Outlet Mall Aftermath: Osage Beach Talks Tough TIFs And A Developer-Friendly Future

OSAGE BEACH, Mo. — Is Osage Beach’s TIF policy too strict? Non-competitive? Does it drive away developers?

Those questions and others swirled at the Thursday, Aug. 18, meeting of the Osage Beach Board of Aldermen. There, the board had planned to discuss and potentially vote on proposed changes to the city’s Tax Increment Financing policy. But after hearing from developers and real estate professionals, the board opted to delay those changes.

Alderman Kevin Rucker said it had been his idea to update and clarify the city’s policy, with the obvious context being the recent termination of a funding agreement for the development of a TIF between the city and a development group who hoped to revitalize the Osage Beach Outlet Mall. Rucker said he worked with City Attorney Ed Rucker on the draft.

Stakeholders Ask For Change

Before the board got to that agenda item, however, they heard from multiple citizens who expressed their unhappiness with the city’s approach to TIFs. First, real estate agent Mark Beeler — the listing agent for the outlet mall — explained his perspective on the timeline of events that led to the termination of the agreement. He faulted the city for voting to hire financial consulting group Columbia Capital, when one of the developers asked the city to choose a different consultant and the city had multiple other options. He also responded to Mayor Michael Harmison’s recent claim in a Facebook post that he had been contacted by two other developers interested in buying and developing the outlet mall. “None of them have contacted me,” he said. “None of them have made an offer.”

Beeler was followed by local real estate agent Susan Ebling. Ebling noted the outlet mall sits on land that had once been her family farm. She urged the city to take a developer-friendly approach, saying, “Our current TIF policy… is one of the most stringent, if not the most stringent in the state… and I would vehemently oppose any discussion that would make it more stringent.” Ebling said a developer with whom she had recently been in discussions had abandoned their plans to invest in the Lake area after seeing how the outlet mall TIF negotiations took place. She argued that if the city did not become more friendly toward TIFs, the outlet mall would sit empty for years. “I would request that you change the TIF policy to be more friendly to developers,” she pleaded.

Then spoke Dan Foster, a prolific local developer who was part of Horizon Developments, one of the two companies in a partnership that had been pursing a TIF agreement with the city. Foster told the board they’d been receiving “bad information,” and he indicated City Attorney Ed Rucker was the source of it. “He is a deal-breaker,” Foster said.

Following Dan Foster, his son Chris Foster spoke. Chris Foster asked the city to look into what the TIF policy was in other cities that Osage Beach might consider competitors, particularly into what percentage of project costs those cities set as a TIF cap. “Columbia and Branson are at 20%… the norm is in the 20s,” he said, contrasting Osage Beach’s cap of 15%. “Feel free to go look those up… when we’re talking about the limitations of a 15% TIF policy in Osage Beach, I’ve not seen one that is more limiting than our current policy,” he said, urging the city not to create a policy that limited TIFs any further.

Questions And Decision To Delay

As the board discussed the city’s TIF policy, it became clear they agreed more work was needed.

City Attorney Ed Rucker urged caution. “A sensitive topic like this… should be the subject of a broader discussion,” he advised the board. He also downplayed the import of a TIF policy, saying, “It’s a resolution, it’s not a binding piece of law… It’s a statement of your present intent.”

The question was whether this draft of revisions did indeed reflect what city leaders — and citizens — wanted.

Alderman Kevin Rucker, who had initiated the TIF policy revision process, mentioned, “things I felt need to be changed because of our recent process… things that weren’t followed.” Rucker also defended the city’s current policy, saying, “It’s a friendly policy… and if we’re the only ones that are this strict in the state, why is it that we’ve had the TIFs we’ve had?” He said he’s heard praise for the city’s policy from other cities, who wanted to use it as a model.

