Ms. Book goes to Tallahassee, sees no conflict voting $ for Lauren’s Kids or dad’s clients

By Francisco Alvarado, FloridaBulldog.org 

Lauren and Ron Book in Times Square in March 2015 promoting her child sex abuse education book. Photo from the documentary “Untouchable” by David Feige

Freshman Broward State Sen. Lauren Book says she won’t abstain from voting on matters involving clients of her father, powerful lobbyist Ron Book. Similarly, she sees no conflict of interest in voting on measures to funnel millions of taxpayer dollars to benefit her non-profit charity and political launching pad, Lauren’s Kids.

Book, a Plantation Democrat, offered her thoughts on the issue of personal voting conflicts in an email exchange last week with Florida Bulldog.

“No,” she said when asked if she plans to abstain from voting on any matters involving Ron Book’s clients. “In ALL matters, I will vote my conscience and in what I believe is best for my district, for Broward County, and for the people of the State of Florida.”

Sen. Book also said that Lauren’s Kids would again seek significant state funding during this year’s legislative session that began March 7. Does that mean she will abstain from voting on bills to authorize funding for her organization?

“No. I have met with the Counsel of the Senate and have been advised that it is proper that I do not abstain on these matters unless the funding directly inures to my benefit, which it will not,” Sen. Book said.

Lauren’s Kids, however, pays Sen. Book a six-figure annual salary for serving as its chief executive. In 2015, her salary was $135,000 – a $20,000 increase from 2014, according to the charity’s federal income tax returns.

“My salary is not paid for with any state funds,” said Sen. Book. “I derive no personal benefit from public tax dollars except knowing that these monies are being used to save lives, raise awareness and prevent childhood sexual abuse.”

Sen. Book said that to make certain her salary includes no state dollars, she “restructured my employment to ensure that no public dollars were used to compensate me for my work” once she declared her candidacy. She declined to elaborate on how she accomplished that restructuring and that separation.

Ron and Lauren Book at a Tallahassee rally promoting Lauren’s Kids in April 2015. Photo from the documentary “Untouchable” by David Feige

Sen. Book did say, however, that she resigned from the board of directors of the Lauren’s Kids Foundation “to add an additional (but entirely unnecessary) layer between myself and the Foundation.”

Lauren’s Kid’s tax return for 2015 – the latest available – shows the charity received more than 83 percent of its $4.5 million in total revenue that year from the state. Since 2012, records show, the state has contributed more than $10 million to Lauren’s Kids.

The Florida Department of Education has requested another $1 million in funding for Lauren’s Kids for Fiscal Year 2017-18 “so we can continue to educate children and families to prevent abuse and help survivors,” said Sen. Book. “I might add, the DOE would only recommend funding if as experts they believed the curriculum was of significant benefit to our children.’’

Ron Book as landlord

Lobbyist Ron Book, the senator’s father, is the unpaid president of Lauren’s Kids. Yet he also makes money from Lauren’s Kids. According to the 501(c) (3) organization’s 2015 tax return, he paid himself $61,651 for renting space to Lauren’s Kids in his Aventura office.

Ron Book, who is also on the charity’s board, collected $63,175 in rent from Lauren’s Kids in 2014, according to that year’s tax return.

Ron Book declined to comment.

On Wednesday, March 22, Sen. Book will face one of the first ethical tests of her nascent political career. As a member of the Florida Senate’s health policy committee, she will be evaluating five bills to establish the rules and regulations for the state’s medical marijuana industry.

While some patient and industry advocates argue the state should open up the market to competition, four of the bills discourage participation by more cannabis providers beyond the seven companies already licensed to manufacture a non-psychoactive, non-smokable form of the drug under a restrictive medical marijuana program set up by the Legislature in 2014.

Among the Florida licensed providers is a joint venture between Homestead-based nursery Alpha Foliage and Surterra, an Atlanta-based medical marijuana company that employs the senator’s father Ron Book as its Tallahassee lobbyist.

While government watchdogs said Sen. Book should abstain from voting on any matters involving her father, she told Florida Bulldog she has no intention of doing so because Florida law and Senate rules do not prohibit it.

“As I stated above, I will follow the letter and spirit of the law in how I vote and how I conduct my business,” she said.

Conflict questions loom

Still, questions about Sen. Book’s potential vote conflicts involving both her father’s 100-plus clients and Lauren’s Kids loom large.

Ben Wilcox, research director for the government watchdog organization Integrity Florida, noted that because Florida has a citizen legislature that allows members to have outside employment, the bar is set low when it comes to ethical requirements.

Florida’s weak Code of Ethics for Public Officers and Employees says that state officers “may not vote on any matter that the officer knows would inure to his or her special gain or loss.” It does not prohibit such votes. Rather, the code says vaguely that officers who vote to benefit themselves or a relative “shall make every reasonable effort to disclose the nature of his or her interest in a public memorandum” that can be filed up to 15 days after the vote.

Integrity Florida Research Director Ben Wilcox

Sen. Book, nevertheless, could face questions when it comes time to vote on an appropriations bill that would include Lauren’s Kids, which advocates against child sex abuse.

“You are not supposed to vote on something that has a direct benefit to you personally,” said Wilcox. “That is where she may get into some trouble if her organization is getting an appropriation from the Legislature.”

Wilcox said Book should also be mindful about voting on matters favorable to her father’s clients. “She should be sensitive to the appearance of a conflict of interest,” Wilcox said. “Even if it technically is not a conflict, it raises questions in the public’s mind and causes the public to lose confidence in government.”

Since founding Lauren’s Kids 10 years ago, Book has seemed on a trajectory for public office. In addition to appearing before the Legislature to lobby in favor of laws that crack down on sexual predators and child abusers, Book has led an annual walk from Key West to Tallahassee to raise awareness for child sex victims that receives statewide media coverage. She’s also written two books, including one for children, about her own experience being sexually abused by her former nanny. Book and her father had a starring role in the recently released documentary about Florida’s sex offender laws called Untouchable.

Book, 32, decided to run for the Senate seat previously held by Eleanor Sobel, who left the Legislature in 2016 due to term limits. After raising more than $1.5 million through her campaign and her political action committee, Leadership for Broward, Book automatically won the seat when no one filed to run against her. A Bulldog analysis of her 2015 and 2016 campaign finance reports and her father’s client list show she received $35,000 from 15 entities that employ Ron Book.

Clients and contributions

Of that amount, her campaign received $1,000 apiece from two of Surterra’s owners, Michael Havenick and Alexander Havenick, who is also vice president and general counsel for Southwest Florida Enterprises, a company that owns several pari-mutuels in the state, including Magic City Casino in Miami. Southwest, four affiliated companies and four other Havenicks also each gave the $1,000 maximum to Sen. Book’s campaign.

According to 2016 lobbyist compensation reports filed with the state, Ron Book’s law firm was paid between $40,000 and $80,000 by Surterra to lobby the Legislature. Ron L. Book P.A. also received approximately $30,000 from Surterra to lobby the executive branch.

Lauren’s Kids has also been the beneficiary of millions of dollars in state funding. According to the organization’s 2014 tax return, Lauren’s Kids received $2.7 million in state grants. Its 2015 tax return shows the nonprofit got $3.4 million that year from Florida’s Department of Education. In 2016, records show, the Legislature awarded Lauren’s Kids $1 million.

A Lauren’s Kids insert in a Florida Department of Motor Vehicles registration renewal.

Florida’s Department of Motor Vehicles also contributes to Lauren’s Kids via the sale of specialty license plates approved by the Legislature. Lauren’s Kids, which got its specialty tag in 2013, received $294,653 from the DMV in 2015, tax records show.

Further, the DMV allows Lauren’s Kids to insert a brochure asking for donations in every auto tag renewal notice mailed to Florida residents. Lauren’s Kids is one of several nonprofits eligible to insert their brochures under the specialty tag program.

Beth Rosenson, a University of Florida political science professor who teaches a course on ethics in U.S. politics, said in an interview that Book might derive a benefit from her father’s earnings as a lobbyist. “Parents always help out their kids,” Rosenson said. “Let’s say she had a medical emergency or something in which she needed money so her father’s financial situation is not something that is totally separate from hers.”

Rosenson said Sen. Book’s potential for conflict is analogous to President Donald Trump and his sons, who have taken over the Republican billionaire’s companies while he’s in the White House. “In a perfect world, she would realize that her relationship with her father raises questions of conflict of interest,” Rosenson said. “So ideally, yes she should recuse herself.”

When it comes to Lauren’s Kids, Integrity Florida’s Wilcox said even if Book’s salary is not being paid with state funds, she should still abstain from voting on matters involving her nonprofit. “In an abundance of caution, that is something she may want to reconsider,” Wilcox said. “While technically it may be correct, I don’t think it will look good to the public.”

