Bellevue leaders say 'demand' means $60M indoor water park won't leave taxpayers underwater (2024)

Joe DejkaOmaha World-Herald

Taxpayers in Bellevue won’t get soaked by the city’s $60 million water park project, according to city leaders who cite market studies predicting success of the giant indoor attraction.

City officials contend that their plan is built on conservative revenue estimates, and that Bellevue could still make bond payments even if the park doesn’t perform as well as projected. They say their plan has been in the works for two years, and only recently involved using Nebraska’s new Good Life District incentive to help fund it.

“My comfort level comes with the financial numbers,” City Councilman Don Preister said. “And it comes from the demand that’s out there for such a place.”

At 100,000 square feet, the indoor Bellevue park with a retractable roof would be much larger than Great Wolf Lodge in Kansas City, which, according to its website, comes in at 38,000 square feet. There are larger parks across the country, some of which are more than double the size of Bellevue’s proposed project.

The park is designed to attract visitors from as far away as 250 miles, generating an annual economic impact of $72 million, city officials say. Visitors coming to the Omaha area for events such as the College World Series and the annual Berkshire Hathaway shareholders’ meeting could book rooms in one of the planned hotels and spend part of their time enjoying the water park, the Omaha zoo and other local attractions, the Bellevue officials hope.

It’s an ambitious project for Bellevue, a city of 64,000 people south of Omaha, and some locals are skeptical.

“Who’s going to come to Bellevue, Nebraska, as a destination location from Denver? From Kansas City?” asked Kyle Rhone, who is running for Bellevue City Council. “To me, that’s an outlandish claim.”

Rhone has pressed for city officials to release more information supporting the decision to build the water park. Rhone said that without more information, he can’t say if it’s worth the risk. And he’s concerned the decision was rushed without public input.

Bellevue applied Feb. 16 to the Nebraska Department of Economic Development to create a Good Life District surrounding the interchange of U.S. Highways 75 and 34. The city-owned water park, which would be managed by a private company, would be inside that district.

City officials said they view the southern edge of Bellevue as key to economic growth, since much of Bellevue is built up, penned in by surrounding cities or restricted because of floodplains and military zones.

Proposed boundaries of the irregularly shaped district extend from Fairview Road on the north to La Platte Road on the south. One arm of the district would run east to Harlan Lewis Road. Another arm would extend west along Hidden Valley Road to about 25th Street.

If state officials approve the application, the 5.5-cent state sales tax on transactions within the district would be cut in half.

Bellevue officials say their intent would be to impose an occupation tax of up to 2.75 cents — the amount given up by the state — on transactions within the district. As a result, park users would still pay the equivalent of the 5.5-cent state tax, but half of the money would go to the city to help pay off the bonds it issued to buy land and build the attraction.

In addition, Bellevue would collect its local sales tax — currently at the 1.5-cent rate — in the district, with those taxes used to repay bonds.

And on top of that, the city also expects to receive a cut of the park revenue, which it could put toward the bond payments, too.

An analysis by a city consultant estimated the city can anticipate $2.4 million in park profits in the first year, according to Harrison Johnson, Bellevue’s director of community and economic development. Even if only half that profit is realized, Johnson said, the city would be able to cover its debt payments.

The Nebraska Legislature and Gov. Jim Pillen passed the Good Life District tax incentive last year. Lawmakers are working this session on refining the rules for the incentive, and it’s not clear how proposed legislation might affect the Bellevue project. One bill under consideration would limit the number of districts to three statewide. Since the state already has approved two districts, that would leave Bellevue competing for the final slot.

Before approving the bonds, city council members were presented with a hypothetical worst-case scenario, although city finance director Rich Severson said it was “not going to happen.”

Severson told the council that if the water park failed, and the city had to pay the debt without the promised revenues, taxpayers would be on the hook for about $5 million a year. To raise that amount in property taxes would require a tax rate hike of about 9 cents per $100 of assessed valuation, or $180 on a house valued at $200,000. But he said it’s unlikely that the council decide would raise taxes that much.

“You would have to find places to cut,” he said.

So as they voted to issue bonds for the water park, council members also voted to ask Bellevue voters to approve a half-cent increase in the city’s local option sales tax. The issue will be on the May 14 primary ballot.

Preister said the increase would bring Bellevue in line with the 2-cent local sales tax in Papillion, Gretna and La Vista in Sarpy County. The proposed increase isn’t specifically intended for the water park project, but it would help if revenues from the project fell short.

“You may have heard the old saying ‘belt and suspenders,’” Preister said. “You’ve got a little backup there.”

He said he has confidence in American Resort Management, hired by the city to provide design and construction services. The company will also manage the park after it opens.

The company has success in operating water parks in cold and hot climates, he said. The company operates eight water parks, including the Turtle Island Indoor Water Park in Belcourt, North Dakota, and the Epic Waters Indoor Waterpark in Grand Prairie, Texas, which city officials have said might be the model for the Bellevue water park.

“They’re not new to the game,” Preister said. “So we’ve got professional management with years of experience. We’ve also got nothing like this within probably 300 miles or more. And we’ve had the demand and people asking for something like this water park for years.”

Carl Foy, spokesperson with American Resort Management, said Grand Prairie, Texas, was transformed by the opening of the water park in 2018.

“A decade ago, Grand Prairie was a town that people drove through to go to Dallas and Fort Worth and to Six Flags up the road,” Foy said.

Since the park opened, “there’s been a massive amount of shopping and restaurants, I mean it has changed the economy of the city of Grand Prairie,” he said.

USA Today readers and editors last year ranked Epic Waters the country’s third-best indoor water park.

“They’ve become a tourism destination,” Foy said. “People travel from all over to go to Epic Waters, and I have no reason to believe that this location in Bellevue will be any different.”

Bellevue Mayor Rusty Hike said the market studies and revenue forecast are encouraging.

Hike said American Resort Management has committed to build a $25 million hotel connected to the water park. City officials are talking with officials from two other hotels about locating in the district, he said.

Hike said that when the Good Life District law was passed last year, the city’s bond attorney told officials it would be the “perfect” tool for the project. And because there’s no development within the proposed Good Life District yet, the state won’t be losing any of existing sales tax revenue, he said.

Meanwhile, he said, Bellevue could wind up with a four-season indoor water park that will serve 400,000 to 600,000 people a year. The city plans to offer discounts for local residents and seasonal youth programs.

And the indoor park could work as a catalyst to draw other development, Hike said.

“It’s providing an awesome year-round recreational piece for our community, at a reduced rate, and bringing outside entertainment dollars into Bellevue,” he said.