Parks and Recreation officials want to keep a Champions Club tennis professional on staff to manage the facility.
But City Attorney Mike McMahan said it may be impossible to keep the manager as a city employee and, at the same time, allow him to run a private business on city property.
"We're trying to figure out how to make it work," McMahan said.
City ordinances say employees are not allowed to take monetary gifts of more than $50. State law also prohibits Champions Club Manager Orlando Lourenco from contracting with the city while he manages the facility.
The City Council is set to hear about the Champions Club at its Parks and Recreation Committee meeting Tuesday.
The meeting was called after a city audit revealed that Lourenco and Assistant Manager Eddie Baker were using the club as a for-profit business and using city employees to help run it.
The audit, covering July 1, 2010, to June 30, 2011, uncovered a litany of problems.
It said the manager operated a pro shop and gave individual lessons, put on summer camps and tournaments and pocketed the revenue without city approval. It said the assistant manager hosted a summer camp and received revenue without approval, and that city employees were used to man the private events while on city time.
The audit found the arrangement had been going on since 2000 with no signed city contract.
Larry Zehnder, director of Parks and Recreation, said no other city recreational facilities, including its two golf courses, has a professional similar to Lourenco on staff.
He said the department is reviewing its options. One could be to make Lourenco a contract worker.
"Maybe that's a result," he said.
City Councilman Russell Gilbert, chairman of the council's Parks and Recreation Committee, said the committee plans on laying everything out and reviewing the matter.
"I think it will be corrected," he said. "It's got to be corrected."