An election result you likely missed: anti-corruption referendum wins big in Tallahassee

By Dan Christensen, BrowardBulldog.org anticorruption

Lost in the hubbub of a heated election season headlined by a down to the wire governor’s race, voters in Tallahassee approved a first-of-its-kind municipal anti-corruption referendum intended to limit the influence of big moneyed special interests in local politics.

The new policy, backed 2 to 1 by city voters, amended Tallahassee’s charter to enact bold ethics and campaign finance reforms that supporters say is the beginning of a national grassroots campaign aimed at stopping “the legalized corruption that has come to define modern politics.”

Under the new rules, which have drawn scant media attention outside Tallahassee, city leaders must establish a tough ethics code within six months, and create an independent ethics board to assist the city commission in drafting the code, and then to administer and enforce it.

More notably, candidates for mayor and city commission may no longer accept campaign contributions in excess of $250 per election. And in a twist on public financing for political campaigns, registered voters who contribute to municipal candidates in Tallahassee are eligible to receive a refund from the city equal to the amount of their contributions, up to a maximum of $25.

If successful, the strategy would empower small donors to dilute the undue influence of big money donors.

“This will encourage the common, ordinary citizen to be involved in the election process,” said Peter Butzin, the chairman of Common Cause Florida. “We need to take back local government one local governmental institution at a time.”

Butzin estimated refunds from the city’s general revenues would cost about $200,000 in an election cycle based on the city’s population of about 185,000. “It’s a system we think will be free of any corruption or administrative problems relating to fraud because it will be super easy to administer,” Butzin said.

Pushing to pass the referendum was an unusual coalition of reform-minded conservatives, including tea party groups, and more liberal, good-government interests like Common Cause and the Tallahassee League of Women Voters. Represent.us, a non-partisan, nonprofit based in Northampton, Massachusetts that’s looking to pass similar measures in cities and states across the country, brought them together.

Josh Silver, director of Represent.us

Josh Silver, director of Represent.us

“Tallahassee was our proving ground,” said Represent.us Director Josh Silver. “We got a huge amount of support, but not from the major political parties and that’s because these political parties are entrenched and both are routinely selling out their values to special interest donors.”

Silver, who zeroed in on Tallahassee with the help of Integrity Florida Executive Director Dan Krassner, said his side won without buying a dime’s worth of political advertising.

“We didn’t pay for a single ad,” he said. “People care about democracy, but they get fired up about corruption.”

The vote was a victory for Citizens for Ethics Reform, the local coalition that collected more than 20,000 signatures over the summer to get the anti-corruption measure on the November ballot – more than twice the required number.

One of those who rang doorbells was Anita Davis, a former Leon County commissioner and ex-president of the Tallahassee branch of the National Association for the Advancement of Colored People (NAACP).

“I had very few people that said no. They wanted to know how they could help,” said Davis, a co-chair of Citizens for Ethics Reform.

“We are now the model for the nation,” said the coalition’s other co-chair Catherine Baer, who also chairs The Tea Party Network. “The diversity of our partnership contributed to the success of it. Opponents had a hard time painting it far right or far left.”

Supporters say local action is needed due to the failure of Congress and state legislatures to address the threat to democracy posed by modern corruption schemes.

“America’s anti-corruption laws are dangerously out of date. With so many perfectly legal ways to exchange money in return for favorable treatment from politicians, “quid-pro-quo” bribery has become obsolete. Our broken system requires the people to buy access to their own government — This is the new face of corruption in the United States,” says the Represent.us web site.

Tallahassee sought to block a vote on the anti-corruption referendum as the movement gained steam over the summer.

In August, Tallahassee City Attorney Lewis Shelley sued Citizens for Ethics Reform complaining that the ballot language was “unclear.” But Leon County Chief Judge Charles A. Francis disagreed, and city commissioners later approved putting the matter on the ballot.

Josh Silver, of Represent.us, said the referendum vote is not vulnerable to legal challenge. A Washington lawyer who specializes in campaign finance law agreed.

“The Supreme Court’s Citizens United decision had a huge impact on state races, but only deals with independent expenditures, not contributions. Similarly, last year’s McCutcheon decision did away with aggregate limits on contributions to all candidates, but didn’t outlaw limits to a single candidate,” said the attorney, who declined to be named.

Represent.us has a diverse board of advisors whose political affiliations range from progressive to conservative.

They include Theodore Roosevelt IV, an investment banker and great-grandson of the former president; Richard Painter, an ethics advisor to President George W. Bush; Douglas E. Schoen, Democratic campaign strategist; Norman J. Ornstein, resident scholar at the American Enterprise Institute for Public Policy Research and Tom Whitmore, of DC Tea Party Patriots.

What’s next?

Silver said Represent.us is surveying the country in search of a dozen more cities where the Tallahassee model might be applied in the next two years. The ultimate goal: to get Congress to pass the American Anti-Corruption Act, which among its numerous provisions would prohibit members of Congress from raising funds from the interests they regulate or from acting to benefit those who spend heavily to influence their elections.

“Tallahassee voters have spoken out that they are tired of the corrupting influence of money in politics and they want a better way forward,” said Integrity Florida’s Dan Krassner, who is also a spokesman for Citizens for Ethics Reform. “This anti-corruption victory proves that conservatives and progressives can and will unite behind bold reforms.”

Gov. Scott had stake in pipeline firm whose $3 billion venture he and his appointees backed

 

By Dan Christensen, BrowardBulldog.org 

Florida's existing and proposed pipeline routes. Gov. Scott invested hundreds of thousands of dollars in companies that own all three. Illustration: NextEra Energy

Florida’s existing and proposed pipeline routes. Gov. Scott invested hundreds of thousands of dollars in companies that own all three. Illustration: NextEra Energy

Upon his election, Gov. Rick Scott’s transition team included a Florida Power & Light executive who pitched his company’s plan to build a major natural gas pipeline in North Florida to fuel a new generation of gas-fired power plants in places like Port Everglades.

“The proposed project will need state regulatory and governmental agencies to understand and support this project,” said the proposal submitted by FPL vice president Sam Forrest.

Gov. Scott understood. In May and June 2013, he signed into law two bills (HB 999 and HB 1083) designed to speed up permitting for what came to be known as the Sabal Trail Transmission – a controversial, 474-mile natural gas pipeline that’s to run from Alabama and Georgia to a hub in Central Florida, south of Orlando.

Five months later, the Florida Public Service Commission, whose five members were appointed by Gov. Scott, unanimously approved construction of Sabal Trail as the state’s third major natural gas pipeline. More approvals are needed from the Federal Energy Regulatory Commission (FERC) and the Florida Department of Environmental Protection, which the governor oversees.

What wasn’t publicly known in 2013, however, was that Gov. Scott owned a stake in Spectra Energy, the Houston company chosen by Florida Power & Light that July to build and operate the $3 billion pipeline. Sabal Trail Transmission LLC is a joint venture of Spectra Energy and FPL’s parent, NextEra Energy.

BrowardBulldog.org’s review of financial records made public last month by Gov. Scott show that as of Dec. 31 his portfolio included several million dollars invested in the securities of more than two-dozen entities that produce and/or transport natural gas – including some, like Spectra, with substantial Florida operations.

His stake in Spectra Energy was reported as being worth $53,000 that day.

Florida’s ethics laws generally prohibit public officials like the governor from owning stock in businesses subject to their regulation, or that do business with state agencies. A similar prohibition exists on owning shares in companies that would “create a continuing or frequently recurring conflict” between an official’s private interests and the “full and faithful discharge” of his public duties.

NEW CONCERNS ABOUT BLIND TRUST LAW

Scott’s investments in companies that do business in Florida raise fresh concerns about the operation of Florida’s so-called “qualified blind trust” statute – a law that allows public officials to veil their investment activity while affording them immunity from prohibited conflicts of interest.

Gov. Rick Scott

Gov. Rick Scott

Scott acquired his Spectra shares via his blind trust. Exactly when that occurred is not known, and Greg Blair, a spokesman for the governor’s re-election campaign, said in an email that Scott has “no knowledge of the investment because his decision to invest was made by a trustee of the blind trust.”

Blind trusts are supposed to eliminate conflicts of interest by “blinding” public officials and the public to the nature of their holdings. The law’s requirement that officials hand over control of an investment portfolio to a disinterested manager was intended to accomplish that.

But as BrowardBulldog.org reported in March, the governor’s blind trust was ineffective in keeping the governor’s assets secret. And Alan Bazaar, a trusted former employee of the governor’s private investment firm Richard L. Scott Investments, managed it.

