Fort Lauderdale to use “poor people’s money” to subsidize transit for affluent?

By William Gjebre, FloridaBulldog.org 

A rendering of Fort Lauderdale's proposed WAVE streetcar. Will tax dollars intended to eliminate slums be used to pay for it?

A rendering of Fort Lauderdale’s proposed WAVE streetcar. Will tax dollars intended to eliminate slums be used to pay for it?

Fort Lauderdale’s recent approval of a no-bid contract to update the plan for the troubled Northwest-Progresso-Flagler Heights Community Redevelopment Agency has raised concerns about a lack of public input amid a rush to add projects not in the current plan at the expense of community needs.

Scott Strawbridge, who serves on the CRA’s 14-member advisory board, has called for outside review of the agency after he and his colleagues were informed that City Manager Lee Feldman signed a $24,500 contract with a private firm in August to amend the current CRA plan, last updated in 2001.

Pompano Beach-based Redevelopment Management Associates LLC has already begun the first phase of the work. Under city code, the city manager has authority to enter into contracts up to $25,000, without seeking approval from the CRA board.

“The city is trying to push through a short term process that should take a longer review,” said Strawbridge, adding there needs to be more data to support any proposed changes. “I think it would be healthy for the public to understand what has been spent…There should be accountability.”

Except for one informational hearing on Sept. 23 about the Redevelopment Management firm’s study, there has been little public notice and input, Strawbridge added.

Frank Schnidman, a Florida Atlantic University professor recognized as an expert on legal issues regarding CRAs law, said state statute makes “clear if projects are not in the plan then it’s inappropriate to use tax increment” CRA funds to pay for them.

By law, the mission of CRAs is to clean up slum and blight. Schnidman said the Northeast Progresso-Flagler Heights CRA apparently is considering funding transportation projects not currently in the plan. But even if they met the legal requirements for CRA funding “they would not alleviate slum and blight…They would be using poor people’s money to subsidize transit for people living in more affluent areas.”

“This would be another manipulation of tax money,” Schnidman said, adding the funds would be better used for “affordable housing, where there is a crisis. Poor people would be left out in favor of politically favored projects, like the Wave,” a proposed streetcar system primarily servicing the downtown area.

Fort Lauderdale City Manager Lee Feldman

Fort Lauderdale City Manager Lee Feldman

City Manager Feldman, who also serves as executive director of the CRA, and Jeremy Earle, deputy director, of the city’s Sustainable Development Office, did not respond to requests for comment.

However, city spokesman Matt Little noted in an e-mail response that the CRA budget includes funding for the WAVE, “as approved by the CRA Board.” He also said the budget may include “a line item” subsidy for the existing Sun Trolley system, if the project is contained in the Plan, but did not clarify if that was the case or not.

The CRA’s plan is being updated because it hasn’t been amended for 11 years, and changes could allow for the enhancement of transportation, provide support for community events and give the CRA Board flexibility to consider other proposals that may be presented, the spokesman said.

The concerns follow a problematic city auditor’s report in May that castigated the Northwest Progresso-Flagler Heights CRA for its poor oversight of a taxpayer-financed office and retail complex, Sixth Street Plaza, which filed for bankruptcy last spring.

“The project lacked fundamental project discipline, from risk assessment and establishing proper governance to detailed accounting of funds disbursement,” City Auditor John Herbst wrote in a cover memo to the city commission, which also sits as the CRA’s board of directors.

The city commission requested the report after FloridaBulldog.org reported in February that taxpayer loans were in jeopardy due to the forced sale of the plaza.

Strawbridge, an official with the Fort Lauderdale Housing Authority, stopped short of naming the agency that should look into NPF’s spending practices. But the Broward Inspector General’s Office has kept close tabs of municipal CRAs in recent years.

Last year, for example, the Inspector General found the Margate CRA deliberately mishandled $2.7 million in funds by rolling the money over for several years without specific purposes. In 2013, it determined that the Hallandale Beach CRA had $2.2 million in questionable expenditures.

Two years ago, the Florida Auditor General cited the Hollywood Beach CRA for failing to report $36.2 million in unspent year-end funds from 2009-2010 and $34.2 million from 2010-2011. The city is now considering options that would redirect funds intended for the CRA to the city.

The proposed route of Fort Lauderdale's WAVE streetcar

The proposed route of Fort Lauderdale’s WAVE streetcar

Strawbridge said the Northwest Progresso-Flagler Heights CRA is seeking to revise the existing plan to add projects for funding consideration that are not included in its existing plan, even as the new fiscal year began Oct. 1.

According to city documents, CRA officials expect Redevelopment Management Associates to present an outline of proposed changes at the end of November, and to city commissioners for approval in December. The company, formed in 2009 and run by redevelopment consultants Kim Briesemeister and Chris Brown, pitches itself as a way to help cities “reinvent” themselves to attract businesses, jobs and revenue.

The CRA budget for the new fiscal year of 2015-2016 will likely include funds for transportation projects not in the existing plan, Strawbridge said.

