Sales tax collections are expected to drop this year in a special district created to pay for nearly $50 million in local infrastructure projects.
Officials with the Poplar Bluff Regional Transportation District say this is not concerning, despite the closure next year of one of district's top 10 sales tax collectors.
Payments are already ahead of schedule, said Shannon Creighton of Gilmore and Bell, the bond counsel for the district.
Creighton met this week with the district's board of directors, who approved financial documents, including an audit for 2016 and revenues for the first 10 months of this year.
Collection of the district's 1-cent sales tax is estimated to reach about $3.1 million by the end of 2017, down from nearly $3.3 million the previous year.
"A lot of the revenues this year do not include a lot of the retailers that are coming online in the Eight Points development, so we anticipate revenue to increase," said Creighton.
Store closures are anticipated when bonds are issued, according to Creighton.
"Keep in mind that retailers are opening in other areas of the city too," she added.
Kmart will be shuttered by early 2018. It is among the 10 retailers responsible for nearly 62 percent of sales tax collection in the largest area of the RTDD.
The Eight Points location, meanwhile, has seen the opening in recent months of Ross Dress for Less and Five Below, among other storefronts. Construction of a gas station, restaurant and hotel are underway.
Bond issues are structured so that there is a cushion with respect to revenue generation, said Creighton.
The district has issued bonds twice, in 2012 and 2016. These bonds have maturity dates of 2042 and 2039, respectively.
A minimum of 74 percent of revenue expectations would have to be collected to meet those targets, said Creighton.
If the district were to collect 100 percent of revenue expectations, maturity dates would be 2031 and 2030, respectively, she said.
The 2012 bonds have already repaid approximately $6 million of the debt, more than $300,000 more than would be required under full revenue expectations.
The 2016 bonds are $5,000 ahead of full revenue expectations, with $155,000 paid to date.
"It is a very conservative estimate as to how much (bonds) are being issued and how much can be repaid," Creighton said. "They don't want the district to overissue, because then they potentially couldn't pay it back."
There is not a set principal amount that has to be paid each year, she said. Every dollar beyond the interest can go toward principal, she continued.
The 2017 payment on principal for both issuances will be just over $1 million, down from $1.5 million in 2016.
Interest payments are approximately $1.5 million a year, currently.
Money from the RTDD has paid for improvements to Oak Grove Road, the creation of Shelby Road and an Eight Points development loop, as well as an extension at Three Rivers College.
The district includes more than 150 businesses in the Oak Grove Road, Kanell Boulevard and Westwood Boulevard areas.
They are broken into Area A, where Kmart is located, and Area B.
Area A makes payments toward the 2012 issuance of $39.8 million in bonds. Rounding out its top 10 sales tax collectors are Aldis, AT&T Mobile, Colton's, Hefner Furniture, Home Depot, J.C. Penney, Kroger, Orscheln Farm & Home and Walmart Supercenter.
Area B sales tax collections cover the 2016 issuance of $7.1 million in bond. The following retailers are responsible for 97 percent of taxable sales in this area: Meek's Lumber Co., Dollar Tree, Dunham's Sports, Godfather's Pizza, 10Box, Hobby Lobby, Marshalls, Menards, Shoe Dept. Encore and Larry Hillis Dodge.
Once either area meets its obligation, sales tax collections can be redirected to the remaining debt for the district, Creighton said.
Area B also contains four retailers that are located in a second special taxing district, the tax increment financing district. The TIF was created to pay Eight Points developers for certain improvements.
Area B must make payments to the TIF totaling half of the sales tax collected by the RTDD at these four locations. The payment was approximately $183,600 in 2016. These payments were factored into the creation of the district, Creighton said.
The RTDD is overseen by a board of directors that includes city manager Mark Massingham, city clerk Pam Kearbey, city planner Dennis Avery, city council member and mayor Ed DeGaris and property owner Ken McVey.