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Lindley Estes is a business writer for The Free Lance-Star and This blog is on Fredericksburg-area business. Send an e-mail to Lindley Estes.

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Shrinking loan volume shows Kalahari’s challenge

The lead article in today’s Wall Street Journal shows that loan volume at the nation’s 15 largest banks shrank by nearly 3 percent in the second quarter, a sign that banks and borrowers continue to avoid risk.

The article made me think of the difficulty Kalahari Resorts President Todd Nelson is having securing financing for the more than $250 million resort planned for Fredericksburg’s Celebrate Virginia complex.

Emily Battle spoke with Nelson about this earlier this month. Nelson said his company still hopes to have the money by the end of this year, but that traditional financing just isn’t available. So he’s searching all over the world for private investors to help finance the park. In the meantime he’s going forward with the project, including hiring a local engineer to do the lengthy site plan work required of such a large project.

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  • mydar

    Kalahari at this point is in danger of missing the required deadlines to receive the City’s economic incentive package. Nelson is on record as saying that without the incentives the Kalahari project won’t happen — and that was *before* he ran into the difficulty with aquiring loans.

    What is the opinion of the Mayor on this situation? The City council? Are they concerned? Will they move the deadlines to accommodate Nelson? Will there need to be another vote? Is Neslon fearful he will not get the full incentive package? How will that impact his financing? How is desperately searching all over the world for financing still “moving forward?”

  • EmilyBattle

    As we have reported, the deadline can be extended in the case of an emergency situation beyond Kalahari’s control. In this case, Nelson’s inability to obtain financing due to the global economic crisis falls under the “force majeure” clause in the performance agreement. If he determines that he cannot meet the 2010 opening deadline, he must write a letter to the city explaining the “force majeure.” He is then freed from the deadline for the period that that situation exists. However, there is an outside deadline of July 2013, after which the city has the right to terminate the contract if the project hasn’t opened. City officials anticipate that this letter, which must also go to the EDA, will come once Nelson has closed on his financing and can name a new projected opening date. We will report on this process as it happens.

  • glasshouse

    Emily, when I read the common person definition of force majure I find:
    There is no case within that definition to cover not being able to get a loan. Trump tried that as have others. Without re-reading Kalahari’s agreement with the city… Since when does the FLS make policy for City Council for existing valid contracts with the City? “the deadline can be extended in the case of an emergency situation beyond Kalahari’s control”. There is much case law to the contrary. The FLS stepped over the line and should be unbiased in its reporting. I hope Kalahari can pull this off but not with one sided reporting and not by disregarding agreements with the citizenry.

  • EmilyBattle

    I believe you are misunderstanding me. I am not making policy. I am reporting on what is contained in the performance agreement, and how that agreement has been interpreted by city staff. I make no editorial comment on that interpretation, because that’s not my job, but you are free to. We are committed to unbiased reporting.

  • mydar

    All interesting information — that should included in articles with blaring headlines such as, “Kalahari Moving Forward.”

    “As we reported . . .”
    The last five articles or blog posts about Kalahari made not reference to the force majeure clause; and no mention of the City’s postilion; and no comment from any city office In fact, they read like excerpts Kalahari press releases.

    Who provided the FLS with the interpretation that the “world economic crisis “falls under” the force majeure clause?

  • glasshouse

    Emily, misunderstanding or misquoting? You reported that the deadline can be extended – your words and not attributed to someone else. Was the above reported as fact or one person’s
    interpretation? Who at the city interpreted that agreement?
    Unbiased? Reporters have a different standard when reporting or writing on a blog-perhaps
    everyone should have this same standard but that is not the case. I understand the written
    word – sometimes too well. Knowing some of the facts and reading your post – I read in bias. Why did you not question the ability of a staff person to make such a determination in your report? Why didn’t you link Kalahari’s problem with that of Trump? Why didn’t you report on others in the same situation? There is much information available to the contrary of some of what you reported.