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State pushes back Kalahari's deadline
Kalahari Resorts gets extension until Oct. 15 to issue tax-exempt bonds


Date published: 5/19/2010

BY BILL FREEHLING

Kalahari Resorts will now have until Oct. 15 to issue the tax-free bonds the company received for its Fredericksburg water park and hotel.

The office of Virginia Gov. Bob McDonnell sent out a letter yesterday notifying Fredericksburg officials that it had agreed to push back the deadline from June 15.

That gives Kalahari representatives and city officials breathing room in finalizing the details needed to allow the company to issue and sell $30 million worth of tax-exempt bonds made possible by the American Recovery and Reinvestment Act.

The Fredericksburg Economic Development Authority is meeting Monday to give final authorization to the bonds, which must be issued through the EDA to grant them tax-exempt municipal status. Kalahari is solely responsible for paying investors the interest and principal on the bonds.

The city EDA receives a fee for being the conduit for the bonds. Kalahari has offered the EDA $375,000 over 10 years to issue the tax-exempt bonds, which is close to the standard fee on a $30 million issuance. The EDA could decide whether to accept that offer Monday.

A special meeting of the Spotsylvania County EDA has been called for about the same time Monday. The purpose of that session will be to bring the county's EDA up to speed on the Kalahari situation.

In addition to the tax-exempt bonds, Kalahari plans to issue about $235 million worth of taxable bonds through an EDA. Kalahari had planned to run those bonds through the city EDA, but a disagreement over fees has sent the company looking for other options.

Scott Little, who is overseeing the Celebrate Virginia project in Fredericksburg for the Silver Cos., said Kalahari's sights are now set squarely on Spotsylvania for the taxable issuance.

Little said the governor's decision to extend the deadline on the bonds, as well as allocate another $5 million in tax-exempt bonds to the city for the project, has left Kalahari President Todd Nelson feeling highly optimistic. Nelson and Little were among a group who met with the governor Monday.

Little said the later deadline dovetails well with Kalahari's financing plan. Kalahari has said it plans to issue the taxable bonds late this year. Issuing the tax-exempts in October instead of June will allow the resort to avoid paying interest in the months between the two bond sales.

Bill Freehling: 540/374-5405
Email: bfreehling@freelancestar.com