By William Gjebre, BrowardBulldog.org
Hallandale Beach City Manager Renee C. Miller
After a brief period of independence, the Hallandale Beach Community Redevelopment Agency (CRA) is once again under the thumb of the city manager.
CRA oversight by Hallandale Beach city managers was a key issue in the year-long investigation by the Broward Inspector General’s Office which recently found that city officials had “grossly mismanaged” millions of dollars in CRA funds.
While the Inspector General expressed concern about a shift back to the city manager-directed CRA, City Manager Renee C. Miller said Hallandale was in line with the majority of Broward’s CRA cities – eight of 12 of which use the city manager to also head the CRA.
In its recent report criticizing the city, the Inspector General noted that CRA management improved briefly last year under the direction of former executive director Alvin Jackson who pushed through a number of changes that addressed the concerns of the county’s investigators. They included new measures to comply with laws and rules governing CRA grants and donations to community groups and to improve accountability.
“In August of 2012,” the report says, “the community redevelopment board finally provided for independent leadership of the CRA by promoting Dr. Jackson to the position of executive director. …Unfortunately, the city has since… receded from this course of action.” That’s a reference to Jackson’s January resignation under pressure from the mayor and the city commission, who also sit as the CRA’s board.
CITY MANAGER REGAINS CONTROL
The board then handed off the executive director’s duties to the city manager – the model that got the city into trouble in past years.
Except for last year’s blip, Hallandale Beach’s city manager has headed the CRA since its creation in 1996. Jackson was hired as CRA director in January 2011, but reported to then-city manager Mark Antonio.
Jackson quickly found the CRA lacked or was missing documents and had failed to create bylaws or establish a separate CRA trust fund to hold its funds. It also had not updated its operating plan, as required by law.
State law requires that each municipal CRA be led by an executive director, which can be a city manager or some other employee. It also requires the CRA to operate as an independent agency.
The Inspector General’s report said the CRA should create both a stable staff and “incorporate some level of independent management…whether the CRA executive director duties remain with the city manager or are again filled by an independent officer.”
Miller, who was not the city manager during most of the period investigated by the Inspector General, said she embraces those goals.
She said the CRA now operates as a separate entity even though she is in charge of both the city and the CRA. She said she also seeks a stable staff for the agency, and wants it to operate in a “clean, transparent” manner.
In that regard, Miller said one of her first actions was to hire in February a former colleague, Daniel Rosemond, as deputy city manager/CRA director at a salary of $146,300.
Miller did not advertise the job, or do any search, saying she had confidence in Rosemond because they worked together at city hall in Miami Gardens, she as deputy city manager and Rosemond as an assistant city manager.
LAZAROW RAISES QUESTIONS
Some residents, however, have raised questions about the hire.
For example, City Commissioner Michele Lazarow. She said the Inspector General recommended that the CRA executive director should have CRA experience, and that the job should be “separate and distinct from the city.”
Lazarow said Rosemond will split his time between his duties as CRA director and deputy city manager in charge of several other departments, including public works. She said the CRA has major projects to complete.
“The CRA requires and deserves a full-time director; not a part time employee,” Lazarow said. “I want to see a separate CRA director, like Hollywood and Dania. “We have the budget to support an independent, separate executive director,” Lazarow said.
Miller said Rosemond’s experience in the past and his additional work assignments as deputy city manager will allow for better coordination of projects involving the CRA. Public Works, she said, has tie-ins to CRA projects. She added that Rosemond’s dual positions will enhance accountability between the CRA and other city departments.
In the past, she said Rosemond has worked in community development for numerous cities. He’s also knowledgeable of budgeting, planning, permitting requirements. Having a top city official in charge of the CRA, Miller said, should assure that the CRA functions properly with other departments.
“I think he’s doing a fantastic job,” Miller said.
Mayor Cooper could not be reached for comment. It’s not surprising that she favored restoring the city manager as executive director of the CRA. She told Inspector General investigators that she preferred to have the city manager as CRA executive director rather than some other employee and had been opposed to Jackson’s promotion to executive director, according to the Inspector General’s report.
By William Gjebre, BrowardBulldog.org
County Commissioner Sue Gunzburger and Broward Auditor Evan Lukic
The Broward County Auditor’s Office has begun looking into whether Hallandale Beach should be required to repay some of the millions in tax dollars allegedly misspent due to “gross mismanagement” by city officials.
The preliminary review was undertaken recently at the urging of a county commissioner and a former Hallandale Beach city commissioner. It was also recommended by the Broward Inspector General’s April 18 report that was highly critical of the city’s handling of those public funds belonging to its Community Redevelopment Agency (CRA).
“Based on the final report of the Inspector General I believe we should recover any funds that were misspent,” said County Commissioner Sue Gunzburger, whose district covers parts of Hallandale Beach.
Broward Vice Mayor Barbara Sharief, who also represents the city, did not respond to calls for comment.
The county has an interest in the CRA funds because it approved establishment of the Hallandale Beach CRA in 1996. Since then the county has sent the CRA approximately $36 million in tax revenue, with the city putting up a matching amount to help rid slum and blight areas.
“The OIG report is problematic,” said County Auditor Evan Lukic. “If the funds were not used for the intended purpose in accordance with state law then money may be due back to the county.“ He said his review could take up to two months.
Following a yearlong investigation, the Inspector General reported that from 2007 to 2012 city leaders used the CRA like a piggybank to improperly pay for the city’s general expenses and other pet projects, including donations to favored charities and loans to local businesses. In all, agents found at least $2.2 million in questionable CRA expenditures.
The report urged the county government “to independently determine” whether Hallandale Beach expenditures were outside the scope the governing state statute, and if so to “determine what legal options are available to prevent ongoing abuse of the CRA process and recover those funds that may have been misspent.”
Hallandale officials, including Mayor Joy Cooper, objected to many of the report’s findings. They also asserted it was riddled with “numerous factual inaccuracies” and even challenged the Inspector General’s authority to investigate the CRA. City commissioners sit as the CRA’s board of directors.
Inspector General John Scott’s office replied that Hallandale’s top leadership, including the mayor and city manager, showed a “basic misunderstanding” of what’s gone wrong.
Cooper could not be reached for comment about the auditor’s inquiry.
