Round Rock Council Approves $350M Worth Of Agreements With Kalahari Resorts [UPDATED]

ROUND ROCK, TX — At their Thursday meeting, Round Rock City Council members paved the way to bring Kalahari Resorts and Conventions to the city after approving various agreements to spur construction of the $350 million project.

For their part, developers are eager to start, as Kalahari owner Todd Nelson indicated to council members at their regular meeting: “We’ve been trying to get to Texas the last four years,” Kalahari owner Todd Nelson told council members. “We started in Frisco and Dallas. There are a lot of reasons Round Rock makes sense for us.”

The resort would be built on 351 acres of land across from Old Settlers Park and Dell Diamond on U.S. 79. The envisioned project includes a 975-room resort, 200,000-square-foot water park and 150,000-square-foot convention center. The project will create some 700 jobs, city officials have previously said.

As part of their inducements package, the city plans to issue bonds to generate the $40 million needed to build the city-owned convention center. Another $30 million of debt issuance will go toward road improvements along U.S. 79 and utility improvements at the site.

At the meeting, Nelson said the Round Rock site would be the company's flagship, its 351-acre expanse nearly three times the size of their typical 125-acre properties.

City officials said Round Rock will receive $4.7 million per year in new tax revenues from the development's first ten years after debt and performance-based incentives payments. As for those incentives, they are projected at $7.5 million to Kalahari for the first decade of operation, according to officials.

For more details on the agreements, and background on the project, click here.

The Kalahari Resort and Convention Center is a water park chain with locations in Wisconsin Dells, Wis., Sandusky, Ohio; and Pocono Mountains, Penn. The company distinguishes itself with the expanse of its attractions, including the 173,000-square-foot indoor water park at its Ohio resort that happens to be the largest of its kind in the entire U.S. The Pocono Mountains location opened just last year, and is expected to surpass the size of Ohio's water park at 200,000 square feet upon its completion.

After signing a memorandum of understanding with Kalahari Resorts in June, city officials posted on the municipal website an entry titled: "Why the Kalahari Resorts Project is a Big Deal." To make their point, city officials focused on the hotel and convention space portions of the project.

"As currently proposed, the 1,000-room hotel and 150,000-square-foot convention center would be the second-largest in Central Texas," officials wrote. That's B-I-G big."

To buttress their point, they compared the project's lodging offerings to the largest hotels in the Austin area: JW Marriott, 1,012 rooms; Hilton Austin, 801 rooms; and Renaissance Austin, 492 rooms. And they compared the coming attraction's indoor meeting space with others of similar size: Austin Convention Center, 369.000 square feet; Hyatt Regency Lost Pines Resort and Spa, 60,000 square feet; the Expo Center, 35,000 square feet.

"That’s why we characterize this proposal as a game changer for Round Rock," officials noted. "It puts us in the hospitality and conference business in a big way. By way of comparison, the Marriott La Frontera has 12,900 square feet of meeting space. The United Heritage Center at Dell Diamond has 5,400 square feet. They're both great spots for a meeting, but nowhere close to the scale Kalahari is planning."

City officials project the resort would draw 1 million visitors to the city annually.

From earlier:

ROUND ROCK, TX — Important city action related to economic development is scheduled this week as Round Rock City Council members consider several agreements with Kalahari Resorts this coming Thursday.

During the Dec. 15 meeting of the Round Rock City Council, its members will consider a master development agreement, an economic development agreement and a ground lease that would enable company officials to build a family resort, water park and convention center on 351 acres of land located south of U.S. 79 near Old Settlers Park and the Dell Diamond.

Kalahari Resorts announced in June of their plans to build an attraction in Round Rock.

For those wishing to attend the hearing, city officials note that the meeting will take place at 5 p.m. instead of the usual 7 p.m. start time in light of the upcoming holidays.

The agreements provide for Kalahari to employ a minimum 700 and invest at least $350 million in a 975-room resort, 200,000-square-foot indoor/outdoor water park and 150,000-square-foot convention center, city officials said. Additionally, the city would issue bonds to provide $40 million in net proceeds to construct the city-owned convention center and $30 million to construct improvements to intersections on U.S. 79, as well as road and utility improvements on the site, city officials said.

As an enticement for construction, the city will waive most development fees, officials said. As further inducement, the city will purchase the 351 acres for approximately $27.5 million, officials said., and then be repaid by Kalahari in the form of two lease payments: a $17 million initial lease payment on Dec. 20, 2016, and a $10.5 million lease payment, plus interest, in 8 years. The property would then be leased to Kalahari for up to 99 years.

City officials explained how the rest of the arrangement would play itself out: The bond debt will be repaid by the project, through select state and city tax revenues generated by Kalahari. And project debt and performance-based incentive payments will be funded by the following select revenues generated by the resort and convention center: state sales tax, hotel occupancy tax and mixed beverage tax; and city property tax, general sales tax, regular hotel occupancy tax and mixed beverage tax.

Not included in the agreement are the city’s half-cent sales tax for property tax reduction, half-cent sales tax for economic development and roads, and 2-percent hotel occupancy venue tax. The city will retain 100 percent of those revenues generated by the project, officials noted.

After the debt service is paid each year, the city and Kalahari will split the remaining select tax revenues, with 75 percent going to Kalahari and 25 percent to the city in years 1-10, and 50-50 in years 11-40, according to city officials.

The City expects to receive $4.7 million a year in new tax revenue after debt and performance-based incentive payments are made, officials noted. The performance-based incentive payments to Kalahari – which will be solely generated by project tax revenues – are estimated to be $7.5 million annually for the first ten years, according to officials.

For more details on the agreements, and background on the project, click here.

The next step in the project will be development of the zoning changes for the 351 acres, which will include multiple public input opportunities, city officials said. That process is expected to begin this spring, officials added.

>>> Image via Shutterstock