The Iowa Department of Natural Resources has outsourced operations of Honey Creek state-owner resort to a New York company expected to pay more than $12 million over 15 years toward its upkeep and improvement.
State officials will write requirements into the contract with Delaware North Companies Parks & Resorts, of Buffalo, N.Y., that all names and trademarks connected to Honey Creek will stay with the state — a reaction to a legal battle between the company and the National Park Service.
Delaware North, which held the concessions contract for Yosemite National Park for more than 20 years, sued the Park Service last fall for not requiring the new operator, Aramark, to purchase the names of park attractions and “intangible property” from Delaware North, according to the lawsuit filed in the U.S. Court of Federal Claims.
The property under dispute includes names of park lodging sites, the slogan “Go Climb and Rock” and even the name Yosemite National Park, as used on T-shirts and other souvenirs. The company claims it had to buy that intangible property from its predecessor and is owed up to $51 million, the Los Angeles Times reports.
The Park Service asserts the value of those assets is much lower.
“DNR has, as part of its due diligence review, explored the current litigation surrounding trademarks and intellectual property between Delaware North and the National Park Service at Yosemite National Park,” states a DNR summary put together for Iowa’s seven-member Natural Resources Commission, which unanimously approved the Delaware North contract Wednesday.
“After review of the pleadings and after inquiry to Delaware North, DNR is not concerned about this litigation impacting Delaware North’s Ability to deliver on its proposal ... and will take steps to ensure intellectual property is adequately addressed in the contract.”
Honey Creek Resort, on the shore of Lake Rathbun in southern Iowa, was built in 2008 and boasts a 105-room lodge, 28 cottages, restaurant, indoor water park and 18-hole golf course.
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The resort struggled for years to repay debt on initial construction costs of about $60 million, but the State Legislature voted in 2013 to pay more than $30 million to retire the bonds.
Honey Creek reported operating revenue of $6.16 million for the year that ended June 30, 2015, the State Auditor’s Office reported. With expenses of $5.83 million, the resort made $325,852 profit.
Honey Creek has been managed by Central Group Companies, of St. Cloud, Minn., since 2007. The DNR pays the company a flat fee to manage the resort. State officials said in 2014 they wanted a new arrangement, possibly one in which a private company operated the resort and paid the state a set fee.
Delaware North will be required to make $2.51 million in capital investments, which will include a conference center/AV upgrade, wedding pavilions, outdoor pool and room refreshing. In addition, the firm will pay DNR seven percent of gross monthly receipts to be put into reserves for maintaining and improving the resort.
“This way, we’ll have $12.4 million coming in,” said DNR Spokesman Kevin Baskins.
If the resort’s annual gross receipts exceed $7 million, Delaware North will pay the state an extra .5 percent, and if gross receipts surpass $8 million, an extra five percent will be paid to the state.