,350. YMCA President/CEO Dan Dummermuth says the Y will work to reduce the amount of subsidy it needs year-to-year, and notes that if the Y ever makes a profit on the pools, the city will get a percentage.

A final contract will depend on backroom talks between city and YMCA officials. Some issues that'll probably come up, judging from points of interest in the Council meeting, are what hours the pools will be made available to non-YMCA members; whether the Y will accommodate the city's Therapeutic Recreation program, which serves people with disabilities and injured vets; and what religious overtones the city facilities will have, given the Y's status as a "Christian organization."

So far, Dummermuth has said non-YMCA members will be allowed to visit city pools only during "open swim" times, at a cost of $6 for kids, $8 for adults, and $25 for a family. But there's no minimum for open swim times at a pool. Programming is designed individually for each facility based on visitation patterns, and can eat up many pool hours.

The Y will keep the city's therapeutic program in 2012, and Dummermuth says the Y is "very open" to keeping it going indefinitely.

When asked about the religious end of things, Dummermuth is less clear. He notes that each Y posts its mission statement, which is built around adherence to "Christian values," and also asks its members to sign a document saying they will uphold those values. He's not sure if those features will go away at the city-owned pools, though he says he'll be examining other YMCA-municipal partnerships across the country for guidance.

"We can take a look at that, and we'll work with the city to see where we need to go on that," he says. "But you know, we are who we are."

The YMCA has past and present ties to the city. Councilor Merv Bennett was the Y's previous CEO, and though he initially said he'd recuse himself from voting on the matter because he "couldn't be objective," he later reneged.

"I feel I don't have a conflict of interest," Bennett asserted on March 12. "I understand my relationship to the YMCA, as you do, but my responsibility now is not to the YMCA. My responsibility is to the city of Colorado Springs and its citizens."

Back in the late 1990s, Bennett was also leading the YMCA when a similar deal came before Council. The city at that time agreed to pay $4.6 million to subsidize the building of the Southeast Family Center/Armed Services YMCA, at 2190 Jet Wing Drive, a part of town considered underserved.

The city didn't tack a lot of requirements to its contribution, and today, evidence of that partnership appears limited to a plaque on the wall and "open swim" times at the pool. Adult admission for a single swim is $10.

Taking a village

In contrast to the pools, the two community-center partnerships seem unequivocal success stories.

Meadows Park Community Center, which could have been dark and empty by now if closure plans had commenced, is instead in a state that program coordinator Brian Kates describes as "controlled chaos" on a recent Thursday afternoon.

In one room of the maze-like former strip mall at 1943 S. El Paso Ave., grade-school boys play "store," one proudly holding up a deck of cards to demonstrate his considerable "profits." Down the hall, youth programming director "Mr. Bob" Rais is consoling a girl following a disagreement with peers. In the gym, a tiny boy is hurling a foam ball, while others attempt basketball. Outside, assistant youth director "Mr. Robert" Bethel is watching kids on the playground.

Kates and his few employees can't police the entire after-school scene, so they bring in teens who volunteer their time. Some have long histories with the center. Miguel Roacho, who just turned 18, started coming to Meadows as a 4-year-old. At 12, he began volunteering. At 16, the center hired him for part-time work, and this summer, he'll be full-time.

"I was born here and raised here, that's what I like," Roacho says of the center. "...It helped me. Instead of going into the streets, the community center led me right."

Community centers tend to serve poorer neighborhoods, providing affordable after-school care, preschool programs, classes and activities, senior meals and socializing, and a place for needy families to access social services and pick up basics like donated food and clothing.

In 2008, the center received $358,500 from Colorado Springs, and brought in just over $15,000 in rental fees. But when the city began hinting at closures in late 2009, Kates was determined to keep Meadows open. After a city Request for Proposal seeking partners for the center returned only one proposal in March 2010 — for Westside — it was clear that no white knight was coming for Meadows. But Kates was already knee-deep in another, less formal partnership proposal.

With commitments from nonprofits, churches, businesses, schools and interested individuals, Kates and Broadmoor Community Church minister Scott Lovaas created a partnership model relying on the community to fund and coordinate the center's programs. That charitable effort — which Kates has dubbed "in-sourcing" — now funds about $66,000 of the center's $256,600 budget, and the center earns another $25,000 of its budget through room rentals. An advisory committee oversees the model.

