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Springfield, MO

Pro: Lack of education swayed city vote

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At a three-hour meeting held April 24, the Branson Board of Aldermen voted 5-1 against approving the request by David Cushman to form a tax-increment financing district that encompassed his 302 acres of land located at the western edge of Branson. Prior to the vote, the aldermen listened to two and a half hours of comments from the public, the majority of which were against the formation of the TIF.

The city held a previous public meeting to “answer questions about the TIF” on April 5. The structure and format of that meeting favored the opinions of people opposing the TIF.

After attending the meetings and examining the proposal, I think I understand why Cushman needed the formation of a TIF to make the project “bankable” and keep any investors’ financial risk to a minimum.

The 365-page TIF application, which cost more than $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. “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 aldermen, everyone seemed able to quote from the report and use it to oppose the formation of the TIF.

The reasons why Branson does not need the proposed TIF can be narrowed down to “I don’t want my tax money given to someone, so they can start a new business and get rich.”

As claimed by the objectors, this TIF is just helping the rich get richer.

I was surprised it turned into a public relations nightmare for Cushman. 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.

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

Branson officials had spent a year and paid $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 approval.

It was obvious 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.

The request to form a TIF is all about cash flow and the ability to borrow money. In the case at hand, before this commercial development can start, over a three-year period, $100 million needs to be spent to get the land ready to build. This is a nonincome producing expense that would be very difficult to finance.

By using the TIF concept, the developer can pledge taxes or fees collected only within the TIF to repay the bondholders. Other than a legally required paperwork approval to allow Cushman to attempt to raise $465 million of private capital, the cost to Branson’s taxpayers would be zero. It is unfortunate the community was not better educated on the details of the TIF’s tax issues.

While it was not the city’s task to defend the TIF, in all fairness, correcting publicly stated mis-information should have been taken. Emotional, rather than business logic, seems to have prevailed.

Michael Hynes lives in the Branson area and consults in the aviation industry. He can be reached at hynesdrm@aviationonly.com.

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