Fort Lauderdale City Manager Accused of CRA Misappropriations, Forced to Step Aside

We reported a few weeks ago that there is mounting evidence of gross mismanagement and illegal activity at the Fort Lauderdale Community Development Agency. On Tuesday, the City Commission/CRA Board plans a stunning move to amend their by-laws to revoke the authority of City Manager/CRA Executive Director Lee Feldman to manage the Agency.

 

By LawsThe move to neuter Feldman follows on the heels of scathing audit findings that reveal the City has been using CRA Redevelopment Trust Funds to cover expenses in places other than the CRA. Over the past two fiscal years, Feldman and his staff questionably allocated over $1.5 million in Redevelopment Trust Funds to the City’s General Fund for “Service Charges” to cover the City’s payroll expenses.  These funds ended up paying for work performed outside the CRA. Spending CRA Trust Funds in this way is a violation of Florida statutes. 

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A Total Breakdown in the “Tone at the Top”

City Auditor John Herbst stated that he has “seen conflict between the CRA Director and the City Manager due to the fact that they do not share the same mission. “ Herbst went on to say: “This was due to the diversion of TIFF revenue” and things the City Manager “would like the CRA to undertake to relieve them of their obligations”.

Feldman and his staff have been unable to provide documentation of the work performed. Feldman was also caught allocating CRA Trust Funds for non-CRA personnel positions that were vacant for either a portion of the fiscal year, or the entire fiscal year.

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As sadly befitting for the third most racially segregated city in Florida, the majority of the illegally appropriated funds were tapped from the predominantly black Northwest. To add insult to injury, Feldman had the Beach CRA Director’s salary paid out the Northwest CRA’s Trust fund while leaving the Northwest CRA Director’s seat vacant and the agency virtually rudderless for the past year. This has caused irrevocable hurt and lost opportunity for the historically segregated and underserved northwest community. 

 

Mayor Seiler says of this gross mismanagment: “Ever since we did the restructuring in an effort to try and fix what happened in the first decade of this century I think we’ve created an agency that doesn’t have anybody where the buck stops. We’ve got….24 people with their hand in the pocket….24 people that are cooking in the kitchen…with nobody that’s the head chef……

Maybe it’s time for Seiler to do a little less distancing, and show a little more leadership  in his role as Chairman of the CRA.

 

Fort Lauderdale Ranked as one of the Nation’s Worst Cities for Young Families

Fort Lauderdale received an “F” grade in 2016 study of America’s Best Cities for Young Families. Fort Lauderdale ranks as the worst city in Florida and the 9th worst city in the nation for young families. This should come as no surprise to the leaders of the third most racially segregated city in Florida.

Seven Florida cities ranked in ApartmentList.com’s 30 worst cities for young families. They were: Orlando (30), Gainesville (28), West Palm Beach (27), Miami (26), Tallahassee (22), Miami Beach (13) and Fort Lauderdale (9).

All seven Florida cities received an “F” grade in the rankings. Of the 474 cities included in the study Allen, Texas was ranked best in the nation with a score of 97.2. Fort Lauderdale came in at number 466 with a total score of 13.5.

 

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  The study centered around four factors — safety (35 percent), housing cost (30 percent), school quality (25 percent) and child friendliness (10 percent). The housing cost category is based on the percentage of the median renter income required to rent a two-bedroom apartment. “Child friendliness” was based on census data, scoring cities based on the percentage of population under 18. 

The analysis centered around the 4 factors that were identified as being important to families:

  • Safety (35%):  FBI data was used to rank cities by the number of violent crimes and property crimes per 100,000 residents.
  • Housing Cost (30%):  Census data was used to calculate the percentage of the median renter income required to rent a 2-bedroom apartment.
  • School Quality (25%): Cities were ranked on high school graduation rate for public school districts based in that city. Comparing schools across different states can be challenging, but using high school graduation rate data from the Department of Education was the method used estimate of overall school quality.
  • Child Friendliness (10%): Communities with a greater percentage of children tend to be more child friendly. Census data was used to score cities based on the percentage of the population that’s under 18.

These factors were weighted using the percentages listed above, and used this index  to assign grades and rankings to the nearly 500 cities in the study. 

Don’t lose hope Fort Lauderdale, you’re still one of the top 10 Best Cities in the U.S.  for Parking according to NerdWallet.com.

 

County Commissioner Says WAVE North Loop a “Ripoff” of Fort Lauderdale CRA Funds

The Free Press is reporting live from somewhere in Fort Lauderdale – the third most racially segregated City in Florida 

“The Little Engine that Couldn’t”

At a Transportation Workshop held earlier this week, Broward County Commissioners expressed frustration and concern about seemingly endless delays and over $50 million in cost overruns of the Fort Lauderdale DDA sponsored WAVE Modern Streetcar Project.

The Fort Lauderdale Downtown Development Authority’s WAVE Streetcar project is now 13 years in the making; it’s four years behind schedule and $52 million over the original $142 million cost .

