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Manteca turning $20,200 land buy into $132 million in next 25 years
shrub sign
Shrubs hide a remaining sign on land near McKinley Avenue west of the Great Wolf resort that warns the area was once used for sewage disposal.

Richard Silverman knows real out-of-the-box thinking when he sees it.

It is why the former councilman is  scratching his head over the incessant Greek chorus this campaign season  slamming the City of Manteca for allegedly being unable to think out-of-the box when it comes to securing municipal revenue and amenities.

The best and biggest examples Silverman can point to stand side-by-side on Daniels Street — Costco and the Great Wolf indoor water park resort.

He was part of the city leadership that oversaw the negotiations that will leverage the $20,200 purchase of 29 of roughly 100 acres bought 56 years ago into nearly $132 million in overall municipal revenue between now and 2050.

 The city in 1966 bought roughly 100 acres at  $700 per acre  for the expressed purpose of using it for land disposal of treated wastewater to irrigate corn fields growing silage to feed dairy cattle.

That land, including 29 acres sold to Great Wolf, led to Manteca:

*Snaring a $180 million private sector investment yielding a 500-room indoor water park resort generating more than 400 jobs.

*Allowing the city to be in the position to eventually collect more than $132 million in net room taxes over the next 25 years from people who reside in San Jose Sacramento, Fresno, San Francisco and elsewhere to help fund day-to-day services for Manteca residents such as police, fire, and such.

*Enabling Manteca to build and operate the six-field Big League Dreams sports complex with an indoor soccer arena that no one wanted in their neighborhood much like the homeless navigation center.

*Putting the city well on the path over 35 years to avoid spending general fund dollars on maintenance and operational costs for the sports complex due to a decision to lease it to the private sector.

Silverman, who served a four-year term that ended in 2018 when he opted not to seek reelection to the council, isn’t a tax-and spend limousine liberal. Far from it.

He is active in Republican Party politics on the county committee level. He’s fiscally conservative but he also gets that government needs money to provide basic services.
It is why he — along with Toni Raymus and Lauren Sephos — were part of a three-member committee that successfully campaigned for the 3 percent increase in Manteca’s room tax in 2016. The measure passed despite some hardcore fiscal conservatives who painted it as an unfair tax .

Silverman at the time pointed out it brought the city’s room tax into line with the average Manteca residents pay in other California travel destinations that those jurisdictions used to provide services to their respective local residents.

 

Risk to Manteca taxpayers

was kept at a minimum

Passage of the room tax means the Great Wolf deal would end up bringing into Manteca municipal coffers $132 million net over 30 years as opposed to $99.1 million as hammered out in the deal.

And while the council directed Manteca’s management to negotiate a deal that put local taxpayers at minimal risk, it was Silverman who hammered away on that point the hardest and loudest.

As a result, what Manteca ended up risking —  basically the delayed payment of growth fees — is being recouped in the first five years.

That was unlike the Great Wolf in Garden Grove. That Southern California city’s taxpayers are on the hook for $100 million in city tax financing and other subsidies. Granted, Garden Grove gets all of the annual room tax that generates as high as $8 million a year, but they receive nothing if the resort isn’t open as was the case during the pandemic.

And that $100 million cost for taxpayers is much higher when the interest on bond repayment is factored into the equation.

The push Manteca has made for a sales tax split with a set end point for Great Wolf, the deal with the developer that brought Bass Pro Shops to Manteca, and to get Kirkland to build a Costco in Manteca and not along Interstate 5 is rare for cities to do.

Most incentive packages to lure large employers involve public financing through bonds and such. And the sales tax splits that get put in place are often forever.

Manteca in all three cases used its location and having infrastructure in place as a bargaining card.

It took the city longer to close deals — Great Wolf was a 10-year odyssey — but in the end the developer saw the value of locating in Manteca and were willing to agree to a limited sharing of the tax generated from the fact they had opened for business in Manteca.

Manteca’s Costco deal stopped the bleed of $600,000 in annual sales tax to Modesto and Tracy from Manteca residents shopping at the Costco in both cities and paying sales tax on applicable purchases.

Kirkland wasn’t ready to build another store in the area. They also made it clear there preferred sites were on Interstate 5 in Lathrop or another store elsewhere in Modesto.

When Manteca got wind of that, the met with Kirkland officials and asked what it would take to get them to build in Manteca and to do so in 2008 and not later.

Kirkland wanted a permanent 50-50 sales tax split.

Manteca balked. They asked what was the minimum it would take to get them to locate in Manteca.

The answer was to recoup the $3.7 million it would cost to build the store.

The result was a sales tax deal where Manteca got 55 percent of what was collected and Costco 45 percent until such time the $3.7 million was paid off with no interest required.

The terms of that contract was met more than three years ago. Manteca now receives 100 percent of the sales tax Costco generates.

“I like to view what we did as long term thinking as well as out-of-the-box thinking,” Silverman said. “I’m proud of what the city did.”

And while Silverman wasn’t on the council when the Costco deal was cut, it was the same vision that drove that deal as well as the Orchard Valley deal that landed Bass Pro Shops.

 

Leveraging $20,200

into $132 million

 The imposing 500-room Great Wolf Lodge indoor waterpark resort  —  the largest hotel in the Great Central Valley — is the result of arguably the most “profitable” land deal ever engineered in Manteca if not  all of Northern San Joaquin Valley.

The linchpin of the 10-year city effort that allowed Manteca to land a $180 million private sector investment was 29 acres the city purchased in 1967 for $20,200 for use as possible land disposal fields for treated wastewater. By the time 2050 rolls around, the city is projected to have parlayed that $20,200 land purchase into $132 million.  That would be enough to cover the current single year general fund spending the city does almost twice.

The land when the city sold it to Great Wolf after Manteca got all of the necessary environmental hurdles cleared as well as putting infrastructure in place that allowed it to market a shovel ready indoor water park project had a fair market value of $6,750,000.

As part of the incentive to secure Great Wolf, the city sold the property to Great Wolf at a tenth of its value — $675,000. The city had to meet stringent state mandated economic benefit criteria in order to execute the deal.

The other part of the incentive package was sharing of the room tax revenue Great Wolf will generate for a period that ends after 25 years.  

The original analysis of the deal projected Manteca would net $99.1 million during the first 30 years Great Wolf is open. Thanks to the voter approval of a measure that took the room tax up to 12 percent from 9 percent, the figure is now $129.1 million as all of the room tax increase goes to the city.

That means the city will have parlayed a $20,200 investment into $129.1 million.

 

To contact Dennis Wyatt, email dwyatt@mantecabulletin.com

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