The details that matter aren’t public yet in the Great Wolf negotiations.
But one thing is clear: The bottom-line deal parameters demanded by the City of Manteca for public infrastructure needed for the proposed 500-room resort and indoor water park has given McWhinney Development Co. pause.
That’s because the ironclad wording for use of the city’s financial strength to borrow money for public infrastructure tied directly into serving Great Wolf means McWhinney – plus whoever invests with the Colorado-based development firm in the proposed Manteca project – will be on the hook financially for bond payments.
Ultimately, the certificates of participation (COPS) Manteca has insisted upon will cost $76 million to payback once $46 million in interest is factored in.
It is why McWhinney is triple- and quadruple-checking their numbers, and then going back and doing it again. They need to have rock solid and conservative projections in order to not only feel absolutely comfortable putting their money on the line but that of private sector investors.
The scenario that McWhinney is working on is a 290,000-square-foot hotel with 500 rooms – with a possible future expansion of 200 rooms – along with an 85,000-square-foot indoor water park and a 20,000-square-foot conference center. A possible expansion would add 79,000 square feet to the water park and double the size of the conference center.
McWhinney and the Apollo Group that acquired Great Wolf Resorts several years ago project a 71.1 percent occupancy rate as being reasonable and conservative.
Based on that, Manteca would have a positive cash flow of $1.4 million a year initially into its municipal coffers from room taxes, sales taxes and property taxes directly tied into Great Wolf after annual debt payments are made. At 71.1 percent occupancy, the city’s receipts keep escalating annually, reaching $3.6 million in 2030. Then in 2045, when the bonds are paid off, Manteca could see $7.1 million flowing into municipal coffers to help pay for everything from police and fire to parks.
The structuring of the COPs, however, would not involve diverting a cent from any Measure M public safety sales taxes or Measure K transportation taxes that the Great Wolf project generates. Nor would it involve the state’s share of the sales tax or any other jurisdiction’s cut of the property tax from the resort.
McWhinney has dumped a lot of time and money so far into vetting the proposed Manteca resort that will cost them $139 million to build without including public infrastructure. It also is picking up the six-figure cost of an environmental study with the goal of making a decision in the next 11 months.
Manteca’s location appeals to them. But what really hooked them is the success of Big League Dreams and Bass Pro Shops – two endeavors that require a much larger market than Manteca-Lathrop. In both cases, traffic is outpacing even the rosiest projections of Bass Pro and BLD. The BLD complex is the most successful in terms of visitors among the company’s complexes. Bass Pro has also met and exceeded conservative projections for the private communally that owns them.
McWhinney’s interest further underscores how much Manteca has done right to position itself for economic growth.
If the project goes forward, it may be the biggest calling card ever to be created for Manteca. That’s because the owners of Great Wolf Resort – Apollo Group Management – are considered one of the top acquisition management firms in the world. They leverage companies not to buy out and flip but to keep and turn into even bigger profit centers.
Among their numerous holdings are the University of Phoenix, Coldwell Banker Real Estates, Century 21 Real Estate, Carl’s Jr./Hardee’s, Norwegian Cruise Lines, CORE Media Group (American Idol, Elvis Presley Enterprises, and Mohammed Ali Enterprises), and Caesars Entertainment (casinos and hotels) to name a small handful. Apollo Group just last month snapped up the Chuck E. Cheese chain.
City Manager Karen McLaughlin confirmed that Manteca has made it absolutely clear that it won’t put the taxpayers on the hook for even a penny of any bond debt connected with Great Wolf’s public infrastructure.
That way if the resort water park swims, Manteca will be, for want of a better phrase, in the money along with having helped create 414 permanent jobs and 156 part-time jobs with an annual payroll of $9.4 million and the overflow spending of 400,000 yearly visitors.
If it sinks, then Manteca is out nothing but it would have infrastructure for private sector use as well as a big private sector project that investors would make sure was put to some use so they could get their money back.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at dwyatt@mantecabulletin.com or (209) 249-3519.
