Great America theme park buys city land for $150 million

SANTA CLARA — Cedar Fair Southwest, the owner of California’s Great America amusement park, has purchased the 112-acre theme park site for $150 million after leasing it for three decades from the city of Santa Clara.

The Santa Clara City Council on Tuesday approved agreements finalizing the sale with the Ohio-based company, which owns 13 amusement and water parks across the country.

“This is a once in a generation opportunity to solidify our control of 112 acres in the heart of Santa Clara,” Cedar Fair President and CEO Richard A. Zimmerman said in a statement Wednesday.

The theme park property was originally purchased by the city’s former Redevelopment Agency, entities which take portions of property tax money that otherwise would have been divided among local government agencies like schools and special districts, and use that money to improve blighted areas.

But after the state dissolved redevelopment agencies in 2011, cities and other agencies have been forced to sell off assets and properties to pay off existing debt, prompting the need for the city to unload its ownership of the Great America property.

The company has leased the land from the city since 1989, and its ground lease, which generates revenue for the city’s main parking lot and an electronic billboard, would not expire until 2074 had the arrangement continued.

The city took bids for the property last year, and the highest bidder offered $158 million. But the city and bidder couldn’t come to an agreement over the terms of the sale, particularly about long-term use of the city parking lot, according to assistant city manager Ruth Shikada.

Cedar Fair was the second-highest bidder, and as part of its existing ground lease had the first right to match the highest offer on the property. As part of the sale, the city will transfer the billboard to Great America and come up with a new agreement for use of the city parking lot.

The ground lease generates about $5.3 million annually in fixed rent and additional rent, an estimated $1.18 million this past fiscal year, based on a percentage of revenue generated by the park, money which goes back toward paying off redevelopment agency debts.

Because the money used to purchase the land was from the city’s former redevelopment agency, proceeds from the sale will be distributed among the various taxing government agencies. The city’s share of that is about 10 percent, or $15 million to the general fund, according to Shikada.

According to the company’s statement, Cedar Fair will finance the purchase of the property “through additional long-term borrowings.”

Contact Thy Vo at 408-200-1055 or tvo@bayareanewsgroup.com.