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Template For A TIF? As Outlet Mall Struggles, Osage Beach Ready For Developers

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Osage Beach Outlet Mall

OSAGE BEACH, Mo. — As more retailers leave the Osage Beach outlet mall, Osage Beach mayor Michael Harmison says the city is more motivated than ever to find a solution for redeveloping the once-bustling retail center.

Since developments of this scale often happen as public-private partnerships in the form of tax increment financing (TIF), Harmison says he's taking a more proactive stance. He has directed the city’s Economic Development Director Mitchell Moon to work with city staff and assemble what is essentially a TIF template, to help streamline the process with a potential developer.

TIF agreements generally have two components:

1. Reduced taxes — The developer negotiates with taxing entities to pay property taxes at a reduced amount as the property’s tax base grows thanks to the development. Those dollars are instead funneled toward paying-off the cost of infrastructure that was part of the overall development.

2. Bonds — Cities or counties may use their bonding authority to help developers get more favorable bond rates, but the city or county does not have to be “on the hook” to pay back those bonds, even if the project was not completed. Cities or counties may choose to backstop the bonds if they see the project as critical. (In 2022 the City of Osage Beach raised concerns that the failure of a city-bonded project could impact the city's bond rating and thus future ability to obtain future bonds at optimal rates, even if the city were not on the hook to pay back the bonds. Horizon Development did not ask the city to backstop its preconstruction bonds in its 2022 TIF application, however the city made clear its aversion to preconstruction bonds. In a recent interview, Harmison reiterated, "The board has made it very clear that they are anti- preconstruction bonds.")

Many of Lake of the Ozarks’ largest retail centers have happened with the help of TIF: Prewitt’s Point (from HyVee to Lowe’s), Dierberg’s Lakeview Pointe, Eagles Landing, Wal-Mart, Osage Commons (Hobby Lobby and related retail space). Most recently, The Preserve at Sycamore Creek apartment complex was approved for development using a Chapter 353 tax abatement agreement, which is similar to TIF.

Harmison says he knows of multiple developers interested in redeveloping the outlet mall, and he has been in communication with them as well as with the corporate offices for Simon, which owns the mall but is seeking to sell it. Thus far the only developer who has publicly advanced a plan for the mall is Horizon Development, headed up by the Foster family. Dan Foster is a well-known condo developer throughout Missouri, and his son Chris Foster developed Rock Island village — an assisted living facility in Eldon — and served multiple years as the head of the Santa Monica Pier Board in Santa Monica, Cali., where he helped spearhead the revitalization of the Santa Monica Pier.

Plans proposed by Horizon, in partnership with Legacy Development out of Kansas City, were submitted to the city in early 2022, but negotiations between the city and the developers came to an abrupt end that summer, with each side blaming the other. However, Chris Foster says Horizon has regrouped and is working to obtain financing for a revised plan. He tells Lake Expo he hopes the City and Horizon can let bygones be bygones and work together for the future success of the mall and the community at large. Mayor Harmison agrees. When Lake Expo asked the mayor whether he thought the city could work with Horizon in the future, he said yes, adding, "There won’t be any ill feelings." Harmison said the city is eager to work with any developer who brings a legitimate, executable plan.

For now, the mall is still on the market, as Horizon and other developers work behind the scenes. Foster met with city staff in January to discuss Horizon’s new plan. Harmison also told Lake Expo he has also been in continued talks with other developers who have expressed interest in the mall.

Meanwhile, Harmison acknowledged the city’s TIF policy may see some changes this year.

After negotiations with Horizon ended in 2022, Osage Beach elected officials and staff came together for a work session in the fall, to consider whether the city’s TIF policy was too strict. The meeting came at the request of multiple aldermen, made during a board meeting.

During that work session, which was also attended by local developers, the primary question was: Is Osage Beach’s comparatively strict TIF policy keeping developers away? Aldermen acknowledged the city competes with areas like Branson and St. Louis for development, especially projects focused on visitors and tourism. They heard input from multiple developers including Chris Foster and Gary Mitchell — whose massive, planned Arrowhead Centre development broke ground in 2015 but has so far only seen the construction of Arrowhead Senior Living — and a letter to the board from The Staenberg Group (Osage Commons development) was read aloud by Harmison. While plenty of ideas were brought up during that work session, Harmison acknowledged the city has not taken any action to revise its TIF policy since then.

"That will happen… I’d say in the next two or three months," he told Lake Expo.

He noted the policy is only a guideline and the city board has the prerogative to make agreements outside its parameters, but also acknowledged the policy communicates what the city is willing and unwilling to do: a point multiple developers made in providing feedback about the policy.

In light of that, and in light of the disappointment of 2022, Harmison said the city is now being proactive: the outlet mall TIF template being drawn up by Moon will, Harmison hopes, clearly communicate to developers what the city wants and is willing to give, in order to help a project at the outlet mall succeed.

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