Holness: Margate isn’t the only city that’s mishandled CRA funds

By William Gjebre, BrowardBulldog.org 

Broward Commissioner Dale V.C. Holness

Broward Commissioner Dale V.C. Holness

In the wake of a critical inspector general’s report that accused Margate of mishandling millions of dollars in community redevelopment funds, Broward Commissioner Dale V.C. Holness says he expects similar findings of wrongdoing about other cities as the county’s investigation continues.

“Unfortunately, this is not the only CRA (Community Redevelopment Agency) handling it this way; others are doing it,” said Holness. “Funds should be utilized…to rid areas of slum and blight, reduce unemployment and help businessmen. CRAs are going for big projects that don’t help neighborhoods and small businessmen.”

The inspector general referred the matter to the Broward Commission “for any action they deem appropriate,” stating the county may reclaim as much as $2.7 million from Margate’s Community Redevelopment Agency (MCRA). The commission has yet to debate the matter.

But Holness, the only member of the nine-member commission to respond to requests for comment, said he’s more interested in the Margate CRA using the funds “the way though should be used, but are not” rather than focusing on reclaiming any mishandled funds.

Attorney Frank Schnidman, a CRA expert and senior fellow at Florida Atlantic University’s School of Urban and Regional Planning, also expects county overseers to find that other CRAs mishandled funds similar to Margate. CRAs have “not paid attention as to how to account for funds left over” at the end of the year, treating their funds “as another [city] account and not as a trust fund” to be maintained separately, Schnidman said.

The county’s findings gives it “leverage to bring Margate to the table to get them to comply” with state requirements through an agreement that would tighten accountability, Schnidman said. If no agreement is reached, the county “has the legal right to the return” of the $2.7 million in county property tax funds that the IG identified in its report.

Should the county take no action, commissioners would be left to explain “to the taxpayers not going after the money,” Schnidman said.

The inspector generals’ July 22 report found that the Margate CRA had “engaged in misconduct in connection with the handling of tax increment financing (TIF) funds it received from Broward County and other taxing authorities.” TIF funds come from taxes levied on the increased value of property in the designated redevelopment area.

“We found that the MCRA has a pattern of intentionally retaining excess funds for the later use of whatever unspecified matter it desired,” the report state. “The MCRA’s failure to appropriate the money in accordance with any legally prescribed alternatives has resulted in a debt to Broward County of approximately $2.7 million for the TIF monies contributed in fiscal years 2008-2012.”

Under state law, the report said, the agency must allocate excess funds to projects to be completed within three years, to reduce existing debt, or to place money in accounts to pay down future anticipated debt. Otherwise, end of the year funds have to be paid back to the county, the city, or the North Broward Hospital District – the entities contributing funds to the Margate CRA.

The report cited one Margate CRA official who informed his board two years ago that the agency “had roughly $10 million in cash that was not committed to any project.”

The county’s report said Margate CRA officials claimed that the funds were allocated to the long-awaited City Center project. However, the report concluded, “…evidence plainly shows that the MCRA has never appropriated a single dollars of annual excess TIF monies for that project.”

In its response to the inspector general, the Margate CRA asserted that it was in “compliance with the spirit if not the letter” of state law, asserting said it “did not hoard public monies for improper purposes.” It nevertheless offered to “appropriate money it ‘hoarded’ to a more specific mandated option,” according to the response prepared by Rachel Bach, a Margate CRA official.

The county’s report on Margate stemmed from an investigation started last September of 10 Broward cities and appeared to center on their handling of end-of-year funds. Other cities included Hollywood, Fort Lauderdale, Lauderdale Lakes, Davie, Pompano Beach, Deerfield Beach, Plantation and Coral Springs.

The probe followed a yearlong investigation of the Hallandale Beach CRA in which county investigators found the agency made $2.2 million in questionable expenditures. The Hallandale investigation and report, issued in March 2013, followed a string of stories in BrowardBulldog.org about questionable city loans to local businesses and controversial land purchase through the CRA.

The inspector general’s office also previously determined that Lauderdale Lakes misspent over $2.5 million in CRA funds.

Margate, like Hallandale before it, challenged the authority of the inspector general to investigate the city’s CRA.

“No report should be issued in this investigation, and if it is, it should be issued to the MCRA or the City of Margate, and not Broward County,” the Margate CRA stated in its response.

The Inspector General has dismissed that jurisdictional claim, stating it has the authority to investigate and asserting that it will continue to probe expenditures of CRA funds.

Hallandale commissioners approve taking from the city, giving to themselves

 

By William Gjebre, BrowardBulldog.org 

Commissioners Anthony Sanders, Bill Julian and Michele Lazarow

Commissioners Anthony Sanders, Bill Julian and Michele Lazarow

Hallandale Beach city commissioners have created a new policy they can use to boost their take home pay by allowing them to pocket up to $10,000 a year in unspent funds from their individual travel accounts.

The city’s five commissioners each earn about $22,000 for their part-time service. In addition, each gets a  $10,000 annual travel allowance.

Before the change took effect October 1, the city had a use-it, or lose-it policy and unspent travel dollars reverted to the city budget. But now commissioners get to keep travel account cash they choose not to spend while on city business.

By a 3-2 vote in July, the commission directed that unspent travel funds be reimbursed to commissioners after the end of the city’s fiscal year on September 30.

Voting for the new reimbursement policy were the three commissioners who traveled the least in 2012-2013 and had leftover funds: Anthony Sanders, Bill Julian and Michele Lazarow.

Mayor Joy Cooper and Vice Mayor Alexander Lewy opposed the change. Both exceeded their $10,000 travel fund last year and even received additional city travel funds – Cooper $7,500 and Lewy $5,000, city records.

SPLIT REACTION

The change drew both criticism and support. “I think it’s a betrayal of trust,” community activist Charlotte Greenbarg said of the cash in policy. Referring to the $50,000 total travel allocation for commissioners, she said, “They shouldn’t be traveling that much.”

