Water Park Resort Planned in Perryville; New Era in Cecil County Economic Development

December 18, 2018
By

NEWS ANALYSIS

A new $200 milllion water park and resort, planned for Perryville near the existing Hollywood Casino, could mark a new era in Cecil County economic development—with a potential ripple effect to attract other new amenities to the western area of the county and revive past development dreams that were dashed by the last recession.

Great Wolf Lodge, which operates 18 resorts with the nearest location in the Pocono mountains in Pennsylvania, is expected to build a hotel with at least 450 rooms, a conference center, restaurants and shops. Those facilities would be centered around its water park, climbing wall and other recreational amenities. The project will be located adjacent to the casino in the long vacant “Chesapeake Overlook” site on about 44 acres in Perryville. Another adjacent 55 acres of open land could become attractive to other developers looking to piggyback on the waterpark’s lure to visitors.

Cecil County officials announced the project, which is expected to open by summer, 2022, at a Tuesday morning (12/18/2018) worksession of the County Council but rumors of such a project have been circulating in local government and real estate circles for months. The project is expected to create from 400 to 600 jobs, including full-time and part-time workers.

“I’m absolutely overwhelmed by the magnitude of this,” county Executive Alan McCarthy told Cecil Times. He said the project could be a catalyst for jumpstarting other economic development initiatives in the western part of the county, especially in the remainder of the “Chesapeake Overlook” site. That area had been slated many years ago for hotel, shopping and entertainment venues in connection with the Hollywood Casino but those plans were abandoned in the wake of the economic recession.

“It’s not a warehouse,” Chris Moyer, the county’s economic development director observed with a smile

Far from it. For the past two years, new economic development projects have created thousands of jobs primarily in warehouse and distribution centers, such as Amazon, Lidl, and others at the Principio business park near Perryville.

But some local critics have dismissed those projects as low-wage job creators—despite Amazon’s recent pledge to pay a minimum of $15 an hour to all its workers—and economic development reports that higher wage jobs involving logistics and planning skills are included in such projects.

The hospitality industry is traditionally a low-wage job provider, but the waterpark format creates the potential for technical jobs—such as operation and maintenance of water slides and other recreational amenities—that might provide higher-paid work options for graduates of the Cecil County School of Technology.

Critics of the past warehouse projects have seized upon state and county incentives, such as low-cost loans that convert to grants if job-creation goals are met or per worker training financial credits, despite statistics that show the long-term net economic development benefits—from property taxes, wages, and other economic improvements—exceed the value of the incentives.

With the waterpark project, the county is using some first-time-ever incentives that only relate to the direct income the project would generate, with no general taxpayer money used to support the project.

A key incentive is that the county would “dedicate” its share of per-room hotel taxes collected for 25 years to help support the project. The hotel tax provision relates to an administrative fee of five percent of room tax revenues collected within a town’s limits, since the county handles accounting and disbursement of the room tax revenues. (Outside the towns, the county itself collects, and pockets, a 6 percent room tax, which was raised last year from a previous 3 percent tax rate.) For the new project, the county would give up its administrative fee of 5 percent of the total room taxes collected, for a period of 25 years.

“If there is no hotel, there is no hotel tax,” Moyer observed.

The second incentive is a 50 percent reduction on local “personal property taxes”—fees assessed on business equipment and inventories— up to a maximum of $4.5 million or 25 years, whichever threshold is reached first. Moyer said that about half of the resort’s investment in its property and amenities would otherwise be subject to full personal property tax levies, which are collected every year.

Legislation to approve the incentive package was introduced in the County Council Tuesday evening and at the morning worksession members of the Council were positive about the project.

“These projects are great,” said Council President Bob Meffley (R-1.) And he sought to head off local critics of economic development incentives, saying “Sometimes people don’t understand that sometimes you have to give a little” to get a lot.

In the broader calculus of economic development, those incentives will actually yield a “187 percent return on investment” for the county, Moyer said. He added that the project would pay 30 million in regular property taxes over 25 years and is expected to return an overall economic benefit to the county of $40 million in the same time period.

“But for these incentives, this project will not happen,” Moyer told the County Council, adding that his observation was a “fact,” and “not scare tactics.”

Moyer told Cecil Times that, when discussions began last spring with the resort developers, there was no specific dollar amount of incentives being sought but the developers did discuss the type of incentives they had been offered in other parts of the country. He said that discussions are continuing on some of the details of the incentives and how they would be administered. The town of Perryville initiated contact with the resort operators, he said, and the county was quickly brought in to discuss the incentives that could make the project work.

“It’s a no brainer” for the resort owners to locate in Perryville, Moyer said, since the resort will be visible from Interstate 95 and could lure families from major East Coast areas, from Washington DC to New York. He said the county expected that the resort would be “a tremendous job creator” and an “anchor” to attract other jobs to the area.

Moyer joked that he would be happy to create a “babysitting service” for parents seeking a break from their water-logged kids while staying at the resort so they could visit the nearby Hollywood Casino. The county, and the town of Perryville, receive “Impact aid” through the state that is tied to “Video Lottery Terminals” (VLTs) or slot machines. The casino has reduced the number of VLTs at the site to make way for table games, which do not yield impact aid money to the county or town.

Local impact aid revenues have fallen short of the initial estimates when Perryville was the first casino in the state, but as bigger and glitzier casinos with more entertainment options emerged in the state, Perryville lagged behind. In the current Fiscal 2019 budget year, the county’s share of casino aid is expected to be $2.7 million, according to county budget documents.

Any uptick in customers playing the slots at the Perryville casino could boost county impact aid in the future.

Great Wolf Lodge has a business model that makes it very different from day-tripper theme parks or water parks and generates higher revenues than those types of parks. Guests have to book rooms at the resort in advance and being a registered guest gives families access to the water park and other active sports amenities. A rationale for that model is to ensure that the park is not overcrowded on any given day and guests can be assured a quality experience.

But that business model also makes a visit to Great Wolf Lodge a “destination” vacation, like Disneyworld, that families plan for well in advance and spend more time, and money, than they would at a day trip waterpark.

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