Whipped Cream Difficulties

Ever heard of Project Rex/Dinosaur City? What about EarthQuest?

No?

Back in 2006, a guy named Don Lessem, who claimed to be both an entrepreneur and a “nationally recognized dinosaur expert” announced plans to build a huge theme park in the southeastern part of Montgomery County. Originally, this started out as Project Rex/Dinosaur City, which was supposed to take up 50 acres and cost $50 million. The project eventually evolved into EarthQuest, expanded to 1,600 acres, and hit a $1 billion cost projection.

Guess what?

Lessem, the brainchild of this great adventure, has left the project, along with the developer, Marlin-Atlantis. No construction is planned; investors are nowhere to be found. Funding to EarthQuest consultants has stopped.

The phone still rings at the EarthQuest Institute, but no one answers. And the site upon which EarthQuest was planned is under the threat of foreclosure. All the while, $7.635 million in municipal bonds issued by EMCID costs local taxpayers almost $600,000 in annual debt service.

(EMCID = East Montgomery County Improvement District.)

It looks like the whole “Project Rex” plan was really a way to get municipalities to pony up land and money for a proposed theme park; the developers would pick up consulting fees, while the locals would take all the risks and front all the expenses:

The RFP stipulations mandated all bidders to: 1) issue revenue bonds for the construction of the project, at their own risk; 2) enact a ticket tax on visitors to repay the bonds; 3) pay for a ‘due diligence study’ at a cost of $100-$125,000; 4) pay for a second study at a cost of $50 – 75,000, if the first study was favorable; 5) pursue tax increment financing for items related to the project; 6) provide a land grant of 50 acres, preferably waterfront.

The hattip on this goes to BlogHouston (good to see those guys active again) which offers an excellent roundup of The Tribune‘s coverage. In another story, Cynthia Calvert discusses the economics of the EMCID’s EarthQuest bonds:

…the total cost and liability of the EarthQuest project is not $10.135 million as previously mentioned, but is more than $21 million due to the future accrual of interest, the payment of which has been guaranteed by EMCID.

And what if EarthQuest doesn’t get built?

…EMCID will have no choice but to repay the principal and interest on the bonds out of current tax revenues. In doing so, the annual debt service on the bonds will significantly impair EMCID’s ability to fund other projects. For example, the total annual debt service of the EarthQuest bonds, by year, is: 2012 – $487,506; 2013 – $550,556; 2014 – $551,506; 2015 – $552,156; and so on.

That’s just the EarthQuest bonds. EMCID has also sold bonds on other unrelated projects, and when you add those bonds into the picture, those figures go up considerably:

…the total, combined annual debt service of all EMCID bonds, by year, is: 2012 – $1,077,494; 2013 – $1,141,924; 2014 – $1,142,849; 2015 – 1,142,133; and so on.

Edited to add: Some possibly relevant links:

• Houston Dinosaur Park. “Information about the new EarthQuest North Houston Dinosaur Park being developed near New Caney, Texas.”
• EarthQuest Institute.
• This appears to be Don Lessem’s personal web site. I debated about including this, since reports indicate that he’s left the project, and there’s nothing about EarthQuest that I can find on his site. But I decided to err on the side of inclusion, especially since Lessem still shows up on the EarthQuest site.

Edited to add 2: Lawrence reminded me that he’d also done a post on EarthQuest. I’ve also been doing some thinking about the $1 billion estimated cost for EarthQuest, and how that compares to Disney World, but I’m not sure I want to post those thoughts yet.