Round Rock expects Kalahari to spend $350 million, create 700 jobs

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The following FAQ was provided by the city of Round Rock regarding the Kalahari Resorts & Convention project. Several agreements are up for vote at a city council meeting at 5 p.m. Dec. 15.

1. What are the terms of the incentive?
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 approximately $40 million in bonds to construct the city-owned convention center and $30 million in bonds to construct city-owned improvements. In addition, the city will waive an estimated $4 million in development fees.

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.

After the debt and performance-based incentive payments are made, the city will receive $4.7 million a year in new tax revenue.

2. How will the bonds be repaid?
The bond debt will be repaid through select state and city tax revenues generated by the project. The $30 million in public improvement bonds will be backed by the city property tax revenues. The $40 million in convention center debt will be backed by local Hotel Occupancy Tax revenues and Type B sales tax revenues.

3. How is the city going to pay for the 351-acre site?
The city will purchase the property for approximately $27.5 million. Kalahari will make an initial rent payment of $17 million, which the city will use for the purchase. The city will contribute the remaining $10.5 million toward the purchase. In eight years, Kalahari will make an additional rent payment of $10.5 million plus interest.

4. What are the safeguards for the city?
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: 1. Debt payments for the convention center and infrastructure; 2. Reserve fund equal to one year of debt payments; 3. Sharing of program incentive payments between the city and Kalahari.

By owning the 351 acres and the convention center, the city has real assets.

Kalahari’s is across from Old Settlers Park and Dell Diamond, two venues that together draw more than 1 million visitors annually.

5. What are the community benefits?
This project will diversify the property tax base by bringing a new industry—the resort-convention business—to Round Rock. The city estimates this project to generate an estimated $10 million in direct annual tax revenue to the city and will provide many jobs for varying experience levels including: full-time, salaried, part-time and hourly opportunities. Kalahari’s $350 million investment will result in new property tax revenue sources for the city, Williamson County and Round Rock ISD. No other single project has added as much value to the city’s property tax rolls.

6. What will the $30 million for public improvements be used for?
The agreement calls for $15 million in onsite public improvements—roads, utility lines, etc.—and $15 million for offsite public improvements. The offsite improvements include a major upgrade to the intersection of Hwy. 79 and Harrell Parkway, which will be a major entrance into the resort, as well as an upgraded railroad crossing further east on Hwy. 79 that accesses a regional wastewater treatment plant. Improvements to the Hwy. 79 and Joe DiMaggio Boulevard intersection are also included. There will also be a new public roadway connecting Kenney Fort Boulevard to Hwy. 79 and improvements to public utilities.

The agreements provide for Kalahari to:
Employ 700 people
Invest at least $350 million
Build a minimum 975-room hotel with a 200,000-square-foot indoor/outdoor water park and 150,000-square-foot convention center.

When Kalahari announced they would come to Round Rock in June, the initial investment was estimated at $250 million.

“There have been a few changes, and they’re win-win for the city of Round Rock,” Assistant City Manager Brooks Bennett said. “This will add a whole new sector to our tourism economy.”

Kalahari’s leaders said they are happy to make such an investment in Texas, their first major investment in the south.

“The Round Rock area is one of the fastest-growing tourist destinations in the country,” Kalahari Executive Vice President Bill Otto said. “With something for everyone, the diverse area attracts a wide variety of visitors of all ages. We are excited at the prospect of joining the city of Round Rock and being here in such great company.”

Otto said his company’s other resorts, with locations in Sandusky, Ohio, Wisconsin Dells, Wis., and the Pocono Mountains in Pennsylvania, are in established tourist destinations within a three-hour drive of a large population center. When considering a new location, he said other factors include the area’s topography, employment pool and future growth opportunities.

The park will be consistent with other Kalahari properties with its authentically African theme, but other plans are still in the works.

“We cannot confirm everything that will be included at this time,” Otto said. “What we can share is the project will host up to 1,000 rooms, an indoor-outdoor waterpark, restaurants, spas, a family-entertainment center and a convention center.”

Round Rock’s commitment includes the issuance of approximately $40 million in bonds to construct the city-owned convention center, $30 million in bonds to construct improvements to the Hwy. 79 intersections, and road and utility improvements on the site. The city will also waive an estimated $4 million in development fees.

The city of Round Rock will own the 351 acres, which will be leased to Kalahari for up to 99 years. Kalahari will make an $17 million lease payment to the city and then an additional $10.5 million lease payment in eight years.

The bond debt will be repaid through select state and city tax revenues generated by the project. The $30 million in public improvement bonds will be backed by city property tax revenues. The $40 million in convention center debt will be paid by local hotel occupancy tax revenues and Type B sales tax revenues.

After the debt and performance-based incentive payments are made, the city will receive $4.7 million per year in new tax revenue, according to city estimates.

Such a steady revenue source complements other Round Rock-based companies, according to the mayor.

“They are two different industries, but Dell is a technology company and it is constantly changing,” McGraw said. “The revenue that we are talking about from Kalahari is people coming in, staying in hotels, enjoying themselves—the things people do on vacation. It is not an ever-changing technology.”

Mayor Pro Tem Craig Morgan said Dell put Round Rock on the map, but the diversity in tax revenue will benefit the city as it continues to grow. The convention component, he said, makes the resort a strong partner in the community.

“This will be a huge tourism draw,” Morgan said. “It opens us to be able to compete with convention space. You will have people coming in from all over the country to conferences at this convention center.”

The wheels on the project started rolling, according to McGraw, after a cold call was made by Ben White, the Round Rock Chamber vice president of economic development.

“They knew they wanted to come to Texas and did an exhaustive search from the Dallas Metroplex to San Antonion looking for exactly the right spot,” McGraw said. “Knowing you want to go to Texas is one thing, finding the exact spot is something totally different.”

In the June announcement, White said bringing the project was a collaboration among many city departments and entities.

If completed today, the Round Rock Kalahari Resort & Conventions development would be the second-largest hotel and the second-largest convention center in metro Austin, trailing only the JW Marriott and the Austin Convention Center, respectively.

The proximity to the city of Austin, Austin-Bergstrom International Airport and highways to San Antonio, Dallas and Houston have city officials excited about the Kalahari development.

“We are sitting in the state with millions of people, and it is easy to get to,” Morgan said. “You can fly into ABIA and get on [SH] 130, and you’re in Round Rock in 30 minutes. Tourists are going to have great access to the resort, so I do think it is going to have a great impact on our economy.”

The City Council meeting will begin at 5 p.m.—instead of the usual 7 p.m.—Dec. 15. After the agreements are approved, zoning changes would next need to be requested for the 351-acre property. The city said the public will have multiple opportunities to provide input during the process, which will begin in the spring.

For more details on the agreements and background on the project, visit www.roundrocktexas.gov/kalahari.

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