IN THE PUBLIC INTEREST
(a series of publications from the Public Interest Institute, Mt. Pleasant, Iowa, www.limitedgovernment.org)

The Iowa Environmental/Education Project (IEEP), dreamed up by Des Moines developer Ted Townsend, is a scheme to construct an eighteen-story indoor rainforest in the Iowa City-Coralville area.  Formerly known as “Iowa Child,” it has been derided by, among others, the Heritage Foundation, ABC News, and columnists Ron Schara, David Barry, and Bob Novak.
The IEEP project might have received little media coverage outside of Iowa were it not for the $50 million in federal taxpayer dollars it received in the 2003 Omnibus Appropriations Bill passed by Congress in January.  It was Senator Charles Grassley who secured the money for the IEEP, earning him the 2004 “Soaking the Taxpayers Award” from the Citizens Against Government Waste.  Because the IEEP was the recipient of this congressional pork-barrel spending, critics of the IEEP have dubbed it the “Iowa Pork Forest.”

To understand what a waste of taxpayer money the Iowa Pork Forest is, it is best to start with the projections of the project’s promoters.  According to a study commission by Townsend the Iowa Pork Forest it will create 500 temporary construction jobs and 400 permanent jobs with a ripple effect of 2,000 other jobs in the community and have an economic impact of $1 billion over a decade.

If we take the jobs projections at face value, the Iowa Pork Forest will have a ripple effect (also known as an “employment multiplier”) of five; that is, five additional jobs created in the community for every one job created by the Iowa Pork Forest.  Yet a ripple effect of five is quite high.  An internet search for “ripple effect of five” and “employment multiplier of five” yielded only one hit, suggesting that such an effect is quite rare.  The internet search showed that most ripple effects were no larger than three.

Promoters of the Iowa Pork Forest claim construction will supposedly cost only $180 million.  However this cost projection is likely low.  As Iowa blogger Jeff Cordts at Tusk and Talon notes, “…the projected construction costs will go up tremendously before this thing is actually completed.  In order to convince people it is worth it, government projects are always sold to the public on the absolutely most optimistic cost projection.  After all, once it’s started, we aren’t going to back out on it.  We’ll have to push through to completion. Look for the actual construction costs to be double of what is being said right now.”
Cordts also notes how much the Iowa Pork Forest will cost to operate once it is completed.  “We’ll pay experts tens of thousands a year to take care of the plants.  It’ll cost about a bazillion dollars a year to keep a glass enclosure heated to steaming jungle temps during an Iowa winter.  We’ll have to pay people to work there.  There will be liability payouts to kids who trip and fall in the place.  There will be sand and salt for the parking lot. There’ll be repair costs to the dome.  There will be upkeep to the grounds.  Those types of nickels and dimes, or more correctly, the Grants and Franklins, add up quickly.”
The Iowa Pork Forest is going to be expensive to build and likely will not have the economic impact that its backers claim.  Next week we’ll take a look at the promoters’ projections for attendance.
 

Last week’s column examined some of the assumptions underlying the Iowa Environmental/Education Project — a.k.a. the Iowa Pork Forest — a $180 million scheme by developer Ted Townsend to construct an indoor rainforest in the Coralville-Iowa City area.  This week we look at the promoters’ projections for visitors to the Iowa Pork Forest.

Backers of the project estimate that between 1.3 and 1.5 million will visit the Iowa Pork Forest every year.  However, these projections seem quite suspect.  Even if the rainforest was open 365 days a year, it would have to attract more than 3,500 visitors a day to reach the 1.3 million visitors per year.  Indeed, it could hardly be in a less ideal location to attract tourists.  The Iowa City-Coralville area has a population of barely 80,000, is near no major airports, and has no other tourist attractions such as theme parks, oceans, or forests.

Compare that to the Henry Doorly Zoo, which has a smaller version of a rainforest (1.5 acres, 8 stories high), and also has many things the Iowa Pork Forest will not, including a white tiger exhibit, an aviary, and desert biome.  The Henry Doorly Zoo is located right across Iowa’s western border in Omaha, population 390,000.  According to zoo officials, annual attendance is about — ready for this? — 1.3 million.