“The legislature makes it easy for officials to get away with conflicts of interest through loopholes in the ethics code,” said Dan Krassner, executive director of Integrity Florida, the nonpartisan research institute and government watchdog group. “Corruption has been institutionalized in Florida with flawed policies like blind trusts and political appointees issuing advisory opinions on what’s ethical.”

The governor, the senate president and the house speaker appoint the members of Florida’s Commission on Ethics.

The governor’s financial interest in Sabal Trail’s builder, Spectra, is also fueling criticism from opponents of the controversial natural gas pipeline project.

“That’s very interesting,” said Susan Glickman, Florida Director of the Southern Alliance for Clean Energy. “It’s totally inappropriate that we have policymakers making important decisions where they have a financial stake in the outcome.”

“OUTRAGED AND DISHEARTENED”

Beth Gordon is a lawyer and former South Florida resident who now lives with her family on a 32-acre horse farm in Levy County where Spectra wants to route Sabal Trail. She helped found Spectrabusters, a citizens’ group that’s fighting Sabal Trail.

“I’m outraged and disheartened by this news. I feel blindsided,” said Gordon, who like Scott is a Republican. “The governor’s interest is in getting these companies the permits they need and he’s not interested in the environment.”

The governor’s financial disclosure form, essentially a snapshot of his extensive holdings as of Dec. 31, shows that Scott also owns a $55,000 stake in another Spectra asset, DCP Midstream Partners. DCM is a natural gas limited partnership 50 percent owned by Spectra Energy.

Scott disclosed his portfolio last month after he closed his original blind trust, then immediately opened a new one and placed all of his assets back into it.

He did it “to ensure that there would not be the possibility of any conflict of interest,” spokesman Greg Blair said via email. “As a result, Gov. Scott has no knowledge of the current contents of the blind trust.”

The trustee of the new blind trust, however, continues to be New York’s Hollow Brook Wealth Management and its chief executive and longtime Scott crony Alan Baazar.

Neither the governor nor anyone on his staff would be interviewed about his investments. Last month’s disclosure form marks the first time the governor has made public a list of his securities investments since he formed the blind trust in April 2011.

The maneuver served to insulate Gov. Scott from criticism about financial transparency amid his re-election campaign against former Gov. Charlie Crist. But it also revealed Scott’s large personal bet on natural gas and firms like Spectra and Energy Transfer Equity LP.

GOV. SCOTT’S STAKES IN OTHER FLORIDA PIPELINES  

Energy Transfer is a publicly traded master limited partnership whose subsidiaries include a joint venture that owns Florida Gas Transmission. FGT is the state’s largest natural gas pipeline, transporting it from Texas through the Florida peninsula south to Miami-Dade.

Florida Gas Transmission is also a major state vendor. According to Transparency Florida, the state website where government spending information is posted, FGT was paid $28.4 million by the Department of Transportation for various construction services in 2013-2014.

Scott valued his units of Energy Transfer as being worth $311,000 as of the end of last year. He likewise reported additional investments in a pair of entities owned by Energy Transfer, Regency Energy Partners LP and PVR Partners LP, totaling $400,000.

Scott’s investments in Spectra and Williams, an energy infrastructure company, also gave him a financial interest in Florida’s other major natural gas pipeline, Gulfstream, which runs from Alabama to Tampa Bay beneath the Gulf of Mexico. Those companies and their limited partnerships jointly own and operate Palmetto-based Gulfstream Natural Gas System LLC.

Scott’s disclosure form reported that in addition to his Spectra holdings he owned Williams shares worth $104,000 and a $71,000 ownership interest in a master limited partnership owned by Williams, Access Midstream Partners.

In addition to the bills Scott signed to streamline permitting for natural gas pipelines, he likewise benefitted the industry last year by approving another law (HB 579) that provides $30 million over five years to fund rebates to commercial fleet operators who buy, convert or lease vehicles that run on natural gas. The program, administered by Agriculture and Consumer Services boss Adam Putnam, offers applicants a maximum annual rebate of $250,000.

The Public Service Commission later approved several individual natural gas vehicle programs. PSC Commission Chairman Ronald A. Brise said the moves helped make “natural gas pricing more competitive with conventional motor fuels.”

The law also exempts natural gas fuel from state fuel, sales and use taxes for five years.

“They’re doing everything they can to build the market,” said Glickman.

Florida’s natural gas market is huge and growing. Nearly 68 percent of Florida’s electric generation, and more than 72 percent of FPL’s total energy, was fueled by natural gas in 2012, according to the Public Service Commission. Pipelines bring virtually all of that gas to Florida.

SABAL TRAIL TO POWER FPL PLANTS

The Sabal Trail underground pipeline is to run through 13 Florida counties. Documents state that it is intended to provide Florida Power & Light with a dedicated supply of natural gas for power generation needs and other purposes starting in May 2017.

Much of that new supply is to come from natural gas fracked from shale. It would flow to Florida from Sabal Trail’s connection to Williams’ Transco pipeline in Alabama.

Sabal Trail is to terminate at a new central Florida hub where it would connect to the state’s two other main natural gas pipelines, Florida Gas Transmission and Gulfstream. Another part of the new pipeline project that does not involve Spectra is the construction of a 126-mile, $550 million pipeline to run from Sabal Trail’s termination point in Osceola County to an FPL plant in Indiantown in Martin County.

“The primary factors driving this increased need are the three modernization projects currently in progress at FPL’s Cape Canaveral, Riviera Beach and Port Everglades natural gas plants to upgrade older, 1960’s-era steam combustion turbine generating units to modern, and more efficient combined cycle technology,” said the Public Service Commission’s October 2013 memorandum endorsing the pipeline projects.

Sabal Trail, however, has drawn significant opposition from both environmentalists who fear pollution and residents who consider the 36-inch steel pipeline a hazard and don’t want it anywhere near them.

In April, the Environmental Protection Agency (EPA) sent a 17-page letter to FERC that questioned the need for Sabal Trail and suggested alternatives, like improved energy conservation measures, that would allow FPL to otherwise meet the power needs of its customers.

“U.S. electricity sales appear to have peaked in 2007,” the letter says.

FPL isn’t the only utility looking to generate electricity using natural gas imported via Sabal Trail.

Later this year, the Public Service Commission will consider plans by Duke Energy Florida to build a new, combined-cycle natural gas plant near Crystal River in Citrus County that would be a major customer of the new pipeline.

According to a Duke Energy press release, the project also requires certification under Florida’s Power Plant Siting Act. Certifications are issued by Florida’s siting board, which consists of the governor and Cabinet.

Gov. Scott signs ethics bill; Lobbyists at water districts must register and disclose

By Dan Christensen, BrowardBulldog.org wmds

Gov. Rick Scott signed into law Friday a state ethics bill that requires lobbyists at Florida’s five water management districts to register and disclose who they’re working for and how much they’re being paid.

The new law that takes effect July 1 marks the first time state lobbyist regulations have been applied to any of the state’s independent special districts – limited purpose governments that raise and spend hundreds of millions of dollars every year.

“It’s encouraging that for the second year in a row, the governor and legislature have advanced anti-corruption measures aimed at improving public trust in government,” said Dan Krassner, executive director of the nonpartisan research institute and government watchdog group Integrity Florida. “While more work will be needed in the future to take on corruption, state lawmakers are moving in the right direction.”

The final bill (SB 846) was a diminished version of the original Senate ethics bill sponsored by Sen. Jack Latvala, the Clearwater Republican who chair of the Ethics and Elections Committee. Under the Senate plan, all 136 independent special districts in the state that levies property taxes would have been required to register and disclose lobbyists who appear before them.

NO LOBBYIST REGISTRATION AT NORTH BROWARD HOSPITAL DISTRICT 

Florida’s taxing districts, many run by unelected boards, levied more than $1.8 billion in property taxes on homeowners and businesses in 2011. The new law means that districts such as the $1 billion North Broward Hospital District and the $483 million Health Care District of Palm Beach –  two of the three biggest taxing districts in the state – can continue to do business with lobbyists out of the sunshine.

BrowardBulldog.org, supported by a grant from the Fund for Investigative Journalism, reported in January that nearly 1,000 independent special districts across Florida do not require lobbyists to register, pays fees or disclose any information about themselves or their clients.

A week later Latvala and Senate President Don Gaetz announced their support for legislation to impose on larger special districts registration requirements long in place for lobbyists at Executive Branch agencies.

“I personally support the idea that ethical standards, including lobbyist registration, apply to special districts,” said Gaetz, R-Niceville. “Broward Bulldog’s reporting has helped raise the profile of the issue.”

The Senate passed the bill 38-0. But the bill languished in the House where House Ethics and Elections Chair Kathleen Passidomo, R-Fort Myers, considered it to broad. Her committee decided to begin by imposing the new requirements only on water management districts. The bill passed the House 118-0 on May 1.

