When last we visited the Kalahari water park project in Fredericksburg (see “Kalahari and the Politics of Interstate Interchanges“), the all-consuming issue was who would pay to build an interchange at Interstate 95 to serve the water park and the rest of the massive Celebrate Virginia project.
Now controversy is focusing on the enormous tax breaks the City of Fredericksburg has granted Kalahari developer. Emily Battle at the
Free Lance-Star has the details:
Fredericksburg would give back nearly half of the local taxes paid by Kalahari Resorts as part of a 20-year, $61 million incentives package that helped convince the Wisconsin-based company to build a water park hotel and convention center in the Celebrate Virginia tourism complex.
The agreement calls for the city to waive $3.35 million in up-front development fees for the project. The bulk of that is a waiver of the roughly $3.2 million in water and sewer availability fees Kalahari would have to pay to connect to the city’s utility system. In addition to fee waivers, the deal calls for the city to return 47.5 percent of the local tax revenues that Kalahari generates to the resort on a quarterly basis for 20 years.
In return, Kalahari will promote Fredericksburg in its marketing, and it will set up 500 square feet of space in its main lobby to promote other attractions in the city. Finally, Kalahari promises that it won’t build any other facilities in Virginia. Ooooo. Water park promotions will drive a lot of traffic to historic downtown, I’m sure. Plus the exclusive Virginia franchise for Kalahari concept. Who knows what that’s worth. Fredericksburg knows how to drive a hard bargain.
Celebrate Virginia and its developer, the Silver Companies, keep popping up on my radar screen. Let’s see… First, there is the matter of those $61 million in tax concessions from the City of Fredericksburg. Then they want the state and feds to pay for a new Interstate interchange to provide access to their property. There’s also those $28 million in tax credits that Silver Companies claimed for putting riverfront land under conservation easements — now disputed by the Department of Taxation.
Questions: Would Celebrate Virginia ever happen in a free-market economy where developers competed on a level playing field? What are the implications of this project for downtown Fredericksburg and all the other interchange-centered development in the Fredericksburg/Stafford/Spotsylvania corridor? While the tax revenues may net out positive for Fredericksburg, what happens to the tax base of neighboring Stafford and Spotsylvania?
