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If voters didn’t OK room tax increase after deal was signed, it would have been as low as $10,200 a year
outside bar
The outdoor bar at the completed Manteca Great Wolf Resort.

Great Wolf — instead of generating a geyser of funds to help raise general fund revenues when it finally opens — is likely to be more of a trickle.

And if voters in 2018 hadn’t approved Measure J to pump up the hotel room tax to 12 percent per night from 9 percent, the indoor water park resort could have ended up bringing the city just $2,004,500 in constant dollars over a 25-year period or $80,100 a year.

That $80,100 a year is less than the city’s room tax receipts had been increasing prior to passage of Measure J. None of the existing hotels have agreements with the city to take a cut of the room tax revenue they generate.

Assuming none of the additional 3 percent in room tax passage of Measure J generates needs to be touched to make the city whole on paying itself back for concessions they made as part of the Great Wolf deal, it would generate $960,000 a year for Manteca’s general fund.


Manteca gets $25 million,

Great Wolf benefits by $68.9M

from room tax deal inked in 2018

That means Great Wolf by itself will likely increase the city’s general fund by around $1 million a year for the next 25 years in return for using the room tax to write down the cost of the project for Great Wolf by a minimum of $68.9 million. That includes $25 million in direct payments in room tax to Great Wolf, $10.7 million to pay the city for development fees a project like Great Wolf was required to pay and $6,750,000 to reimburse the city’s wastewater treatment fund to cover the discounted price Great Wolf paid for the land from the city.

That number doesn’t include a 75 percent cut of remaining room tax receipts collected each year after obligations in the development agreement are met. That cut drops down to 50 percent for the last 15 years of the 25-year deal splitting room tax that Great Wolf generates.

City leaders at the time touted Great Wolf as a way to secure other private sector investors in the envisioned 120-acre family entertainment zone that the indoor water park resort and Big League Dreams serve as bookends.

They also pointed to the creation of 500 new jobs including half that are fulltime.

A review of the development agreement a previous City Council assured the public would pump up room tax revenues in excess of $1 million to support police, fire and other general fund services when they inked the final deal crafted under the leadership of former City Manager Tim Ogden, shows the city will be lucky to net $10,500 annually for the first two years under the original 9 percent room tax the development agreement was based on. They made the $1 million assertion before Measure J was passed eight months later.


Great Wolf pockets first

$2 million annually for 25 years

Before the city gets a chance at pocketing a penny in room taxes generated by Great Wolf, the first $2 million annually for the next 25 years goes to Great Wolf from the original 9 percent tax. After that the next obligation is paying off various city funds where Manteca leaders opted to “waive” the fees that Great Wolf would have had to pay by committing to tap into Great Wolf room tax to make those funds whole again. That comes to $10.7 million. Then there is $6.7 million that the city wrote down on land that was once part of the wastewater treatment plant that the room tax has been designated to make that fund whole again.

In what looks like a best case scenario that $10,500 “net” to the city yearly in room tax for the first and second years could improve to $73,000 annually in the third to 10th years of the 25-year deal the City of Manteca signed with Great Wolf to “share” the room tax that the 500-room resort and indoor water park generates.

 After that in the 11th and 20th years the city would receive in a best case scenario $83,500 annually. In the last four years the city’s take based on the best possible scenario assuming the 70 percent occupancy rate used in the proforma that a consulting firm specializing in revenue sharing deals that the city hired to analysis the deal could be bumped up to $201,000.

In year 26 the city could theoretically start receiving all of the $3.89 million in annual room tax assuming there are constant 2020 dollars, the room tax isn’t increased after 10 years, and the occupancy averages 70 percent.


Agreement did not require

interested paid on what are

essentially city fund loans

There are, however, questions being raised as to whether the development agreement that was signed can legally allow money from various city accounts to essentially be borrowed interest free. Typically when the city borrows money from one account to another such as they did to complete the Woodward Avenue fire station that opened earlier this year, it is repaid with interest based on the lowest available commercial market rate.

Making matters potentially worse, the city had projected being able to count on in excess of $1 million to hit the current fiscal year budget based on assumptions made in 2018 that assumed Great Wolf opening two months into the 2020-2021 fiscal year that started July 1, 2020.


Now the room tax

revenue is divvied up

Here’s how the pivotal terms regarding Great Wolf room taxes based om the 9 percent are committed in the 400-plus page development agreement that city leaders signed off on in 2018.

*There are 500 rooms. Assuming an average room charge of $250 — rates vary based on time of week and time of year — with 70 percent of the 500 rooms occupied 365 days a year would generate $45.6 million annually in room revenue.

*Using a 12 percent room tax $45.6 million in basic room charges would generate $3.19 million annually. The development agreement references only a 9 percent room tax as the deal was based on a 9 percent rate before voters in November 2018 increased it to 12 percent. That means three quarters of the $3.83 million is $2.87 million.

*The first commitment each year for the room tax revenue is $2 million that goes to Great Wolf. Over 25 years Great Wolf would receive $50 million to help partially offset their $180 million investment. After that is deducted from the $2.87 million, it leaves $870,000.

*The second commitment is for $500,000 worth of city fees that Great Wolf was required to pay that the city agreed to use the room tax to cover. It would be taken out over two years at $250,000 annually. That leaves $620,000. When this commitment goes away in the third year the city’s net share could go up to $73,000 annually.

*The third commitment is to pay back $6,750,000 for the nearly 30 acres Great Wolf bought from the city’s wastewater treatment plant assets. That is a 10-year commitment at $675,000 annually without interest. That leaves $552,500 When it goes away after 10 years the city’s take could jump to $83,500 annually.

*The fourth commitment is the remaining $10.2 million in city fees assessed to the project that instead of Great Wolf paying the city the city is paying itself back from the room tax. The agreement calls for it to be paid over 20 years without interest at $510,000 a year. That leaves $42,500. When it goes away after 20 years, the city’s take could jump to $127,500 annually.

*The fifth commitment splits the remaining room tax with 75 percent going to Great Wolf and 25 percent to Manteca for the first 10 years. It would give Great Wolf $31,500 a year and the city $10,500. For the last 15 years the split is 50-50.

The city’s share of sales tax that Great Wolf is expected to generate based on as 2017 analysis along with its share of property taxes was expected to be a wash in terms of the demand for services Great Wolf would create such as police and fire.

The Measure M sales tax guests would pay in a typical year was projected at $123,000 or about three quarters the cost of either one freighter or police officer.


To contact Dennis Wyatt, email