Another indoor rain forest, the Mitchell Park Domes, is located in Milwaukee, next to Miller Park where the Milwaukee Brewers play.  Given that the Iowa Pork Forest will not be located near a major metropolitan area, the 1.3 to 1.5 million attendance projection seems like little more than a rosy scenario.

Another projection that seems fanciful is the ticket cost.  Backers of the Iowa Pork Forest assume that they will be able to charge $15 a ticket for adults and $9 for children.  By contrast, the Henry Doorly Zoo charges $9.75 per adult and $6 per child and the Mitchell Park Domes charges $4.50 per adult and $3 per child.  One can now even buy a five-day pass at Disneyland that comes out to $20 per day.  Are adults are going to pay $15 to visit a rain forest in Iowa?

Indeed, even if we take the attendance and ticket assumptions at face value, the revenue they are likely to generate probably will not be enough to cover costs.  The ticket sales, if we assume that the attendance of 1.5 million is composed of two-thirds adults and one-third children, will amount to $19.5 million.

Based on assumptions from the backers of the project, the costs of paying salaries and for heating and electricity will come to $15.9 million.  The Iowa Pork Forest would seem to be in the black, but that is before the costs for repairs and supplies for the plants and animals are included.  Better hope those costs do not amount to more than $4.6 million.

The project promoters’ use of overly-optimistic projections increase the chances the Iowa Pork Forest will eventually fail, but only after wasting millions of taxpayer dollars.
 

The Iowa Environmental/Education Project — a.k.a. the Iowa Pork Forest — is Des Moines developer Ted Townsend’s scheme to construct an indoor rainforest in the Iowa City-Coralville area.  Now that $50 million of federal taxpayers’ dollars have been committed to the project, one would hope that the money was being put into a sound investment.  One would hope, but…

To get a sense of the chances that the Iowa Pork Forest will succeed, it is worth looking at what the market appears to think about it.  Of the $90 million raised for the Iowa Pork Forest thus far, $50 million has come from the Federal Government, and another $20 million in in-kind contributions have come from the City of Coralville.  Thus, only $20 million has come from private investors, and $10 million of that is from Ted Townsend!  It seems that private investors are not too impressed with the Iowa Pork Forest’s potential.

None of this would matter all that much if it were simply a private endeavor.  The Iowa Pork Forest might be just another misguided investment project if it were funded solely through private funds.  But with the contributions of the Federal Government and the City of Coralville, the taxpayer is now picking up part of the tab.  This raises the simple issue of fairness.  Why should taxpayers — especially middle class and poorer ones — help fund the plaything of a millionaire developer like Townsend?

That question is seldom asked, and surely not asked with any effect.  Indeed, it is likely that the taxpayers will be on the hook to fund even more of the Iowa Pork Forest.  Some are arguing that the State Government of Iowa should kick in.  The project “is an ideal Vision Iowa project,” wrote the Des Moines Register editorial board.  “Lawmakers should embrace it.”  Most troubling is that Senator Charles Grassley, who secured the $50 million in taxpayer funds for the Iowa Pork Forest, may try to get even more next time.  “The only thing I feel bad about is not getting more money,” Grassley said about the Iowa Pork Forest.  “It is just such a worthy project.”

The Iowa Pork Forest is a waste of taxpayer money.  It will not produce anywhere near the economic benefits that its supporters claim and will likely go bankrupt.  Unfortunately, it will probably receive even more taxpayer dollars before it does.
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The views expressed in this column are those of the author and not necessarily those of Public Interest Institute.  They are brought to you in the interest of a better-informed citizenry.

David Hogberg, Research Analyst, Public Interest Institute, 600 North Jackson Street, Mt. Pleasant, IA 52641-1328.  Phone:  319-385-3462. FAX:  319-385-3799.  Web site:  www.limitedgovernment.org.
E-mail:  public.interest.institute@limitedgovernment.org.