There's been a lot of debate lately over proposed Community Improvement Districts (CIDs) — namely, over two luxury hotels who were approved to establish CID's so they could implement a special tax to pay for renovations.
On Thursday, Missouri State Auditor Nicole Galloway announced she will audit two of the state's biggest CIDs, both in the Kansas City area.
The Independence Center CID and the Ward Parkway Center CID will be the first audits since a bill that allows the State Auditor to audit CID's without a citizen petition process went into effect in August.
The Independence Center CID was established in 2007 to pay for the construction of the Silverstein Eye Centers Arena, and includes the mall and several other shopping centers. In 2015, it collected $5.6 million in taxes, making it the largest CID in the state.
The Ward Parkway Center CID was established in 2011 to help fund renovations. It collected $1.5 million in 2015.
Previously, Galloway's office could only audit a CID if her office was petitioned by the voters living in that district.
"However because so many of these are commercial developments only and do not have registered voters living within the district boundaries, often there would be no way to investigate complaints that we would get about Community Improvement Districts or to audit their operations and their finances," Galloway says.
She says that kind of immunity from oversight is "inappropriate."
"When you're charging millions of dollars in property and sales taxes, and then spending those public dollars within the district, citizens expect accountability and transparency," Galloway says.
For the first two audits, her office will be looking at finances and operations of the district, compliance with state law, adherence to any rules established by the districts to govern themselves, and general best practices for public governing bodies.
Because many CIDs are structured differently and have different uses for tax dollars, Galloway says there aren't strict guidelines for how to audit them.
"Part of the issue that we have is that there are so many special taxing districts within the state of Missouri," Galloway says, "And when we were doing research on Community Improvement Districts we realized that not all CIDs were reporting their financial statements to the auditors office as required."
Galloway's office says the audits won't be complete until next year.
In addition to the CID audits, a statewide report on Transportation Development Districts and an audit on Tax Increment Financing are now underway.
Lisa Rodriguez is a reporter at KCUR 89.3. Connect with her on Twitter @larodrig.