Investors to lose millions as sale of Legacy Park in Mesa OK'd by bankruptcy judge
A bankruptcy judge approved the sale of Legacy Park in Mesa to new owners, a deal that seemed the best option to keep the troubled — but popular — sports facility running. But the sale will cause financial pain for the investors who bought the bonds that financed it and the firms that built it.
The $25.5 million sale price to Burke Operating Partners out of Florida represents a small fraction of the more than $280 million raised for the facility’s construction through bonds issued in 2020 by an arm of state government, the Arizona Industrial Development Authority.
A group of investors has filed a lawsuit asserting that they should get their money back, naming several parties who should be liable, including the investment bank that underwrote the bonds. Money from those bonds went to the park's previous owner, a nonprofit called Legacy Cares, which filed for bankruptcy, prompting the sale.
Only one potential buyer, a Florida-based company, presented an offer, which the judge approved Wednesday. The owners of the park had expected to sell it through a competitive auction, but received no valid bids by the court-imposed deadline.
The deal was supposed to be finalized Monday. An army of attorneys had made its way into the courtroom in downtown Phoenix for hearings both Monday and Tuesday, only to be told each day the details were still being hammered out.
The judge approved the deal, though the final form of the documents were still to be prepared after the hearing.
The bulk of the sales price of $25.8 million will close liens filed by construction companies that installed the fields, plumbing and buildings.
The firms had claimed some $30 million in unpaid bills, but will make due with divvying up $19.1 million.
Okland Construction Company, Inc., the main contractor, was the last major lienholder to agree to the tentative terms of the deal.
Bondholders would receive $2.4 million — about 1% of the original investment — but gain an 11% equity stake in the firm that is taking over the park. The remaining funds were set aside for professional fees.
On paper, the new owner of Legacy Park is AZ Athletic Associates, a limited liability company created Nov. 13. Its sole member, according to corporate records, is Burke Operating Partners, based in Miami Beach, Florida. In a memorandum of understanding about the sale, it listed a "supporting entity" as Rocky Mountain Resources.
The Republic was unable to reach neither Burke Operating Partners nor Rocky Mountain Resources for comment.
After the hearing, Keith Bierman, the court-appointed restructuring officer for Legacy Cares, said that "the park will continue to operate and continue to serve the community."
That new owner was to provide approximately $19.7 million of the sales price. The remaining $6 million was to come from the landlord, Pacific Proving LLC. That firm is co-owned by William Levine and Arte Moreno, the owner of Major League Baseball's Los Angeles Angels.
Ahead of Wednesday's hearing, the court received some objections to aspects of the deal from parties involved in the case.
One objection came from Salt River Community Gaming Enterprises, operators of Casino Arizona and Talking Stick Resort. It said its sponsorship deal should not transfer to the new owners, saying it did not want its name associated with what its filing called “certainly one of the largest economic debacles in recent Arizona history.”
The objection from the U.S. Trustee, the government agency that oversees bankruptcy cases, said it wanted to make clear that the new ownership had no involvement with anyone involved with Legacy Cares previously. At a hearing Monday, the assistant U.S. Trustee said the office was particularly concerned about Randy and Chad Miller, the father and son who operated the park.
At that hearing, Mike Burke, head of Burke Operating Partners, appearing telephonically, avowed that he had no association with the Millers.
Mesa sports park bankruptcy case: Questions of fraud, misappropriation of bond funds
A vision for a park, but a lack of financing at first
Randy Miller had worked since at least 1990 to create a sports facility that could host several types of events at once. In an interview with The Arizona Republic, Miller said he got the idea after he and his then-wife spent weekends shuttling their two sons to varying sporting events. He thought of a spot that could host youth fields of varying types and that had a restaurant and bar where parents could relax between or after games.
But Miller had trouble cobbling together private financing for his vision. Miller said that at times he trusted the wrong people and got burned. At other times, according to court records, people accused him of fleecing them.
Miller finally found an avenue to bring his vision to life: the Arizona Industrial Development Authority.
The Arizona Industrial Development Authority, created by then-Gov. Doug Ducey, had the power to issue bonds whose proceeds were exempt from taxation. It was a power granted by the federal government that was meant to give a leg up to certain projects that might have trouble getting financing on their own.
Most development authorities, including those run by Phoenix and Maricopa County, concentrate on affordable housing or senior living facilities located in their jurisdiction.
