Bonds are cornerstone of plan to build Nebraska water park

Bellevue, Nebraska, plans to issue $60 million of municipal bonds to build a 100,000-square-foot indoor water park as a draw for visitors and their money.

Inspired by a Texas water park and managed by the same company that runs that park, American Resort Management, the new water park will form part of an entertainment district that Bellevue hopes will attract tourism revenue to the area, according to Harrison Johnson, the city’s director of economic and community development.

“Bellevue is looking to expand the entertainment and recreation options for our residents [and] attract tourism from roughly 180 to 250 miles away, while generating revenue to fund further development of our parks and reduce the burden on property taxpayers,” Johnson said.

The city, seven miles south of Omaha, has about 63,000 residents and is anchored by Offutt Air Force Base.

The city had $73.2 million in outstanding bond debt on the books Sept. 30, 2022, according to its most recent audited financial statements. Of the $60 million in new bonds, $55 million will go toward the costs of building the water park and $5 million will go toward buying the property where it will be located.

Bellevue is establishing what is known as a “good life district” – a creation of Legislative Bill 727, signed by Nebraska Gov. Jim Pillen on June 6, 2023, which also enabled bond financing of state freeway projects – in a bid to help fund the construction of the water park.

In good life districts, municipalities are able to cut the state sales tax in half, to 2.75%, then levy an occupation tax of 2.75% that generates additional revenue for the city while keeping the development tax neutral.

According to October 2023 guidelines from the Nebraska Department of Economic Development, applicants for good life district funds “must certify by an economic impact analysis that any anticipated diversion of state sales tax revenue will be offset or exceeded by sales tax paid on anticipated development costs.” Racetracks and casinos are excluded from consideration.

“In our case, we’re using it to fund the development of our water park project and the infrastructure for our entertainment district, NC3 Project and the Inland Port Authority,” said Johnson.

Through the good life district, Bellevue will divert 50% of the park’s sales tax revenue to fund the park’s operations. The city estimates that will bring in $900,000 per year, according to the Omaha World-Herald, with the occupational tax bringing in an estimated $1.8 million annually. The city reportedly expects those revenues to more than cover its bond payments. 

“While sales tax revenue will back the bond issuance, the City anticipates that occupation taxes and sales revenue from the Water Park itself will fund the bonding costs,” according to the staff report for the Feb. 6 meeting at which the City Council approved the bond ordinance.

D.A. Davidson will be underwriter, according to the staff report.

The overall entertainment district is based on the “live, work, play” model in which people can walk between work, home and recreation opportunities, Johnson said.

“The water park will be roughly around the area of Highway 75 and 34. It’s a mostly agricultural area adjacent to some residential and industrial development,” he added. “The City is working closely with property owners who are very excited about putting a project like this on their land.”

How successful good life districts will prove remains to be seen. Legislators appear to be working out the kinks in the new development tool.

State Sen. Lou Ann Linehan, who shaped the Good Life Transformational Projects Act in Legislative Bill 727, last month introduced Legislative Bill 1374. The bill looks to establish local sources of revenue for good life districts to supplement the sales tax revenue. The authority to appropriate those local revenue sources would derive from a resolution that local voters would have to approve.

“Municipalities in Nebraska are unable to effectively assist the development within good life districts formed pursuant to the Good Life Transformational Projects Act because of their inability under Nebraska  law to raise sufficient capital to replace the state sales tax which is reduced when a good life district is established,” the new bill reads in part.

“Without an efficient replacement of such sales tax with local sources of revenue,” it goes on, “development within good life districts will fall short of reaching the full potential intended by the Legislature when it enacted the Good Life Transformational Projects Act, resulting in lower sales tax revenues for the state.”