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Kalahari plan faces additional scrutiny
Tuesday vote on Kalahari isn't the last approval needed

Date published: 1/20/2008


On Tuesday, Fredericksburg City Council members will consider voting on a letter of intent tied to the $230 million Kalahari Resorts water-park hotel proposed in Celebrate Virginia.

That vote is not the last decision the council will have to make before the project's fate is final.

And last week's three-hour public hearing wasn't the last chance area residents will have to weigh in on the Kalahari project.

The letter of intent is a four-page document in which Kalahari President Todd Nelson tells the council what he proposes to do in Celebrate Virginia, and outlines what he is seeking from the city.

It is not a binding legal agreement. By approving the letter of intent, the council would be authorizing the city to work out a performance agreement with Kalahari.

The performance agreement isn't likely to be much different from the letter from a practical standpoint, but it would take the basic business points from the letter and wrap them in the legal language that's customary for government contracts.

City Manager Phillip Rodenberg put it this way: "The letter of intent is our engagement, and the performance agreement is our marriage."

As the performance agreement is being written, the city will hire Marlyand-based consulting firm Basile, Baumann, Prost & Associates to verify the claims that Kalahari has made about how much tax revenue it will generate.

That firm also advised the city on the deals it struck to sell the former Maury School and land for a downtown hotel. Rodenberg said those services could cost about $10,000.

City officials have targeted the March 11 City Council meeting for the council to receive the performance agreement.

Meanwhile, city Police Chief David Nye and Fire Chief Edwin Allen have both reported on research they did on Kalahari's impact on fire and public-safety services in its two current locations--Erie County, Ohio, and Wisconsin Dells, Wis.

Both reports acknowledge that any development in the Celebrate Virginia complex will require more city services.

Nye stated in his report that Sandusky law enforcement officials told him Kalahari's resort there generates 300 police calls a year. In Fredericksburg, the Central Park Wal-Mart generated 580 calls in 2007.

Nye said he doesn't think the police would need more manpower to deal with Kalahari's impacts immediately after opening, but he did note that Kalahari can help keep the call level down by not opening any bar or nightclub in the resort to the general public.

Allen pointed out that the city has planned for fire-service needs in Celebrate Virginia, and no matter what goes there, Fredericksburg will need to find money to build and staff a third fire station on land the Silver Cos. donated in that development.

Emily Battle: 540/374-5413
Email: ebattle@freelancestar.com

The city will waive more than $3 million in upfront fees that Kalahari would have to pay to build its project. Fees to be waived include:

water and sewer availability and connection fees

various zoning and planning fees

building permit and inspection fees

fire permit and inspection fees.

The city will return 47.5 percent of the local tax revenues that Kalahari generates to the resort for 20 years. Kalahari has projected that it will generate about $6 million a year in local taxes.

Those local taxes include:

business license tax

real-estate and personal-property taxes

the 1 percent of the sales tax that is local, and not designated for education

meals tax

lodging tax

admissions tax.

The city is going to sell water and sewer services to Kalahari at cost. Kalahari's rate will rise and fall as the city's cost rises and falls.

In addition to its more than $225 million initial investment, Kalahari must invest an additional $25 million in the property within the first 10 years of this 20-year agreement. That additional $25 million would translate to another 200 hotel rooms, and more water-park space. If Kalahari doesn't make this additional investment, all the incentives end after 10 years.