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Columbia Missourian

Strong sales, population growth contribute to $50,000 downtown tax surplus

By Hannah Cushman
April 17, 2013 | 6:58 p.m. CDT

COLUMBIA — Revenue from the Downtown Community Improvement District sales tax is exceeding expectations. 

The half-cent cut of all business transactions occurring within the district was projected to generate about $300,000 annually at the time downtown residents voted to approve it. In its budget for fiscal year 2013, which began Oct. 1, however, the improvement district planned for $401,000 in revenue.

In the past six months, however, the tax has outpaced both projections, funneling $250,000 into the district's coffers. That's 60 percent more than the original figure and 20 percent more than the revised budget estimate.

Carrie Gartner, executive director of the district, said she has always foreseen growth in sales tax revenue. 

When consultants conceived of a districtwide sales tax in March 2008, no one anticipated the bleak turn the economy would take six months later. Members of the Special Business District, which became the Community Improvement District in 2011, were told to expect annual revenue in excess of $400,000.

Then "the bottom fell out," Gartner said. The Special Business District board adjusted its forecast accordingly but remained optimistic that downtown spending would rebound.

It came sooner than expected, Gartner said. In its first year, the tax is on track to generate proceeds closer to the pre-recession prediction than the post-recession adjustment. 

Gartner pointed to the resilient dining sector and blooming downtown population as factors contributing to the rapid recovery.

Despite accounting for less than a quarter of businesses within the district, restaurants are a major driver of sales. During the recession, Gartner said, it's likely customers of the myriad bars and restaurants downtown would skip appetizers and alcohol to save money. Now, most can afford the hors d'oeuvres and aperitifs again. More money spent means a larger tax base and a larger tax base means higher revenues.

Moreover, the number of downtown residents has risen, even if many aren't technically within the district's boundaries. 

The number of residences — that's addresses, not people — within the district has grown by about 20 since 2007, from 299 to 318. The number of active voters, though, has more than doubled. In 2011, the district sales tax was put to a vote of 118 registered downtown residents. Today, 271 residents would receive ballots, Boone County Clerk Wendy Noren said in an email.

And those figures don't include two of downtown's most dense housing options:  the Brookside on College apartments and developers Jonathan and Nathan Odle's newest project adjacent to Lee Elementary. Together, the pair adds roughly 140 residences to the greater downtown area.

The proportion of downtown residents has always favored students, Gartner said. Maintaining a mix of businesses catering to that majority while retaining appeal for nonstudents is key to continued success.

Gartner cited Poppy Arts Fine Craft Gallery as an example. The shop at Tenth Street and Broadway carries jewelry that Gartner said she would buy but that wouldn't look out of place on a 21-year-old, either.

At its inception, the improvement district created a five-year plan that can now be fast-tracked thanks to the surplus. In addition to maintaining all existing services, revenue from this fiscal year will be used to hire a marketing director, who will focus on creating a more cohesive downtown via social media and business outreach, Gartner said.

Supervising editor is Scott Swafford.