City Manager Renee C. Miller said, “I would understand that they are looking into this… We will communicate and will reach out to them.”
Miller said the city continues to work to improve CRA operations, which includes “having and retaining a stable staff.”
Auditor Lukic said his review would determine what spending authority the Hallandale Beach CRA was given when it began. Hallandale got one of the first CRAs, he said, and there were fewer restrictions placed on them at that time.
Should he find the county’s authority lacking, there will be “no recourse” to recover funds from Hallandale Beach, Lukic said.
The County Commission will address the matter at its regular June 4 meeting. One of those who will speak is former Hallandale Beach city commissioner Keith London, who has called for a full county audit.
London, who frequently challenged CRA expenditures when he was on the commission, said a county audit is necessary not only because of the Inspector General’s findings. He accused his former colleagues of skirting “their fiduciary responsibility to the taxpayers” by ignoring both the Inspector General’s recommendations and a relevant 2010 Attorney General’s opinion.
That opinion held that CRA expenditures should go toward “brick and mortar” projects. The Inspector General, however, determined that Hallandale CRA’s violated that guideline with spending on grants and donations for favored charities.
City officials have countered that the Attorney General’s advisory opinion was non-binding, and does not prevent the city from making such grants.
By William Gjebre, BrowardBulldog.org
The Broward Inspector General’s final report on the “gross mismanagement” of millions in tax dollars by Hallandale Beach is sharply critical of city leaders it says have shown a “basic misunderstanding” of what’s gone wrong.
Hallandale Beach city managers past and present, the city attorney, the mayor and other city officials defended the handling of funds of the city’s Community Redevelopment Agency in formal responses included in the 56-page report released last week.
The Inspector General, after a year investigating, determined that from 2007 to 2012 city leaders used the CRA like a piggybank to improperly pay for the city’s general expenses and other pet projects, including donations to favored charities and loans to local businesses.
By law, CRA is a limited purpose special district whose funds are only to be spent to address slum and blight conditions within a defined area. It receives 95 percent of the taxes collected on the appreciated value of properties within its boundaries, or about $70 million since it began in 1996
Some of the report’s bluntest words rebut claims by Mayor Joy Cooper and City Attorney V. Lynn Whitfield that the Inspector General had no authority to investigate the CRA’s activities.
Hallandale Beach City Attorney V. Lynn Whitfield
Whitfield’s “assertions ignore the fact that the OIG (Office of Inspector General) has authority over all municipal officials in identifying mismanagement of public resources,” the report says. “A municipality cannot avoid OIG oversight by spending taxpayer funds through an agency that is independent in name only.”
Likewise, the report ripped “another common theme” of the city’s defenders that the Inspector General mistakenly relied on a Florida Attorney General’s advisory opinion that the Inspector General said precluded the city from spending CRA funds as it had.
City Attorney Whitfield’s arguments “reflect the basic misunderstanding that is at the core of the gross mismanagement identified in this report: the city has failed to comprehend that the CRA has a limited purpose and that the powers of the CRA to expend CRA…funds is not equal to the power of the municipality to expend general funds.”
The report urged Hallandale Beach’s leaders to ask the Attorney General for another opinion if they don’t like the original one.
CITY MANAGER MILLER CRITICIZED
The report also criticized City Manager Renee Crichton Miller, who it said made “unsupported” arguments to support Cooper and Whitfield’s erroneous claims that the Inspector General had incorrectly determined that CRA funds were improperly used to repay city bond obligations for park improvements in other parts of the city.
City officials contended that it was always the city’s intention to repay any CRA funds spent on parks outside the CRA boundaries, The report, however, says those arguments failed to “address the plain fact that $416,365 in CRA funds – deemed ‘negligible’ by (Miller) – have already been expended on parks outside the CRA boundaries” without any repayments or any plan for repayment.
Miller, hired last summer and not identified in the report as being responsible for past mismanagement, stuck by her arguments in an interview after the report’s release, saying the city has every intention to repay funds owed the CRA. She said it does not have to do so now because those projects have yet to get underway.
“We have a difference of opinion with the Inspector General,” said Miller. “I would not disparage their view.”
Hallandale Beach Mayor Joy Cooper
Asked for comment, Mayor Cooper referred a reporter to her statements in the Inspector General’s report.
Said former City Commissioner Keith London, who lost a race for mayor to Cooper last November, “I hope the State Attorney’s office will look into this further.”
BrowardBulldog.org first reported the Inspector General’s preliminary findings last month. Last week’s final report incorporated the responses of city leaders.
Investigators found at least $2.2 million in questionable CRA expenditures, including inappropriate loans to local business and grants to local non-profits. The city improperly also spent $416,000 in CRA money for parks outside the CRA boundaries, the report said.
The report also said there is “probable cause” to believe that Dr. Deborah Brown, the founder and director of the Palm Center for the Arts engaged in criminal misconduct. In one case, the center allegedly spent nearly $5,000 to make a payment on Brown’s timeshare at the Westgate Resort in Orlando, and make payments to Brown and her brother. The matter was referred to the Broward State Attorney’s Office for criminal prosecution.
In her response to the Inspector General, Brown provided a document of expenditures and details of youth activities that she said provided “positive, measurable results” at her Palm Center for the Arts. The report, however, said there was a lack of supporting documentation for those expenditures.
“Her submission does not alter our determination that there is probable cause to believe that Dr. Brown may have engaged in criminal misconduct,” the report says.
Brown could not be reached for comment.
CITY LOANS DEFENDED
In their responses, Cooper and former city manager Mike Good defended various CRA loans to local businesses, including a $75,000 loan in 2009 to Digital Outernet Inc., a startup firm that planned to earn income from advertising on televisions screens it hoped put in local businesses.
Digital Outernet closed a short time later when its principal owner died. But the city failed to secure a guarantee of repayment from other investors and waived a provision in the deal that would have given it some collateral for the loan.
Cooper said the Digital Outernet loan was “not gross mismanagement” because it attempted to help establish a minority-owned business, according to the report. Good said the loan was “properly made,” adding that at it was “unfortunate that some paperwork had not been signed,” the report said.
