Branson Landing sales tax falls short of debt service

Branson’s waterfront shopping, dining and entertainment district known as Branson Landing has not been generating the sales tax revenue needed to fulfill debt payments on bonds issued to support its development, according to a May 21 report by State Auditor Tom Schweich.

The audit of the Branson Landing Transportation Development District revealed that the $2.2 million generated in sales tax revenue during 2010 and 2011 was insufficient to cover its debt service. However, the district received a “good” rating, because the city of Branson dipped into the district’s reserve funds to cover the payments.

In 2011, more than $54,000 was pulled from the reserves, and another $160,000 was allocated for the June 1 payment. The district is $220,000 short of making the payment, and the city siphoned nearly $60,000 from a May revenue check to cover the most recent debt payment. Since 2007, the city has subsidized the Branson Landing TDD by $2.75 million.

The $425 million Branson Landing includes more than 20 clothing stores such as Victoria’s Secret and Coldwater Creek, 14 restaurants including Black Oak Grill and Joe’s Crab Shack, two Hilton hotels and a parking garage. The Branson Landing TDD, which is located within a tax increment financing district, generated $1.2 million from the 1 percent TDD sales tax last year, with half going to the TIF district.

The city manages the TDD, which was formed in 2005 to help fund construction of the outdoor retail center on land owned by the city. Businesses operating within the TDD collect the district sales tax to help fund $42.6 million in debt service during its 30-year payment schedule.

City officials, who were not in office when financing was established, told Springfield Business Journal last week Branson Landing revenue projections were overly optimistic when the complex financing structure was erected prior to the center’s 2006 opening.

“Branson Landing is not earning the revenues that were projected from the very beginning, but I don’t know that we can say those projections were accurate. I think they were way too high,” said city Finance Director Jamie Rouch, noting the projections came before the Great Recession.

According to a Branson Landing feasibility study and a city TIF report, TDD revenues have come up short by at least $430,000 each year and by $2.75 million cumulatively the past five years. Since 2007, Branson Landing’s first full year of operations, TDD sales tax revenues have totaled $5.8 million against projections of $8.5 million through 2011.

According to a memo of explanation to bond trustees written by Rouch, the TDD’s reserve fund was replenished in April with $54,000 in Branson general revenue funds.

“This is not new news to us,” city Administrator Dean Kruithof said. “We’ve been dealing with this a long time.”

Branson Mayor Raeanne Presley called the early projections “very optimistic” but said the city has been handling the issue appropriately and pointed out that the audit report contained no findings. According to the report, the “good” designation indicates the entity is well-managed, and there are no significant deficiencies in legal provision, management practices or internal controls.

The audit report states the Missouri Development Finance Board issued roughly $176.3 million in Infrastructure Facility Revenue Bonds on behalf of the city for the redevelopment of the Branson Landing area.

According to the city’s five-year TIF report, Branson Landing debt service on three infrastructure bonds – including the TDD bond issued in 2005 – totaled roughly $11 million per year in both 2010 and 2011. Kruithof said funding for all debt service payments comes from a variety of sources, including sales and property taxes.

He said just because sales tax revenue generated at Branson Landing has not lived up to projections does not mean the development is a failure.

“The Landing is vibrant. We see a lot of stores staying there long-term. The financial projections when the entire development was put together were simply too high,” Kruithof said.

He noted the TDD was established, in part, as a way to lure Bass Pro Shops to the development.

Bass Pro Shops spokesman Larry Whiteley declined to disclose store revenues, but he said the company has not been disappointed.

“We are pleased with our sales at this location,” Whiteley said via e-mail.