Why the Business Loop CID faltered and the tax workaround it exposed

Oct 2, 2015

Map of Community Improvement Districts and Registered Voters

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When property owners in commercial neighborhoods want to clean up their block, they sometimes turn to creating special tax districts.  These districts use tax hikes to pay for aesthetic and safety improvements. But what happens when you cut out the public from having a voice on those taxes?

That public exclusion has created a mess in Columbia’s Business Loop District and locals are irked about the process.

Eyesore entryway to Columbia

When you enter the city of Columbia on Business Loop 70, you’re greeted with a five-lane road lined with car lots, fast food joints and commercial businesses. It’s been decades since many of the buildings have been updated. Some people here say the business loop is like the doormat you wipe your feet on before entering the college town.  

“As people travel in to the university, which is one of our most valuable assets, this is what they see and it’s not the picture we want to paint of our community,” Tom May said.

May is the chairman of a board hoping to clean up the area by creating a Community Improvement District, or CID. For Business Loop 70, that means new landscaping, burying power lines, and adding crosswalks and lighting.

To create a CID, property owners along the loop organized and drew a boundary to designate the space where new taxes can be proposed.  Their plan was to increase their own property assessment and raise the sales tax to bring in about a quarter of a million dollars of revenue annually. The money would all go toward sprucing up the outdated, commercial strip.

What about the community

Columbia city council approved the formation of the district in April. Fourth Ward councilmember Ian Thomas was one of two dissenting votes and expressed concern over the hasty decision.

“The one piece I felt was missing was in the way that the organizers went about it was they didn’t take any community input from the people who would be impacted by it,” he said.

On top of that, the property owners drew the boundary for the district to exclude any of the residential parcels of land from being included in the district. This was done for two reasons. The first: They didn’t want to ask homeowners to increase their property assessment. Executive director of the district Carrie Gartner said that would be unfair to ask of homeowners.

The other, more controversial reason is if there are no registered voters actually living in the district, the property owners can levy a sales tax without a vote of the people. By not reaching out to the neighbors to the district in the planning process, the district was accused by locals of gerrymandering the district lines to push through the sales tax increase.

“My elementary and junior high school history taught me we fought a revolution in order to among other things to have no taxation without representation,” said Dan Cullimore, president of the North Central Columbia Neighborhood Association.

“This gerrymandered CID district is taxation without representation.”

Cullimore said his neighborhood, which touches the southern border of the CID, is made up of working class residents with about half renters and half homeowners. He said these are the people who will be impacted most by a sales tax increase at the shops and grocery stores closest to them.

Taxation without representation

The shape of the district slices around city blocks cutting out homes and apartment complexes like a jigsaw puzzle piece. Judith Stallmann is a professor at the University of Missouri who specializes partly in community development.  She said cutting out voters is a preemptive move community improvement districts can legally do.

“You do not know if you hold a vote that whether citizens will vote for it or against it but the presumption is citizens will vote against it, so you eliminate that risk,” she said.

Stallman said this allows a community improvement district to act as a workaround of the Hancock Amendment, which says that in Missouri, taxes can’t be levied without a vote of the people.

Jen Henderson, 23, was the first voter to be discovered in the Business Loop Community Improvement District.
Credit Kristofor Husted / KBIA

“It is somewhat ironic that we will not allow a set of elected officials such as the city council to raise taxes without a vote of the people, and yet we will allow unelected business owners to raise taxes without a vote of the people,” she said.

But, the Community Improvement District Act does grant the property owners the right to levy their desired half-cent sales tax.  That is unless a voter appears.

Voters found

Jen Henderson, 23, is a registered voter and a senior at the University of Missouri. She lives and works at a temporary housing complex for out-of-town patients undergoing health treatments. Near her home are several businesses including the Salvation Army thrift shop right around the corner.

“Across the street from there is Head Motor,” she said. “We've got US bank, Sherwin Williams. Parkade has many businesses in side of it. JJ's Café – which I love going there. “

After the CID was drawn, she popped up as a registered voter in the district to the surprise of everyone. Carrie Gartner, the district director, reached out to Henderson. She told her about the goals for the district with money that would come in from the half-cent sales tax – a tax Henderson could give the thumbs up or thumbs down to. It looked like she’d be the sole person to decide.

“The overall belief is everyone who uses the loop pays a little bit of money,” Gartner said. “You can pool that together and make great things happen.”

Henderson said she thought it sounded like a good idea. “The tax doesn't sound that expensive. Business loop definitely seems like it could use some help, look prettier. And then I did more research about it.”

Henderson said the shape of the map is what made her think something fishy was happening. “When I saw the district plan, I saw they purposefully excluded residents from the vote. And basically by mistake, I was the only one.”

In contrast, when Columbia’s Downtown Community Improvement District was established in 2011, property owners had to include voters in the conversation because so many residents lived within the boundaries. Carrie Gartner also led that district in what’s generally accepted as a successful venture.

But because the Business Loop CID excluded voters, it soured the relationship with its neighbors. The board also postponed a vote for a sales tax hike. Then a KBIA investigation using advanced mapping tools found 13 additional voters registered in the district.

“I think everyone is very uncomfortable with this situation and rightly so. It's unanticipated,” Gartner said.

Time to regroup

Gartner says the district is now in a $110,000 hole due to mostly legal fees it had to pay to get the district approved. And without the annual sales tax revenue of more than $200,000, it will only have the property assessment revenue coming in to pay off that debt, and make improvements while paying the district director’s salary.

“I absolutely know we can not do everything we talked about with $50,000. It's just not doable,” Gartner said.

In the meantime, Gartner said the board is looking at other funding options to meet its commitments. Speaking on behalf of the board, chairman Tom May has also recently backtracked on statements made by some board members to the Columbia Tribune about their intention to cut out voters. He said the district was merely meant to include the parcels of land that sit directly on Business Loop 70.

“It didn’t matter what size the parcel was, who was in the parcel or anything like that,” he said, “It was a simple matter of these are the interested people in the business loop.”

Ultimately, many involved in the Business Loop fiasco want the neighborhood to step out of the 1960s and shine like it ought to. The manner in which this all went down has left many wishing for more public involvement, something the Missouri statute does not require. Resident Jen Henderson, whose discovered existence got the snowball rolling, said she hopes the situation shines a light on the sometimes problematic process of community improvement districts.

“I don't think community improvement districts are bad entities,” Henderson said. “The district downtown we've seen a lot of cool things happen from that. I'd like to see everyone have a voice in this.”

It’s not yet clear whether the postponed vote will happen and if so when. The district board has said it is reaching out to all 14 registered voters to hear their ideas on how to improve the Business Loop. The board is also passing out surveys to the business owners, employees and neighbors to gather their input.

The neighborhood associations say that’s a good step, but it will take time to build back the trust and repair the relationship between residents and the district.

INTERACTIVE MAP (at top of page) by James Gordon. Voters residing in the CID are shown in green, while all other voters are shown in blue. Click the buttons to focus on each CID. Use the + and - buttons to zoom in and out. You can also click anywhere on the map to zoom in. (CID boundaries from city of Columbia. Voter data from Boone County Clerk.)