Good, too, defended a $50,000 loan to the South Florida Sun Times weekly newspaper, saying it was “justified” because the newspaper needed assistance. The 2009 loan, under terms so favorable that half of it need not be repaid, was made under a new program Good had established for assist struggling businesses.
At the time, the two top executives of the for-profit newspaper reported to the IRS that they’d paid themselves $469,000 in salaries in the two years before receiving the loan.
Cooper told the Inspector General that the salaries of those seeking loans are now part of the loan evaluation process, the report said.
But the Inspector General’s report said Hallandale Beach’s failure until recently to take any steps to empower the CRA as an independent body that might “act as a check on the improper use” of CRA tax funds is problematic.
“While we are encouraged by the remedial steps taken by the city and the CRA in the last year, the OIG remains concerned that the city has not acknowledged the statutory limit on the use of TIF (tax increment financing) funds diverted to the CRA,” says the report, which makes a number of recommendations it said would ensure the CRA’s independence.
Hallandale Beach is not the only Broward city to have misspent CRA funds. Within the last year, the Inspector General found $2.5 million misspent by Lauderdale Lakes and the Florida Auditor General identified “several significant expenditures” by Hollywood that did not follow state law.
“It is becoming increasingly apparent that the gross mismanagement of CRA funds by a Broward County municipality is not a unique occurrence,” the report says. “The OIG will continue to examine the expenditure of CRA funds by municipalities.”
The report also recommends the county assess its legal options “to prevent the ongoing abuse of the CRA process and recover those funds that may have been misspent.”
By William Gjebre, BrowardBulldog.org
Hallandale Beach City Manager Renee C. Miller
Hallandale Beach officials have fired back at county investigators who last month found “gross mismanagement” of tax funds at the city’s Community Redevelopment Agency, accusing them of “numerous factual inaccuracies” and challenging their legal authority.
In its official 10-page response to the Broward Inspector General’s report, the city also said the OIG had misinterpreted the state statute governing the CRA.
“It is this failure which results in the OIG (Office of Inspector General) erroneously coming to certain conclusions that the city and CRA grossly mismanaged public funds,” says the report approved by City Manager Renee C. Miller.
The Inspector General’s preliminary report in March, after a year-long investigation, concluded that top city officials had grossly mismanaged millions of dollars in public funds “entrusted to the care of its” CRA. It identified at least $2.2 million in questionable CRA expenditures between 2007 and 2012, including inappropriate loans to local businesses and grants to nonprofits.
More than $400,000 in bond proceeds also were said to have been used improperly, according to the Inspector General’s report.
The report identified several contributing factors to the mismanagement: the city commingled CRA money with city funds instead of setting up a separate CRA trust fund in years past; the city improperly spent on parks and other activities outside the CRA’s boundaries; and it failed to access and verify work performed by nonprofits that received grants.
The CRA was established in 1996 under a state law that allows it to collect tax revenue to be used to rid slum and blight conditions. It receives 95 percent of the taxes collected on the appreciated value of properties within its boundaries. Hallandale’s CRA has received approximately $70 million since it began.
Florida law does not permit the CRA to fund charitable donations to nonprofits, according to the Inspector General’s report. And a Florida Attorney General’s opinion in 2010 said CRA expenditures should be used only for “brick and mortar” projects, it said.
Yet in its April 4 response obtained by the Browardbulldog.org, the city challenged many of the Inspector General’s assertions, including that one.
“A close reading of this opinion will reveal that the Attorney General gives no definite answer as to whether or not grants to nonprofits are outside the scope of the community redevelopment act,” says the response, noting the opinion was advisory and nonbinding.
City Manager Miller declined to discuss the response in detail. “We asserted our objections,” she said.
City Attorney V. Lynn Whitfield and CRA attorney Steven Zelkowitz helped Miller prepare the response, which included the assertion, first raised last June, that the Inspector General does not have regulatory authority over the CRA.
Mayor Joy Cooper, who like her fellow city commissioners also acts as a CRA director, did not respond to a request for comment.
But Hallandale Beach’s response made it clear that city officials were not backing down and asserting they had acted properly and in accordance with state law.
“There is very little case law or authority providing guidance as to what types of projects may or may not qualify as a community redevelopment project,” stated the response.
The response pointed out that in a case involving the Panama City Beach CRA, a court ruled the state statute governing CRA expenditures for public projects.
The city objected to the Inspector General’s finding that the city had failed to create a separate CRA trust fund until last May, saying in its response that a fund was established in 1996 by city ordinance. The response adds that state law does not require that the trust fund “be maintained in a separate bank account.”
The city also parried the Inspector General’s assertion that the CRA had failed to create an update its redevelopment plan saying, “there is no statutory requirement to update the plan.” The city noted, however, that it is currently updating its plan.
The Inspector General’s critique that the city had failed to established standards for awarding grants to charitable organization was met by a similar defense. The city argued that state law “does not require a transparent process or standardized criteria” — and because of that cannot be accused of “gross mismanagement.”
The city said, however, that it has adopted a formal process for applying for grants that will go into effect next year.
The city’s response acknowledges a good practice would have been to monitor how non-profits spent the money the CRA gave them, but once again contended that state law did not require this.
“The legal requirement is that the funds be utilized for a public purpose,” the response said. “It is the responsibility of the government board to determine whether or not it is a public purpose.”
The city attacked the Inspector General’s criticism of the CRA loan program saying it had failed to understand the need for “flexibility in the administration of its programs” and that some businesses may not qualify for regular private financing.
“This is the nature of community redevelopment,” the response stated. “In certain instances, such may result in financial losses and require the waiver of certain loan terms. Such does not necessarily constitute gross mismanagement….”
Likewise, the city took issue with the Inspector General’s concern that CRA bond funds were used to pay costs related to the upgrading of two parks outside its boundaries, Scavo and South Beach.
“The city objects to the inclusion of this matter in the report,” the response said.
City officials have said a plan is in place to repay any CRA funds used for those parks once work actually gets underway.
The city noted, too, that changes have been made in the past year to improve CRA management and operations.
These include hiring an experienced CRA attorney and a financial analyst; amending CRA policies on loans and grants; assuring accountability for loans; creating standards and accounting for charitable loans to nonprofit groups; fiscally separating CRA funds from city funds; ensuring city and CRA priorities are aligned; maintaining clear and consistent lines of communications regarding for plans and projects.
