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Neither the U.S. nor the Canadian government is giving Kalahari Resorts any money directly as part of the $25 million in financing
Date published: 1/20/2010
Outgoing Gov. Tim Kaine's staff sent a letter to the city Friday afternoon announcing that the project had received $25 million in recovery zone bonds, which are intended to spur economic development in areas "of economic distress." City Council declared Fredericksburg a recovery zone, citing the city's 9.8 percent unemployment rate as of September and the 6.5 percent decline in sales tax revenue in the last fiscal year.
Though the federal government wouldn't receive any tax revenue from the interest payments that investors are paid on the bonds, it wouldn't be involved in funding the $25 million. The bonds would likely be underwritten and sold by an investment bank and backed by Kalahari's credit and collateral. The bonds would have to be issued by March 31, and construction would have to begin no later than June 30.
Though Kalahari president Todd Nelson has hailed the state's and city's commitment to the project, the exact financing methods that will be used for the $260 million resort are still a work in progress.
As an example, the application submitted for the recovery zone bonds made reference to a $10 million "Canadian government grant."
Scott Little, Silver's project manager for Celebrate Virginia, said Kalahari is looking everywhere for the best financing for the project. Kalahari buys some of its aquatics equipment from a Canadian company; Canada has a program to promote exports through low-interest loans for up to 85 percent of the purchase.
To read a press release from Kalahari put out yesterday and for links to previous stories and documents, go to Fredericksburg.com/blogs/bizbrowser.
--Staff reporter Emily Battle
Bill Freehling: 540/374-5405