Cliff Sain’s excellent report on Branson Landing in the July 18 Springfield News-Leader contains statements that illustrate some of the dilemmas faced by developers and local governments when planning a large project.
Branson’s aldermen (none of whom were in office when the Branson Landing project was approved for construction) have chosen to take $1.4 million from the city’s general fund and $1.2 million from the city’s transportation fund to make up shortfalls in TIF revenues to make debt service on the bonds used to finance the construction of the Branson Landing infrastructure and related street improvements. In addition, part of the TIF-secured bonds issued to finance Branson Landing also refinanced debt incurred for the decade-old Branson Meadows project, which has always been a weak generator of sales tax revenue.
The TIF-financed bonds are not general obligations of the City of Branson, which means that the bondholders have no claim on any revenue other than that generated by the increase in the taxes pledged for debt service. But if Branson’s TIF bonds are allowed to default, the city gets a black eye.
In this post, I’ll look at the implications of statements made by alderman Mike Booth and developer Rick Huffman, as quoted by Cliff Sain’s article.
Alderman Mike Booth: “If we didn’t have to spend $1.2 million (from the transportation fund), then maybe that road in front of your house could be paved better.”
The traditional role of local government is to fix potholes and keep the snowplows running. Nobody says this isn’t a proper role of government. And citizens complain to their aldermen when the streets in front of their houses aren’t in good repair. Big projects, at times, divert money from taking care of the needs of the little people.
Rick Huffman of HCW, Branson Landing developer, made several incisive observations, including these:
“The city wanted to get as much cost into the project as possible because they get to use state sales taxes.
“Visitors to Branson Landing spend money and generate sales taxes outside the TIF district and might not come to Branson at all without the Branson Landing project.
Through HCW’s efforts, Governor Holden and the state TIF commission approved the Branson Landing project so that the increase in state taxes in the project area, not just city taxes, could be used to repay the TIF bonds.
With this incentive, and probably for other reasons, Huffman strongly makes the point that the city was given the opportunity to use money that would have otherwise not been available to pay the remaining debt on city projects having little or nothing to do with Branson Landing, such as the city hall expansion, a fire station and Branson Meadows.
As Sain points out, it’s debatable whether the Branson Landing visitors spend enough outside the TIF district to make up for the effect of Branson Landing and Branson Hills shopping centers in pulling shoppers away from the Strip and other locations outside the TIF.
Branson residents and elected officials, like most Americans, would say they’re for small government and letting markets make big decisions. But Branson’s city officials were tempted by Branson Landing, because it offered the opportunity for redeveloping the Taneycomo lakefront, which needed rejuvenation, and bringing people to Branson who wouldn’t otherwise come to Branson, because of the lack of convention facilities and the nature of the existing shopping and dining opportunities. It also allowed the city to repay some old debt with a new source of revenue.
The TIF-financing, especially with the state’s portion thrown in, proved irresistible. Branson Landing has brightened the image of Branson and made Branson a much more attractive destination. Those faced with allocating the city’s revenues will never know whether Branson Landing, as built, was the best choice, but they’ll have to play the hand they were dealt or step aside.