Incentives approved for $350M water park north of Austin
Round Rock City Council unanimously approved Thursday a complex series of economic incentive agreements with Kalahari Resorts & Conventions that will see the Wisconsin-based company build a $350 million water park and resort in the suburban city north of Austin.
In addition to capital investment stipulations, the deal requires the company to hire and maintain a workforce of at least 700. Kalahari plans to build a 975-room hotel and 200,000-square-foot water park while the city has committed to building a 150,000-square-foot convention center on the site along U.S. 79 across from the Dell Diamond minor league baseball stadium.
The convention center will be owned by the city and paid for with $40 million in bonds. The city will also invest $30 million in bonded funds to upgrade U.S. 79 to handle expected traffic. The bonds are supposed to be paid back by tax revenue generated at the park.
Additionally, the city will also buy the 351 acres for $27.5 million and lease it to Kalahari for up to 99 years. The lease would be paid in two installments, a $17 million payment due Dec. 20 and a $10.5 million payment, plus interest, due in eight years. Once the lease is up, Kalahari will have the option to buy the land outright at $1 per acre.
The agreements also call for the city to waive approximately $4 million in development fees for the project.
After Kalahari pays off the bond money with tax revenue, Round Rock and the resort company will share whatever tax revenue is left over. For the first 10 years, Kalahari will get 75 percent of the remainder of the tax revenue left over after debt service is paid and Round Rock will get 25 percent. In years 11 through 40, Kalahari and the city will split the post-debt service tax revenue 50-50.
Despite the tax revenue split, city officials estimate the project will generate $4.7 million more per year in tax revenue over the first 10 years of the deal than they would have received without the water park. Those projections are based upon the hotel maintaining a 74 percent occupancy rate.
Source: Austin Business Journal