Tired of problems, Fort Lauderdale audits its community redevelopment agencies

By William Gjebre, FloridaBulldog.org cralogo

Fed up with project failures, management problems and possible city overcharges, Fort Lauderdale commissioners have ordered an extensive audit of the city’s Community Redevelopment Agencies.

In a little-noted action, commissioners directed the audit of three CRAs at a conference meeting earlier this year.

The audit was triggered by the million-dollar failure of the Sixth Street Plaza project. Some commissioners expressed additional concerns about the findings of a city auditor’s report on CRAs that they said indicate the city had unfairly overcharged the CRAs for services during the past five years.

Commissioners ordered “a full audit” of the Northwest/Progresso/Flagler Heights (NWP) Community Redevelopment Agency, the Central Beach (CB) CRA and the Central City (CC) CRA, City Auditor John Herbst said in an interview. He said the audit, now under way, may be completed in two months.

Herbst said the audit was undertaken because the city wants to get in front of the matter, knowing the Broward Inspector General’s Office has been investigating CRAs around the county for some time.

Herbst said he expects the audit to determine whether CRA spending was “in compliance with state law and CRA bylaws,” and whether the CRAs were properly managed and contracts adhered to the CRAs’ limitations.

“We want to make sure money was spent in accordance with governing legislation,” Herbst said. The audit will cover the past three years – a reasonable time period, the auditor added.

Fort Lauderdale Commissioner Robert McKinzie

Fort Lauderdale Commissioner Robert McKinzie

Herbst said the troubled Sixth Street Plaza project is a key factor in the ongoing audit. Last May, the city auditor’s office criticized the CRA for poor oversight of a taxpayer-supported office and retail plaza that was to be the centerpiece of the city’s ambitious plans to revitalize the Sistrunk Boulevard corridor.

But the 23,000-square-foot building at 900 NW Sixth St. filed for bankruptcy, jeopardizing the repayment of $1 million in taxpayer loans.

Following that finding, Vice Mayor Robert McKinzie’s staff asked Herbst in a memo to conduct “a complete audit of the day to day operations of the CRA.” Herbst said Mayor Jack Seiler and his fellow commissioners backed the call for the audit in a consensus vote during a city commission conference meeting in January.

‘Inconsistent leadership’

Herbst said the city’s CRAs have had problems because of frequent management shuffling. “There was inconsistent leadership due to transfers,” he said.

A report by his office noted that the Northwest/Progresso/Flagler Heights CRA, in a less-affluent area, was charged $1.7 million for city services over the past five years, while the Central Beach CRA, in a wealthier area, was charged $909,000 during that same period.

The finding upset City Commissioner Dean Trantalis, who said an “excessive amount of money is charged for administration, denying the neighborhood that is suffering blight and neglect and so much money being used for staff.”

Fort Lauderdale Commissioner Dean Trantalis

Fort Lauderdale Commissioner Dean Trantalis

Trantalis said he has asked City Manager Lee Feldman about correcting CRA allocation issues, but “he hasn’t been responding. We need to change the practice. We discovered that the city manager, to shore up the budget, has been attributing staff time to the CRA.”

Feldman did not respond to requests for comment before deadline after promising to make himself available for an interview.

At the city commission meeting in January, others expressed their concern about the auditor’s findings.

Minutes of the meetings say McKinzie “questioned why such a large portion of funds was allocated [to] the [Northwest/Progresso/Flagler Heights] CRA for administration and resources when the CRA did not have a director.”

Commissioner Bruce Roberts suggested the matter be referred to the State Attorney’s Office or some other investigative agency for a criminal probe.

“Many feel CRA funds have been drained for administrative services, and there is a lopsided disparity,” Trantalis said at the January meeting. The mayor and the city’s four commissioners also serve as directors of the CRAs.

Problems found

Herbst’s audit report mainly delved into the current fiscal year salary allocations of the two CRA offices, Northwest/Progresso/Flagler Heights and Central Beach. But it found problems.

“The method used to allocate personnel costs may lead to excessive General Fund expenses being allocated to the CRA, a violation of Florida Statute 163.370(3)(c),” the report stated. The state provision prohibits the tax-increment funds that CRAs receive from covering general government operating expenses unrelated to planning and carrying out a CRA plan.

The report goes on, “We determined that the Department of Sustainable Development (DSD) and the Budget Office were not able to provide adequate support for the percentages used for personnel cost allocations to/from the CRA fund and the sub-funds. Additionally, they are allocating charges to the CRA for personnel positions which are vacant for either a portion of the fiscal year or the entire fiscal year.

“The budgeted allocations are then charged to the CRA throughout the year without reconciling those estimates to actual costs incurred, resulting in an excess of allocation over actual cost,” according to the report.

The faulty allocations can negatively impact the CRAs’ ability to achieve their goals, the report aid.

