The city of Scottsdale, Ariz., has until October 7 to file an answer to a claim that the municipality improperly subsidized the private operator of the club with taxpayer dollars. The lawsuit claims the city has paid for more than $2 million in improvements to clubhouse facilities while the operator retains 97 percent of revenue.

The city of Scottsdale, Ariz., has until October 7 to file an answer to a claim alleging the municipality improperly subsidized the private operator of the McDowell Mountain Golf Club with taxpayer dollars, Arizona.newszap.com reported.

The lawsuit claims the city has paid for more than $2 million in planned improvements and upgrades to clubhouse facilities at McDowell Mountain with little chance of recouping those dollars—while the operator retains 97 percent of revenue generated for operations, Arizona.newszap.com reported.

In addition to subsidizing concerns, the lawsuit alleges a third amendment to the “golf course concession agreement” violates the Scottsdale City Charter and ignores Arizona Supreme Court guidance on how the state gift clause ought to be interpreted, Arizona.newszap.com reported.

Mark Stuart and John Washington filed the lawsuit June 17 in Maricopa County Superior Court. The city of Scottsdale responded in June by filing a motion-to-dismiss request. Scottsdale City Attorney Bruce Washburn and Assistant City Attorney William Hylen stated in July, “there is no legal requirement that the city recover the cost of its investment.”

The motion to dismiss was denied September 17 by Superior Court Judge Sally Duncan. During a September 24 Superior Court hearing, Washington said the complaint seeks to rectify the alleged misgivings of the city’s third amendment to the golf subsidy project—an amendment that involved the city providing public money to make improvements to the golf course clubhouse, Arizona.newszap.com reported.

Both the federal government and the private operator of the golf course—White Buffalo Golf LLC, a private business whose principal investors include Phil Mickelson—are not interested in revisiting the subsidy agreement, Washington said.

“We have communicated to them,” Washington said. “They have demonstrated no interest whatsoever.”

In turn, Washburn argued there is no real claim and no real process to follow as a remedy has never been offered by pending litigation, Arizona.newszap.com reported.

“The status of the third amendment (to the golf subsidy agreement) is basically the city was to build to its clubhouse,” Washburn told the judge. “It is impossible for this court to require White Buffalo to pay more money without (being a part of this process.)”

Stuart and Washington contend they aren’t asking White Buffalo to return any money or pay additional money to the city. Instead, they want members of Scottsdale City Council to be held accountable for their actions, and they want the opportunity to ask public officials to explain their actions, Arizona.newszap.com reported.

“Nominal parties, who are also high-up governmental officials (in this case they are the top of the pyramid), cannot be deposed unless there is showing they have unique knowledge relative to the case,” Washburn said.

Stuart contends all aspects of the case must be presented to the court for the good of the public. “The public purpose of this entitles us to move forward,” he said to the judge. “We don’t want to necessarily hassle the city council. At this point, the court would be doing the case a disservice to not allow us to question the council.”

The McDowell Mountain Golf Club sits atop land owned by the federal government through the Bureau of Reclamation, which is under a Cost Sharing and Land Use Agreement entered into by the city of Scottsdale in 1982 for a 50-year period, Arizona.newszap.com reported.

The agreement has been amended three times, the latest coming June 2012 when Scottsdale City Council allowed the city to improve the golf course’s clubhouse facility, according to the lawsuit. The amendment allows for little financial oversight and leverages fee dollars, which are a portion of overall revenue generated at McDowell Mountain then deposited into the Basin Management Fund, according to the notice of claim, Arizona.newszap.com reported.

The June 2012 amendment, among other things, freed the current operator from shouldering all costs for improvements—a major tenet of the original agreement and subsequent amendments, the claim states.

The claim alleges White Buffalo approached the city of Scottsdale to improve the course’s clubhouse following its $2.2 million purchase of the concession interest at McDowell Mountain in April 2011 and as it adopted a $1.2 million golf course upgrade project shortly thereafter, Arizona.newszap.com reported.