TDD Audits Note Troubles

 

The article below is from the Columbia Daily Tribune on Wednesday, March 30, 2011.  While it’s a few months old, it does a good job highlighting issues with TDD’s around the state.  The key item I focused on – competitive bidding.  After all, this is public tax money.  Competitive bidding assures that taxpayers are getting the most for their money.  The problem as I see it is that these TDD’s are run by people not familiar with the requirements of political subdivisions spending public money.

Don’t get me wrong, I’m not against TDD’s, but they must learn the rules and follow them.

 

Auditor notes TDD troubles

Schweich cites overspending.

By Jacob Barker

Wednesday, March 30, 2011

Missouri Auditor Tom Schweich released his annual review of the state’s Transportation Development Districts yesterday, again noting problems with competitive bidding, budgeting and reporting finances to the state.

Each statewide audit of the districts since the first one was conducted in 2006 has been critical of the quasi-public entities. The districts, known as TDDs, are established via a petition in the courts and impose a tax on retail sales in their boundaries to pay for road and site improvements. Almost all the districts are formed by the property owner or developer of a commercial venture and are governed by a public board, though members usually are appointed by the owner or developer.

Supporters say the districts finance projects that would not otherwise be built. For instance, the Stadium widening project is financed in part by three TDDs.

Columbia has 14 TDDs that charge a half-percent sales tax at nearly every large shopping center in the city, including the Columbia Mall, all three Walmarts and the Bass Pro Shops.

The report issued by Schweich surveyed 16 selected TDDs, including the Gans Road and Highway 63 TDD in Columbia, and noted many of the same problems as his predecessors. Statewide, there were 154 TDDs established as of December 2008. Through their lifespans, which can be as long as 40 years, they had total estimated project costs of $1.5 billion and total estimated revenues of $1.8 billion, according to the audit.

The report noted many of the audited districts’ budgets contained math errors, overspent or weren’t properly documented. In some cases, the report noted the auditor’s office was not aware when a new TDD was formed, highlighting the difficulty of overseeing public money in the hands of private developers.

Missouri law requires the state auditor to review each TDD once every three years and for each TDD with financial activity to submit a financial report to the state auditor. But 21 TDDs did not file a report with the auditor on time in 2007 or 2008, including two Columbia districts. The Northwoods TDD at Smiley Lane and Range Line Street did not file a report in 2008. The CenterState TDD, on property owned by Columbia Bass Properties, did not file a financial report in 2007 or 2008. Representatives of the districts could not be reached by deadline.

The audit noted the Gans and 63 TDD “overspent its 2008 and 2007 budgets by approximately $59,000 and $4.2 million, respectively.” The report also said a formal budget resolution was not approved authorizing the expenditures.

The Gans and 63 TDD was formed in 2006, and the land it covers was later acquired by Bristol Development Group, an entity owned by now-deceased Columbia developer Jose Lindner and his son, Jay Lindner. The Lindners had plans for a mixed-use development at the site and helped finance the Gans Road interchange built in 2008, planning to get repaid with TDD revenues.

The TDD had $4.2 million in debt obligations to Bristol Development, but the Lindners lost that property in foreclosure in August. Those notes were used as collateral in a financing agreement with Sapp-Bristol Management Group, led by Elvin Sapp, according to a legal notice. That company bought some of the land at Gans and 63 at the foreclosure sale in August and now holds the TDD notes.

But because nothing was ever developed at the site, there is no revenue to pay off the notes. Sapp’s attorney, Bruce Beckett, said the company is working toward settling those obligations. A legal notice said they are to be sold at auction April 11.

Attorney Craig Van Matre, who works with many of the city’s TDDs, said he is working to dissolve the Gans and 63 TDD. He said once the district’s debts are resolved the district should be able to dissolve.

In January, Columbia’s 14th TDD was formed on land owned by Red Oak Investment Co. across from Grindstone Plaza, according to court filings. There is no development there now, though last summer the company won approval from the Columbia City Council to rezone the land to commercial.