During a visit to Springfield yesterday, Missouri Auditor Nicole Galloway bashed transportation development districts and called for a complete overhaul of the taxing program.
An audit conducted by Galloway’s office found taxpayers are culpable for nearly $1 billion in outstanding project costs for which they did not vote on and for which there’s little oversight or transparency. TDD laws, Galloway said, allow for “taxation without representation.”
“I’m calling for a complete overhaul,” she said. “As a citizen, the TDD laws are rigged against you.”
TDDs are designed to impose sales taxes ranging from 1/8 percent to 1 percent for transportation-related improvements within the district. Springfield has three current TDDs on file with the state: College Station, the Heer’s building and the East-West Arterial covering Evans Road west of U.S. Highway 65, according to
DOR.Mo.gov.
The College Station TDD was among 12 statewide randomly selected for Galloway’s examination.
At College Station, Galloway said the audit found some businesses charged sales taxes related to the district but did not display prominently the fact the extra taxes were being levied, a requirement by state law. She also said city officials did not sufficiently notify voters within the district an election for the local TDD board was underway when the 1 percent district was formed in 2006.
A list of 2015 and 2014 sales tax revenues for the districts included in the audit report did not have figures for College Station. The revenues are listed as redacted because fewer than seven businesses collected taxes within the district. The East-West Arterial TDD had 2015 sales tax revenue of $23,891, a dip from $24,695 in 2014, according to the report.
Sarah Kerner, interim economic development officer for the city of Springfield, said the TDD related to College Station was enacted specifically to pay for the parking deck. The city issued $10.9 million in special obligation bonds to finance the project costs, and the outstanding balance was $8.6 million as of Dec. 31, 2015. The parking deck was completed in late 2008.
“The sole project undertaken by the TDD is to generate sales tax to provide partial financing for the College Station parking deck,” Kerner said via email. “The TDD is obligated by a cooperative agreement with the city to transfer all revenues each year to the city to be applied to the city’s parking deck debt payment.”
For the city’s fiscal years 2009-15, the College Station TDD collected $157,062 in sales taxes, Kerner said.
In some cases, Galloway found TDD projects used lease agreements so taxes could be funneled directly to the property owner or developer, allowing them to “double dip” on income generated within the district. College Station, she said, was not found to be in violation of that grievance.
In another example, the board of the St. Louis Convention Center TDD controlled by the property owner changed the district’s timeline to 40 years from 13, according to the report. Under current law, Galloway said that kind of change does not require a vote by residents or approval from an outside authority. Galloway said the process should be changed so taxpayers are involved.
For the audit, roughly 60 percent of existing TDDs in Missouri submitted requested financial disclosure documents. Of those, Galloway estimates $941 million is owed in project costs statewide. She believes the full amount to be higher.
While Galloway admitted not much can be done for already developed TDDs, she is asking the General Assembly to rework the districts to improve transparency and reduce the burden on taxpayers.
“Insiders have rigged the system to take advantage of Missourians. It is outrageous that taxpayers are on the hook for a billion dollars in debt without even realizing it," she said. "It appears as though the General Assembly has legalized self-dealing and conflicts of interest through the transportation development district laws.”
This is not the first time a Missouri auditor has taken issue with TDDs.
In 2013, Auditor Tom Schweich said one out of four TDDs were late in filing financial statements to the state auditor or failed to file the required reports altogether.
