Fate of community improvement district hangs on a single vote
Fate of community improvement
They say one vote can make a difference. That is especially true when there is only one person voting in an election. Property owners in the Business Loop 70 section of Columbia, Missouri, learned that lesson the hard way as their efforts to impose a half-cent sales tax increase have stalled due to resistance from a local college student – who happens to be the only registered voter in the area.
Missouri allows cities and counties to establish “community improvement districts.” Local property owners petition the city to form such districts, which if approved can levy their own property and sales taxes. These revenues are then used to finance infrastructure improvements within the districts. It is largely up to the people seeking to form a district to define its precise boundaries. Missouri law only requires its boundaries be contiguous and that the petition is signed by a majority of the property owners.
Columbia previously established a community improvement district for its downtown. Earlier this year, a group of property owners located in nearby Business Loop 70 submitted a petition to form their own district, which the city council approved in April. The new district’s leaders planned to raise $50,000 in new property taxes and approximately $220,000 through the proposed sales tax increase.
A potentially costly drafting mistake
Under state law, the sales tax increase must be approved by the “qualified voters” of a community improvement district. This means anyone living in the district who is registered to vote in state elections. If nobody actually lives in the district, then the vote takes place among the “the owners of one or more parcels of real property located within the district.”
Business Loop 70 owners thought they had defined the boundaries of their district to exclude any residential properties. This would allow them to approve the sales tax increase without difficulty. But it turned out they made a mistake. A single University of Missouri guest house remained within the district. The house’s resident, Missouri student Jen Henderson, registered to vote in February, making her the sole “qualified voter” under state law.
Henderson indicated she might oppose the proposed sales tax increase, noting it could raise prices for poorer residents who have to buy groceries within the improvement district. She said district leaders tried to “manipulate” her, asking her to “unregister” her vote so they could proceed with the sales tax increase unopposed. At an August 31 meeting attended by Henderson, the district’s board of directors decided to postpone the vote for now.
But this is not the end of the matter. The improvement district said it cannot raise sufficient revenue from property taxes alone to finance its planned improvements. And the district is already over $100,000 in debt, primarily because it must reimburse the city for the cost of certifying its petition. According to the Columbia Daily Tribune, the district’s board said it would continue to “work with Henderson and her attorney to find a mutually agreeable way to pass a sales tax.”
S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info
Lucinda Rowlands has been the general manager at Zip2Tax since 2010. She has extensively researched sales and use tax regulations in order to help small businesses navigate complicated tax rules.