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City receives another $5 million in recovery zone bonds for Kalahari project
Kalahari is seeking financing for a proposed water park resort in Fredericksburg similar to this one in Wisconsin.
file/Wisconsin State Journal
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BY BILL FREEHLING
Virginia Gov. Bob McDonnell has allocated another $5 million in tax-exempt bonds to help Kalahari Resorts finance a water park in Fredericksburg's Celebrate Virginia.
A formal letter will likely go out today from the governor's office to Fredericksburg officials, said McDonnell spokeswoman Stacey Johnson. Fredericksburg City Manager Beverly Cameron received preliminary word about the $5 million allocation late last week.
Kalahari will be solely responsible for the interest and principal, but the tax-exempt bonds carry an interest rate that is about 3 percentage points lower than a taxable issue. The extra $5 million could save the resort about $150,000 a year in interest payments.
"It's big for them," Cameron said.
The Recovery Zone Facility bonds are part of the American Recovery and Reinvestment Act of 2009. The tax-exempt bonds are for private projects in areas under economic stress.
Kalahari got another $25 million in RZF bonds this past January on one of Gov. Tim Kaine's last days in office. That allocation has shaped the Wisconsin-based company's financing plans for a water park, hotel and convention center.
The project would cost about $260 million, but Kalahari wants to borrow more that that to cover early interest costs.
Numerous other projects in Virginia also received access to the RZF bonds. The additional $5 million comes from projects that didn't end up using the financing.
The city has requested yet another $5 million from McDonnell's office and expects to find out about that by August.
The city has also asked McDonnell's office to extend the deadline for when Kalahari must issue the bonds from June 15 to Oct. 31. Federal guidelines state that the bonds must be issued by the end of 2010.
Representatives for Kalahari and Celebrate Virginia developer the Silver Cos. met with McDonnell yesterday.
To receive the tax-exempt status and the resulting lower interest rate, the RZF bonds must be issued through the city's Economic Development Authority, which has been deadlocked on the issue of what fee Kalahari should pay.