More Evidence of Failures of CIDs
The two sure things in life are said to be death and taxes. I might add a third (admittedly related to the latter): When special taxing districts such as community improvement districts (CIDs) or transportation development districts (TDDs) face an audit, they fail it.
Numerous state audits over the past decades have identified the shortcomings of these districts. Now, the Kansas City Auditor has reviewed the use of CIDs in Kansas City and found many of the same issues. Show-Me Institute analysts have written about the problems with CIDs and TDDs for years. Common problems with these special taxing districts include financial abuses, lack of transparency, egregious boundary drawing to avoid voter participation, and much more.
The recent audit of CIDs in KC found many of the same things. From the article in the Kansas City Star (emphasis added):
In recent years, however, several CIDs have been created to benefit a single property owner or developer. In 2016, for example, the Intercontinental Hotel at the Country Club Plaza created a CID for itself to raise taxes earmarked to pay for upkeep of deterioration that the ritzy hotel argued had created blighted conditions. A similar CID was approved for the Romanelli Shopping Center in Waldo in 2019.
Both were criticized for using taxes to subsidize property maintenance. More than half of the existing CIDs in Kansas City benefit a single owner or developer, as opposed to community-based districts like those covering Westport or downtown.
The audit also noted that several CIDs — more than a third — have not submitted their annual budgets to City Hall, a requirement under Missouri law.
Legislation just passed by the state legislature makes some modest reforms to CIDs. These reforms include mandating annual financial reports, competitive bids for contracts, and requiring at least one independent board member. Hopefully, the governor will sign it. But we need to go much further and ensure these taxing districts cannot abuse the public trust for private gain, which is all many of them are good for. (Yes, there are exceptions to that.)
We need far more voter involvement, stricter reporting requirements, tougher limits on which expenditures are allowed, and total tax caps, just to name a few potential improvements. The single most important thing we need is a requirement that a full city (or county, for unincorporated areas) vote to approve all new CIDs and TDDs. Absent greater reform, these special taxing districts will continue to just be the great Missouri tax-and-spend deception.