Alderman Bob O’Steen — who had been one of the two “No” votes when the city voted 4-2 to hire Columbia Capital — called the discussion a “Pandora’s Box.” He asked what the catalyst was for these changes, and whether any other policy was being used as a model. He called it a “disservice to our community” if the city were to approve a TIF policy without referencing the policies of “communities such as Branson.” O’Steen articulated three areas of the proposed updated policy where he said the city was “so out of line with what other communities are doing that we put ourselves at a disadvantage.” Among them: the 15% cap (O’Steen noted Jefferson City’s policy is 50% and Branson’s is 20% — “How did we derive 15%?” he asked), the clause about additional consideration given to projects over $25 million (he noted Branson does this for projects over $15 million), and the requirement that a project be essentially complete before any bonds could be issued (he said Jefferson City and Branson’s rules about bond issuing are much less restrictive).

Mayor Harmison then suggested the board should consider tabling the discussion for a separate meeting dedicated to working through the TIF policy. Before the board voted to do that (the vote was unanimous), Harmison gave the other board members the opportunity to speak to the policy.

Alderman Richard Ross put it plainly: “Perception is reality,” he said. “If we have a perception that developers think we’re trying to close the door on them, then we need to look at that.” Ross added, “We need to bring in the developer community and get their input on any decisions that we make.” He suggested the board could give a philosophical framework to city staff — such as, “We want a competitive policy” — and then have staff work-up some options.

Alderman Phyllis Marose said she too wanted to work on the policy more. She had come to the meeting prepared to vote 'No' on the proposed changes, she said, adding, “We’ve got to be more transparent, and try to make this as easy as possible for any developers.”

Alderman Tyler Becker, who is the board’s representative on the TIF Commission, said he had initially been okay with the proposed changes. But, he said, “If perception is reality, then we need to work on this.”

Alderman Kallie Schumann agreed as well that she would like for the board to have a workshop and get community feedback.

Mayor Harmison then spoke at length.

“I hold this very near and dear to my heart,” he said. “One of the things I ran on as mayor is pro-growth, pro-development.”

“We want the mall,” Harmison emphasized. “We all want the mall! People came up and talked about losing their health insurance. Nobody wants that to happen.”

He then recounted his perspective on the city’s dealing with Horizon Development (the Fosters) and Kansas City-based Legacy Development. He walked through a timeline of events, none of which contradicted those given by the Fosters. The two sticking-points were in the issuing of pre-construction bonds and the selection of Columbia Capital.

To the bond question, Harmison said, “They’re asking for millions of dollars in kickstart money.” He implied that worried him due to concerns over Legacy Development, who has past lawsuits related to some other projects. “When you hook your coattails on an organization that has so many legal issues currently…” he suggested.

To the choice of Columbia Capital to advise the city, Harmison said, “The developers are telling the aldermen who we can and cannot choose to examine their financials on this risk. Red flag on this one!”

Harmison lamented about “a lot of misinformation here. It’s frustrating for me. It’s frustrating when an article comes out from LakeExpo…” (referencing LakeExpo’s Editorial Opinion dated Aug. 16.)

He then referenced several points he had previously made on Facebook in his response to the LE editorial.

Harmison made a broad appeal to stop “pulling at the public’s heartstrings and making the city look bad…”

He also defended City Attorney Ed Rucker. “[Ed Rucker] is not the bad guy. When I ran for mayor, I did not know about this guy. I’ve gotten to know this guy,” he said. “Mr. Foster, this guy has not torn this deal down.”

Multiple times, Harmison emphasized his support for the Fosters. “We’re cheering you on still,” he said, noting he had recently met with Dan Foster in early July and both had expressed hopes that the project would find a way forward.

"Since then we've heard nothing," he said.

Harmison's clear perspective, and that of several aldermen, remains that the city did not kill the deal, but instead the developers walked away.

Ending his speech, Harmison repeated his plea for people to stop making the city look bad.

The board agreed to discuss potential changes to the TIF policy at a workshop meeting, on a date yet to be announced. That meeting will be open to the public.