Lawyers for a consortium of private fitness clubs argued in Albemarle Circuit Court Friday that the City of Charlottesville broke state law when it signed a ground lease with the Piedmont Family YMCA for a planned aquatic and fitness center in McIntire Park.
The YMCA, while not party to the lawsuit, has held off construction until the legal issues are resolved.
“The City set up a façade to allow it to ‘lease’ the land to the YMCA in such a way that no other entity could compete,” wrote Edward B. Lowry and David W. Thomas of the firm MichieHamlet which is representing the Charlottesville Area Fitness Club Operators Association.
“Because the YMCA was the only bidder, the City could then grant them the lease for $1 per year without having to explain why it rejected bids of thousands, or even tens of thousands, of dollars from any one of the Plaintiffs,” continued the court brief.
Representatives of the group, which consists of ACAC, Gold’s Gym and Total Fitness, declined to comment on the case on Friday.
The YMCA was the only party to respond to the city’s request in October 2007 for proposals for “persons interested in leasing approximately 3.5 acres of land [in McIntire Park]… for the purpose of developing a non-profit fitness and recreational center of approximately 70,000 square feet.”
City attorneys responded by pointing out that none of the three gyms responded to the proposal or even objected to it at a public hearing. The city’s brief also points out that the group waited two and a half years after the lease was awarded before filing a lawsuit.
“The complaint does not allege, and cannot allege, that any of the individual plaintiffs were entitled to receive the award of the lease,” read the city’s brief. It was written by City Attorney Craig Brown and Deputy City Attorney Allison Manson-Davies.
The city claimed that state law “vests considerable discretion in the local governing body when awarding a lease of public property.”
“Even if they had submitted a bid, regardless of whether the lease was limited to a non-profit facility, the City was not required to accept any particular bid,” the city’s brief stated.
However, the plaintiffs allege the city will lose money because the for-profit clubs were not permitted to bid.
“The result of this sweetheart lease is to provide a private entity a below-market lease which damages the City twice: once by depriving it of market rents; and twice because as a non-profit, the YMCA does not pay taxes on the revenue it generates.”
“They’re basically making the argument that the city violated the public procurement process by awarding the ground lease,” said Kurt Krueger, chair of the Piedmont Family YMCA in an interview.
”The city argues that they can lease to anyone they want,” Krueger said. “What the [plaintiffs are] trying to argue is that when the city is considering bids, they have broad discretion, but they have to have an articulated reason.”
Friday’s legal action pertained to a request by the city to dismiss the case. Judge Cheryl Higgins will announce her ruling at 12:30 on April 18. If she rules in the fitness clubs’ favor, their lawsuit will proceed.
Higgins previously dismissed a similar lawsuit against Albemarle County, but the fitness groups have appealed that ruling. A decision on whether the Virginia Supreme Court will hear the appeal will be known by the end of April, according to Krueger.
Krueger said the YMCA is keen to have all the legal issues resolved so it can proceed with their $15 million project.
The city is contributing $1.125 million and the county is contributing $2.03 million toward the facility’s capital costs. Krueger said there are enough pledges from donors to proceed with financing, and that advertisement for construction bids will take place a week after the final resolution of the legal case.