The city charged the CRAs for hours city employees spent working on agency matters.

In one instance, the report said the Northwest/Progresso/Flagler Heights CRA was “overcharged” $30,000, which should have been charged to the Central Beach CRA. That happened after an employee was promoted from assistant to the city manager to the position of economic and business development manager in charge of the Central Beach CRA. For three months, he was paid from funds allocated to a vacant position in the Northwest/Progresso/Flagler Heights CRA, the report said.

A correction was later made, but “the prior overcharging was not corrected timely” and ate into how much funding was available to meet the CRA’s goals.

Since the report, the city has begun making changes.

Trantalis said in an interview that city commissioners have removed the CRAs from reporting to the Department of Sustainable Development and made them separate entities with their own managers to oversee day-to-day operations. State law requires CRAs to operate independently of other departments.

City Manager Feldman, however, will continue to function as executive director of the CRAs.

Other changes call for improved financial oversight from the city finance director and the city auditor, identifying a separate CRA funding and accounting structure, and allocating additional funds for the two CRAs to implement changes during the current fiscal year.

Firm tied to US Rep. Lois Frankel gets no-bid contract, owner gives her campaign $11K

By Dan Christensen, FloridaBulldog.org  

U.S. Rep. Lois Frankel, D-Boca Raton Photo: WPTV

U.S. Rep. Lois Frankel, D-Boca Raton Photo: WPTV

Fort Lauderdale’s Downtown Development Authority awarded a lucrative, no-bid contract for its security patrol program to a private guard firm with political ties to Congresswoman Lois Frankel.

Frankel was actively involved in the DDA’s selection last year of Professional Security Consultants (PSC), which does business as Professional Security Concepts. DDA records state that Frankel introduced the company to DDA officials and later met with a DDA delegation about the matter in 2014.

“Lois spoke highly of the work they had done for the West Palm Beach DDA when she was mayor,” said Fort Lauderdale DDA board chairman Michael Weymouth.

Democrat Frankel’s glowing endorsement of PSC and its regional boss, Willie Perez, was used in a marketing PowerPoint presentation to the DDA’s board of directors before it voted unanimously on June 12, 2014 to hire PSC without seeking competitive bids.

Two months after the vote, PSC’s founder and owner, Moshe Alon, began contributing to Frankel’s campaign.

Alon is a California businessman and ex-Israeli Secret Service agent who the New York Post once reported was a longtime bodyguard for the late film star Elizabeth Taylor. Alon has contributed nearly $11,000 to Rep. Frankel’s election campaigns since August 2014, according to Federal Election Commission records.

Frankel, whose elongated congressional district covers downtown Fort Lauderdale, declined to be interviewed, but her office did release this statement:

“The congresswoman has known Willie Perez from his work with the city of West Palm Beach as a security consultant. He was instrumental in helping turn West Palm Beach into one of the safest cities in America. While meeting with the (Fort Lauderdale) Downtown Development Authority, she mentioned her experience with Willie, and they asked for his contact information.”

A page from PSC's PowerPoint marketing presentation to the Fort Lauderdale DDA in June 2014

A page from PSC’s PowerPoint marketing presentation to the Fort Lauderdale DDA in June 2014

The DDA is a special taxing district created in 1965 with a mission to provide for the rehabilitation, redevelopment and revitalization of slum and blighted areas in the downtown area. Governed by a seven-member board appointed by the city commission, the DDA levies property taxes on commercial properties within its compact boundaries.

Los Angeles-based PSC says on its website that it has 2,500 employees and approximately $80 million in annual revenues. The company says it is licensed in more than 40 states and provides security guards to about 100 malls, hotels, private communities and municipalities.

‘SECURITY AMBASSADORS’

PSC was hired to provide a small team of unarmed “security ambassadors” to enhance downtown safety by patrolling on foot or on bicycles in areas like Riverwalk. The company also provides security ambassadors to the Pompano Beach Community Redevelopment Agency (CRA) as well as the West Palm Beach DDA, according to its contract with the Fort Lauderdale DDA.

In addition to hiring PSC to patrol downtown, the contract says the DDA also wanted to hire the firm to provide security guards for the Fort Lauderdale CRA. Wren said that plan fell apart when Jenni Morejon, the city’s director of sustainable development, said PSC could not be hired without a competitive procurement process. The city’s Northwest Progresso-Flagler Heights CRA is currently rewriting its plan to mitigate slum and blight and its plan to bid out an ambassadors program would not occur until after that.

The contract between the Fort Lauderdale DDA and PSC was signed Sept. 30, 2014 and the program began three weeks later. The agreement is on a month-to-month basis. DDA board-approved minutes indicate that the board was pleased with PSC’s work.downtown-development-authority-fortlauderdale

The DDA’s original budget for last year’s pilot program was $100,000, but that soon rose to $154,882 when the city kicked in additional funding. The current budget is $200,000, said Fort Lauderdale DDA executive director Chris Wren. The funds pay for two or three patrol guards, Wren said.

