I used to do a lot of municipal bond work in my legal practice, so I cannot help but wonder what possessed the local municipality (other than the fact that it is in Arkansas) to issue bonds for such a lunatic project in the first place, but in any event a "Noah's Ark" theme park appears near collapse as 50% of the needed bond issue goes unsold. The park is yet another creationist effort to pass off Bible myths as fact and it is encouraging to see that institutional investors recognize a bad investment. Perhaps some of the Christofascist groups will buy up the remaining binds and lose their shirts in the process. Kentucky.com looks at the impending debacle. Here are highlights:
A Northern Kentucky theme park to be built around a full-scale replica of Noah's Ark might sink unless investors buy about $29 million in unrated municipal bonds by Feb. 6.
In December, the city of Williamstown issued taxable debt for affiliates of the Christian non-profit Answers in Genesis, data compiled by Bloomberg show.
Even though $26.5 million of securities have been sold, the project needs to sell at least $55 million to avoid triggering a redemption of all the bonds, Ken Ham, the non-profit's president, wrote in an email message Thursday to supporters. Without the money, construction funding will fall short, he said.
Proceeds are intended to help build a 510-foot, or 300 cubit, wooden ship, the centerpiece of a planned biblical theme park called Ark Encounter.
The project has drawn comparisons to tourist attractions in Alabama and Nebraska that have defaulted, and it comes with the added risk of legal challenges because its religious theme might violate the U.S. Constitution.
The Washington-based group Americans United for Separation of Church and State said it is monitoring the project.
Industrial-development bonds are considered the riskiest municipal debt because they account for the largest proportion of defaults in the $3.7 trillion municipal market. Williamstown issued the bonds without a rating, making the prospect of repayment even less clear.
Ark Encounter has had no institutional investors buy its bonds, Ham said.
The documents cite at least 39 risks to buyers, including that Answers in Genesis has no obligation to back the debt. Bondholders' sole revenue would come from money spent by visitors.
Dan Blank and Zach Logan at the underwriter, Ross Sinclaire & Associates, didn't immediately respond to voice mails seeking comment. Joe Boone, vice president of advancement at Answers in Genesis, didn't return calls to his office and mobile phone.
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