Judge: Special Business District Did Not Comply With State Law, Board Members Failed To Disclose Conflicts of Interest

In January 2016 the Locust Business District was sued by a property owner within the district. Last month the property owner, Bob Wood, was victorious. Yes, for 18 months he’s tried to improve transparency of just one of the city’s many special districts. From March:

But for more than a year, Bob Wood has been battling in court with the Locust Business District, which collects a special property tax estimated to bring in about $325,000 this year to fund security and events in an area stretching from Downtown West to Midtown.

Wood, the owner of the Majestic Stove and Adler Lofts in the district, took his case to trial in St. Louis Circuit Court this week, where his attorney, Elkin Kistner, grilled Locust Business District board members about meeting minutes, budgeting and the tedium of administering a taxing district.

Wood said he was looking for Judge Joan Moriarty to say that some of the district’s management and budgeting practices were illegal. A ruling in the case is expected in about two months. (Post-Dispatch)

I’ve been following the case since it was filed. The ruling was in Wood’s favor:

Budget practices at the Locust Business District did not comply with Missouri law, board members failed to disclose conflicts of interest and the district made unlawful donations of tax money, a St. Louis judge ruled Tuesday.

The ruling by St. Louis Circuit Court Judge Joan Moriarty caps over a year of litigation against the special taxing district, which uses property taxes to pay for security, marketing and events in an area stretching from Downtown West to midtown. (Post-Dispatch)

Judge Moriarity’s 16-page ruling doesn’t mince words, for example:

The District routinely spends money without Board approval. Its Rules, Policies and Procedures explicitly authorize expenditures by the Chairman of the Board of up tp $2,500 without board approval.

The Board frequently considers matters presented to it by Commissions who have personal, financial interests in those matters. Such matters present conflicts of interest. Commissioners who are so conflicted do not make written disclosures of the nature of those conflicts, nor do they always refrain from participating in Board discussions of, and votes on, such matters. (See ruling) 

By some estimates there are at least 100 such districts in the greater St. Louis region, there are probably at least a few more like this. Don’t expect your elected official to make sure this doesn’t happen — it can benefit them greatly.

— Steve Patterson