Photo by Whitney Curtis
Melissa Kingsbury starts each workday with a large chai latte from the Starbucks at 2350 S. Grand. It costs $4.95 after taxes, a nickel more than at some other Starbucks locations. That’s because this coffee shop falls in one of St. Louis’ community improvement districts, which collect an extra sales tax, property tax, or special assessment.
Whereas CIDs in larger districts such as The Grove and Grand Center encompass multiple businesses, this district holds just one. And this Starbucks isn’t alone: Nearly three-quarters of all CIDs created in the city over the past decade have been so-called single-site districts, such as a condominium development in the Central West End and a gas station and grocery store planned for the Near North Side. Since 2010, the number of CIDs in the city and county has doubled, with more than 100 now in existence. As TIFs and tax abatements have received public scrutiny, “we’ve seen an increase in these special taxing districts,” says Mary Rocchio, manager of regional policy research for the East-West Gateway Council of Governments.
Across the state, community improvement districts are drawing closer scrutiny. In mid-October, the Kansas City Business Journal said, “The use of CIDs in Kansas City has been in the news lately,” noting two large hotel projects. At the same time, state auditor Nicole Galloway announced plans to audit K.C.’s Ward Parkway Center CID and the Independence Events Center CID, the latter being the state’s largest CID, bringing in $5.6 million in 2015.
Creating a CID requires the approval of 50 percent of property owners within the district, but when the district only comprises a single property, just one vote is needed. As a result, critics say there’s little oversight or accountability. To that end, last summer, Governor Jay Nixon signed legislation allowing the state auditor to audit CIDs without a petition from residents in those districts, as was required in the past.
Steve Conway, the 8th Ward alderman who sponsored the bill to create the South Grand Starbucks CID in January 2015, says developers and business owners seek out these districts because the municipalities “cannot provide the underlying infrastructure or safety improvements that these businesses want in order to make their businesses grow.” In this case, the business replaced a former gas station that had remained vacant for 15 years. With Conway’s support, the Board of Aldermen approved a 10-year tax abatement and single-site CID with a 1 percent sales tax.
Conway notes that the Tower Grove East Neighborhood Association “controlled the look, the view, the placement of the drive-thru, and set the conditions for the approval of that Starbucks”—and he doesn’t recall anyone saying no to a CID. However, multiple current and former board members of the neighborhood association say they were unaware of plans to create a single-site CID when they approved the Starbucks in August 2014.
The property was initially approved for a local developer, but it was sold to a California investor that December. (Calls to the property’s listed contact were not returned.)
If a business wants to charge a higher sales tax to pay for improvements, Conway says, it should be “no skin off my back and no skin off anybody else’s.” It should be up to consumers to decide whether they want to patronize the business, he says. Yet CIDs don’t require businesses to display signs notifying consumers.
So are consumers aware of the added cost? A manager at the Starbucks store didn’t realize it, nor did Kingsbury, who visits the store five times a week. The only indication: a line on her sales receipts.
