Fort Lauderdale’s sewer calamity blamed on budget strategy that diverted funds meant for fixes

Sewer water spilling into a Fort Lauderdale canal.
Sewer water spilling into a Fort Lauderdale canal. Photo: CCA Florida

By Noreen Marcus,

State regulators did what they could to prevent the Fort Lauderdale sewer mess that experts predicted years before a major pipeline sprang leaks in December–and kept on spewing waste for almost three months.

But Fort Lauderdale failed to protect itself. Now, in the middle of a pandemic, the city is fighting a costly rearguard action to restore the sewage system, rescue marine life and preserve clean water.

While there is no villain in this saga, the state blames a budgeting technique that siphoned funds away from sewer projects to other services at times when the money was desperately needed for sewer projects. And the most zealous practitioner of this now-abandoned technique was former City Manager Lee Feldman, who was fired in October 2018.

“I blame a lot of people,” said Stan Eichelbaum, spokesman for the Fort Lauderdale Association for Good Government. “I blame Feldman for the diversion of the money and for ignoring the public safety issues.”

Last month, the state threatened the city with a $2.1 million penalty, payable immediately, if Feldman’s budget strategy makes a comeback.

On June 30 Gov. Ron DeSantis signed legislation that increased penalties for violating environmental laws; at the same time, his $1 billion in budget cuts included about $60 million for water and wastewater projects.

During the Gov. Rick Scott era, the Florida Department of Environmental Protection (DEP) settled a complaint against Fort Lauderdale for unchecked sewage discharges. The Sept. 29, 2017 deal the state and city struck, called a consent order, scheduled sewer fixes and promised hefty fines for violations.

Exploding sewer pipes

The question is: After city leaders signed that agreement, why didn’t they move fast enough to keep the sewer pipes from exploding? Residents who demanded action long before the state weighed in said they were ignored.

“It’s been incredibly frustrating that appeals to the city were stifled, yet authorities like the state and consultants recognized the issues and need for better practices,” Eichelbaum said.

Stan Eichelbaum

The worst sewer meltdown in Florida history, which started in early December and didn’t end until late February,might have brought a record $2.1 million DEP fine.

Instead of paying the fine into a statewide environmental fund, the city opted for a closely monitored, $3.1 million local restoration project. Beyond that, the city has announced a five-year plan to invest more than $600 million in water, sewer and stormwater systems.

Fort Lauderdale residents were outraged, but couldn’t have been surprised, when 230 million gallons of wastewater poured into their streets and waterways, damaging property, killing fish and polluting the air.

For years the media had amplified public outcries about smelly discharges after isolated pipe breaks. Also, a citizen-led task force has been meeting and reviewing sewer projects for three years and counting.

The DEP has turned the Fort Lauderdale sewer fiasco and penalty into a cautionary tale for other cities. In a statement to Florida Bulldog, DEP Secretary Noah Valenstein said he hopes the Fort Lauderdale situation will be “a wake-up call to cities across Florida.”

‘Enough blame to go around’

Still, Marilyn Mammano, who chaired the city’s infrastructure task force its first three years, cautioned against rushing to rebuke any one individual or group. Mammano teaches urban planning at Florida Atlantic University.

“Nobody thinks about infrastructure until something breaks. Then everybody’s looking around to blame somebody,” she said. “There’s enough blame to go around for everybody.”

Mammano said she was “not unhappy that the state stepped in the way they did. That was the shot that got everybody to take notice. That sort of galvanized everybody.”

Marilyn Mammano

State regulators take the position that city administrators knew what they had to do to save the decrepit sewer system, but didn’t follow through quickly enough to avert a crisis. The regulators focused on the city’s financial procedures and didn’t like what they saw.

Fort Lauderdale paid Orlando-based Reiss Engineering about $1.2 million to consult on water, sewer and stormwater needs and management. Reiss’s 837-page report, released in April 2017, put the city on notice that parts of the water-and-sewer system were “on the brink of failure” and said renovations would cost $1.8 billion over 20 years.

Penalty tied to any ROI comeback

But not all urgently needed projects could be tackled urgently. For many years city administrators used a budgeting method called return on investment (ROI). Instead of tapping a dedicated utilities budget to fund sewer projects, they shifted the money to a general budget to support police and fire departments and other services.

Between 2012 and 2017, Feldman used ROI to move about $90.4 million earmarked for water and sewer projects to the general budget, the South Florida Sun Sentinel reported in August 2017.

