JEFFERSON CITY, Mo. – State Auditor Nicole Galloway is calling for a drastic re-evaluation of the state’s transportation development district (TDD) laws after finding rampant abuse inherent in 12 audited districts, including nearly $1 billion in outstanding project costs used with sales taxes citizens had ability to vote on.
Under Missouri’s current TDD law, property developers can set up their own political subdivision, create a board, put whoever they want on the board with no oversight from any kind of public commission, and then collect sales tax from people in that TDD through the businesses on that property. The audit found many developers awarded their own businesses with contracts to develop the property.
“I’m calling for an overhaul of the laws that allow and even encourage this kind of activity,” she said Monday. “Missouri residents and taxpayers deserve better. The TDD law as it stands needs to change.”
They can do this activity because of a change in Missouri law in 1997 that allowed for the creation of “micro districts” which could be as small as a single parcel of land or piece of property, instead of a larger division like a municipality or county meant to enrich transportation and infrastructure funding for a given area.
But the law changed into something that Galloway said hurts taxpayers. For instance, in two TDDs in Washington Avenue in St. Louis, Galloway’s office found property owners funneled money through a TDD which then had a board elected which in turn mandated a sales tax. The revenue from that sales tax was then used to rent from the owners of the parking garages the TDD was formed around, who were still charging fees for their spaces, essentially allowing them to double dip, all without the input of citizens.
That was just one example. There are over 200 TDDs in the state, and Galloway found other stark problems with the current TDD law.
“That’s what’s so stunning about all of this,” Galloway said. “The way these are operated, this billion dollars, developers awarding themselves contracts, sales tax without a vote of the people, it’s all allowed under the TDD law. The TDD laws are set up against the taxpayer and against the citizen.”
Galloway urged lawmakers to work with her to fix the TDD law, but she noted it was highly unlikely anything could be done this session.
Her full report can be read below.