By William Gjebre, BrowardBulldog.org
Broward will seek the return of county property tax dollars from city community redevelopment agencies that hoarded that money instead of spending it on projects to fight slum and blight that are ready to get underway, according to County Administrator Bertha Henry.
The county’s toughened stand follows recent findings by Broward’s Inspector General that Margate deliberately mishandled $2.7 million in CRA funds. It also comes amid fresh criticism about the way Hallandale Beach allegedly handled its community redevelopment funds.
Frank Schnidman, an attorney and senior fellow at Florida Atlantic University’s School of Urban and Regional Planning, said in an interview that Hallandale Beach appears to have mishandled $12.6 million in CRA funds – an allegation disputed by a top city official.
“They lost track of the money,” Schnidman said. “They were not aware there were all these millions of dollars…they had misplaced.”
The County approves the establishment of CRAs after the need for redevelopment is studied and documented and contributes tax dollars – so called tax increment funding, or TIF – to the municipal agencies from revenue generated by the increase in property values in the redevelopment area.
Ten Broward cities have CRAs that receive TIF dollars. Others include Fort Lauderdale, Hollywood and Pompano Beach, have CRAs.
Henry said in an interview last week that the county will enhance its review of expenditures to make sure municipal CRAs don’t improperly bank funds at year end instead of spending them as required by state law.
“They now know they have to comply,” said Henry, referring to the Inspector General’s publicized findings.
Under state law, CRAs that have funds at the end of the year must spend that money on projects to be completed in three years, pay down debt or return it to the county.
INSPECTOR GENERAL’S PROBE
For months, the Inspector General has been conducting what appears to be a review of how some municipal CRAs in Broward have handled funds unspent at the end of each fiscal year.
In Margate, investigators found, the CRA mishandled funds by rolling them over from year to year without designating them for specific purposes. The Inspector General said the county could retrieve $2.7 million in funds provided to Margate.
Henry’s parallel review of CRA spending is expected to take two months. County representatives will then meet with CRA’s receiving tax increment property tax funds. For cities that don’t have projects ready to go, “I will recommend we go after the money,” she said.
Cynthia Chambers, director of Broward’s environmental protection department whose duties include overseeing municipal CRAs, will also be watching. She said the county would “certainly” seek the return of tax funds from CRAs that violate state law regarding the handling of year-end funds.
The Inspector General’s ongoing CRA probe began in 2012 after a string of stories in BrowardBulldog.org about questionable loans to local businesses and land purchases by Hallandale Beach. The 14-month investigation found $2.2 million in questionable CRA expenditures, the improper co-mingling of city and CRA funds dating to the CRA’s establishment in 1996 and poor record keeping.
The Inspector General also asked the city to tell it how much money the CRA had, suggesting the amount was uncertain. An audit by Hallandale Beach that in July, 2013 identified $12.6 million in CRA funds co-mingled with city funds.
Schnidman, the FAU professor and a former consultant for the Hallandale Beach CRA, was critical of the audit finding such a huge sum.
“They were not aware the money was there; they misplaced it. They were hanging onto the money…year after year,” Schnidman said.
The $12.6 million, Schnidman said, should be returned to the government agencies that, like the county, contributed property tax increase funds to the Hallandale Beach CRA – the city, South Broward Hospital District and Children’s Services Council.
Hallandale Beach City Manager Renee Miller disputed the notion the CRA had excess funds. “Anyone saying that is misleading the public. It’s not found money…not excess cash,” she said.
Miller said the audit went back to as far as 1996 to ascertain the amount of CRA funding, with interest. The money, she said, was then transferred to the CRA trust fund. Asked where the money was located, Miller said it was from current funding that year, not from any leftover funds from previous years.
Miller said the city had a good estimate of the amount of CRA dollars co-mingled with city funds, but the audit confirmed $12.6 million.
In the past when funds were co-mingled, Miller said it had been the city’s practice to account for CRA costs near the end of the budget year on September 30.