“I don’t see any problem with it,” said Csaba Kulin, another community watchdog and former unsuccessful candidate for a seat on the commission.

The idea of refunding unused travel expenses to commissioners was suggested at the July 29 meeting by Commissioner Sanders. He noted it has been done with unspent health insurance funds for years.

The new travel reimbursement policy could benefit Sanders the most. In 2012-2013, he spent  $1,040 from his $10,000 travel account, according to city records. If he spent the same amount this coming year, he would be reimbursed $8,960, representing a 40% salary hike.

Lazarow spent $2,329 last year. If she spent the same in the coming year, she would be reimbursed $7,671, representing a 34% salary increase.

Julian spent $4,265 last year. If he spent the same this year, he would be reimbursed $5,735, representing a 25% salary hike.

The trio defended the policy change, which was in addition to a 2.5% cost of living increase for commissioners approved at the same July meeting.

“We have to have reasonable income to spend more time at the office and not need another job,” said Sanders, a minister.

“I don’t go on many trips,” said Julian, noting that his commission salary is his only steady income and helps him take care of his elderly mother who lives with him in a rented duplex. The travel reimbursement, he said, would be taxable and “added income.”

Lazarow said the change was a way to adjust commissioners’ pay without increasing their base salary.

Meeting minutes record that Mayor Cooper opposed the change and instead supported allowing for an increase in travel allowances when commissioners exceed their budget and have been selected to represent the city at state and national meetings.

In an interview, Cooper said that if commissioners’ wanted higher pay they should have sought a salary increase.

BIG TRAVELERS

City records indicate that when Cooper exceeded her $10,000 travel account last year the commission added $5,000, and later another $2,500 to cover additional business travel expenses.

Cooper traveled to attend meetings of the National League of Cities in Boston and Washington D.C., and the U.S. Conference of Mayors in Las Vegas, San Francisco and Washington D.C. City records show she spent all but $439 of her $17,500 travel budget last year.

Lewy, a Democratic candidate for a state House seat, said in an interview that letting commissioners keep their unspent travel cash was a “disincentive” for commissioners to travel on city business because they may view use of funds as “taken from their own pocket.”

Lewy, who had his travel budget increased to $15,000 last year, went to National League of Cities meetings in Boston and Washington D.C. and also took other trips to the nation’s capital in connection with the city’s attempt to obtain U.S. Postal Service property near city hall. He had $1,131 remaining in his $15,000 travel budget at the end of the fiscal year.

The 2.5% cost of living increase raised salaries for four commissioners to $22,378. Mayor Cooper’s base salary, however, is slightly less at $21,727 because she turned down an increase several years ago during tougher economic times, according to the city’s Human Resources department.

Hallandale commissioners this year also get a $12,531 annual stipend to cover their purchase of health insurance. They are the only city officials eligible to have any left over funds refunded to them personally.

Last year, four commissioners got back money from unspent medical insurance funds. Commissioner Lewy received $5,402 and Commissioner Sanders got $1,235. Commissioners Lazarow and Julian, who were elected in November, 2012, received $1,030 and $1,501, respectively.

Mayor Cooper had no excess funds to claim last year. However, she was reimbursed $11,314 – the amount of last year’s stipend – after providing documentation to support her claim that she obtained outside coverage for at least that amount, according to city personnel official Radu Dodea.

Dodea declined to disclose what plans commissioners purchased from outside sources citing federal laws governing the privacy of medical records.

 

Two senators short-circuit Legislature’s plan to audit troubled Hallandale Beach CRA

By Willliam Gjebre, BrowardBulldog.org 

State Sen. Eleanor Sobel, D-Hollywood and State Sen. Oscar Braynon II, D-Miami Gardens

State Sen. Eleanor Sobel, D-Hollywood and State Sen. Oscar Braynon II, D-Miami Gardens

A Florida Legislature’s joint auditing committee is dropping its inquiry of Hallandale Beach’s questionable use of local redevelopment funds at the urging of two area state senators, one a long-time acquaintance of Mayor Joy Cooper.

Democratic Senators Eleanor Sobel and Oscar Braynon II, representing portions of Hallandale Beach, could not be reached for comment, despite repeated calls, to elaborate on a letter they signed recommending against a state audit or any action related to the controversial city spending of Community Redevelopment Agency (CRA) funds.

In addition, the committee will not ask the Florida Attorney General for an updated opinion on how CRA funds can be used. This was a contentious issue between the city and the Broward Inspector General’s Office which found that Hallandale Beach had “grossly mismanaged” millions of dollars in CRA funds while ignoring a 2010 opinion that limited CRA spending to “bricks and mortar” redevelopment projects.

‘NO ONE STEPPED TO THE PLATE’

“Broward has a huge (legislative) delegation and no one stepped to the plate and said let’s take a look at what happened to the $80 million” received by the city’s CRA from property tax dollars since 1996 to battle slum and blight, said Frank Schnidman, an attorney and senior fellow at Florida Atlantic University’s School of Urban and Regional Planning.

The Joint Legislative Auditing Committee “depends on local input and two delegation members said don’t…look back.” Schnidman said.

With the Broward County Commission recently having conceded it has no authority to order an audit of the Hallandale Beach CRA under an existing operating agreement, the Legislature’s audit committee was an opportunity for an analysis of the city’s CRA spending, said Schnidman, who worked as a consultant to Hallandale’s CRA for about a month earlier this year.

“State law has to [be amended] to establish clear criteria so cities, counties and CRAs can be held accountable,” said Schnidman.

Hallandale Beach’s CRA is funded by a portion of property taxes collected with its boundaries, roughly three-fourths of the city west of the Intracoastal Waterway. By law, the funds are to be used to revitalize the area.

