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 wgjebre@browardbulldog.org

By William Gjebre, BrowardBulldog.org 

Commissioners Dorothy Ross, left, and Anthony Sanders

Hallandale Beach City Manager’s Office has refused to fully cooperate with the Broward Inspector General’s Office investigation into the city’s management of the Community Redevelopment district.

City Attorney V. Lynn Whitfield informed the Inspector General’s Office by letter Wednesday that City Manager Mark Antonio’s office will not voluntarily schedule requested meetings between county agents and city commissioners, who also serve as the CRA’s Board of Directors.

City Attorney Whitfield also sought in her letter to identify the target or targets of the investigation.

“As it relates to the members of the City Commission, it is imperative, in order to properly advise them as to the availability of legal counsel, that I know whether your investigation is directed to the actions of the City Commission as a whole or to the actions of only individual City Commissioners,” Whitfield wrote. “This will assist me in advising whether or not they need to obtain independent legal counsel.”

The Inspector General began an investigation in April of city management practices following numerous news stories in Broward Bulldog and elsewhere regarding the city’s poor record keeping of land acquisitions and loans through the CRA.

County investigators have been to City Hall at least twice. They are known to have met with Antonio, who retires June 29, and CRA executive director Alvin Jackson. The city also has responded to the Inspector General’s request for various documents dealing with the CRA and other aspects of city operations.

But in yesterday’s letter addressed to county Special Agent William Cates, the city refused complete cooperation – apparently until the county is willing to disclose which commissioners are under scrutiny.

Outgoing City Manager Mark Antonio

“It is my understanding that the City Manager’s office has notified you that they will not be scheduling those meetings and advised that all such requests should be directed to me or the CRA attorney Steven Zelkowitz,” Whitfield said.

Antonio, a 25-year city employee who has been city manager for the past two years, did not respond to a request for comment. Neither did Whitfield or his replacement, Renee Crichton, who is working alongside Antonio until his departure and has assumed administrative duties, according to a city spokesman.

Special Agent Cates also could not be reached for comment.

MEETINGS ANYWAY?

Despite the letter, two city commission members told Broward Bulldog that they are willing to be interviewed if asked. Two others indicated they would not talk without consulting with the city attorney.

Commissioner Keith London said he does not understand the suggestion that city officials refrain from cooperating with investigators.

“I will go as quickly as I can. I have nothing to hide and look forward to speaking with the IG about (the) CRA and Hallandale’s mismanagement of fund,” he said. “I look forward to the final report and the arrest and conviction of people who mismanaged taxpayers’ money.”

The Inspector General is not conducting a criminal inquiry. It can, however, refer its findings to the State Attorney’s Office for possible prosecution.