Independence bond move aimed at protecting general fund, basic services
The city of Independence will borrow $45 million to refinance several bonds for the Falls at Crackerneck Creek development, extending some bond payments by six years to 2051, but with the plan that bond payments should not divert funds from basic city services.
The City Council unanimously approved the deal Monday. The transaction has been in the works for well more than a year and much discussed at a handful of council meetings over the past several months, with interest rates at generally historic lows. The bonds will go for sale in June.
The commercial development off Interstate 70 and Missouri 291, commonly called the “Bass Pro TIF” for its anchor store, started a couple years before the 2008-09 recession, financed by city-backed bonds. While Hobby Lobby and Mardel soon joined Bass Pro, ultimately joined by other restaurants, stores and a hotel, the tax revenues failed to cover bond payments in the early years, and the city paid the balance from the general fund – preserving a good bond rating but diverting money that could have gone for police, fire and other services.
Since a second refinancing in 2015, and aided by tax revenues from other more-profitable development areas in southeast Independence, the city has not had to make a debt balance payment. City staff and consultants say Monday’s refinancing is the best plan to keep it from becoming more of a millstone, as the city faced some payments in a few years that far exceed projected revenues.
“If we did not do anything,” said Bryan Kidney, the city’s director of finance and administration, “we were projecting that revenues were not enough to cover payments in 2024.”
The deal covers three bond series that have an outstanding balance of more than $37.8 million, and interest will be no greater than 4.25 percent. Two of the bond series that will be refinanced have interest rates starting above that. In essence, the city will be making debt payments for a longer time, but those payments will be smaller – and ideally covered by tax revenues from the Crackerneck Creek and other development areas. The city will use some tax revenues from other, more profitable areas to help cover the debt payments.
In 2026, the Crackerneck Creek tax-assisted financing expires, so other taxing jurisdictions such as the Blue Springs School District and Mid-Continent Public Library will receive their full property tax allotment from that area, and the city’s portion will go fully toward bond payments.
Kidney said the city will look at refinancing another series of Crackerneck Creek bonds from 2015 in the next few years.