Item 221/2025
Final
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
To:
Lisa L. Kim From: Ursula Luna-Reynosa
Dept:
City Manager Dept: Economic Development and
Housing
Date: 6/24/2025
Subject: Adoption of a Resolution approving the City Acknowledgment to Collateral Assignment and Agreement between the City of Garden Grove and GWGG, LLC. (Action Item)
OBJECTIVE
To request City Council consideration and approval of a Resolution approving the City Acknowledgment to Collateral Assignment and Agreement (the “City Acknowledgment”) between the City of Garden Grove and GWGG, LLC, a Delaware limited liability company, et al. (the “Owner”).
BACKGROUND
Great Wolf Lodge Southern California is a 60 3-room indoor waterpark resort that opened in 2016 at 12681 Harbor Boulevard (the “Hotel”). The Hotel is owned by GWGG, LLC, and operated by Great Wolf Resorts, Inc., which retains a minority ownership interest. Since its opening, the H otel has served as a significant source of Transient Occupancy Tax (TOT) revenue for the City.
In November 2024, the City Council approved a Restrictive Covenant Agreement (the “Agreement”) with the Owner pur suant to which the Owner agreed to construct and i nstall certain up grades equivalent to the current Great Wolf brand standards (the “Gen 4 Improvements”) the cost for which would be not less than $40 million dollars. In return, the City agreed to remit an amount equal to 40% of the resort’s annual TOT revenue for ten years (the “Covenant Consideration”), provided, among other things, the Hotel remains branded as a Great Wolf Lodge through at least 2041 and a 250 mile radius restriction.
On June 1, 2025, the Owner and MGWGG Investments, LLC (the “McWhinney Member”) executed a Collateral Assignment of Covenant Consideration in favor of the California Municipal Finance Authority (CMFA). CMFA intends to issue Limited Obligation Revenue Bonds (Covenant Consideration), Series 2025 (the “Series 2025 Bonds”), proceeds of which are to be used to reimburse the Owner for the cost of the Gen 4 Improvements. U.S. Bank National Association will serve as trustee under the related Indenture of Trust, also dated June 1, 2025.
Item 221/2025
The City is not a party to the Collateral Assignment.
DISCUSSION
The Series 2025 Bonds allow the Owner to finance a portion of the Gen 4 Improvements by pledging the Covenant Consideration as bond security and the source of repayment. This structure enables timely project completion, preserves the Great Wolf brand, a nd protects the City’s long -term revenue stream. To facilitate the closing of Series 2025 Bonds, the underwriter requested that the City approve and execute the City Acknowledgment which, among other things, approves the Series 2025 Bonds as required by t he CMFA formation documents.
FINANCIAL IMPACT
There is no financial impact to the City resulting from the issuance of the CMFA Series 2025 Bonds (the Bonds). The City will not be a party to the Bo nds and will have no obligation – financial or otherwise – related to their repayment. The issuance or non-issuance of the Bonds will not affect the City’s finances or credit rating in any way.
RECOMMENDATION
It is recommended that the City Council:
Adopt a Resolution approving the City Acknowledgment to Collateral Assignment and Agreement (“City Acknowledgement”);
Authorize the City Manager, or designee, to execute and implement the City Acknowledgment and any minor, non -substantive modifications necessary to facilitate the Collateral Assignment and ensure accurate payment distribution to the McWhinney Member or its affiliate, provided no material changes to the City’s rights or obligations result; and
Direct staff to incorporate the Covenant Consideration payment schedule into the Fiscal Year 2025–26 budget and future budget cycles.
By: Greg Blodgett, Deputy Director
ATTACHMENT(S)
1. Resolution
2. Collateral Assignment of Covenant Consideration