|By Andrea Jares, Fort Worth Star-Telegram, Texas|
Knight Ridder/Tribune Business News
Sep. 3, 2004 - The Gaylord Texan Resort & Convention Center on Lake Grapevine is contesting a $270 million appraisal, a tax fight that could affect Grapevine's ability to repay bonds that covered the costs for roads and other infrastructure for the opulent mega-hotel.
Gaylord sued the Tarrant Appraisal District in August. The resort contends that the property is worth $138,892,917, said John Marshall, the district's chief appraiser and executive director.
Greg Rossiter, a spokesman for Gaylord Entertainment in Nashville, Tenn., said the hotel hired its own appraiser.
"We're probably using different methodology and calculations, but the specifics of that are part of the appeals process, and we are engaged in that process and intend to see it through," Rossiter said. He said it is typical to seek a third opinion on such a hotel value assessment.
The district appraised the land and hotel as of Jan. 1, Marshall said. Since the hotel didn't open until April, the tax valuation next year will be higher to account for property such as stoves and furniture, Marshall said.
No meeting has been scheduled to resolve the issue.
Grapevine will set the tax rate this month that would determine how much Gaylord would pay in property taxes by Jan. 31, based on the valuation.
If Gaylord succeeds in getting the valuation lowered, it could mean that the resort's tax increment financing district will receive less money in January than it needs to make a bond payment, city officials said. If that happens, the city may have to dip into its own budget to make up the difference.
Grapevine set up the special taxing district in December 1998 to cover costs for improvements such as roads, utilities and a parking garage.
The taxing district is based on the hotel's having a value of about $270 million, City Manager Roger Nelson said.
"We're going to pursue this. We don't believe its value is $130 million," Nelson said. "We're going to pursue this to protect the tax increment financing district. We don't have much of a choice."
Until this year, the property tax revenue generated by the district was always less than what was owed for the bond payments. That was expected in the years that the resort was in development. To make those payments, the city took out more bond money than it needed for the infrastructure and used the extra, plus the interest accrued from the bond money not yet spent, Finance Director Fred Werner said.
This year was the first year that Grapevine met the bond payment without dipping into interest money. The city paid $1,883,000 on the bonds from the $1,952,000 generated by the tax district with the hotel valued at $108 million, Werner said.
Next year, the city will start making its first principal payments on the bonds, Werner said, making the amount due even higher: $2,613,000.
As of July, $1,270,000 in interest is left from investing the bond money, Werner said. Any more money to meet the bond payments would have to come out of the city's fund balance, which is money set aside for emergencies. At the end of September, the fund balance had $6,104,000, Werner said.
"We try to avoid spending the fund balance as a conservative management of city resources," Werner said. "If there were a spending of the fund balance, we would have to evaluate if that could be recoverable with the following year's tax rate."
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