Friday, May 19, 2006

With no market study, sub museum risks sinking


The State
By John Monk
May 16, 2006

A Hunley submarine replica built by Clemson College

students in 1960 is on display at the State Museum.

$42 million facility could be one of S.C.’s most expensive, least studied
Officials who want to build a $42 million museum for the Hunley submarine in North Charleston haven’t done feasibility, site and market studies that experts say are crucial to knowing whether the project will work.

And, if the dwindling numbers of visitors to other, smaller Hunley exhibits are any gauge, it’s possible the mostly taxpayer-supported museum might fail to draw sufficient visitors and wind up being a white elephant.

It would be an expensive white elephant.

At $42 million, the future Hunley museum will be among the most costly in South Carolina, above the $16 million Columbia Art Museum but below the $70 million Charleston aquarium.

A state panel called the Hunley Commission has chosen a site for the museum whose star attraction would be the Confederate sub. The site is on a portion of the former Navy base in North Charleston, less than a mile from where the Hunley hangs in a sling in a tank of water at a conservation laboratory.

To build the museum, officials are counting on aid from the city and hefty infusions of state and federal taxpayer dollars.

But no market studies have been done, according to Freedom of Information Act requests filed with the Hunley Commission, the Friends of the Hunley foundation and the city of North Charleston. And visitors at other Hunley exhibits are not turning out in the numbers expected.

Sen. Glenn McConnell, R-Charleston, Hunley Commission chairman and the museum’s biggest promoter, declined to answer questions about the museum. In the past, he has said — apparently without any studies to support it — that 1 million people would visit a Hunley museum in its first year.

Experts say no big museumlike facility should be built without in-depth market studies. Such studies would test the viability of a location, a project’s cost versus its expense and the appeal of the subject matter, most importantly.

“This is like investing in a stock. How could you possibly invest in a stock without doing due diligence?” said Harry Miley, a state economist who headed the S.C. Board of Economic Advisors for eight years after being appointed by the late Gov. Carroll Campbell.

“If you asked a real estate developer to put up a $42 million project without doing a feasibility study, it would look very odd,” Miley said.

Already, a $3 million Hunley exhibit in one of the state’s hottest tourism markets — complete with a full-scale Hunley replica and a gift shop — has failed.

In December, the Hunley exhibit at Myrtle Beach’s Broadway at the Beach closed two years into an anticipated 15-year run. Broadway at the Beach is a 350-acre tourist Mecca that draws 12 million people a year.

“For us, in our market, it had limited appeal,” said Pat Dowling, spokesman for Burroughs & Chapin, the company that owns Broadway at the Beach. Dowling declined to discuss attendance figures.

Two years ago, Hunley promoters and Burroughs & Chapin officials said the Myrtle Beach exhibit would attract up to 500,000 people a year.

But that exhibit, too, opened with no marketing studies to see whether tourists would actually visit.

Meanwhile, the number of tourists visiting the Hunley lab is falling off. Half of the lab’s approximately 276,000 visitors went through by 2002, the first year it offered consistent tours. The 48,000 visitors in 2002 slid down to 37,000 in 2005, despite a climb to 41,500 in 2004, when the burial of the Hunley’s crew increased interest.

Officials at five other museums in Virginia and North and South Carolina told The State that professionally commissioned, detailed studies are essential before launching a museum project.

A few years ago, before going ahead with an $18.5 million expansion plan for an observatory, planetarium and IMAX theater at the State Museum in Columbia, museum officials did a feasibility study and learned an IMAX wouldn’t pay for itself.

“It said we couldn’t support an IMAX, so we backed off on that,” museum director Willie Calloway said.

Such studies ideally are done by academics who use sophisticated research techniques and who have “no political or business ties” to the project to be studied, said Michael Johnson, an expert in feasibility studies and location analyses at the Carnegie Mellon business school in Pittsburgh.

North Charleston Mayor Keith Summey acknowledged no market studies have been done for a Hunley museum. An attraction as special as the Hunley will draw enough visitors to get the museum launched, he said. After that, the right kind of marketing and advertising will take care of the rest, he said.

In North Charleston’s vision, the Hunley would have its own museum. It beat out sites in Mount Pleasant and downtown Charleston that would have made the Hunley part of existing museums and cost much less.

But critics say a lack of market studies is just one potential drawback to putting a $42 million museum in North Charleston.

Others shaping up are:

• Fundraising limitations

• Traffic woes

• Crime

• The politics of the Confederacy.


The Hunley project has struggled to raise private dollars.

The Hunley hasn’t proved to be the kind of project that prompts many major gifts from corporations and wealthy individuals. Originally, Hunley supporters said big donations would pay for much of the project.