Sen. Joseph Abruzzo, D-Palm Beach, chaired the Legislature’s auditing committee in June when he and vice chairman Rep. Lake Ray, R-Duval, sent a certified letter to Hallandale Mayor Joy Cooper city citing the Inspector General’s report and seeking further information about questionable spending. The letter warned that if expenditures were found to be improper the city might have to restore the money to the CRA trust fund.

In an interview, Abruzzo, now the committee’s vice chairman, said not a single Broward legislator “came forward to ask that we take it up. We can’t do anything until we have a request [from a legislator].”

Instead, the committee has only the joint letter from Sobel and Braynon.

“Out of respect for the two, the committee will not go forward with an audit,” said committee staff coordinator Kathy Dubose.

INSPECTOR GENERAL’S REPORT

The committee had waded into the thorny issue of Hallandale Beach’s CRA spending after receiving the Broward Inspector General’s 56-page report that found city officials had co-mingled CRA redevelopment funds with city funds for many years and misused CRA funds for grants to nonprofit groups and for such expenditures as fireworks displays. The committee asked the city to explain the allegation of misuse of funds.

At the same time, the committee urged the city commission to ask the Florida Attorney General for an updated opinion to clarify how CRA funds can be spent, and to abide by the decision. The city rejected that request in a 3-2 vote in July supported by Mayor Joy Cooper and commissioners Alexander Lewy and Anthony Sanders.

Neither Sobel nor Braynon responded to multiple requests for comment about their letter recommending against a state audit.

Their letter, however, Sobel and Braynon’s letter urged the committee to “abandon” any plans to audit the city or its CRA as “unnecessary and duplicative.”

While not mentioning the county’s inquiry found “gross mismanagement” of tax dollars by top city leaders, including questionable loans and grants to businesses and nonprofits, the two senators embraced arguments that paralleled the city’s arguments. They noted the city cooperated by providing requested documents and that city personnel gave interviews even though it was the city’s position that the Inspector General did not have jurisdiction. The city also implemented many of Inspector General’s recommendations, including a reorganized CRA staff and procedures, the letter said.

“It is our opinion that the city and the Hallandale Beach CRA are being punished because they asserted their right to express a difference of opinion with the OIG,” the letter said. “Finally, we are concerned that the state legislature is being used to further political agendas at the local level.”

Former city commissioner Keith London said he was disappointed the committee has backed off its probe. “It has egg on its face and its tail between its legs,” he said.

London, who lost a bitter race for mayor against Cooper last year, also said he was not surprised Sobel made a recommendation against a state audit because she and Cooper have been friends for years.

Cooper acknowledges her 14-year friendship with Sobel, but says it had nothing to do with the senator’s opposition to the Legislative audit. Sobel’s stand was based on her review of the situation, nothing more, the mayor said.

“I think she responded knowing Hallandale Beach and what we have done and how much we have accomplished,” Cooper said. “Why go any further?”

Cooper blamed London for attempting to keep the issue in the public eye. “We have a sour grapes person who lost an election,” said Cooper. “I think the city is doing wonderfully.”

While the committee’s plans for a Hallandale audit appear over, Abruzzo said the matter could resurface if a member of Broward’s legislative delegation steps forward to ask for one.

Hallandale finds allies amid aggressive response to county’s request for CRA documents

By William Gjebre, Broward Bulldog.org hbcralogo

A group of Broward cities have reached an agreement with the county Inspector General’s Office to turn over financial documents from their redevelopment agencies, temporarily heading off a possible court battle over the county’s claim that it has jurisdiction to investigate those agencies.

The Inspector General’s Office requested those Community Redevelopment Agency (CRA) documents earlier this month citing its authority under the county charter, but after encountering resistance agreed instead to request them using Florida’s public records law.

Hallandale Beach city commissioners, criticized this year by the Inspector General for mishandling millions of dollars in CRA funds, sounded the battle cry at a meeting on Monday with a vote to explore teaming up with other CRA cities to obtain a legal ruling about the county’s authority over CRAs.

Commissioners approved several aggressive measures aimed squarely at the Inspector General’s Office, including a requirement that the county pay the city copying and other fees for any CRA financial documents it receives under the Public Records Act.

Commissioners authorized the city to file its own public records request for the Inspector General’s file on its completed yearlong probe of Hallandale Beach, including information about the sources of the allegations that helped start the investigation. Likewise, the commission also approved asking the Inspector General to specify the authority it believes it has under county law, or any legal ruling, to investigate CRAs.

MILLIONS AT STAKE

The Inspector General’s request for CRA records from city halls’ across the county signaled the opening of a broad inquiry into the potential misuse of funds and a possible attempt to recover from those cities millions of unspent taxpayer dollars.

Hallandale Beach maintains the Inspector General does not have the authority to investigate CRAs, and that CRAs are under the jurisdiction of the state.

“The jurisdiction question has to be resolved,” the Hallandale Beach CRA’s attorney Steven Zelkowitz told the CRA’s board of directors Monday. In Hallandale, as in many other cities, the city commission also sits as the CRA’s board.

Zelkowitz is expected to seek support for any legal action from eight other cities that challenged the IG’s request under the county charter for the financial documents. Those cities are: Lauderdale Lakes, Dania Beach, Fort Lauderdale, Hollywood, Coral Springs, Deerfield Beach, Pompano, and Davie.

“I feel comfortable that we have support,” Zelkowitz told Hallandale commissioners. The cost of any legal action would be spread among the participating cities, he said.

Plantation, the tenth city to receive a letter from the Inspector General, is not part of the challenge. Mayor Diane Bendekovic said her city had already provided the requested documents under the original request.

Hallandale Beach Mayor Joy Cooper, who leads the pushback effort against the county, blamed county officials for “a witch hunt” against cities whose CRAs receive property tax funds from the county.

“I’m tired of the Inspector General wasting taxpayers’ money,” Cooper said. “We welcome an investigation by the proper authority,” Cooper said, adding that the Inspector General is not that agency.

