That's because you've left the paragraph break/line break that's creating the empty line outside the IF field. Instead of being constructed thus:
{IF{MERGEFIELD Bus_Address_2}<> "--" "{MERGEFIELD Bus_Address_2}"}¶

tt should be constructed thus:
{IF{MERGEFIELD Bus_Address_2}<> "--" "{MERGEFIELD Bus_Address_2}¶
"}
Scenarios like this are actually dealt with in the Mailmerge Tips & Tricks thread, in the note under Mailmerge Empty Line Suppression

__________________
Cheers,
Paul Edstein
[Fmr MS MVP - Word]