Seagull Musings Column
Given the recent spate of publicity pertaining to the financial woes of the Wonders of Wildlife Museum, WOW, in Springfield, some probably expect another column cautioning about the possibility of the same thing happening at Branson Landing. The current publicity surrounding WOW is, however, only the report of the actuality of what past reports had forecasted was going to happen. Rather than be redundant let’s consider the possibility that the financing of the public portion of Branson Landing just might not be another WOW.
To a large extent it appears that WOW’s financial woes are based on the rather bizarre way its revenue projections were used in its financial planning. WOW’s planners had received two different studies from two different reliable sources, two years apart. The last study indicated a 40 percent drop in potential revenues from the first study.Did they use the lower estimate?No, they increased the newer lower estimate by about twenty percent and proceeded based on those figures!The rest is history.
In the case of Branson Landing the initial, unsubstantiated estimates by various developers and others were anywhere from 40 to 50 percent higher than those ultimately indicated in a study furnished to the City of Branson by a nationally recognized firm, ERA, in October of 2003.The difference is that in the case of Branson Landing, its planners are using the lower more conservative figure in the ERA study as the basis for their financial planning.
The Ole Seagull had an opportunity to meet with Alderman Dick Gass, City Administrator, Terry Dody and the City’s Finance Director, Deanna Schlegel to discuss the indebtedness and revenue projections for Branson Landing.Based on that meeting and documentation furnished by Schlegel it appears that, using the more conservative lower figures contained in the ERA Study, over a 23 year period, there will be a surplus of $86 million dollars more than will be spent in debt coverage. The surplus grows to $92 million if Tax Increment Financing is combined with an Annual Appropriation by the City guaranteeing debt payment.
“Hey Seagull, what’s this Annual Appropriation stuff, didn’t ‘they’ originally say that the City of Branson wouldn’t be legally responsible for the debt involved with Branson Landing?” It’s a matter of public record, sure they did.”Were they lying?” No, they just didn’t overly emphasize the fact that without such an appropriation financing for the project might be more difficult to obtain and that the rate of interest to get the financing would be much higher. For these and other obvious reasons, the Ole Seagull has never had any doubt that, when all is said and done, there will be an Annual Appropriation by the City guaranteeing the public portion of the Branson Landing debt.It just makes good business sense to do so.
In a column written in November of 2003, the Ole Seagull asked, “How financially viable would the project be if those figures were off 10 to 25 percent or more?What exactly is the “worse case scenario?”
According to the information furnished by the City, even if the revenues were off by 25 percent, over a 23 year period, there will be a surplus of $40 million dollars more than will be spent in debt coverage using pure Tax Increment Financing and a surplus of over $50 million if combined with an Annual Appropriation.
Well what about the “worse case scenario?”Although that is pretty subjective, if revenues were off 50 percent, over a 23 year period, there will be a deficit of about $13 million dollars using pure Tax Increment Financing and a surplus of almost $7 million dollars if combined with an Annual Appropriation.
“Well Seagull, that’s all well and good but how do we know if the figures are going to be right?”Unless we have a crystal ball we don’t, it’s just the process of using the best available information in an effort to make the decisions that have to be made.”Is there any better information available that could be used?”The Ole Seagull has been to a lot of meetings relating to the financing of the Branson Landing Project and has neither seen any nor heard anyone request to submit alternative information that could be used to make the financial decisions that have to be made regarding Branson Landing.
“Hey Seagull, how about this, only about 19 percent of the anticipated revenues from the Branson Landing Project will come from Convention Center visitors but it represents about 40 per cent of the project indebtedness. Why don’t we just forget the Convention Center?”Hum, the possibilities are endless aren’t they?
Gary Groman is an independent columnist and the editor of the Branson Courier and may be reached by clicking here.