OTHER CRA CITIES CONCERNED

Hostilities between Hallandale and the county flared again following the Inspector General’s letter to Hallandale Beach and nine other Broward cities seeking a variety of CRA financial documents. This time, Hallandale’s concerns were shared by others.

Attorneys and officials representing eight CRA cities challenged the Inspector General’s assertion of jurisdiction under the county charter. They met last week with Jennifer Merino, general counsel for the Inspector General.

Zelkowitz said an agreement was reached in which the Inspector General’s Office would rescind its letter citing charter authority and re-issue a letter seeking the information under Chapter 119 of Florida’s statutes, the public records act.

The county also agreed to push back the date when the documents were due to be produced by about two weeks. The records had been due on Friday.

Merino told Browardbulldog.org her agency agreed only to “clarify” its request letter, saying the agency always wanted the documents under the public records law even though the original letter cited the county charter. She also said her agency is only conducting an “inquiry” for information and not an investigation.

According to Zelkowitz, the Inspector General’s office refused a request by the cities to jointly seek a ruling in Broward Circuit Court on whether does or does not have investigatory authority over CRAs. He also said the Inspector General failed to cite specific provisions giving it investigatory authority over CRAs.

Merino, maintaining that the Inspector General’s Office has the authority, said her office felt it “was not the right time” to seek such a court ruling.

“We are not trying to throttle any investigation,” Zelkowitz told Hallandale commissioners. “We want the right investigative agency to do the investigation.”

In June, Broward County commissioners, expressed frustration when told by county staff that their authority to audit Hallandale Beach’s CRA was limited by both state and county law. They vowed to change state law to gain control. The commissioners created the Inspector General’s Office several years ago.

In Hallandale, several of Mayor Cooper’s colleagues expressed a different kind of frustration as the tug-of-war continues with the Inspector General’s Office.

“We spent enough taxpayers’ money on this,” said Vice Mayor Alexander Lewy.

But Commissioner Michele Lazarow, the lone dissenting vote in Monday’s commission action, has called for state officials to seek an Attorney General’s opinion on the city’s use of CRA funds, and for an outside audit of the CRA to determine if funds have been misused in the past.

William Gjebre can be reached at wgjebre@browardbulldog.org

Broward opens broad inquiry into misuse of property tax dollars by CRAs; millions at stake

By William Gjebre and Dan Christensen, BrowardBulldog.org iglogo

The Broward Inspector General’s Office has opened a broad inquiry into the potential misuse of public funds across the county with written requests sent to at least nine cities with a Community Redevelopment Agency to hand over a variety of financial records for inspection.

One official with knowledge of the inquiry told BrowardBulldog.org the Inspector General’s review is “the beginning of a long term process.”

Frank Schnidman, an attorney and senior fellow at Florida Atlantic University’s School of Urban and Regional Planning, said the Inspector General’s request for records is all about millions in tax dollars and who should control them.

“It’s about time that somebody was trying to hold CRAs accountable. The Inspector General’s Office might not be the right mechanism to do that, but it’s about time,” Schnidman said.

CRA’s administer programs within districts designated by local governments under state law as community redevelopment areas.  Boards made up of local government officials or persons appointed by the local government run them.

Tax increment financing is used to fund CRAs, which receive tax revenue generated by increases in real property value in their area over a baseline number determined when the CRA is created. By law, those revenues – the “increment,”— are put into a CRA Trust Fund that’s dedicated to the redevelopment of the area.

KEEPING TABS ON CRAS

In sending letters to the CRAs the Inspector General’s Office is carrying out a vow made earlier this year amid its investigation of Hallandale Beach’s CRA to keep close tabs on municipal redevelopment groups that receive half their funds from property taxes collected by the county.

Identical records requests were sent to at least eight of the 10 Broward cities with CRAs that receive county funding – Hallandale Beach, Hollywood, Fort Lauderdale, Lauderdale Lakes, Davie, Pompano Beach, Margate, Deerfield Beach and Plantation. An official in Coral Springs, the 10th city, said that city has not received a letter but expects one soon.

While some CRA officials express uneasiness, others welcomed the Inspector General’s action.

“I think they are looking for general information, but they may want to see if there is anything that’s improper,” said Will Allen, administrator at the Davie CRA. “They won’t find anything wrong here.”

In Hallandale, City Commissioner Michele Lazarow said, “I don’t think it is an accident that the letter was sent” shortly after the Inspector General issued a critical report against the Hallandale Beach CRA.

Earlier this year, the Inspector General charged that Hallandale Beach city officials had “grossly mismanaged” millions of dollars in CRA funds. The office said it found at least $2.2 million in questionable expenditures between 2007 and 2012.

Mayor Joy Cooper challenged many of the county’s allegations. Asked to comment about the Inspector General’s new request for documents, she said the city “will respond accordingly.”

The Inspector General’s office asked the cities to produce:  

*A copy of the ordinance that established the CRA Community Redevelopment Trust Fund. Hallandale Beach, for instance, did not have a separate fund for the first 16 years of the agency’s existence.

*Bank statements for the redevelopment trust fund accounts for the months of September and October for the years 2009-2012.

*The CRA’s general ledger account ending balances from 2009-2012

*Any and all CRA capital improvement plans for 2009-2012.

*Documentation for the disposition of all money remaining in the redevelopment trust fund at the end of fiscal year ending September 20, 2012 that was later used to reduce indebtedness for pledged funds.

*Records regarding all money deposited into escrow accounts from 2009-2012 for repayment of CRA debts.

Schnidman said the records that were sought indicate that the county’s agents are attempting to determine if the CRAs have complied with the requirements of state statute – 163.387(7) – regarding how tax increment trust fund balance amounts are to be treated at the end of the fiscal year.

Under the law, Schnidman said, those balances are supposed to be proportionally returned each year to each taxing authority, such as the county, that paid into the CRA.