Wren said he recommended to the board that bids be obtained for the security ambassadors contract, but that his idea was rejected.

“We did not competitively bid it. I brought that up at a board meeting. I wanted to competitively bid it and they didn’t want to wait around. They asked the general counsel and he said it did not have to be competitively bid,” said Wren.

Wren explained that the board was enthusiastic about the idea of establishing a security ambassadors program – an idea in use in a number of cities across the country, including West Palm Beach – in order to better address safety and nuisance issues often caused by the homeless downtown.

“They said no, we don’t want to go out to bid. Get a contract and hire them,” said Wren. “I thought we might get a better deal with bids, but in their minds it was an emergency.”

AN EAGER BOARD

DDA chairman Weymouth said Monday that he did not know why the contract was not bid and had no recollection of Wren’s recommendation that bids be taken. The board’s non-verbatim minutes don’t mention such a recommendation by Wren, but do make clear the board was eager to move ahead quickly.

Willie Perez, regional security manager for Professional Security Consultants

Willie Perez, regional security manager for Professional Security Consultants

PSC’s Perez told the DDA in 2014 that he’d been running an ambassadors program at West Palm Beach’s City Place for 13 years. It was during that time that Frankel’s involvement with PSC began. She served as mayor of West Palm Beach from 2003 until 2011.

The Palm Beach Post reported in 2010 about police union anger with IPC International, the security guard company Perez was then working for, after the city commission hired it to guard the city’s waterfront – one of a number of city contracts obtained by the company. Universal Protective Service acquired IPC in 2013 – the same year Perez’s Linked In profile says he started at PSC.

The paper also reported that Perez’s full name is Wilfredo Perez-Borroto. Perez-Borroto, while employed by IPC International in 2011-2012, contributed a total of $2,700 to Frankel’s campaign.

In an editorial several days later, the paper fretted about a possible perception of favoritism due to Perez’s close relationship with then-Mayor Frankel. Mayor Frankel, the editorial said, publicly “gushes” over Perez’s company and, while denying Perez was giving her free bodyguard services, did say he accompanied her on weekly inspection tours.

Wren said Frankel did not lobby in Fort Lauderdale for PSC. “She just said we do a program, why don’t you talk to (West Palm Beach DDA boss) Rafael (Clemente) about it?” Wren said. “I wasn’t told to hire them as much as it was presented as an opportunity.”

Wren did meet with Clemente and said he came away impressed with PSC’s work. He also said that Rep. Frankel’s endorsement of PSC “made me feel more comfortable” about the company.

Board minutes from Feb. 13, 2014 say that James Ellis, a local real estate developer who today is a DDA board member, also led a DDA team to evaluate the ambassadors program to West Palm Beach where they “met with Lois Frankel and the DDA and it was positive.”

FRANKEL ‘DROPPED BY’

In an interview Monday, Ellis denied that there was any substantive meeting with Frankel, explaining she merely “dropped by” during a lunch meeting he was leading with about a dozen people, including PSC officials.

“She introduced herself and I believe she took off. That was the only time I’ve met or seen her. It was just a ‘Hi, how are you doing?’ ” Ellis said. He added that Frankel might have mentioned how pleased she was with West Palm Beach’s ambassadors program.

Support for the ambassadors program solidified a month later after discussions about funding sources and additional positive input from Mayor Jack Seiler and police officials in Fort Lauderdale and West Palm Beach. At that time, Wren announced his goal was to begin in October.

Fort Lauderdale DDA executive director Chris Wren

Fort Lauderdale DDA executive director Chris Wren

“Mr. Weymouth said the DDA (is) invested in getting this up and going and once up and running the DDA would step away and let the police take over,” the minutes say.

In the months that followed, there was no discussion of bids or considering any other private security guard firm. The board made its intention to hire PSC explicit in May 2014.

The deal came formally together at the board’s June 12, 2014 meeting following Perez’s PowerPoint presentation about PSC. Wren said Fort Lauderdale would “mirror” West Palm Beach’s program, and help pay for it with a tax rate increase. The millage rate was raised a month later.

Compliments about the program began to flow after it began that October. In February 2015, amid discussions about expanding the program and obtaining additional funding from both the city and the Northwest Progresso-Flagler Heights CRA, “Chairman Weymouth reminded the board that Lois Frankel introduced them to PSC.”

Draft minutes of the DDA’s most recent board meeting on Dec. 10 say Wren is now working with Perez on creating an ambassadors program for the next three years. Wren said the DDA would need to supply $1.2 million to make that happen.

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.

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