Let’s make this easy. Here are four business matters to watch in 2014.
Local municipalities are challenged amid unfunded mandates and financial strains.
Branson tourism is in question after Southwest Airlines decided last month to leave the city airport in June.
Residential development positions itself for a return in the post-recession era.
And John Q. Hammons Hotels & Resorts finds its way forward following last year’s death of John Q. Hammons.
Go.
1. Municipal challengesThe business of running a government is especially challenging this year, and the Missouri Municipal League has identified three key issues: deteriorating infrastructure, the Internet sales loophole and unfunded mandates.
Springfield City Manager Greg Burris said the city and county face an estimated $1.6 billion in upgrades during the next 15 years to meet a host of air, water and waste mandates from state and federal regulators.
At a Jan. 8 meeting of the Joint City-County Planning Task Force, Burris said the city, county and City Utilities are working with the U.S. Environmental Protection Agency and the Missouri Department of Natural Resources to develop a holistic approach to meet requirements.
“We want to continue to be good environmental stewards of the community, but at the same time, we have to introduce affordability into the equation because it doesn’t do any good for environmental mandates to come into the city, the county or the utilities if they can’t be afforded,” Burris said.
Some entities, such as Greene County, have tried to close what is considered an Internet tax loophole to shore up strained finances and level the playing field for brick-and-mortar retailers. With the county’s effort failing before voters in November, the issue is likely to come up again.
2. Branson tourismWith a new roller coaster unveiled at Silver Dollar City last year, a new thrill coming to White Water in 2014 and Southwest Airlines (NYSE: LUV) leaving Branson in June, the billion-dollar tourism town is ratcheting up a notch.
Lynn Berry, director of communications for the Branson/Lakes Area Convention & Visitors Bureau, said roughly 6 million people visited Branson through October, compared to about 4.5 million during the same time period the prior two years. While annual numbers won’t be in place for another month or so, Berry is optimistic about 2014 but cautioned that wintry weather might dampen the typical November and December traffic.
“Christmas is big in Branson,” she said. “I think we’ll get back on an even economic keel this year.”
Comparing CVB data released this month and numbers from the mid-2000s, some key demographics are changing.
Tourists are spending almost $200 more per party today – $974 per party last year – but slightly fewer families are visiting, 38 percent, compared to 41 percent eight years ago. A fact that could help mitigate the loss of Southwest Airlines, 92 percent of tourists travel to the city by car, compared to 82 percent in 2005.
Other demographics are steady. Berry said the average length of stay is four days, which is unchanged from 2006, and the average age of adult visitors is 57.5, which has been trending down in recent years. Still, theater is king, and 80 percent of visitors attended shows last year, most taking in three shows per trip, Berry said.
Last month, aviation analyst Michael Hynes of Branson-based Hynes Aviation Service Industries said he expects the cash-strapped Branson Airport to find a replacement for Southwest by the time the airline exits the market in five months.
The clock is ticking.
3. Residential construction2014 could be a return to the good old days of the mid-2000s for area residential contractors, or at least, a return by some to speculative construction.
Before the calendar turned, Stu Stenger of Ron Stenger Cos. announced the residential and commercial development firm’s plans to build a three-phase, 82-acre subdivision just east of U.S. Highway 65 on Division Street. Construction is expected to begin by summer.
A rebound is in order, and Home Builders Association of Greater Springfield officials point to positive movement in residential building permits to carry along. On the heels of an 18 percent increase in 2013 across Barry, Christian, Greene, Stone, Taney and Webster counties, HBA officials project another 18 percent increase in residential building permits this year.
Kenny Bussell, CEO of Bussell Building Inc., said his firm built 84 new homes in 2013, and he’s expecting the same this year. With an estimated market value up 24 percent to $16.4 million, compared to Bussell Building’s homes in 2012, he expects the market value of the homes the company constructs this year to rise 10 percent or more.
In the second half of last year, Bussell’s company bought 19 lots at Kelby Creek subdivision in Nixa out of foreclosure for an undisclosed amount. With one lot sold and construction starting soon, he plans to bet on the market and build seven others without buyers in place.
“We are getting inquiries daily,” Bussell said. “I think we’ll build that out by the end of the year.”
Contrary to trends, Bussell continued to develop speculative homes during the recession, but now he feels more comfortable with taking on risk.
“We probably backed off and did 15 to 20 specs a year, and now we are doing between 45 and 50,” he said. residential building permits to carry along.
4. Hammons falloutWhat happens when a billionaire dies? Squabbling, for sure. A struggle for power? Check. That’s the story line with hotelier John Q. Hammons.
Much about the future of John Q. Hammons Hotels & Resorts is unknown following the May death of the 94-year-old founder.
What is known is that the company and its new CEO, Jacquie Dowdy, are at the center of a few lingering lawsuits.
Jonathan Eilian, a private investor who helped start Starwood Hotels and Resorts Worldwide, is behind three lawsuits filed against Dowdy and JQH Hotels in the last three years. All three take issue with Dowdy’s appointment to lead the company and question the value of Hammons’ estate, for which CEO Jacquie Dowdy serves as successor trustee.
In the latest suit, New York lender SFI Belmont LLC seeks to recover $140 million on a $275 million loan backed by the Hammons estate. The loan was made to Hammons Hotels Development in 2005 through Eilian-led Atrium Lendco LLC and its subsidiary, iStar Financial Inc. Eilian is a principal of Atrium Lendco, and iStar Financial Inc. is the sole member of SFI Belmont.
The case was filed in Cook County, Ill., in August, and is ongoing, according to court records. The last actions were taken on Dec. 18, when a pair of continuances was allowed for Jan. 16 and Jan. 29, according to electronic court records.
JQH Hotels Vice President Phill Burgess said by email the company would not comment on SFI or any ongoing lawsuits. He said Hammons had an estate plan in place for years, and Dowdy was capably leading the business in his stead.
Hammons didn’t have children, and with his wife suffering from Alzheimer’s disease, it is unclear what will become of his fortune – the value of which is a matter of public speculation.
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