He cited two memos from Feldman to commissioners. One outlined an extension of the proposed $50 million WAVE streetcar to a portion of the Northwest Progresso-Flagler Heights area at a cost of $7.5 million. The CRA would make an anticipated annual payment of $870,000, for up to 11 years.

The other memo called for the CRA to pay $197,000 to offset operational expenses for the existing Sun Trolley system in the CRA area.

In the past, the CRA has also funded neighborhood street parties, giving one group up to $142,000, Strawbridge said. He questioned whether that was a proper expenditure under a previous opinion by the Florida Attorney General’s Office, which opined that CRA funds should be used for “bricks and mortar” projects.

ObamaCare oversight: Budget squeeze forces HHS watchdog to trim investigative targets

By Fred Schulte, Center for Public Integrity HHSOIG

Facing major budget and staff cuts, federal officials are scaling back several high-profile health care fraud and abuse investigations, including an audit of the state insurance exchanges that are set to open later this year as a key provision of the Affordable Care Act.

The Department of Health and Human Services Office of Inspector General, which investigates Medicare and Medicaid waste, fraud and abuse, is in the process of  losing a total of 400 staffers — or about 20 percent of the workforce — from its peak strength of 1,800 last year. About 200 of those staffers will have departed by the end of this year, and the other 200 are slated to be gone by the end of 2015. (more…)

Broward Auditor looks at Hallandale Beach CRA with eye toward recovering misspent funds

By William Gjebre, BrowardBulldog.org 

County Commissioner Sue Gunzburger and Broward Auditor Evan Lukic

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.

 

Hallandale mayor, ex-city managers defend millions in suspect spending to county agents

By William Gjebre, BrowardBulldog.org 

Hallandale Beach City Hall

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

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

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 wgjebre@browardbulldog.org

Broward Health believes whistleblower is behind anti-kickback probe; Justice Department involved

By Karla Bowsher, BrowardBulldog.org 

A whistleblower apparently sparked the ongoing federal anti-kickback inquiry into allegations of false Medicare and Medicaid claims at Broward Health.

U.S. Department of Health and Human Services (HHS) agents surfaced the probe in May 2011 with a subpoena demanding records related to the public health care system’s business dealings with more than two-dozen doctors.

“We have reason to believe there’s a whistleblower,” said Broward Health General Counsel Sam Goren. He explained that belief is “based on the nature of the subpoena and its substance,” as well as the experience of Broward Health’s Washington, D.C. lawyers.

Under the False Claims Act, private individuals with knowledge of fraud against the government can blow the whistle – and seek rewards – by filing a lawsuit on its behalf. By law, such lawsuits are brought under seal to allow the Department of Justice time to investigate and decide whether to help prosecute the lawsuit.

An HHS official declined to say whether a whistleblower is involved in the Broward Health case.

BrowardBulldog.org, however, has learned that HHS agents are conducting the current civil inquiry jointly with the Department of Justice in Washington, D.C. and the U.S. Attorney’s Office in Miami.

Does that mean there is a parallel criminal probe? “Not to our knowledge,” said Goren.

Millions of pages of district documents have beenhanded over to federal authorities, Goren said. He explained it took so long because the district’s lawyers sought to limit how much information had to be turned over.

Broward Health, whose legal name is the North Broward Hospital District, did not finish producing all of the subpoenaed records until last month.

SUBPOENA SERVED

The 15-page subpoena from HHS’ Office of Inspector General (OIG) demanded Broward Health’s records concerning its contracts, negotiations and agreements with 27 doctors and one doctor-run business, North Broward Orthopedic Associates.

The kinds of documents sought included tax returns, financial data and other information regarding compensation, patient referrals and hospital admissions by the 27 doctors since January 2000.

The subpoena also required Broward Health to produce proof that it had taken steps, like employee training, to ensure that federal anti-kickback laws were not violated.

Click the chart for the complete list of names

State corporate records state that North Broward Orthopedic Associates was run by physicians Michael Abrahams and Sein Lwin, and was involuntarily dissolved in 2008 when no annual report was filed.

“I just happened to be the representative for the group,” said Lwin, one of the 27 doctors named in the subpoena. “It has nothing to do with my practice.”

Broward Orthopedic Associates’ contract with Broward Health ended more than five year ago, Lwin said, and he had not been served a subpoena himself.

Lwin is one of six orthopedic surgeons named in the subpoena. Seven other physicians are cardiologists or chest surgeons – the most common specialty among the 27 identified.

Cardiologists generally treat more Medicare patients than other types of specialists because cardiac problems are common among the elderly.

Most of the doctors named in the subpoena – 18 – belong to the Broward Health Physician Group, meaning they are district employees rather than independent doctors in private practice.

INVESTIGATION ONGOING

The tax-subsidized Broward Health has hired the Arent Fox law firm to represent it in the matter. Attorneys Linda A. Baumann and Jacques Smith specialize in false claims issues. Both declined comment because the investigation is ongoing.

