The former Havasu Fitness building is set to become Lake Havasu City’s new municipal courthouse but emails obtained by Today’s News-Herald showed city officials entertained buying the building months before owners announced its closure.
Before Havasu Fitness entered the picture, the city was looking into the gym’s next door neighbor at 94 Acoma Blvd.
Havasu has had the need for a new courthouse on its radar for several years, but that need was accelerated in 2019 when the Lake Havasu City Municipal Court deconsolidated from the Mohave County Superior Court and Justice Court’s. Havasu has been renting space at the courthouse on College Drive ever since.
The city started looking into constructing a new courthouse on the City Hall campus and an initial study estimated the cost of building a new facility from scratch at $7.5 million. But city officials said all options were still on the table and they would continue to look at existing facilities in the city if it made sense.
In early 2020, prior to the pandemic, the city took an interest in the office building at 94 Acoma Blvd. which is adjacent to the City Hall campus and, at 24,000 square feet, would have provided enough space for the courthouse.
The city got as far as making an offer on the property, but were ultimately outbid by a private investor.
John Parrott, a sales associate with Coldwell Banker Realty, served as the city’s agent during that transaction.
Parrott said he has been a friend of Havasu Fitness owners Jack and Dale Bailey for about 30 years and knew that they were thinking about retirement and interested in selling their business. When the 94 Acoma building sale was finalized, Parrott brought up the possibility of using the 92 Acoma property, which is also adjacent to the City Hall campus, as the courthouse in an email to City Manager Jess Knudson on April 7.
“I am open,” Knudson responded via email. “But typically when a City approaches someone about the sale of their property, the number escalates quickly.”
But Parrott said the Bailey’s weren’t interested in selling to the city at that time, hoping that it would remain a gym.
“They had been trying to sell the building, but they had it listed on a website that markets to gym owners, they didn’t have an agent or anything,” Parrott said. “They were not interested in selling it to anybody except someone who would come in and operate it the way it was being operated. We didn’t take any action on it because it wasn’t available, so the discussion just sort of stopped.”
But the coronavirus pandemic made it challenging for the Baileys to find a buyer that would keep it operating as a gym. Gov. Doug Ducey initially ordered gyms to close on March 20 and Havasu Fitness remained closed until May 25.
Parrott said during that time the Bailey’s identified a promising buyer whom they agreed to sell their business to. Unfortunately, finding financing proved to be too difficult for the buyer as banks shied away from lending money to purchase a gym with the immediate future of such facilities still in flux, despite what Parrott said was a substantial down payment.
Once the purchase fell through, Parrott said the Bailey’s started to reconsider selling the property to the city.
“They said over and over again, ‘Tell (Knudson) we don’t want to sell it to him, but we need to be retired,’” said Parrott, who served as the seller’s agent during the purchase of the 92 Acoma property.
Knudson said talks between the city and Havasu Fitness started to kick up in June, and City Councilmembers, who would ultimately be responsible for approving the sale, were brought into the loop about the negotiations.
“Working with John and eventually the Bailey’s we were able to get a better understanding of what the cost would be, not just for the purchase but ultimately the renovations of the building, to get us where we need to go to,” Knudson said.
Parrott sent Knudson the first draft of a proposal to purchase from the Bailey’s on June 28, which included a request to keep the negotiations confidential for the time being. Gov. Ducey’s executive order closing gyms for a second time was issued the very next day.
Knudson agreed to keep the negotiations confidential, but advised that the city would have to put out a public notice the week before calling a special meeting for the City Council to discuss and approve the purchase.
“I think that was important for both parties,” Knudson said. “As we go through the negotiations, from the city’s perspective, we are trying to control the conversations that are happening between the two parties. So as a city we can get a better understanding of what their needs are and then get a better idea of what the city’s needs are.”
The city received a copy of the appraisal report for the property on July 27, which allowed the purchase to move forward. The next day Knudson advised Parrott that he was ready to bring the plans to the City Council for approval with a special meeting on Aug. 11, and advised that the agenda for the meeting would need to be released on Aug. 6.
On July 31 the Baileys announced Havasu Fitness will not reopen its doors in an email to club members citing, “economic realities and the ongoing uncertainty brought on by the covid-19 pandemic with no relief in sight for the fitness industry.”
“I think everybody understood with their age, health concerns, then all of this opening and closing down they just couldn’t handle it,” Parrott said.
Less than two weeks later the City Council met for a special meeting and voted unanimously to purchase the Havasu Fitness property for $3 million. At the time, councilmembers said the timing of the sale was terrible, but it gained support because it was a good opportunity for the city to save money by using an existing building for the courthouse rather than building new.
Once approved by City Council, the rest of the process went pretty smoothly and Havasu took ownership of 92 Acoma on Aug. 28.
Knudson said the two properties on the 90 block of Acoma Boulevard were the only two that the city took significant interest in throughout the process. He said the fact that they were both right next to the City Hall campus made them more attractive options than other vacant buildings in town.
After being involved in both negotiations, Parrott said he thinks the Havasu Fitness property will probably be a better fit due to its layout and he said it was certainly the cheaper option of the two – although he said either building would have likely saved the city money compared to building a new facility.