If registration works smoothly at the water districts, Passidomo said, she will consider requiring more special districts to register lobbyists.

WATER DISTRICTS TO SPEND $1 BILLION THIS YEAR

Florida’s water management districts will spend more than $1 billion this year, with nearly half of that money coming from property tax revenues.

The South Florida Water Management District, with a $622 million annual budget, is the largest of the five districts. It collects taxes in 16 counties, including Broward and Miami-Dade, and is a frequent target of lobbyists who engage staff and a governing board dominated by real estate, agribusiness and development interests.

The new law requires lobbyists at water management districts to register annually, disclose and pay a fee of up to $40 per client. Registration includes a statement from each principal authorizing the lobbyist’s work and identifying the client’s main business and a statement disclosing the existence of any direct or indirect business relationship between the lobbyist or any officer or water district employee.

All lobbyist registration records are public records that must be available online.

The new law includes other changes to Florida’s ethics laws:

  • Allows the Florida Commission on Ethics to initiate investigations when state officials fail to file financial disclosure reports.
  • Requires annual ethics training for elected municipal officials
  • Applies portions of the state ethics code to Enterprise Florida and Citizens Property Insurance Corporation.

Gov. Scott chose a familiar face to manage his $72 million blind trust

 

By Dan Christensen, BrowardBulldog.org 

Alan Lee Bazaar, left, and Gov. Rick Scott

Alan Lee Bazaar, left, and Gov. Rick Scott

Most Floridians have never heard of Alan Lee Bazaar. Yet as chief executive of the New York investment advisory firm that serves as trustee of Gov. Rick Scott’s blind trust, Bazaar is the keeper of an important public trust for Florida’s citizens.

Bazaar and the company he runs, Hollow Brook Wealth Management, oversee Scott’s $72 million portfolio of stocks, bonds and other investments on the governor’s behalf. Their duty is to decide when to buy or sell the governor’s assets without telling him – in effect “blinding” Scott to his holdings and, by law, immunizing him from prohibited conflicts of interest.

Trustees of qualified blind trusts in Florida are supposed to be disinterested fiduciaries. Relatives of the governor, his political allies, state employees or any “business associate or principal” need not apply.

The governor’s office describes Bazaar and Hollow Brook as “independent” of Gov. Scott. Bazaar and Scott, however, are intimate, longtime associates at Richard L. Scott Investments, according to a variety of public records.

Bazaar was a principal at the governor’s Naples-based investment firm for nearly 11 years, serving in positions of responsibility and trust until shortly before the governor announced his candidacy in April 2010. Bazaar joined Hollow Brook shortly after leaving Scott’s firm.

Bazaar worked for Scott from July 1999 to January 2010 as managing director and portfolio manager. He “co-managed the public equity portfolio and was responsible for all aspects of the investment decision-making process, including all elements of due diligence,” according to a biography on file at the U.S. Securities and Exchange Commission.

DEEPER TIES

Scott’s relationship with Bazaar is deeper than employer-employee, and he and his family’s financial ties to Hollow Brook go beyond the blind trust.

SEC records show that more than a decade ago the two men were members of a Delaware company that invested several million dollars in a small Deerfield Beach computer security company – an investment that later yielded tens of millions of dollars in returns.

SEC records also show that today Hollow Brook is “investment adviser” to two other large entities in which Gov. Scott owns a beneficial interest, – “a family partnership controlled by Richard L. Scott’s spouse (the Scott Family Partnership) and a revocable trust for the benefit of Mrs. Scott’s spouse (the Scott Revocable Trust).”

Bazaar declined to discuss Hollow Brook or his work, past or present, for Gov. Scott. “We don’t speak to reporters,” he said.

The governor’s office was asked why Gov. Scott chose Bazaar to oversee his blind trust given their long-standing business relationship. A spokesman cited the state ethics code’s definition of business associate: “Any person engaged in or carrying on a business enterprise with a public officer….as a partner, joint venturer, (or) corporate shareholder where the shares of such corporation are not listed on any national or regional stock exchange.”

“Mr. Bazaar does not fall within that definition,” spokesman John Tupps said in an email.

The past relationship between Gov. Scott and the man who oversees his blind trust is nevertheless troubling, according to Dan Krassner, executive director of the nonpartisan government watchdog group Integrity Florida.

“The relationship certainly stretches the concept of an independent third-party making disinterested investment decisions,” said Krassner. “When the legislature said don’t use business associates, you would think that would prohibit involvement of someone’s portfolio manager.”

BLIND TRUST CREATED TO HIDE THE GOVERNOR’S ASSETS

Gov. Scott’s blind trust was created in 2011 to place a veil over Scott’s many financial assets and any transactions involving them. Under a state law enacted last year, the arrangement immunizes Scott from any prohibited conflicts of interest because those assets are considered to be outside Scott’s knowledge or control.

Last week, however, BrowardBulldog.org reported that the trust has been ineffective in preventing disclosures of the governor’s assets. Information about stock purchases and sales by the blind trust are a matter of public record elsewhere.

For example, U.S. Securities and Exchange Commission records show that since December 2012 the blind trust has sold millions of dollars worth of shares of Argan Inc., a company that does business in Florida through its power plant construction subsidiary, Gemma Power Systems. Scott continues to be the beneficial owner of approximately $27 million in Argan shares.

The law does not require Scott to make public the agreement he signed with Hollow Brook that created the blind trust, and his office declined BrowardBulldog.org’s request to release a copy.

Instead, Bazaar certified to Florida’s Commission on Ethics last July that the blind trust met the law’s requirements. There is no way to verify Bazaar’s assertion.

Gov. Scott picked Hollow Brook and Bazaar, who turns 44 this weekend, to manage his blind trust when it was created in April 2011. It was a comfortable selection for both men. Bazaar’s duties were similar to his former job at Richard. L. Scott Investments where he helped research and choose Scott’s investments.

SCOTT’S EYES AND EARS

At the firm, Bazaar was Scott’s eyes and ears when serving as a director on the boards of corporations in which Scott had taken a large investment stake.

A decade ago, for example, Bazaar was named to the board of directors of a company called Media Sciences International. Federal records state that Bazaar’s board membership was part of a deal in which Scott invested $1.25 million in exchange for a million shares of Media Sciences stock directly from the company.

Alan Bazaar, third from right, with other members of the board of directors of NTS communications

Alan Bazaar, third from right, with other members of the board of directors of NTS communications

As trustee of the governor’s blind trust, Bazaar continues to serve on boards of companies in which Scott is heavily invested.

One example is NTS, a broadband services provider. Bazaar joined the board of directors in 2012 in the wake of a settlement between management and dissident shareholders looking to make changes in order to maximize shareholder value.

Last month, Lubbock, Texas-based NTS merged with another company and its stockholders received $2 for each share they owned. SEC reports show that Scott’s blind trust owned 1.25 million shares worth $2.5 million. Scott was also the beneficial owner of an additional 3.7 million NTS shares held by the Scott Family partnership and the First Lady’s trust. The total value of the Scott’s NTS shares: $10 million.

In 2013, Bazaar also became a director at Wireless Telecom Group of Parsippany, N.J.

Two years before, Gov. Scott’s blind trust reported its initial assets included $434,000 in Wireless Telecom stock. When Bazaar joined Wireless Telecom’s board on June 12, 2013, the company disclosed that Gov. Scott was the beneficial owner of 1,872,265 shares, or 7.9 percent of the company. The market value of those shares was $2.26 million.

How many of those Wireless Telecom shares were assets of the blind trust is not known. The governor typically owns shares indirectly via trusts or partnerships and Wireless Telecom did not identify the entity or entities holding Scott’s shares.

Hollow Brook, whose employees also include Scott’s longtime corporate accountant Cathy Gellatly, charges its clients fees based on a percentage of assets under management and performance, according to SEC records.

SCOTT FAMILY’S ENORMOUS ASSETS

In the case of the Scott family, those assets are enormous. The governor’s blind trust alone holds assets valued at more than $70 million. The Scott family partnership and the First Lady’s revocable trust are worth upwards of tens of millions of dollars more, SEC records show.

SEC records reveal something else: an apparent coordination of transactions among those three entities, each of which owned huge parallel interests in some of the same stocks.

On more than one occasion, the blind trust, Ann Scott’s trust and the family partnership bought or sold large numbers of shares on the same day, at the same price and in the same or similar proportions.

Gov. Scott filed reports with the SEC disclosing two such transactions.

The first report states that on Nov. 2, 2011 the blind trust, Ann Scott’s trust and the family partnership each bought shares of NTS for which they paid a total of $750,000. The second filing reported proportional sales by those entities of 350,000 shares of Argan on Dec. 20, 2012. The sales grossed $6.3 million.

