The proposed deal with Great Wolf to build what will be the largest hotel in the Central Valley is the latest of three moves by the City of Manteca to secure more taxes to run municipal services while generating local jobs.
The waterpark resort project would involve sharing the 9 percent city tax charged on rented rooms collected only from a proposed 500-room Great Wolf hotel.
City Manager Tim Ogden describes it as “giving up a percentage of tax dollars” Manteca wouldn’t get if a Great Wolf wasn’t built. And what Manteca is projected to net off of the deal starting in the first year is $1.7 million annually from all tax sources connected with the resort.
It is similar to deals that landed Bass Pro Shops/Orchard Valley and Costco.
After determining — based on Costco member purchasing data — that the wholesale warehouse stores in Tracy and Modesto were siphoning off $60 million a year in Manteca consumer dollars that would have generated $600,000 annually to pay for city services — Manteca entered into a 45-55 split of sales tax that essentially ends when Costco recoups its $3.7 million investment to build the store. Costco’s 45 percent take is expected to end in 2019 when the $3.7 million mark is reached. That means Manteca would get all of the taxes or a $270,000 a year jump based on 2008 numbers.
The deal also has generated $300,000 annually for the last nine years in Measure M public safety tax and will continue to do so. That is roughly enough to pay for the salaries and benefits of one firefighter and one police officer.
At the time Costco was pondering building a second store in Modesto and was looking at Lathrop in future years. The Manteca deal got Costco to change its plans and has helped Manteca pull in consumer dollars from Lathrop and Ripon shoppers as well.
The Orchard Valley deal that landed Bass Pro where 98 percent of the shoppers are non-Manteca residents involved a sales tax split with developer Poag & McEwen to rent the 1,922 parking spaces for 35 years.
Excluding the public safety tax (Measure M) and county transportation tax (Measure K) the city collects 45 percent of the sales tax based on the first $1.1 million annually over a 35-year period. If it is less than $1.1 million, the city’s payment to Poag & McEwen is capped at 55 percent of the amount collected. If it more than $1.1 million the excess all goes to the city. The maximum that Poag & McEwen can receive over 35 years is $18.5 million.
Orchard Valley in its first full year with just JC Penney, Best Buy, and Bass Pro Shops in place took in close to $2 million in local sales tax with the bulk of it from Bass Pro. That meant Poag & McEwen received $605,000 and Manteca $495,000. In addition Measure M tax receipts for the complex were $500,000.
What’s in the Great
Wolf proposal now
The City Council when they meet tonight at 7 o’clock at the Civic Center, 1001 W. Center Street, will consider entering into an exclusive negotiation agreement with Great Wolf.
Ogden said after that Great Wolf will significantly kick up its investment in planning for a possible Manteca resort. Over the next two months a development agreement will be hammered out that will be reviewed by the Planning Commission and then sent to the council. If that document is approved by both the council and Great Wolf, the deal would be cemented and mid-2018 ground breaking could take place.
Great Wolf believes that it would be ready to open by early 2020 providing 500 jobs with a payroll that documents provided for tonight’s meeting indicates will be nearly $20 million. That is in addition to creating 1,500 construction jobs.
The financials involve the selling of the 30 acres of city-owned property immediately west of Costco to Great Wolf and giving them the first right of refusal to buy an additional 9.73 acres of municipal land for a future expansion.
Based on Great Wolf’s historic 70 percent occupancy at its existing 15 resorts, the Manteca location is anticipated to generate $4,237,000 in room taxes on an annual basis as well as $246,000 in sales and use taxes, $348,000 in property taxes, and $123,000 in Measure M half cent sales tax dedicated to public safety. That represents only what the city would get. Based on a $250 million annual assessment, Great Wolf would pay a $2.5 million property tax bill with most of the money going to the schools and the county. It would also generate close to $1 million in sales tax for the state.
The only revenue that comes into play for Great Wolf is the room tax it generates.
Under the proposed agreement involving the projected $4,237,000 in annual room tax receipts:
Great Wolf would receive $2 million annually for 25 years to assist with the “significant development costs” associated with the resort construction. The project will require Great Wolf to invest and secure financing of $250 million.
For the first two years Great Wolf would be reimbursed on a pro-rated basis with no interest for $1.6 million in fees they need to pay up front as well as reimburse $756,465 in permit and plan fees the city incurs processing the project. Any shortfalls would be rolled over into future years.
The city would be paid the appraised value of the 30 acres amortized over 10 years with any shortfall rolled over into future years.
The city would be reimbursed for $7.6 million in deferred fees such as for development growth fees and sewer connections amortized without interest over a 20 year period. Any shortfalls would be rolled over into future years.
The remaining room tax would be shared with the city receiving 25 percent and Great Wolf receiving 75 percent for the first 10 years. Then for the next 15 years the split is 50-50 before the city receives all of the room tax in the 26th year and thereafter.
Under the split as described above involving the 9 percent room tax sharing, a third party analysis projects the city would receiving roughly $1 million on top of being reimbursed for the fees and land.
Manteca expects to incur $350,000 annually in providing non-user fee based city services to Great Wolf such as police and fire. Subtracted from the $592,000 in property and sales taxes the city takes in, it would provide a net flow of $242,000 yearly into the general fund. That is on top of the $1 million annually in room taxes to help fund general city services and $123,000 yearly for Measure M public safety positions.
Split with Great Wolf
restricted to 9 percent
room tax cap
Other deal points include:
he sharing of room tax is restricted to the current 9 percent level. That means if the city opts to increase by half the room tax to 13.5 percent that is more in line with other destination areas in California, based on the Great Wolf projections the city would generate an additional $2.35 million annually for city services from Great Wolf alone and another $500,000 from existing hotels that are now collecting $1 million a year. Should the city make such a move, its room tax receipts would go from the current $1 million a year to $3.85 million in addition to the split with Great Wolf for the first 9 percent room tax they collect. That $2.85 million increase would allow Manteca — if they dedicated it all to police officers and firefighters — hiring 30 more personnel.
The city would retain all over sales, public safety, property, and use taxes.
The city will not provide financial incentives for any development that includes more than 5,000 square feet of indoor water park space.
As part of the new second generation of Great Wolf Lodges, the Manteca location — if built — would include a family entertainment area known as Adventureland. It includes a rope course, zip line, miniature golf, and mini-bowling alley, rock climbing wall, arcade, and more. It is all indoors and is accessed off the lobby. It is pay to play meaning guests as well as the general public are charged for each attraction.
There will be four or five different restaurants at the proposed Manteca resort. One would be a family sit down restaurant while another would be buffet style. Others typically include a Tex-Mex and American style dinning. That is in addition to other eating/drink places that typically include Ben and Jerry’s ice cream, Dunkin’ Donuts, and other outlets such as a candy store.
All of the dining options — that between them will seat 2,100 people — are open to the public as well.
Great Wolf anticipates 500,000 annual waterpark resort guests
To contact Dennis Wyatt, email email@example.com