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Kalahari awarded $25 million in recovery zone bonds
UPDATE: See the letter from the governor’s office to the city here.
Gov. Tim Kaine’s office put out word late today that it had allocated $25 million in tax-exempt financing made available through the federal stimulus act to Kalahari Resorts’ proposed waterpark hotel in Celebrate Virginia.
Officials with the city and the Silver Cos. said the news signifies a huge vote of confidence from the state that should help Kalahari as it continues to try to secure financing for the $260 million project.
Fredericksburg, Silver and Kalahari have been pursuing this financing, known as American Recovery and Reinvestment Act Recovery Zone Facility Bonds, for the past two months. These bonds are for private projects in areas that have been found to have significant poverty, unemployment or home foreclosure rates, or other general distress.
The process was highly competitive, and Kalahari’s allocation of $25 million represents more than one-fifth of the total amount of recovery zone facility bonds the state made available through this competitive process.
City Manager Beverly Cameron said city officials learned of the news around 3:30 this afternoon, during Kaine’s last day on the job.
"We are thrilled," Cameron said. "It’s a real solid building block for the project."
Scott Little, Silver’s project manager for the Celebrate Virginia development, said there is still work to do to secure the complete financing package for Kalahari, but the state’s allocation of these bonds provides a strong show of support that should give the project a boost as Kalahari talks to banks and other potential investors.
"There is still work to be done, but it does get us that much closer, and it is a huge vote of confidence and bolstering of the authenticity of the project," Little said.
The city approved a 20-year, $61 million package of tax-based incentives for the Kalahari project in 2008.
The resort is seen as a major anchor for Celebrate Virginia and tax generator for the city, but its construction alone will have a large economic impact.
It is expected to take 1.5 million work hours to build the hotel and indoor/outdoor waterpark, and Little said today that between 85 and 90 percent of the construction budget will be spent with Virginia contractors.
For more on this story, see tomorrow’s edition of The Free Lance-Star.