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Politics & Government

Tax Questions Raised About Manchester's New South Side Shopping District

After years of negotiations, Manchester moves forward with a new South Side Shopping District, despite complaints by aldermen that tax money collected for the shopping district is not being used properly.

On Aug. 11, the Manchester Board of Adjustment put an end to what has been years of negotiations with the South Manchester Transportation and Development District (SMTDD). The board, which handles zoning issues within the city, approved several variances to the city’s zoning law so the SMTDD could begin improvements to businesses in the strip mall directly across from the Manchester Highlands shopping complex.

The district encompasses the area on the south side of Manchester Road between Highway 141 and Enchanted Parkway.

Since its creation in 2006, the SMTDD has collected hundreds of thousands of dollars in sales tax from shoppers in its district, according to Manchester board of aldermen minutes. Prior to the Aug. 11 meeting, Manchester City Attorney Patrick Gunn confirmed that no money had gone toward any improvement.

In addition, some Manchester aldermen complain that a large portion of the money has been used to pay the SMTDD's attorney fees.

A Five-Year Battle

On Nov. 20, 2006, the Manchester Board of Aldermen approved the creation of the SMTDD to make enhancements to the buildings and attract new business to the shopping district on the south side of Manchester Road, said Ward 2 Alderman Michael Clement, who served on the board of aldermen at that time.

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Since May 1, 2007, the SMTDD has been collecting sales tax from every dollar spent in the shopping district.

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Shoppers pay an extra ¾ of a cent in sales tax for purchases in the SMTDD, so for every $100 spent in the SMTDD, 75 cents goes to the SMTDD. On a smaller scale, for every one dollar spent in the SMTDD, .0075 cents, or less than a penny, goes to the SMTDD.

Clement said in addition to the strip mall improvements, the money collected through sales tax is to help pay for the new stoplight built at the intersection of Manchester Road and Highlands Boulevard Drive.

He said the SMTDD agreed to pay for a portion of the stoplight because it not only benefited the Highlands Shopping Center, but also enhanced the entrance to businesses on the south side of Manchester Road.

Pace Properties paid for the $1 million cost of the stoplight. The SMTDD still owes Pace the $350,000 that the district promised to pay, City Attorney Patrick Gunn tells Patch.

In addition to the stoplight issue, Clement said no improvements were made to the area designated as the shopping district.

“There were many plans, but they have never gone very far,” Clement said.

Patch tried to reach Steve Hutkin, executive director for the SMTDD, however, Hutkin's attorney said he would speak on behalf of Hutkin.

Stephen Kling, legal representative for the SMTDD, said there were delays due to disagreements with some of Manchester's zoning requirements and variances that needed to be resolved before improvements were made. He said the economy did not help, either.

“It is no secret the state of the economy, and we lost the largest tenant in the district, a big furniture store, which generated a lot of sales tax,” Kling said.

Attorney Fees

Board of aldermen minutes state, in 2009, Clement and other board members discussed the SMTDD issue, as new information came out about the amount of money the district had collected and how much of it had gone to legal fees.  

At that time, of $260,000 collected by the district, $150,000 had gone to their legal firm, Jenkins and Kling.

Clement said he understood certain legal issues needed to be worked out, but thought the amount spent was too large, and the money could have been put to better use.

“When you spend $182,000 in legal fees out of $312,000, you don't have a lot of money left over to make any improvements,” Clement said.

Ward 1 Alderman Paul Hamill asked Shannon Creighton, the city’s legal representative for the SMTDD’s case, if the SMTDD was involved in any litigation which would force them to incur such large legal fees, board of aldermen meeting minutes state.

Creighton responded "No."

Hamill asked what then the $150,000 in legal fees were for.

Crieghton said in preparation to the meeting, she had requested copies of the invoices from the Jenkins and Kling law firm, but the invoices were completely redacted. The amounts were totaled, Creighton said, but she “had no idea and cannot guess the services rendered,” board minutes stated.

“You look at this and say, 'Wow, this is a lot of money, what is this all for?” Hamill told Patch. “It seems like a very, very large amount of money to be paying for attorney fees.”

In June 21, 2010, the SMTDD issue was raised again before the board. At this time, the board found out that out of $312,000 in tax dollars collected up to date by the SMTDD, $182,000 had gone to attorney fees.

“We continued to pay these taxes to make improvements, but to me it seems a lot of it was just diverted to their law firm,” Clement told Patch.  

The board even entertained the idea of having the SMTDD audited by the state, but Crieghton said it would not be appropriate and could be very costly.

“The concern we all had was, all these collections were not being used for their purpose, which is to pay off the light and start making the developments,” Clement told Patch. “Here we were, over a year later, and nothing had happened.”

When Patch spoke with Kling and asked about the attorney fees, he said it would not be appropriate to talk about that issue. Kling argued that since there was a meeting with the city coming soon, he did not wish to comment on that particular issue.

According to a letter from a Missouri Department of Revenue spokesperson, from 2010 until July of this year, approximately $156,000 in sales tax has been collected by the SMTDD. However, that same spokesperson for the DOR told Patch that information on what the money had been spent on was not public.

Moving Forward

On Thursday, Aug. 11, the board of adjustment granted the SMTDD the variances it had had requested for new signage in the shopping district.

Prior to the meeting, Kling said if the variances for their signage was approved at that meeting, the SMTDD would begin making all the necessary improvements and payments.

“Certainly once the signs are approved, the district will start making the payments,” Kling said. “There is a contemplation on the second phase of the improvement, but It depends on whether new businesses come in.”

Clement attended the meeting and said he was pleased with the final outcome. He said he hopes this matter is finally resolved, and the taxpayers' money can be finally be put to use for its original purpose.

“I am pleased the variances were all granted,” Clement said. “I believe and hope this should be the last obstacle for the SMTDD begin their improvements.”

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