“It is our mission to continue to implement enhanced internal controls as well as stabilize the administration of the CRA and the city,” the response concludes.
The Inspector General’s Office has said that once it receives the city’s response it will finalize its report and officially release it.
William Gjebre can be reached at email@example.com
By William Gjebre, BrowardBulldog.org
Nearly $11 million in fines imposed for property code violations in Hallandale Beach in the past five years have been excused by city managers without the city commission’s review or approval, according to city records.
The city collected only a fraction of the total.
Breaks worth tens of thousands, even hundreds of thousands of dollars, were handed out to individual property owners, developers, businesses, banks and investment companies.
“There needs to be accountability. There needs to be transparency, especially on those not elected,” said former Miami City Attorney George Knox, a professor of law at Florida International University. “There should be some review to avoid the appearance of favoritism.”
Last month, a report by the Broward’s Inspector General’s Office was harshly critical of top Hallandale Beach administrators it said had “grossly mismanaged” millions of dollars in public funds related to its Community Redevelopment Agency.
Hallandale property owners may appeal fines to the city manager. The managers have lowered or erased fines under a policy begun in 2004 under then-City Manager Mike Good. The policy gave them the authority to slash fines 95 percent for homesteaded property and 90 percent for non-homestead property. In hardship cases, fines could be cleared completely or owners charged only the city’s costs.
The question of whether the city manager should have unbridled authority to reduce code violation fines split the city commission, which voted 3-2 in February to affirm that authority by incorporating the administrative policy into the city code and adding clarifying language.
“No one should have that spending authority,” said Commissioner William “Bill” Julian, who noted commissioners have not been informed of reductions in property fines. “I want to be part of the process. We were elected to oversee.”
Commissioner Michele Lazarow, who joined Julian in voting no, said she favored city commission approval of all fine reductions “over $50,000.”
Mayor Joy Cooper and Commissioner Anthony Sanders did not respond to calls for comment. Vice Mayor Alexander Lewy could not be reached. The trio passed the measure to strengthen the city manager’s authority on fine reductions.
From 2008 through 2012, assessed fines totaled $11.7 million, with the city only collecting only about $751,345, or six percent, according to city documents. The fines were drastically reduced by Good; his successor, Mark Antonio; and current city manager Renee Crichton Miller.
Records show there were 276 fine reduction cases during that period, with 75 cases for fines above $50,000. The smaller cases typically involved work done by homeowners without permits and ailing or elderly homeowners who could not afford to keep up their property.
As BrowardBulldog.org reported two weeks ago, the largest fine reduction occurred last month when the city commission voted to wipe out $453,000 in fines against longtime Miami developer Tibor Hollo.
Professor Knox said he was not surprised that the fines reached as high as they did and the small percentage amount the city collected was what could be expected. “In this context [cities] collect a penny or two on the dollar,” he said.
Knox called the fines, which can escalate on a daily basis, “a brutish method” to coerce property owners to clear up violations that is nevertheless “lawful and constitutional.”
Knox, however, said that is a mistake to put “too much authority in the hands of the manager…without a rendering back of accountability.” The manager should be required to provide regular reports to the commission explaining the rationale for such fine reductions, he said.
With Commissioners Julian and Lazarow urging a change in the process, the commission decided to ask City Manager Miller to come back with a report on how other cities handle the reduction of fines for property code violations.
Miller cautioned that requiring commission approval to reduce any fine by more than $50,000 would slow the process of dealing with code violations and fines, and said the commission find itself “flooded” with cases involving small property owners, she said.
“This is not about power and authority,” Miller said. “It’s not about the manager’s authority; it’s about what makes sense.”
The matter would not have surfaced had the Hollo group accepted the 90% fine reduction — to $45,300 – the city manager could grant. But Hollo wanted the fine reduced to zero, something only the commission could do.
The Hollo group bought the 3.5-acre property along N. Federal Highway, next to the Mardi Gras Casino, two years ago. A 250-room hotel, residential and retail complex called “Bourbon Street” is planned. The code violations and fines existed before the purchase.
The developer’s representatives have said there was an understanding with former City Manager Mark Antonio that if their company corrected the code violations and cleared debris from the property the city would drop the fines completely. There was no formal agreement, however.
The Hollo group has a commitment from the city’s Community Redevelopment Agency (CRA) to receive $25,000 to help it clean up the site.
Ultimately, the commission approved a deal in which the Hollo group agreed to pay the city’s costs of $4,600.
By William Gjebre, BrowardBulldog.org
Miami developer Tibor Hollo
Hallandale Beach city commissioners have let a prominent developer off the hook for nearly half-a-million dollars in fines for property code violations accumulated before it bought the land at a much lower price than paid by the former owners.
In a contentious 3-2 vote on Wednesday, commissioners eliminated a trio of liens on property owned by the family of longtime Miami developer Tibor Hollo.
Jerome Hollo, an executive vice president with his father’s flagship corporation Florida East Coast Realty, said the commission’s decision allows him to move forward to obtain financing for a proposed 250-room hotel, residential and retail complex called “Bourbon Street” on 3.55 acres in the 800 block of N. Federal Highway, next to the Mardi Gras Casino.
“It’s going to be a wonderful project for the city,” said Hollo, who is also an executive with the company that purchased the property, 801 N Federal LLC. The younger Hollo appeared personally at Wednesday’s meeting at the request of the city commission, presenting them with preliminary architectural renderings of the proposed project.
But while the commission majority felt the $453,000 in fines were unfairly punitive, two other commissioners, William “Bill” Julian and Michele Lazarow, opposed the measure excusing the fines.
“I have a hard time forgiving this amount,” Julian said, adding he believes it would be the largest fine mitigation in the city’s history.
Julian said the Hollo group knew about the city’s liens when it bought the property in 2010 for $2.5 million. He also noted that the previous owner paid $12 million for the property in 2006.
“You got a heck of a deal and you are coming in [seeking relief]” knowing all that, Julian said.
“This is taxpayers’ money and I am being called to waive it,” said Lazarow. “We are trying to protect the taxpayers.”
But Mayor Joy Cooper, Commissioner Anthony Sanders and Vice Mayor Alexander Lewy agreed that total relief was appropriate.
