HARPERSFIELD TOWNSHIP — A comprehensive property appraisal of Spire Institute obtained by the Star Beacon indicates the athletic training and sports facility will be unable to support itself in the future. It also illustrates why the 170-acre venue, once valued at just under $55 million, is only worth about $7 million at best.
Waronzof Associates Inc. of California, the independent real estate appraisal firm contracted by the Ashtabula County auditor to analyze Spire Institute’s development and finances from 2014 to 2016, has submitted a 187-page preliminary draft of its study to county officials.
Though the report is not yet finalized, its analyses portray a “world-class” facility forecasted to continue operating in the red for lack of a viable regional market and revenue potential seen at other comparable U.S. sports facilities included in the study.
In light of Spire’s financials and studies of those similar venues — one of which was sold to its local municipality for $1 then leased back — the firm estimates Spire could likely only be sold for between 5 and 10 percent of its initial construction cost.
“In many respects, the facility provides a sports training and competitive venue that is world-class; it is certainly capable of meeting the needs of a wide variety of athletes training for or competing in national- and world-class events,” reads one summary comment in the draft.
“The facility is so large, however, and so poorly located (in a rural area of Ohio) that it does not have the population to create attendance, visitation (or) utilization by athletes and coaches or trainers. It is grossly over-capacity and located in much too small a market or trade area to garner the revenues necessary to support a competitive return on investment.”
The appraisal shows the facility itself has generated an average $4.1 million per year from 2013 to 2017 through Spire Academy, its multi-sport academy for high school and postgraduate athletes, for which annual boarding costs average between $52,000 and $58,000; its sports training camps; and other revenues such as contributions, rental income and food and beverage sales. It reported losing an annual average about $1.5 million, which reflects an average about 9 percent decline in compound growth each year.
Also included in the appraisal are tax forms filed by Spire’s non-profit operator, the Geneva Area Recreational Educational and Athletic Trust, which show the nonprofit lost an average of about $3.4 million per year from 2010 to 2016. The firm noted its only positive financial year came in 2010, during which more than $19 million in contributions were reported.
Much of those contributions came from Spire CEO Ron Clutter, owner of Spire’s for-profit ownership entity Roni Lee LLC, as shown in tax forms from previous years.
The facility was also built entirely with private funds, which appeared to be a point of pride for Clutter during the project’s infancy. Appraisers, however, called that model “atypical,” citing research that shows major league sports facilities built between 2000 and 2010 were funded by an average 61 percent in public investments.
“This ‘public investment’ or ‘cost sharing’ is quite common and has become the norm in professional sports stadia,” the report states.
“Local government is perceived to benefit from the construction and occupancy of a professional sports facility directly and indirectly (from revenues and taxes derived from the stadium and team as well as from new, surrounding development and economic activity),” it continues. “Further, local government and the community may also receive non-monetary benefits such as community pride, a national reputation as a city that is home to a professional sports team and/or elite amateur athletes and athletic programs.”
And by the appraisal firm’s account, Spire’s offerings are on-par with other sports venues or athlete training facilities of its kind, though it notes “there are virtually none on the scale of the Spire Institute.”
The appraisal notes Spire’s “well qualified” coaches for each of its three academy sports, who have coached dozens of NCAA champions or championship qualifiers, as well as the state of its facilities, which were “largely in service and appeared to be in good, functional order,” clean and well-maintained.
The appraisal estimates the “effective” ages of Spire’s buildings are equal to their actual ages — including its aquatics, soccer and track facilities, each completed between seven and 10 years ago. It projects the facilities’ lifespans at between 45 and 50 years.
“Generally speaking, each area of each building is well-conceived, meets or exceeds many of the standard performance objectives that we see in modern buildings (and) appears to do so fairly efficiently,” the report states.
“It is when we consider the entirety of the complex and compare it to its peers as well as its poor financial performance that we begin to grasp the most fundamental aspect of the functional utility of the property – its gross over-capacity for the populations of athletes, spectators and users in the region in which the property is located.”
Though the appraisers note some other facilities’ capabilities are comparable to Spire’s, most are associated with large public universities “with student populations in the tens of thousands.”
“We could identify only a handful with the broad capabilities of (Spire), and as we identified them, we routinely heard stories of financial failure or distress,” the report states.
The appraisal also cites former Spire executive and former IMG Academy vice president Ted Meekma, who said in 2011: “The multiple-sport academy is almost nonexistent. It requires you to have budget that is so big, it prevents most people from even trying it.”
Spire, the only designated U.S. Olympic and Paralympic Training Site in Ohio was found to have the largest campus size among other Olympic sites studied in the appraisal, with an indoor facility size at about 750,000 square feet — more than 10 times larger than the second largest.
When comparing average annual income in the markets surrounding those facilities in 50-mile radii, however, Spire’s showed an average of about $68,000, which ranks it 15th out of the other 21 markets. The appraisal also notes a projected 1 percent population decrease in the local region from 2017 to 2022.
The appraisers noted Spire is a “special purpose” property, intended for a single use or owner. That could impair any alternative uses, should Spire be ultimately sold. The appraisal notes Spire’s 175 acres and 750,000 square footage could be used for a “limited amount of strip commercial development” along State Route 534, with the remainder purposed for rural and residential land development.
A former appraisal commissioned by the Geneva Area School Board forecasted Spire would ultimately become a warehouse. The new report notes Spire’s proximity to Interstate 90 and also recommended a hotel or light industrial manufacturing complex that could take advantage of that.
County Auditor Roger Corlett said Friday several of his employees are still reviewing the appraisal draft and withheld comment on the document itself until it’s finalized and studied. He said he plans to reach out to vested parties this week to note their availabilities, should the Board of Revisions call a new hearing on Spire’s latest valuation under the new appraisal.
The appraiser will testify and be questioned by Spire and school board officials on its methodology, which likely won’t happen until early fall, Corlett said last month. The board will deliberate later and decide whether to accept the new appraisal, he said.
Clutter may also accept the valuation or appeal the ruling to the Ohio Board of Tax Appeals, or file the appeal in county Common Pleas Court.
Ed Brashear, president of the Geneva Area City Schools board, which collects close to half of Spire’s tax payments, said Friday the board is also still reviewing the massive document — while a figurative elephant reads over board members’ shoulders.
The appraisal’s drastically lower valuation could alter the landscape of a $4 million back tax deal between Spire operators and the various taxing authorities it owes. If Clutter chooses to accept the new valuation for the 2014 to 2016 tax years, would that alter the amount of property taxes Spire would owe?
“I had the exact same question. It’s going to be one of the primary questions that I ask the auditor,” Brashear told the Star Beacon Friday. “I want to know what options this appraisal actually presents to Spire.”
An amendment to an Ohio House bill signed into law in mid-June contains the language necessary to allow Spire what amounts to a a 17-year, 75 percent tax break on close to $17 million in back and future taxes. Certain emergency segments of that legislation were set to take effect immediately.
Commissioner J.P. Ducro IV, the commissioners board liaison throughout the tax deal negotiations, said he remains hopeful those parties can continue to benefit from Spire as a “wonderful asset” to the community.
“The document is the document,” he told the Star Beacon Friday. “As a community, I’m still hopeful we can use it as a tool to continue to generate economic development and that it will be able to be successful and sustainable — that Mr. Clutter will continue to keep his commitment to keeping it functional.
“All entities can work together to that end.”
Spire officials did not respond to requests for comment.