“What the Inspector General is doing is he’s trying to figure out which of the county’s CRAs are in violation of the law and need to return all this money they’ve husbanded away,” said Schnidman. “It’s millions of dollars.”

WILL OTHER COUNTIES FOLLOW BROWARD’S LEAD?

At a time of tight municipal budgets, the Inspector General’s gambit could reverberate it city halls across the state.

“I wonder if other counties will follow this effort by the Broward IG’s Office in the continuing revenue discussions between some counties and their CRAs,” said Schnidman. “The threshold question is by what authority is the Broward IG seeking this information from Broward County Dependent District CRAs that it arguably does not have jurisdiction over?”

City officials in Hallandale briefly challenged the Inspector General’s authority over its CRA, but later backed off that position.

In Margate, where the CRA has focused on “streetscape” improvements along Atlantic Boulevard and State Road 7, City Attorney Eugene Steinfeld took a wait-and-see approach to the county’s inquiry.

“It sounds like they are just gathering information,” Steinfeld said.

Lauderdale Lakes CRA executive director J. Gary Rogers welcomed any new oversight.

“They are doing their job,” said Rogers.

In 2012, following up on a story the year before by BrowardBulldog.org about missing redevelopment funds, the Inspector General found that Lauderdale Lakes had misspent $2.5 million in CRA funds. The city is repaying the money to the CRA.

“We were investigated and employees were terminated,” Rogers said. “We came close to a big financial disaster” under a previous administration, added Rogers who was not with the city at the time.

“I got no problem with them looking at us,” Rogers said. “They want to make sure we are spending money appropriately.”

William Gjebre can be reached at wgjebre@browardbulldog.org

Defiant Hallandale commissioners reject call for new legal opinion on CRA spending

By William Gjebre, BrowardBulldog.org hallandalelogo

Hallandale Beach city commissioners have shot down a request from a legislative committee that it seek a new opinion from the Florida Attorney General on how community redevelopment funds can be spent and abide by the ruling.

Sitting as directors of the city’s Community Redevelopment Agency (CRA), commissioners voted 3-2 Wednesday night to approve telling the Florida Joint Legislative Joint Auditing Committee that the CRA “cannot at this time advocate seeking the requested” Attorney General opinion.

The action raised the likelihood that state legislators could order an audit of the city’s CRA spending. “I’m not concerned if they order an audit; they can do that regardless,” CRA Attorney Steven Zelkowitz said after the Wednesday meeting.

The state committee got involved after reviewing a highly critical report by the Broward Inspector General’s Office that found Hallandale’s CRA had “grossly mismanaged” and misspent millions of tax dollars.

The Inspector General’s report relied heavily on a 2010 Attorney General’s opinion that said CRA funds should be used for “brick and mortar” projects. City officials, however, have questioned that interpretation of state law and said that the use of CRA funds for things like handouts to local nonprofit groups and city fireworks displays are legitimate expenditures.

Hallandale’s defensive posture appears to have prompted the legislators to suggest the city seek a new legal opinion that it would agree to live by.

The city’s resistance to that idea was clear in a four-page report to the legislators that was submitted to the CRA’s board – Hallandale’s five commissioners for their approval.

“The questions the committee has requested to be posed to the Attorney General will have an impact on (CRA’s) on a statewide basis,” the report said. “The city and (its CRA) cannot legally bind themselves to abide by a yet to be issued [opinion].”

Zelkowitz, City Manager Renee C. Miller and City Attorney V. Lynn Whitfield wrote the report.

“I’m very disappointed,” said Commissioner Bill Julian, who with Commissioner Michele Lazarow favored seeking the Attorney General’s opinion but were outvoted.

“I’m not surprised” by the vote, Lazarow said.

Mayor Joy Cooper, who attended via phone, Vice Mayor Alexander Lewy and Commissioner Anthony Sanders voted for the report. After the meeting, Lewy said the city has made numerous improvements to the CRA recently.

In response to several other matters raised by the state committee, commissioners agreed to reply that is their position that state law and a few case rulings do not prohibit the questioned expenditures. “In fact, the statutes and case law provide a broad framework for the expenditure of CRA monies,” the report said.

On another issue, the city’s report to the legislature noted that while Hallandale had co-mingled city funds with CRA money in the past — which the Inspector General said was improper — it established a separate CRA trust in May, 2012 and reported the fund balance is approximately $15 million at present.

At the meeting, commissioners also unanimously approved an eight-page report outlining the city’s response to recommendations made by the Inspector General.

The report – a copy of which will be sent to the state audit committee – said Hallandale has:

*Stabilized CRA staff by naming City Manager Miller executive director and hiring a new Deputy City Manager to serve as CRA director and supervise key departments that interact with the CRA.

*Provided training to top city officials regarding provisions of the state law, Chapter 163, governing CRAs, and established a process and standards for awarding funds/grants to nonprofit groups, as well as on-going performance evaluation.

*Trained staff on policies and procedures for all CRA programs; established legal and financial reviews of loans and other financial funds, and implemented controls to monitor all CRA expenditures.

William Gjebre can be reached at wgjebre@browardbulldog.org

 

 

Hallandale may seek Attorney General opinion on CRA spending; statewide impact seen

By William Gjebre, BrowardBulldog.org hallandalewateretower1

Hallandale Beach city commissioners on Wednesday will consider asking the Florida Attorney General for a ruling on how community redevelopment funds can be spent, a decision that could have a far-reaching impact.

“This is an opinion that would affect every CRA in the state of Florida,” Hallandale Beach Community Redevelopment Agency (CRA) attorney Steven Zelkowitz cautioned city commissioners at a recent meeting.

Commissioners will also review the city manager’s draft response to recommendations made by the Broward Inspector General’s office, which has criticized the city for “grossly mismanaging” millions of dollars in CRA funds.

While stating they are complying with many of the Inspector General’s recommendations, city officials continue to challenge the accusation that community development money was misspent, primarily by funding certain nonprofit groups.