SEC records also disclose Bazaar’s personal investments in stocks that Scott owned.

For example, Bazaar was a member of Fernwood Partners II, a Delaware investment company that Scott and his wife, Ann, used in 1999 to invest $3.7 million in Cyberguard, a Deerfield Beach computer security firm.

As part of that deal, Cyberguard added Scott’s brother, William Scott, and former Columbia/HCA Healthcare executive David Manning to its board. Gov. Scott was Columbia/HCA’s chief executive until 1999 when he resigned amid a federal Medicare fraud investigation.

Others who later joined Cyberguard’s board included Gov. Scott’s longtime friends, Broward Sheriff Ken Jenne, who later went to prison for corruption, and Fort Lauderdale lobbyist William D. Rubin. For their board service, both men were granted Cyberguard shares worth hundreds of thousands of dollars.

Gov. Scott quietly rakes in millions from stock sales; Florida’s blind trust law ineffective

By Dan Christensen, BrowardBulldog.org 

Gov. Rick Scott Photo: Joe Burbank, Orlando Sentinel

Gov. Rick Scott
Photo: Joe Burbank, Orlando Sentinel

Over the last 15 months, Gov. Rick Scott and his wife, Ann, through various entities, made more than $17 million selling hundreds of thousands of shares of Argan Inc., a publicly-traded company whose subsidiary, Gemma Power Systems, does business in Florida.

The Scotts’ Argan profits were magnificent, more than quadruple their investment.

Gov. Scott’s blind trust sold 140,976 of those Argan shares worth $2.54 million on Dec. 20, 2012. After the sale, the blind trust retained more than 520,000 Argan shares worth $9.43 million.

You aren’t supposed to know that. Gov. Scott isn’t supposed to know it either.

Not long after taking office in 2011, Scott put his personal portfolio of stocks including Argan, bonds and other financial assets into the blind trust that’s managed by others. The idea was to eliminate any appearance of a conflict of interest between the governor’s financial assets and his official duties by “blinding” him  – and the public – to the nature of his vast holdings.

Yet an investigation by BrowardBulldog.org has found that the governor’s blind trust, and Florida’s qualified blind trust law, have been ineffective. They have not prevented public disclosure of Gov. Scott’s personal riches.

MILLIONS IN BLIND TRUST ASSETS VISIBLE 

Millions of dollars of assets placed in the Richard L. Scott Blind Trust – securities, partnership interests and the like – are not veiled as the law intended. They are visible to Scott or anyone else who knows where to look. They are a matter of public record.

The reason: Florida’s blind trust law is trumped by the public reporting requirements of the U.S. Securities and Exchange Commission.

“The public is not benefiting from Florida’s so-called blind trust policies. It’s really not a blind trust. It’s more like a removable blindfold,” said Dan Krassner, executive director of the nonpartisan watchdog group Integrity Florida.

No one in the governor’s office, including General Counsel Peter Antonacci, would be interviewed for this story.

Gov. Scott and First Lady Ann Scott

Gov. Scott and First Lady Ann Scott

In response to emailed questions, Scott spokesman John Tupps said, “The governor’s blind trust is controlled by an independent trustee by law. He has no knowledge of any blind trust activity or transaction since his assets were placed in the blind trust on April 30, 2011.”

Still, publicly available SEC records show that just two weeks ago the governor and the First Lady cashed out another $10 million from the stock market when their five million shares in the publicly traded telecommunications firm NTS, held indirectly through several entities they control, were acquired in a merger. NTS changed is name from XFONE in 2012.

Gov. Scott’s blind trust accounted for a quarter of that total, or $2.5 million, the records show. Half of the Scotts’ stake, including the blind trust’s shares, were acquired at a bargain basement price directly from NTS on Nov. 2, 2011 – nearly one year to the day after Scott’s election.

The governor voluntarily created his blind trust about four months after his inauguration. Because public officials in Florida are not required to report spouses’ holdings, only financial assets owned directly in Scott’s name, or by the Richard L. Scott Revocable Trust, went into the trust.

Florida’s qualified blind trust law, signed by Gov. Scott last May 1, allows public officers to find legal safe harbor from prohibited conflicts of interest by using such trusts to hold their assets outside their knowledge or control.

Over the summer, Scott sought a ruling from the ethics commission that his blind trust met the new law’s standards and that he was entitled to its protection. In September, after Scott’s lawyers disclosed a list of initial assets placed into the trust, the ethics commission ruled that “under the circumstances presented,” Scott’s blind trust complies with state law.

So far, the extremely wealthy Scott is the only public official in Florida to create a qualified blind trust to shield his assets, according to the Commission on Ethics.

‘SECRECY APPROACH FAILED’

Today, however, the governor’s safe harbor seems in jeopardy because of the blind trust’s inability to keep his assets hidden from public view.

Dan Krassner, executive director of nonprofit Integrity Florida

Dan Krassner, executive director of nonprofit Integrity Florida

“The secrecy approach to accountability has failed and full disclosure is the solution. Lawmakers should repeal the blind trust law and instead have a policy of full disclosure of private financial interests of public officials,” said Integrity Florida’s Krassner.

The blind trust’s shortcomings would appear to create an immediate potential problem for Gov. Scott in his oversight role as chair of the State Board of Administration.

The SBA, with more than $176 billion in public money under management, invests widely on behalf of the Florida Retirement System and other funds, including the Lawton Chiles Endowment Fund, which manages the state’s tobacco settlement monies. The funds are run day-to-day by SBA staff and an executive director who serves at the pleasure of the SBA’s trustees – Gov. Scott, Chief Financial Officer Jeff Atwater and Attorney General Pam Bondi.

The pension fund and the Chiles fund own stock in hundreds of corporations. We now know, however, that includes stock in companies in which the governor’s blind trust is also heavily invested. One example is Argan. At the end of 2013, the SBA reported the state funds owned $260,000 in Argan shares.

Do Scott’s large investments in corporations whose shares are also owned by the pension plan and the Chiles fund create a conflict for him as SBA chair?

“The interests in question were acquired prior to (Scott’s) holding office. Interests such as these, residing in an office holder’s blind trust, do not create any conflict of interest,” spokesman Tupps said in an email.

The SEC generally considers beneficial ownership of more than five percent of a publicly traded company’s shares to be significant enough to report to the public. Persons who acquire such a large stake must promptly disclose, then file updates to reflect material sales or purchases. Insiders who own more than 10 percent of a company are subject to additional reporting rules.

SCOTT’S NET WORTH $83.8 MILLION

Gov. Scott reported a net worth of $83.8 million in June. His stock holdings sometimes amount to hundreds of thousands, even millions of shares – stakes large enough to trigger SEC public reporting requirements.

Reports filed at the SEC detail a number of large transactions involving stock beneficially owned by the governor, including shares of Argan and NTS.

The reports bear Scott’s electronic signature as the person who filed them.

Asked about that, the governor’s office said Scott didn’t personally file those reports, adding they were filed by an authorized trustee on his behalf.

SEC regulations, however, require insiders and large beneficial owners like Scott who use an authorized representative to disclose. Representatives are instructed by the SEC to use their typed signature and then indicate that they are signing on behalf of the person they represent. Authorizing documents, such as a power of attorney, must also be filed publicly with the SEC.

SEC reports about the Argan and NTS transactions are signed by one person, Scott. And a review of related SEC records filed by Scott and his blind trust trustee, Hollow Brook Wealth Management, found nothing that authorizes others to sign government forms or schedules on the governor’s behalf.

$10.8 MILLION IN ARGAN SALES IN JANUARY

As recently as seven weeks ago, an ownership report filed under the governor’s electronic signature reported the sale of another 350,000 Argan shares in seven transactions from January 10 to January 22. The reported price per share was between $30 and $30.45. The gross sales price: $10.8 million.

The report lists Hollow Brook Chief Executive Alan L. Bazaar only as a “person authorized to receive [SEC] notices and communications.”

Scott’s report does not identify the specific accounts, trusts or entities involved in those most recent sales of Argan shares. But a prior insider report about the December 2012 Argan sales show the Scott family has used a trio of entities to buy and sell the company’s shares – the blind trust, the F. Annette Scott Revocable Trust, named for Florida’s First Lady, and the Richard L. and F. Annette Scott Family Partnership.

Together, those three entities grossed $6.3 million selling Argan shares at that time, Scott reported.

The Scotts remain large stakeholders in Argan. In January, following the latest sales, the governor disclosed that he remains the beneficial owner of 965,255 Argan shares, or 6.8 percent of the company. At Wednesday’s closing price for Argan stock of $28.10 a share, that’s $27.1 million.

