The Fort Walton Beach City Council on Tuesday postponed a decision on awarding a $7 million contract for the Preston Hood Athletic Complex expansion, directing staff to return with detailed financing options at the next meeting.

• Finance Director Nicole Nabors brought the issue to a head when she asked City Attorney Jeff Burns a pointed question: If the council awards the contract tonight and staff later determines the city can’t afford it, what happens?

“You award it – it’s been awarded,” Burns replied. He said the city would face an “uncomfortable conversation” with the winning bidder and potential breach of contract.

An initial motion by Councilman Bryce Jeter to award the contract to Gum Creek Farms Inc. of DeFuniak Springs failed 2-5, with only Jeter and Councilman David Schmidt voting in favor.

The proposed expansion would transform a 12-acre site at 203 Hollywood Boulevard — formerly the city’s field office complex — into an extension of the Preston Hood Athletic Complex. Plans call for a 1,953-square-foot recreation operations building, restroom facilities, multipurpose fields with artificial turf, five pickleball courts and additional parking to ease congestion during tournaments.

Councilman Payne Walker said he couldn’t support moving forward without more financial clarity, noting the city used $5.1 million in general fund reserves to balance the most recent budget.

• “We apparently attacked our reserves, dug into them last year,” Walker said. He questioned committing to the project while a voter-approved 3% operational budget cap remains in place and conversations at the state level continue to consider redirecting tourist development tax revenue that staff hopes will cover annual debt payments.

The 3% cap, approved by voters in November 2024, limits year-over-year growth in the city’s operational budget.

Staff has been negotiating with the Tourist Development Department to fund debt service estimated at $600,000 to $700,000 annually. TDD staff indicated tentative support but has not secured approval from the Okaloosa Board of County Commissioners, Nabors said. The funding percentage would be determined by data showing how much tourism impact the recreation complex generates.

Councilman Bryce Jeter asked whether the $4 million the city received from selling the fairgrounds property to the county could help fund the project. Nabors said that money had been “eaten up” by the $5.1 million needed to balance the budget.

Councilman Ben Merrell said he wanted to see the project built but needed confidence in the city’s ability to pay for it.

• “We need to know that it’s going to be covered,” Merrell said. “It’s just so much money. I can’t go for supporting this in the current state. It’s a great project. I want to see it.”

When council members asked Nabors about developing financing options, she said the issue wasn’t structuring the debt.

“I can give you different options, but it’s the funding that’s the issue,” Nabors said.

Supporters argued the city shouldn’t delay a project that’s been in development since 2021.

• “We’ve been at this park two or three times in the last couple weeks, and people talk about parking, more fields, this and that,” Jeter said. “It’s well needed. It’s well past the time that we should have already had it built.”

Schmidt pointed to the economic impact of sports tourism, saying families travel to Fort Walton Beach for the recreation complex and spend money at local restaurants and hotels.

“I want people in our community that are going to travel with their family,” Schmidt said. “I don’t care if they’re playing badminton or baseball, but spending money in our restaurant, spending money in our city.”

City Manager Jason Davis acknowledged the parks department would likely need to add staff to maintain the expanded facilities, adding to operational costs under the budget cap.

Public Works Director Daniel Payne said Gum Creek Farms would hold its pricing for 30 days. The city received eight bids in August, with Gum Creek submitting the lowest responsive bid at $7,059,312.75, including alternates and an allowance for waste disposal.

• After the failed vote, Merrell made a motion to continue the item and direct staff to work with the TDD and return with financing options. That motion passed 6-1, with Walker casting the lone dissenting vote.

The city has been working on the expansion since April 2021, when the council rejected two proposals to purchase or lease the city-owned surplus property and directed staff to develop it as a recreation expansion instead. In May 2021, the council authorized a task order with Jenkins Engineering for design services, and in August of that year approved final design work.

In September 2024, the council awarded a bid to Bear General Contractors, but Empire Building Group protested the result. The council rejected all bids in October 2024.

Staff will return to the council in November with detailed financing options from PFM Financial Advisors.