Last week, multiple news outlets reported that representatives of Downtown STL, a taxpayer-funded organization, wants to set up a transportation development district (TDD) downtown. That TDD would charge a 0.5 percent sales tax (on top of existing taxes) from the river to Compton Avenue. While this taxing district would raise almost $3 million annually, the plan for how the money would be spent amounts to little more than a “trust us” from an unelected body.
TDDs are small taxing districts that collect property or sales taxes and spend that money on transportation-related projects. We’ve been largely critical of TDDs in the past, because:
. . . TDDs are ad-hoc specially created taxing districts with idiosyncratic boundaries. They are created through what is not a normal democratic procedure (see “qualified voters” and flexible district boundaries), with boards that are not elected in the normal sense.
Most TDDs opt to collect sales tax dollars instead of property taxes, allowing the micro-districts to export taxation. However, as TDDs proliferate, it becomes increasingly difficult for a resident to know how much they are getting taxed and where that money is going, even in their own city.
There are situations where using TDDs or other small taxing districts may be appropriate. For instance, we wrote favorably about the use of a Community Improvement District (very similar to a TDD) to build a causeway in the Lake of the Ozarks. In that instance, the district had: 1. A clearly defined and much needed improvement (a causeway); and 2. Virtual unanimity among those who would be taxed.
As things stand, the downtown TDD fails to meet these criteria. What critical transportation improvement requires the TDD? According the chief executive of Downtown STL, “We don’t have a definite proposal but we know what the needs are. . . .” Reportedly, projects could include pedestrian improvements, security cameras, and/or supporting a “development spine” to Midtown. In addition, Downtown STL has long pushed for a streetcar; setting up a TDD is a common first step toward that goal.
Because the TDD will charge sales taxes, unanimity among taxpayers is already out of the question. City/county residents from outside the TDD who come downtown for a Cardinals game or Ball Park Village (both of which city and state taxpayers subsidize) will have no vote on the matter. But even within the district, business owners are not all on board. Cardinals ownership is opposed, and hotel representatives point out that they already have a very high tax rate—17 percent—and visitors’ complaints are mostly about safety, not transportation.
When it comes to downtown Saint Louis, there are plenty of taxes in place to pay for necessary street improvements. There are also elected representatives who are empowered to manage those resources. Residents should think twice about giving an unelected group what amounts to a $4.5 million taxpayer budget without that group articulating a clear, non-controversial plan.