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Reimburse Great Wolf out of motel tax for infrastructure

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POSTED June 26, 2012 1:23 a.m.

Editor, Manteca Bulletin,

Dennis Wyatt’s column on the Great Wolf resort project (June 18) suggested that the city assume financial responsibility for public infrastructure such as “sewer, water, and storm lines as well as streets, lights, and other public owned improvements” needed for the Great Wolf development and finance this required infrastructure with a 50/50 split of the motel room tax that the project will generate. Half would repay the debt that the city incurs by borrowing money, while the other half would boost the city’s general fund. Wyatt opined that “any financing of public improvements is likely to have a 10- to 20-year payback.”

Splitting the conservative estimate of $4 million annual motel room tax in half comes to $2 million a year debt payment. The public hasn’t been told the actual amount of infrastructure costs, but putting the projections together ($2 million annually over a 10-20 year time frame), infrastructure costs seem to range between $20 to $40 million. Wyatt claims that the motel tax financing option is one “that puts the city at no exposure.” I disagree.

I believe that developers should have the responsibility to pay for and put in any infrastructure needed for their projects. Tying the Great Wolf resort infrastructure into a supposed future city entertainment area that will, in all likelihood, not be developed for 15 to 20 years (How is our public library expansion coming along? Oh right, it isn’t!!!) is disingenuous at best. That said, if city leaders are determined that the city will finance the Great Wolf infrastructure, there is a less financially risky way to achieve this. Currently, we are fed rosy projections and positive potential (jobs, motel tax revenue) about the Great Wolf project without any actual guarantees. Any of us who sometimes play the lottery have the “potential” to be a millionaire, yet how many of us are? We risk our own money, but city leaders are accountable to the public and must protect the citizens’ best interests.

They must balance between outright rejection of a project’s potential and overly optimistic promises. If city leaders finance the infrastructure, they should not borrow outside money to do so.  Instead, require Great Wolf to pay infrastructure costs up front which the city will repay using the motel tax 50/50 financing option. Why is this better? Wyatt’s suggestion hinges on hoped-for success of the resort. All is well if the $4 million is generated annually in motel taxes and the city pays back $2 million yearly for 10 years (conservative figure) while putting the other $2 million a year in the general fund. But if the resort doesn’t perform as anticipated, instead producing half ($2 million) the motel tax amount and the resort’s owners decide to close the facility after 10 years, due to insufficient profits, the city is stuck still owing $10 million  to be repaid on the loan with the funding mechanism gone. The $10 million raised for general fund will probably already have been spent. What’s next, more layoffs of recently hired police and firefighters? However, if Great Wolf foots the bill, language in the agreement can spell out that the city will repay the resort with the 50/50 split of motel tax until the debt is cleared “as long as the resort remains in operation.” If the resort closes, the city is absolved of any remaining payments, keeps its general fund share, and the resort absorbs the debt. That, in my opinion, is the best way to truly protect city interests.

Karen Pearsall
June 20, 2012

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