Lake Ozark takes a proactive approach to casino

Lake Ozark aldermen voted unanimously to approve the first readings of two ordinances that bring the Osage Nation casino one step closer to reality.

At the start of the Nov. 4 special meeting, attended by around 30 people, City Administrator Harrison Fry provided an overview of the ordinances.

He explained that the two “unique but interconnected agreements” establish a framework for revenue sharing to the city, municipal services given to the nation at their site and infrastructure improvements that would serve both parties and the community at large. 

“I want to be very clear, as is the case with all of my staff reports to the board, this is not intended to be an endorsement of their project or to be considered an inclusive or exhaustive list of the impacts of the projects. There's over 1,000 pages online in their environmental assessment that cover those impacts at a much deeper level,” Fry said, adding that the 27 acres of land purchased in 2021 by the Osage Nation must be transferred to federal tribal trust status by the Bureau of Indian Affairs before any development can proceed.

The summary indicates the Osage Nation intends to develop a 150-room hotel with a pool, fitness center and 6,000 square feet of meeting space. The project will also include a 40,000-square-foot gaming floor containing 750 Class II gaming devices, which does not include table gaming (Class III). 

According to the American Gaming Association, Class II gaming includes bingo and non-banked card games. Class II slot machines, which can be found in gas stations and restaurants around the Lake, are hooked up to a server which controls what machines will win and how much will be paid out. Tribes do not need to enter into any agreements at the state level to conduct Class II gaming under IGRA. Instead, tribal governments are responsible for regulating Class II gaming with NIGC oversight. Class III gaming may only be established in a separate agreement with the state of Missouri once federal approval is granted.

Fry said the Osage Nation will “likely construct a temporary gaming facility on a much smaller scale immediately when federal approval is given while they begin construction on the full project.” He also reminded those in attendance that the city does not have a formal role in the approval process.

“So that kind of brings us to what we're in front of today. Mayor Ridgely was elected in April and one of his first items of priority was to begin conversations with the Osage Nation in good faith. In May of this year, myself, Mayor Ridgely, and Attorney (Chris) Rohrer began meeting with Osage Nation representatives to formulate these agreements. Our guiding principle throughout was trying to create an agreement that was as close as possible to the implied agreement that we have with other businesses and properties within town, i.e., if you own a home in Lake Ozark, you pay property taxes annually and you receive services in exchange for that. If you own a business within city limits, your customers pay sales tax to us and you receive police, water, fire, etcetera. We did not want to have a vending machine style line-item cost structure that could become outdated over time,” Fry said, adding that Alderman Krista Watts also got involved in those discussions. “Just a few months ago, the city engaged a firm that specializes in tribal law to protect our interests and clarify some restrictions that govern such agreements.”

Summary of the two agreements

• The agreements will be effective upon approval and execution by both parties, and the property is taken into trust.
• The Osage Nation agrees to remit to the city an amount equal to 2.5 percent of adjusted gross receipts (gross receipts from Class II gaming, less winnings paid to wagerers) on a quarterly basis, with payments made on the first business day of each calendar quarter.
• Osage agrees to collect a 1 percent Resort Fee on paid (not “comped”) hotel room transactions and remit it to the city, also on a quarterly basis. 
• The city will provide water and sewer services, and the Osage Nation will pay the in-city commercial rate for both. 
• Osage will be responsible for any needed water and sewer improvements to any infrastructure located within the Osage Property boundaries. The City will be responsible for providing any necessary infrastructure improvements outside Osage property boundaries but within city.
• Osage will work with the city and/or the relevant utility providers to relocate existing utilities to accommodate the new construction.
• The city will be responsible for any road and/or traffic improvements with the following exceptions: Osage agrees to install and/or fund the installation of a designated westbound right-turn lane on Bagnell Dam Boulevard and additional traffic control devices, based on future traffic demands.
• Although the Osage Nation isn’t required to follow the city’s building codes, they actually follow a newer version of the International Building Code than the city uses.
• A full range of law enforcement services will be provided around the clock by Lake Ozark Police Department at the same level and quality as the city would provide to other properties and residents within city limits. In return, the Osage Nation will pay $100,000 annually in quarterly installments made on the first business day of each calendar quarter.
• Osage is not using the Osage property for any diesel and/or gasoline and/or ethanol fuel sales. Additionally, Osage is not constructing or operating a convenience store or a discount package liquor and tobacco store to serve the public on the Osage property. Osage will sell items typically found in full-service hotels and resorts such as alcohol and tobacco to its guests. During the project's construction, Osage may, at its discretion, set up a temporary structure to sell these items at retail to its patrons.

Fry said although the sovereign status granted by the federal government won’t require the Osage Nation to collect and remit the 2.75 percent retail sales tax required elsewhere in the city, “the additional 4/10 of a percent of gaming revenue, based on their calculations, will generate funds in excess of what their projected retail food sales would be if taxed at the local rate. This is actually more financially advantageous to the city than if we just taxed retail sales on our historical basis.”

According to Fry, the city currently collects around $5.5 million in sales tax, $720,000 in water fees and $800,000 in sewer fees annually.

“Based on three-year projections, this agreement represents on the water and sewer side, the police dedication, the hotel transaction fee and the gaming share $1.9 million annually to the City of Lake Ozark once operations commence. This represents a significant increase to our revenue lines and will allow the city to increase both the quality and quantity of services that would be available throughout the community to residents and businesses alike.”

Those who voiced concerns mentioned the possibility of the Osage Nation building a gas station and convenience store, which was addressed in the agreement, the likelihood of reaching the projected revenues and the rights the Osage Nation had to the land. Fry said revenues for any business can be unpredictable. Rohrer said because the Osage Nation purchased the property, they had the right to develop it. 

Ridgely, Fry and Rohrer all said the city took a proactive stance to protect the city’s best interests, since the Osage Nation wouldn’t be required to pay anything to the city under federal law.

Fry said representatives of the Osage Nation plan to attend the next meeting, set for 5:30 p.m. Wednesday, Nov. 12. Meetings are normally held on Tuesdays but this year the meeting date fell on Veterans Day.

The ordinances and agreements are posted on cityoflakeozark.net/agenda/minutes under the “Packet” link. Visit osagelakeozarkea.com for the Osage environmental impact report.