Iowa Department of Natural Resources
Conservation and Recreation Division

For Immediate Release
March 29, 2007

HONEY CREEK PROJECT WILL BE RE-BID

DES MOINES - A first-of-its-kind resort project destined for Honey
Creek State Park will be re-bid after all of the bids received last week
were rejected due to cost.

Only one bid was received for construction of a 108-room
hotel-convention complex. Hanson Co. of Johnston bid $24,350,000 for
that project which carried an engineer's estimate of $13,500,000. The
bid was also rejected for not meeting a bid requirement of providing
unit prices for the proposal.

Also rejected was the low bid of $4,929,000 from Vieco Development and
Construction of St. Joseph, Mo., for construction of 28 cabins that were
estimated at $4,250,000.

"We are going through with this project and are fully committed to
seeing a resort complex constructed at Honey Creek," said Ken Herring,
administrator of the Conservation and Recreation Division for the DNR.

Herring said that anyone who has been involved in a bidding process
knows that occasional surprises, both good and bad, are inevitable
sometimes even in the same project which has been the case at Honey
Creek.

In December, the low bid for first phase of the project that included
construction of an 18-hole golf course came in at just over $6 million,
more than $700,000 less than the engineer's estimate. The low bid
allowed for the addition of several conservation-friendly additions to
the project such as expanding the native grass plantings in the rough
areas of the golf course by 23 acres and installing a more efficient
irrigation system that will reduce water usage by 20 percent.

The DNR will now be working with its consulting engineers to review the
project and re-bid it in the very near future, according to Arnie Sohn,
Honey Creek project manager for the DNR.

"We are totally committed to providing a first-rate resort complex
that Iowans can be proud of, but we are also very aware that we need to
be fiscally responsible in the development of this project,"said
Sohn.

Sohn said the DNR is already looking at a variety of options to reduce
costs of the project and to attract more construction firms to
participate in the next round of bidding.

"We are going to notify a lot of likely prospective contractors about
the upcoming bid process. We will also be casting a wider net, making
sure that we are advertising the project to as many potential bidders as
possible," Sohn said.

Sohn said it is still possible to reach the goal of a Memorial Day 2008
opening because the initial land grading and extension of utilities such
as electricity and water has already been completed.

"Essentially, we are ready for construction to begin right away,"
said Sohn.

The 108-room lodge, conference center, indoor aquatic center, 18-hole
golf course and 28 family and group cabins are all components to the
overall plans for the resort. In addition, the normal array of state
park facilities will be provided: semi-enclosed picnic shelters, paved
multi-purpose trails, hiking/nature trails, boat ramp, boat-docking
facilities, and an upscale RV campground. These facilities will be
located on an 850-acre tract of land on the north shore of Rathbun
Lake.

The existing Honey Creek State Park (an additional 850 acres) lies
across the bay, and development plans include a pedestrian trail bridge
to link the two parcels.

The principle financing source for the project is $28 million in bond
proceeds that will be paid off over a 30-year period with revenues
generated by the resort. Rathbun Regional Water, Chariton Valley
Electrical Cooperative and Iowa Telecom will contribute more than $2
million in utility systems. Appanoose and Monroe counties, Rathbun Lake
Resort, Inc. and private contributors have provided more than $2 million
in cash advances to be repaid from hotel/motel tax receipts.

Additional information on the Honey Creek Resort State Park project can
be found at http://www.iowadnr.com/parks/honeycreek/index.html
For additional information, contact Arnie Sohn at 515-281-5814.

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