Broward IG says Hallandale made “immense” gaffe in overseeing $12.7 million in city bonds

By William Gjebre, BrowardBulldog.org 

Initial findings by Broward’s Inspector General of mismanagement at Hallandale Beach City Hall have led officials to revise plans for a $12.7 million bond issue, according to city and county records obtained by BrowardBulldog.org.

Exactly what has gone wrong at City Hall remains unclear as the Inspector General’s investigation continues, but it’s now known to involve an alleged mistake with the bond issue, and a possible violation of state law.

“We are pleased that your administration has ultimately acted to address the issue identified by the investigation,” Inspector General John W. Scott told City Manager Renee Crichton in a Nov. 7 letter.

“Clearly, we remain concerned with the circumstances that allowed such an immense oversight to occur in the first place,” Scott wrote.

“Our final investigative report will detail those circumstances and contain recommendations which we hope will, if enacted, create institutional controls that will prevent such misappropriation from occurring in the future.”

Although Scott has prompted action at City Hall, the head of an agency under scrutiny is questioning the county IG’s authority to investigate, and to allow partial information on that investigation to become public.

Hallandale CRA Executive Director Alvin B. Jackson Jr.

“Nowhere in the (county) code is the Inspector General provided with the general authority to act as a watchdog agency by providing correspondence making allegations and recommending future courses of action,” said Hallandale Beach Community Redevelopment Agency (CRA) Executive Director Alvin B. Jackson Jr. in a Nov. 13 letter to Scott.

Jackson criticized Scott for expressing his concerns in letters to the city manager and city commissioners that “are now public record” and “can cause unnecessary negative publicity.”

“We would respectfully request that the Inspector General refrain from sending any further correspondence concerning” the CRA, Jackson said.

The Redevelopment District was established by the City Commission to collect and oversee the use of property tax dollars to promote business and revitalize neighborhoods. Those dollars are supposed to be spent on projects within the district.

The IG’s office has been investigating city management practices, including those at the CRA, since April. Agents have questioned city officials and asked for records concerning CRA property acquisitions and business loans and city grants and leases with community groups.

BOND CONCERNS

In his Nov. 5 letter, Scott wrote that he was concerned about a Nov. 7 city commission agenda item regarding $12.7 million in revenue bonds. The bonds would complete Phase One of the city’s $23.2 million bond issue approved by the city commission in 2007 for park improvements and land acquisition.

“The OIG (Office of Inspector General) has obtained substantial evidence that the funding appropriated for the capital improvements of Joseph Scavo Park and South Beach Park, two parks included in Phase One, would constitute a violation of the Florida Community Redevelopment Act, which requires that Community Redevelopment Agency (CRA) funds should only be expended for capital improvements within the CRA boundaries,” Scott said in his letter.

“Upon questioning by OIG Special Agents, city and CRA officials have verified that the CRA is scheduled to pay the bond over 20 years, even though the parks in question are located outside of the CRA boundaries,” Scott said. “Therefore, the City will risk violation of Florida law if it expends the funds as presently appropriated.”

“The OIG is particularly concerned that city staff have acted unilaterally in accessing the funds for city — not CRA– purposes and in doing so, have neglected to consult the CRA Director,” Scott said.

Scott went on to “strongly recommend” that commissioners halt the use of CRA funds to pay for parks outside the district’s boundaries.

Hallandale Beach City Manager Renee Crichton

In her Nov. 6 response letter, City Manager Renee Crichton challenged Scott’s interpretation of events, saying he had “misrepresented certain facts.” She suggested that included wrongly accusing the city of using the CRA – governed by Hallandale’s five city commissioners – to cover its bond obligations.

SHARING COSTS TO PREVENT TROUBLE

Crichton said the city would make sure debt service payments are proportional between the city and the CRA. She noted city projects outside the CRA district accounted for only 22 percent of the $25 million in bond funds.

The city manager’s assurances seemed to satisfy Scott that the bond would be paid back appropriately. Still, he pointed out in his reply that if not corrected the city could have gotten itself into bigger problems.

“Both the city’s finance director [Patty Ladolcetta] and Dr. Jackson have recently admitted to the OIG special agents that the CRA was intended to pay 100 percent of the bond, despite the fact that the bond was in the city’s name and several hundred thousand dollars had already been spent outside the CRA district,” Scott stated. “This fact was corroborated by various documents obtained by the OIG.”

“As a watchdog for the taxpayers of your municipality,” Scott added, “we believe it is our duty to inform the commission of concerns which might jeopardize the funding of the overall project.”

“After reviewing the city’s revised approach, as outlined in your letter, we agree…the city could correct its initial misappropriation of the CRA-funded bond.”