“There is no money leaving the coffers of Hallandale Beach,” Lewy said. He added that well-off developers should not be treated differently than “mom and pop” property owners.
Preliminary rendering of proposed “Bourbon Street” development
The Hollo group, Lewy said, “wants to do construction.”
Commissioner Sanders indicated Hollo should not be penalized for getting a good deal on the property.
“He did a good business deal,” Sanders said.
Mayor Cooper said the intent of fines and liens has been to get property owners to clean up their property and comply with city codes, not to be punitive. That approach is common in many cities, she said.
Cooper noted that then-city manager Mark Antonio had asked the Hollo group to clean up the land under a city initiative to enhance and make properties attractive for development. Hollo’s group was told that if they complied the fines would be dropped, according to city documents.
“You did what Mark Antonio asked,” said Cooper.
Cooper accepted a $500 contribution from Tibor Hollo for her successful reelection campaign this past November.
Hollo’s attorney, Alan Koslow, pointed out that the fines were accumulated by former property owners and began with only $500. The fines increased daily when they did not comply, he said.
As part of the agreement to drop the fines, Hollo agreed to pay $4,615 to cover the city’s costs in connection with the violations, which included unsafe conditions and littered grounds that led to loitering and slum and blighted conditions.
The city’s Community Redevelopment Agency (CRA), which is governed by the commissioners, previously agreed to award the Hollo group $25,000 to clean up the property, with payment to be made once the liens are cleared.
If commissioners had not erased the fines, the city manager was authorized under city code to wipe out 90% of the fine.
That power concerned Julian and Lazarow.
“We are the ones who should make the decision,” Julian said.
Commissioners agreed to review the policy, which past city managers have used to wipe out fines both large and small. For example, in July 2010 the city manager forgave 90% of assessed code violation fines for foreclosed home at 747 NW Fifth Court – dropping the total owed from $176,300 to $17,630.
City records show the Hollo group acquired the properties on North Federal Highway in November 2010 from the Federal Deposit Insurance Corporation through a foreclosure process.
Both Tibor Hollo and Jerome Hollo are listed in state records as officials of 801 N Federal LLC.
By William Gjebre, BrowardBulldog.org
Hallandale Beach City Hall
Current and former top Hallandale Beach officials defended – or offered excuses for – the handling of millions of dollars in community redevelopment funds to county investigators who have now accused the city of “gross mismanagement.”
The Broward Inspector General’s office slammed the city last week in a 50-page report, citing “numerous” improprieties and deficiencies.
Mayor Joy Cooper staunchly defended the controversial spending by the city’s property tax funded Community Redevelopment Agency (CRA), which she chairs, according to the report.
For example, the mayor said a $50,000 “loan” to the South Florida Sun Times, a local newspaper where she has been a columnist since 2003, was an appropriate 2009 CRA expenditure that she likened to an incentive for a struggling business.
“They were having issues and might fold,” Cooper said.
Under the terms of the deal, the Sun Times was only required to repay half of the loan – $25,000 – even though the paper’s owners paid themselves $469,000 in salaries the year before. Cooper told investigators she was unaware of those prior salary payouts when the CRA Board approved the generous loan.
Former city managers Mike Good and Mark Antonio, who oversaw the huge pool of CRA funds during most of the past 11 years, admitted to investigators that they never had any training regarding the state law (Chapter 163) that governs CRAs.
Ex-City Managers Mike
Good, left, and Mark Antonio
Good, in charge for most of that time, told Browardbulldog.org this week, “I don’t think anything was grossly mismanaged during my administration” adding “I will be vindicated” and so will the city.
Antonio did not respond to a request for comment.
The 14-month probe by the Inspector General began after a string of stories in BrowardBulldog.org about questionable city loans to local businesses and land purchases through the CRA.
Last week’s preliminary report found at least $2.2 million in “questionable” CRA expenditures between 2007 and 2012 – including loans to local businesses and grants to nonprofits. The report also found that bond proceeds had been improperly used.
The report said the city was supposed to set up a separate CRA trust fund in years past, but instead co-mingled CRA money with city funds. It also said CRA funds were improperly spent for parks outside the CRA’s boundaries and city fireworks displays.
In one case, investigators reported finding “probable cause” to believe that the founder of one local nonprofit diverted about $5,000 in grant funds for personal purposes, including making a payment on her Orlando timeshare. The matter was referred to the Broward State Attorney’s Office for prosecution.
City records regarding payments to non-profit groups were so lacking, the report said, that investigators were “unable to reliably assess the amount of possible losses suffered by the CRA as a result of ‘misapplication of funding by non-profits.”
Florida law does not permit the CRA to fund charitable donations to non-profits, the report said.
Hallandale’s CRA was established in 1996 under a state law that allows it to use an increase in tax revenues to rid slum and blight conditions in the designated area, in this case the entire city west of Northeast 14th Avenue.
The funding total since then has reached approximately $70 million, approximately one-half coming from the county and most of the other half coming from the city.
The five members of the city commission control that money because they also serve as directors of the CRA governing board.
Cooper, the leader of the city commission, had a different viewpoint than investigators on a number of issues. She contended that CRA funds can be used for expenditures such as Fourth of July fireworks held “outside the CRA boundaries” because such activities “also benefit and promote the CRA.” the report said.
While the Inspector General asserted that a 2010 Florida Attorney General’s opinion required CRA expenditures be related to “brick and mortar” projects, Cooper stated “she believed CRA funding for festivals was” permitted by the Attorney General’s opinion.
Hallandale Beach Mayor Joy Cooper
When investigators questioned Cooper about the CRA’s donations to local charities because they were not mentioned in the city’s CRA plan, Cooper said that “those donations were identified in the city budget” and “encompassed the actual goals and objectives of the CRA plan,” the report said.
Cooper also told investigators that the law that governs CRAs is “pretty general” and allows them “flexibility” to spend CRA funds as it sees fit to “address slum and blight,” the reported added.
Cooper would not be interviewed, said city spokesman Peter Dobens.
Good, city manager from 2002-2010, “had a free hand to implement anything for the CRA” and rarely asked for and considered any other opinions, former CRA director Kendrick Pierre told investigators.
