Riviera faces decision
Fix financial problems or see the state come in.
Sunday January 14, 2007
The state audit that Riviera Beach politicians resisted told Riviera Beach residents what they needed to hear.
In just one year, from October 2004 to November 2005, the city’s community redevelopment agency spent $5.6 million for consultant services yet had little to show for it. There were big and bad accounting practices: a total of $1,273,919 paid to one consultant, the auditors said “without detailed billing indicating the level of staff that performed the services, the number of hours or work performed, or the rate(s) at which the CRA was billed.” [ed. emphasis added] There were the small and ugly undocumented expenses: $4,335 in flowers, food, restaurant and other charges, though auditors said it was “not apparent from available documentation that these payments served a public purpose or complied with” state law.
Even if the state auditor general didn’t conclude that there were any criminal violations, some city employees ought to be fired. Some politicians ought to resign. Despite the scathing report, however, city and CRA officials want the public to believe that they already knew about the poor financial controls and already had the fixes in.
Residents have little reason to trust that given what state Rep. Carl Domino, R-Jupiter, said were “not casual or isolated incidents of fiscal malfeasance.” Despite city denials, he is correct that the findings are “a pretty broad brush, at the very least, of poor internal controls, and that’s got to be resolved right away.” The Joint Legislative Auditing Committee that he chairs will further scrutinize the audit findings in public hearings next month.
Ultimately, issues such as the ongoing PSA fiasco show why it may take state intervention to produce fiscal accountability in Riviera Beach. PSA, a consulting firm, has been paid several million dollars over several years. PSA says the city owes it another $800,000 for program and construction management, of which Riviera has had neither. The city council members who also sit as the CRA board would be correct to ask what PSA has done to deserve any of that money.
At their last meeting, however, several council members tried to write PSA into the new contract for redeveloping the Ocean Mall on Singer Island. Again, given the audit, Riviera Beach residents should question any city official who would pay PSA another $800,000 based on more vague invoices.
The three PSA supporters – Elizabeth Wade, Ann Iles and Vanessa Lee – are up for election in March, along with Mayor Michael Brown. Then-council Chairwoman Wade traveled to Tallahassee in October 2005 attempting to dissuade Rep. Domino’s committee from even conducting the audit. Mayor Brown, whose post is ceremonial, says his calls to address the favoritism toward PSA and other financial issues prompted the council to kick him off the dais at CRA meetings. He wants Riviera Beach to switch to a strong-mayor form of government, but
he brought PSA to the city.
Riviera Beach’s finances are a mess, as demonstrated in the undocumented expenses on the 42 credit cards issued to city employees. So, the state audit was worth waiting for, particularly if the city acts upon its findings. The kind of report Riviera Beach just got from the state helped Lake Park straighten out its books. But Riviera Beach’s elected leaders remain in denial.
If that continues, the only answer may be the kind of state intervention that happened in Miami in 1996. Then-Gov. Lawton Chiles appointed an oversight board led by Lt. Gov. Buddy MacKay to fix Miami’s financial problems. Riviera Beach may give Gov. Crist no choice.
[ed. The Mayor's call for a
form of government is not the solution.
Exploiting 'blight' to gobble taxes
Community redevelopment agencies gained popularity in the 1980s as vehicles to repair neglected urban areas by siphoning off tax revenues from increasing property values.
The idea is called tax increment financing. A city will designate an area for redevelopment, then the property taxes from that area are frozen at the same level for many years. The CRA is allowed to capture the taxes above the set level as values rise. In theory at least, each year the gap widens and the CRA takes in more revenue.
CRAs have done much good in Florida, but also have been abused and misused, as any money-generating machines will be.
Two weeks ago, the Florida Auditor General's Office released an audit of the Riviera Beach CRA that was startling for the waste and irresponsible spending uncovered - some of it perhaps criminal. Boynton Beach considered doing away with its CRA last year because of political infighting and failure to get anything done. In Hollywood, a $7 million CRA plan for a performing arts center just went bust. Two years ago, the former chairman of the Miami CRA killed himself in the lobby of The Miami Herald while awaiting trial on kickback charges.
It hasn't been pretty in recent years. More insidious than the scandals is how CRAs have strayed from the work they were intended to do.
Miami is considering using CRA money to build a new stadium downtown for the Florida Marlins. CRAs, by law, are supposed to spur economic development in blighted areas, not provide accommodations for millionaire big-league ballplayers. Miami's Overtown neighborhood remains a textbook example of urban blight, yet CRA dollars are fixing next to nothing there.
In West Palm Beach, the downtown CRA is moving forward with one of the most ambitious and expensive publicly financed projects in the state's history - an $87.9 million bond deal to pay for a new library and waterfront redevelopment.
"I don't know of a CRA in Florida that has issued $88 million in one bond issue," says CRA director Kim Briesemeister, "because I don't know of a CRA in Florida that has enough tax increment to be able to issue an $88 million bond."
An explosive surge in downtown construction during the last decade has left West Palm Beach with a huge pile of tax revenue to spend and the power to borrow tens of millions with bonds. Mayor Lois Frankel says that a new library and city hall - the City Center project - and the waterfront renewal will occur without raising taxes.
Technically true, but taxpayers should be skeptical enough by now to know that CRAs don't print money, and ultimately somebody gets stuck with a bill. While Mayor Frankel isn't raising taxes, she is committing 30 years' worth of property taxes to repay the bonds, a mortgage that comes with costs.
There are winners and losers. The people in the downtown CRA district, for example, are stuck with the entire bill for the library, though it is a facility that is to be used by the entire city.
Because the CRA will continue to siphon off tax increment money for decades to come, revenue that would have gone into the general fund won't get there. Those diverted funds won't be available for neighborhood improvements, citywide services or to reduce taxes. It's wrong to suggest CRA projects don't drain neighborhoods outside the downtown. Because the CRA also captures county taxes, the county taxpayer will also pay for the city's library and waterfront.
As with Miami and the baseball stadium, the West Palm Beach plan raises questions about what CRAs are supposed to do.
None of the $87.9 million goes to remedy blight, or create affordable housing, or improve streets - the reasons CRAs were created. What blight afflicts the West Palm waterfront that justifies spending $15.5 million in CRA money? Months ago, the mayor wanted to pay for the waterfront by selling city land. Now, Flagler Drive qualifies for slum relief. Wait'll she tells Palm Beach.
The argument that the projects will stimulate the downtown economy is dubious. There is no attempt to leverage the public plans with private development. Potential job creation is minimal, except for the construction itself.
CRA doesn't mean free. Taxpayers need to
remember that as the bills come in.