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Kalahari makes pitch to Spotsylvania
Silver Cos. talking to other localities about their EDAs issuing Kalahari's bonds


Date published: 5/12/2010

BY BILL FREEHLING

The Silver Cos. has turned to Spotsylvania County about issuing bonds for Kalahari Resorts after running into a "logjam" with Fredericksburg's Economic Development Authority.

Jud Honaker, president of commercial development for the Silver Cos., said he approached members of Spotsylvania's Board of Supervisors and EDA about the possibility soon after an April 12 meeting between the Fredericksburg EDA and Kalahari representatives.

That meeting featured an exchange between Kalahari President Todd Nelson and Fredericksburg EDA member Rick Pullen; Nelson called the EDA's bond fee "ridiculous" and Pullen responded "we'd use the money for economic development in Fredericksburg, so we don't think it's ridiculous."

Since then Kalahari and the Fredericksburg EDA have gone back and forth negotiating an acceptable fee on the roughly $265 million in bonds that the resort wants to issue through the EDA. But thus far no agreement has been reached, including at a meeting Monday in City Hall. The city EDA is scheduled to reconvene Friday afternoon on the matter.

Though it's rare that one locality's EDA would issue bonds for a project in another locality, it's not unprecedented. Honaker said he approached Spotsylvania to "get past the logjam" and "help get Kalahari to the finish line." He said Kalahari would benefit the entire region.

Honaker, whose company is developing the Celebrate Virginia South complex in Fredericksburg where Wisconsin-based Kalahari plans its resort hotel and water park, said there are many EDAs in Virginia that would love to issue the bonds in exchange for the fee Kalahari has agreed to. To date Spotsylvania is the only locality with whom he's spoken.

That fee would be about $900,000 over 10 years.

Kalahari's financing plan calls for the resort putting up $30 million of its own money and executing two separate bond sales to institutional investors--a tax-exempt bond for at least $25 million and a $240 million taxable bond that would work like a corporate issue but be technically a municipal offering.


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