Another former CRA director, Bobby Robinson, said he told his immediate superior about inappropriate spending and other problems, but nothing was done.
Good was given wide latitude in making CRA business loans. He OK’d the controversial $50,000 Sun Times loan under a program he created to assist businesses having financial problems, the report said. Like the mayor, he told investigators that he was unaware of information in CRA files that showed the paper’s executives had paid themselves $469,000 in 2008.
Good acknowledged his 2009 recommendation that the CRA waive a requirement that a startup business, Digital Outernet, own its business location in order to receive a $75,000 loan. The owners planned to install closed-circuit television screens in local businesses to provide information to the public, earning income by selling advertisements.
Digital Outernet made one installment payment of $2,284, then shut down after its local partner died suddenly. The city never obtained a signed guarantee document from the firm’s partners and was eventually forced to write off nearly $73,000.
“Sometimes in a blighted area, you take a risk,” Good told investigators.
Mark Antonio, who took over after Good was fired in 2010 due to chronic work absences and other reasons, told investigators that he, too, “never received any CRA-related training.” He served for two years, following stints as Good’s chief assistant and finance director.
Antonio told investigators that before 2011 “the CRA had no viable process in place for managing charitable donations it provided to non-profits.” He said city commissioners would use the CRA’s money to “fund whatever they wanted” and that “neither the city nor the CRA attempted to verify how they were spent,” the report said.
When Alvin Jackson was named the CRA’s executive director last August, he was the first person to head the agency that did not take orders from the city manager.
With that independence, he pushed through a number of changes that addressed investigators‘ concerns. He created a separate CRA trust fund and bylaws; hired an independent finance director to conduct an annual audit; employed an attorney experienced in CRA law and established an accountability system for grants to local groups.
But Jackson resigned under pressure from the CRA board in January following a dispute with some commissioners.
Today, Hallandale Beach once again is operating the CRA under the city manager model that got it into trouble.
“Whether the CRA executive director duties remain with the city manager or are again filled by an independent officer, the CRA should incorporate some level of independent management for CRA issues,” the report recommended.
William Gjebre can be reached at firstname.lastname@example.org
By William Gjebre and Dan Christensen, BrowardBulldog.org
Broward’s Inspector General has found that Hallandale Beach officials “grossly mismanaged” millions of dollars in public funds “entrusted to the care of its Community Redevelopment Agency,” according to a report obtained by BrowardBulldog.org.
“The OIG (Office of Inspector General) investigation substantiated the allegations and uncovered numerous deficiencies in the city’s administration of the CRA,” says the 50-page preliminary report that has not been released publicly.
Investigators said they found at least $2.2 million in questionable CRA expenditures between 2007 and 2012, including inappropriate loans to local businesses and grants to local nonprofits – as well as the improper use of bond proceeds.
The city improperly spent $416,000 of CRA money for parks outside the CRA boundaries, says Tuesday’s report.
The spending, which was not always documented, was often done at what amounted to the whim of former city managers Mike Good and Mark Antonio, the report says.
Former Commissioner Keith London told investigators that his colleagues “looked at the CRA fund as one big pile of money and they didn’t care how or where the money went,” the report says.
Mayor Joy Cooper, however, offered a different take. “She was not concerned with the CRA administration’s lack of (expenditure) verification because the CRA Board members observed the work of the nonprofits when they went out in the community,” the report says.
Cooper and the rest of the city commission also sit as the CRA’s board of directors.
“This report vindicates everything I have stated for the last six years,” London said Tuesday night.
Cooper could not be reached for comment.
Former commissioner Keith London
The probe began 14 months ago following a string of stories in BrowardBulldog.org about questionable city loans to local businesses and land purchase through the CRA. It surfaced publicly last April when county agents sought a multitude of records at City Hall.
In some cases, the report says, the CRA awarded funds despite a 2010 Florida Attorney General opinion that CRA expenditures must be connected to “brick and mortar” capital improvements – not, for example, to promote economic development or promote socially beneficial programs by nonprofits.
In one case, the line of what’s legal was apparently crossed and a crime may have been committed, the report says.
The Inspector General’s findings about Hallandale Beach are the latest to cite serious mismanagement of CRA funds. A year ago, for example, the Inspector General slammed Lauderdale Lakes for misspending $2.5 million in CRA funds. More recently, the Florida Auditor General identified misspending by Hollywood’s CRA.
“It is becoming increasingly apparent that the gross mismanagement of CRA funds by a Broward County municipality is not a unique occurrence,” the report says.
The CRA was established in 1996 under a state law that allows it to collect tax revenue to be used to rid slum and blight conditions. It receives 95 percent of the taxes collected on the appreciated value of properties within its boundaries. The county has provided Hallandale’s CRA with approximately $35 million since it began.
Inspector General John Scott’s report includes what amounts to a warning to other Broward cities that his office will be eyeballing their CRA’s to see how they spend their property tax dollars.
“The OIG will continue to examine the expenditure of CRA funds by municipalities,” says the report.
The final report will recommend to the county that it look over its legal options “to prevent the ongoing abuse of the CRA process and recover those funds that may have been misspent,” the preliminary report says.
In Hallandale, there was an apparent lack of regular monitoring by the CRA of who got its funds and how that money was spent.
In one case, the report says, a nonprofit grant recipient spent nearly $5,000 in funds to make a payment on her time-share at the Westgate Resort in Orlando, make payroll payments to herself and her brother and on other things.
Dr. Deborah R. Brown with former Congressman Kendrick Meek
“We found probable cause to believe that Dr. Deborah Brown, the founder and director of the Palms Center for the Arts (PCA), engaged in criminal misconduct in the handling of a $5,000 award the PCA received from the CRA,” the report says.
Brown could not be reached for comment Tuesday night.
The matter has been referred to the sheriff’s office and the Broward State Attorney for prosecution.
The Inspector General’s report also clears Commissioner Anthony Sanders of allegations that the CRA showed favoritism toward him by substantially overpaying his nonprofit, Higher Vision Ministries, for property it purchased in 2009 at 501 NW First Ave.
“The investigation did not substantiate the allegations, although we found that the CRA fomented an appearance of favoritism by failing to consider the purchase of the property in a fully transparent manner,” the report says.