The $12.6 million CRA funds were used to pay agency costs during 2012-2013, according to Miller and city controller Melissa Cruz. Of that, more than $10 million went to pay salaries and benefits, administrative charges, debt service, utilities, material and supplies, repairs and maintenance, community redevelopment programs, grants to community groups, professional and outside services, subsidized loan programs, and other service charges. Another $500,000 was transferred to the city, and $2.3 million was designated for capital projects.
“It’s not as insidious as was inferred,” Miller said.
Aletheia / September 8, 2014 12:33 pm
Miller is a moron who distorts the truth. Broward County and the State need to come down hard on those cities that mishandled, misappropriated, lost or stole dedicated CRA funds. And left out of this article is the “glorious” City of Lauderdale Lakes that owes their CRA almost $2.5 million…and their CRA owes County residents $3.4 million! Lakes CM Jon “the Fabricator” Allen and his brain-dead commission have re-assigned their missing CRA funds as long-term debt…something they are not legally authorized to do! And they’ve purposely not carried over past CRA fund balances, in order to present a better (though false) financial picture!
Chaz Stevens, Festivus / September 9, 2014 11:05 am
Although there are many cities identified in this article with CRA fund balances that should be returned to the County as required by FS 163, one city of note is missing. That is Lauderdale Lakes under the control of past CRA Chair (City Commissioner) Eric Haynes and his sidekick City Manager Jon Allen.
Since at least 2010 the LL CRA has maintained a fund balance of $3.4 million that should have been returned by FS 163. The CRA has never re-appropriated that fund balance of $3.4 million for use in now what will be at least five years with the recent adoption of the 2015 CRA budget. But much worse than the other CRAs identified, Haynes and Allen actually “loaned” $2.5 million in CRA cash (part of that $3.4 million fund balance) to the city to pay BSO expenses and then set up a 15-year repayment period. They called it a “forbearance agreement” which was quickly approved by the CRA Attorney and City Attorney even though it did not meet the requirements of the city charter for adoption. So we think you will find collusion all over the place there.
But getting past the fund balance misuse, there are other serious issues there. Under the Haynes/Allen leadership, the CRA purchased Commerce Park for over $6.2 million, well over appraisal price, with no apparent CRA use in mind. They purchased the Ireland Property from the city no less at over the market value with no apparent CRA use in mind other than a community garden.
But the crowning glory of the Haynes/Allen duo was the Educational and Cultural Center constructed at over $4 million with the only use identified at a Parks rental facility. In fact the city through the Parks Department collected rental fees while the CRA paid operating and salary expenses for over four years. And before we forget to mention, the CRA paid over $4 million to put this facility on the second floor of the Broward County Library Building. This is a building that the CRA or city will never own. Just recently the CRA finally signed over its tenant rights to the second floor ECC to the city to operate as a Parks facility.
And we believe there are really questionable projects and even special events funded by the CRA with possible ties to CRA Board Members and staff with little or no benefit to the CRA or its purpose. And city staffers have routinely been paid with CRA dollars.
We believe the Haynes/Allen duo put the CRA in debt over $12 million with costs and expenses that do not meet the requirements for use by a CRA. And they are holding $3.4 million in fund balance that is due to the County and taxpayers.
Dear OIG: Go get them. And don’t forget to bring your big net when you go as there are some fat fish there.
Aletheia / September 17, 2014 10:17 am
I almost forgot the “forbearance agreement!” What a piece of work. After allen & company were exposed for using $2.5 million of CRA funds for City business, like paying down the huge amount of BSO past due expenses and unpaid bills they had accumulated ($8-$9 million)…they turned around and made believe that this misuse of public funds was some kind of pre-arranged loan to the General Fund! And so they crafted an illegal and phony forbearance agreement! And then had the gall to say that they would pay back the squandered funds in 15 years! Haaaaa! Does it get any sleazier than that?
All the evidence is there for the SAO to shut down this three ring circus…and get taxpayers money back! SAO…it’s your move!