Missouri State Auditor Nicole Galloway announced Tuesday that her office will audit two Community Improvement Districts in the St. Louis region.
Those include the BaratHaven Community Improvement District in St. Charles County and the North Oaks Plaza Shopping Center in north St. Louis County.
Galloway said the special taxing districts should be transparent and accountable to taxpayers.
"We did receive hotline calls from our whistleblower hotline with citizens’ concerns on two of these Community Improvement Districts, so we’re going to take a closer look at these citizens’ concerns through the audit process,” Galloway said.
(Learn more about Community Improvement Districts in this recent St. Louis Public Radio story.)
Community Improvement Districts are created with the approval of more than 50% of property owners within the proposed boundaries. If approved a five-member board of directors can assess a property tax and/or up to a 1% sales tax. Missouri state statute gives districts a lot of latitude in how they spend that money.
The special taxing districts are receiving more scrutiny from Galloway’s office following a state law approved last year that gives the auditor the ability to review the districts even without a petition of voters. Many CIDs are formed with only one business within their boundary and no residents.
“Now, with new law that went into law last year, we have the authority to audit Community Improvement Districts without a petition, and you’re seeing some of that work in Kansas City and now St. Louis,” she said.
Galloway said the two St. Louis-area CIDs are very different from one another.
The BaratHaven CID covers a subdivision in Dardenne Prairie developed by Paul McKee’s McEagle Properties. It was established in 2006, according to Galloway, and assesses a property tax on 245 homes. In 2015 the CID generated about $150,000 in property tax revenue.
The North Oaks Plaza Shopping Center CID is in the city of Northwoods and was set up in 2007. The 30 businesses within the district charge a special sales tax. The district collected about $110,000 in 2015, according to the Missouri Department of Revenue.
While the BaratHaven CID filed a financial report with the Missouri auditor’s office last year, it did not include information on its five-member board of directors.
The North Oaks Plaza Shopping Center CID has not filed the required annual financial report with the auditor since 2009.
“That’s a concern,” Galloway said of the lack of reporting, “and we can address that through our audit.”
In an earlier story about the districts, the auditor told St. Louis Public Radio that the state statute regarding CIDs lacks the teeth to enforce reporting requirements.
Galloway said she expects both audits will be completed this year.
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