Wednesday, April 23, 2014
By Brian Chappatta
A Kentucky theme park to be built around a full-scale replica of Noah’s Ark may sink unless investors purchase about $29 million in unrated municipal bonds by Feb. 6.
In December, the northern city of Williamstown issued taxable debt for affiliates of the Christian nonprofit 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 in total to avoid triggering a redemption of all the bonds, Ken Ham, the nonprofit’s president, said Thursday. Without the proceeds, construction funding will fall short, he said.
“We still need those Ark supporters who weren’t able to purchase the Ark bonds at closing to prayerfully consider participating in a secondary bond delivery at the level they had indicated to us,” Ham said. “Will you please step out in faith with us?”
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 from Alabama to Nebraska that have defaulted, and comes with the added risk of legal challenges because its religious theme may violate the 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.
The first phase is estimated to cost $73 million, offering documents show. About $14 million had been raised before the bond sale, which was supposed to make up the difference. Instead, Ark Encounter has had no institutional investors buy its bonds, Ham said.
Construction is supposed to begin in March, with Ark Encounter due to open in April 2016.