Tracey Moody: Ark Encounter $62 Million in Debt

Tracey Moody, writing in Patheos in November of last year, suggests that, behind the grand opening of the Ark Encounter, there are financial concerns that Ham is not being upfront about. As she notes, the Ark 'n Park is being funded by a $62.5 million TIF. What is a TIF?

TIF stands for “Tax Increment Financing” and they’re usually issued in urban areas that are considered “blighted.” For example, suppose there was an abandoned shopping mall in a deteriorating community. A TIF can be set up to attract developers whose businesses may revitalize the area. The district officials could, for example, give the developers interest-free loans to build their project based on what they expect they can retrieve in property taxes over the next 30 years. That’s it. The developers don’t have to do anything differently from if they hadn’t been issued the TIFs at all. But now, rather than the property taxes going back to the community, the tax revenue is diverted to pay off the loan.

This can be a great help to the local economy if the development is a long-term success — it’s money well invested. The downside is, if the new developments fall short of projections (or fail entirely), the developers aren’t held liable for repayment and the burden of debt falls on the investors and taxpayers.

TIFs are controversial for a number of reasons and they’ve been discontinued in California, the first U.S. state to implement their use, because of the numerous lawsuits they led to (not to mention other unintended consequences).

So, at least on the surface, it seems as if Ham and his backers are hedging their bets, just in case the whole operation goes south. There are other incentives that the backers of the Ark Encounter managed to get out of the city of Williamstown, Kentucky (who's city planners plainly want this project to succeed at all costs):

According to Section VIII of the Memorandum of Agreement, in addition to the $62 million, the city and county agreed to other incentives (courtesy of local taxpayers):

$175,000 would be given to Ark Encounter to reimburse the amount they felt the property was overvalued.

$19,000 would go to Ark Encounter’s real estate agent, representing 2% of the total purchase price of the land.

98 acres of Grant County land would be sold to Ark Encounter for $1 (yes, one dollar).

As Moody notes, “These are perfect examples of public funding, regardless of Ken Ham saying again and again that, “No money will be taken out of the state’s budget to fund the Ark.””

There is additional funny business going on.  When Ham states that “No unwilling taxpayer will subsidize the Ark,” he is technically correct. The catch is that the Ark, itself, is the only non-profit portion of the park. Moody elaborates:

Crosswater Canyon, controlled by Answers in Genesis, is a non-profit that owns and operates two for-profit companies, Creation Museum, LLC and Ark Encounter, LLC. All donations for the project come in through the non-profit Crosswater Canyon, but all the tax incentives are applied to the for-profit Ark Encounter, LLC.

The literal Ark itself is the only non-profit portion of the attraction. So all the tax deductible donations people make are applied to the construction of the Ark, which qualifies as non-profit because it is an “educational tool.”

What about the land surrounding the Ark? That’s not technically part of the non-profit part of the park, so your donations wouldn’t apply there… but that’s why visitors will have to pay to park their cars (800 acres of land, and Ken Ham wants to charge people to park) and then pay admission to satisfy the business portion of the attraction.

Moody notes that she is a humanist and, while not antagonistic to Christian concerns, clearly does not share them. The report is fairly dispassionate, however, and her concerns are genuine. She notes that the Park would never survive in the real world because it needed tax-payer funding to succeed. This is, perhaps, true and, perhaps, not. Typically, large, for-profit sports teams get a municipality to pay for their stadiums and arenas because such edifices are, often, massive undertakings that can cost upwards of $100 million to build. For example, the Delta Center, in Salt Lake City (a much less euphonious appellation than ‘The Salt Palace,’ the arena it replaced) cost $93 million to construct, in 1991, which is $162 million in 2016 dollars.  Here in Knoxville, one of the sticking points in getting large, popular bands to come to the city is that, in order to finance the Thompson-Boling arena, on the University of Tennessee campus, a punitive ‘entertainment tax’ was levied on all entertainment in the city, adding up to 20% to ticket prices and to local hotel prices.

All eyes are on Ham and his new wonder attraction.  It will be interesting to see what attendance numbers are and whether it declines in the same pattern that the Creation Museum's has.