Sunday, July 26, 2009

Privatize Honey Creek Resort

We libertarians are sometimes criticized as having all these "big ideas" about limited government and personal freedom but lacking small, practical steps to implement them. Here's one idea that I think fits the bill: Privatize Iowa's Honey Creek Resort State Park.

Billed as Iowa's first "destination park," Honey Creek Resort opened for business last September. The luxury resort, located on Iowa's Rathun Lake, was built and is owned by the Iowa Dept. of Natural Resources. The resort boasts 105 spacious rooms in its "great lodge," 28 resort cabins, a pirate-themed indoor water park, an 18-hole golf course, 50-boat slips, boat launch, fishing pier, conference center, RV park, and a full-service restaurant and lounge. Whew!

The resort park has about 138 employees, making it one of Appanoose Countys largest employers, impacting the economy of southern Iowa. This is of course why the state government built the place, for the economic impact.

But what is this impact? Economist Henry Hazlitt teaches: "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." We need to look beyond 138 employed persons in southern Iowa and any immediate tax revenues of the resort.

What is the resort's impact on other similar businesses in the area? A quick Google search identified 10 hotels, 4 golf courses, 3 RV parks and 4 private campgrounds near Moravia Iowa (where the resort was built). The state has created a tax-payer subsidized business to compete directly with them.

This impact stretches much further since the resort obviously hopes to draw tourists from all over the state as well as from out of state. A day a family stays at the resort is a day that they don't stay in a bed and breakfast in Dubuque or a day they don't spend shopping at Coral Ridge Mall or enjoying Arnold's Park or Adventureland Park, making those enterprises less profitable. The state has not "created" 138 jobs and a new revenue stream, it has merely borrowed them from private businesses throughout the state.

This is only the direct impact. More jobs and money will be sucked from elsewhere in the state via taxes. The state of Iowa has pumped atleast $8 million directly into the project. In 2008, Senator Chuck Grassley requested an additional $7.1 million in federal funds for projects around Rathbun Lake. In true government fashion, delays and cost overruns were frequent. Construction of the golf course alone went 150% over budget.

The project also racked up about $33 million in public revenue bonds to pay for construction. These will have to be paid back. Early projections from 2007 (before the economy tanked) showed that the resort should be showing a small profit by the third year of operation (2011). Since the resort will make the bond payments out of it's net income, every year that the resort doesn't break even the Iowa taxpayer will have to make the bond payments.

All this tax money is perhaps diverted from more needful government projects at a time when the state is having difficulty paying the bills. But the money was originally diverted from its rightful owners: the people of Iowa. Every dollar taken from us to fund frivolous projects is a dollar not spent or invested in our own communities to create jobs and build dreams.

So when we see the "massive mosaic fireplace" of Honey Creek's "great lodge," before we marvel at its grandeur, let us take Hazlitt's advice and use our mind's eye to see "the possibilities that have never been allowed to come into existence. [Let us] see the unbuilt homes, the unmade cars and washing machines, the unmade dresses and coats, perhaps the ungrown and unsold foodstuffs. [...] What has happened is merely that one thing has been created instead of others."

Honey Creek Resort is already built. Iowa should sell it to private investors. Let them assume the debt and compete against Iowa's other businesses on equal footing, without the coercive and confiscatory power of government tipping the scales in the resort's favor.


  1. So, Iowa taxpayers are essentially subsidizing vacationers who can afford a $300/night hotel (as we wonder if we can splurge on the Super 8)? Sounds like quite a deal to me... I would agree with selling it, but have no doubt that a sweetheart deal would allow someone to get it at below market prices.

  2. Honey Creek resort in Rathbun Lake is the best summer experience. I;ve been there last month when I visited my hunting land in Iowa. I love hunting big bucks and whitetails in Iowa. There are lots of hunting lands for sale in Iowa.


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