Since 2006, homeowners in the BaratHaven Community Improvement District in Dardenne Prairie have been paying extra property taxes due to what Missouri State Auditor Nicole Galloway calls a “lack of oversight” by the district and St. Charles County officials.
“Special taxing districts like CIDs must be held accountable for how public dollars are collected and spent,” Galloway stated in an Oct. 25 news release on her audit findings. “In this case, lack of oversight led to a critical error that left residents paying thousands in extra taxes. It’s imperative these citizens are refunded their money.”
CID districts are set up to fund public infrastructure improvements and facilitate a residential and commercial development. The BaratHaven CID has been funded through $1.6 million in notes with the developers to be repaid by property taxes on those living and owning businesses within the district. The CID’s Board of Directors established a property tax rate of up to $1 per $100 assessed valuation for 40 years.
According to the audit findings, the CID and St. Charles County failed to certify the tax rate with the state auditor’s office, as required by state law to ensure rates are properly calculated. The county viewed the tax rate as a special assessment that didn’t have to be certified. The CID, which began in 2006, collected $1.3 million in property taxes that didn’t comply with state law.
The property tax rate also exceeded the allowable rate in 2012, 2014, 2015 and 2016, resulting in $34,397 in excess collections. The CID also failed to identify errors in the tax rolls that resulted in four commercial properties not paying property taxes to the taxing district.
The report also found that the taxing district has failed to generate enough revenue to make required principal and interest payments on the project. Plans for retail and office space within the development did not materialize, leaving the CID reliant on property taxes paid by residents to repay the loan.
In addition to the CID, the development also has a Transportation Development District [TDD] layered on top of it. A combined $4.2 million was spent by the two districts, but there is no documentation to show that CID funding was not spent on transportation costs that should have been funded by the TDD.
The BaratHaven Community Improvement District was created in 2006 to help fund a proposed commercial and residential mixed-use development by developer Paul McKee, although only the residential portion was completed. It is funded through property taxes on the 245 homes in the subdivision. This district is located near the intersection of Interstate 64 and Winghaven Boulevard and includes what now is the Barat Haven subdivision and some adjacent vacant commercial property.
The CID was established by an ordinance passed by the city’s Board of Aldermen. A CID board was appointed by the mayor with the consent of aldermen. Mayor David Zucker said on Oct.2 that beyond establishing the board and appointing CID board members to three-year terms, the city has no oversight over the CID’s operations or management.
However, the appointment of new directors has drawn in the city. Shortly after Zucker became mayor in 2015, representatives of the subdivision’s homeowners association complained about the BaretHaven CID board. Zucker said he saw some inconsistency in rules establishing the composition of the board, which included representatives of the developer.
When two vacancies occurred on the board, Zucker said he proposed naming two residents who owned property in the CID. That drew some “push back” from the CID’s legal counsel, he said. The city was asked to indemnify new board members from lawsuits, which the board agreed to do. The result is that the current five-member board has four homeowners in the CID district and a board member from the bank that owns the district’s undeveloped commercial property.
“His [the bank representative’s] appointment is legitimate and the other guys are legitimate because they’re residents and property owners in the district,” Zucker said. The appointments haven’t been challenged legally so far, he added.
The audit began in February 2017 and was one of two CID audits in the St. Louis area. CIDs have become increasingly popular. The auditor’s office noted there currently are about 300 CIDs established statewide – more than 100 of those in St. Charles and St. Louis counties and the city of St. Louis – compared to 19 in 2007.
Zucker said to his knowledge the BaratHaven CID is the only one in a residential development in the city. A commercial area CID is located at the southeast corner of Bryan and Feise roads.