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Optimism for projects despite crisis KALAHARI CREDIT CRUNCH: 'THIS PROJECT WILL HAPPEN'
Update on Kalahari Resorts

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Date published: 10/4/2008


Kalahari Resorts owner Todd Nelson has seen firsthand the state of the nation's credit market, and it isn't pretty.

Nelson has been busy making plans to open a water-park resort in Fredericksburg's Celebrate Virginia South, but he's facing a "frozen" credit market.

"It's nuts what's going on," Nelson said Thursday during an interview in Fredericksburg, where he spent time this week meeting with city and state tourism officials to tell them about the project.

Kalahari's plans for Fredericksburg call for a 700-room hotel, a 15,000-square-foot spa, a 100,000-square-foot "family-fun center" and the featured 200,000-square-foot indoor water park.

Nelson doesn't skimp on expenses at his parks, and the anticipated price tag for the project is $250 million. He needs to borrow about $230 million of that.

Kalahari plans to sell about 150 condo units at the Fredericksburg park, as it has done at its parks in Ohio and Wisconsin. At about $500,000 each, the condos will raise nearly $80 million toward the price tag.

But that leaves Kalahari needing to secure $150 million in permanent financing. In a normal credit market, Nelson said, that wouldn't be a problem. But as anyone who has picked up a newspaper in the past month knows, times are far from normal in the U.S. credit market.

Fear-stricken banks aren't lending to each other or to customers as they fight for survival in the wake of the massive housing slump. Nelson has used community banks in his home state of Wisconsin for the previous two parks, but the banks just aren't lending right now.

That has frustrated Nelson, but it hasn't kept him from pushing forward with the project. He's still optimistic that Kalahari can break ground by April and stick to its original plan of opening by December 2010. If there are delays, Nelson said, he can use that time to enhance the design.

"We're committed as ever," Nelson said. "This project will happen."

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The area's first Wegmans grocery store is beginning to take shape near the planned site of Kalahari Resorts. The 150,000-square-foot store off Fall Hill Avenue in Fredericksburg is expected to open by June or July.

In addition, PNC Financial Services is expected to break ground in November on a branch at Celebrate Virginia South, said Jud Honaker, president of commercial development for the Silver Cos.