While the federal government deems Scott to be a beneficial owner of his wife of 41 years’ revocable trust and her share of the family partnership, Florida does not require him to report that ownership interest or place it in the blind trust. To protect him back home, Scott’s reports to the SEC about his beneficial ownership include a small print disclaimer that they should not be construed as an admission that he is actually a beneficial owner.

According to its literature, Argan’s primary business is designing and building power plants through its wholly owned subsidiary, Gemma Power Systems.

In the early 2000s, before Argan acquired it, Gemma constructed plants in Bartow, Arcadia and Wachula for Progress Energy and El Paso International. After 2005, Gemma let its registration to do business in Florida lapse for several years. Gemma reinstated its registration with the Division of Corporations in March 2011.

NTS, recently acquired by affiliates of a Connecticut private equity firm, does not do business in Florida. NTS boasts obtaining $100 million in federal stimulus funds to bring its internet access services to rural areas in Texas and Louisiana.

THE SCOTTS DOUBLE DOWN

Records show that on Nov. 2, 2011, the Scotts doubled their substantial NTS stake by taking advantage of an offering to existing shareholders to buy additional shares directly from the company at a discount to the market. The blind trust, the First Lady’s revocable trust and the family partnership paid $750,000 to acquire more than 2.5 million shares, Scott reported. The shares cost 30 cents each. Open market trades of NTS shares that day ranged from 40 to 41 cents a share.

Last month, the Scotts received $2 a share for each of the five million NTS shares they began accumulating in 2007. Profit: $2.5 million.

But the Scott’s NTS gains are eclipsed by profits from their investments in Argan.

In February 2011, about two months before the blind trust was created, Scott reported he was the beneficial owner of 1,673,000 Argan shares. Records show he’d acquired those shares, about 14 percent of the company, in a half dozen transactions by a limited liability company called Argan Investments since 2006.

In the fall of 2010, Argan Investments was dissolved and its holdings distributed to its members: the First Lady’s trust, the family trust and the Richard L. Scott Revocable Trust, which was later placed into the blind trust.

The Scotts paid $9.5 million for their Argan shares. In little more than a year they’ve sold less than half their stake for $17 million while retaining nearly a million shares worth many millions more.

SEC files contain public information about other stocks that were listed as assets in the governor’s blind trust in 2011.

MeetMe is a social networking company known as Quepasa Corp. when it was based in West Palm Beach. It was registered to do business in Florida from 2007 until last September.

MRS. SCOTT BUYS A MILLION SHARES AS 2013 LEGISLATURE CONVENES

The blind trust document valued the governor’s Quepasa investment at $1.4 million. That translated to about 167,000 shares at the time the trust was established.

While no subsequent reports were filed with the SEC regarding Scott’s MeetMe investment, the New York City investment firm Scott hired to manage his blind trust, Hollow Brook, reported holding 331,628 MeetMe shares at the end of 2012.

Hollow Brook has other clients and its report does not identify the owner or owners of those MeetMe shares. Still, MeetMe reported a few months later that in exchange for $2.75 million Richard L. Scott Investments had acquired one million MeetMe shares on the first day of the 2013 Legislative session.

Richard L. Scott Investments, now run by Ann Scott, changed its name this year to Columbia Collier Management. Among its other assets: the nine-passenger Cessna Citation business jet Gov. Scott uses to fly around Florida at his own expense, according to Federal Aviation Administration records.

Hollow Brook’s quarterly holdings report for the period ending Sept. 30, 2013 listed 1,331,628 MeetMe shares. By year end, however, Hollow Brook reported holding no MeetMe stock.

What happened to the MeetMe shares owned by the governor’s blind trust and Richard L. Scott Investments, now known as Columbia Collier? Were shares sold, transferred or otherwise disposed of?

SEC records don’t say. Scott’s office said the governor doesn’t know, and Hollow Brook Chief Executive Alan Bazaar declined to comment.

Florida ethics bill: Lobbyists at independent taxing districts must register, disclose

By Dan Christensen, BrowardBulldog.org floridaseal

A government ethics bill introduced in the Florida Senate would for the first time require lobbyists before many large independent special districts to register and disclose their clients, areas of interest and general compensation.

If enacted, the sweeping new registration requirements would apply to every independent special district across Florida that levies property taxes – from water management and hospital districts to children’s services councils and improvement districts.

Florida has 136 independent districts, many run by unelected boards that impose ad valorem taxes on homeowners and businesses, according to data from the Department of Revenue. Not all exercise that power, but in 2011 those that did levied more than $1.82 billion in property taxes.

The three independent special districts that collect the most property tax dollars are the South Florida Water Management District, North Broward Hospital District and the Health Care District of Palm Beach.

Senate Bill 846, filed last week by Sen. Jack Latvala, R-Clearwater, chairman of the Senate Ethics and Elections Committee, was filed less than a month after BrowardBulldog.org reported how Florida independent special districts that raise and spend billions of dollars in public funds every year do not require lobbyists to register or disclose any information about themselves or their clients.

The bill seeks to impose on independent special districts the same registration and reporting requirements now faced by lobbyists at the Executive Branch. Those requirements include annual registration before lobbying can commence, the filing of quarterly compensation reports and a ban on expenditures.

Latvala’s committee has scheduled the bill for an initial hearing on Feb. 17.

“Generally, it would be fair to characterize Integrity Florida’s first look at Senate Bill 846 as containing several solutions that would strengthen ethics laws in Florida,” said Integrity Florida’s executive director, Dan Krassner. “We look forward to hearing more about it at the hearing.”

In addition to expanding Florida’s lobbying regulations, the bill would also:

  • Require elected municipal officers across the state to participate in annual ethics training and certify to that participation on their annual financial disclosure forms.
  • Apply Florida’s Code of Ethics for Public Officers and Employees regarding gifts and conflicts of interest to officials and members of the boards of Enterprise Florida, Space Florida, the Florida Development Finance Corp. and the Florida Clerks of Court Operations Corp.
  • Establish revolving door prohibitions that would bar departing public officials at those entities, and Citizens Property Insurance Corp., from returning to lobby within two years.
  • Authorize Florida’s Commission on Ethics to initiate investigations and public hearings regarding any failures to file a full annual financial disclosure form. If violations are found to be “willful,” the commission would have to recommend an official’s removal from public office.
  • Toughen the collection of unpaid ethics fines. Government employers would be authorized to withhold the entire amount of an ethics fine, plus related costs, from a violator’s paycheck, unless hardship could be proven. The ethics commission would be allowed to seek wage garnishment from private employers, and refer unpaid fines to a collection agency.

The bill has the support of Senate President Don Gaetz. If passed and signed into law by Gov. Rick Scott, it would take effect July 1.

The measure marks a second round for ethics reform that began last year. That legislation gave the ethics commission the power to investigate complaints referred by law enforcement and the governor, and allowed public officials to put their personal assets into what the law calls “blind trusts” to avoid conflicts of interest.

Florida’s independent special districts provide dozens of specialized governmental services such as ports, airports, mosquito control, community development, water management and public hospitals. They outnumber Florida’s counties, cities, towns and villages by more than two to one, yet operate largely in the shadow of their better-known municipal counterparts.

In all, there are nearly 1,000 independent special districts in Florida. Collectively, they spend in excess of $10 billion every year. Many, however, are so small they never encounter a lobbyist seeking to influence a contract or policy.

Under Latvala’s 26-page bill, lobbyist regulation requirements would be confined to independent taxing districts. Hundreds of small districts, many with budgets of less than $10 million a year, that use bonds or assessments to raise revenues won’t be included in the new rules.

Some big budget operations are also are not covered by Latvala’s bill. For example, the Hillsborough County Aviation Authority, the independent special district that runs Tampa International Airport, also does not levy ad valorem taxes.

 

Independent special districts: Where lobbyists ride free and the public is in the dark

 

By Dan Christensen, BrowardBulldog.org  

Florida's sprawling water management districts spend hundreds of millions of dollars every year, but do not require lobbyists to register. Photo: Florida Department of Environmental Protection

Florida’s sprawling water management districts spend hundreds of millions of dollars every year, but do not require lobbyists to register. Photo: Florida Department of Environmental Protection

Nearly 1,000 special-purpose governments across Florida that raise and spend billions of dollars in public funds every year do not require lobbyists who appear before them to register, pay fees or disclose any information about themselves or their clients.

Lobbyist registration and disclosure have been mandatory for years in Tallahassee and in many city and county halls across the state, where lawmakers found it necessary to preserve the integrity of the decision-making process. Violators can be fined and barred from lobbying for up to two years.

But Florida’s independent special districts are a separate class of government – a hodgepodge of obscure taxing and other authorities that, with few exceptions, offer the public no information about lobbyists or what they’re up to at their agencies.

