There’s a wolf at the door.
Normally that means foreboding economic news.
But in the case of Manteca, it could mean 570 jobs and an annual payroll of $9.4 million.
It is what Great Wolf Resorts is averaging in the last two indoor water parks and hotel resorts with conference centers the company has opened including one in Ground Mound, Wash.
The firm which is North America’s largest indoor water park resorts operator is partnering with McWhinney Development to explore the possibility of building a resort in Manteca on 30 acres just west of Costco along the 120 Bypass.
On Tuesday, what was viewed as promising news by City Manager Karen McLaughlin took place. K-9 Acquisitions entered into a merger agreement to purchase Great Wolf for $703 million including the assumption of the company’s outstanding debt. An offer to purchase share of common stock in Great Wolf at $5 a net share was outlined in an ad Wednesday in the Wall Street Journal.
K-9 Acquisitions is an affiliate of Apollo Global Management. Founded in 1990, the alternative investment firm’s assets totaled $5.3 billion in 2011 with assets under management in excess of $75.2 billion. Among the higher profile companies owned by the management group are CKE (Carl’s Jr. Restaurants as well as Hardee’s), AMC Entertainment, Caesars Entertainment Corp., Norwegian Cruise Line, CKX (American Idol and other entertainment concerns), and Realogy (Coldwell Banker and Century 21 Real Estate).
“We understand that will put Great Wolf in an even better cash position,” McLaughlin said.
The city has been meeting with Great Wolf Resorts and McWhinney Development to hammer out a deal that would lead to at least a 400-room resort a 75,000-square-foot indoor water park and a 30,000-square-foot conference center to be built on land currently owned by the city.
A critical hurdle to cross is extending infrastructure such as sewer and water lines and streets to serve not just the 30 acres but about 90 additional acres of city-owned property that Manteca wants to open to development and sell to create jobs as well as generate additional municipal revenue.
The first part of Daniels Street that allowed the Stadium Retail Center to be built as well as provide access to the Big League Dreams sports complex site was financed with $10.1 million in redevelopment agency funds.
Now that the city can no longer use RDA funds to put infrastructure in place to spur economic development they are exploring other alternatives for financing.
One is essentially securing a loan against future revenue to put in the needed public improvements.
Such an alternative would appeal to Mayor Willie Weatherford only if the risk was minimized and the return was solid enough that it significantly went beyond the annual debt service payment.
One possible way is to secure funding by working out repayment tied specifically to a special motel room tax that Great Wolf Resorts would pay. The annual motel room tax revenue from Great Wolf would be split between the bond repayment and the city’s general fund. After the debt is paid off all of the room tax collected would then go to the municipal general fund.
“It has to make sense for the city,” Weatherford said. “If not, I couldn’t support it.”
Manteca’s economic development specialist Don Smail noted if a workable Great Wolf deal was struck it would take 2.5 years to get the resort up and running.
If a deal goes forward and McWhinney builds a resort, it will range in size from 400 to 600 rooms based on various options. As such, the proposed special resort zone 15 percent motel tax would generate between $4 million and $6 million annually based on tracked performance at the Great Wolf Resort in Great Mound.
If McWhinney built the larger version reflecting a $200 million investment, that would translate into roughly $2 million a year in property taxes compared to $6 million a year in motel room taxes.
Preliminary numbers based on a special district room tax of 15 percent per night as opposed to the 9 percent levy elsewhere in Manteca indicated the resort alone could generate between $4 million (400 rooms) to $6 million (600 rooms) a year. By comparison, Manteca’s existing room tax generates $350,000 annually while the city’s share of sales tax receipts is $7.5 million
The project could ultimately represent a $200 million private sector investment in Manteca, add 414 permanent jobs and 156 part-time jobs, draw 400,000 visitors annually, create 1,000 construction jobs, and cement Manteca as a legitimate tourist attraction.