The shining Fourth Estate and the theme park
Cynthia Calvert, the editor of The Tribune of Humble, Texas, is restoring community journalism to its rightful place in the Fourth Estate. She has written a series of articles challenging the actions of the East Montgomery County Improvement District (EMCID), which funded a now-bankrupt theme park called EarthQuest.
Payments from a 2009 municipal bond offering, and possibly other East Montgomery County sales tax collections, have been paid to various “consultants” on the EarthQuest project, most of whom appear to have left. The land on which the project was to be built, the only asset other than the intellectual property, is being foreclosed upon by the local bank that lent the funds to purchase it. The 500-acre theme park was an enormous gamble for a county improvement district to support, and the district appears to have lost the bet and the taxpayers’ money.
Calvert fires her most recent salvo in her article “EarthQuest 2009 bond sale: where did tax dollars go.” In the very best tradition of a journalist holding public officials’ feet to the fire, she wants to know exactly where the money from the bond offering went:
The netherworld of EarthQuest is a complex financial maze that challenges even the most intrepid investigator. But The Tribune is dedicated to unwinding this tangled web called EarthQuest so that all taxpayers will know how their elected officials have spent their hard-earned tax dollars.
This article will focus on one aspect of EarthQuest, the 2009 municipal bond sale. Specifically, how were the proceeds of that bond sale, totaling $7.635 million, disbursed, to whom and for what purposes. The bond proceeds were actually reimbursed to Global EarthQuest Ventures, LP, an entity of the Marlin-Atlantis Companies (the “Developer Group”). But The Tribune will spotlight those parties that ultimately received payment, thereby removing the ‘corporate veil’ of the Developer Group that would otherwise shroud the identities of the true recipients.
I wish journalists from the mainstream media demonstrated the same amount of zeal in uncovering wrongdoing as Calvert does. The EarthQuest story, like most failed public efforts, is documented in the public record but requires a reporter to sift through a lot of documents to string together the story over a period of time.
The EMCID, the subject of Calvert’s investigation, was created by the Texas Legislature in 1997 with the mission to “promote, develop, encourage and maintain employment, commerce, economic development and public welfare in the eastern area of Montgomery County, Texas.” The EMCID issued bonds to fund EarthQuest, which they described in the bond offering’s official statement (page 4):
Proceeds of the Bonds will be used by the District to reimburse EarthQuest for certain pre-development costs incurred and associated with the proposed development of an approximately 500-acre EarthQuest Resort. EarthQuest Resort is planned as an immersive/interactive family destination resort that will include a theme park, water park and family entertainment center (including retail and hospitality), and a non-profit research institute, focused on the world from prehistoric times to the present with education and research on earth systems and sustainability. According to EarthQuest, the total costs for the project are currently anticipated to be approximately $600 million.
Bond investors knew upfront that the bonds were issued to cover planning costs on a highly speculative development project. The bonds were not tax-exempt at the federal level but are insured by Assured Guaranty and backed by a substantial reserve fund. Bond investors also have the comfort of knowing that the bonds are being repaid with the collection of 3/4 of cent sales tax. They will suffer no losses.
It’s the taxpayers of East Montgomery County who will eat the losses from this grandiose project. Calvert is doing the right thing in documenting and challenging the poor decisions made by the EMCID. According to a 2007 article in the Houston Business Journal, Calvert, who owns and edits The Tribune and several other publications, distributes the newspapers as free-circulation, advertising-supported broadsheets delivered to homes and displayed on racks. Local-area taxpayers are getting a free news source and, more important, the best of a free and informed press.