Noah Valenstein, Secretary of the Florida Department of Environmental Protection

Before the current city administration phased out ROI budgeting and ended it completely this year, the total had climbed to an estimated $120 million. So at the moment the money was required for some crucial sewer repairs, it wasn’t immediately available.

ROI is legal but the DEP rejected it, at least the way it was used in Fort Lauderdale.

A June 12 addition to the 2017 consent order demands that the city “continue to spend utility revenue only on its wastewater system.” The revised deal gives the city a choice between the $3.1 million environmental project and the $2.1 million fine–provided there’s no ROI. Otherwise, the local option disappears and “the entire penalty shall immediately become due.”

A ‘simple’ message

DEP Secretary Valenstein said in his statement, “Our message is simple: Engaging in the practice of diverting utility funds and sending that money elsewhere is no way to mitigate, monitor or address the issue of aging infrastructure.”

Dean Trantalis, a commissioner for several years before he was elected mayor in March 2018, railed against what he called Feldman’s overuse of ROI. Trantalis’s push for infrastructure funding reform was a cornerstone of his successful mayoral campaign.

Still, the city didn’t stop using ROI cold turkey. That wasn’t doable, Trantalis said.

The first year he was mayor, “Feldman refused to participate with the commission in finding ways to cut the budget in order to reduce the ROI,” Trantalis said. He said cuts totaling $20 million were required.

Lee Feldman

After that first year, the new city manager, Chris Lagerbloom, warned that such drastic cuts would have “a serious detrimental effect on the rest of the budget,” Trantalis said. Lagerbloom recommended phasing out ROI over three years; in the end, it was done in two.

In a recent interview with Florida Bulldog, Feldman defended ROI, noted that he didn’t invent the concept, and denied that he alone made budget decisions.

“It was something that we discussed in advisory boards and it was looked at by the city auditor,” Feldman said. “All of them deemed it to be appropriate and a best practice.”

A widely accepted strategy

Indeed, ROI is a widely accepted budgeting strategy–within limits that the DEP suggests Fort Lauderdale exceeded.

After Trantalis became mayor he and the commission fired Feldman, largely because of his perceived failure to prioritize infrastructure repairs. He left at the end of 2018 and was replaced by his assistant Lagerbloom.

In November Feldman started a $255,000-a-year job as the city manager of Gainesville. Though he’s gone from Fort Lauderdale, the sewage disaster refreshed memories. Some residents haven’t forgotten or forgiven him for his budgeting choices.

“It was a judgment call and his judgment was wrong,” civic activist Eichelbaum said. “We kept saying, ‘You’re playing Russian roulette with public safety.’”

Feldman responded, “Mr. Eichelbaum can make whatever assertions he wants. It’s easy to blame the guy who’s not there.”

Seiler: We embraced consent order

The same might be said about Fort Lauderdale attorney Jack Seiler. Feldman’s seven years as city manager overlapped most of Seiler’s 2009-2018 tenure as mayor.

Seiler said his administration took the 2017 consent order as their marching orders, “expedited the infrastructure repair process and put a lot of money and resources towards that goal.”

“We created the infrastructure task force for this. We started the go-fast campaign, we got a $200 million bond issue, and we did all of that responding to the state bringing this to our attention,” he said.

Yet Seiler said he does take some responsibility for the sewer disaster that occurred after he left office. “Everybody who has served on the city commission for the past two decades, including the mayors, should take responsibility for this,” he said.

Mammano, the task force chair, said she believes the city is finally getting somewhere on infrastructure. “Once the state stepped in, it was like turning a battleship around. It takes a little time to get a battleship turned around,” she said. “We’re picking up speed now.”

Fear of a second wave

Residents said sewer lines are still breaking, but the leaks are less serious and frequent because the coronavirus closed hotels and other high-usage businesses. They fear a second wave of water and sewer problems when the city reopens completely.

“Our concerns are very much drinking water and water contamination,” Eichelbaum said.

The city has stopped major sewage leaks and is building a 54-inch main sewer line to back up the one that suffered catastrophic damage, Trantalis said.

The mayor said two bond issues totaling $400 million will pay for essential upgrades to the water-and-sewer system. He’s looking for federal money and any other resources he can find to fund waterway cleanup and revive marine life.

“Within a year we hope to have a sewage system that can take us into the next 50 years,” Trantalis said.

The bond money will be available at relatively low interest because of a recent development. On June 25 Standard & Poor’s upgraded to AAA the rating of Fort Lauderdale’s special obligation refunding bonds. S&P’s cited the city’s strong economy, management, liquidity and “budgetary flexibility.”