BrowardBulldog.org, supported by a grant from the Washington-based Fund for Investigative Journalism, spent months documenting that sweeping lack of government accountability; a free ride enjoyed by lobbyists at independent special districts around Florida with the power to tax, assess fees and/or sell low-interest bonds to finance government spending.

“The issue is transparency: who is getting the benefit of governmental largess,” said Frank S. Palen, a West Palm Beach attorney who specializes in government law and special districts.  “If people don’t have knowledge it undermines legitimacy, but as a practical matter it would depend on the scale of the entities.”

Independent special districts have been around for 100 years. The oldest, the Hastings Drainage District in Putnam and St. Johns counties, was created July 1, 1913, according to Jack Gaskins Jr., who runs the state’s Special District Information Program.

Eric Draper, executive director Audubon of Florida

Eric Draper, executive director Audubon of Florida

Today, these agencies offer dozens of specialized governmental services – from water management, mosquito control and community development to public hospitals, children’s services, ports and airports.

Hundreds of districts, like the Choctawhatchee River Soil and Water Conservation District in Florida’s Panhandle, are so small they’re unlikely to see lobbyists looking to influence policy or a contract award.

MANY DISTRICTS SPEND BIG

But many independent districts with big money to spend, like the $622.2 million South Florida Water Management District, regularly encounter lobbyists.  The state’s largest water district collects property taxes in 16 counties and is run by a governing board appointed by the governor and dominated by real estate, agribusiness and development interests.

The environmental group Audubon Florida sees a problem in the lack of lobbyist registration at government agencies like the South Florida Water Management District.

“There are consultants to the sugar industry who are spending time with and influencing the thinking of South Florida Water Management District governing board members and they should be registered as lobbyists,” said Audubon Executive Director Eric Draper. “We see them, but it’s too shadowy to know exactly what they’re doing.”

Florida’s five water management districts levied $480 million in property taxes statewide in 2012, yet none register lobbyists. Draper said the Legislature should adopt statewide lobbying rules for all special taxing districts.

“We should know who is lobbying, who is being paid to lobby and who they are lobbying,” Draper said.

Florida Department of Revenue data obtained in response to a public records request identified 93 independent special districts with annual budgets of more than $10 million in 2012. chart2

BrowardBulldog.org surveyed dozens of independent districts, including the 38 largest with budgets in excess of $50 million. Only three districts reported having some form of lobbyist regulation; another prohibits lobbying in its bylaws. The rest, with cumulative annual spending of $7.1 billion, said they do not require lobbyists to register.

A half-dozen attorneys and officials who represent or work for special districts in Florida, including Palen, said they were aware of no other independent districts that register lobbyists.

Integrity Florida, the Tallahassee-based nonprofit and nonpartisan government watchdog, said change is needed to ensure accountability.

“If you’re spending taxpayer money and there’s a lobbyist involved in the spending of that money then there should be at least some basic lobbyist disclosure,” said Integrity Florida Research Director Ben Wilcox. “This situation has never really come up and been discussed that I can remember.”

O’Neal Bardin Jr. is president of the Florida Association of Special Districts and is also executive director of the $28 million Northern Palm Beach Improvement District. He said registration would help those who work at special districts better understand those who may approach them.

“Are they trying to persuade me of a position based on their remuneration or employment? It’s a matter of understanding who you are talking to,” said Bardin. “It seems based on a sense of uniformity that it would make sense that we do the same thing about lobbyists as the county or the city or the school board does. It would certainly further transparency.”

Special districts are independent or dependent. Dependents, which include ubiquitous community redevelopment agencies (CRAs), are vassals of municipalities and typically follow their rules regarding lobbyist registration.

ANTI-CORRUPTION LAWS DON’T EXTEND TO SPECIAL DISTRICTS

There are 992 active independent special districts, according to the Florida Department of Economic Opportunity’s special districts database. They outnumber Florida’s counties, cities, towns and villages better than two to one yet operate largely in the shadows of their better-known municipal counterparts.

The Uniform Special District Accountability Act of 1989 obliges special districts to comply with many of the same accountability standards that apply to state and local governments, like open meetings and public records. But state anti-corruption laws requiring lobbyists before the Legislature and the Executive Branch to annually register, pay fees and disclose their clients and compensation don’t extend to special districts.

“I haven’t heard why the Legislature didn’t include special districts,” said Bardin. “But they could easily have overlooked it…we’re not the first group that comes to mind when you talk about governments.”

“You can’t think of everything,” said attorney Palen.

Florida law also does not require counties, cities and other municipalities to enact lobbyist registration rules, although many have. In jurisdictions with no lobbying rules, like rural Sumter and Highlands counties, that means dependent districts don’t register lobbyists either. chart1

Florida has authorized 136 independent districts, many run by unelected boards, to impose ad valorem taxes on homeowners and businesses in one or more counties, according to the Department of Revenue data. Not all exercise that power, but in 2011 – the most recent year for which complete statistics are available – those that did levied more than $1.82 billion in property taxes.

Seven districts account for half of that total. They are: the South Florida, Southwest Florida and St. John’s River water management districts; the North Broward Hospital District, also known as Broward Health; the Health Care District of Palm Beach; the Children’s Services Council of Palm Beach and The Children’s Trust in Miami-Dade.

Their cumulative 2012 property tax bite: $936,700,000.

The Children’s Trust is the only one of the seven with a registration requirement. It doesn’t handle the task itself; rather, it voluntarily follows the county’s rules and advises lobbyists to register there, President and Chief Executive Charles Auslander said in an email.

ONLY TWO DISTRICTS REGISTER LOBBYISTS

Only two districts in the state register lobbyists themselves: the Greater Orlando Aviation Authority, which runs Orlando International Airport, and the South Broward Hospital District, also known as Memorial Healthcare.

The information they collect and its accessibility to the public varies.

For example, Greater Orlando requires lobbyists to file annual expenditure reports detailing how much they spent on entertainment, research, advertising, travel, hotels and the like. South Broward does not. Also, Greater Orlando posts lobbyist information online; South Broward does not.

The Broward’s Children’s Services Council, with 2012 revenues of $59.5 million, prohibits lobbying in its bylaws.

Smaller districts, which provide services such as lighting, drainage, fire protection and community development, have budgets that typically run between $750,000 and $2 million a year, according to special districts association president Bardin. Many of those entities, like the Choctawhatchee River Soil and Water Conservation District in Defuniak Springs, had budgets of $50,00 or less in 2012.

Lobbyists generally have little interest in those small-money districts.

“Someone is not going to hire a lobbyist for a $10,000 janitorial contract,” said Bardin, whose association represents about 200 mostly small special districts.

Yet a small district with a contract worth a million dollars a year is another matter.

LOBBYISTS AND LAWN MOWERS

The obscure Capital Regional Community Development District (CDD) raises revenue through assessments to operate and maintain several planned communities in Tallahassee. Several years ago, it bid out a three-year lawn-mowing contract worth $3 million.

“That’s the only time I was approached by a lobbyist,” said David Ramba, a lawyer and lobbyist for the special districts association who also chairs the Capital Region CDD.

Smaller districts with large public works projects are also attractive to lobbyists.

Frank S. Palen, West Palm Beach attorney who specializes in government law and special districts

Frank S. Palen, West Palm Beach attorney who specializes in government law and special districts

The $12 million Lake Worth Drainage District has for several years been exploring the establishment of a regional water utility to address southeast Florida’s future drinking water supplies, said Palen. It would involve a re-plumbing of much of western Palm Beach County to make drainage flow to the south to replenish aquifers in Broward and Miami-Dade.

“The project may involve a $1 billion investment in infrastructure, land acquisition, etc.,” said Palen. “It should attract a lot of interest.”

Community development districts, like Capital Regional, assess fees on homeowner’s lots and have issued billions of dollars in low-interest municipal bonds to pay for local roads and other infrastructure. They account for more than half of Florida’s independent special districts.

During the build-out phase, developers run the CDD’s governing board. Later, homeowners take control.

Miami Lakes investment advisor Richard Lehmann publishes the Florida Community Development District Report. He said he doesn’t see the lack of lobbyist registration at CDDs as a problem.

“Developers run things as if they were paying the money themselves,” said Lehmann. “For homeowners, it’s money that’s coming out of their assessments and therefore it’s not like a government spending other people’s money.”

PURITY IN PURCHASING

Janet Tutt is the district manager of The Villages, the fast-growing retirement community about 20 miles south of Ocala. The Villages is comprised of 13 CDDs and one dependent utility district in Sumter County that work together via inter-local agreements.

“We have $250 million in budgets,” said Tutt. “Some of our contracts are quite large.”The Villages has no lobbyist registration, but discourages lobbying “as a matter of custom,” according to Tutt. “The purchasing process is only as good as how pure it’s kept.”

