The Great Wolf deal is expected to net Manteca $99.1 million during the first 30 years after its doors open.
That’s the bottom line of an economic impact by a firm that has analyzed city-private sector partnership for major cities including San Francisco, Los Angeles, Denver and Oklahoma City.
Economic & Planning Systems will present their independent analysis of the deal Tuesday prior to the Manteca City Council considering a development agreement that would secure a 500-room hotel and indoor waterpark on 29 acres of city-owned land immediately west of Costco and adjacent to the 120 Bypass.
The council meets at 7 p.m. at the Civic Center, 1001 W. Center St.
The deal calls for Great Wolf to build a 109,767-square-foot indoor water park. That is roughly the same floor space as the Manteca Walmart. It would include a 500-room hotel and a 13,219 square feet conference center accommodating between 1,000 to 2,500 people making it the largest such venue in the South County. It will not require booking hotel rooms to use.
Great Wolf has included a 58,896-square-foot family entertainment center dubbed Adventureland. It will feature everything from zip lines, climbing wall, and arcade to a mini-bowling alley.
There will be five or more restaurants in an 18,609-square-foot restaurant/food court that will seat up to 2,100 people
You do not have to be a hotel guest to access Adventureland or the restaurants.
There also will be a 30,323-square-foot ancillary building for mechanical operations and support services. Altogether Great Wolf will construct 588,000 square feet.
Based on the EPS analysis, Manteca would be subsidizing Great Wolf by $40 million from on-site room taxes that are generated over the first 25 years of the 30-year period that the firm crunched numbers. The tax sharing ends after 25 years The analysis was done for 30 years out to give the city an idea of the long-term bottom line after the subsidy disappears.
The $40 million room tax share is 22 percent of the $180 million construction budget. That percentage is slightly less than what the Southern California City of Garden Grove provided assistance to secure a Great Wolf and $29 million less in actual dollars. The slightly larger Garden Grove project also included a parking structure that brought the total to $300 million.
Garden Grove issued $51 million in bonds; Manteca won’t be on
the hook for any debt
Unlike the Garden Grove deal, Manteca is only giving up a set amount of room taxes collected from Great Wolf guests over a 30-year period. Garden Grove provided a $22 million parcel, $5 million at the start of construction and issued $51 million in bonds obligating the city to help pay for the construction. Manteca is incurring no new debt for the Great Wolf project.
Manteca did invest at least $8.7 million in redevelopment agency funds to install infrastructure such as sewer, water, and storm lines to not only make the 29 acres shovel ready but also help make an additional 180 acres of city land developable as a family entertainment zone. The infrastructure project 15 years ago was originally conceived to simply extend a gravity flow wastewater treatment line to south of the 120 Bypass so the existing line can that requires pumping can reverse flow via gravity treated wastewater to irrigate parks and other greenbelt areas in south Manteca. The line runs under where Great Wolf would build a parking lot.
The wastewater treatment line would not have cost $8.7 million by itself. That figure reflects piping a South San Joaquin Irrigation drainage canal, water lines, and storm lines to serve the 29 acres.
The city also will use some of its remaining RDA bond money to extend Daniels Street to McKinley Avenue to provide access for Great Wolf, the FEZ, and possibly the Lathrop-Manteca Altamont Corridor Express station that may be relocated to McKinley just north of Daniels from its existing location on West Yosemite Avenue. The Daniels Street extension and related main infrastructure to access the entire 210 acres and not just Great Wolf is not expected to exceed $7.5 million
City bought 20 acres for
$20,200 in 1973 that is
now worth $6,750,000
The city is also selling the 29 acres to Great Wolf at a reduced price. The land was purchased by the city for $20,200 in 1973. Its current market value has been appraised at $6,750,000.
The deal calls for Manteca to sell the property to Great Wolf for a tenth of its value — $675,000. The city would be paid out of Great Wolf’s share of the room tax split that is a 9 percent add on to the price of renting a room.
The reduced sale price is being justified by the city based on the net revenue that will flow into municipal coffers as well as the impact on the local economy.
The EPS study verifies there would be 250 fulltime jobs and 250 part-time jobs with a fulltime time equivalency pegged at 350 workers at the Great Wolf reflecting wages, salaries and benefits of $8.9 million.
The city, based on the EPS analysis, will generate 1.75 fulltime equivalent fulltime equivalent jobs for every $35,000 in invests in room tax sharing. based on constant 2018 number, the resort payroll will put $270 million into the pockets of workers over the first 30 years.
Indirect and induced economic impacts countywide would be the creation of 106 additional fulltime equivalency jobs with $4.5 million in earnings.
The on-site construction expected to be completed by the stare of 2020 would provide 1,397 jobs with a payroll of $76.3 million. The construction phase is expected to lead to 123 other jobs countywide with a project combined earnings of $7.1 million.
The $20 million earnings figure a Great Wolf representative used at a community meeting lumped all three of the job categories together.
Off-site spending by the projected 500,000 annual visitors should support another 270 direct, indirect and induced jobs according to the EPS study.
The EPS analysis concluded:
uThe proposed deal structure is relatively simple and presents low risk to the city.
uThe entire subsidy is drawn from project-created sources.
uThe deal structure creates no inherent risk to the city.
uRelative to deals that involve issuing bonds, the incentive is a higher percentage of development costs although the percentage is only somewhat higher than other room tax rebate programs offered by other cities.
uThe room tax revenue that funds the incentives is all new revenue to the city.
uThe city has sought hotel development at the location before.
The numbers in the 25-year
room tax sharing deal
Under the proposed agreement involving the projected $4,237,000 in annual room tax receipts:
uGreat Wolf would receive $2 million annually for 25 years to assist with the “significant development costs” associated with the resort construction. The project will require Great Wolf to invest and secure financing of $250 million.
uFor the first two years Great Wolf would be reimbursed on a pro-rated basis with no interest for $1.6 million in fees they need to pay up front as well as reimburse $756,465 in permit and plan fees the city incurs processing the project. Any shortfalls would be rolled over into future years.
uThe city would be paid the appraised value of the 30 acres amortized over 10 years with any shortfall rolled over into future years.
uThe city would be reimbursed for $7.6 million in deferred fees such as for development growth fees and sewer connections amortized without interest over a 20 year period. Any shortfalls would be rolled over into future years.
uThe remaining room tax would be shared with the city receiving 25 percent and Great Wolf receiving 75 percent for the first 10 years. Then for the next 15 years the split is 50-50 before the city receives all of the room tax in the 26th year and thereafter.
Under the split as described above involving the 9 percent room tax sharing, an third party analysis by EPS projects the city would receiving roughly $1 million on top of being reimbursed for the fees and land.
Manteca expects to incur $350,000 annually in providing non-user fee based city services to Great Wolf such as police and fire. Subtracted from the $592,000 in property and sales taxes the city leaves, it would provide a net flow of $242,000 yearly into the general fund. That is on top of the $1 million annually in room taxes to help fund general city services and $123,000 yearly for Measure M public safety positions.
Economic & Planning Systems has done previous analyses for the City of Manteca on tax revenue sharing ventures that secured the Manteca Costco as well as Bass Pro Shops and The Promenade Shops at Orchard Valley. They also did the independent analysis of the Big League Dreams sports complex.
Among the firm’s major national projects to date are the Denver Union Station Market & Feasibility Study, San Francisco Pier 70 master plan and developer selection/negotiations, and the Los Angeles Economic Adjustment Strategy. EPS has offices in Oakland, Sacramento, Denver, and Los Angeles.