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    Auditor Galloway Urges Reform To CID Laws After Discovering Pattern of Self-Dealing and Lack of Accountability (MO Auditor 2018)

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    The Missouri State Auditor released a report on Community Improvement Districts (CIDs) that found taxpayers will be burdened with $2.2 billion for CID projects with little oversight. Over 80% of CID boards are controlled by developers who stand to financially benefit. The report calls for reforms to prevent self-dealing and ensure taxpayer money is spent properly.

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    Auditor Galloway Urges Reform To CID Laws After Discovering Pattern of Self-Dealing and Lack of Accountability (MO Auditor 2018)

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    Grant Millin
    12 views2 pages
    The Missouri State Auditor released a report on Community Improvement Districts (CIDs) that found taxpayers will be burdened with $2.2 billion for CID projects with little oversight. Over 80% of CID boards are controlled by developers who stand to financially benefit. The report calls for reforms to prevent self-dealing and ensure taxpayer money is spent properly.

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    Auditor Galloway urges reform to CID laws after discovering pattern of self-dealing and lack of accountability (MO Auditor 2018)

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    The Missouri State Auditor released a report on Community Improvement Districts (CIDs) that found taxpayers will be burdened with $2.2 billion for CID projects with little oversight. Over 80% of CID boards are controlled by developers who stand to financially benefit. The report calls for reforms to prevent self-dealing and ensure taxpayer money is spent properly.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    12 views2 pages

    Auditor Galloway Urges Reform To CID Laws After Discovering Pattern of Self-Dealing and Lack of Accountability (MO Auditor 2018)

    Uploaded by

    Grant Millin
    The Missouri State Auditor released a report on Community Improvement Districts (CIDs) that found taxpayers will be burdened with $2.2 billion for CID projects with little oversight. Over 80% of CID boards are controlled by developers who stand to financially benefit. The report calls for reforms to prevent self-dealing and ensure taxpayer money is spent properly.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Missouri State Auditor's Office 1/8/24, 2:52 PM

    The O!ce of Missouri State Auditor

    SCOTT FITZPATRICK
    HOME AUDITS REPORTS ABOUT US EMPLOYMENT CONTACT US

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    Auditor Galloway urges reform to CID laws after
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    Taxpayers on the hook for more than $2 billion in project costs; Employment
    boards that oversee spending of sales taxes often controlled by Contact Us
    developers who stand to benefit
    08/22/2018

    JEFFERSON CITY, Mo (Aug. 22, 2018) Missouri State Auditor Nicole Galloway today released a
    report on Community Improvement Districts (CIDs), which found that lax oversight of taxpayer-
    funded projects has allowed for spending decisions to be made by those that benefit the most.
    Taxpayers will be burdened with increased taxes to pay for an estimated $2.2 billion in costs for
    more than 400 CIDs across the state. The majority of CIDs are funded by increased sales taxes.

    "Taxpayers are on the hook for billions in project costs they did not approve and have little to no
    say in," Auditor Galloway said. "Meanwhile, there is no law to ensure developers are accountable
    for the public dollars they receive and there are few requirements of the municipalities that
    approve these districts. State laws must be reformed to ensure taxpayers get the protection they
    deserve."

    CIDs are special taxing districts designed to fund projects to better the community and can
    include a wide variety of purposes, such as land acquisition and development, business retention
    and capital improvements. There are more than 400 CIDs throughout the state, the majority of
    which were established within the last 10 years.

    Municipalities approve CID requests, but state law does not require local governments to evaluate
    whether a district is in the best interest of the public. Districts can form with vague purposes and
    timeframes and can change their purpose after being established.

    In the vast majority of CIDs, voters do not approve the additional taxes. State law specifies that
    CID taxes should be approved by the qualified voters within a district; the majority of districts,
    however, are designed in such a way so as not to include any registered voters within their
    boundaries. As a result, the developer/property owner is the only entity to approve and impose
    the tax.

    Once a CID is established, oversight falls to a board. Because there are no requirements as to the
    makeup of the board, the developer/owner typically has a controlling interest in how dollars are
    spent. Auditor Galloway's report found more than 80 percent of CID boards are developer-
    controlled, meaning spending decisions are made by the owners and developers who stand to
    gain the most from the districts' tax collections.

    In one specific example, the board for the Downtown St. Louis CID paid more than $1.6 million
    for management services to a not-for-profit organization that was represented on the board. In
    another case, the Park Ridge CID, located in Lee's Summit, paid over $75,000 for lawn and
    landscaping services to a company owned by the board chairman.

    https://auditor.mo.gov/news/item/auditor-galloway-urges-reform-cid-laws-after-discovering-pattern-self-dealing-and-lack Page 1 of 2
    Missouri State Auditor's Office 1/8/24, 2:52 PM

    "There need to be protections in place to ensure public dollars are being utilized efficiently,
    effectively and for the good of the public," Auditor Galloway said. "It is simply unacceptable that
    state law allows for self-dealing and conflicts of interest within these taxpayer-supported
    projects."

    Lack of oversight and transparency has resulted in cases of CIDs collecting excess taxes after a
    project is complete. In Eureka, for example, the public paid $120,000 in taxes after the project
    was complete and paid in full. A similar instance in Springfield showed more than $225,000
    collected after the project was complete. In both cases, the excess taxation went into city coffers.

    The report also found concerns with the ability of the Department of Revenue to adequately track
    sales tax district boundaries, resulting in errors in how taxes are administered. The report found
    four examples of taxes collected by a business inside of a district, but not remitted to the state. In
    other cases, businesses within a CID boundary were not charging the CID sales tax or businesses
    outside a district were charging taxes as if they were located within the district.

    The report outlined multiple recommendations to improve oversight and of CIDs and address lack
    of transparency. The complete report on Community Improvement Districts can be found here.

    For more information, contact:

    [email protected]

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    https://auditor.mo.gov/news/item/auditor-galloway-urges-reform-cid-laws-after-discovering-pattern-self-dealing-and-lack Page 2 of 2

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