$63M Apartment Complex Planned At The Lake

OSAGE BEACH, Mo. — The Lake of the Ozarks' housing shortage could meet some relief with a new, planned 268-unit apartment complex. But the plan to pay for it includes major property tax breaks, and Camdenton R-III School District Board President Gail Griswold says some in the district have concerns.

The Preserve at Sycamore Creek would be developed by Tegethoff Development, would be located on Nichols Road across from Osage Hatchery (between Highway 54 and Osage Beach Elementary School). Its estimated cost is $63 million.

Last week, Osage Beach alderman approved the first reading of Bill #22-74, an ordinance that:

• declares the land where the complex would be built (Nichols Road) to be blighted,

• approves the development plan,

• approves the development agreement, and

• authorizes the City to enter into a development agreement and take certain other actions in connection with it.

Jeff Tegethoff, founder of Tegethoff Development, says his project would help address the Lake of the Ozarks housing crisis. Tegethoff says he first learned about the Lake's housing shortage from his wife, who was an occupational therapist in Osage Beach when he met her.

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“There was just no housing, and as I met more people, more of her work colleagues, and ultimately at the time that CEO of the hospital, I started hearing the story that housing was the number-one recruiting hurdle to get people to move full-time to the Lake for the hospital,” Tegethoff said. “And I started talking to larger employers down there, and I kept hearing the same thing.”

The development is planned on the site of the former Sycamore Creek Golf Course and will encompass a total of 22 acres. The apartment community is planned to include 10 four-story buildings with 116 one-bedroom units, 140 two-bedroom units and 12 four-bedroom units for a total of 268 total units.

Tegethoff says the complex will include community amenities such as a clubhouse, pool and splashpad, fitness center, dog run and surface level parking. Rent is expected to start at $900 a month and go up to $2,000 a month for a year lease.

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Funding & School Concerns

Tegethoff and the City both explained that the City is extending two financial incentives for the development:

1) Sales tax exemption on construction materials

2) Property tax abatement

“So basically, the incentives that we're getting is we're getting a sales tax exemption on construction materials, so materials that we buy outside of the immediate area, we will get a sales tax exemption on,” Tegethoff explained. “And so we will get a 100% real estate tax abatement for the first five years, and then a 75% for 8.5 years and then a 50% for the third five years and 25% tax abatement for the final five years... and then after 20 years, we'll be paying 100% of our real estate taxes.”

In the Development Agreement between the developer and the city is included the sale of Taxable Industrial Revenue Bonds, with a maximum principal amount of $63,000,000, "for the purpose of facilitating a sales tax exemption on construction materials for the Redevelopment Project."

In a response to LakeExpo's inquiries about the bonds, Mayor Michael Harmison replied, "The bond transaction is a mechanism available under state law to facilitate the sales tax exemption incentive. The sales tax exemption is the only purpose of the bond transaction. It is very different than other bonds that a city, school district or other governmental entity might issue to fund governmental projects – for example, no tax dollars will be used to repay these bonds and there are no actual cash proceeds from the bonds. In the Development Agreement, the Developer has agreed to indemnify and hold the City harmless from any issued associated with the entire project, not just the sales tax exemption."

According to alderman at the last Osage Beach Alderman meeting, this is the first time bonds of this type have been issued in the city.

The development is located in Camdenton R-III school district, just a short walk from the district's newest campus, Osage Beach Elementary School. In fact, Tegethoff says they hope to construct a sidewalk between the complex and the school. Camdenton R-III School Board President Gail Griswold says she expects the new apartment complex will increase district enrollment, and that's why she's concerned about the property tax abatement included in the funding package: a large portion of property tax revenues goes to the school district. Griswold says the district was not consulted about this funding plan before last week's vote.

"While we understand that there is a need for affordable housing, Camdenton schools would have liked to been considered for feedback when discussing tax abatement proposals and how that would impact the school so that the district can plan for the increase of students without the tax funding," Griswold said. "This project is near one of our smaller schools and we would need to plan for that increase. It will [affect] staffing, class sizes, and potential need to readdress boundary lines." She added, "The school has always taken a position of dissent when a tax abatement is for residential housing." Recently, Griswold, who is a member of the city's Tax Increment Financing (TIF) commission, expressed her concerns over the property tax abatement being considered in the funding plan to redevelop the Osage Beach Outlet Mall, as those development plans included more than 200 apartment units. Negotiations between the outlet mall developer and the City have since ground to a halt.

When asked if the City had reached out to the school district about possible tax abatement, Mayor Harmison responded, "The school district was provided a cost-benefit analysis, indicating projected revenues, net of abatement." But Griswold contends that the first she had heard about it was when the City dropped off an information packet to the school district after last week's board of alderman meeting.

"There is a concern that the school had not been contacted before this hearing was put on the city agenda and still has yet to be asked for feedback. A work session with the school would have been appreciated. We hope that the City of Osage Beach would consider the school impact and listen to our concerns from a planning perspective," Griswold said.