Patrick Ishmael

As my colleagues David Stokes, Michael Rathbone, and Joe Miller have chronicled for years, community improvement districts (CIDs)—a type of local taxing district—are both popular and problematic for policymakers in Missouri. CIDs can generally raise property assessments without much restriction, and after a CID is formed, the operations of the district often become a black box. As Michael wrote earlier this year, "The auditor’s office has consistently found deficiencies in reporting and documentation for these districts." Once a CID is in place, it can be very difficult to keep it accountable. 

But sometimes even the formation of a CID lends itself to chicanery. In Columbia, organizers of a CID planned to have only the businesses within the district's bounds vote on a proposed sales tax, so earlier this year they crafted the bounds of the CID to include only businesses—excluding nearby residents who, in many cases, would be paying the proposed tax. Why would they cut out those residents? Well, when there are no registered voters in a CID, under state law the property owners vote instead. And since the district has already started spending money, a vote in favor of the sales tax by the property owners who supported it was all the more important to keep the CID functioning.

There's just one (and I emphasize one) problem.

A mistake by representatives of the Business Loop 70 Community Improvement District means a sales tax increase the district needs to thrive will require approval by a single University of Missouri student.
 
On Feb. 28, Jen Henderson, 23, became the sole registered voter living within the community improvement district, or CID, meaning she is the only person who would vote on a half-cent sales tax increase for the district....
 
[CID Executive Director Carrie] Gartner said the CID has incurred “significant debt” the district hoped to pay down through the tax, including more than $100,000 it owes the city and for legal representation, $55,000 owed to Jack Miller of True Media and a $60,000 line of credit with Landmark Bank.
 
An official apparently even asked Henderson to "unregister" her vote so that the CID could be decided by the property owners as organizers intended, but it doesn't sound like that's happening.
 
Henderson said she doesn’t plan to give up her right to vote and feels negative about an increased sales tax—but has not made a decision about how to vote. Henderson said her concerns include vague project outlines, Gartner’s pay, Business Loop improvements she said will help businesses but not nearby residents and how an additional sales tax would affect low-income people purchasing groceries and other necessities.
 
Those are all very important questions that deserve serious consideration in all CIDs. Of course, the director of the CID has said that if they can't get their sales tax, they'll begin paying off the district's debts through special assessments on district properties instead. The reason is simple: a special levy by the CID has no voting requirement, but a CID sales tax needs voter approval. So even a "no vote" here (emphasis on the singular) or having no vote would still likely mean higher taxes being passed on to consumers in the CID, albeit in a more indirect way.
 
But whatever the case, Columbia's tax district problems are beginning to attract interest from around the country, focusing much-needed attention on CID practices that not only are largely done out of sight, but oftentimes are designed to game our political system. In this case, the CID wanted to impose a sales tax without letting the people purposefully left outside the district a chance to vote on the matter. That is difficult to justify under almost any circumstance, and points to the need for significant reform of the laws that control CIDs in Missouri. Hopefully, Columbia's comedy of errors will provide the final umph needed to make those reforms happen.

About the Author

Patrick Ishmael
Director of Government Accountability

Patrick Ishmael is the director of government accountability at the Show-Me Institute.