Great Wolf Lodge image via Great Wolf Resorts

With the expectation that the Great Wolf Lodge project at Highway 99 and Caldwell Avenue would attract 600,000 visitors a year, the developer has convinced Tulare County to rebate much of the bed taxes that would normally go to taxpayers over the first 15 years.

Chicago-based Great Wolf says it has similar agreements with cities and counties elsewhere and that the rebates help secure financing for the huge project.

How huge? A County consultant pegs the economic impact of the construction of the 35-acre destination resort at $1.7 billion.

The deal approved this week also includes a deferral of certain impact fees which will be recaptured through the tax on hotel stays, also known as a transient occupancy tax (TOT).

According to County staff reports: “Without these incentives, Great Wolf Resorts would not be able to move forward with financing the construction of the proposed development project. These requests are commensurate with economic incentives approved by jurisdictions where Great Wolf Resorts or other similar large-scale resorts have located.”

The County justifies the incentive package since the revenue source would not exist without the project. Like many other jurisdictions, the County has negotiated with the developer to rebate a share of future TOT to ensure initial feasibility.

How much is the public giving up to make this happen? A County analysis says during the 15-year subsidy period, Great Wolf will receive $87 million of monies that would normally go to the County general fund. At the same time, the County’s take of the TOT would be $33 million.

 

County officials say the general fund will not lose money and will grow by several million dollars every year — not just from TOT income but also property taxes and taxable visitor spending that not only boosts the County, but also the nearby City of Visalia.

Back in February, the Tulare County Board of Supervisors approved an amendment to the Sequoia Gateway Commerce Center Specific Plan to allow the entitlement of the 35-acre property. The County now expects the final map and development agreement will be completed by the end of this year, making it likely project could start a two-year construction schedule next year.

The proposed 525-room hotel features an indoor water park and restaurants, meeting space, and a family activity center to be open for hotel guests and other visitors. The proposed resort includes a “higher end” concept to be housed within a separate structure adjacent to the main building. Catering to families, the resort has — in addition to a water park — restaurants, arcades, spas and other children’s activities.

Here is how the TOT subsidy works:

The TOT rebate steps down in 5-year increments over 15 years:

– 100% of the TOT generated during the first 5 years of operation will be rebated to Great Wolf.

– 75% of the TOT generated during operational years 6-10 will be rebated to Great Wolf; 25% to remain with the County.

– 50% of the TOT generated during operational years 11-15 will be rebated to Great Wolf; 50% to remain with the County.

– After 15 years of operation, the County will keep 100% of TOT revenues.

Great Wolf will use the TOT tax rebates to pay down deferred county fees without interest over the five-year initial period.

Hotel/waterpark guests are typically families and can include extended families and groups of friends and family. Parties will typically stay 2-3 days or more and often travel a few hours to reach the resort. Visitors to the proposed resort would likely come from throughout the San Joaquin Valley and beyond. While many visitors will spend most of their time within the resort’s facilities during their stay, others will venture off-site to purchase retail goods, seek alternative dining options, or simply explore the area, says the consultant report.

The City of Visalia is expected to capture the greatest share of off-site visitor spending for both general retail and food service — about $15 million annually. The project will use the City of Visalia sewer system. Source says the City declined to offer guarantees to fix the connection installed by the project in case it fails. As to the water source for the hotel and pools, California Water Service would serve the resort.

As for employment, the resort could generate almost 1,000 jobs during the construction period and 660 at the resort once it is operating. The financial estimate uses a room count of 525 hotel rooms, but the actual number may range from 450 to 700, says the report. The landowner and developer of the resort will be GWR Tulare LLC, an affiliate of Great Wolf Resorts.

The company has 19 locations across the U.S. and three under construction. The first project dates from 1997. The most recent nearby project was the opening of the Great Wolf Lodge in Manteca. There is also a location in Anaheim.