Michael Day, president of Dial Family Resorts, wants to develop Shipwreck Falls, a resort/hotel/indoor waterpark in West Warwick. He was in the state yesterday to testify before the House Finance Committee in the hope of receiving a tax deal for the proposed development.

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The Providence Journal / Connie Grosch

PROVIDENCE — As state lawmakers cast about for ways to revive Rhode Island’s sinking budget, West Warwick politicians have a plan to help keep their town’s finances afloat: an indoor water park resort.

The $140-million deal, making its way from a Nebraska developer to West Warwick and now to the General Assembly, has come full of promises — new taxes, a boost to a blighted part of town and “the break” West Warwick has been looking for to revive its economy since the plan to build a casino there was shot down by voters in 2006.

The Shipwreck Falls proposal calls for a 65,000-square-foot water park just off Route 95 with an attached 347-room hotel and a variety of resort-like amenities. Visitors must stay in the hotel to use the park, which could limit local business, though town officials estimate that the attraction could still bring in $700,000 a year in property, hotel and meal taxes and create 250 jobs.

But the deal is contingent on an entity — such as the Town of West Warwick — providing $17.9 million in bond financing, the town waiving a portion of the taxes it might otherwise collect from the new tourist attraction, and the General Assembly signing off on the 25-year tax deal.

More specifically, the “tax stabilization agreement” locks down the tax value of the property at predetermined levels for 25 years and commits the water park owners to paying the balance of what they would otherwise owe the town in property taxes to whatever entity issues the bonds.

House Finance Committee members yesterday questioned the particulars of the deal, including liability if the project fails. The committee did not vote on the plan.

This is the second tax agreement lawmakers will consider for Shipwreck Falls. Last session, the Assembly granted “project status” to the deal, eliminating sales tax on construction materials with the idea that the park would create jobs and boost the local economy. That same designation eluded Johnston trucking company A. Duie Pyle and has become the subject of an FBI investigation amid allegations that West Warwick Sen. Stephen D. Alves spiked the bill.

But the water park’s tax incentive, coupled with yesterday’s potential financing agreement, is part of why Nebraska-based Dial Family Resorts Inc. said it targeted Rhode Island.

Harder to pinpoint is whether an indoor water park can succeed in a state that’s never seen anything like it. Bill sponsor Rep. Timothy A. Williamson, D-West Warwick, called the idea “an odd thing.”

Though rare in the Northeast, indoor water resorts have become something of a phenomenon in the Midwest, where colder seasons limited the scope of outdoor parks. The enclosed ones feature the waterslides and wave pools that have beckoned families to outdoor parks for years. The key, of course, is that they’re open year round as family-friendly vacation destinations, not unlike ski or golf resorts.

Nearly 100 indoor parks have cropped up in states such as Wisconsin and Ohio since 2000, according to the World Water Park Association. “They’re for families who are looking for something beyond an afternoon at the movies — maybe something they can do in a few days on a tank of gas,” said the association’s Aleatha Ezra.

Now, as indoor water park developers look to expand their reach to other parts of the country, the Northeast, with its long winter season and populated communities, is the next frontier.

“Combine the huge number of families in 150-mile radius and the fact that there are no water parks around and you’ve got Economics 101,” said Michael Day, Dial’s president. Day said he doesn’t believe the requirement that families must rent a room to use the park will impact popularity.

“When you see the growth of this type of product around the country, it’s obviously catching on as a trend,” said Martha Sheridan, president and chief executive officer of the Providence-Warwick Convention & Visitors Bureau. But “only time will tell” if the attraction can make a profit, she said.

In an interview last week, Williamson, who is also West Warwick town’s solicitor, raised concerns about the project’s viability. “Personally, I don’t know how it’s going to [work] because it just seems to be such an isolated attraction. If you and your wife have two small children … are you going to go to the Cape, or are you going to go to an indoor water park?” he said.

Still, he said the developers have “done all their studies and they’re ready to invest the money. And to tell you the truth, it’s much-needed tax revenue. It’s really what we’re getting out of there now versus what we’re going to get. So if they can make it a go, it’s great. To me it just seems an odd thing.”

Co-sponsor Patricia A. Serpa, D-West Warwick, reiterated that the town “desperately needs some relief and some new jobs.”

Scrambling to close school and municipal fiscal gaps, West Warwick officials too have pushed hard for the project, even playing down concerns about the recurring water shortages in Kent County and what they could mean for a park that depends on 120,000 gallons of water each day.

But as the proposed water park splashes toward reality, it may encounter another unexpected obstacle: Foxwoods Resort Casino has reportedly reached an agreement with a Wisconsin company to develop a similar indoor park and hotel near the casino. Unlike Dial Family Resorts Inc., which has little water park experience, Great Wolf, the Foxwoods developer, is a well-known industry name, having built a string of parks in the Midwest.

Dial’s only other foray into the water park industry, a plan to build a facility in Sandusky, Ohio, several years ago was put on hold because of changes in market demands, according to documents filed in that state.

With reports from Steve Peoples.

cneedham@projo.com