Prospect Meadows seeks public aid to ‘sustain our operations’

CEDAR RAPIDS — The Linn County Board of Supervisors has approved — and the city of Cedar Rapids is working on — deals to provide hundreds of thousands of dollars of public money to help Prospect Meadows, the softball and baseball complex near Marion, pay off its debt by the end of the year.

Linn County supervisors approved a deal Tuesday, with Supervisor Kirsten Running-Marquardt opposing, to pledge $250,000 in county money to Prospect Meadows if it raises funds to pay off the rest of its debt within less than four months.

The agreement, which expires Jan. 1, also stipulates that Prospect Meadows would need to provide a 10-year cash flow statement to ensure long-term sustainability, and the county funds would go only toward the debt and not other expenses.

Cedar Rapids’ Finance Department, in a statement, said Tuesday it was “working through a potential new agreement” to essentially advance $300,000 to Prospect Meadows under an existing deal that ties hotel stays to city support. The lump sum also would have to go toward satisfying the debt. Such an agreement would have to go before the Cedar Rapids City Council for approval.

The Prospect Meadows complex is situated on 128 acres of Linn County-owned land near Highway 13 and County Home Road. It features eight baseball/softball fields and a Miracle Field for youth of different abilities.

Local officials have touted the nonprofit complex, which opened in 2019, as a major regional attraction drawing in residents and visitors, and an economic engine that helped spur growth in housing, a hotel opening this year and other businesses.

Linn County, Marion and Cedar Rapids have provided millions of dollars in public money to support the facility, tapping into hotel-motel tax money and federal pandemic aid.

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Supervisor Ben Rogers, who voted for the new county pledge using capital project savings, said in an interview with The Gazette that the funding would be the last dollars used if Prospect Meadows is able to retire its debt.

But the total of that outstanding debt is unknown to the public. Last month, a Prospect Meadows communications director told The Gazette the nonprofit’s debt is not due until 2034 and all debt payments are current — but did not say what the amount is. Rogers said the county does not know how much it is, either. Prospect Meadows representatives did not respond Tuesday to The Gazette for comment.

“We have a vested interest in the success of the organization because we own the land it operates on,” Rogers said. “It has also demonstrated an economic success in terms of direct spending into the community and solidifies our past support that we think it’s an important quality of life amenity. Our pledge is a continuation of support if they can raise the funds they need through a private campaign to assist them.”

Rogers said the pledge is “low risk” for the county since it will not contribute the funds if Prospect Meadows does not reach its financial goal.

“We were intentional in the beginning of the project to ensure the county retained ownership of the land, and since there’s infrastructure on it, we think it’s important we’re a part of their funding solution. Retirement of the debt is critical to their long-term success,” Rogers said.

Prospect Meadows asks for support

In a Sept. 13 letter from Prospect Meadows board Chair Tim Strellner to the Board of Supervisors, Strellner asked for additional financial support from the county “to sustain our operations.”

“We find ourselves in a difficult financial position at this time,” Strellner wrote.

Prospect Meadows is “driving significant economic growth for the area” according to an economic impact study conducted based on the 2022 season, Strellner wrote. From March to October 2022, Prospect Meadows generated 127,200 visits to the complex, resulting in 24,204 hotel nights, according to the study. Visitors from outside the state accounted for 54.2 percent of attendees.

Prospect Meadows created $11.08 million of economic impact over the eight months reviewed, and tax revenue generated was nearly $1 million, according to the study.

Strellner said in the letter that Prospect Meadows’ numbers have continued to increase, “and we expect those trends to continue.”

The estimated gate attendance in 2024 is 133,695, compared with 127,200 in 2022. An estimated 2,653 tournament games will be played this year compared with 1,900 in 2022, and an estimated 1,011 travel teams will compete compared with 958 in 2022, Strellner said.

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Running-Marquardt was the lone “no” vote on the county pledge, saying that while she supports Prospect Meadows, she is concerned about the county’s budget moving forward under a new law — House File 718 — aimed at reducing Iowans’ tax bills.

The law seeks to achieve a reduction in property tax growth primarily by merging most property tax levies into one general levy that is capped, then also installing mechanisms that limits revenue if taxable valuation grows beyond a certain level.

In the last two years, the county has trimmed almost $3 million from its spending plans, Running-Marquardt said, and county officials don’t yet know how HF 718 will impact next fiscal year’s budget. Running-Marquardt said the county has ongoing projects its needs to prioritize in the budget.

“I do support Prospect Meadows,” Running-Marquardt said. “I hope and believe they have a chance to raise money on their own. I look forward to seeing them prosper and fundraise on their own for this debt.”

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Supervisor Louis Zumbach, who also voted “yes” to the pledge, asked whether the value of the county land on which Prospect Meadows sits would fall if the complex were to fail. “If it isn’t a ball field, what does it become?” Zumbach asked. “Any other use is going to cost more money.”

Prospect Meadows also approached Cedar Rapids for financial support.

Cedar Rapids now has a 10-year agreement with Prospect Meadows through Dec. 31, 2028, to provide up to $100,000 annually, not to exceed $1 million. The support from the city’s hotel-motel tax revenue is tied to overnight hotel stays linked to the nonprofit.

The deal being worked on in the city’s Finance Department would advance funds the city anticipates would be generated under the existing agreement, according to an email to The Gazette. If the debt is paid off, Prospect Meadows would be eligible to apply for additional hotel-motel awards in fiscal 2027, under the possible deal.

Financial support over the years

Linn County and Marion each were required to sign loan guarantees in 2018 with Cedar Rapids Bank & Trust for a $2.4 million loan the bank made to Prospect Meadows to build the facility. Each municipality was asked to guarantee $1.2 million to pay off the $2.4 million bank loan should Prospect Meadows be unable to make the payments.

Prospect Meadows requested $2.633 million in federal American Rescue Plan Act dollars from Linn County in 2022 to assist in recovery from the toll COVID-19 took on the organization.

Half the Linn County ARPA payment was used to wipe out the county’s $1.2 million loan guarantee. The remainder of about $1.317 million was paid to Prospect Meadows on April 14, 2022. The Marion City Council awarded $500,000 in ARPA dollars to go toward the city’s loan guarantee. Marion’s remaining share of the guarantee is about $460,000.

A feasibility study presented to the Linn County supervisors in 2018 projected Prospect Meadows would see a net income of $245,068 in its 2019 opening year and ramp up to $936,052 by 2022, the end of phase one with the first eight diamond fields.

In 2023, as Prospect Meadows was slated to enter the second phase, the study projected it would earn a net income of $1.456 million and climb to $1.911 million in 2025. The study was prepared by Sports Facilities Advisory in March 2018.

Those projections have not yet come to fruition, with challenges facing the complex during its first full year of operation in 2020 between the pandemic and the derecho.

In a report to Marion spanning January through June, Prospect Meadows was continuing to miss revenue goals — coming in at $536,482, which is about $96,797 under budget. Expenses have totaled $1.069 million, about $24,416 over budget.

It was operating at a steeper-than-projected loss of $711,266, far in excess of the budgeted operating loss of $505,545. This reporting period, however, stopped short of the outdoor facility’s more lucrative summer operating months.

Comments: (319) 398-8411; grace.king@thegazette.com