With unemployment howling at 16 percent and the city general fund anemic, Manteca’s leaders are stepping up efforts to generate more jobs and tax revenue.
There strategy is based on a simple premise: People just want to have fun.
The Manteca City Council Tuesday is expected to commit $57,000 in redevelopment agency funds to pay Market & Feasibility Advisors to draft a family entertainment zone market feasibility study and market plan. It will cover 150 acres of city-owned property on the western end of Daniels Street beyond Costco and Big League Dreams.
The linchpin of the strategy is the Great Wolf Resort. McWhinney Development and their operating partner Great Wolf Resorts are continuing to negotiate with city staff to locate a 400 to 600 room hotel, indoor water park, and convention center immediately west of Costco along the 120 Bypass.
Manteca - with the Great Wolf Resort deal alone - is in the hunt for between $5 million and $7 million annually in additional general fund money plus 500 permanent public sector jobs.
The general fund revenue would be generated by a special entertainment zone hotel room tax. The estimated annual city tax receipts is based on the revenue at other Great Wolf Resorts. It is the equivalent of a fifth of the city’s current general fund revenue of $26.3 million. If the resort were operating today, Manteca would be starting next fiscal year on July 1 with a $1 million to $3 million budget surplus instead of having to come up with ways to bridge a $4 million gap between spending and revenue.
Great Wolf, a publically-traded company, credits its ability to continue to grow in the weak economy and to outperform its competitors even in more robust times to exclusivity.
They are the only indoor water park firm that limits access to the water park to those who book rooms. Typically a one night stay of $300 for four people provides each of those individuals with two days of water park access. The only exceptions are during off-season periods - away from holidays, summer, and traditional vacation times - when the company provides deep discounts to fill the revenue gap by targeted marketing to “locals” much like large hotels in resort cities sell leftover rooms during off-peak seasons for deep discounts for last minute bookings.
The entertainment zone piggybacks on the successful Big League Dreams partnership the city entered into on the sports complex. It is exceeding optimistic projections in revenue and attendance despite opening at the start of the Great Recession. The facility is booked for at least one tournament a weekend year round.
City going after leisure dollars
BLC does it by tapping into the lucrative leisure time market of recreation pursuits for youth, adults, and families.
It is generally referred to as tourism but it is a misnomer as most think of camera toting, luggage laden travelers. Those who access such activities Manteca is targeting do so in relatively short distances of 100 miles or less and typically on weekends. The premise is they keep spending money on such activities involving their kids even in an economic slowdown - although perhaps to a lesser degree - than they do on full blown vacations.
BLD has successfully tapped into a 100-mile market that lures people with disposable income not just from the Northern San Joaquin Valley but from the Bay Area and Sacramento as well.
Great Wolf operates on the same premise. Its convention center also can be a bit misleading, Many think of business or service club gatherings but they are actually aimed at gatherings with a heavy youth orientation such as cheerleading competitions.
The strategy is working well enough for the Madison, Wisconsin-based Great Wolf Resorts that several of its older resorts that it developed without a partner in the Midwest are no longer generating concerns among investors that they may need to be re-financed.
Resorts that have been open at least a year saw a 4.6 percent increase in revenue in constant dollars while room occupancy jumped 1.7 percent.
Overall earnings were up 19.6 percent.
Great Wolf - which operates 11 resorts - had $46.9 million in cash on hand as of March 31, 2011. It had a total debt of $540 million of which $459.5 million is secured. They are spending an average of 8.5 percent of their revenue on debt with the average maturity of that debt being about 6.7 years.
The city’s strategy - should they land Great Wolf Resorts - is to create synergy by developing an entertainment zone that could have everything from traditional attractions such as novel golf courses and rock climbing studios to virtual amusement parks.
City leaders have said the deal with Great Wolf would require investing RDA money. Although no details are available on what that may entail, typically RDA deals of this nature involve investment in infrastructure such as sewer, water, streets, storm drainage system and such that can be accessed for additional development down the road.
The city, for example, invested $10.1 million on the extension of Daniels Street - including land acquisition, sewer and such - to make it possible for Kitchell Development to develop the Stadium Retail Center that is anchored by Kohl’s. The city estimated they would take about six years to recover that investment through sales tax.
A Great Wolf payback would be much easier to track as almost all of it would be in the form of a special room tax. If the RDA, for example, invests $20 million and the project returns $5 million year to the city’s general fund the dollar-for-dollar investment has been covered in four years. Factoring in debt payment it would take at least twice as long to recover the investment.
But the big advantage is that unlike RDA money, the room tax can be used to pay for everything from police and fire to streets and library services. It also keeps coming in. Over a 30-year period, the initial $20 million investment would - based on the most conservative estimate - bring in $150 million to the city’s general fund alone.
The City Council meets Tuesday at 7 p.m. at the Civic Center, 1001 W. Center St.