The Arnold Retail Corridor Transportation Development District must continue to collect a 1-cent sales tax due to the TDD contributing to paying off a bond issue and projects that still need to be completed, a lawyer representing the ARC TDD said.
Debbie Rush of Thompson Coburn LLP explained why the sales tax and ARC TDD remain in place during a Board of Directors meeting on May 12 in the downstairs meeting room at Arnold City Hall. Nine people attended the meeting.
The board has three members – Arnold Mayor Bill Moritz, Arnold Finance Director Bill Lehmann and former Arnold Treasurer Dan Kroupa. Former Ward 4 Councilman Gary Plunk, who lost his bid for re-election in April to Brad Cary, was the board’s chairman, but he resigned Feb. 3, and a new member is expected to be appointed in August.
Jerel Poor, who attended the meeting, questioned why the ARC TDD still existed and was collecting sales tax because a state audit report said it had paid off all of its bond obligations. The sales tax is collected mainly from businesses in the Arnold Commons and Arnold Crossroads shopping plaza and some businesses in the Water Tower shopping plaza.
State Auditor Scott Fitzpatrick called for the dissolution of the ARC TDD in a scathing audit report released on April 6. The State Auditor’s Officer gave Arnold, the ARC TDD and Triangle TDD the lowest possible rating of “poor,” and the report claimed ARC TDD continues to collect a 1-cent tax despite having no viable project to fund and that city officials have kept it in place to pay off city development debt unrelated to transportation projects, in violation of state law.
The Auditor’s Office has not sought legal charges to be filed over the disputed use of sales tax.
The audit of the city and two TDDs was opened in November 2024 following the outcry after Arnold officials announced and abandoned a controversial road project in August of that year.
The proposed 2-mile, two-lane road between Hwy. 141 and Richardson Road, which was to be called the Arnold Parkway, was projected to cost about $75 million, including the cost to acquire 38 homes in the Key West Estates subdivision, multiple businesses and a portion of the Water Tower Place Shopping Center.
Rush said one reason the ARC TDD was still collecting sales tax is because a portion of the money is used to pay off bonds issued by the Arnold Crossroads and Arnold Commons tax increment finance (TIF) districts.
Arnold refinanced the bonds in 2016, and after originally having three separate bond series, the city condensed the sale into two series. One bond was for $23,050,000 and was publicly sold, and the other bond, for $4,624,500.76, is held by THF Realty.
On May 18, Lehmann said the $23,050,000 bond issue has been paid off. He said the other bond still had a balance of $3,969,247.55 as of late 2025.
Lehmann said the ARC TDD contributes a portion of its collected sales tax to pay off the existing bond every month. He said the ARC TDD annually pays $200,000 toward paying off the bond, which is expected to be paid off in 2028.
Rush also said the ARC TDD still has not completed three of the eight projects that were stated when it was created.
Arnold officials said the three remaining projects include building a connector road between Hwy. 141 and Michigan Avenue; landscaping and beautification at the I-55/Highway 141 intersection; and a broad category of roadway, parking and access improvements benefiting the district.
“State law says you can’t dissolve a TDD when there are outstanding obligations,” Rush said during the May 12 meeting. “This TDD is not at that point yet.”
On May 12, Lehmann said the ARC TDD is continuing to purchase homes in the Key West Estates subdivision, which is made up of Harrys Lane, Christy Drive, Big Bill Road, Ridge Drive and Lone Star Drive, in order to build the connector road.
In 2024, homeowners in the area had received letters from the ARC TDD offering $225,000 for their houses.
As of May 18, Lehmann said the ARC TDD has paid $7,420,464.57 for 27 properties to home and business owners who wanted to sell their land.
He also said there are two properties under contract that were expected to close early next month, and two more properties are expected to go under contract soon.
“The first step is to buy the properties to build the road on,” Lehmann said during the ARC TDD board meeting on May 12.