• WHAT: Great Wolf Resort Manteca
• JOBS: 570
• PROJECT PAYROLL: $9.4 million
• PROJECTED TAXES: Up to $2 million a year in property taxes and up to $6 million a year in room taxes
Great Wolf Resorts – the firm that wants to build a water park resort and hotel in Manteca – is the subject of an intense bidding war.
Private equity concerns Apollo Global Management and KSL Capital Partners have been fighting for the right to buy Great Wolf Resorts since March 13. The battle apparently ended last week when KSL Capital Partners said it would not make a counter offer to Apollo’s latest bid of $7.85 a share.
The bidding process drove the price of Great Wolf shares up 57 percent since March 13 to $7.85 per share.
City leaders view the private equity bid to purchase Greta Wolf resorts as a move that will make the Manteca proposal by Great Wolf more viable.
“We view it as a positive development,” noted City Manager Karen McLaughlin earlier this month.
Increased value of a company makes it easy to secure financing for expansion. Apollo has made it clear they want to add Great Wolf locations as they like the business model that draws consistent revenue year-round. They also are interested in creating synergy with other brands they own such as Norwegian Cruise Lines and American Idol.
The bidding war did not sidetrack negotiations that Great Wolf Resorts and partner McWhinney Development of Colorado have been having with municipal leaders over the proposed 30-acre Manteca site on property currently owned by the city west of Costco.
Great Wolf is looking at building a resort with between 400 and 600 rooms in Manteca along with a 75,000-square-foot indoor water park and a 30,000-square-foot conference center. If the $200 million project move forward, it would represent the single largest private sector investment in Manteca history.
It would generate 570 jobs with an annual payroll of $9.4 million to make it the largest private sector employer in the city edging out Doctors Hospital of Manteca followed by Kaiser Hospital.
Although details of the negotiations aren’t being made public, city leaders have confirmed that it may hinge on Manteca being able to extend Daniels Street along with sewer, water, and storm system lines from where they end next to Costco all the way to McKinley avenue. The extension for Daniels Street is through more than 120 acres of a city-owned land currently attached to the wastewater treatment plant.
Mayor Willie Weatherford has made it clear that he will not support the project unless whatever investment the city does in infrastructure makes sense for the city and can be handled without impacting the general fund.
Preliminary numbers cobbled together by the city 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 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.
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.
If Great Wolf and McWhinney built the larger version reflecting a $200 million investment, that would translate into roughly $2 million a year in property taxes plus $6 million a year in motel room taxes.
Apollo Global Management was 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).