A recent CR Gazette article reports that Iowa’s state-owned Honey Creek Resort continues to be an albatross around the neck of Iowa taxpayers. According to the article: “The resort’s revenue fell $549,766 short of its budgeted revenue of $6.4 million, which was better than fiscal 2011 when Honey Creek missed its goals by nearly $645,071.”
In 2006 the state issued $33.5 million in bonds (which means they borrowed $33.5 million) to partially pay for the new $58 million resort. Not to worry, taxpayers were assured, this beauty would pay for itself! (Picture a sweaty man with a bad combover, really wide tie and a plaid suit coat selling this idea to state officials.) The state could pay off the bonds with profits from the resort itself.
According to the rosy projections that the bond issue was sold with, the resort may suffer a small shortfall the first couple of years but should already be raking in a small $316,000 profit by the third year of operation. Honey Creek is now in it’s fourth year of operation and it ended FY2012 with a loss of $549,766.
That money has to come from elsewhere in the Iowa DNR’s budget. The Gazette report again: “Revenue for fiscal 2012 did not cover bond payments and management fees for the resort, which caused the DNR to shift nearly $1.3 million from statewide conservation efforts to Honey Creek. More than $4.9 million in Resource Enhancement and Protection (REAP) funds have gone to Honey Creek since the resort opened.”
So the DNR built a luxury resort to stimulate the economy (not its job), it has hemorrhaged money ever since, causing the DNR to pull millions of dollars away from the enhancement and protection of Iowas natural resources (its job). Only in the world of government does that make sense.
But surely things could turn around and the state could start earning enough to make Honey Creek self-suffient. Read my much-earlier post Privatize Honey Creek Resort to see why I still wouldn’t like it.