ndeThe largest youth sports facility in Iowa could shutter just months after it opened, according to its operator.
The non-profit Iowa Youth Athletic Foundation is suing for the Kettlestone Central Sports Complex in Waukee to receive tax-exempt status, according to The Des Moines Register.
The organization claims it will be forced to close the $40M facility or sell to a for-profit buyer if Dallas County does not relent. The county has already denied an appeal by the organization.
The stakes are not insignificant:
140K-square-foot complex (two 70K-square-foot buildings)
12 basketball courts/18 volleyball courts
Wrestling and pickleball space
Part of a $350M multi-use development
Projected annual economic impact of $125M
The organization operates two tax-exempt facilities in Ames and the Waukee YMCA is tax-exempt, but the county assessed the complex and its land as commercial property worth close to $20M.
There is a temporary injunction against property taxes on the site, which opened in April. But a court ruling on whether the IYAF has to put up an injunction bond is pending.
A non-jury trial is scheduled for next April with taxes set to become due in September; the IYAF estimates its annual tax bill would be at least $500K.
The IYAF has business and leadership ties to for-profit entities, according to the report, including a developer involved in the surrounding projects. The IYAF’s statewide All Iowa Attack basketball program does have some fees-based offerings as well. But the IRS considers the IYAF a public charity, according to the report, and its recent tax filings showed $4.4M in revenue (including $1.5M in donations and grants) and $2.9M in expenses.
The organization has no employees and said any excess revenue goes toward reserves and charitable endeavors.
Real estate and taxes are NOT MY AREA OF EXPERTISE.
But.
This is an interesting case of a non-profit wrapped inside a for-profit residential and commercial zone. On one hand, the county benefits from the influx of attendees and that $125 million of “economic impact”, according to a study.
On the other hand… it sits in the middle of a mixed-use zone that includes apartments and commercial property. IYAF may not be making money of it, but others certainly are or will, at least indirectly.
I imagine you’ll see more examples of local governments trying to extract some money from “non-profit” endeavors. 🤳 Follow Buying Sandlot on Social
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