Judge reverses abrupt closure of Iowa’s Honey Creek Resort

A district court judge has ruled the state of Iowa must allow business to resume as usual at Honey Creek Resort while a lawsuit plays out over which entity will manage the state-owned property moving forward.

Judge Jeffrey Farrell last week granted a temporary injunction in favor of Terry and Beth Henderson and their company Achieva Enterprises, which is suing the state over its abrupt termination of the contract naming Achieva as the resort’s operator.

The Iowa Department of Administrative Services terminated the agreement in late October over purported contract violations, at which point the resort was immediately closed and its entrances barricaded.

Per the terms of Farrell’s order, Achieva will now be able to access the resort grounds in southern Iowa’s Appanoose County and should pursue its reopening “as soon as reasonably possible” or by March 12 at the latest.

“That means that the lodge and cabins shall be open for customers by that date and the golf course shall be open for play by that date, weather permitting,” Farrell wrote.

Farrell previously issued a separate injunction temporarily barring the state from hiring a new third-party operator to manage the resort while the lawsuit moves forward in court.

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‘Heated’ phone call precedes abrupt closure

The state hired Achieva in 2023 to operate and revitalize the Honey Creek Resort, which sits on land owned by the Iowa Department of Natural Resources near Rathbun Lake. The resort campus includes a 106-room lodge, 28 cabins, an indoor water park and 18-hole golf course.

The $60 million facility first opened in 2008 as a state-run resort, but after years of financial struggles, the DNR in 2016 entered into a management contract with private hospitality firm Delaware North.

That firm later pulled out of the contract following back-to-back resort seasons that were negatively impacted by the COVID-19 pandemic, prompting the state to seek a new operator and hire Achieva.

In its lawsuit, Achieva claims that’s when it “inherited a resort in disrepair — physically, financially and reputationally” that eked by on “razor-thin” profit margins.

Despite those challenges, Achieva argued in its suit that the company worked hard to improve the resort’s reputation, extend its operating season year-round and address deferred campus-wide maintenance issues.

The water park presented a particular area of concern, the suit states, with the Hendersons arguing in court documents that the company was losing roughly $500,000 a year on an amenity that would cost more than $2 million to reasonably repair.

Court documents state the issue came to a head during an Oct. 21, 2025, phone call between the couple and the recently appointed Department of Administrative Services Director Mark Campbell and the department’s lead counsel, Nathan Reckman.

Campbell told the Hendersons he had scheduled an appointment for a pool company to inspect the water park for a repair estimate, which documents state caused immediate frustration for the couple who had already independently sought and reported findings on the facility’s financial feasibility.

The couple then repeatedly told Campbell that they would close the resort if the state insisted upon leaving the water park open, which the pair later told the court was a “kneejerk reaction” borne of exasperation.

Eight days later, the state informed Achieva that it would be immediately terminating their operating contract to protect the state’s interest in the property. State officials arrived at the resort the same day to cease operations, escorting staff and visitors from the premises.

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Judge finds Achieva’s claim has ‘reasonable likelihood’ of success

The state has previously stated it terminated the contract with Achieva because the company failed to live up its contractual obligations “for significant lengths of time.”

In granting the injunction, however, Farrell found that early legal filings and oral arguments indicated Achieva had shown a “strong likelihood that it will prevail on the merits of” its claim that immediate termination was not justified.

Citing evidence presented during oral arguments, Farrell wrote that the majority of the state’s concerns had been identified ahead of the Oct. 21 phone call without having prompted a call for Achieva’s immediate ouster.

He also noted that those same concerns could likely have been handled with the 60-day provision included in the contract through which the state would provide Achieva notice of a given concern and allow time for it to be addressed prior to terminating the contract.

Ultimately, Farrell wrote, the state opted to pursue immediate termination based upon the Hendersons’ Oct. 21 statements about closing the resort despite ample evidence indicating the couple had no real intent to do so.

“Notwithstanding the Hendersons’ puffing and threats, there is no evidence that they actually did anything to terminate or suspend the business,” the order states. “This became obvious to the State at the time it arrived at the resort to shut it down” given that both guests and staff were found on site.

In lieu of the bond usually required as part of a temporary injunction, Farrell ordered that Achieva must instead obtain property insurance for the resort. The company’s suit against the state can move forward in the interim, and a trial scheduling conference is scheduled for Jan. 7.

Comments: grace.nieland@thegazette.com