But Arizona’s authority started entertaining more exotic projects outside the state's borders. For instance, after the authority approved issuing bonds for the sports facility, the board moved on to the next project on the agenda: a convention center in Puerto Rico.
Arizona Industrial Development Authorit: Obscure Ariz. agency paved way for troubled $283M Mesa sports park
At the time, the authority’s president was Victor Riches, who was the deputy chief of staff to Ducey in his first term. Riches left that post to head up the Goldwater Institute, a think tank that advocates for the free market and Libertarian principles.
Riches stepped down from the authority in 2021, the year The Republic asked questions about its operations and the projects it pursued. He remains president of the Goldwater Institute.
Gov. Katie Hobbs, who took office in January, issued new mandates to the authority, asking it to concentrate on specific types of projects, including affordable housing and renewable energy. She also asked the agency to prepare statements outlining how projects would benefit Arizonans.
Miller created a nonprofit, Legacy Cares, in October 2019, in part to allow him to apply for government-issued bonds through the authority. Once the deal was approved in March 2020, he stepped away from Legacy Cares and, along with his son, Chad, agreed to run the facility through his Legacy Sports company.
The facility opened in early 2022. The 300-acre park became popular with youth, amateur and semi-pro leagues. Pro pickleball and cornhole leagues held events there. The formerly vacant land that was used by General Motors to put cars through their paces in the desert heat had suddenly become one of the busiest areas in the city on weekends.
Yet, the facility could not turn the foot traffic into profits.
Default and bankruptcy
By June 2022, investors on conference calls were asking pointed questions about the troubling picture in the financial spreadsheets. By October 2022, Legacy Cares defaulted on the bonds. It filed for bankruptcy in May.
Ahead of that filing, the nonprofit owners, Legacy Cares, changed the management of the park. Randy Miller’s company, Legacy Sports, was out. The new operator was Elite Sports Group. It was run by Brett Miller, another son of Randy Miller.
Wednesday's sale ended the bankruptcy case. But it does not end the court proceedings faced by Legacy Cares, Legacy Sports and Randy Miller.
A group of investors who bought the bonds that funded Legacy Park have filed a lawsuit in Maricopa County Superior Court that named as defendants both Randy and Chad Miller, their company Legacy Sports, Zigler, the investment house that underwrote the bonds and Gust Rosenfeld, the law firm that prepared the bond paperwork.
The lawsuit says the parties involved intentionally inflated the projected financial health of the endeavor “with the goal of collecting personal consideration through contracts, kickbacks, and other means.”
The investors, filing the lawsuit under a company called Legacy Cares Acquisition, asked that their bonds be paid back, using the financial term “rescission.” Essentially, the investors in the lawsuit are asking to be made whole since they believe they were investing based on false or misleading information.
By law, if a judge or jury finds merit in the claim, they would assign each party a percentage of responsibility. That entity would then have to pay back the money.
The lawsuit was pitched to investors on a September conference call. Jon Schotz of Saybrook Fund Advisors said bondholders could assign their legal rights to the newly created company in order to file the lawsuit. He also said that Saybrook had planned to acquire Legacy Cares bonds on its own.
A spokesperson for Zigler did not return emails seeking comment. A former public relations person who had previously done work for the Millers did not respond to an email. Neither did a crisis public relations agent who had done work for the facility.
The general counsel for Gust Rosenfeld, Charles Wirken, said the law firm had a limited role as bond counsel: affirming that the bonds would be tax-exempt. The firm was not tasked, he said, with concluding whether the project would be successful.
Wirken also said the investors who bought the bonds originally were institutional houses that were provided a thick prospectus that had plenty of disclaimers and warnings. "They came into it with eyes open," Wirken said.
Saybrook or anyone else who bought the bonds after signs of trouble also should have known the risks, Wirken said.
Those parties had their "eyes further opened by the fact the bankruptcy has already been filed," Wirkin said, "and by reading The Arizona Republic."
Reach the reporter at 602-444-8473 or richard.ruelas@arizonarepublic.com. Follow him on X, formerly Twitter: @ruelaswritings.
Reporter Maritza Dominguez covers Mesa and Gilbert and can be reached at maritza.dominguez@arizonarepublic.com or 480-271-0646. Follow her on X, formerly Twitter: @maritzacdom.
This article originally appeared on Arizona Republic: Legacy Park in Mesa sold in Arizona bankruptcy court
