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

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Kalahari Resorts agrees to EDA fee on tax-exempt financing

Kalahari Resorts has agreed to pay the Fredericksburg Economic Development Authority’s annual fee on the $25 million in tax-exempt financing to be used for the planned $260 million project in Fredericksburg’s Celebrate Virginia South. This would amount to a $31,250 annual payment from Kalahari to the city EDA for 10 years. The EDA would use the money for economic development in the city. Kalahari is asking the EDA to waive its fee on the roughly $220 million-$240 million taxable portion of the financing plan (Kalahari would also put up about $30 million of its own money; the total costs of buying the land from the Silver Cos. and developing the resort would be about $260 million, and the additional amount borrowed would go toward financing and other costs). The EDA will meet May 10 to discuss the waiver request. Click here for some background information on this, and see tomorrow’s FLS for more details.

Also, click here to see a report on the economic impact that Kalahari is expected to have on the city.

Click here to read a letter Kalahari’s attorney sent the city/EDA dated April 8. This reveals that Kalahari has already spent about $3 million on the project.

Click here to read the follow-up letter dated April 22 that Kalahari’s attorney sent the city/EDA. This reveals that the going interest rate on the taxable portion of the financing package is about 11 percent.

Click here to read the letter that City Manager Bev Cameron sent to the governor’s office asking for an additional $10 million in Recovery Zone Facility (tax-exempt) bonds for Kalahari.

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Permalink: http://news.fredericksburg.com/businessbrowser/2010/04/26/kalahari-resorts-agrees-to-eda-fee-on-tax-exempt-financing/

  • http://constantnever.blogspot.com wizard1073

    Holy cow! 11% interest? In this rate environment? I want to know why the banks see so much risk!

  • ellismozart

    If Kalahari would have hired local legal representation, he would have known that the EDA charges a standard fee of 1/8 or 1% to ALL of those seeking to use them as a conduit for financing. I agree, the fee amount on the $200mil is a lot of change. I also think that 11% interest on the financing is excessive. However, if someone is making 11% off their money, then Kalahari should be able to pay a small pittance that amounts to 1/88 of that of the lenders. Perhaps Mr. Harms should have read both Virginia and Fredericksburg code prior to advising his Clients on bond and financial issues in our City. I do hope all parties can come to agreement as this will be good for all if goes off as planned.

  • Rufus

    The little $340,000 fee for this Kalahari Project is too cheap. The fee should be ten million dollars, for all the money that Mr. Nelson will make after Kalahari’s opening. And the 11 percent interest on the investment should be taxed to the max.

  • Einstein

    Is that Economic Impact Report an attempt at a joke? The first 2 bullet points under “Major Assumptions” has an asterisk with the footnote that the information was supplied by Kalahari. Love slide 8. And using estimates out to 30 years is a nice touch — the project hasn’t even begun due to inadequate 5 year projections. Is it just an attempt at some faux due diligence to keep people interested in this alleged golden egg?

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