Nicholas Johnson, Rain Forest Lessons

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Rain Forest Lessons

Nicholas Johnson

Des Moines Cityview
and
Cityview Online
[http:www.dmcityview.com]

December 29, 2005

[Note: This material is copyright by Cityview, and is reproduced here as a matter of "fair use" for non-commercial, educational purposes only. Any other use may require the prior approval of Cityview.]

The Des Moines Register headlined a Dec. 13 editorial, "Rain Forest Hinges on Donor Support." And the Register's right: "rain forest gate" can't swing without hinges. But, like any effective barnyard gate, it requires more than the one good hinge of donor support. And therein lies a lesson of profound significance, not only for Iowa, but for every state and community throughout the country. It involves the juncture of five common, but dangerous, themes:

The willingness to use public money to create and subsidize for-profit and non-profit ventures alike

The belief that tourism is your town's lodestone to economic prosperity

The ease with which boosterism can mushroom, and thereby

Support the near-universal faith that "if we build it they will come"

All relying on the widespread willingness to focus on benefits to the exclusion of costs and risks, to substitute board members for financial analysis, and enthusiasm for data.

Using taxpayers' money to fund for-profit corporations and non-profit public ventures is coming under increasing scrutiny from tax-and-spend Democrats, borrow-and-spend Republicans, and don't-spend Libertarians alike. We do have another model: the marketplace. It offers incentives. Entrepreneurs have dreams of riches and nightmares of bankruptcy. Venture capitalists and banks want to get their money back. They insist on detailed business plans.

But note something often ignored. Even with those motivations, one-third of each year's 800,000 new businesses fail within four years. When those motivations are not present and public money is, responsibility is diffused, boosterism replaces financial analysis, and the likelihood of financial failure escalates even further.

Is that reason to oppose all taxpayer-funded development? Of course not. But it is reason enough for public officials and media to apply a loan officer's standards to public and private projects alike.

I'm neither booster nor basher of the rainforest. (How could anyone be without more facts?) But I've been intrigued by it for the last five years of its nine-year history. That's when I first started asking the questions to which I have yet to get answers.

Iowa needs bold ideas and "vision." But it also needs to welcome the questions that can morph that vision into reality rather than dismiss them as the ranting of the unimaginative. And this is the media's responsibility. Tell us to walk toward the rainbow, yes. But also remind us to keep our eye on the road lest we step in something on the way.

After nine years of expensive fundraising the rainforest is between $90 and $170 million short of its more modest $180 million (once $300 million) goal. Not one dime has been raised in two years. The project's been rejected by Des Moines, Cedar Rapids, Iowa City and probably Coralville. Sen. Chuck Grassley's $50 million pork contribution is on ice. And now the promoters are back in Des Moines, kind of like Harold Hill in "The Music Man," only without the 76 trombones.

So what lessons should we learn?

For starters, note that the sandbags in the rainforest's heavy luggage have been there from the beginning. The time to have asked tough questions was at the project's birth, not its death:

The promoters' public relations have continued to shift focus, from tourist attraction to educational training to scientific research center. "There's no 'there' there."

Without focus there can't be business plans, or revenue stream projections. (Independent economists think attendance projections are wildly optimistic.)

There's no detail behind the oft-quoted "$180 million," not to mention ongoing operating costs.

Secrecy, stonewalling, lack of transparency and a trail of missed deadlines bedevil public officials, media and public alike.

Even more important than construction costs and overruns are financial projections five, 10 and 20 years out. Virtually all new projects' revenue and attendance projections are grossly overstated, sometimes as much as tenfold. Rainforest promoters project annual attendance of 1.1 to 1.5 million (roughly half of Iowa's population). That's the equivalent of attendance at all U.S. presidential libraries combined. The most poorly attended? Iowa's at 66,000 annually. Coralville's Coralridge Mall gets 10 million visits a year. Yet fewer than 100,000 enter its Children's Museum. Dubuque's nationally renowned Mississippi River Museum draws 300,000 a year, the Living History Farms 100,000.

Major million-plus-attendance attractions work best in "destinations" with multi-million-population urban centers and other draws, such as southern California or New York City. And they start off with cash in hand, like Home Depot's $200 million contribution to Atlanta's newly opened "world's largest" aquarium.

What works in places like Iowa? Community support; precise focus; up-front financing; realistic revenue projections; knowledgeable, experienced management; transparency with public and media; and relationship to the locality, like Iowa's Living History Farms, or the Dubuque attractions' focus on Dubuque's river, topography and rich history.

Iowans need dreams. But when dreams involve major projects and public money it does no one a favor for enthusiastic promoters, officials and media to emphasize the "Wow!" and wonderful and ignore inherent risks and costs.

Clearly, one of the rainforest's -- indeed any major project's -- barnyard gate hinges is donor support. But there are many others as well. And not the least of them is the media's willingness to ask the obvious, tough, Management 101 questions about such projects long before they reach this stage.
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Nicholas Johnson teaches at the University of Iowa College of Law and maintains a rain forest Web site at www.nicholasjohnson.org.