At its Oct. 12 work session, multiple members of the O’Fallon City Council expressed skepticism toward a developer’s proposal to establish a Community Improvement District that would impose an annual assessment on homeowners in a new city subdivision.
During a presentation to the city council, an attorney for McBride & Son Homes said the home builder is requesting the creation of the CID to help cover “extraordinary development costs” related to its Cobblestone Crossing development located off Hwy. P in O’Fallon.
CIDs are political subdivisions that are created as a financing mechanism for public improvements and can generate funding either through imposing property taxes, a sale tax or a special assessment.
David Richardson, an attorney representing McBride & Son, said the company has proposed the CID because of significant costs related to development and the project’s large size. The development spans 82.5 acres and will include 284 single-family homes.
“A larger development obviously takes longer. There’s a lot more upfront costs and it takes longer to sell out, build out,” Richardson said.
If approved, the Cobblestone Crossing CID would be able to issue a maximum of $950,000 in obligations and funding for improvements that would include projects related to sanitary and storm sewers, creek crossing pavement work and water mains.
Homeowners would pay annual assessments that would be set to a fixed amount and duration. Annual payments would equal $300, $400 or $500 depending on the tier of home purchased from McBride and for a maximum of 28 years. The special assessment would be paid in addition to a homeowners association fee.
The CID would he managed by a board of five property owners to be selected by the mayor and approved by the city council.
A number of councilmembers expressed skepticism at the proposed CID. Councilmember Jeff Kuehn [Ward 4] said some of the improvements McBride wants to use the CID for seem like normal development costs.
“My understanding of what a CID is and supposed to be is a community improvement district. Improvement being the key word there, not development district,” Kuehn said.
Councilmember Dave Hinman [Ward 1] asked why McBride doesn’t hike up the prices for the Cobblestone Crossing homes to account for the increased development funds.
“I don’t see a difference in issuing this CID and increasing the price of the initial price of the home,” he said.
Richardson said raising the home prices would leave McBride at a “competitive disadvantage” compared to other developments.
“Our research shows and our experience based on other projects is that the CID is the way to go,” Richardson said.
McBride has formed CIDs for four developments located in Eureka, Maryland Heights and Jefferson County. The company also recently proposed establishing a CID for a new subdivision in Lake Saint Louis.
Councilmember Dale Kling [Ward 3] issued concerns about whether Cobblestone Crossing homeowners would know about the CID and the yearly assessments when they purchase their homes. Meanwhile, Councilmember Reid Cranmer [Ward 3] argued that those who purchase the homes will understand they’ll be imposed the assessment fee.
“I’m not sure why the council is advocating for the resident because the resident knows exactly what they’re getting into,” Cranmer said.
A vote on the CID was not taken.