The Round Rock City Council approved several agreements with Kalahari Resorts, including a Master Development Agreement, an Economic Development Agreement and a Ground Lease, at its Dec. 15 meeting. Kalahari Resorts announced in June its intent to build a family resort, water park and convention center on 351 acres south of U.S. 79 near Old Settlers Park and the Dell Diamond.
“This will be our flagship property,” said Todd Nelson, who with his family owns three Kalahari Resorts, in Wisconsin, Ohio and Pennsylvania. “We’re going to create a spectacular resort out there.”
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. 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 improvements to intersections on U.S. 79, as well as road and utility improvements on the site. In addition, the City will waive most development fees.
The City will purchase the 351 acres for approximately $27.5 million. The City will 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 will be leased to Kalahari for up to 99 years.
The bond debt will be repaid by the project, through select State and City tax revenues generated by Kalahari.
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.
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.
The City expects to receive $4.7 million a year in new tax revenue after debt and performance-based incentive payments are made. 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 years 1 through 10.
The next step in the project will be development of the zoning changes for the 351 acres, which will include multiple public input opportunities. The City expects that process to begin this spring.