Hallandale Beach turns tables, accuses Broward Inspector General of “factual inaccuracies”

By William Gjebre, BrowardBulldog.org 

Hallandale Beach City Manager Renee C. Miller

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.

iglogoThe 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

 

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5 Comments Post a Comment
  1. FrustratedInHallandale says:

    This should be the OIG response

    “The OIG gets attacked when you weed out corruption.”

    “It’s tough when you’re investigating people,”

    Anyone who gets looked at that starts immediately complaining validates they are worried!

  2. Chaz Stevens, Malcontent says:

    “When any Government agency complains about being named as a target in an audit, it makes me worried.

    Palm Beach County is tagged as “Corruption County” from both FORBES and TIME magazines. So, what is all the balking at oversight of the oversighters?”

    http://www.cityethics.org/content/appearance-problems-surrounding-request-audit-county-ec

  3. aletheia says:

    If the City of Hallandale Beach objects to the OIG’s inclusion in the report that CRA bond funds were used to pay for the upgrading of two parks outside the CRA boundaries…then isn’t promising to pay back these funds an admission that they were illegally allocated for something outside of their intended use?

    So what’s their gripe or “assertion?” Me thinks that a lightweight like Miller dost protest too much!

  4. Chad Lincoln says:

    It would seem that CM Miller has made to citizens attempts at achieving good government hers to thwart. Too Bad. This war is now her’s, I personally had such high hopes for her. Ms. Miller, the Honeymoon is over.

  5. bozobuststhebudget says:

    Ms. Miller cut her teeth in Lauderdale Lakes…so none of her remarks about the Hallandale Beach CRA should surprise anyone!

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