All News & Blogs
Kalahari Resorts trying to obtain another $10 million in tax-exempt financing
Date published: 3/30/2010
Kalahari Resorts is trying to get up to another $10 million in tax-exempt financing toward its planned $260 million water park resort in Fredericksburg's Celebrate Virginia South.
In January, the office of outgoing Gov. Tim Kaine approved Kalahari for $25 million in Recovery Zone Facility Bonds, which are part of the American Recovery and Reinvestment Act and are intended to spur economic development.
Though Kalahari would be responsible for the interest on the bonds, the investors holding them would not have to pay tax on the resulting income. The investors would therefore accept a lower interest rate on the bonds, making the cost of capital cheaper for Kalahari.
The RZF bonds would be tax-exempt because they would be issued through the Fredericksburg Economic Development Authority. Kalahari would pay the EDA one-eighth of 1 percent of the outstanding debt balance annually, and the EDA would use the fees for economic development in the city.
Kalahari would be solely responsible for making the interest payments on the bonds, which would be underwritten and sold by Merrill Lynch, according to Kalahari's application to the EDA. Neither the city nor the EDA would have any responsibility for the payments.
The EDA will hold a public hearing on the proposed bond issuance at noon April 12 in a conference room at the new Print Innovators' plant on Belman Road.
If the issuance is approved, the matter will then go before City Council on April 27, and the EDA could give its final approval May 10.
Kalahari is asking the EDA to issue up to $35 million in bonds. Scott Little, who is overseeing the Celebrate Virginia South development for The Silver Cos., said Kalahari is asking the EDA to approve the additional $10 million so Kalahari can move more quickly should the state give the company access to more tax-exempt financing later this year.