Now, Meadows is thriving. In 2011, it had record attendance, with around 60,000 turnstile visits. That same year saw 135 volunteers gifting 2,000 hours of work; $69,500 in independent donations; $97,000 in in-kind donations; and 60 partnerships. (The city contributed just $117,500 to the budget that year, with the U.S. Olympic Committee chipping in $17,900 and the federal Community Development Block Grant program $13,200.) Partners give everything from passes to the Cheyenne Mountain Zoo to free counseling sessions to food. Partners have helped the center add programs such as Girls on the Run, which seeks to build self-confidence in pre-teen girls through running, and an expanded summer camp program.

Last year, campers who showed leadership skills were treated to an overnight trip to one of Colorado's famed 10th Mountain Division huts. Kates remembers one girl was thrilled to cook something the old-fashioned way and share it with her friends; her previous experience in the kitchen had been limited to a microwave.

New programs, he says, tend to be well-received when created through a bottom-up approach. It was in that spirit that Meadows opened a satellite, Stratmoor Hills Community Center, at 2027 B St., in 2011. Completely funded through charitable donations, the center is available as a community meeting space and open as a food pantry on Wednesdays. In summer, area children connect from there to Meadows' youth programming.

Kates describes one group of elementary school boys that used to meet every summer morning and wander the neighborhood; they were a "gang of lost 8-year-olds," he says. But thanks to the new center, those boys spent last summer visiting the zoo and going to the library, among other day trips.

"It made a big difference," Kates says. "And it didn't cost the city a dime."

Meadows already is scouting for a location for a second satellite office in the Eighth Street area, also to be funded through donations.

Its broad-based partnership is fresh and exciting enough that it's being featured at the Alliance for Innovation's Transforming Local Government Conference in Kansas City, Mo., in April. There's also hope that it could work for the city's two community centers that aren't in partnerships: Hillside Community Center, at 925 S. Institute St., and Deerfield Hills Community Center, at 4290 Deerfield Hills Road.

Joan Clemons, Hillside's director, says she's found some partners, but without many nearby businesses, it's been difficult to draw bigger players.

"It doesn't seem like there's much interest," she says. "One of the reasons is location. Meadows is lucky."

But the two non-partnered centers are nevertheless experiencing big changes, largely due to grants. At Deerfield, for instance, a partnership and grant will fund a neighborhood revitalization project, providing energy retrofits and exterior upgrades on homes, and hosting a festival to celebrate.

Grace and space

Like many of his volunteers, Dick Siever, director of Westside Community Center, is here because of Jesus. Retired from Boeing, he's on part-time loan from his job at Woodmen Valley Chapel, where he coordinates its community-outreach nonprofit, A.C.T.S. Siever does all this because he believes in God, loves God, and thinks charity is the work of God.

But God isn't really supposed to be a part of Westside.

"We really are here because we're expressing amazement of God's grace," Siever says. "But we don't talk about that."

In fact, there's not much evidence that Westside is run by an offshoot of a church, aside from the "Expressing the Amazement of God's Grace" signs hung over the building's light switches.

"We honestly feel like, as a church or body in this community, that we should give back to the community," Siever says. "And people don't get it very often, but that's as simple as it is."

There's little question that Westside has maintained, and even expanded, core programming. The preschool, which was always full, still is. The new after-school program has 36 kids and a waiting list. The Golden Circle Nutrition program, a federal discounted lunch program for low-income seniors, has grown from about seven or eight participants to 30-plus on a good day. And Westside has worked with teachers to expand opportunities to the whole community: A local fitness trainer, for instance, charges for classes, but also supervises the gym gratis for several hours a week when it's open to the public.

Still, there's none of Meadows' "controlled chaos" here. Westside is extremely structured. Doors stay locked. Kids follow set schedules. Part of the difference seems philosophical, the rest related to differences in location and the buildings themselves.

From a neighborhood standpoint, Westside just doesn't have the population of kids that Meadows does. Siever notes that actually it would have been easy to turn Westside into a senior center, because of the concentration of older adults nearby.

Also, while Meadows' refurbished strip mall barely contains the activity within, Westside is a century-old school spanning three large buildings. Westside has separate offices for organizations like Rock Ledge Ranch and the Pikes Peak Community Action Agency; a full gym and workout center; a Penrose-St. Francis nurses program; the Westside Cares Food Pantry; and separate rooms for programs like a kids' literacy effort. None of this would be possible at Meadows.

But Westside's space is also a burden. It's comical to see Siever fuss over the huge ring of keys for the building's grounds. Utility bills run up to $5,000 a month, and maintenance worker Norman Jorgensen guesses it's been decades since some basic tasks were done. He was shocked to discover that one hallway of tiles he thought were gray actually proved white when years of dirty wax were stripped off.

