Despite bankruptcy, sports complex owners still hope to develop Middletown property

MIDDLETOWN — Frederica-based DE Turf hosted at least one tournament this year originally scheduled for a struggling Middletown sports complex currently in federal bankruptcy court.

The Town of Middletown included the claim in its quest to nullify a 99-year lease at $1 annually on municipal-owned land to Delaware Sports Complex LLC. The agreement was signed Feb. 24, 2016.

The DSC claims the lease is still valid and it plans to eventually develop the roughly 170 acres of land as Chapter 11 bankruptcy protection proceeds.

In its bankruptcy notice, the DSC listed nearly $1.6 million in debt claims to 13 creditors, including $195,000 supposedly owed to the Town of Middletown.

After construction for the DSC project stalled after six playing fields were completed in 2016, the town said one or more planned tournaments was moved to Appoquinimink School District facilities and another to the DE Turf that opened this spring.

The Delaware Sports Complex in Middletown was originally scheduled to open in Spring 2016 before construction stalled. The sign has since been removed and was taken to a Town of Middletown shed for storage. (Delaware State News/Craig Anderson)

In response to a DSC motion, the town maintained that the LLC must provide a performance bond calculated at $290,695 in July 2016.

According to the town, it terminated the lease on March 5, 2017, while specifying three default actions. DSC owner Daniel Watson described the claim as “baseless” in court papers.

Middletown Mayor Kenneth L. Branner Jr., Town Manager Morris Deputy and Director of Public Works Wayne Kersey are scheduled to testify Monday afternoon in Wilmington regarding DSC’s bankruptcy case.

Mayor Branner and Mr. Watson declined comment earlier this week.

The town also referenced $2,816,730 that the DSC was supposedly required to pay for a Delaware Department of Transportation Traffic Impact Study. The complex is located at 955 Levels Road near U.S. 301 and the Maryland border.

According to a now-removed sign in front of the DSC, the facility was scheduled to open in Spring 2016. The town removed the sign and took it to a municipal shed for storage, officials said.

Survival in question

While Middletown officials mistakenly included the Charles Price Memorial Park in its lease agreement with the DSC, the town said a site plan only included the 170-acres cited for the project, not the 319.69 acres listed in the agreement.

“The park, dog park, playground and vacant field have never been part of any discussions between debtors, its promoters and the Town of Middletown,” the town claimed. “The town continues to spray irrigate those 150 acres with reclaimed water.”

A notice of default letter was sent to the DSC on Feb. 1, the town said in court documents.

Only two of six grass fields at the DSC are irrigated, the town said, and “the other four fields are unlikely to survive a typical hot, dry Delaware summer even without the heavy use anticipated by operations of tournaments.”

A parking lot and access road to the complex are unfinished, according to the town. Construction began in Sept. 2015 under the Erosion and Sediment Control Plan, the response indicated.

The town disputes that the lease is part of the DSC’s assets included in its bankruptcy filing.

“Even if the lease were still in effect, debtor cannot reasonably be expected to generate revenue to operate the project,” the response stated.

Middletown pointed out that it owns the land and the DSC has leased it.

“Debtor is not a co-owner,” the town said in documents. “This Court should not sanction an effort to steal the Town’s fee interest in the property.”

Nichols Nursery of Newark claims it is due $811,337 from the DSC for initial construction labor and materials, according to papers, while Van Cleef Engineers of Hillsborough, New Jersey has a claim for $205,483.

In court papers, Nichols claimed that a supposed assertion by the DSC that no creditors are secured.

In a separate lease agreement, Mr. Watson is tied to a town-owned tract near the proposed DSC in which construction on a golf course, clubhouse and swimming pool at the St. Annes development are ongoing.

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