In February 1998, Warren Lasch told the Hunley Commission his goal was to raise $15 million in private funds. That money would go toward the Hunley’s raising, preservation and a fledgling endowment, Lasch said.

From 1998 to 2005, Lasch headed the Friends of the Hunley, a fundraising foundation that also oversaw the excavation and preservation of the Hunley. The foundation was created by the Hunley Commission to handle day-to-day Hunley affairs.

From 1998 to 2004, Lasch’s foundation attracted $4.8 million in contributions, falling far short of $15 million, according to foundation audits and IRS records. During the same time, the foundation spent $1.1 million for professional fundraisers, according to those records.

The Hunley foundation disputes some of The State’s numbers. Foundation spokeswoman Raegan Quinn, for example, said the organization has received about $10 million — not $5 million — in cash, equipment and donated services. That total was not apparent in The State’s reading of Hunley audits and IRS statements.

The fundraising failed to hit the $15 million goal despite having professionals doing the job and despite widespread publicity on the Hunley — a television movie, a front-page story on The Wall Street Journal and statewide television specials.

But North Charleston is helping out.

Summey said the city is donating $50,000 a year toward the Hunley’s preservation. And the city has $3 million in hand to move forward with the museum’s design, he said.


The traffic woes in North Charleston are only going to grow, critics say.

The former Navy base where McConnell and North Charleston officials want to put the Hunley museum is in large part an abandoned industrial complex with no easy access from interstate roads.

The I-26 corridor, while nearby, suffers from severe congestion during morning and evening rush hours. And, in recent months, plans have been firming up for the State Ports Authority to build a port just two miles south of the proposed museum.

To accommodate the port, the state plans a $300 million, 1.8-mile access road from I-26. Once the port is in operation, and the road is built, that area will see over time 6,500-plus extra truck trips a day, according to a 2005 study by the U.S. Corps of Engineers.

“It will be a catastrophe — the worst traffic congestion in South Carolina — gridlock,” said Dana Beach of the S.C. Coastal Conservation League, a group tracking the development.

Phoebe Miller, North Charleston’s mayor pro tem, said the new port is located on the old Navy base’s southern edge, while the museum is at the north end. “I don’t think we’ll feel the impact.”

Another problem that might diminish the lure of a museum in the city of 84,000 is crime.

For two years in a row, North Charleston has ranked in the nation’s top 50 cities for crime, in a survey by Morgan Quitno Press, a Kansas research firm. North Charleston ranked 42nd last year and 22nd in 2004. (Charleston last year ranked 116th; Columbia, 49th.)

Miller said crime isn’t as big a problem as some people think.

“Oh, but we get a bad rap!” she said. “In my neighborhood, we keep the doors open. We’re safe. We have good police.”

Summey said since he became mayor 11 years ago, North Charleston’s police force has increased from 170 to nearly 300 officers. Three years ago, he said, the city’s crime rate ranked it 12th-worst in the nation on one study.

“We are dealing with the issues,” he said.


Politics, too, might limit the appeal of a museum.

Hunley Commission members — most of whom belong to the Sons of Confederate Veterans — insist on flying the Confederate flag in front of a Hunley museum, according to commission minutes.

That could rekindle the bitter debate that racked South Carolina during the 1990s over whether to fly the Confederate flag atop the State House dome.

Already, black leaders like the Rev. Joe Darby of Charleston are vowing that if the Confederate flag flies at the publicly financed Hunley museum, they will do all they can to keep schoolchildren away from it.

Despite all that, Hunley supporters insist attendance would be strong.

“Yes, this (the Hunley museum) will probably be the premiere (sic) tourist attraction in South Carolina,” McConnell said in a 2004 letter to state lawmakers.

The state’s largest tourist draw is Riverbanks Zoo in Columbia. It gets more than 850,000 visitors a year.


Other states with major underwater finds have put their wrecks in existing museums rather than build new ones.

In Virginia, the turret of the Monitor, the first ironclad battleship — also from the Civil War era — will go into a $30 million new wing of a maritime museum in Newport News, officials said.

Before deciding to build the wing, officials did about $500,000 worth of market and feasibility studies. Those professional studies were “essential” in developing a realistic idea of whether people would visit the exhibit, said maritime museum public relations director Justin Lyons.

In Texas, another major underwater find — a French ship called the La Belle — is undergoing about 20 years of preservation in a laboratory. When that is finished, it will be exhibited at the state museum in Austin.

One person who is surprised at the growth of the Hunley project, especially a proposed $42 million museum, is former Sen. Larry Richter, R-Charleston.

In 1996, Richter co-sponsored the McConnell bill that established the Hunley Commission, giving it the authority to find a home for the Hunley.