The report also cites “institutional deficiencies in the establishment, organization and function of the CRA” that it says contributed to numerous instances of gross mismanagement. They include:
• Failure for nearly 16 years to establish a CRA trust fund, as required by law, which led to the commingling of CRA funds with city funds in the city’s bank account. A trust finally was set up last May.
• Failure to operate the CRA independently from the city. Former CRA executive director Alvin Jackson told investigators the CRA “was treated like any other city department and that the city had ‘free rein to tap into CRA funds.
• Failure to timely generate detailed CRA plans and adhere to them, as well as a lack of a “stable and empowered CRA staff to ensure compliance” with the law.
“We also identified multiple instances where city officials ignored warnings from CRA staff of various deficiencies in the management of the CRA,” the report says.
The report notes that before Jackson there were several CRA managers under City Manager Good’s heavy managerial thumb. “More troubling is evidence that Mr. Good and other senior officials lacked understanding of” state statutes governing the CRA “and did not require compliance.”
The report notes that in 2011, after news reports about CRA problems in BrowardBulldog.org and elsewhere, it undertook “remedial steps” to improve its management and effectiveness.
But the Inspector General indicated those steps, including the establishment of the trust fund, are not enough.
The report includes a half-dozen recommendations intended to “ensure the independence of the CRAs,” including building a stable and knowledgeable staff with the authority to ensure compliance with the law, and diligent future monitoring of expenditures.
By William Gjebre, BrowardBulldog.org
A short-lived, perk-laden retirement plan has paid off big for some top Hallandale Beach officials who helped set it up a decade ago – but today it’s costing city taxpayers extra millions of dollars.
Approved and implemented by the city commission in October 2001, the plan’s key provision granted those ranking city officials retroactive credit for prior years of service – even if they were in another retirement plan.
The Professional Management Retirement Plan also boosted pensions for top city bureaucrats in other costly ways. For example, the plan was calculated to equate the sedentary desk jobs of department heads and their assistants to the “high risk” street duties of city police and firefighters.
City commissioners were also eligible for the plan, but because their pay was so low, and their length of service varied, the financial impact was minimal.
Three former city managers who played key roles in developing the retirement plan or subsequent add-on benefits are now collecting pensions that are at or near their highest annual salaries when they were active city employees.
Ex-city manager Mike Good was fired in 2010 after eight years due to his chronic work absences and for other reasons. Today, at age 51, Good receives a monthly pension of $17,522, or more than $210,000 a year. His highest regular salary was $212,000.
But a higher monthly pension isn’t the only way that Good and his fellow city managers have benefitted from the management retirement plan.
Good, who started working for the city as a welder in the 1980s, cashed out $786,000 from his city DROP (Deferred Retirement Option Plan) savings account a few months before he departed. The account, established under the retirement plan, was funded largely by the city.
Good also received another $146,000 in accrued sick leave, vacation time and other benefits when he left.
The city commission closed the retirement plan, including the DROP program, to new employees in 2007 citing exorbitant costs. City records indicate that about 70 employees, active and inactive, are eligible to receive benefits under the plan that initially required employees contribute five percent of their salary, but was later hiked to seven percent.
“It’s outrageous: fat, oversized pensions,” said Csaba Kulin, a community activist and city commission candidate. “This was mismanagement…employees should not have gotten credit for past years of service. They should have begun accumulating benefits when the plan went into effect. It’s undue compensation.”
The pension disclosures come as the Broward Inspector General’s Office continues its investigation into suspected mismanagement and fraud involving city loans to local businesses and questionable land purchases by the city’s commission-run Community Redevelopment Agency.
PAYOUTS JACKED UP
Payouts to top city workers were further jacked up by management plan provisions that reduced the full retirement age from 60 to 52 with 25 years of service, inserted regular cost of living increases, and allowed workers to purchase additional years of service for time they didn’t actually work.
Some top employees also received two pensions because they were allowed to keep 10-17% of gross salary contributions by the city in the previous retirement plan.
Some details of the Professional Management Retirement Plan are unclear. BrowardBulldog.org asked the city clerk’s office to provide commission minutes and documents regarding the authorization of retroactive service credit for employees prior to October 2001, but was told those records are “not available.”
Mark Antonio, 56, is a former city finance director who succeeded Good as city manager in 2010 and retired at the end of June. In 2001, he explained aspects of the retirement plan to commissioners before it was approved. He now receives a monthly pension of $10,645, or $127,800 annually. City records state that his highest base city salary was $165,000.
Like Good, Antonio accumulated a considerable city-funded nest egg in his DROP account: $744,637 by July 31, 2012, according to city records. City officials said he was also due about another $100,000 for unused sick and vacation days and other earned benefits.
Ex-City Manager Mike Good
Randolph J. “R.J.” Intindola, under whose administration the retirement plan was adopted, retired as city manager in 2002. He receives a monthly pension of $9,308, or $111,700 annually. His highest base city salary was $118,664.
Intindola, now 61, retired a year after the plan was implemented citing health concerns. At the time, the plan did not allow him to have a DROP account. He did receive a payment of $139,000 for accrued sick, vacation and other benefits, according to city documents.
Two city commissioners who backed the plan in 2001 now wish they hadn’t.
“My thinking today is ‘no,’ ” said Commissioner Dorothy Ross. “We can’t go back to that time.”
William Julian, who left the commission but is now running again, said he had “no experience with pensions” when the matter was brought up years ago by City Manager Intindola and staff. He said they told him the plan was “normal” for top city officials.
“Looking back, we should never have offered the plan,” said Julian, especially the granting of credit for past years of service. “I was new,” Julian said. “It sounded logical and we took staff at their word, but I wouldn’t take it now.”
The cost of the plan is in the millions, said Julian. He added that cost includes the $900-a-month he began to receive last year. He was credited for service on the commission from 2001 until 2010 when he was not reelected.
Mayor Joy Cooper, who has been on the commission since 1999, was the lone vote against the plan back in 2001. “I did not feel comfortable,” she said.
She said she also now opposes the idea of equating top management jobs to those of police and firefighters – something she voted to approve in 2003.
“Police and firefighters are in a different category,” Cooper said. “They put their lives on the line.”
