If You're Confused About Paying 11% Sales Taxes At Random Spots Throughout Kansas City, You're Not Alone
City Auditor confirms Community Improvement Districts lack oversight and accountability
If you have ever looked down at your receipt after purchasing a coffee and wondered “Why the hell is the sales tax over 11%?”, it’s probably because you are in a Community Improvement District.
You might wonder: what are we getting for 11%?
The City Auditor confirmed in a recent audit, which is quoted here throughout, that Kansas City, Missouri often doesn’t know what these Community Improvement Districts’ public benefit actually is and there is little accountability to keep them in check.
The Auditor also illustrated that many of the “Communities” are not really “Communities” but rather single-property owners collecting sales tax to support their own projects.
So what are Community Improvement Districts also known as CIDs and what do they do?
CIDs are a political subdivision that “may use collected revenues [such as sales taxes] and borrowed funds for a variety of purposes including, but not limited to, security, maintenance, refuse collection and disposal, landscaping, property acquisitions, and promoting tourism and business activities.”
How do you create a Community Improvement District?
“A majority of property owners within the defined area of the proposed CID submit an appropriate petition to the city.”
“City Council holds a public hearing on the CID petition to determine whether to continue the process of establishing the CID.”
“If the City Council decides to continue the process, an ordinance to establish the CID goes through the city’s legislative process. City Council approval of the ordinance results in the establishment of the CID.”
The intent of the CID program was to support business and retail districts keep up with maintenance and additional services that are shared among business and property owners such as trash, security, and promoting the entire district.
This program has devolved over time into questionable creation of CIDs, especially with single property CIDs where only one owner benefits, and use of funds. It seems they are constantly audited and found to be out of compliance and misused, even statewide.
So what did the Auditor find?
There are 74 active CIDs in Kansas City. You can check out a map here.
A majority of CIDs are now single-beneficiary CIDs like the Kansas City Convention Hotel for example. A majority of the public disapproves of this application of the CID program and the public benefit isn’t evaluated thoroughly.
City Council doesn’t have a clearly defined process to determine public benefit and implement accountability measures.
Related to accountability, a good number of CIDs didn’t comply with state law in turning in a proposed yearly budget and an annual report.
Why is this important?
CIDs are taking your tax dollars and supposed to be using it for “public benefit.”
It is well documented that abuse of the CID system and its intent is rampant.
Some CIDs provide really good “public benefit” for an actual community and should be the standard.
Single-property CIDs are bad public policy. Since when is one property owner or one single property a “community”?
What are the next steps to make this whole thing better?
6th District Council member Andrea Bough has been working on a rework of the system that informed the City Auditor’s direction.
We can look forward to those new ideas but in the interim the Auditor made recommendations. Here are some of the highlights:
“The city manager should prepare for City Council consideration an ordinance defining and codifying the city’s CID policy that includes a comprehensive evaluation process for proposed CIDs that, at a minimum, assesses public benefit, tax burden, overlapping economic development districts, and alignment with city goals.”
“The city manager should prepare for City Council consideration an ordinance defining and codifying the city’s CID policy that requires reporting on expenditures for public infrastructure or services benefiting the public.”
The city manager should prepare for City Council consideration an ordinance defining and codifying the city’s CID policy that imposes a fine for failure to timely submit required reports to the city.
Ultimately, Kansas City will benefit from a robust oversight of these districts and a tightening of what type of CIDs should exactly be created.
A patchwork of taxing entities, a majority of them single property owners with little accountability and ill-defined “public benefit,” doesn’t benefit Kansas Citians.
City Council should move to make substantive changes and hold strong against people pushing the intent of the CID program to its limit for private gain.
Thanks for reading! If you’re interested in local Kansas City politics and other musings, consider subscribing and sharing this post.
And if you’re feeling generous and want to throw some coins my way, I’d appreciate it. Venmo: @JamesSpenceBaker. I’ll keep reading and writing about the inner workings of city government and politics.
So when you say "after purchasing coffee" you mean at those coffeehouses all owned by that one church?!