Chateau on Lake of the Ozarks enters final approval stages

Nearly a year to the day after John Q. Hammons Hotels & Resorts acquired a 30-acre Osage Beach lakefront parcel, the city’s board of aldermen is expected to approve plans for a nearly $100 million, 15-story, 320-room luxury hotel.

Springfield-based Hammons Hotels acquired the peninsula property for Chateau on Lake of the Ozarks on Dec. 12, 2006, and a city vote is scheduled for Dec. 6.

To help foot the bill, Hammons Hotels is seeking $6.5 million from the establishment of tax increment financing and a community improvement district, both of which would be active for about 20 years.

Hammons Hotels submitted a 77-page redevelopment plan outlining why TIF and CID monies are justified. The document argues that the land is “blighted” and could be improved by the hotel, which company officials are predicting will generate about $25 million in annual revenues.

Osage Beach does not collect property tax, so the increase in sales tax revenue could be a boon for the city.

The city keeps 2 percent of the 7.225 percent base sales tax rate, so the hotel could boost city coffers by $500,000 a year.

“Hammons is going to bring a new breath of fresh air to Osage Beach,” said Alderman John Olivarri, who also sat on the 11-member TIF commission formed to review Hammons Hotels’ case.

The last time Osage Beach issued a TIF, Olivarri said, it resulted in a retail development that attracted Lowe’s, The Home Depot, Target, Marshalls and Outback Steakhouse in less than five years. Olivarri feels Chateau on Lake of the Ozarks will have a similar effect.

TIF, CID questions

However, city leaders are debating whether Hammons Hotels should receive TIF and CID monies for the project. The blighted designation is at the heart of the discussion.

The land, which was zoned for commercial use before Hammons Hotels bought it, contains fewer than 10 vacant houses that are each about 30 years old, according to Scott Tarwater, senior vice president of development for Hammons Hotels.

The company’s redevelopment plan, which was crafted by law firm Husch & Eppenberger, claims that the land generates tax revenue on a per-square-foot basis of 33 percent to 94 percent less than neighboring parcels, thus dragging down the city’s economy.

“It just makes sense to put a beautiful new project – a big revenue-generating and tax-generating project – there rather than old homes that are leaning to one side,” Tarwater said.

That argument has convinced most Osage Beach officials, whom Tarwater called “professional, forward-thinking businesspeople.” The TIF commission unanimously approved the proposal Oct. 15, and the Osage Beach Board of Aldermen granted first-reading approval on Nov. 1. Aldermen voted 5-1, with Eric Medlock casting the lone opposing vote.

Alderman Medlock said that the property is not blighted, and the project shouldn’t receive TIF and CID monies.

The property is surrounded on three sides by Lake of the Ozarks and is about a mile from Osage Beach Premium Outlets. It’s already visible from the well-traveled Grand Glaize Bridge, part of U.S. Highway 54, and a new Highway 54 expressway will allow traffic to exit at the property. Construction on the new Highway 54 began this year.

“All through-traffic through Osage Beach will see this property from that bridge,” Medlock said.

“Not only is it a prime real estate location, but when over half the property is still covered by trees and is forested, to me that’s not blight.”

Procedural matters

Despite Medlock’s stance against giving Hammons Hotels TIF and CID monies, the measure is expected to pass after its second reading during the Dec. 6 board of aldermen meeting.

The proposal overcame one minor hiccup when the TIF commission ordered Hammons Hotels to recalculate some figures in the proposal after it first viewed the document at an Oct. 3 meeting.

The changes were necessary because financial calculations were based on an old timetable that had the hotel opening in 2009, Tarwater said.

If approved, the $3.7 million TIF would capture 50 percent of the increased sales taxes and county property taxes that are generated from Hammons Hotels’ redeveloped property. That money would help Hammons Hotels pay for the development.

The $2.8 million CID would add 1 percent to the base sales tax rate for that property, according to city officials.

“I see it more as a buy-in from the city on the project itself, as opposed to the actual financing,” Alderman Olivarri said.

If approved, construction on Chateau on Lake of the Ozarks could begin in spring with an anticipated opening in March 2010. Hammons Hotels officials initially intended to break ground six months after the land purchase.

The hotel, which will feature a spa and more than 100,000 square feet of meeting space, is modeled after Branson’s Chateau on the Lake, which Hammons Hotels founder John Q. Hammons opened in 1996.[[In-content Ad]]