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Independence refinances Crackerneck debt

Updated: 2013-04-16T23:03:41Z

By BRIAN BURNES

The Kansas City Star

Independence is refinancing its debt on the shopping district that includes the Bass Pro Shops store.

The City Council approved an ordinance Monday night allowing the city to take advange of lower interest rates. The deal refinances debt-service payments on bonds issued to finance construction of the shopping area formally known as The Falls at Crackerneck Creek.

The refinancing will save an estimated $8.5 million in obligations payments over the next three fiscal years.

“The city has been working to actively limit the financial exposure to the taxpayers on this project,” said City Manager Robert Heacock.

In 2004, the Independence council approved about $72 million in tax increment financing for the project. The $171 million development, on the southwest corner of Interstate 70 and Interstate 470/Missouri 291, transformed a rugged undeveloped area into a 192-acre shopping district featuring an 18-acre lake and a 70-foot-tall waterfall.

The Bass Pro store opened there in 2008.

At the time, developers suggested that as many as 70 retail stores or restaurants could surround the store, generating sales and property tax revenues that would be used to pay debt service on bonds.

Although some stores and a restaurant since have opened — Mardel, Hobby Lobby, Cheddar’s — the subsequent lack of expected tax revenues forced the city to shoulder debt-service payments on the bonds. The first payment, in early 2011, was $3.5 million. Through this summer the total debt-service payment will approach $12 million.

The viability of the project remains strong, said Heacock.

“It has been more of a timing issue,” he said.

The project received a boost last fall, however, when officials announced that a Stony Creek Inn would be built on eight acres near the Bass Pro store. The Stony Creek development also includes plans for a conference center. The two facilities would allow city tourism officials to bid on hosting events that it previously could not consider.

“That really elevates our opportunities to market that trade area,” said Heacock.

Byron Constance, an Independence lawyer who is a member of the five-person investment group, Crackerneck Creek LLC, said he was gratified with the refinancing.

“We are very pleased that the city feels it is in a position to do that,” Constance said.

Constance said he expects construction to begin on the Stony Creek project within three months. “They are completing the architectural details now,” he said.

The refinancing approved Monday adds three years to the term of payments. But, Heacock said, it also positions the city for further refinancing of other Crackerneck Creek obligations. The city will direct half of the savings from this refinancing to the unassigned fund balance of the city’s general fund.

A fully funded balance, Heacock said, will appeal to ratings agencies. That, in turn, will provide for more more favorable interest rates.

“Interest rates are less than than they were, so it is a good time economically for us to restructure the payments,” Heacock said. “Again, our primary concern is on completing the project.”

To reach Brian Burnes, call 816-234-4120 or send email to bburnes@kcstar.com.

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