UNIVERSITY CITY, MO — Several citizen watchdogs say they have discovered major financial problems with University City's proposed taxpayer-funded development at Olive Boulevard and Interstate 170. An apparent error by PGAV Planners, a consulting firm hired by the city to provide a cost-benefit analysis of the project, leaves the city short about $27 million — money that had been projected to come from the development in the form of new capital improvement and sales taxes.

A final vote on the project was postponed last week after the error was pointed out, though the city says that isn't why. In the cost-benefit analysis provided to city officials, PGAV consultants seem to have misidentified University City as a point-of-sale city. By state law, a point-of-sale city is entitled to keep most of the revenue generated by sales taxes in its jurisdiction. But, pool cities — which is what University City is — pay into a countywide tax pool. The county then distributes tax dollars back to municipalities based on population.

According to PGAV, University City will see about $30 million in new revenue from a countywide sales tax and a capital improvement tax from the Olive/170 project over the next two decades. But, that's based on the assumption that the city will keep about 85 percent of the taxes generated by its new retailers, the largest of which will likely be a Costco. In reality, the city will get to keep only a fraction of that money. Ninety-two percent will go to the county to be shared with other municipalities. A cost-benefit analysis provided to University City appears to misinterpret state tax law. Consider just 2020, the year PGAV assumes Costco will open its doors. According to the consulting firm, the site's existing businesses currently bring the city about $58,000 annually from the countywide sales tax. PGAV says that number will jump to about $1.1 million in 2020, but slightly less than half that sum will go toward repaying the TIF, leaving the city with $611,365.

Table 8 from PGAV's analysis (see above) shows $517,826 staying in the city, with only about 15 percent ($93,539) going into the pool. But Patch can't find any basis for that in the law. It actually appears U. City will get less than $29,000 in 2020 from the 1 percent countywide sales tax. Likewise, the half percent capital improvement tax — which PGAV says will bring another $259,830 to the city that year — will mostly go toward the county pool. U. City will see only about $35,000 of it.

While a half percent parks tax, quarter percent fire protection tax and a quarter percent economic development tax are not subject to the pool, in total U. City will see only about half the money it anticipated from new taxes.

Retired engineer Greg Pace caught the mistake, while local attorney David Harris prepared a table with corrected revenue estimates.

"These concerns call into serious question the economic benefit of the project for us," Harris said, speaking at the Jan. 28 council meeting. "I recognize we could be wrong about these concerns, but we will need a more specific reply and analysis from the city administration and consultants than what we have received so far. I implore the council to have an open dialogue in study sessions or a series of public meetings about all aspects of the project, including its economics and the contents of the redevelopment agreement." If the project goes forward, Harris said, the city deserves a good deal.