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  • Concerning the Fiveash water treatment plant that provides green or yellow drinking water to 250k people (plus 3.8m in ships and cruise ships that visit Port Everglades), Reiss told Ft Lauderdale to do a GAC pilot study. Granular Activated Carbon is one method of filtering water. It is used along with lime softening, ozone, UV light, biofiltration, hydrogen peroxide, etc. The pilot study would determine which method to use to produce clean, clear water with the least amount of toxic chemicals at the lowest price.

    Did the city of Ft Lauderdale do this GAC pilot study? No. They hired an engineering company to do it but after Carollo got the $650k job, Paul Berg, the public works director at the city of Ft Lauderdale decided to “save” $150k and not do the study (Paul and his secretary got fired or quit in December).

    Carollo somehow figured that ozone wouldn’t work for our water (it does, and there’s a study proving that). They said that GAC would cost the city $130 million per year (a completely ridiculous figure – the first version of their report said $1-2m per year) so it would be cheaper to build a new $433m water treatment plant using nanofiltration and ion exchange which is more than three times as expensive to build and run than upgrading Fiveash with GAC and other technologies.

    Another problem is that the city doesn’t have $433m in their Utility Fund (they used $150m of Utility Fund money for pensions and raises) so they want to do a public/private partnership and let an outside company build and operate a new water treatment plant. Of course this private company needs to make a profit so your already high water bills are going to skyrocket.

    Even if we decide to build this outrageously expensive new water treatment plant, we still need a plan to clean up our drinking water over the next 5-10 years while it is being built. The GAC pilot study would tell us what can affordably be done THIS YEAR to give us clean water.

    Here’s what Reiss Engineering wrote on 2/6/20:

    A few notes regarding the cost conclusions related to the application and the tests:

    1. The GAC pilot recommended in the 2017 Master Plan was to define costs/feasibility of retrofitting the existing WTP versus constructing a new WTP. All of Carollo’s specific process recommendations are related to a brand new greenfield WTP. The focus herein is on the retrofit option.

    2. Regarding cost conclusions for GAC, for total organic carbon (TOC) levels in the 10-12 mg/L range, GAC by itself is likely not cost effective, consequently, many full scale and demonstration facilities with high TOC levels have preceded GAC with supplementary TOC removal processes such as ion exchange, advanced oxidative processes (AOP) combined with biofiltration, coagulation-flocculation-sedimentation, etc. In the case of retrofitting the existing WTP, an AOP would minimize infrastructure and could include combinations of ultraviolet light (UV), ozone, hydrogen peroxide, etc. The existing WTP filters would be repurposed for biofiltration/GAC polishing.

    3. While the pilot GAC performance may have been adversely affected by upstream chloramination; not sure how significant an impact this would be but the chloramination process could be moved downstream and 4-log virus inactivation requirements supplemented by the AOP. We would like to move the City away from chloramines but one step at a time.

    4. For the potential retrofit and achieving expedient color removal and taste/odor improvement, an AOP combined with the existing filters repurposed for biofiltration/GAC should be tested.

    5. Depending on the AOP utilized it is acknowledged that other byproducts, e.g., bromate, chlorite, etc., may be an issue, testing would confirm. For your enjoyment, our Chief Water Engineer Glenn Dunkelberger did a pilot study on Fiveash water for ozone for color removal in 1992 attached. Ozone removed 60% of the Fiveash raw color and promoted some further biological TOC removal. Bromate testing was limited, but showed little formation if ozone residual was avoided. There are also full scale facilities with combinations of UV/peroxide, ozone/peroxide, etc. that could be tested to minimize unwanted byproducts and extend the run life of downstream GAC.

    Recommendation: put a legitimate 4” column biofilter/GAC pilot on site, run it without chloramine residuals, and test various AOPs and the impacts to GAC breakthrough, color/TOC removal, bromate, chlorite, disinfection byproducts, etc. Calculate the resulting retrofit capital and operating costs for the City to assess.

    We need to do what Reiss said to do three years ago concerning a GAC pilot study. We didn’t listen to their advice with the sewer system. Look how that turned out.

  • Sew and Water was part of the last election for Mayor of Fort Lauderdale and the one before. The water and Sewer money got used to pay to attract tourists and more condo developers. We have been trying to get the pipes and plants fixed for years. But it only happens when the water or shit runs in some rich peoples house. And then it is just patches. I have 48″ pressure sewer main in front of my house. If I am lucky it will fail under the river and not in my yard. It was installed in the early 1970’s

  • Gainesville, should take another look at this guy. Feldman, sounds just like trump, never take responsibility for anything that goes wrong. Fess up Feldman, you were part of the problem!

