Lauderdale Lakes scrambling to find $1.7 million missing from redevelopment coffers

By Buddy Nevins, BrowardBulldog.org

Already drowning in red ink and buried under past due bills, financially crippled Lauderdale Lakes is deeper in the hole after the discovery that $1.7 million is missing from the city’s redevelopment fund. 

The city learned in October that money had disappeared. After an internal investigation, puzzled City Hall officials this month hired forensic auditor Michael G. Kessler & Associates to find it.

The Kessler firm also was ordered to determine whether somebody stole the money.

“We want to know what happened, how did it happen, when did it happen and where the money is now,” said J. Gary Rogers, executive director of the Lauderdale Lakes Community Redevelopment Agency.

Rogers and others do not suspect embezzlement.  They believe the missing money, which under state law was supposed to be only used for redevelopment, was wrongfully spent to keep the city running.  

City officials are not really sure where the $1.7 million is.

If it is found that the city used the money, it will have to repay it to the redevelopment agency adding to its existing $4.6 million budget shortfall.

The Lauderdale Lakes Community Redevelopment Agency is one of 178 CRA’s created under state law to revitalize blighted areas. Some of them are in well-known areas, such as Ybor City in Tampa and along Fort Lauderdale Beach.

The agencies are taxing vehicles which raise money from property taxes and grants inside the redevelopment zone and are required to use it only to improve the area.   Much of the money missing from Lauderdale Lakes’ CRA is committed to pay off loans used to buy redevelopment property.

Even before Lauderdale Lakes’ problems, some CRAs have been controversial.  The key example in Broward is Hollywood’s CRA.

The Hollywood CRA, which covers the beach and downtown area, has been plagued by cost overruns, questionable spending, almost no supervision and poor record-keeping.  The agency, which over its life has renovated the beach Broadwalk and spruced up downtown, has gone through four directors in a little over a year.

Rogers has been Lauderdale Lakes CRA director for nearly a decade.  Like many CRAs, the city handles the agency’s government functions and finances. The city commission serves as its board of directors.

Theft not suspected

The $1.7 million was discovered missing from the Lauderdale Lakes CRA after City Finance Director Larry Tibbs was fired late last year for a violation of employee rules “unrelated to the missing money,” City Manager Anita Fain Taylor said.  She would not be more specific, but said the finance director is not suspected of stealing money, nor is anyone else.

After Tibbs left in October, Taylor and an assistant went through the redevelopment agency’s records and found that money was gone.  

“We immediately told the CRA what we found,” Taylor said.

This couldn’t have happened at a worse time for the troubled city, where ledger books are hemorrhaging money. Lauderdale Lakes, which is celebrating its 50^th anniversary this summer, had a surplus before the recession.

At the heart of Lauderdale Lakes’ financial problems is sinking property values.  The values, which help determine real estate taxes, have plunged from almost $1.4 billion in 2008 to $850 million in this fiscal year. Taylor and her finance staff are expecting another 20 percent drop in property values in the next fiscal year.

Taylor blames the drop in values on the general economy, a large number of foreclosures in her city and expanded homestead exemptions.

With less revenue, there is less to spend. 

The city budget was reduced $2.5 million from last year and now stands at $35 million annually. Four-day work weeks and week-long furloughs were introduced in City Hall.  City pension contributions were cut 3 percent and health benefits reduced.

There are fewer police and fire employees. The city staff has been pared. Still more cutting needs to be done, because the city can’t pay its bills on time.

BSO owed $4.8 million

Lauderdale Lakes has not paid the Broward Sheriff’s Office for contracted police and fire protection this year. It owes BSO $1.2 million-a-month for the first four months of 2011

City finances are so bad that commissioners last month considered asking Gov. Rick Scott to appoint an oversight board to help overcome the budget shortfall, which may be the last step before bankruptcy.  They abandoned that idea for now.

Instead, officials are hoping that Lauderdale Lakes can make it until the next fiscal year, which starts Oct. 1, when they plan to raise property taxes once again.

On top of all this gloom comes the missing redevelopment money.  If someone illegally transferred the money to the city to pay bills, the city must pay it back.

Taylor vowed that, if necessary, the money will be repaid to the CRA using a payment schedule to be worked out. She doesn’t know yet where the dollars will come from.

Meanwhile, the forensic Kessler auditing firm will be pouring through the CRA and city financial records to uncover exactly what happened and who was at fault.

“Regardless of where it went, it was an inappropriate use of funds,” the CRA’s Rogers said. “That money is by state statute for redevelopment, not other uses.”

Because of the vanished $1.7 million, redevelopment is now stalled.

Improvement dollars dry up

The CRA’s 2011 budget has been reduced to reflect the missing money.  Negotiations have been suspended on the purchase of more land.  Shopping centers have been told that there is no money for the facade improvement program this year. Elaborate plans to build a 25-plus acre commerce center to create new jobs between State Road 7 and Florida’s Turnpike are on hold.

Amid all the fiscal misery, city officials remain optimistic.

“We will survive this,” Vice Mayor Levoyd Williams vowed.

Officials said Lauderdale Lakes’ biggest plus is the chanted mantra of every real estate agent: Location, location, location

The city is perfect for redevelopment because it is planted between two major roads, Florida’s Turnpike and Interstate 95, Rogers said.   He noted that the CRA’s redevelopment zone contains some of the only new property for light industry in Broward.

“We are in the heart of Broward.  This city’s redevelopment plans will be realized.  Maybe not today or tomorrow, but someday.  It has to happen,” Rogers said.  “These current problems are just a road bump.”

Buddy Nevins is a former political reporter for the South Florida Sun-Sentinel who now operates the political news and opinion blog, BrowardBeat.com