Revenue not enough to pay its bond debt; new stores coming
GONZALES — A Gonzales finance official said it is going to take the addition of a large “big-box” retailer in the taxpayer-financed Cabela’s shopping complex to keep up with the project’s infrastructure debts.
Cabela’s opened in late 2007 just as the national economy was taking a nosedive. After the resulting slow development start that the seller of hunting and fishing gear was financed to attract, the addition of new businesses has picked up over the past year and a half at the site off Interstate 10 and La. 30 in Gonzales.
In addition to Cabela’s, fast-food restaurants, a Don’s Seafood, Logan’s Roadhouse and three new hotels are open in the 80-acre complex. Ground has been broken on two more hotels.
But a new financial audit and other city figures show the independent board that issued $49.6 million in bonds in late 2008 to build the Cabela’s building, roads and other infrastructure is increasingly falling behind on its debts.
After six years of falling short on the interest and principal payments on the 30-year bonds, the Gonzales Industrial Development Board accumulated a net deficit of $10.2 million in the fiscal year ending May 31, the 2012-13 audit says.
“It’s not even close. It’s never been close to paying a monthly payout,” said Clay Stafford, Gonzales’ city clerk and finance director. “The hotels are not going to get it done. You need another huge box in there. You would need another Home Depot to get it.”
A share of city and state sales tax revenue collected from Cabela’s and new nearby businesses was pledged to pay off the bonds under an arrangement known as tax increment financing.
Under the TIF, the city and the state each set aside 1.5 cents of the sales taxes collected from a special district encompassing the development and overseen by the industrial board.
The TIF was pitched as a way to draw a “destination” retailer such as Cabela’s with new sales tax generated from the project, a win-win deal, backers argued, with no up-front cost to the taxpayer.
But that TIF project and another in Denham Springs drew criticism that taxpayers should not subsidize low-paying retail jobs nor favor one business over another.
The industrial board’s arrears do not pose a credit risk to the city, Stafford said, but the insufficient debt payments are a sign the project has not met early projections.
Stafford said when the project was envisioned, Home Depot was planned for the site. The do-it-yourself home retailer built in Gonzales, but across I-10 from Cabela’s and outside of the TIF district.
Brent Rhodes, a real estate developer and manager of the entity that owns land around Cabela’s, said Monday that a strip mall has just been finished and more retail development is coming.
“Seven new business are about to be built or opened out there, as we speak. That’s not counting the hotels,” Rhodes said, adding another strip center is also planned.
Rhodes said he is hopeful to see a turnaround in finances in a year and a half. About 42 acres remain undeveloped.
Stafford said there is still time for the board to catch up with its debts.
Rhodes said Cabela’s and the group he manages, Carlisle Resort LLC, knew going in that the bonds would not be paid off in the first eight to 10 years because of the amount of sales tax pledged to the bonds.
The Bass Pro Shops TIF project in Denham Springs has more sales tax revenue pledged, Rhodes noted.
“We knew that on the onset. That’s not even an issue. We don’t even worry about it,” Rhodes said.
With those expectations, Cabela’s and Carlisle Resort have continued to hold the bonds and do not plan on calling them, Rhodes said.
Carlisle holds nearly $7.5 million in bonds; Cabela’s holds nearly $42.2 million.
Through the end of the fiscal year, Carlisle Resort was owed $3.2 million in back principal and interest. Cabela’s was owed $17.8 million, board debt payment figures show.
Joe Arterburn, a spokesman for the Sidney, Neb., hunting and fishing equipment retailer, declined comment Friday.
According to the 2012-13 audit, the board took in $1.9 million in revenue, primarily in sales tax collections, in the 2012-2013 fiscal year.
Even though that represents an increase of 15 percent from the previous fiscal year, the industrial board still came up short $3.6 million on its annual expenses.
In prior fiscal year, 2011-2012, the district was in the hole just under $7 million after falling short $3.9 million on annual expenses.
Cabela’s also annually pays the board about $380,400 to compensate for lost property tax revenue because the board owns Cabela’s building and land. The payments make up almost all of the remainder of the board’s revenue.