Gilroy city officials visited the Great Wolf Lodge in Southern California and days later a representative from the national water park hotel group came to Gilroy seeking feedback from locals.
The results were mixed. City officials were excited about the prospect of bringing in millions of dollars a year in tax revenue, however locals expressed concern about the traffic and development that the resort could bring in.
Garden Grove Mayor Steven Jones told Gilroy officials that the Great Wolf Lodge water park hotel, which opened in February 2016, has been a tourist and financial boon. The city invested more than $65 million of public money to bring the project to fruition.
Great Wolf representatives projected that Gilroy would bring in $6 million a year in taxes and $165 million over 20 years.
“We built hotels before Great Wolf, but they really didn’t put us on the map,” Garden Grove’s mayor said. “We were looking for something that had a theme and was upscale that would help rebrand Garden Grove. Great Wolf has certainly done that.”
Six Gilroy representatives, including Mayor Roland Velasco, economic development coordinator Tammy Brownlow, City Administrator Gabe Gonzalez, Tourism Director Jane Howard and Chamber of Commerce officials Mark Turner and Lisa Faris flew to the Southern California city to check out the park and get feedback from city officials about the 105,000-square-foot, 603 room destination hotel-water park, which is considering a Gilroy location adjacent to Gilroy Gardens.
The feedback they got was upbeat.
“They are meeting their projections like they said they would according to economic reports,” said Garden Grove Economic Development Director Greg Blodgett. “We have this machine that generates 25 percent of the top line of general fund revenue and we stand by that all day long. It’s a gift that keeps on giving for the city once you get over the initial hump of absorbing it.”
The Orange County Register has reported that Great Wolf Lodge will pay $2.8 million annually in property taxes and that the resort is meeting expectations on $8 million in annual transient occupancy tax revenue. It will also pay as much as $1 million a year in sales taxes on commodities such as its $14 hamburger, $39 bone in ribeye steak, $9 craft beer, $8 wine and $3 soft drinks.
While Blodgett wouldn’t share exact revenue figures for Great Wolf, Director of Community and Economic Development, Lisa Kim said it brought in the equivalent of six to eight Costcos into city coffers.
With an annual city budget of around $100 million according to Jones, Garden Grove, a city of 175,000 people, derives 25 percent of its revenue from hotel room tax, competing with famous attractions in the region including Disneyland, which is four miles away, Knott’s Berry Farm and Universal Studios.
Gilroy officials spent last Friday touring the hotel and meeting with city officials to see if it would work for Gilroy, one of several sites considered to be the company’s first Northern California outlet. The Madison, Wisconsin-based company bought in 2015 for $1.35 billion by Centerbridge Partners has built 14 other lodges across the continent since it began in 1997 in smaller cities adjacent to big ones, including Sandusky, Ohio, Traverse City, Michigan, Kansas City, Kansas, Grapevine, Texas and Great Mound, Washington.
Garden Grove funded bonds, construction and land grants to complete a deal with McWhinney Enterprises, a Colorado-based real estate investment company, to develop the first Southern California Great Wolf Lodge outpost.
Located on Harbor Boulevard, the main thoroughfare of Garden Grove, the hotel was built on a former mobile home lot, whose residents were relocated by the city to accommodate the new construction. The 13 acres, which was gifted to McWhinney by the city, was valued at $30 million by the Orange County Assessors Office. McWhinney also required the city of Garden Grove to make $5.2 renovations to Harbor Boulevard, including repairing the road, installing traffic signals and installing landscaping.
Garden Grove gave $5 million for the construction of the parking garage and $42 million into the construction of the hotel itself. The city issued bonds to raise these funds and with interest over the next 18 years will bring that price tag up to $65 million. The bond will be paid for and backed by a redevelopment trust fund. Negotiations for the financing lasted several years.
For Garden Grove, attracting Great Wolf Lodge served as a vehicle to move them out of the shadow of nearby Anaheim, a tourism juggernaut and away from what Jones said is a reputation as “the Rodney Dangerfield of cities.”
For Garden Grove, Great Wolf Lodge is the destination for an all-inclusive “staycation.” Access to the waterpark is restricted to hotel guests and the water park itself is dotted with bars and restaurants to help keep parents happy while the kids enjoy the water park.
Along with taxes, Great Wolf Lodge employs 670 employees at peak occupancy times with 35 to 40 percent of those being full-time jobs said General Manager Tony Bruno. Of those full-time employees, 60 are in managerial positions. Garden Grove officials said 10 percent of employees are from the city itself, while half are from surrounding Orange County. Most of the 300 vendors who provide services to the lodge are local, Kim said.
Would Garden Grove do the deal again if it had the chance Gilroy Mayor Velasco asked the Southern California staff members?
“Absolutely,” answered Garden Grove City Manager Jones.
There is a local competition for the project. While the city-owned land near Gilroy Gardens fits the wooded, lodge ambiance of Great Wolf Lodge, Brentwood and Manteca, have done studies in the hope landing tourist dollars.
“I was very pleased with the tour,” Velasco said. “Both the city and Great Wolf Lodge provided useful information for the delegation to bring back to Gilroy.”
Great Wolf Lodge Director of Development Bryson Heezen was at the monthly Gilroy Welcome Center tourism meeting Tuesday and along with exposing the merits of building the resort in Gilroy he had a message for city residents. If they aren’t wanted, they won’t come.
“We have no interest in investing $250 million in Gilroy if you don’t want us,” Heezen said.
Later that evening, at a meeting with residents at Eagle Ridge, the welcome wagon, wasn’t so welcoming.
Great Wolf Lodge and Gilroy are midway through a 60-day exclusivity negotiation period where both sides work, exclusively, with each other to hammer out a deal.
The Wisconsin-based resort company now has 14 locations that draw five million guests a year and employs 6000 employees.
Feedback was split locally.
“A lot of people sacrifice a lot to live here and we like the peace and quiet and the fact that we know our neighbors,” said Eagle Ridge resident Lori Flores, 64.”Something like this is going to impact not just us, but Gilroy. This thing will have all the things that a downtown really needs and it’s going to hurt downtown even worse.”
Added Dave Welsh, 53, “I think Gilroy is selling out one of our best assets, which is Hecker Pass. If this thing is not successful what’s it going to become? There have been some big companies that have come to Gilroy that didn’t make it. What’s going to happen when they leave, they’ll be on a lease. They can’t just pick up the building when they leave.”
At the City Council meeting Tuesday, Jane Howard, Executive Director of the Gilroy Welcome Center worried that dollars would dry up in the city isn’t more proactive about attracting tourists.
“If Gilroy doesn’t continue to add amenities, it will become a flat destination. We see it as another Carmel Valley. We think it’s that beautiful.”
Great Wolf tests the water in Gilroy
