Kalahari commitment is top story for Round Rock in 2016
Kalahari Resorts & Conventions’ first development west of the Mississippi will also be its first in a warm climate. And in true Texas style, Kalahari owner Todd Nelson promised Round Rock’s development will be the biggest and best, calling it the company’s “flagship.”
The original Kalahari resort and headquarters were built in Wisconsin Dells, Wisconsin, in 2000. In 2005, Sandusky, Ohio, was the site of the second Kalahari, followed by the Pocono Mountains, Pennsylvania, location in 2015. All three are in resort communities with heavy tourism statistics. Round Rock, Nelson said, will be an ideal place for his family-owned company to grow.
“We’ve been trying to get to Texas the last four years,” Nelson said. “We started in Frisco and Dallas. Then we met with [Round Rock Chamber Vice President of Economic Development] Ben White. There are a lot of reasons Round Rock made sense for us.”
And city officials said Kalahari makes a lot of sense for Round Rock. The economic impact of the proposed $350 million hotel, water park and convention center will offer a long-term boost to the local economy.
“The project is a real game-changer for the community,” Round Rock City Manager Laurie Hadley said. “The project will generate more than $4 million a year in net new revenue to the city, with a business that doesn’t require much in the way of day-to-day [city] services.”
The city of Round Rock will spend $27.5 million to purchase 351 acres across Hwy. 79 from The Dell Diamond and Old Settlers Park. The city received a payment from Kalahari of $17 million on Dec. 20, 2016 and will receive another payment of $10.5 million, plus interest, in eight years.
Round Rock’s commitment includes the issuance of approximately $40 million in bonds to construct the city-owned convention center and $30 million in bonds to construct improvements to the Hwy. 79 intersections as well as road and utility improvements on-site.
The agreements in place with the city of Round Rock and Kalahari, passed unanimously Dec. 22 by City Council, call for a hotel with a minimum of 975 rooms to be built with a 200,000-square-foot indoor-outdoor water park and a 150,000-square-foot convention center. Kalahari also agreed to hiring a minimum of 700 people for operation of the facilities.
Nelson said those numbers may be conservative.
“This will be our flagship,” he said. “We are going to create a spectacular resort here. I could see the convention center more like $50 million and 200,000 square feet. We will hire 250 lifeguards, 250 housekeepers, and 200 in food and beverage.”
Nelson said a design team is in place, and after zoning changes are made, Kalahari would like to break ground May 2018, if not sooner. The opening date is targeted for May 2020.
Win For Round Rock
Nelson said while negotiating with Round Rock officials, it was clear they were not willing to risk a failed development.
“You have a very talented bunch of people here,” Nelson told City Council on Dec. 15. “They said, ‘Our residents cannot be responsible for one dime.’ We struck a deal that is fair to everyone and puts your community at absolutely zero risk.”
The city has agreements in place to protect its investment in case Kalahari cannot uphold its end of the deal.
“All debt will be paid off with tax revenues, and no incentive payments will be made to Kalahari until the yearly debt payment and reserve requirements are 100 percent met,” said Brooks Bennett, Round Rock assistant city manager. Kalahari will contribute a one-year financial reserve for the project to help protect the city.
The city will own the land and the conference center, leasing it back to Kalahari. Revenue-sharing agreements are in place for the first 40 years of operation.
“A project of this nature will absolutely have long-term financial benefits to the city,” Hadley said. “It will generate significant property tax, hotel occupancy tax and mixed-beverage revenue for decades to come. And the resort and convention center will only use a portion of the 351 acres, so we anticipate revenue from additional development Kalahari is planning for the balance of the property.”
The development gives Dell Inc. a strong partner, tax-wise, in Round Rock.
“They are two different industries, but Dell is a technology company and it is constantly changing,” Round Rock Mayor Alan McGraw said. “The revenue that we are talking about from Kalahari is people coming in, staying in hotels, enjoying themselves—the things people do on vacation. It’s not an ever-changing technology.”
Hadley said both Dell and Kalahari import revenue into the community.
“Just like Dell customers in other Texas cities provide sales tax revenue to Round Rock, Kalahari visitors from across the state and nation will bring dollars from outside the community into Round Rock.”
It all started with a cold call
White has received credit from Hadley and McGraw for the cold call that brought Kalahari to Round Rock. Discussions, a visit by city officials to the Kalahari in the Poconos and preliminary numbers led to a June announcement Kalahari was coming. Six months later, the financial and legal agreements were signed.
“They knew they wanted to come to Texas and did an exhaustive search from the Dallas Metroplex to San Antonio looking for exactly the right spot,” McGraw said. “Knowing you want to go to Texas is one thing; finding the exact spot is something totally different.”
Kalahari Executive Vice President Bill Otto, also on hand for the City Council meeting Dec. 15, said Round Rock is one of the fastest-growing tourist destinations in the United States.
“With something for everyone, the diverse area attracts a wide variety of visitors of all ages,” Otto said. “We are excited at the prospect of joining the city of Round Rock and being here in such great company.”
Making a mark in Central Texas
If completed today, the Round Rock Kalahari Resorts & Conventions development would be the second-largest hotel and second-largest convention center in the Austin metro area, trailing only the JW Marriott and the Austin Convention Center, respectively.
The proximity to the city of Austin; Austin-Bergstrom International Airport (ABIA); and highways to San Antonio, Dallas and Houston have city officials excited about the Kalahari development.
“We are sitting in a state with millions of people, and [the resort] is easy to get to,” Round Rock Mayor Pro Tem Craig Morgan said. “You can fly into ABIA and get on [SH] 130, and you’re in Round Rock in 30 minutes. Tourists are going to have great access to the resort, so I do think it is going to have a great impact on our economy.”
Zoning changes for the property will be the next step before City Council. That process is expected to begin early this year.