Alicia Valle, spokeswoman for Miami U.S. Attorney Wilfredo Ferrer, declined to comment.

Agent Omar Perez with the HHS Office of Inspector General’s Miami Lakes regional office declined to discuss specifics of the inquiry.

“We’re still … inquiring whether there’s some substance to the allegations that were raised,” he said.

By law, whistleblower lawsuits filed under the False Claims Act must remain under seal for 60 days. If the government wants to keep it sealed after that, it must demonstrate “good cause” to a judge every 60 days

PROGNOSIS UNKNOWN

If Broward Health submitted false or otherwise improper insurance claims to Medicare or Medicaid, the district could be in violation of the federal Anti-Kickback Statute or the Stark Law.

The Anti-Kickback Statute prohibits offering or receiving incentives for patient referrals that involve any federal health care program, such as Medicare and Medicaid.

Criminal offenders can be sentenced to up to five years in prison and fined up to $25,000 per violation. Civil penalties can include fines of up to $50,000 per violation.

The Stark Law, also known as the Self-Referral Law, prohibits doctors from referring Medicare patients to entities, such as hospitals, to which they have financial ties. It also prohibits those entities from billing Medicare for such referrals.

Violators can be required to refund illegal payments and pay civil fines up to $15,000 per violation.

Broward Health commission Chair Joel Gustafson did not respond to interview requests.

Broward Health Chief Executive Frank Nask, through attorney Goren, declined to comment because the investigation is ongoing.

Karla Bowsher can be reached at kbowsher@browardbulldog.org

Investigators focus on Hallandale after reports of questionable city loans and land purchases

By William Gjebre, BrowardBulldog.org

Investigators with the Broward Inspector General’s office descended on Hallandale Beach City Hall this week following numerous reports of mismanagement of tax dollars.

On Tuesday, two OIG investigators spent nine hours at city hall seeking records and interviewing City Manager Mark Antonio and Community Redevelopment Agency (CRA) director Alvin Jackson.

“We were there,” confirmed Dylan Hughes, an assistant inspector general. “I can’t comment on the nature of an ongoing investigation.”

City officials had no immediate comment.

Broward’s Inspector General investigates suspected misconduct, “including fraud, corruption and abuse and gross mismanagement,” according to its web site. The specific focus of investigators at city hall was not immediately clear, but for nearly a year Broward Bulldog has reported about questionable city loans to local businesses and land purchases through the CRA. Hallandale Beach city commissioners also sit as the directors of the CRA.

Last month, a report by outside auditors described poor recordkeeping and oversight at the agency during the tenure of former longtime City Manager Mike Good. Good was fired in 2010, and commissioners asked for the audit weeks later.  On April 2, the city announced that it had selected Renee Crichton to take over as the next city manager when Antonio retires on June 29.

News of the Inspector General’s probe was welcomed by critics of city management.

“I’m delighted to hear that,” said activist Charlotte Greenbarg. “It’s long past due. What’s going on in Hallandale Beach needs a lot of investigation; it’s very welcomed.”

“I’m thrilled that Hallandale is being looked at by an independent agency,” said City Commissioner Keith London, who is running for the mayor’s seat. “I’ve been asking for this for about four years.”

The CRA was created in 1996 with a 30-year mission to facilitate redevelopment in the city. But while it has spent millions in tax dollars over the years, critics complain the city has little to show for it.

A number of controversial findings and actions regarding the city’s redevelopment agency have surfaced in the past year:

  • An auditing firm reported in September that the CRA failed to properly track city land acquisitions totaling more than $28 million and loans to businesses exceeding $1.5 million.  Last month, auditors said the city also failed to provide them with $20 million in vendor contracts for review, limiting the scope of their audit report.
  • The CRA acquired nine properties for $23.5 million during the past five years – taking them off the tax rolls – yet the city has enacted no plans for how to use eight of the parcels. The value of those properties has also fallen by $9.1 million.
  • A local weekly newspaper that regularly features a column written by Mayor Joy Cooper – and has touted her in front page puff pieces – received a $50,000 CRA loan in 2009 that only required the paper to repay half of that amount. The loan was made even though the South Florida Sun Times’ two top executives had made annual salaries averaging $200,000 for two years prior to the loan.
  • Last month, the Sun-Sentinel reported that city officials acknowledged they erroneously forgave an extra $7,500 on a property improvement loan that Commissioner Anthony Sanders had obtained in 2002 before he joined the commission. That meant Sanders’ nonprofit Higher Vision Ministries didn’t have to repay $15,000 of a $46,000 loan. In 2009, the CRA brought the property from Higher Vision for $235,000, with Sanders abstaining, triggering a controversy because the price was higher than two city appraisals, the newspaper reported.

City Manager Antonio, a long time city employee and city manager for approximately two years, would not talk about the Inspector General’s investigation. Through a city spokesman, he declined comment.

Mayor Joy Cooper did not respond to requests for comment.

CRA Director Jackson, who took over at the agency in January 2011, had no comment.

William Gjebre can be reached at wgjebre@browardbulldog.org

 

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