Back in January, I penned an OpEd in support of the proposed 2,000 seat amphitheater to be located in Osage Beach between Beach and Sunset Drives adjacent to Backwater Jacks. In the OpEd, I simply outlined a scenario whereby an amphitheater in use for no more than twelve days per year (1% of the time) would impact the neighborhood far less than almost any other use imaginable. And the positive economic impact such a facility would bring to the community would be significant. The OpEd is available online at https://www.lakeexpo.com/real_estate/an-argument-for-the-backwater-jack-s-amphitheater-big-benefit/article_43ab3a14-4325-11ea-9385-ff5377a1bf4c.html.
On July 14th, after a six-month delay due to the pandemic and other procedural and legal missteps by the City, the Osage Beach Planning Commission finally voted 5-2 in favor of recommending to the Board of Aldermen that the project be approved. This vote is a positive outcome for the local residents nearby and the citizens and taxpayers of Osage Beach in general.
Osage Beach needs such bold new projects. Growth in the city has stagnated in recent years. Back in December, long before we heard of the Corona Virus, the Board of Aldermen passed a 2020 Operating Budget projecting a mere 1% increase in the rate of growth over 2019. Adjusted for inflation, this equates to a negative rate of growth in real terms - so the budget is actually shrinking. When the pandemic hit, the City of Osage Beach correctly assumed there would be a major revenue shortfall given the lockdown and the number of businesses that were forced to close. Approximately half of the City’s revenue is acquired directly through sales taxes. Although the City never formally revised the 2020 Operating Budget, at the May 7th meeting, the Board of Aldermen discussed the matter and agreed to a revised forecast of a 15% reduction in revenue due to the crisis. Based on this forecast, they correctly took numerous steps to offset the deficit by cutting expenses, deferring certain projects and furloughing some staff. As May and June passed, the actual revenue reduction was only about half of that forecast - around 8%. A huge reduction, but certainly less than originally feared.
But what about the actual shrinkage of the local economy? Sales tax revenue and Local Area Gross Domestic Product (LAGDP) are not well correlated. For example, a furloughed employee buying goods and services in the City of Osage Beach using unemployment benefits and/or stimulus funds is certainly generating sales tax revenue but adding nothing to economic growth. Similarly, a business owner forced to close may keep the essential services going in the shuttered shop via savings, borrowings, CARES Act stimulus funds, etc. Once again this creates some short-term sales tax revenue but contributes almost nothing to LAGDP. Finally, the initial pandemic “hoarding” that was occurring (whereby consumers buy more goods and/or services than they would otherwise) also distorts the true impact.
The actual shock to (Lake Area) LAGDP economic growth is going to be severe, unprecedented and yet unquantified. Our modeling indicates that the actual 2020 contraction to LAGDP will be at least 10% and could be as much as 20% depending on how the pandemic plays out. This should be at least very troubling to most and positively terrifying to many – especially if you are an economist. Moreover, new economic growth will be difficult to generate for a long, perhaps even a very long time as the unprecedented losses are absorbed. If LAGDP shrinks by the upper end of our estimated range, we would go back to 2014 levels of economic activity – six years of growth wiped out in barely nine months. Assuming the pandemic is in its waning days and the economic contraction is at the lower end of our forecast range, we would still go back to mid-2017 economic levels. And this is the best-case scenario. We can hope for the latter, dread the former and most likely end up with something in between. Any of the scenarios equate to a dire economic circumstance post pandemic.
Which brings me back to the proposed amphitheater project. Given the dire economic circumstances, the Osage Beach Board of Aldermen must have an extremely compelling reason to vote against the project. What does not qualify as a compelling reason to object is a handful of neighbors worried about a dozen days per year of increased traffic and higher noise levels or a longstanding grudge against the developer. The Board should be elated that a private developer, with a very successful track record, is willing to risk more than two million dollars of his own private capital to create a brand new facility in the community. As I have been attending planning board meetings in recent months, there most certainly has not been a line out the door of other developers willing to take such risks. Who can blame them given the economic circumstances? As previously stated, Osage Beach economic growth is stagnate and negative in real terms even before the pandemic. Over the last year, prior to the pandemic, numerous businesses within a mile of City Hall have closed their doors. And these are not all small strip center boutique businesses with a normally higher turnover rate. This includes major names such as Wood’s Supermarket (the only supermarket on the West side), Ezard’s Ace Hardware (a business with a strong decades long legacy in the community), and Fastenal (a fast-growing multi-national company). The list goes on. My attendance at recent Board of Aldermen Meetings reveals far too little discussion regarding economic growth. By my estimate, city employee benefits, sewer and utility maintenance, regulations on shouses (commercial buildings with living quarters) and street repairs have all trumped the time allotted to economic growth discussions and ideas. The citizens and taxpayers deserve better from their elected officials. To her credit, Ward II Aldermen Phyllis Morose has reached out to myself and others in the community to make economic growth a primary objective. One of her objectives is to revive the dormant “Citizen’s Advisory Committee” so that it can be reconstituted with individuals with economic expertise that can make recommendations to the Board. She should be commended for such efforts and the other Aldermen should follow her lead.
I made the following statement in my January OpEd before the pandemic, but it is worth repeating here: “For communities to continue to grow and prosper, they must accept creative destruction and welcome new ideas. The proposed amphitheater is one such new idea.” This is even more vital now, given the economic carnage the pandemic has created. The amphitheater in and of itself cannot entirely offset the economic damage caused by the pandemic. But it is a start. Of course, if successful the developers stand to benefit financially from the project – as they should given the capital they will have risked. But so too will the City of Osage Beach benefit and most importantly its citizens and taxpayers.
The only other economic contraction that can even be compared to our current situation is the Great Depression of the 1930s. It lasted a decade, and this one could too. To finally get economic growth moving again way back then, it took bold new ideas and projects. Huge new infrastructure projects, both public and private were undertaken. Indeed, the construction of Bagnell Dam was a new idea that had some local opposition but was completed with vast benefit to the entire community. Bagnell Dam generated massive economic growth at that time and continues to contribute economically to this day – almost a century later.
We strongly encourage the Osage Beach Board of Aldermen to grant final approval to the proposed 2,000 seat amphitheater. Any other outcome would be against economic development and a disservice to many that you have been elected to serve.
Timothy P. Hand
TNT Solutions LLC