Triumph of a Boondoggle

Why the U.S. National Whitewater Center's short-term loss can lead to long-term gain
U.S. National Whitewater Center
Professional kayaker Michal Smolen paddles the Whitewater Center in October 2012.

Since it opened in 2006, the U.S. National Whitewater Center has been a subject of outrage and mockery from self-appointed custodians of the public dime.

I thought I’d rehash a few of the choicer bits, casting back a few years. From Jeff Taylor of The Meck Deck, the Charlotte-based blog for the John Locke Foundation, March 6, 2007:

Dear heavens, I cannot make this stuff up.

In case you forgot about the $32 million National Whitewater Center built with loan guarantees from local government, here comes the $32 million National Whitewater Center to invite you for lunch.

Yes, ladies and gentlemen, the one-of-kind National Whitewater Center will soon be in the food biz, along with thousands of other wholly privately backed operations. The Eddy Restaurant & Bar is supposed to open at the end of the month.

Wait! There’s more. The National Whitewater Center also has its own retail arm. A “pro shop” that is “Charlotte’s Premier Whitewater Outfitter.”

Charlotte’s non-subsidized sporting goods stores must be thrilled!

Taylor again, Feb. 22, 2008:

In short, this thing is a complete foul up. Other local governments who foolishly “guaranteed” the center’s loans will also be hit up for money. Better still, it looks like local residents may have to pay twice—once with tax dollars and again to use the facility, even just to take a walk or ride the bike paths. Brilliant.

But even that does not capture the problems. The business model cannot generate enough revenue to pay the down the debt. The banks seem to be counting on local officials to keep signing checks without question. Guess what? They may just have to.

From former Creative Loafing columnist Tara Servatius, now manning an AM talk radio mic in Charleston, in a post titled, “The Whitewater Six: Meet the men who blew $12 million”, March 17, 2009:

As often happens when big booster projects go bust around here, council members were finally asking the questions someone should have asked when the U.S. National Whitewater Center was proposed at the beginning of the decade.

Too late now. The center, which opened in 2006, features a large man-made river for kayaking and rafting that is situated on 300 acres 10 miles from the Center City. The non-profit that runs it recently defaulted on $38 million in loans for the second year in a row. That puts Gastonia ($500,000), Belmont ($500,000), Mount Holly ($1 million), Charlotte ($2 million), Gaston County ($1 million) and Mecklenburg County ($7 million) on the hook for a total $12 million in taxpayer money.

The center was originally supposed to generate millions in revenues for area governments. Instead, Mecklenburg County, which is now so broke it is yanking money from the schools, must find a way to reconcile the $7 million it is on the hook for. Ditto for other area governments now watching their tax dollars sink.

Boondoggle, white elephant, foolish waste of taxpayer money, government can’t do anything right, we all have to tighten our belts in this economy, government shouldn’t spend more than they have on hand, that’s just sound fiscal policy.

No, it’s not. We’re eight years into the affront to fiscal prudence that is the USNWC—the “giant log flume ride,” as Taylor branded it—and guess what?

It’s making money (from WFAE-FM’s Michael Tomsic):

Since the Whitewater Center opened in 2006, Mecklenburg County, Gaston County, the city of Charlotte and three other cities have supported it with taxpayer money. Local officials thought of it as a good public-private partnership – a private group builds and runs a recreation facility for the whole region, and local governments support it with up to $12 million during its first seven years

That support would only kick in if the Whitewater Center couldn't cover its expenses and debt payments.

In an earlier interview with WFAE, Mecklenburg County Parks and Recreation Director Jim Garges said that's been the case up until now.

“The last six years of the agreement, we've paid the full $1 million,” he said. “This would’ve been the last year of that seven-year agreement. And based on the financials that we’ve seen, they’re really not in a loss position, so therefore we wouldn’t have a payment this year.”

In other words, the Whitewater Center is fine on its own. Mecklenburg County Manager Dena Diorio released her recommended budget Thursday to make it official.

Wait! There’s more. Local governments enter public-private partnerships because, when done well, they work. They’re investments. The private sector is more likely to invest when it sees significant support from area governments, and local officials here were realistic enough to understand that the center would probably operate at a loss for its first several years—as untested businesses tend to do.

For supposed genuflectors at the shrine of business principles, the people kvetching about public spending for the Whitewater Center in its first few years failed to appreciate an essential one: Sometimes, businesses have to lose money in the short term to make it in the long.

The upside is that Charlotte has a unique venue that’s on its way toward sustaining itself. The public outlay was worth the risk, just as bonds for park improvements and new schools pay off, just as public investment in the Levine Center for the Arts is proving to be worth the stretch. This is why we can have nice things.

Categories: Poking the Hornet’s Nest