A company like Kalahari is highly prized as a corporate citizen, making recruitment very competitive and incentives often necessary. Kalahari will generate an estimated $4.7 million of new net tax revenue a year to the City and bring hundreds of new jobs to Round Rock. The City believes the project will attract additional businesses and development in Round Rock beyond the $350 million investment Kalahari will make for its resort. The City has used incentives in the past to attract other highly desirable companies to Round Rock and has a proven track record of providing performance-based incentives to businesses that expand employment opportunities and the tax base. Examples are Dell, Dell Diamond, Round Rock Premium Outlets, IKEA, Bass Pro and Emerson. These companies are assets to the community and our economy.
A debt payment reserve fund will be established that gives the City enough money to pay a full year’s debt payments. Here is the order in which the select State and City tax revenues will be spent:
- Debt payments for Convention Center and infrastructure
- Reserve fund equal to one year of debt payments
- Sharing of program incentive payments between the City and Kalahari
The City purchased the property for approximately $27.5 million on Dec. 21, 2106. Kalahari made an initial lease payment of $17 million which the City used for the purchase. In addition, the City will contribute $10.5 million towards the purchase. In eight years, Kalahari will make an additional lease payment of $10.5 million plus interest. An additional 1.5 acre tract is scheduled to be added to the project following a City Council vote on Jan. 26, 2017. The City will purchase the property with funds provided by Kalahari in the form of a lease payment. Updated Jan. 24, 2017
State hotel occupancy tax and sales tax; and City property tax, general sales tax, regular hotel occupancy tax and mixed beverage tax generated solely by the project. Not included are the State mixed beverage tax, and 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 venue tax was approved by City voters in 2011 to fund debt and operation costs for the Round Rock Sports Center. The tax revenues not included in the agreement are retained by the City at 100 percent. Updated May 9, 2017
The bond debt will be repaid through select State and City tax revenues generated by the project -- which are State hotel occupancy tax and sales tax; and City property tax, general sales tax, regular hotel occupancy tax and mixed beverage tax generated solely by the project. Not included are the State mixed beverage tax, and 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 venue tax was approved by City voters in 2011 to fund debt and operation costs for the Round Rock Sports Center. The tax revenues not included in the agreement are retained by the City at 100 percent. Updated May, 2017
The agreements provide for Kalahari to employ a minimum of 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. The City will own the 351-acre tract of land, which will be leased to Kalahari for up to 99 years. In addition, the City will issue bonds to provide $40 million in net proceeds to construct the City-owned Convention Center, and $30 million to construct city-owned improvements. Also, the City will waive most development fees. After the debt payments are made each year, the City and Kalahari will share remaining select State and City 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. Based on projected revenues the incentive payments to Kalahari are estimated to be $7.5 million annually for years 1 through 10. The City expects to receive $4.7 million a year in new tax revenue after debt and incentive payments are made for years 1 through 10.
The Round Rock City Council will make the final decision based on benefit to the City, community input and staff and Chamber recommendations.
The City of Round Rock has initiated an active community communications program, including:
- Elected and neighborhood leader briefings
- Media briefings and updates
- Information provided on the City website and social media channels
- Community meetings
- Required public hearings
- Communication of Council decisions
Kalahari currently plans to open the Round Rock resort by 2020. The City Council voted on a series of financial agreements on the project on Dec. 15, 2016. The process of putting together a development agreement and zoning changes began in spring 2017. A zoning vote is anticipated to occur at the March 7, 2018, Planning and Zoning Commission meeting. The City Council approved on a Memorandum of Understanding in June 2016.
Updated March 1, 2018
The regional trail is designed to accommodate Round Rock and surrounding communities. Kalahari Resort will be another destination on the regional trail. Residents and visitors will be able to continue to use the trail to commute to work, visit a local business, park or friends, and/or for exercise and recreational purposes.