Missouri State Auditor Scott Fitzpatrick said he believes an audit of the city of Arnold and two transportation development districts will be completed near the end of summer.
The Auditor’s Office announced the audit on Nov. 7, stating in a letter sent to Mayor Ron Counts that the Auditor’s Office had received multiple complaints from its Whistleblower Hotline about Arnold’s oversight and operation of the Arnold Retail Corridor Transportation Development District (ARC TDD) and the Triangle Transportation Development District (Triangle TDD). The letter said the Auditor’s Office investigated the complaints and determined they were credible.
“I would say we have three to four weeks of work to complete and then we will be in the drafting stage,” Fitzpatrick said on March 24. “We try to shoot for 120 days from the time we wrap up field work to the time the report is released.
“Hopefully by late summer, we will be in a position to get this thing out.”
As of March 24, the Auditor’s Office had not found any evidence of fraud, Fitzpatrick said.
“When we think about fraud, we are looking for public funds or resources being used for personal use or gain,” he said. “There has been nothing, at this time, that we view as being fraud or someone converting public resources for their own personal use.”
The Auditor’s Office was asked to look into the ARC TDD after Arnold officials announced a controversial Arnold Parkway road project in August 2024. The city abandoned the road project later that month following a public backlash. In addition, the owners of a shopping plaza that would have been affected by the abandoned road project filed a lawsuit against the city.
When Arnold officials announced the now-defunct project, they said they wanted to build a road between Hwy. 141 and Richardson Road to connect retail districts along those two roads. The plan was projected to cost about $75 million, including the cost to acquire 38 homes, multiple businesses and a portion of the Water Tower Place Shopping Center.
The project would have been funded with revenue from a 1-cent sales tax collected by the ARC TDD, mainly from businesses in the Arnold Commons and Arnold Crossroads shopping plazas, but also some from the businesses in the Water Tower shopping plaza.
In its Nov. 7 letter, the Auditor’s Office identified three issues that possibly could constitute improper government activity, adding that there could be more issues.
The following are the three possible issues:
■ Ownership of property located outside the boundaries of the TDDs.
■ High-level city officials serving as TDD officers.
■ Financial statements filed with the state Auditor’s Office indicating the TDDs had paid off their debts and should be closed but remained open.
When the audit was announced, Arnold City Attorney Bob Sweeney told City Council members that the issues the Auditor’s Office identified in the letter were similar to a long list of allegations made by the Water Tower Place Shopping Center owners in the lawsuit they filed against the city in August 2024 to stop the road project and dissolve the ARC TDD.
Sweeney also said the claims in the lawsuit and in the letter from the Auditor’s Office are inaccurate.
Fitzpatrick said the audit is being conducted to make sure the ARC TDD is being operated according to the law.
The Auditor’s Office issued two subpoenas to Arnold on March 10. One of the subpoenas requested information about the ARC TDD, and the other requested an interview with Counts on April 8, Fitzpatrick said.
He said his office issued the subpoenas a couple of months after city officials did not produce requested records, adding that the Auditor’s Office was unable to proceed with the audit without the requested information.
“We try to be accommodating with requests for extensions for providing information when there is a limited staff or if they have some other big thing happening that requires a lot of their attention,” Fitzpatrick said. “But when we are really just getting, ‘We will get to you when we have time’ and there is no apparent effort to comply with the request, that is when we start to lose our patience a little bit.
“Give them credit where it is due; they reacted quickly once they received the subpoena and got on the information we asked for.”
Fitzpatrick said the subpoena seeking an interview with Counts was sent after he was not at some meetings Auditor’s Office staff members had with other city officials that they expected Counts to attend but who wasn’t there.
“(Counts) is someone who is necessary for us to speak to,” Fitzpatrick said.
He said the Auditor’s Office probably has to send subpoenas for information in 1 of 10 audits.
“That is not scientific, but thinking about the audits we have done over the last couple of years, it is fairly rare,” he said. “Most audits that we do do not require subpoenas. I don’t know if we have ever issued a subpoena during an audit of TDD.”
Arnold officials said in a March 26 written statement that the city had provided the Auditor’s Office several thousands of pages of documents that stretch from the initial creation of the ARC TDD in September 2007 to the present.
“While we hope that the end of the process is approaching soon, we will continue to provide any additional documents or information that are requested by the State Auditor’s Office,” city officials said in the statement.
The subpoena for ARC TDD records was sent to City Administrator Bryan Richison, who also is the ARC TDD executive director. Richison met with officials from the state Auditor’s Office on March 18 to provide the following information.
■ A list of all residential and commercial properties the ARC TDD was planning to purchase as part of the connector road project.
■ Appraisals for any residential property purchased by the ARC TDD for an amount greater than the standard $170,000, plus $55,000 relocation payment. The city sent letters to homeowners last year with the $225,000 offer to purchase their houses.
■ All letters sent to property owners informing them of the TDD’s intent to purchase their property, and all correspondence with each property owner.
■ The Arnold Retail Corridor TDD refunding revenue bonds transaction schedule.
■ Buyer’s settlement statements for three properties purchased last year. The subpoena sought statements for a $281,945.79 withdrawal on April 12, 2024; a $25,719.54 withdrawal on April 18, 2024; and a $249,576.71 withdrawal on Nov. 14, 2024.
The city reported on March 26 that ARC TDD funds had been used to purchase 16 properties for a total of $3,942,000. It also reported that three additional properties were under contract for a total of $1,715,000, and 19 more property owners have expressed interest in selling their property.
Fitzpatrick said after the draft of the audit report is complete, it will be reviewed internally, and the city and ARC TDD staff will have the opportunity to review it and provide responses. Depending on those responses, the Auditor’s Office may provide additional context or comment to the report.
He also said the entire audit report and responses will be published for the public to review.
“We try to do a transparent and fair process, and we just report the facts,” he said. “People can read what we put out and agree with it or disagree with it. We only produce audit findings that are well supported.”