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Consultant gives Kalahari project good marks
Kalahari Resort and Waterpark in Lake Delton, Wis., is such a popular attraction, the owner has said he would like
Sarah B. Tews/Wisconsin State Journal
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Date published: 3/19/2008
The incentives that Fredericksburg has offered Kalahari Resorts to build a water park hotel and conference center in Celebrate Virginia are justifiable, and may be crucial if Kalahari is to secure financing for its more than $225 million project.
That was part of the message that James Prost, of Maryland-based Basile, Baumann, Prost, Cole & Associates, delivered to City Council members at a work session last night.
Prost called Kalahari the "gold standard" of water park hotel operators, and said its claims that it will generate nearly $6 million in new annual tax revenue for the city are reasonable.
But as the market for hotel financing tightens, lenders are demanding that developers show higher projected annual incomes relative to what they'll owe on their loans.
The city--by returning to Kalahari 47.5 percent of the new local taxes that it generates for a 20-year period--can help Kalahari meet that threshold, and gain a powerful new tax-generating engine in the process.
Prost said this arrangement, where the city and Kalahari share new tax revenues, puts most of the risk on the private project developers, since the city won't be writing any checks before new money starts rolling in.
"There really is very limited direct risk to the city, which is very important," Prost said. "A hotel project, and particularly a major resort hotel project like this, is going to bring in net revenue that the city would not otherwise receive."
City officials have proposed to distribute Kalahari's incentives by creating a tax-increment financing district. That means all the new revenues generated in that district after Kalahari opens for business would be put into a special fund.