Ad-Express and Daily Iowegian, Centerville, IA

February 3, 2010

Officials remain optimistic despite tough start for Honey Creek

By Pat Shaver, Courier Staff Writer

MORAVIA — If it wasn’t for the Honey Creek State Resort, Joe Sinclair wouldn’t be in the boat rental business, and he wouldn’t be employing several college students during the busy summer.

Sinclair, owner of Quality Power Sports out of Albia, is among the many business owners and local residents near the resort that can see a direct impact on the community since the resort opened in September 2008.

But a recent report by the state auditor’s office showing the new state-run resort nearly $1 million in the red is raising some eyebrows, including at least one state senator who’d like to see the state sell the resort during these difficult economic times.

Local and other officials, however, remain firm that the resort is an important asset.

“It has really raised the awareness of Centerville and Appanoose County,” said Tod Faris, executive director of Appanoose Economic Development Corporation. “If people are staying there a couple of days, they’re starting to look at other things to do.”

Honey Creek Resort has a 105-room lakeside lodge, 28 cottages, 20 full hook-up RV campsites, 6,500 square-feet of indoor/outdoor meeting space, an 18-hole golf course, a pirate-themed indoor water park, trails for hiking and biking and a restaurant with an outdoor patio.

“It opened during an epic flood and worst recession we’ve had in 80 years. With that said, I think we have done a tremendous job on getting that thing up and running,” said Iowa Department of Natural Resources Director Richard Leopold.

Local impact

Businesses around Rathbun Lake have seen up to a 40 percent increase in business since the resort opened, said Honey Creek Resort General Manager Andy Woodrick.

Sinclair said since the resort opened, his business has added about 120 hours of labor per week between Memorial Day and Labor Day.

Sinclair partnered his business with the resort and rents out boats on Rathbun Lake. He said Quality Power Sports was “100 percent started because of the resort.”

David Elliot, who owns Elliot’s General Store in Moravia, seven miles east of Honey Creek, said business started to pick up when construction began.

“We’ve seen gradual increases over the last three years,” Elliot said. “It’s definitely increased traffic flow for us.”

Locals in the area say they have been to the resort for dinner, business meetings and other activities, though many don’t have a reason to stay overnight at the resort.

“Are we going out there on a regular basis, I don’t know. I’m sure some families may,” said Faris, who goes to dinner at the resort a few times a month.

“It’s something to do in the wintertime,” said Danette Kosman of Moravia, who has been to the indoor waterpark a few times. “I think it’s a great thing for the community.”

Deena Hoffman, director of the Moravia Public Library, has had family members visit her in Moravia and said they were pleased with the programs and attractions at the resort.

“I think it’ll get better as time goes on, we’re hoping,” she said. “That’s a beautiful area out there.”

Hoffman has seen more visitors to the Moravia library in the summer; many of them are from the resort looking to use the Internet.

Cheryl Gray, of Unionville, works at Spencer’s Grocery in Moravia. In the summertime, she said, business picks up because of the visitors to the park.

“It’s a nice, beautiful place,” she said, although when she had dinner at the resort, she thought it was too expensive.

Woodrick said resort officials are focused on marketing for businesses looking for a place for conferences and workshops. Woodrick said the resort is “reasonably priced” for business visitors or locals looking for a weekend getaway.

Economic growth

In 2006, the Rubbermaid plant in Centerville closed and more than 500 people lost their jobs. Around the same time, Curwood and Modern Muzzleload Inc., also in Centerville, closed and roughly 70-80 jobs were lost.

“[Honey Creek Resort] is going to be a godsend for us,” said Kris Koestner, owner of J & K Market in Centerville. “This could be our future. This will be our future.”

He said the community has supported the resort since the idea came about nearly 40 years ago.

“I see Appanoose County reinventing itself once again,” said David Howe, of Centerville and member of Rathbun Lake Association.

Howe, the vice president of Iowa Trust and Savings Bank in Centerville, said along with increased business, the resort has brought jobs to the community.

In April 2009, Bentley Management Group, a Milwaukee, Wis., company, announced plans to develop land adjacent to the Honey Creek Resort State Park that will bring retail construction, residential development and entertainment attractions to the region. The projects planned total $90 million and would include commercial retail, village-style shops, a sports activity center, condominiums and rental cabins. Officials said the development will create jobs and help attract more visitors to the resort.

Officials at Honey Creek are working to team up with local communities and organize tours outside of the resort.

“We have a lot to offer, but can you stay six to seven days here and not get bored?” Woodrick said.

The golf course has a “9 and Wine” event once a month in the summer, where couples taste local wines and golf nine holes.

Auditor’s report

A report by the state auditor’s office last month shows Honey Creek’s operating loss was at $884,412 from Sept. 18, 2008, to June 30, 2009.

Woodrick said since the resort opened after the summer season and the report included slower months, the loss was expected.

“First-year businesses this size generally operate at a loss. I don’t think anyone expected it would make money in the first year, or even the first couple years,” Woodrick said.

Woodrick believes that over time, the resort will be a place where families continue coming back, and the kids will grow up and return to Honey Creek with their kids.

“It was accurate, but it wasn’t fair,” Howe said about the auditor’s report. A report of the first 18 months of operation might have been more telling of the resort’s income, Howe said.

Honey Creek Resort reported operating revenues of $3,104,679, which included $1,344,054 from lodging, $1,292,423 from restaurant operations and $294,941 from golf course operations. Total operating expenses for the resort for the 10-month period totaled $3,989,091. Expenses include: $437,538 for lodging, $1,346,295 for restaurant operations and $459,996 for golf course operations.

“It was never meant to be this huge money-generating machine. We want it to pay itself off,” Leopold insists.

State officials manage the contracts, but the resort itself is run by Central Group, a private company out of Minnesota.

“What continues to be a challenge in the future is the bond payment,” Leopold said. Initially, there was a four-year grace period before the first bond payment was due, but since Honey Creek opened later than anticipated, the first bond payment was due around the time the resort opened.

In the resort’s first year, they had several expenses that will diminish after its first few years of operation, like training expenses, said Woodrick.

But at least one state senator, Matt McCoy, D-Des Moines, has suggested that the state sell the resort. Attempts to reach McCoy for comment were unsuccessful.

The resort is on U.S. Army Corps of Engineer land that is state bonded, so it would not be realistic to sell it to a private company, Leopold said.

The idea of the state selling the resort “is certainly not a worry. It’s a beautiful property and whoever owns it will be successful,” Woodrick said.

If the state decided to sell the resort to a private company, Howe said that it would probably not sell for what the state has already invested in it.

“It will get to the point where it will be a sustainable business. It will be a jewel,” Howe said.

Pat Shaver can be reached at (641) 683-5360 or by e-mail at p.shaver@ottumwacourier.com.