KC Auditor's Office Makes Recommendations To Strengthen CID Oversight, Transparency, And Accountability

From the City of Kansas City:

May 13, 2021

The City Auditor’s Office released an audit evaluating whether the city is exercising oversight of Community Improvement Districts (CIDs). Oversight covers evaluation of proposed CIDs, the City Council’s decision to approve or not approve the establishment of CIDs, and ongoing monitoring of CIDs’ compliance with requirements outlined in state statutes, city policy, and establishing petitions. State statutes give the City Council significant power over the establishment of CIDs. The City Council’s authority to approve or not approve proposed CIDs is one of the city’s most important oversight tools.

From 2002 to May 2020, City Councils approved 77 CIDs in Kansas City; 74 are still active. The majority of these CIDs impose a sales tax on top of existing sales taxes. Almost 60% are single beneficiary CIDs, and nearly half overlap with one or more other economic development districts.

Auditors concluded the city’s current review process does not critically evaluate public benefit, purpose and plan of the proposed district, sales tax burden impact, overlaps with other economic incentives, and alignment with city goals. A robust evaluation of these elements by city staff would provide the City Council with information to consider when they deliberate whether to approve the establishment of proposed CIDs.

The audit also found over a third of CIDs did not submit a proposed budget and more than 25% did not submit an annual report as required by state statutes. The city also did not monitor CID reporting status as required by city policy.

To strengthen oversight, transparency, and accountability, we recommended improving and codifying the city’s existing CID policy by including a comprehensive evaluation process, establishing shorter CID lifespans, rescinding automatic renewals, outlining required reporting, and imposing fines for non-compliance. We also recommended improving compliance monitoring and reporting efforts.

View the Full Report or Highlights online on our Recent Reports page. The audit is scheduled to be presented at the Council Business Session at 2 p.m. on Thursday, May 13, 2021.

Did you know you can submit audit ideas to the city auditor? This audit was inspired by suggestions made by the public.

This press release was produced by the City of Kansas City. The views expressed here are the author’s own.