Success Notification Overlay
Failure Notification Overlay
Missouri State Auditor's Office - 2004-
Auditor Seal


Office of the State Auditor of Missouri
Claire McCaskill

Report No. 2006-12

March 2006


The following problems were included in our audit of Transportation Development Districts.

Transportation development districts (TDDs) are separate political subdivisions established and organized for the construction of roads, bridges, interchanges, or other transportation-related projects, financed through the issuance of notes, bonds, or other debt securities and governed by a board of directors.   These boards have the authority to impose sales taxes or tolls, or levy property taxes or special assessments within the boundaries of the respective TDDs to pay those transportation-related project expenditures.


TDDs are initiated by the filing of a petition in the circuit court of the county where the proposed district is located.  For TDDs established as of December 31, 2004, 96 percent of the petitions initiating their establishment were filed by the owners of the property located within the proposed district.  In many instances, it appears only a single property owner/developer petitioned for the creation of a district.    


Although the Transportation Development District Act was enacted in 1990, the first TDD was not established until 1997, apparently the result of statutory changes the General Assembly made that year.  These changes have resulted in a dramatic increase in the number of TDDs established.  As of December 31, 2004, 69 TDDs had been established in the state.  This significant growth has continued in 2005, with 18 additional TDDs being established as of October 2005.


In a survey of the 69 districts, officials of 68 of the TDDs reported total estimated transportation project costs of over $578 million.  In addition, 62 of the 69 TDDs reported total estimated revenues of over $787 million would be collected during the lives of the respective TDDs.  All of the districts established as of December 31, 2004, have imposed a sales tax, with rates ranging from one-eighth of one percent to one percent on retail items sold within the districts' boundaries.  As a result, all retail establishments located within a TDD charge a higher total sales tax than the retail establishments that lie outside the district's boundaries.


Our audit disclosed various issues regarding the TDDs in the areas of public awareness/involvement, and accountability and compliance, including:


        There is no requirement for the public to be notified when a property owner(s)/developer files a petition with the circuit court to form a TDD.  In addition, public hearings regarding the establishment of TDDs are not required to be held.


        Neither registered voters nor their elected representatives are involved in the decision to levy taxes for most TDDs.


        There is no requirement the petitions filed with the circuit court include any information regarding estimated transportation project costs or the anticipated revenues that will be collected over the life of the TDD. 


        There is no requirement for an independent        review  or oversight of TDD     transportation project costs or other expenditures.


        There is disagreement over whether the construction of a TDD-funded transportation project(s) can be started prior to the legal establishment of the applicable TDD.


        Most TDD sales taxes are not collected by the Missouri Department of Revenue, creating less assurance over the controls and monitoring of such revenue.


        Many TDDs had not filed annual financial reports with the State Auditor's Office (SAO), as required, and the current audit requirements related to TDDs need to be reconsidered.


        In many cases, significant project costs were initially paid by the private developer(s), who were then subsequently reimbursed by the TDD after bonds or other debt had been issued.  Such reimbursement process weakens the accountability over project-related costs.


        The revenues of TDDs located in TIF areas are being handled in different manners, and in some instances there is not adequate assurance TDD sales tax revenues are only used to pay the TDD's share of bond financing costs.


The audit recommended the General Assembly review the issues addressed in the report and work with the Missouri Department of Transportation, the State Auditor's Office, and other governmental entities to make necessary revisions to the TDD-related statutes.


Complete Audit Report

Missouri State Auditor's Office