Westside has a $250,000 budget these days, down from $408,600 in 2008. Though its contract doesn't call for it, the center has received a $75,000 subsidy from the city each year — something Councilors originally chalked up to fairness. The rest of its budget comes in grants and donations, most from a single anonymous donor.

Is the model sustainable? The contract expires in December, and city officials already say they're hopeful it will be renewed. Siever thinks it will be firmed up by summer. The nonprofit just needs to make sure its funding is steady before committing to another three years.

As for expanding the model to other community centers, Siever says that's not on the table right now. His nonprofit already bit off plenty when it took over Westside.

This may be the true weakness of the Westside model: It's not very repeatable. After all, how many other big organizations are looking for a tremendous burden to carry during a recession?

No one-size-fits-all

When Mayor Bach came to office last June, he began hiring, firing and rearranging.

Somewhere in that jumble, the division of Economic Vitality and Innovation emerged. Strongly connected with the mayor's hopes for his administration, it shares the sixth floor of the downtown City Administration Building with his office.

Steve Cox leads the effort, with Nick Kittle managing innovation and sustainability. They both have already been a part of many city partnerships. One deal with Enterprise Rent-A-Car saved transportation dollars; another with Chief Petroleum and Acorn Petroleum cut fuel costs; a Greener Corners agreement brought recycling to the city free-of-charge; and a deal with Canteen Vending provided drink and snack machines in city buildings.

Partnerships come from different places. Sometimes, Kittle says, it starts with questioning assumptions. Now, for instance, the city is wondering whether it has the right number of parks. Perhaps some could be repurposed as open space or community gardens with help from partners; that would allow available parks funding to be shared among fewer sites.

Other times, ideas come from putting a shout out to the community. Recently, Xerox agreed to help fund some city streetscaping. Freedom Honda will pay to redesign a park. "They get some recognition for being a good community partner," Kittle notes, "and at the same time they realize there's value in creating a more valuable community."

Often, Kittle says, the issue boils down to "permission." He recalls a company that found a way to combine the "brown grease" that clogs sewer lines with used restaurant "yellow grease," refine the product, and use it as biodiesel. Colorado Springs Utilities allowed the company to harvest its troublesome grease, and the city provided it with an aging vehicle to test its fuel on. The project was successful and could have ended up saving the city a boatload of money on fuel costs.

"If this guy hadn't gotten his lights sued out [by a competitor]," Kittle says with a laugh, "this probably would have been a major breakthrough."

But other "permission" cases have worked locally. Utilities, for instance, partnered with Neumann Systems Group over four years ago to test a new product dubbed the NeuStream, which aimed to cut emissions. In tests on parts of the downtown Martin Drake Power Plant, NeuStream worked better than anyone had imagined. Utilities ended up spending more than $100 million to have the system installed at Martin Drake, which will help it comply with new pollution requirements. What's more, CSU will receive a profit-share for the product once it's sold to other power plants.

In another instance, Waste Recoveries agreed to partner with the city, auditing its trash and ensuring its disposable systems are efficient. The company is paid from a percentage of the money it saves the city.

Partnerships, however, aren't always free, or easy to replicate. It's also important to keep community trust in mind, Cox says. That's especially true when the city contracts with a private company, as in a pilot snow plowing program this year.

For that contract, a competitive RFP process was used to select Landscape Assist/Sod Tech. Since the point was to see if private companies could plow streets better at a smaller cost, the city paid to put GPS on both public and private plows to track how much ground they covered. A separate company was contracted to judge which did the job better and more cheaply. Results are due in the coming months.

"We have to restore faith in government," Cox says. "And involving a third party to say the evaluation was done fairly and appropriately, that's really important to us."

But while some tip-toeing may be in order, Cox says that timidity can't stand in the way of progress. Not now. The reality, he notes, is that in 2013, Starsmore Discovery and Helen Hunt Falls visitor centers, Rock Ledge Ranch, the Accessible Coordinated Transportation (a group of nonprofits that provide rides for seniors and people with disabilities), the small business incubator, and the small business development center could all see city funding cut back or eliminated. They've already received notices in the mail.

And there could be more at risk. Bach is following a zero-based budgeting approach, cutting out all assumptions about how money is spent. That means nearly everything is up for grabs.

"Our hats are off to everybody in the community who stepped up and has been stepping up for many, many years," Cox says, "but we will still need to look at every piece of the organization."


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