Richter said he always assumed the Hunley would go in an existing museum — not a new expensive one.

“In tough times like these, we have to use the assets we have as opposed to expanding our asset base,” Richter said.


What a Hunley museum might lack in national name recognition it could make up for in the sub’s sheer mystique.

What the Hunley has going for it, according to McConnell, is the secrecy in which it was developed, the mystery of how it sank and the story of how a gold coin found on board had stopped a bullet that might have otherwise killed the Hunley’s commander at the Battle of Shiloh.

McConnell envisions the museum as an expensive, world-class facility.

“To do it right, you have to have a state-of-the-art, world-class facility,” McConnell said during a Feb. 12, 2004, Hunley Commission meeting. “Not only will it be a great world attraction, but it will be an asset to the taxpayers rather than a burden, but it takes money.”

He has said, for example, he wants computer-enhanced “virtual reality” experiences so visitors will feel they actually are on the Hunley.

And he plans a Hunley replica that will take people on a water voyage into the Cooper River.

The riverfront city of North Charleston had plenty of Lowcountry competition in its bid to be the Hunley’s home.

But it offered what the other cities did not: lots of land and a large incentive package.

Weeks after the Hunley was discovered in 1995, McConnell had the General Assembly pass a resolution saying the “remains of the Hunley” should go to Patriots Point museum in Mount Pleasant “for enshrinement.”

Patriots Point, a state-run waterfront museum, has a collection of naval ships, including the USS Yorktown aircraft carrier and two submarines. And, with 275,000 visitors last year, it is one of the state’s major tourist destinations.

In the site’s favor is its location just off U.S. 17, the coastal roadway traveled by millions of tourists each year.

Several years later, The Charleston Museum near downtown Charleston and the city of North Charleston became interested in the Hunley.

For years, The Charleston Museum had displayed a Hunley replica and kept the sub’s memory alive in a city visited by millions of tourists each year.

North Charleston became interested after the Hunley was raised in August 2000 and placed in a lab at the old Navy base.

In February 2004, after lobbying from all three cities, the commission chose North Charleston. And it made that recommendation to the Legislature, which by law has to sign off on a site.

The reasoning: North Charleston offered $13 million in incentives, including lots of land. It was, McConnell said, the best financial package.

Under North Charleston’s plan, the state will pay $7 million; the federal government, $9 million; and North Charleston and Charleston County together, $18.9 million. Foundations and grants are expected to pay $6.9 million.

State money for the museum has not been secured. Summey said the private sector and local government could pay more, if they need to.

Hunley Commission member state Rep. Kenny Bingham, R-Lexington, said in a recent interview that one reason he and most other commission members were impressed by the North Charleston proposal was its choice of architect. Ralph Appelbaum, who designed the U.S. Holocaust Museum, is world-renowned.

“With him, visiting the Hunley becomes an experience,” Bingham said. “If it’s just the Hunley sitting there, that is not going to draw people again and again.” Moreover, Bingham said, the North Charleston site is on the water, and the city has a special tax district that allows it to raise money for the museum.


In March 2004, the state Senate, where McConnell is president pro tem, quickly approved the North Charleston site.

In the House, Rep. Chip Limehouse, R-Charleston, who represents the Patriots Point museum area, got the museum resolution bottled up in a committee.

Limehouse thinks North Charleston is isolated from traditional tourist centers and would attract few visitors. He said he stalled the resolution to provoke a public debate.

“When you build a shopping mall or motel, you have a market research study,” Limehouse said in a recent interview. “They look at things like demographics and traffic count.”

McConnell, reacting to Limehouse, wrote a letter to all House members, criticizing Limehouse.

Later, someone slipped the museum resolution into a budget measure. It quietly passed both legislative chambers in 2004.

Limehouse, told by The State recently that the General Assembly had approved of North Charleston, said he thought the measure had died in 2004. He’s not sure lawmakers knew they had not only selected a site but had signed off on a free-standing, more expensive museum.

The mayors of Charleston and Mount Pleasant say their cities are still good candidates to exhibit the Hunley.

Mount Pleasant Mayor Harry Hallman said the state already has one major naval museum — Patriots Point — so why build a second one just for the Hunley?

Charleston Mayor Joe Riley said more people will see the Hunley if it is at The Charleston Museum.

“People don’t have unlimited time, and our location is in the thick of things,” Riley said.

But Summey wants North Charleston to be a major tourism destination and “get a piece of tourism pie.” Besides the Hunley museum, the city is planning a $7 million firetruck museum.

The Hunley museum won’t be a moneymaker, Summey said.

But “it is going to be something that adds to the quality of life, the quality of perception of our greater Charleston area.

“It’s just going to be in North Charleston.”



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