With both sides at odds, the push to involve the Attorney General’s Office is coming from a state committee that has injected itself in the matter.

The Florida Legislative Joint Auditing Committee, expressing concerns about questionable spending cited by the Inspector General, recently invited the city to seek a new legal opinion that might clarify CRA spending rules.

The committee made the request after noting that Hallandale Beach officials questioned a 2010 Attorney General’s opinion that held CRA funds should be used for “brick and mortar” projects. In its letter to the city, the legislative committee also asked the city to agree to adhere to any new legal ruling.

Hallandale CRA attorney Steven Zelkowitz

Hallandale CRA attorney Steven Zelkowitz

City officials have argued the 2010 opinion does not limit CRA spending only to brick and mortar projects, and contend the ruling was nonbinding anyway.

The state committee also has asked the city to explain its questioned expenditures and to provide a copy of its response to the Broward Inspector General’s recommendations.

CRA attorney Zelkowitz could not be reached for comment. But during his remarks at a June 17 CRA board meeting, he noted that it was unusual for the committee to have asked the city to seek a new legal opinion and warned about the pitfalls in doing so.

“We have never seen a request that actually goes so far as to say we would like you, as a board, to request an Attorney General opinion as to certain matters and…(to) abide by it,” said Zelkowitz. “This is not to be taken lightly.”

A majority vote by Hallandale Beach’s five city commissioners, who also sit as the CRA’s board of directors, is needed to get an opinion, Zelkowitz said.

Zelkowitz told commissioners the state legislative auditing committee could order an audit of the CRA even if the city receives an Attorney General opinion that favors the city’s position or if the city does not ask for a legal opinion.

City Manager Renee C. Miller’s eight-page draft response regarding the Inspector General’s recommendations cites the 2010 legal opinion in defense of the city’s actions. It states that “…a close reading of this opinion will reveal that the Attorney General gives no definite answer as to whether or not all grants to nonprofits are outside the scope of the Community Redevelopment Act.”

Much of the remainder of the response outlines how the city has altered its practices – many of them absent or disregarded in the past – in an effort to comply with the Inspector General’s recommendations and comport with state law governing CRAs.

The response said the city has:

*Stabilized CRA staff by naming Miller executive director and hiring a new Deputy City Manager to serve as CRA director and supervise key departments that interact with the CRA.

*Provided training to top city officials regarding provisions of the state law, Chapter 163, governing CRAs, and established a process and standards for awarding funds/grants to nonprofit groups, as well as on-going performance evaluation.

*Established a separate CRA trust account – CRA property tax funds were commingled with city funds before – and indicated it would provide information on the trust fund balance by the end of the fiscal year.

*Trained staff on policies and procedures for all CRA programs; established legal and financial reviews of loans and other financial funds, and implemented controls to monitor all CRA expenditures.

In another development, the city commissioners have agreed to pay Zelkowitz’s law firm $40,000 more for additional legal work stemming from the Inspector General’s report. Zelkowitz told commissioners his firm had exhausted $60,000 in its contract with the city because of the extra work.

Wednesday’s meeting was scheduled after a dispute among commissioners on the need for a public hearing. Mayor Joy Cooper and Vice Mayor Alexander Lewy wanted to have Miller and Zelkowitz prepare responses and brief commissioners individually.

They were outvoted, 3-2, in favor of a public meeting. It was backed by commissioners Michele Lazarow, Bill Julian and Anthony Sanders.

The Inspector General’s probe involved a review of the city’s purchase of property from Sanders’ nonprofit High Vision Ministries at 501 NW First Ave. The Inspector General, however, cleared Sanders of an allegation that the CRA showed favoritism toward him by substantially overpaying his nonprofit group for the property.

Higher Vision brought the property in 2001 for $45,000 and sold it to the city in 2009 for $235,000. Appointed to the commission in 2008, Sanders did not vote on the purchase.  In between the purchase and the sale, the CRA gave the group $46,000 for property improvement; the group was required to repay only $31,000 of the loan, with the balance forgiven.

Hallandale diverts millions from CRA’s budget to pay for non-redevelopment programs

Hallandale Beach City Hall

Hallandale Beach City Hall

By William Gjebre, BrowardBulldog.org 

Hallandale Beach has diverted nearly a third of its Community Redevelopment Agency’s $11.6 million annual budget to pay for various city programs, including some apparently outside state guidelines for CRA expenditures.

That $3.5 million in questionable spending, identified by BrowardBulldog.org, is in addition to millions of dollars in CRA funds that Broward’s Inspector General has said were misspent as a result of “gross mismanagement” by city leaders.

Hallandale City Manager Renee C. Miller defended as legitimate each of the program allocations that were spread among numerous city departments.

Miller also challenged the authority of a Florida Attorney General’s opinion – cited repeatedly by the Inspector General in his highly critical report – that says CRA money should be used only for “brick and mortar” redevelopment projects to reduce slums within the CRA’s boundaries

“It’s an opinion,” Miller said. “What we dispute is the idea that we can never use [CRA] funds for anything other than bricks and mortar (projects).”

In Hallandale, the CRA covers about three-fourths of the city from I-95 to 14th Avenue and from Pembroke Road to County Line Road.

Hallandale Beach City Manager Renee C. Miller

Hallandale Beach City Manager Renee C. Miller

The Inspector General’s Office issued its final report about Hallandale in April after a yearlong investigation that was triggered by stories in BrowardBulldog.org and other news outlets. It was silent about funds parceled out to city departments.

Hallandale’s CRA is ostensibly autonomous, but like many other municipal CRAs around the state it is run by the city’s five commissioners, who also serve as its board of directors.

