WEST WARWICK — The town will not have to count tax revenues from the coming $150-million 7th Wave water park and resort in its annual calculations to ensure that it does not exceed the state cap on property tax levy increases, thanks to legislation that won the General Assembly’s blessing last week.

Aside from setting aside 7th Wave revenue from the general property revenues, the legislation also creates an exemption for taxes collected from the project that gives the town more discretion on how to spend the money.

The water park project is getting some of its financing through tax increment financing. For a given number of years, the local tax bill for the development is frozen, while the additional taxes it ordinarily would generate will be used instead to pay off bonds for the project.

“Normally, in the case of TIFs, the money has to be put back into the TIF district,” said Town Solicitor Timothy A. Williamson. “This bill allows us to take the money out of the district.”

Formerly, all of the money received as a TIF payment would have to be applied in calculating a municipality’s levy. The exemption granted next not only means West Warwick won’t have to apply the TIF money toward its levy, it won’t have to use the money only in the project area.

All other tax increment finance projects in the town and throughout Rhode Island will be subject to another piece of legislation that passed through the General Assembly on the last day of the session. That bill, co-sponsored by Rep. Elizabeth M. Dennigan, D-East Providence, exempts tax increments from being included in the levy calculations as well, but under very specific circumstances.

The difference between the statewide bill and the West Warwick exemption lies only in how the money can be spent. The statewide bill requires that if the money collected from a given project forces the town to go over the state mandated tax levy cap, the excess must be used to pay off principal, interest or other costs related to that project.

The West Warwick bill exempts the water park project from that statewide law, making it the only development in the state thus far to have such an exemption.

Dial Family Resorts, a Nebraska developer, plans to build a Hawaiian surfer-themed resort, including 409 hotel rooms, a 75,000-square-foot indoor water park and 12,000 square feet of meeting space. The 22-acre site, in the West Warwick Business Park, will also include a family dinner theater, a restaurant, lounges, spa, stores and an arcade.

The developer has said that, without the TIF program, the project would not have been possible. But without the exemption, the project wouldn’t have been advantageous for the town, said Town Council Vice President Peter F. Calci Jr.

“It would have been a deal killer,” Calci said. But because of the exemption, any TIF revenue beyond which is needed for bond payments can be used as the town sees fit. It could mean, for example, a new fire truck, upgrading the fire alarm systems in town buildings or implementing automated trash collection throughout the community.

tbuford@projo.com