The wolf is hungry, and the Village of Gurnee hopes to share in its next meal.
The national resort chain Great Wolf Lodge plans to take over Key Lime Cove Waterpark Resort and pay Gurnee $150,000 more per year in hotel and resort taxes than the village currently gets from Key Lime.
"Key Lime Cove has been underperforming," said Gurnee Director of Community Development David Ziegler.
The waterpark resort, which is right off Interstate 94 across from Gurnee Mills, has only been netting the village $400,000 per year on average in hotel and resort taxes since it opened in 2008. Ziegler said he thinks Great Wolf will do better.
"Great Wolf is an industry expert," he said. The Village Board agreed Monday night to enter a tax-sharing agreement with Great Lodge to replace its current agreement with Key Lime.
Gurnee has an agreement with Key Lime where the resort receives half of the hotel and resort taxes paid by customers. The resort has been collecting about $800,000 per year in this tax, Ziegler said, paying the village half of it.
The village’s agreement with Key Lime was that the resort would continue to receive half of the 7 percent combined hotel and resort tax until 2028, with a maximum amount of $22 million paid to the hotel over the life of the 20 year pact. Key Lime has only received $4 million under this deal, even though they’ve been in Gurnee for almost half of the time period of the agreement.
Key Lime Cove Rachael Strecher / Chicago Tribune
A view of the lobby at Key Lime Cove in Gurnee following the waterpark resort’s opening in early 2008.
A view of the lobby at Key Lime Cove in Gurnee following the waterpark resort’s opening in early 2008.
(Rachael Strecher / Chicago Tribune)
The agreement with Great Wolf runs until 2029, and includes a maximum of $18 million in tax revenue paid to the resort over that time period. The deal is structured differently than the one with Key Lime, Ziegler said.
For the first $1.1 million in hotel and resort taxes paid in a given year to Great Wolf, the resort will get half and so will the Village, $550,000 each. Any hotel or resort tax collected above $1.1 million per year will all go to Great Wolf.
"The better that they do, the better the village does," Ziegler said.
Ziegler said in addition to the hotel tax of 5 percent and the resort tax of 2 percent, Great Wolf will generate a nominal amount of home rule sales tax, and a more significant amount of the village’s restaurant food and beverage tax, which is 1 percent of receipts. The food and beverage tax currently generated by Key Lime is about $30,000 annually. Ziegler said. Gurnee anticipates Great Wolf will generate $155,000 annually of this tax.
According to Jack Linehan, assistant to the village administrator for Gurnee, Great Wolf will only pay the 3 percent amusement tax on a small number of games within its facility, not on the pool activities.
"The water slides don’t count," he said.
Although Great Wolf will not pay the village a property tax because Gurnee does not have one, it will contribute to other taxing bodies, like local school districts, the Warren-Newport Public Library District and the Lake County Forest Preserves, according to Ziegler.
"All of those will see a small bump," he said, since Great Wolf plans to spend $65 million on renovations, increasing the property’s assessed value.
If the sale goes through, Linehan said, Key Lime will likely close this spring. Then Great Wolf will do its renovations for one year and, Linehan hopes, the resort will open in time for spring break 2018.
"There are no dates confirmed at this time," he said.
Linehan said he anticipates Great Wolf will stay in town even after it has received the entire $18 million in tax revenue. He said the company’s "significant capital investment" will entice it to stay after the hotel and resort tax incentive is gone.
Great Wolf owns resorts in several states, including in Wisconsin Dells, Wis., and also in Canada. It recently purchased Water Park of America in Bloomington, Minn.
Key Lime Cove opened in February 2008 as a $135.7 million facility with 414 guest rooms and a 65,000-square-foot indoor waterpark. Its principal investor was Dave Anderson of the Famous Dave’s barbecue chain, and future concepts called for Key Lime to add 200 additional rooms, a 30,000-square-foot indoor water park with a transparent roof and a 60,000-square-foot outdoor park, but those plans never came to fruition.
Mary McIntyre is a freelance reporter for the News-Sun.
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