Conservancy ventures on Virginia seashore lose millions
For $3 million, the Cobb Island Station was then converted into a rustic 12-room inn intended to anchor a high-end tourism venture. The inn was part of a collection of for-profit ventures the Conservancy launched here in the 1990s to convince the dwindling local population that small business could be profitable and preservation-friendly.
Now, the Conservancy has determined the project was a waste of money. The restored inn is shuttered and for sale.
One by one, the other Conservancy-backed business ventures at the group's 45,000-acre Virginia Coast Reserve failed. In October, auditors tallied the cost: millions in losses and a slew of failed companies. They also found that the project — which envisioned a sweet-potato-chip company, an oyster and clam operation, even a real-estate development — was beset by incoherent planning.
The subject headings in an independent report commissioned by the Ford Foundation, one of the project's financial backers, list succinct reasons for what went wrong: "flawed concept," "flawed business plan," "flawed execution."
The reserve's financial mess led to the resignation of its longtime director and the reassignment of the Conservancy's one-time acting president, W. William Weeks, the project's primary promoter. A Conservancy audit found that despite the reserve's $53 million in assets and multimillion-dollar budget, it had "not traditionally employed a person to focus explicitly on its finances." The assessment charged that in pursuing expensive real estate, managers had lost sight of ecological goals.
In addition to tourism, the Conservancy had planned to use the Virginia reserve for "eco-friendly" seaside farms and waterfront homes. But it now believes liquidating the business is the only solution. It has put most of its Eastern Shore holdings — 15,000 acres of seaside farms — on the market.
In a 1997 book called "Beyond the Ark," Weeks argued the best way to conserve land was to persuade local communities to stop selling forests and farms to subdivision builders and instead choose less-intrusive development.
At Weeks' suggestion, the Conservancy in 1995 established the Center for Compatible Economic Development, with an annual budget of $1.5 million and total autonomy. It launched more than 30 ventures nationwide with seed money — tens of millions of dollars — provided by Conservancy donors and foundations. Some of the businesses were for-profit, others were initially tax-exempt but expected to become self-sufficient.
In Virginia, the center set up its flagship operation near the reserve, 14 barrier islands owned by the Conservancy. The center launched the for-profit Virginia Eastern Shore Corp. as a holding company for as many as 15 enterprises. Investors included the Ford Foundation.
In mid-1999, Eastern Shore Corp. suddenly went belly up. Its collapse set off alarms at the Conservancy's headquarters in Arlington, Va. The Ford Foundation commissioned an independent inquiry in late 2000.
Parts of that report document how the Eastern Shore enterprise burned through 86 percent of its initial capital over the first two years before collapsing in "a sea of red ink" in August 1999.
Instead of aiding farmers, artisans and business people, Eastern Shore Corp. had micromanaged everything. "In doing so, it became more of an intruder than a catalyst to local action," the report said.
The Conservancy's own assessment noted that too much money was tied up in properties of no ecological import.
Ruminating on the Eastern Shore experience, Conservancy President Steven McCormick recently expressed doubts about the organization's ability to handle commercial ventures.
"We're a nonprofit organization," he told The Post. "We don't tend to think like a business. ... We've learned from experiments that it's real hard."