Pflugerville makes a splash

"Pflugerville for years has been looking to build and become a regional destination," Pflugerville Mayor Jeff Coleman said. "Because a water park does not exist in the Central Texas region, we always thought this was a good idea."

From idea to reality

HFE builds and operates water and adventure parks designed to appeal to families with children ages 2–14. The company has been involved with the financing, construction and management of 20 water parks since the mid-1980s, including four in Texas.

The company's experience was one of the primary attractions for Pflugerville's leadership in solidifying the partnership. In 2009, city officials believed they had secured a deal to construct a $16 million privately funded Blu Bambu water park on land owned by the Pflugerville Community Development Corp.—the city's economic development organization. The deal, however, fell through in 2010 after the developers failed to secure the necessary financing.

"The difference between [Blu Bambu] and [Hawaiian Falls] is that Blu Bambu had never run a water park before," PCDC Executive Director Floyd Akers said. "[Hawaiian Falls] is definitely being built."

To help ensure the Hawaiian Falls project does not meet the same fate as Blu Bambu, the city has agreed to provide the upfront financing needed for purchasing land, labor and construction materials. In September, the city expects to begin selling more than $21 million worth of municipal bonds. Hawaiian Falls will in turn pay rent to the city in an amount equal to what is owed for the bond payments.

"The taxpayers are break-even on the deal as far as the bond issuance goes," Akers said. "Hawaiian Falls is going to be using their profit to pay off the bond."

Ultimately, the PCDC will retain ownership of the park, and Hawaiian Falls will manage all of the engineering, construction and day-to-day operations during the 30-year term of the contract. Hawaiian Falls will also retain any profits that exceed its operating costs and debt payments. The city also agreed to refund 90 percent of the property taxes from the park back to Hawaiian Falls and defer the remaining amount to the PCDC. The PCDC will also receive all of the local sales taxes collected from Hawaiian Falls.

Coleman said the only financial risk to the city is if the park fails to generate revenue and defaults on the agreement.

"There is some risk," Coleman said. "The reason why we are not worried is because [HFE] has operated 20 of these kinds of parks. This will be their flagship, the largest [Hawaiian Falls] they have produced."

A deal in the making

Despite the cost of the water park, there were few questions about the project from council members during the Aug. 6 meeting.

Prior to the meeting, in fact, the parties had already concluded several months of closed-door negotiations that had all but ensured the deal would be approved. Led primarily by Akers and HFE President David Busch, by the final week of July, the sides had already negotiated the final details of the project's funding, incentives and location.

Busch credited the city's and PCDC's leaders with recognizing the urgency of putting a deal together quickly so construction could begin in time to have the park operating by May 2014.

"[Pflugerville] had a streamlined approach to their development process," Busch said. "The conversations really picked up pace in May, June and July—it had to, or else it wasn't going to happen, and then you lose another year. Things happen when you start postponing things—you get interested in new, shiny things and move on."

Pflugerville's ability to put the Hawaiian Falls deal together in a matter of months has also allowed the city to win the race to host the Austin area's first large-scale water park—a designation it appeared the city of Cedar Park was ready to secure until just recently.

In 2010, Cedar Park officials announced an incentive and performance agreement to develop a multiphase Schlitterbahn water park and resort. Originally intended to open in 2012 and encompass 96 acres with an estimated $360 million worth of developments, issues with the financing and location have since stalled the project's progress.

Phil Brewer, Cedar Park economic development director, said it was too early to determine what effect the Hawaiian Falls development could have on Cedar Park's ability to secure a deal with Schlitterbahn.

"[It is a] good question to which I really don't have an answer," Brewer said. "The city is still committed to bringing a Schlitterbahn resort/water park to Cedar Park, and we continue to meet with our development partners on the project regularly."

Rewards of the park

While the city of Pflugerville is not likely to receive much in the way of direct revenue from Hawaiian Falls, city leaders believe the park will spur future developments, draw consumers to nearby stores and restaurants, and add hundreds of summer jobs for local high school– and college-age students.

According to an economic impact study prepared for the PCDC, the park could generate more than $498 million in taxable sales—within the park itself and through surrounding businesses—during its first

30 years of operation.

"We were not looking at the water park by itself being the 'game-changer' for us," Coleman said. "We are looking at what it is bringing along with it and what the attraction is going to do for us. We anticipate the ancillary benefit is going to be significant."

The city of Waco hosts a 12-acre Hawaiian Falls facility that opened in 2012 and was financed through a combination of public and private funds. Similar to the deal with Pflugerville, the arrangement allows the city to retain ownership of the park, while Hawaiian Falls manages the facilities.

Rusty Black,Waco Parks and Recreation director, said the partnership allows the city to improve its own aquatic and recreational facilities without having to bear the costs of park maintenance and operations.

"Our experience has been outstanding," Black said. "Before we entered into the contract with [Hawaiian Falls], we talked to several cities. The people we talked with, their experience with [Hawaiian Falls] was under-promised and over-delivered, and our experience has been very similar."

Black said Waco's Hawaiian Falls drew approximately 145,000 visitors during its first year of operation—exceeding the city's expectation. Busch, however, believes that Pflugerville's Hawaiian Falls, with its larger size and Austin-area location, will bring in a minimum of 300,000 visitors annually.

Addressing water and traffic

Water has become a heightened concern in Pflugerville since the city instituted mandatory watering restrictions in June. City Manager Brandon Wade said the restrictions were mandated by the city's membership with the Lower Colorado River Authority, which bases its drought conditions on lake levels. The city, however, also has access to well water, which it plans to use to fulfill the park's water needs, he said.

"[Hawaiian Falls] is really not going to impact our water situation at all," Wade said. "Once the parks are filled up, they don't require a lot of water to operate. ... You fill it up once, and then you just have to add water to top it off due to evaporation."

LCRA General Manager Becky Motal said a city's lawns generally consume more municipal water than large water parks, primarily because the parks run their own filtration and recycling systems.

"I think there are probably other things [than a water park] that do use a lot more water," Motal said. "If they have the water, they're willing to pay for the water, they're mindful about the conservation and they try to recycle, it's clearly a community decision[to host a water park]."

City leaders are also planning for the increased traffic the park will bring. Located near several housing developments, a shopping center, two toll roads and a cluster of schools, the planned location is already one of the city' most congested areas.

Assistant City Manager Trey Fletcher said the majority of the traffic coming to and from the park will likely avoid the peak morning and evening travel hours. The city is also in the process of planning a number of new roads to offer residents alternative access points to the neighborhoods, businesses, schools and roads surrounding the park.

"Those [new roads] aren't necessarily going to be how you get to the water park, but if congestion occurs, it provides people who aren't going to the water park viable alternative means of circulating in that general area," Fletcher said. "Given the existing roadways in the area that can handle a volume of traffic and the connectivity of projects that are underway and future projects, we felt this was as good of a site we could muster to facilitate the water park."