Purity is a word not necessarily associated with special districts.

In 2012, Gov. Rick Scott ordered a thorough review of Florida’s 1,600 special districts with an eye toward finding efficiencies and increasing accountability.

“We’re still working on it,” said Scott’s press secretary, Jackie Schutz.

In 2011, BrowardBulldog.org reported about the South Florida Water Management District’s $1.5 million purchase in 2007 of 15 large electric pumps that quickly failed, and how the company that sold the pumps was refusing to honor its warranty. At the time of the sale the company had an undisclosed inside connection: its lawyer/lobbyist was vice chairman of the district’s nine-member governing board. The lack of lobbyist registration served to veil that relationship.

Other special districts in the news:

  • The billion-dollar North Broward Hospital District, which has a long reputation for political favoritism and a lack of transparency in contracting, is the focus of an ongoing federal anti-kickback inquiry that’s examining allegations of bogus Medicare and Medicaid claims.
  • Prosecutors in Orange County are investigating two board members of the troubled Orlando Orange County Expressway Authority (OOCEA), which collects hundreds of millions of dollars in tolls, for possible Sunshine law violations regarding their alleged efforts to oust the authority’s former director, according to the Orlando Sentinel. In 2007, an authority contractor was indicted for bribery after he gave $2,600 in theme-park tickets to OOCEA’s chairman in hopes of keeping his contract.
  • The Lee County Mosquito Control District, with a $22 million annual budget, has a bug-killing air force and its own airport. It’s been criticized for overspending. In 2012, then-Republican Sen. Mike Bennett called it “truly a showcase of out-of-control special taxing districts,” according to the Fort Myers News Press.

None of those districts has lobbyist registration. Yet each pays lobbyists to influence matters of policy or procurement in Tallahassee, where they must register.

COSTS TO REGISTER LOBBYISTS PROHIBITIVE?

Many other independents pay lobbyists, too, including smaller districts where the cost of registering lobbyists is considered prohibitive.

Terry E. Lewis is a Palm Beach lawyer and lobbyist. He represents a dozen special districts, including independents like the Port of Palm Beach.

“For the South Florida Water Management District, maintaining a lobbyist list would be a blip on their financial radar screen…On the other hand, I’ve worked with some special districts that literally have one employee and a budget of $25,000. So you’ve kind of got the disparity complaint, that it’s a financial burden,” Lewis said.

Broward County confronted the cost problem two years ago during a rewrite of its ethics ordinance. It was decided then to hold down expenses by confining its monitoring and enforcement of lobbyist registration requirements to the county and all municipalities. Special districts were left out.

“It became too expensive to monitor others,” said County Commissioner Lois Wexler. “This is something that should be addressed by the Legislature.”

In the meantime, one independent district in Broward surveyed for this article, the Downtown Development Authority of Fort Lauderdale, has decided to change.

“Your question intrigued me, so I talked with counsel and we will be starting a registration system,” said Executive Director Chris Wren, whose agency is spearheading development of a $142 million streetcar system called The Wave. “We will post the information online.”

Lagging in South Florida, Broward County has no on-demand video of public meetings

By William Hladky, BrowardBulldog.org 

A screen shot from an on-demand video of a meeting last month by the Miami-Dade County Commission. Broward commissioners don't make on-demand viewing of their meetings available to the public.

A screen shot from an on-demand video of a meeting last month by the Miami-Dade County Commission. Broward commissioners don’t make on-demand viewing of their meetings available to the public.

Unlike most local governments, the Broward County Commission limits the amount of sunlight that shines on its meetings.

Broward is the only county in Southeast Florida, and the only major government in Broward County, that does not archive its recorded commission meetings for later on-demand viewing online by the public.

Miami-Dade, Palm Beach and Monroe counties, the Broward School Board, and 18 of 31 Broward cities – including Fort Lauderdale – provide on-demand video or audio web viewing. Only Broward’s smaller municipalities lack this service.

More than 85 percent of Broward’s population resides in cities that offer on-demand web video or audio viewing of commission or council meetings.

Many governments also provide anytime viewing for meetings that occurred months or even years earlier. For example, Coral Springs has archived online video recordings of every city commission meeting since the start of 2007.

Fort Lauderdale started putting video of every city commission conference and regular meeting online in August 2012. The Broward County School Board keeps videos its meetings available online for the last six months.

Individuals wanting to watch a video of a prior Broward County Commission meeting must file a public records request to obtain a DVD copy of the session. A DVD copy costs $8 plus postage if it is mailed.

The Broward County Commission broadcasts live regular meetings and public hearings on its web page and on cable television. The meetings are re-webcast and most of the time re-broadcast on cable once, at 5:30 pm the Friday following the meetings.

FLORIDA’S SUNSHINE LAW

While Florida’s Sunshine Law only requires governments to keep general written minutes of their proceedings, on demand videos increase transparency by preserving the “richness of the discussion” that leads to decisions, said Carla Miller, founder a non-profit organization called City Ethics that provides local governments with ethics training and programs.

“If you don’t do digital recordings there is a…suspicion,” she said. “Anything that decreases the public trust is not good…Withholding things on line will always bring up suspicion.”

Broward residents have reason to be suspicious. According to the Justice Department, Florida led the nation in federal public corruption convictions between 2000 and 2010.

Integrity Florida, a nonpartisan, nonprofit research organization, reported that public corruption was a factor in Forbes Magazine’s decision to list the greater Fort Lauderdale metropolitan area as the seventh most “miserable city” in the United States in 2012. Forbes ranked Miami #1. West Palm Beach was fourth.

Daniel Krassner, executive director of Integrity Florida, supports on-demand video or audio web access, noting that many people are at work during commission meetings and are only able to watch them later. The Broward Commission meets regularly on Tuesdays starting at 10 a.m. Public hearings begin at 2 p.m.

“There is a difference between transparency and providing easy access,” said Krassner. “Putting them on line would be a best practice for open accessible government.”

Still, there appears to be no urgency to make on-demand video happen any time soon at County Hall.

“There are other things in the pipe line ahead of (on-demand video of commission meetings),” said Broward Mayor Kristin Jacobs. Jacobs pointed out that commissioners were briefed last week about efforts to redesign existing county web sites for mobile devices. “We are really excited about it,” she said.

ON-DEMAND SYSTEMS RELATIVELY INEXPENSIVE

Jacobs said, too, that Broward’s limited budget hinders archiving videos of commission meetings for on-demand viewing by the public.

In fact, many on-demand systems are relatively inexpensive.

In Jacksonville, the city purchased a $250 digital recording device and after each governmental meeting city staff links an audio recording on its web site for on-demand use.

“It’s not a hard thing to do,” said Carla Miller, who is also director of Jacksonville’s Office of Ethics, Compliance and Oversight.

Broward School Board spokeswoman Cathleen Brennan said her board’s more sophisticated video system cost $12,485 to operate this year.

Fort Lauderdale pays Granicus, a California corporation, $2,290 a month to operate the city’s on-line video system. Granicus started managing the city’s system in 2012. The city’s startup cost with Granicus was $27,825.

Chaz Adams, Fort Lauderdale’s public information officer, stressed in an email that Granicus’ cost covers not just online web access to meeting recordings but it also covers many aspects of the city’s “workflow management system.”

Government on-demand web services range from the sophisticated to the simple, from the easy to the difficult to access.

Fort Lauderdale’s system is one of the more sophisticated. Once a video recording is selected, that meeting’s agenda appears below the screen. Clicking an agenda item moves the video to that part of the meeting where the item is discussed.

Miami-Dade County’s online video archives feature more than commission meetings. Also to be found are meetings of various committees, including county finance, health and social services, public safety and animal services.

William Hladky can be reached at whladky@browardbulldog.org

 

Conflicts of interest run rampant in state legislatures, including Florida

By Nicholas Kusnetz, Center for Public Integrity 

New Mexico's state capitol, the Roundhouse

New Mexico’s state capitol, the Roundhouse

SANTA FE — On February 20, New Mexico’s House Energy and Natural Resources Committee gathered for one of its regular meetings in a drab room here at the capitol, a circular building known as the Roundhouse. On the agenda: a bill that would hike fees and penalties for energy companies drilling wells in the state.

The votes fell along party lines, with five Republicans lining up against the bill and the committee’s Democratic majority voting to send the legislation to the House floor. The Republicans argued the bill would stifle business and cost jobs, and for one lawmaker, the issue hit particularly close to home. Rep. James Strickler spends most of the year running his own small oil and gas production company, JMJ Land & Minerals Co. The bill would directly affect his profits. (more…)

Newsletter

Notify me by email when new stories are published.

Bulldog Archives