The CRA’s fiscal year runs from Oct. 1 to Sept. 30. Records show its funds were channeled to various departments:

  •   Police — $1,175,474 to pay for three programs aimed at    reducing crime and enhancing safety. Each program pays for two to four police officers. The cost for those programs was $181,000 more than the previous year.
  • Public Works/Utilities and Engineering – $690,000 for capital projects, such as pedestrian and crosswalk improvements; $138,906 for project management; $148,500 for landscaping and maintenance. That was about $100,000 less than was spent last year.
  • Parks and Recreation – $376,695 for three new programs at Johnson and Foster parks for after-school care for students.
  • Human Services –$159,600 for an after-school tutoring program; $217,661 for social worker services; $203,000 for jobs training. The cost of those programs was up about  $16,000 from the previous year.
  • Development Services — $175,246 for code compliance and $20,000 for planning and zoning related to matters that have regional impact. There were no CRA charges for these services in the previous year.
  • City Hall operations — $236,000 to reimburse the cost of services provided to the CRA by the city manager, city clerk, and various city departments. This cost was $900,000 last year.

City Manager Miller said those funds were properly spent to reduce slum and blight in the CRA area, which covers three-fourths of the city.

“We want to have a higher level of service for the CRA area,” she said.

Miller said state laws governing CRAs specifically mentions the use of CRA funds for policing. She added that CRA funds for Parks and Recreation are allowable because they meet social service needs in the community.

CRA money sent to code enforcement is necessary to redo the city’s “archaic code” and is aimed at aiding redevelopment, she said.

Miller said Hallandale follows “best practices” guidelines, that its expenditures are allowable under state law and that they are in accordance with the city’s CRA program.

The $236,000 in operational fees that the city charged the CRA included $16,000 to rent offices at City Hall.

Other city departments are not charged rent. The city charges the CRA because it is a separate city agency that receives its own funding from a portion of property tax dollars collected in its area.

Hallandale, however, rents space in City Hall to the Hallandale Beach Area Chamber of Commerce for $1 a year.

“That’s comparing apples to oranges,” Miller said.

Still, Miller said Hallandale appears ready to change the way it spends CRA funds.

“There is a shift on the [commission] dais,” Miller said. “I think changes are coming, placing emphasis on bricks and mortar.”

That could be because the city has acquired considerable land around City Hall for park development. Within the past year plans have been outlined for a City Hall park and for other sites that fall under the scope of the CRA, including a new central fire station.

Unhappy Broward commissioners want more control over city CRAs

By William Gjebre, BrowardBulldog.org 

The Broward County Commission

The Broward County Commission

Broward County commissioners vowed to seek changes in state law to give them more oversight over municipal redevelopment agencies after learning they cannot audit alleged misspending by Hallandale Beach’s Community Redevelopment Agency.

“We want to get back some control from the state,” County Commissioner Sue Gunzburger said in an interview.

Gunzburger and other commissioners expressed frustration when told by county staff that their authority to audit was limited by both state law and the county’s 1996 agreement with Hallandale Beach that established its CRA.

The issue came before the commission last week when a Hallandale city commissioner and a former city commissioner, both critics of the way the city has operated the CRA, traveled to County Hall to urge the county to conduct a financial review.

The critics, Commissioner Michele Lazarow and former Commissioner Keith London, cited a recent Broward Inspector General’s report that found that the CRA had “grossly mismanaged” millions of dollars in public funds. The report had recommended a county audit with an eye toward recovering any misspent county funds.

A CITY DELEGATION TO COUNTY HALL

A delegation of city officials who have challenged the Inspector General’s report, led by Mayor Joy Cooper, argued successfully that the county has no authority to conduct an audit.

During the discussion, County Commissioner Tim Ryan noted that the Inspector General’s Office had cited possible violations of state law by the CRA, which is overseen by the Hallandale City Commission sitting as the CRA’s board of directors.

“Can we recoup [misspent funds]? Do we have the ability to act on violations?” he asked.

County Attorney Joni A. Coffey and County Auditor Evan Lukic gave the county commission the news that they were powerless to review $36 million in tax funds they have sent to Hallandale Beach for CRA purposes during the past 17 years.

Coffey explained that the county’s agreement with Hallandale Beach provided that oversight of CRA actions belongs to the city and the state, not the county.

Said Lukic, who reviewed the county-city CRA pact, “We have limited authority – but not to audit.”

Lukic said he and Coffey will work together in coming days to better define the scope of the county’s oversight authority.

CRA LIKE A PIGGYBANK?

The Inspector General’s report says that from 2007 through 2012 Hallandale used the CRA like a piggybank to improperly pay for the city’s general expenses and other pet projects, including donations to favored nonprofit groups and local businesses. In all, agents found $2.2 million in questionable CRA expenditures.

“The Inspector General has raised concerns about the use of money,” said Gunzburger, whose district covers part of Hallandale. “We send money to the Hallandale Beach CRA and it may be being used in inappropriate ways.

“They continue to use CRA for a piggybank,” Gunzburger added. “I am disappointed we are…not able to do anything about possible violations of law.”

Gunzburger and other commissioners asked the county’s staff to look into finding ways to change state or county laws, and make recommendations after the county commission returns from its summer recess.

“This has to be addressed through Tallahassee,” Commissioner Lois Wexler said.

The matter is “not a Republican or Democrat issue” but one of oversight of CRA spending, Commissioner Martin Kiar said.

Changes are needed “to protect the taxpayers’ money,” Commissioner Ryan added.

While the county’s elected leaders had a lot to say publicly about the matter, Hallandale Commissioner Lazarow informed them that her colleagues in Hallandale have remained mostly mum.

“There has never been an official action taken by the policy makers: No agenda item. No resolution. No motion. No vote,” she said.

Since the county commission meeting, the Florida Legislature’s Joint Legislative Auditing Committee, chaired by Sen. Joseph Abruzzo, a Palm Beach County Democrat, has jumped into the debate, asking city officials to explain how the funds were handled and spent.