  • I sat on the Fort Lauderdale’s Budget Advisory Board from 2013 to 2017 (and the Audit Advisory Board before that) so I’m intimately aware of the financial details and the politics that led to the current fiasco. Shortly after being hired, Lee Feldman instituted the scheme of a “Return on Investment” or “ROI” payments to the General Fund — a mechanism that the city auditor called “a revenue grab”. That’s a direct quote from John Herbst at one of our meetings.

    Jack Seiler was a driving force behind this type of financial mismanagement. Seiler (and former commissioners Bruce Roberts and Romney Rogers) would do anything to avoid a millage increase. At one of our joint workshops Seiler mused aloud about the tapping into the millions set aside for perpetual care from the Cemetery Fund. Robbing the dead for political expediency.

    Municipal revenues fall into four broad categories: property taxes, revenue sharing (the city’s share of state imposed sales, communication and gas taxes), fees charged for public services and grants. A catchall “miscellaneous” category rounds out the mix. Fully one-quarter of the General Fund’s revenue was labeled “Miscellaneous”. The second and third largest sources of General Fund revenue (just a little less than property taxes) were the funds siphoned from the Water and Sewer Fund, and the Fire-Rescue Assessment — both in the Misc category. It was obvious to anyone who looked at the revenue mix with open eyes that something was dreadfully wrong. Miscellaneous is for the little stuff that can’t be accounted for easily, not for leading sources of cash flow. Any attempt to bring this imbalance up at a Budget Advisory Board was nixed or deflected by the City Commission or City staff. Any discussion of why monies earmarked for maintenance of the water and sewer infrastructure were not being spent was similarly dismissed or avoided altogether. The chair of the Budget Advisory Board was afraid to upset Feldman, Seiler or the police and fire departments, so any meaningful discussion was tabled. When asked direct questions, Feldman would lie to our faces — with his charming smile.

    The underlying need for all this backdoor revenue was to balance the General Fund without a property tax increase. When you look at the costs in the General Fund from 2000-2017, the long-term trend for most expenses is gradual increases in line with inflation, with one glaring exception: Pension Costs. The funding of the city’s pension plans is rather Byzantine — you can’t find a single place in the financial reports that reflects the total cost. Some is found in Fringe Benefits. Some is in Debt Service on the $330 of Pension Obligation Bonds the city issued. Some is classified euphemistically as “Contributions” — which reflects a flow-thru of millions of dollars collected from city property owners by the state on property/liability insurance policies issued within the city. State law earmarks those funds exclusively for Police & Fire pensions. The city closed its General Employee plan about a decade ago — and instituted a 401k-like plan for new hires. It is the ongoing pensions for its Police & Fire plan that caused, and still causes, the massive imbalance in the city’s General Fund. Contracts granting those pension benefits were approved by City Commissions for decades. They were a sop to the Police and Fire Unions that contribute to the City Commissioners — or their challengers. Unlike the standard pension plan in Florida, which are run by boards of Trustees that are evenly split between appointees of the city commission and employee (union) representatives, the majorities on the pension boards in Fort Lauderdale are employee/union reps: 4-3 on the General Employee board, and effectively 5-2 for the Police and Fire Board (2 Police, 2 Fire, 2 City and those six find a seventh to sit with them — usually a retiree from Police or Fire Dept). The self-serving behavior will continue indefinitely.

    BTW: The Fire Assessment is “non-tax” backdoor method to fund the Fire Pensions — and that flat-dollar assessment hits lower-value properties more harshly. For some reason, municipalities across the state can balance their budgets without such an assessment. Of the total amount of Fire assessments levied across the state, 80% are collected by cities in Broward County alone, Fort Lauderdale being the largest. Elsewhere, this backdoor tax is not needed. That’s off-topic, but something that should be examined.

    Looking back, I’m proud of my service on the Budget Advisory Board, raising relevant questions even while being outvoted on many important decisions. Then-Commissioner Trantalis appointed me to the Board and never once asked that I refrain from upsetting the apple cart. (Thanks Dean) Events have proved a lot of the points I tried to raise. I encourage others who want to make a difference to step up and help provide necessary oversight so that this doesn’t happen again. A misguided City Manager enabled by a feckless Commission can create a stinking mess. (For another example, look at the Fort Lauderdale’s self-funded health insurance fiasco under Manager Floyd in 2003)

    I applaud the current city commission’s and city manager’s efforts to eliminate the ROI and find some sustainable path to financial sanity. Good luck with that in Fort Lauderdale, where the standard question has always been “How to we find someone else to pay for what we want?”

  • Great reporting

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