A recent column entitled “Australians did not get $5 million and other Branson Landing Info” contained, without editing or comment, four specific questions that the Ole Seagull had sent to Branson City Administrator Terry Dody and his response. Click here to view that column.
In his answer to the question relative to how much the city had spent on the project as of Nov. 30, 2004, Dody replied “the total spent by the City as of November 30, 2004, is $52,527,101. This number includes everything: land, financing costs, permits, feasibility studies, legal fees, professional services, demolition, capitalized interest, lobbying, etc., etc., etc.” The next question asked “Of that amount how much is the city of Branson and its citizens not legally obligated to pay?”
Dody responded, “The city of Branson and its citizens are not legally obligated to pay any of the above stated amount.” In substantiation he quoted the standard legal “boiler plate” language appearing on the approximately $77.3 million in bonds authorized thus far for the project by the Missouri Development Finance Board. The language quoted said that the issuance of the bonds is “not an indebtedness of the State of Missouri” or “the City” and “shall not obligate the State, the City or any other political subdivision to levy any form of taxation therefore or to make any appropriation for their payment.”
“But Seagull, doesn’t that substantiate that the city of Branson is not legally obligated to pay on the bonds?”
“Well, not really, but even if one took that position the ‘devil is in the details’ and, as Paul Harvey might say, ‘Now, here’s the rest of the story.”‘
When the issuance of the bonds for the project was being discussed back in 2001, at a public meeting, Dody said words to the effect that with the type of bonds being used to finance the project that the city of Branson and its citizens would be under no legal obligation to pay them because the investors assumed all the risk. Those words had scarcely been spoken when David Queen, an attorney from Gilmore and Bell, the city’s bonding attorney, very quickly pointed out the practical reality of the bond market.
Queen said that, although not legally obligated to do so, from a practical point of view, the city might very well want or have to assume some liability, such as an appropriation pledging payment on the bonds. As the Ole Seagull recollects, his rationale for such action was, among other things, to get a lower interest rate on the bonds, to make the bonds more marketable, etc.
“OK Seagull, let’s see if I have this straight, although the language of the bonds themselves doesn’t ‘obligate’ the city to make any appropriation for the payment of the bonds the city could do so if they wanted to for whatever reason, a lower interest rate, to make the bonds more attractive to investors, etc.?”
“That is exactly right.”
Although there was no legal requirement to do so, at a meeting held in conjunction with the initial bonding for the project, the Branson Board of Aldermen, for what the Ole Seagull believes was good reason, agreed to use appropriations to guarantee the payment of the bonds. Said another way, if the project doesn’t generate enough revenues to pay off the bonds the city will pay them from other revenue sources.
A Feb. 28 memo from Gilmore & Bell, presented as part of the public record for a meeting of the Tax Increment Financing Commission of the City of Branson held on Feb. 28, confirmed the fact that the City has assumed “debt obligations for the project based on the bonds that have been issued and will be issued.” The bonds that have “been issued” are the approximately $77.4 million in Series 2003A and 2004A bonds referred to by Dody in his response. Among the bonds yet to be issued is approximately $76.7 million dollars of Series 2005A bonds for which the same city obligations will more than likely apply.
“Wow Seagull, how can anyone say that the city of Branson is not legally obligated to pay any of the $52,527,101 spent on the project as of Nov. 30, 2005? If it looks like an obligation and has to be paid like an obligation isn’t it an obligation?”
“An Ole Seagull would think so. It reminds him of the old adage attributed to Abraham Lincoln, “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.”