Legislature asks Hallandale for answers about CRA spending; Subpoenas land at city hall

By William Gjebre, BrowardBulldog.org  hallandalecomplex

The Florida Legislature’s joint auditing committee is wading into Hallandale Beach’s questionable spending of local redevelopment funds, demanding that city officials explain the use and handling of those funds.

Legislators who head the committee also are urging the city commission to ask Florida’s Attorney General for a new opinion to clarify how Community Redevelopment Agency (CRA) funds can be spent. City leaders have challenged a previous opinion.

In a separate but related development, the Broward State Attorney’s Office issued subpoenas last week to Hallandale Beach officials -including Mayor Joy Cooper -in connection with a criminal investigation into the alleged misuse of city funds by a nonprofit group, the Palm Center for the Arts.

BrowardBulldog.org obtained one subpoena served on the city clerk asking her to produce the transcribed minutes and tape recordings of a March 17, 2010 commission meeting, a copy of a $5,000 check issued by the city to the Palm Center and any correspondence between the nonprofit group “and/or founder Dr. Deborah Brown” regarding that check.

City Clerk Sheena James is to appear at the State Attorney’s Office with the records and to testify on June 24 at 9 a.m. The subpoena is signed by Assistant State Attorney Deborah Zimet.

A YEARLONG INVESTIGATION

The subpoena and the audit committee’s inquiry stem from a yearlong investigation by the Broward Inspector General’s Office that found city officials had “grossly mismanaged” millions of dollars in CRA funds.

Hallandale Beach Mayor Joy Cooper

Hallandale Beach Mayor Joy Cooper

The CRA is funding by a portion of the property taxes collected within its boundaries.

Inspector General John Scott’s office said it found “probable cause” that Brown, the Palm Center’s founder and director, had engaged in criminal misconduct and asked the State Attorney’s Office to investigate.

Hallandale Beach officials have denied any misspending of CRA funds and defended how those funds were handled. They have also challenged many of the Inspector General’s findings, including criticism that the city wrongfully funded nonprofit groups, paid for fireworks displays and provided loans to businesses.

A delegation of city officials, led by Mayor Joy Cooper, went to County Hall last week in the wake of talk about a possible county audit of CRA tax funds it had sent to the city to inform Broward commissioners they don’t have the authority to do that.

County officials acknowledged that only the state has the authority to review CRA actions.

The Legislature now appears interested.

Sen. Joseph Abruzzo, a Palm Beach County Democrat who is chair of the Joint Legislative Auditing Committee, and Rep. Lake Ray, a Duval County Republican who is the vice chair, began asking questions on Thursday after being contacted by “a concerned citizen.”

Abruzzo and Ray sent a certified letter to Mayor Cooper. Copies were sent to Florida Auditor General David Martin, Broward’s commissioners, county Inspector General John Scott and City Manager Renee C. Miller.

Citing the report by Scott’s office, the legislators asked Cooper to respond to accusations that Hallandale had improperly co-mingled city and CRA funds and justify more than $2.2 million in questionable spending.

Abruzzo and Ray’s letter says that if the city fails to provide “specific authority” under state law, or if the expenditures were not included in the city’s CRA plan, Hallandale may have to restore the money to the CRA trust fund.

The legislators also suggested that city commissioners, who also sit as the CRA’s board of directors, seek a new Attorney General’s opinion regarding what constitutes allowable expenditures.

Abtruzzo and Ray also want to know if the city is complying with recommendations by Broward’s Inspector General, including whether the city has established policies to comply with state law and ensure the CRA operates independently.

Cooper said she has informed the committee that lawyers for the city and the CRA will respond to their questions. “I reaffirmed my position and that of our attorneys that expenditures by the CRA are within the authority of the statute to address slum blight, crime and economic development,” she said.

County agents have asked the city to provide a status report on their recommendations by July 16.

THE MAYOR’S SUBPOENA

Cooper said prosecutors subpoenaed her as a witness in their criminal case.

“I cannot comment any further on the matter.  I was asked to go in as a witness on the 25th, but have asked to come in earlier due t o my schedule,” the mayor said.

Prosecutors’ investigation of The Palm Center for the Arts follows the Inspector General’s allegations that nearly $5,000 in city funds were used to make a payment on Brown’s timeshare at the Westgate Resort in Orlando and to make payroll payments to herself and her brother and for miscellaneous personal expenses.

City Commissioner Bill Julian said in an interview that the city clerk’s office informed him a subpoena had arrived for him, too. He had not seen the subpoena, but was told it requires him to appear at Zimet’s office on June 25th.

Julian believes that many of the same city officials who previously were questioned by the Inspector General’s Office were issued subpoenas. “I’ll go there and answer questions,” he said. “I have nothing to hide.”

Commissioners Anthony Sanders could not be reached for comment. Likewise, Brown could not be reached. Commissioner Alexander Lewy said he did not receive a subpoena.

PALM CENTER PAYMENTS

Palm Center received at least $107,000 in CRA funds over a three-year period. Brown was also listed as a principal and director of Zamar School of Performing Arts. About three years ago, Zamar received $25,000 in CRA funds.

Both programs operate on city property at 501 NW First Ave. The city leased the property to Palm Center in 2009 for a one-time payment of $10. While Palm Center was prohibited from subletting the facility, the city later modified the agreement to permit Zamar to operate a summer camp there in 2009.

The city property was once owned by a group headed by Commissioner Sanders. The Inspector General’s Office probe involved a review of the city’s purchase of the property from Sanders’ nonprofit Higher Vision Ministries.

Higher Vision bought the property in 2001 for $45,000 and sold it to the city eight years later for $235,000. Sanders, appointed to fill a commission vacancy in 2008, did not vote on the purchase.

In between the purchase and the sale, the CRA gave Sanders’ group a $46,000 property improvement loan. Sander’s group was only required by the city to repay $31,000; the rest was forgiven.

In its report, the Inspector General cleared Sanders of an allegation that the CRA showed favoritism toward him by substantially overpaying his nonprofit group for the property.

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