The developer behind a proposed youth sports and recreational complex in Johnston is being asked to repay more than $3.8 million in grants and fees to the city after they defaulted on the development agreement and failed to arrange for the city to purchase the property by Feb. 1.

It’s the latest chapter for the city and Ignit Johnston LLC, the group behind the proposed development on 30 acres north of Interstate Highway 80/35 on the west side of Merle Hay Road. 

Last fall, Waterloo-based Lincoln Savings Bank filed foreclosure against Ignit Johnston LLC, claiming Ignit Johnston’s mortgage with the bank was in default. According to the petition, filed Nov. 7 in Polk County District Court, the developer owed more than $3.56 million as of Oct. 23, plus more than $1,600 per day in accruing interest.

According to online court records, the foreclosure case is pending while discovery takes place. A trial scheduling conference is scheduled for Feb. 18.

Online court records also show that two investors in the project filed lawsuits in January against Ignit Johnston LLC alleging the developer is in default of promissory notes they signed with the investors.

In those petitions, investors say they invested $50,000 each and signed a promissory note with Ignit Johnston LLC. The promissory note came due and Ignit Johnston failed to make payment, the investors claim in their lawsuits.

Now, the city of Johnston is asking Ignit Johnston LLC to repay grants paid to the developer and professional fees the city has incurred as a result of the project.

The Johnston City Council voted on Dec. 1 to find Ignit Johnston LLC in default of the development agreement and to take remedies outlined in the development agreement. 

Josh Laraby, the city’s director of economic development, said the city has not terminated the agreement with Ignit Johnston LLC.

Laraby said the developer was notified of the council’s decision on Dec. 3 and was given 10 days to respond and notify the city if they intended to keep property and repay the pre-development grants they received and professional fees the city incurred.

The developer did not reply within those 10 days, Laraby said.

“He did not inform the city of his intent to retain the property, and ultimately had until Feb. 1 to convey that property to the city, free and clear of all mortgages, liens and other encumbrances,” Laraby said.

That would have allowed the city to purchase the property for $1,440,375.

“The developer has not worked with us in any fashion to prepare for that transfer on Feb. 1,” Laraby said.

As a result, Ignit Johnston LLC had 30 days from Feb. 1 to reimburse the city for more than $3.5 million in predevelopment grants and up to $300,000 in legal, engineering and other project-related costs, Laraby said.

All the actions being taken are outlined in the development agreement the city has with Ignit Johnston LLC, which lays out what happens if the developer fails to comply with conditions of the agreement.

Chad O’Meara, co-founder of Ignit Johnston LLC, said in an email that “we continue to work with the city of Johnston, our lenders, creditors and investors on the best paths forward.”

“Completion of the project is in the best interest of all parties involved and we continue to pursue multiple paths that could result in project completion,” he said in the email.

O’Meara declined further comment.

According to the Iowa Secretary of State’s Office’s website, there are as many as 12 mechanics liens filed against Ignit Johnston LLC and the site where the proposed sports complex was planned.

Those plans included four buildings constructed around a plaza area.

In a September 2023 story in the Business Record, O’Meara described the proposed $55 million facility as a “world-class venue with some nice lifestyle features.”

It was expected to have more than 250,000 square feet of indoor space, including a competition-level track and courts for basketball, volleyball, pickleball and futsal, an indoor style of soccer played on hard-surface courts using a smaller, low-bounce ball.

The area, which is adjacent to a city park and recreational trails, has been long considered by the city as a gateway into the suburb that could spur other development in the area. 

The city’s planning and zoning commission approved the site for Ignit Johnston LLC in 2022. Initial plans were for the facility to be completed in spring 2023. Supply chain issues following the COVID-19 pandemic slowed its progress.

Laraby said the city has not talked about what the future of the site will be if the project doesn’t happen.

“We’ve been of the understanding that the developer was going to make this project happen,” he said. “We’re not going to speculate what we would do with the property if it’s transferred.”

He said the site is part of the Merle Hay Gateway Plan, approved by the city council more than a decade ago, with a vision of making that area an “entrance to a vibrant retail and experience-based corridor.”

“That included attributes of family sports entertainment,” Laraby said. “Did it say we’re going to have a sportsplex and it’s going to look like this? No, but I feel comfortable saying the vision remains the same for that corridor.”