Schlitterbahn near a new deal

The original package

The January 2010 agreement outlines up to $86.25 million in reimbursements and tax kickbacks for the partners over four phases. Phase 1 reimbursements total $6 million over the first two years of operation.

The price and scope of the original Schlitterbahn project—$360 million built in four phases spanning 20 years—likely contributed to investor apprehension, Brewer said. A scaled-back version of the initial plan seemed more attractive to investors in a recovering economy, he said.

"The fact that we've pulled it back and we're only looking at a Phase 1 makes it a lot more attractive. It's not as speculative, like when you're talking about a four-phase project with hotels and conference centers and a river walk," Brewer said.

Funding tourism

Tourism projects in Cedar Park can be funded through many avenues. Brewer helped recruit Schlitterbahn, but the partners were responsible for finding investors.

Cash incentives such as the $6 million reimbursement pledged to the partners from the city's 4B corporation—a tax-funded board that allocates funds for community development—are useful only when the market is responsive, Councilman Mitch Fuller said.

"The city has an incentive package in front of somebody, but most of the money is going to come from the private sector on this," Fuller said. "Schlitterbahn is a perfect example of having the capacity to incentivize the private sector."

Through 4B corporations, cities can use sales tax dollars for entertainment, parks, sports and other facilities as well as infrastructure. Cities can also use hotel occupancy taxes—in Cedar Park, a 7 percent tax added to overnight stays—toward funding tourism.

"The one thing about the use of HOT funds, whatever project is being considered needs to show some level of positive impact on the local lodging industry," said Duane Smith, tourism and community development manager.

The Tourism Advisory Board reviews applications for HOT funds before final approval by City Council. The board allocated $64,275 last year for marketing campaigns, a volleyball tournament and a mobile tourism website.

"We're not on I-35, which is historically where the commercial corridor is. So for Cedar Park to garner a lot of tourism, we really have to stand out in the area," said Mel Kirkland, Tourism Advisory Board chair. "Now that we have a lot of foundational stuff that will bring people to town, it's really about working off of that and getting our visitors to go from one event and then to another so they stay overnight."

Ideas for additional tourism attractions—including a planetarium and science center, a festival and an ice rink—have surfaced in City Council and internal ad hoc committees. Smith said future tourism ventures could be eligible for HOT and 4B funds.

"It's not just the impact on the hotel rooms. The whole thing is an economic impact for the city," he said. "Part of it is the lodging, and part is what they're doing here while they're in town—going shopping and eating out. It all starts to add up."

The big picture

Fuller said Schlitterbahn's advancement toward breaking ground in Cedar Park, along with tourism promotion, coincides with City Council's strategic goal to make Cedar Park a tourism destination.

"We want to create a city of destination that brings people into the city that don't otherwise live here," he said. "It creates economic activity when you are, and have a goal of being, a destination city."