Rancho Cordova is betting that movies, bowling and laser tag can shoot millions of dollars into the city's economy.
The City Council voted earlier this month to approve the 10-year-old city's biggest subsidy yet to a development project. Rancho Cordova will contribute $1 million in cash, $4.6 million of city-owned land and $775,000 in fee deferrals to help build a 72,000-square-foot entertainment center with eight movie theaters, 24 bowling lanes, a laser tag arena and a ropes course, among other attractions.
The $28 million center is being proposed by three companies for a 13-acre piece of city-owned land on Kilgore Road.
American Family Entertainment of Wyoming will run the facility. The company is developing the center in partnership with D&S Development of Folsom and Diede Construction, based in Lodi.
The developers involved with the project have a history of working with municipalities to tackle large projects. D&S Development has won praise for its urban mixed-use projects in Sacramento and was selected by the city to redevelop the 700 block of K Street into a promenade with housing, stores, restaurants and live music. Diede Construction is working with the city of Galt to build a two-story bowling alley and movie theater combo, a complex that's intended to be the linchpin of the city's downtown redevelopment.
American Family Entertainment has opened and operated several entertainment complexes throughout the country, although not any in the Sacramento area yet.
Rancho Cordova officials are so confident the project will succeed that the city has essentially become an investor. Starting five years after the facility opens, the city will begin drawing 10 percent of its profits as repayment of the subsidy. The profit sharing will continue for 10 years, after which any additional amount owed will convert to a loan.
If the developers sell the project before Rancho Cordova makes its investment back, the city will receive 30 percent of the sale price.
Micah Runner, the city's economic development manager, said the city's $1 million cash contribution won't be made all at once, but will instead by doled out in three increments: $500,000 when the first phase of the project is completed, $100,000 when the project is half completed and $400,000 when it's finished.
"It's not like we give them a check for a million dollars and say good luck," Runner said.
In addition, the city is not on the hook for cost overruns should the project go over budget, and it's not responsible for paying the facility's debts if it goes belly up.
Developers and city staff who have been working on the project say that possibility is unlikely, however. Two rounds of market research completed before Rancho Cordova struck the deal predict the complex will be successful because city residents frequently travel to neighboring towns to visit movie theaters and bowling alleys, said John Anderson, senior vice president for business development at Diede Construction.
By building an entertainment complex in Rancho Cordova, the developers and the city stand to recapture that market and keep the business within the city.
"The numbers were very supportive," Anderson said.
Rancho Cordova, which currently lacks a movie theater and a bowling alley, also stands to gain an attraction that will draw businesses and residents into the city, which should bolster tax revenue and serve the community better, Runner said.
The project is expected to bring in $2.15 million in tax revenue within 30 years of opening and generate $20 million of economic activity for the community in that period.
The development team is contributing $4 million to the project, and already has investors lined up who will chip in the additional $16 million necessary to get the project completed, Anderson said. They plan to begin construction in spring 2014.
Call The Bee's Benjamin Mullin, (916) 321-1034.