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Analysis: What went wrong with Branson’s TIF?

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Last edited 3:47 p.m., April 25, 2018

Editor’s note: Branson resident Michael Hynes examined the tax increment financing proposal for Branson Adventures and attended the public discussion with city officials. Here’s a summary of his analysis after last night’s 5-1 vote to deny the development application.

The 365-page tax increment financing application, which cost over $300,000 to produce, may have been impressive to the consultants who created it, but it appears to have been overkill and beyond what the average person could digest.

I am sure it was to developer David Cushman’s dismay that the report was used as fodder by all who opposed the TIF for his Branson Adventures proposal. The report contained about 100 pages of complex financial data, most of which was in print too small to read.

“Was the data correct?”

“Was it too optimistic?”

“Was it too pessimistic?”

Those were questions asked but never answered by the city. Depending on who was addressing the Branson Board of Aldermen, everyone seemed able to quote from the report and use it to oppose the formation of the TIF.

Why stop the TIF?
There were many reasons given why Branson does not need the proposed TIF. They could be narrowed down to two:

1. “I don’t want my tax money given to someone, so they can start a new business and get rich.” The statements that Cushman was asking for “the taxpayer’s money” and “city of Branson funds” to build his project were never disputed. Someone from the city should have addressed this claim.

2. The strong belief held by the objectors was that the business activities planned within the TIF would cannibalize income from existing businesses.

Taxpayer fact and fiction
As claimed by the objectors of the new TIF in Branson, this TIF is just helping the rich get richer. The phrases “using taxpayers’ money” or “city funds” to help Cushman has become the cry of the opposition to the TIF.

I was surprised the TIF application and approval process was allowed to turn into a public relations nightmare for Cushman.

Back in 1952, when the TIF concept was first created in California, the public did not know much about it or how it worked. The use of a TIF quickly spread across America, with Missouri being a leader in TIF formation. However, over the years, the use of a TIF to help fund development of blighted areas has led to much abuse.

For Branson Adventures, the city had spent almost a year and paid about $10,000 for experts to study the TIF proposal. The conclusion was that the TIF would be good for the citizens and businesses in Branson. The special TIF study committee appointed by the city also recommended that the TIF project be allowed to progress.

It was obvious that the average person did not understand how “the use of taxes raised within the TIF” really works. The TIF allows a governing body, which is set up to manage it, to establish and collect “sales or use taxes” from the people who do business only within the TIF.

Factually, the TIF would never receive any “tax money” or “funds from the city of Branson.” This fact was never addressed by any city staff or the aldermen.

Concerns of cannibalizing sales
On cannibalizing tourists and local customers from existing Branson businesses, the strongest objections came from motel and hotel owners. There may be roughly 155 motels and hotels in Branson.

The lodging facilities to be built in the TIF are for high-end customers willing to pay up to $300 per night. It does not seem logical that tourists, who are now paying an average of $50 per night, would be cannibalized by the hotel planned to be built in the TIF.

The TIF consultants estimate that as many as 600,000 new tourists would come to Branson as a result to the activities planned within the TIF and new marketing dollars being spent by the TIF. Would not many of these new tourists prefer lower cost hotel/motel rooms? Is the potential loss of business by existing hotels/motels in Branson the correct or legal grounds to stop the TIF?

The impact the TIF might have on existing Branson restaurants, the zip lines and other attractions also was voiced. Like opposition to many economic expansion projects, “Not in my back yard” thinking prevailed at the two public hearings.

Emotional, rather than business logic, seems to have prevailed.

Michael Hynes can be reached at hynesdrm@aviationonly.com.

Comments

2 comments on this story |
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Dr. Skeptical

Could it be that it failed because no one had any real equity in the deal?

Wednesday, April 25
Connie Crawford

First, let me state I do not live in Branson and very rarely visit the attractions. I have no dog in the race. However, I am a stickler for facts and the impartial reporting of facts. I think the author of the article either deliberately or obtusely missed several facts in order to write this article. From my reading of the article several times, it appears the author was pushing an agenda. For what reason, I have no idea. Perhaps he really wanted this new attraction so he could visit it with his family frequently. Perhaps he just dislikes Branson city and the citizens.

He states that "Factually, the TIF would never receive any “tax money” or “funds from the city of Branson.” In pure verbiage, this is true. However, part of the taxes paid from the incremental taxing would not go to the general fund nor school funding. They would go to re-pay the developer for his putting in infrastructure and improvements. In essence, that money would never be in Branson's coffers. That money would go right back to the developer. Perhaps the people who spoke up in disagreement for the TIF were jumping over the entire explanation of how the TIF works and going to the main end point - where the incremental taxes collected go back to re-pay the developer for the work he put into the project. Basically, repaying the developer for the development.

The entire paragraph about tourists not wanting to pay $300 a night versus the going rate of $50 night for hotels now is entirely speculative and an opinion based upon no facts. There are several hotels in Branson that costs more than $50 a night. There are also hotels that cost $25 night in the extended stay hotels. How does the author know that no one who currently stays in Branson will not pay more for a night at the new development? Perhaps it would be worth it for all the bells and whistles at the new attraction. I feel the author was demeaning and trying to make Branson City and citizens look stupid and anti-progress, saying they couldn't recognize the great good this TIF would create.

The author should look back at several other TIFs the city has granted. None of those can be considered a great success. Why throw bad money after good? If, and definitely if, this new development was such a money-maker, why shouldn't the developer put his money where his mouth is? Why does he feel the necessity of having a TIF if this idea is such a guaranteed lottery winner, money-wise?

I wish the author would stick to facts - and only facts - and not subject readers to his opinions, when he doesn't even know the entire story behind the decision. Unless this was an op-ed piece; then he is certainly entitled to spout his opinions willy-nilly, even if he doesn't have all the facts to back his opinions up. That's the beauty of op-ed articles.

Thursday, April 26
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