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.
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.