‘We Got Behind.’ Developer Explains Why Work Stopped On $63M Apartment Project In Osage Beach

OSAGE BEACH, Mo. — Construction on a major new apartment complex at the Lake of the Ozarks’ has ground to a halt, and in an interview with Lake Expo, developer Jeff Tegethoff has confirmed the reason why.

The entrance to the construction site at The Preserve at Sycamore Creek — a $63-million, 268-unit complex slated to open this year — was blocked by equipment on Tuesday, March 12, with a “No Trespassing” sign posted.

Not a soul could be seen on the job site, except a lone electrician, sent to check on the status of equipment. He told Lake Expo the reason it was so quiet, and it’s what subcontractors and many in the Lake community have begun buzzing about: the money stopped flowing. He said his employer pulled off the job due to delinquent payments. He had heard the framing crews had wrapped up with what materials were available before leaving the site.

Subcontractors have been contacting local elected officials, worried that they’ll never be paid for what Lake Expo has been told is millions of dollars worth of materials and labor. On Tuesday afternoon, Lake Expo spoke with Tegethoff, who explained what happened.

What Happened

Tegethoff, principal of Tegethoff Development, says he ran into a funding gap between the portion of the project funded by his own equity and the remainder that would be funded by the bank. Tegethoff emphasized he was to blame for the cessation in funds, and he affirmed that the bank had already begun releasing funds to get caught up.

Jeff Tegethoff at The Preserve Groundbreaking — Jeff Tegethoff speaks at a groundbreaking ceremony in March 2023 for The Preserve at Sycamore Creek, his apartment development in Osage Beach.
photo by Nathan Bechtold

“We did get behind,” he acknowledged in the interview with Lake Expo. “It's a hundred percent my fault. We're in the process of righting the ship and expect to be a hundred percent caught up here over the next couple weeks.”

“I just want to make sure that people realize it has nothing to do with Thomas [Construction],” he said, referencing the general contractor for the development. “They've been great.” He said the team from Thomas Construction would be working with subcontractors to get them paid in the next two weeks.

Once contractors are paid, work is expected to resume on the project that has progressed quickly since the groundbreaking just over a year ago, on March 9, 2023.

The Preserve at Sycamore Creek - Groundbreaking — photo by Nathan Bechtold

Three of the apartment buildings have siding and at least one has functional lighting: visible from Highway 54 at night time. Five more are in various stages of completion.

Tegethoff acknowledged the situation was not ideal. But he added, “We're committed to keeping this on path… We’ve done over a billion dollars worth of development. We've never not completed a development.”

Tegethoff explained the payments go from the bank to a title company and disbursing agent, who then disburses to the general contractor, who disburses to the subcontractors. But he said he expected all subcontractors should be paid-up within the next couple of weeks.

The Money

Some in the community, after hearing work at The Preserve had stopped, raised concerns that Tegethoff had taken money from the city and then vanished. (Osage Beach used a Chapter 353 tax exemption to incentivize the development of The Preserve — an exemption that helps fund infrastructural portions of the project.) But he emphasized he has received no money from the city, and the economic development incentives would not kick-in until the project was completed.

“Any of the economic development tools that were used… none of them are checks written to me,” he said. “The projects have to be completed; there are development agreements in place. It’s not like I was given money by anybody, for these.”

He also explained how large projects like The Preserve at Sycamore Creek are financed: “Our equity goes in first. The bank doesn't say ‘Hey we'll put money in alongside of you.’ They say ‘You put all of your money in first then we'll put our money in.’ So that's what's been going on, and there's always a transition from when our equity goes in to when a bank comes along.”

However, he admitted, “It's typically not this disruptive, and we typically don't get behind, but we did… and it's a hundred percent on me. I don't want to put the blame on anybody else; the blame is not on a bank, the blame is not on Thomas [Construction], the blame is not on anybody: the buck stops with me. But also, we're in the process of getting that back on track.”