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Schlitterbahn Waterparks of Texas, a very popular water and entertainment park headquartered in New Braunfels, has been asked by four different
Schlitterbahn Waterparks of Texas, a very popular water and entertainment park headquartered in New Braunfels, has been asked by four different cities outside of Texas to consider building a park in their area. All the offers include some version of the following incentives: • Immediate cash incentive (year 0) • A 10% of first-year incentive as a direct property tax reduction for 8 years • Sales tax rebate sharing plan for 8 years • Reduced entrance (usage) fees for area residents for 8 years Table below summarizes the estimates for each proposal, including the present worth of the initial construction cost and anticipated annual revenue. The annual M&O costs are expected to be the same for all locations. Use incremental B/C analysis at 7% per year and an 8-year study period to advise the board of directors if they should consider any of the offers to be economically attractive. City 1 City 2 City 3 City 4 First cost, $ million 38.5 40.1 45.9 60.3 Entrance fee costs, $/year 500,000 450,000 425,000 250,000 Annual revenue, $ million/year 7.0 6.2 10.0 10.4 Initial cash incentive, $ 250,000 350,000 500,000 800,000 Property tax reduction, $/year 25,000 35,000 50,000 80,000 Sales tax sharing, $/year 310,000 320,000 320,000 340,000