Auditor Galloway finds that nearly $300,000 meant for public infrastructure spent unlawfully by former board of CID in Van Buren
Taxpayer funds collected through sales tax at Black Mountain CID were used to pay private debts, make improvements to business assets at convenience store
JEFFERSON CITY, Mo. (Dec. 9, 2019) – Several former board members of a community improvement district (CID) in south central Missouri used almost $300,000 in taxpayer funds to pay their private business debts and for private business improvements and construction, State Auditor Nicole Galloway said. The findings are in an audit she released today of the Black Mountain CID in Van Buren, located in Carter County.
“We discovered several members of the initial Black Mountain CID board used taxpayer money for their own benefit,” Auditor Galloway said. “CIDs are meant to fund projects that benefit the community. They aren’t supposed to be illegal personal piggy banks for board members or anyone else, especially for spectacularly improper projects like a $10,000 walk-in beer cave.”
Black Mountain CID was organized and approved by the city of Van Buren in 2010 to create a sales tax for the purpose of making public infrastructure improvements inside the district’s 17 acres. All but one member of the initial CID board owned property or businesses in the CID. The current board has four new members and one vacancy.
Last December, two members of the current board contacted the State Auditor’s Office with concerns about how the previous board had spent taxpayer dollars. After an initial review, the Auditor’s Office determined further investigation was warranted and the current Black Mountain CID Board passed a resolution formally requesting and authorizing an audit.
The audit found $296,937 in CID monies was spent for purposes not allowed by state law. That included more than $100,000 in private business loans used to purchase equipment, and inventory for resale; provide cash flows for operational expenses; and perform repairs and maintenance to the Black Mountain Convenience Store, which was owned at the time by CID board members Donald Black, Curtis Black and Jacob Black.
In 2013 and 2014, CID funds were used to make $125,972 worth of improvements to the convenience store. Those improvements included new fuel pumps ($52,324), a new canopy over the pumps ($25,866), and a new walk-in beer cave ($9,960), as well as remodeling of restrooms, new wallpaper and painting, and electrical work. Six months after the work was completed, the convenience store was sold to new owners.
The audit also found the CID board could not provide adequate documentation to support more than $77,000 of expenses, including more than $51,000 paid to entities owned by board members. In addition, the CID board approved – without a written agreement – reimbursement of $135,000 in private business construction costs to a local developer who had past business connections to the board chairman. Payments of $28,000 were made without an agreement.
The current board responded to the audit by saying they have implemented or will implement the recommendations. Auditor Galloway said her office has sent the audit findings to state and federal law enforcement authorities.
CIDs are special taxing districts designed to fund projects to better the community and can include a wide variety of purposes, such as land acquisition and development, business retention and capital improvements. There are more than 400 CIDs throughout the state.
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