Kalahari celebrates 1 year: Did resort fulfill its deal with Round Rock?

Business

ROUND ROCK, Texas (KXAN) — Kalahari Resort & Conventions, Round Rock’s 351-acre, family-friendly resort, is celebrating one year of operations in the city Friday.

The resort opened Nov. 12, 2020 at a time when COVID-19 cases were surging in Texas and large gatherings were considered unsafe.

At the time, capacity was limited to 3,000 people inside a place that can accommodate 7,000 to 8,000 people.

These restrictions affected many businesses across the State of Texas and especially at Kalahari, where major economic agreements and incentives were made with the City of Round Rock.

“It has been difficult, but it’s also been very rewarding,” said Tim Arnold, Kalahari general manager. “We passed the projections we had for the first year.”

One year after Kalahari’s launch, there’s celebratory music playing throughout the resort.

“Backing down on this project was never an option,” said Jason Ball, Round Rock Chamber of Commerce president. “The Kalahari project is a great example of why we have these incentive tools and how we use them in an appropriate way.”

Round Rock’s Chamber president helped pave the way for Kalahari. Under the multi-faceted deal, officials estimated millions in tax revenue to be generated for the City of Round Rock — estimates that are on track, despite launching during a pandemic, according to officials.

“It was a record summer. All of our resorts performed well, but this one surpassed what the assumptions were,” said Arnold.

The deal between the city and Wisconsin-based Kalahari Resorts & Conventions required the company to hire at least 700 workers and spend at least $350 million to build the resort.

“We reached that and realized we needed more employees, so we actually got as high as 1,600 associates,” said Arnold. “We’ve been hovering around 1,400 and 15,000 associates.”

In order to build the facility, Round Rock issued $40 million in bonds to construct a 150,000-square foot, city-owned convention center on the property. The city would also issue about $30 million in bonds to pay for upgrades to U.S. 79.

The bonded funds would be paid back by state and local tax revenue generated by the resort and water park.

Despite the tax revenue split, city officials estimate the project will generate $4.7 million per year in tax revenue over the first 10 years of the deal than they would have received without the water park. Those projections are based upon the hotel maintaining a 74% occupancy rate.

The City of Round Rock told KXAN Friday as of September, Kalahari has brought in $5,865,041 in hotel and venue tax collections. This does not factor in the debt service payments or the other revenues the City of Round Rock received from Kalahari: the sales tax, mixed beverage tax and state rebates.

“It could have been a precarious time,” said Ball. “When you speak to the Nelson family, what you find is they have some real grit to them. The whole time, they said… ‘we are going to get this spun up, this industry is coming back. It’s going to be a tough time in 2020.'”

Kalahari’s efforts at building incentivized water parks have not always panned out.

Just before the dawn of the Great Recession, the company proposed building a $260 million indoor waterpark in Fredericksburg, Virginia. The city promised the developer $61 million in incentives, and state leaders further incentivized the project with a $25 million cash bond. But the recession hit, and Kalahari was unable to get additional funding for the project.

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