Joplin Government’s risky use of TIF Districts comes at a high cost to city services, the low income, and to education!

By: Brian Evans

After the Joplin tornado, the Joplin City Government began implementing the use of what are known as TIF Districts (Tax Increment Finance Districts)… Also known as CID (Community Investment Districts) and TDD (Transportation Development Districts). The origins of these districts go back to the 1950’s in California, but when California began to run massive budget deficits, they dissolved their TIF program in 2012 to try and alleviate their financial crisis. In fact, they found that by eliminating TIF Districts, it would save the taxpayers $5 BILLION PER YEAR! Apparently, the benefit of TIF’s didn’t outweigh the gain, which is no surprise, based on past precedent with these financial monstrosities that siphon taxpayer dollars from where they were designated to go by taxpayers!

In fact, when TIF districts acquire, by redirection, the sales and property taxes paid by their incremental (additional) property valuations, they take not just city-levied taxes, but they take all levied taxes, including those by county government, by school district, and even by the state. Meanwhile, as TIF funds are collected from countless disenfranchised taxpayers and are then used to benefit relatively few property owners within the established TIF districts of the city, the remaining majority of citizens not only lose services that they paid for… but the taxing entities then use those financial and service shortfalls to pressure citizens for even higher taxes, to pay for services that would have been paid for in full, had they not been previously skimmed off the top and given to private developers! Sadly, too many of our political leaders are tax and spend politicians… or they do not understand the realities of the mechanisms of how these tax and spend monstrosities work, and how they are so detrimental to the taxpaying public!

The first CID in Missouri was the Three Trails Village CID, which popped up in Kansas City in 2002! More recently, cities like Chicago have noted that these TIF/CID/TDD Districts have little to no benefit for the community, but meanwhile cost the taxpayers dearly in the years that it’s in effect! Furthermore, these districts siphon off increasing tax value dollars from older low-income homes (blighted areas) as the government calls them, and redistribute the benefits to wealthier individuals… by what’s is called gentrification! This lowers the availability of low-income housing, and can lead to greater homelessness in our community as well! As a result, TIF’s seem to benefit neighborhoods that were already gentrifying, and siphon’s off funds that should have gone to public services and schools!

In 2018, the Missouri State Auditor performed an audit of these districts in Joplin and throughout the entire State, and found some major problems including…

State law allows a CID to be formed and taxes and assessments imposed without adequate public scrutiny or sufficient public protections.
They allow sales tax to be imposed without voter approval.
They create a significant conflict of interest to potentially occur.
They impose sales taxes that do not have to be disclosed to the public.
They lack adequate reporting compliance requirements.
There is a serious lack of enforcement power over these taxing districts.
State law currently allows CID’s to OVERTAX the public, and then REMIT THE EXCESS TAXATION TO CONFLICTED PARTIES.
DOR Sales Tax Administration does not adequately track sales tax district boundaries.
DOR Sales Tax Administration does not have procedures in place to ensure district sales taxes are correctly administered, charged, collected, and dispersed.
The State Auditor found that 75% (11 out of 15) of the Special CID taxing districts that they evaluated did not properly adopt budgets… and/or did not properly provide prepared budgets to municipalities.
These taxing districts consistently failed to provide required annual financial reports to the State Auditor’s office, as well as failed to provide performance reports to the Department of Economic Development!
20% of these special taxing districts failed to comply with sunshine reporting laws, making public transparency minimal!

Joplin previously closed out the Hope Valley CID which had $170,000 of the district’s taxpayer funds mailed to one of the consultants’ home addresses… an incident that led to the arrest of Darryl Gross, and his being charged with stealing Joplin taxpayer funds. In 2022, the consultant pled not guilty, but later pled guilty on two cases of stealing and misappropriation of funds in Joplin’s TIF District, as well as, in a TIF District in Neosho! He was later placed on probation for five years in March of 2021, but is now facing the revocation of his probation for his failure to pay restitution to the taxpayers of Joplin and Neosho! We will likely never see our stolen tax dollars repaid!

Joplin also recently closed out the Joplin Recovery TIF District, but has the following districts still in place…

1717 Market Place TDD (Transportation Development District) with a tax rate of 8.850%
Northpark Lane CID (Community Investment District) with a tax rate of 9.725%
510 Rangeline CID with a tax rate of 9.725%.
Hwy 166 CID with a tax rate of 9.725%.
Hope Valley CID with a tax rate of 9.725%.
32nd Place CID with a tax rate of 9.725%.

The rest of Joplin has a tax rate of 8.74%. Check out your receipts when you check out in some of these TIF Districts, vs. other areas of Joplin! It is eye opening.

So you may be asking why a Special Taxing District can have a higher tax rate than other areas of Joplin? That is because a TIF District board can generate revenue for the developers based on sales and use taxes, real property, personal property, and business license taxes, with a few exceptions such as public right of way for utilities. The vast majority of these districts fund the developers through sales taxes (87%), with 10% coming from special assessments, and 3% from property taxes.

Chicago Policy Review noted that …

“There is strong evidence that TIF is misused”!

They note how areas that they deem as ‘blighted’, are far from blighted! The Chicago Policy Review adds that…

“This has led critics to claim that TIF largely benefits the more affluent parts of the city while siphoning away funds from public services such as schools.”

Other areas that suffer are parks, public safety, roads, and even pay for city employees, leaving facilities understaffed such as pools, recreational facilities, etc.! They go on to add that…

“Even when used in areas that appear to fit the definition of blighted, TIF funds tend to focus on projects in areas that are at risk of gentrification, potentially contributing to the displacement of lower income families and individuals.”

Sadly, gentrification leads to the reduction of low-income housing, and with so many displaced with nowhere to go, we have a growing domestic homeless crisis.

As far as the Missouri State Auditor’s findings, Joplin has seen some of these same concerns, as well as we have seen little evidence that these TIF/CID/TDD have actually produced any benefits, but it is becoming apparent that they have taken a toll on the less fortunate in our community! Furthermore, with so many Tax Increment Financing districts in Joplin, it places less money in our coffers, and has led to our city asking for tax increase, after tax increase, after tax increase… despite the growing amount of revenue that the city brings in! That is because these TIF’s rob much-needed tax dollars that would go to our city’s funds to spend on much-needed services to the taxpaying public, and to public schools to support the education of our children! This hurts the entire community, which is why other cities and states are beginning to question their value, their dangers, and their fiscal benefits!

In a future article, I will discuss how these TIF districts are only one concerning area of fiscal management in Joplin, as I will discuss the concerning ways that Joplin has utilized tax abatements (tax breaks) for multi-million / billion dollar corporations, as well as developers, and how even though local small businesses provide over 98% of the jobs and a majority of the revenue to our city, it is big businesses that get the bulk of the tax breaks… not our small business!

Sources:

Missouri State Auditor… https://auditor.mo.gov/news/item/auditor-galloway-urges-reform-cid-laws-after-discovering-pattern-self-dealing-and-lack