“Iowa Child” Concerns
Nicholas Johnson
January 22, 2001
| Financial Viability | Governance
The Merits of an Iowa Rain Forest and Environmental Concerns |
My support of the Iowa Child project is contingent upon adequate responses to a number of categories of concerns and unanswered questions.
Commercial success is not a top priority in evaluating quasi-public projects, but without it there is little need to proceed further.
Based on what I have seen and heard so far I cannot imagine that a conventional banker, venture capitalist, or major foundation executive would be willing to put money into this nearly $300 million project. There are assertions regarding projected numbers of visitors and revenue, but little to back them up.
Project spokespersons have said its Web page needed updating. The drawings and plans, they said, were not necessarily final. As of January 21, 2001, it has been removed entirely and replaced by a page the project is "currently updating" that no longer has any links to financial or other data.
The track record of projects designed to bring tourist dollars to unlikely locations through the use of various “attractions” is at best mixed. The aquarium and museum in Flint, Michigan. Another aquarium in New Jersey. The Biosphere II project in Arizona (now operated by Columbia University). Northeast Iowa’s “Silos and Smoke Stacks.” All have failed to deliver their promoter's promise.
That’s not to say Iowa Child is doomed to fail. It is only to say that revenue projections need to be provided, checked and double-checked by professionals who are not paid consultants or boosters for the project.
On the assumption it is initially viable, there are still three concerns about the financial future of the project.
What is the future scenario if the project does go belly up? Who owns the land and buildings? What happens to them? When a boutique shop or restaurant downtown, or in a mall, doesn’t make it the space can be converted to suit the next entrepreneur. But what does one do with an enclosed and abandoned artificial rain forest in the middle of Iowa?
What if the project earns just enough to stay open, but not enough to keep it in top shape? Or, what if the operators simply choose to take more profit out of it and put less into regular upkeep? Would there be a contractual obligation to maintain the facility? Between whom? How would such standards be drafted? How, and by whom, would they be monitored and enforced?
In the event that additional money is needed for capital improvements or operating expenses will there be a requirement that additional public money be provided? Will there be the opportunity to invest additional public money, if public bodies choose to improve the facility?
Any financial analysis of a business plan requires that there at least be a plan. In this case the plan has never been entirely clear, is often lacking the details necessary for an evaluation – and then seems to change over time, as with the disappearing Web site, noted above.
This both shakes a reviewer’s confidence in whatever does, ultimately, end up being the “final answer.” And, in the meantime, it provides little to evaluate one way or another.
The project seems to involve such a disparate mix of undertakings as to lack focus both as to mission and as to financing. It is to be a rain forest and aquarium, but also a hotel. An elementary school, but one over which local school districts have no control. A teacher training facility, but with no apparent source of funds, faculty or ties to colleges of education.
The hotel and any shops would, presumably, be operated as for-profit enterprises for the owners that would benefit from the presence of the rain forest. The rain forest would, presumably, charge an admission fee for adults, although no admission price has been mentioned. Is there to be any public control, or even review, of the level of hotel and rain forest fees?
What about the students of the in-house school, and those visiting from neighboring districts? Will they contribute to the profit side of the attraction, or will their attendance be subsidized in whole or in part? Is this project just for the “Wealthy Iowa Child”? To the extent students (not school districts) will pay, what provisions (if any) will be made for low income students?
Whatever else may be said of this project it is certainly not a response to a local demand. It is being pitched to various Iowa cities, two of which (Des Moines and Cedar Rapids) have turned it down, for whatever reasons.
The name, “Iowa Child,” seems more a catchy advertising slogan designed to play upon the positive emotions surrounding children than one designed to describe a new hotel and rain forest.
This concern increases with the inclusion of a most superficial suggestion of some kind of school and teacher training facility without any of the details, and involvement of professional educators, necessary to its success.
The perception that Iowans may, once again, be dealing with a Howard Hill from “The Music Man” tends to put reviewers on guard.
Subject to some pretty minimal zoning and other regulations, entrepreneurs are relatively free to engage in any for-profit venture of their choosing.
