Mayor: City’s history of economic development success continues with Kalahari 

Mayor Craig Morgan pens a monthly column for the Round Rock Leader. This is a repost of his most recent feature.


What does the word “growth” bring to mind for you? If comments on the City of Round Rock’s social media pages and citizen surveys are any indication, your answer is probably traffic. 

You would be hard-pressed to find a city in our area that is not experiencing some level of growth. From July 2016 to July 2017, Austin-Round Rock was the fastest-growing metropolitan area in the state, adding 55,269 residents, according to the U.S. Census Bureau.  

If we choose to sit back and hope that inevitable expansion will not occur, we risk making the exact things we fear about growth a reality. Through wise planning, we can ensure our growth serves the public by improving quality of life, creating new jobs and maintaining our City’s financial health so we can afford to carry out our strategic plans. We also look for ways to mitigate the potential negative impacts, such as traffic, that new development can create. 

The question we find ourselves asking is this: How can we make growth less burdensome on residents? How do we ensure that development has the least amount of impact possible on our daily commutes and creates a true economic benefit to our residents? 

These questions came to mind as we considered the future of a 351-acre tract of land along U.S. 79 across from the Dell Diamond and Old Settlers Park – the future site of Kalahari Resorts and Convention Center, which breaks ground May 15. The developers plan to employ a minimum of 700 people and invest $550 million in the project, which includes a 975-room resort, 200,000-square-foot indoor/outdoor water park and a more than 150,000-square-foot convention center.

There were two possible development scenarios for this piece of land, with the first being single-family residential. If that entire tract of land was developed as housing, it could have resulted in the construction of up to 1,404 homes. That means 1,404 families with commutes between home and work in the morning and evening, adding to congestion on U.S. 79. 

Another option was to follow the pre-existing zoning of the land. This would allow for a 15-story hotel, 50,000 square feet of retail, 350,000 square feet of offices, a 47-acre business park development, 400 townhome units, 8 acres of retail development, in addition to light industrial development with buildings up to five stories tall. Although this was the better of the two scenarios, it still created additional traffic concerns around the 8 a.m. and 5 p.m. rush hours along U.S. 79. 

With these two options on the table, Kalahari’s interest in the land was a game changer. The traffic to this resort destination will not peak at a particular time of day, unlike mixed-use developments and residential neighborhoods that draw residents and employees to and from during rush hour. 

Additionally, we knew the project would bring significant convention and hotel space to our community and help diversify our economy, not to mention the potential of creating a new revenue stream to provide essential City services while demanding fewer of those services. 

In the first 10 years, the development is expected to bring a net revenue of $4.7 million to the City’s budget per year. To put into perspective just how meaningful that is, consider this: to raise $5 million in property taxes from residents would require a 10 percent increase in the tax rate, meaning we are essentially able to maintain and improve our services at a discount to homeowners. Kalahari’s $350 million investment in the project will create significant property tax revenue to the City, Williamson County and Round Rock ISD. This is the largest impact a single project has ever had on the City’s property tax base. Thanks to the efforts of State Rep. Larry Gonzales, we are able to utilize a state law to keep State tax revenues, including the hotel occupancy tax, sales tax and mixed beverage tax revenues, generated by the resort in the community to help pay for the project’s public debt and revenue sharing. 

The great part about these agreements is that all incentive payments are being funded by the revenue brought in by the development. 

By planning ahead, the City Council is following in the steps of our predecessors who worked to make Round Rock as successful as it is today. 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. After seeing a surge in commercial and industrial activity in the 80s and early-90s, our City’s forefathers successfully recruited the headquarters of a little company you may have heard of – Dell – from Austin to Round Rock in 1994. That increase in the City’s tax base resulted in a series of public works projects and additional public amenities. 

In 2006, City Council saw the need to diversify our sales tax base and made an economic development agreement with Round Rock Premium Outlets. IKEA opened in 2007, becoming the largest single retail store in Central Texas. Emerson Process Management relocated its international headquarters and technology center to Round Rock in 2012 and Bass Pro Shops opened a 104,0000-square-foot store just north of the Outlets. The Round Rock Chamber is instrumental in retaining and recruiting several other businesses that are helping our community thrive. 

It’s easy to see Dell’s direct economic impact in the form of jobs and contribution to the City’s financial well-being after all these years – it’s why we enjoy one of the lowest property tax rates in the state of Texas. It’s also easy to become overly dependent on its success, which is why we continue to look for new opportunities to grow our economy along with the inevitable population growth. Economic development wins are an important part of Round Rock’s success story, and we are excited to see how these projects continue to benefit our community.