State Auditor Scott Fitzpatrick has called for the dissolution of the Arnold Retail Corridor Transportation Development District and said Arnold officials intentionally misled taxpayers and abused state law to collect millions of dollars in tax revenue without voter approval.
In a scathing audit report released Monday, the State Auditor’s Officer gave Arnold, the ARC TDD and Triangle Transportation Development District the lowest possible rating of “poor” while finding numerous conflicts of interest, a lack of transparency and an effort by the city to derail the audit process, according to a statement announcing the report.
The audit said the 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 bottom line is Missourians spending money in the ARC TDD are being overtaxed by 1 percent on every purchase because of the pervasive and persistent betrayal of the public trust by TDD and city officials,” Fitzpatrick said in a written statement. “Taxpayers have every right to be furious about the lengths to which the city has gone to cover up the truth and the extent to which the city has abused the state’s TDD laws to generate additional tax revenue without voters having a say.
“Legislators should use this audit as a case study for the many areas in which TDD laws need to be strengthened and more clearly defined so this kind of abuse of the public’s trust can’t happen in the future.”
In a response to the audit, Arnold officials said the audit is biased, incomplete and legally flawed. It misstates statutory requirements, ignores economic realities, omits critical interviews and selectively presents facts to support a predetermined narrative, according to Arnold’s response.
Fitzpatrick had his office on Nov. 6, 2024, start an audit of Arnold’s oversight and operation of the ARC TDD and Triangle TDD after receiving multiple complaints from its Whistleblower Hotline after the city announced and abandoned a proposed 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, sparked outrage. Residents attempted to gather enough signatures to force recall elections for all Arnold elected officials, and the owners of the Water Tower shopping plaza filed a lawsuit to stop the road project and to dissolve the ARC TDD.
Arnold Mayor Bill Moritz, who is a member of the ARC TDD Board of Directors, said the ARC TDD will not be dissolved. He also said Fitzpatrick is playing political games by releasing the audit report the day before municipal elections.
On Tuesday’s ballet, there are contested races for four Arnold City Council seats, three two-year terms and a one-year term.
“That is a ridiculous thing, and we are not going to do that,” Moritz said of disbanding the ARC TDD. “We addressed every one of their (the auditor’s office) concerns with state law or case law. (Fitzpatrick) is trying to play election games. Why else would they release this the day before the elections?”
The audit report also includes a recommendation that the General Assembly review ambiguity in the state TDD law that allowed for many of the issues identified in the report to occur.
“We followed state law,” Arnold City Attorney Bob Sweeney said. “They (the auditor’s office) don’t like state law. Their interpretation is that we abused it. Why are you throwing rocks at us? I don’t believe that is appropriate in an audit.”
The auditor’s office said the city and ARC TDD refused to cooperate numerous times throughout the audit. The report said the auditor’s office issued three subpoenas for two individuals to testify, and produce records and documents related to their testimony.
The city also filed a lawsuit against the auditor’s office to prevent portions of closed meetings from being disclosed to auditors. The lawsuit was dismissed when disputed records were given to the auditor by a person Fitzpatrick referred to as a whistleblower.
“The lack of cooperation from the city is on a level I have not seen during my time in office,” Fitzpatrick said in a statement.
The audit also said Sweeney had excessive involvement in ARC TDD matters, billing the city at least 340 times from 2022 to 2024 for TDD-related purposes. It also claims Sweeney provided an intentionally misleading statement about his involvement with the TDD, claiming he made false statements on March 18, 2025, that were not discovered until July 17, 2025.
The audit said the violation has been referred to the Jefferson County Prosecuting Attorney’s Office, even though the statute of limitation to prosecute may have passed on March 18.
“I never represented the TDD,” Sweeney said. “As they (the auditor’s office) do point out, everything that goes on with regard to the TDD is ultimately a city of Arnold issue. I have represented the city of Arnold’s interest throughout the process, which sometimes includes being involved in TDD issues. The argument they are trying to make is I should have admitted that I represent the TDD, but I didn’t.”
The audit report is posted on the state auditor’s website, auditor.mo.gov. Arnold officials said the city will post its response, which is included in the audit, and ARC TDD documents starting from its formation.
Property purchases
Arnold has continued to purchase homes through the ARC TDD in the Key West Estates subdivision, which is made up of Harrys Lane, Christy Drive, Big Bill Road, Ridge Drive and Lone Star Drive.
Homeowners in the area had received letters from the ARC TDD offering $225,000 for their houses before the road project was abandoned.
On April 2, Arnold Finance Director Bill Lehmann told the council deals for five properties are getting close to closing.
In March, city officials said 22 of 50 properties had been purchased by the ARC TDD and there were 19 properties on a waiting list to be purchased. Officials said nine property owners did not respond to offers.
Traxler said the sales tax generates approximately between $285,000 and $300,000 per month. He said that allows for one home purchase per month, and at this time, deals to purchase homes stretch into October.
Traxler said after enough homes are sold, the city plans to demolish them but there is no set number of homes that need to be purchased before starting the demolition process.