That’s equally true of a rain forest that increases a hotel’s occupancy rates and profits. Such a project could be capitalized with bank loans, venture capital and stock sales. If the project makes a profit the investors are rewarded. If it goes belly up they lose their investment.
The red flags only go up when a for-profit enterprise seeks taxpayer contributions – either as start-up capitalization or as “bailout” after failure. Such ventures are characterized as “socialism for the rich, and free private enterprise for the poor.” A classic example is the public funding of athletic facilities where millionaires play games for the profit of billionaires.
At a minimum, such an arrangement should include precise agreements and accounting practices regarding allocation of costs and revenues and any private payback of the public moneys. Those do not seem to be present here.
More often, such an arrangements are simply inappropriate.
There are three categories of taxpayer contributions for Iowa Child.
What is the proposed administrative and governance model here? Where will the ultimate decision-making power reside (as distinguished from the ability of any citizen to make requests and recommendations)? In the owners (and who are they)? In some presently existing, or to be newly-created public body (and, if so, which)? A split? If the latter, what issues are to be decided by which bodies?
For example, assume hypothetically that educators and citizens’ groups complain about the absence of any reference along the rain forest tour to the corporate destruction of the real rain forests. Who would have the power to agree, or disagree, with the addition of such posters?
As a local school board member I have a special interest in the operation of the proposed school.
My initial impression was that it would be a public school within the Clear Creek-Amana School District.
It now appears that is not the case. It will apparently be run by the Iowa Child Foundation, as a school “within the world of public education,” but one that draws students from up to 50 miles away under a lottery system.
Far be it from me to resist educational innovation, having spent over two years on a school board trying to encourage it. But this idea really does need considerable additional clarification.
What is meant by “the world of public education”? Is the school to be what would normally be described as a “private school”? A charter school? (That’s something the Iowa legislature has yet to approve.) Will the rain forest become its own school district? What is to be the source of funding – state funds, tuition from parents, local school district (including local property tax) funds?
When cable television systems were first competing for franchises they would use the technique of “rent-a-citizen” – gaining local spokespersons by promising extremely generous returns on citizens’ minimal “investments.”
It may well be that Iowa Child has engaged in none of this. But the project’s transparency on this issue would lend credibility to its claims.
To what extent have payments been made to consultants, local officials and other citizens, or developers, in the form of cash, campaign contributions, fees, “investment opportunities,” gifts, tips, trips or other benefits?
Who owns, or has since bought up, the land around this project in anticipation of profiting from its development?
What has been the extent of the study and endorsement by those cited as supporters? (Some indicate they have done little more than attend a briefing, and did not intend their participation to constitute an endorsement.)
The Merits of an Iowa Rain Forest and Environmental Concerns
On the one hand, the notion of even trying to create and maintain a rain forest in the middle of an Iowa winter seems a little bizarre. On the other hand, reasonable persons can differ about the prioritizing of what is and is not appropriate, an attraction, or an educational experience for young people.
What does seem incontrovertible, however, is the discordance between the project’s purported purpose and its actual impact. Its purpose is, in part, to increase the environmental awareness of its visitors, young and old. But its impact will be to draw down heavily upon the region’s water and energy supplies – some have estimated by a factor equivalent to the total energy consumption of the University of Northern Iowa.
Others have detailed their objections to Iowa Child from an environmental perspective, including its impact on real rain forests, and the benefits of alternative projects (such as a native prairie) thought to be more environmentally and educationally sound.
The project’s spokespersons have made claims regarding the creation of jobs. Clearly, there will be short-term jobs related to the construction – although it’s not clear either how many of those workers will come from (and return to) other areas or how many will be high-wage union jobs.
But once the project is complete it is not clear how many jobs will be provided, nor how many will pay more than the $7.00-to-$10.00 scale.
Finally, there is the negative impact of an additional 600-room hotel on the business of the motels currently available in Coralville.
Although I am not attracted to the Iowa Child project,
neither do I now know enough to be opposed. What I do oppose is proceeding
with it prior to the satisfactory resolution of the issues raised above.