Theme Park Subsidies Take Taxpayers for a Ride

Published August 1, 2007

Axiom Entertainment of Rochester, Michigan is eyeing 1,800 acres of state-owned land near Grayling, in north-central Michigan, for a $160 million theme park.

Axiom is also reportedly seeking $25 million in infrastructure improvements from the state. The site, in Crawford County, currently lacks sewer and water service and would likely require improved highway access as well.

On May 29 the Grayling Township Planning Commission unanimously approved a “concept plan” for the park, including a request that the Michigan Department of Natural Resources sell 1,800 acres of public land for the venture. A letter of intent for the purchase of the oak and pine woodlands along Interstate 75 reportedly has been signed by David E. Freed, who oversees land sales for the department.

Lousy Record

Michigan has an abysmal record of theme park subsidies, however.

Some $35 million in local, state, and federal funds were invested in AutoWorld, a seven-acre theme park in downtown Flint. The park, which opened in 1984, was supposed to draw 900,000 visitors annually and revive the beleaguered city. It closed after only two years.

Construction of Cereal City USA, in downtown Battle Creek, was made possible by a loan of $900,000 from the state that was secured by the city. The attraction, which opened in 1998, was billed as “a land of wonderful, interactive experiences and entertainment for the entire family, as they explore the birth, development, and global impact of the cereal industry.”

Officials estimated the park would draw 400,000 visitors annually, but it was shuttered in January 2007 after years of dismal attendance.

The Kalamazoo Aviation History Museum secured a $3 million state grant to launch construction of an aviation theme park. The attraction was touted as “a centerpiece for economic development and tourism in southwestern Michigan,” and local officials hoped the state would finance half the $80 million construction cost. A 25 percent hike in the local hotel tax also was considered.

Ultimately, the grant money was returned to the state after the project was scaled back for lack of support.

The city of Pontiac invested $55.7 million to build the Silverdome in 1975. The Detroit Lions relocated to Detroit’s Ford Field in 2002. Although the team paid the city $26 million for breaking its contract, Pontiac continues to incur a hefty deficit in maintaining the 127-acre site.

No Need for Handouts

It’s not as if Michigan would lack recreation in the absence of park subsidies. The state already is home to several theme parks and water parks, including Michigan’s Adventure in Muskegon, which attracts hundreds of thousands of visitors annually–without corporate welfare.

Any amusement facility that must rely on tax dollars rather than private investment is by definition not viable and thus unworthy of taxpayer support.

By no means is Axiom Entertainment alone in seeking economic favors from state government. The Mackinac Center’s Michael D. LaFaive has calculated that state and local governments have pledged in excess of $3 billion in tax incentives to some 200 firms over the past two decades under the Michigan Economic Growth Authority. A slew of other subsidies also have been granted.

While officials justify this “investment” as necessary to job creation, such deals rarely make good on the promised returns.

The supposed benefits of yet more amusement park subsidies pale in comparison to the true costs, yet Gov. Jennifer Granholm (D) is demanding Michigan families surrender more of their hard-earned wages to the state to support these dubious private ventures.

Diane S. Katz ([email protected]) is director of science, environment, and technology policy, and James M. Hohman ([email protected]) is a fiscal policy research assistant, both for the Mackinac Center for Public Policy in Midland, Michigan.