EX-CITY MANAGERS LIKE THE PLAN
Each of the three former city managers defended the management retirement plan, though only Intindola acknowledged that it has elevated costs to taxpayers by millions of dollars.
“Absolutely, it was okay,” said Antonio, who got retroactive credit for the 14.25 years he worked for the city before the plan went into effect in 2001. He also purchased an additional five years of service credit at a cost of 8% of salary for each year purchased.
Without credit for those 14.25 years, Antonio’s pension would be about 57% lower. Without those years and the extra years he purchased, his pension would be approximately 77% lower.
Antonio said commissioners implemented the management retirement plan to address a lack of fairness regarding pensions for top managers. At the time, the city was contributing 10 to 17 percent of gross salary to their 401a retirement accounts.
Intindola agreed. “It was a good thing,” he said. “We had to improve the [existing] plan; we had a high turnover.”
Intindola began working for the city in February 1982. He received nearly 20 years of retroactive credit under the management retirement plan, and also bought another four years of service.
Without those nearly 24 years of credit, Intindola’s pension would be about 96 percent lower.
HOW MUCH DOES IT COST?
The 2001 switch to the management retirement plan was not supposed to be costly, Intindola said. The amount the city was then paying in benefits was expected to cover most of the new plan.
But changes made after he left, including the addition of a cost of living adjustment (COLA), and a guaranteed 8 percent annual increase to DROP accounts, proved to be “a killer” – driving up annual pension costs by $2 million, Intindola said.
Radu Dodea, a Hallandale personnel official who administers the management pension plan, said he has no estimate as to how much the city will have to pay management plan participants over their lifetimes.
But city activist and commission candidate Kulin said those cost estimates are exorbitant. He estimated the long-term cost to city taxpayers for the years of service and other benefits total about $10 million.
A city financial report from 2002 obtained by BrowardBulldog.org stated those payouts could amount to nearly $9 million. The report said the initial estimate for unfunded costs, including covering past years of service for employees, was approximately $1.7 million.
The change that Intindola said caused the city’s costs to spike occurred while Good was city manager.
Good, unlike the other ex-city managers, said he did not receive retroactive credit for years of service because he had been in the General Employees Pension Plan since the day he started in March 1985. He switched to the management plan for its superior benefits when it was approved in 2001 and transferred money he and the city previously contributed. By then he was director of Public Works.
It was also under Good in 2007 that the management plan was finally shutdown for new employees.
“The economy went kaput and defined pension plan costs were rising and they wanted to cut costs,” city Human Resources director George Amiraian said.
By William Gjebre, BrowardBulldog.org
Hallandale Beach City Manager Renee Crichton
New Hallandale Beach City Manager Renee Crichton has hired an independent auditor to review the controversial $1.1 million purchase last year of property from a charter school company run by former Broward County Congressman Peter Deutsch.
Crichton retained former longtime West Palm Beach internal auditor Imogene Isaacs to determine how the purchase was approved and who actually bought the property – the city or its Community Redevelopment Agency.
“It is paramount to me as an administrator to always strive for integrity and transparency in my operations,” Crichton told city commissioners in an Aug. 31 memo. “The time involved in doing a proper inquiry may be extensive.”
The city’s attempt to sort things out regarding the 1.9-acre parcel at 416 NE Eighth Avenue comes amid a broader investigation by the Broward Inspector General’s Office into allegations of mismanagement and possible corruption involving questionable city loans and CRA land deals.
The property was purchased in July 2011 from Deutsch’s Hallandale School LLC, which had planned to open a Ben Gamla Charter School there. Deutsch, a Democrat who served in Congress from 1993 to 2005, pushed hard for city support, but the plan wilted in the face of stiff neighborhood opposition.
Still, Deutsch’s group, which owned the property for just three years, netted a $600,000 profit on the sale to the city.
In her memo, Crichton said City Commissioner Keith London raised questions about the acquisition at last month’s meeting of the CRA’s board of directors. The directors are the five members of the city commission.
Commissioners, sitting as CRA board members, authorized acquisition of the “Ben Gamla” property with CRA funds.
But that’s not what happened.
Former City Manager Mark Antonio’s administration instead used city funds – not CRA dollars – to buy the land, and then titled it in the city’s name, not the CRA.
“No official action was taken by the city commission” to acquire the property using city funds, Crichton said in an interview.
In her memo, Crichton said Isaacs’s job will be to “review the circumstances surrounding the approval process and use of funds associated with the purchase of the Ben Gamla School property; to issue a report on the findings, including recommendations on how to improve the process.”
Several months ago, BrowardBulldog.org reported that all 59 properties purchased with CRA money in recent years are in the name of the city – not the CRA. The CRA has been seeking to re-title 43 of the properties in its name, with 16 others remaining in the name of the city.
PLAYING GAMES WITH MILLIONS?
London, who is running for mayor against incumbent Joy Cooper, said he was “disgusted and disappointed” that city officials “would play games with millions of dollars in funds.”
The money that actually paid for the Ben Gamla property was leftover dollars that developers put up to help pay for traffic, sewer and park improvements. “The money has been sitting there for years,” London said.
Commissioners had expected the funds to come from the CRA, and what happened was not authorized, according to London.
“This is sleight of hand with our money,” he said. “I’m looking forward to…the auditor’s report on who is responsible,” London said.
OLD PRO CALLED UPON
City Manager Crichton turned to a veteran auditor to get to the bottom of what happened.
Isaacs has 37 years of internal audit experience, which includes 25 years of work for West Beach Beach and Lakeland. She also worked in the Inspector General’s Office of the U.S. Department of Housing and Urban Development for 12 years.
Earlier this year, Isaacs resigned as West Palm Beach’s first internal auditor after a dispute with City Commissioner Keith James who had instructed her not to meet with “any person from outside the city” without permission, according to a story in the Palm Beach Post.
In stepping down, Isaacs, 71, said she saw “some attempts at controlling the independence of the internal auditor,” according to the Post story.
In 2007, she wrote a critical audit of West Palm’s federally funded program to re-roof low-income housing after recent hurricanes, according to another Post story. Eventually, according to the Post, the city had to pay back the federal government $1.67 million.
Crichton said Isaacs will be paid $50 an hour. She expects the total cost of the audit to be as much as $3,000.