The Florida Department of Transportation has offered to take over the final design and construction of the lagging project some have described as “the Lawyer’s Loop”.

Fort Lauderdale’s total cost share to date for the WAVE is about $46million. Beyond that the City will now be responsible for 25% of any construction costs that go over the updated $195 million budget.

FDOT and the County will require the City, the CRA, and the DDA to keep their checkbooks open until the end of the job.

County Commissioner Lois Wexler remarked: “The progress is terrible. It’s not going anywhere. I’m in the same place I was 11 years ago when I came in office. What should concern all of us is you’re buying a pig-in-a-poke”

 

County Commissioner Dale Holness expressed concerns that stakeholders in Northwest Fort Lauderdale are adamantly telling him that the WAVE Northern Loop is “ripoff” of CRA redevelopment funds from the Northwest community. Holness said that he would not support additional funding for the WAVE unless it includes expansion across the tracks and westward on Sistrunk Boulevard.

Holness said, “the community that needs this the most …it’s going to their doorsteps and turning away. It’s not going across the railroad tracks…..that infamous railroad track that’s caused so much angst over the years.”

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(The intersection of the railroad tracks and Sistrunk Blvd. is the dividing line of the third most racially segregated city in Florida (also, we would point out – one of the top ten best cities for parking according to NerdWallet.com)

Holness went on to say “It seems short-sighted to me that we would have designed this system that would go all the way up to Sistrunk Blvd on the east side of Andrews Avenue and the railroad track and not cross the tracks at all….to ensure that folks on the other side have access to transportation to Downtown so they can get to work. But even beyond that, so there’s some economic development that can take place that’s so greatly needed in that area – the community that has been left behind for so long.”

At the time of the WAVE Loop’s quick and quiet approval, some members of the Northwest community expressed concern that no plans or studies had ever been done to substantiate how this investment fit into their approved redevelopment plan.

Florida law requires CRA’s to stick pretty close to their adopted plans. It’s pretty much against the law for a CRA to spend money on projects that are not described in their adopted plan. Taxpayers are supposed to be able to give public input as to what those special taxes can pay for.

Some experts have told us the rules are pretty simple, but pretty strict. According to state law, all the CRA money is supposed to be in a trust fund, and only spent on authorized projects in the adopted plan. 

Generally, the legal experts say “If it’s not in the plan, you can’t do it”

 

 

 

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Fort Lauderdale’s CRA REDEVELOPMENT PLAN                                                                                       “IF IT’S NOT IN THE PLAN, YOU CAN’T DO IT”

As a general rule, CRA money is supposed to be used to eradicate crime, slum, and blight and to build affordable housing for low and middle -income families. A CRA can do other stuff, but the project has to be in the plan before it can be funded.

We delved into the City’s official 2001 Redevelopment Plan. We looked everywhere, even in the couch cushions,  and we could not find any mention of streetcars, trolleys, buses, or mass transit of any shape or size or location east or west of the tracks. Nothing.  

We understand the City intends to amend their CRA Redevelopment plan sometime later this year in an effort to “come into compliance”.

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In other words, the CRA Board may have broken the law by approving this project before having the authority to do so……

The Fort Lauderdale CRA took out a $7.5million loan to fund 100% of the cost for the WAVE Northern Loop. The Loop takes the streetcar on a short parade around some very desirable private property in the heart of trendy Flagler Village.

The CRA has taken on almost $900,000 per year towards debt service for the project. The 11 year loan gets paid off just as the agency loses its authority to exist in 2025. The CRA has about $5 million a year to spend on Redevelopment. They spent almost $3million last year on operating costs. Add in the debt service, and it looks like there’s little left for the taxpayers who live across the tracks.

The otherwise financially embarrassed Downtown Development Authority (running out of money fast) is comfortably collecting a surplus of about $500,000 more per year in property assessments. They are squeezing the downtown property owners for $500,000 per year more than needed to make the payments on their $19.5 million loan for the eventual construction of the WAVE. 

 

County Commissioner Tim Ryan lent his perspective on expanding the WAVE streetcar into Northwest Fort Lauderdale. “In my view, it’s all based upon ridership and if the studies indicate that the greatest ridership is going to be based upon expanding it on the 17th Street Causeway and to the Airport, then that’s where we go.”

Ryan went on to say “On a project that is so immensely expensive, you can’t just build it and say it will lead to economic development. You have to already (I think) be there. You have to have consultant reports, disinterested consultant reports that say the levels of ridership”

Fort Lauderdale City Manager and CRA Director Lee Feldman seemed agreeable as he told the group that the Northern Loop is being funded by the Fort Lauderdale CRA and that the City has commissioned a study to explore the viability of moving the WAVE west on Sistrunk into Northwest Fort Lauderdale

Commissioner Holness asked if a ridership study was done on the WAVE Loop Extension.

Fort Lauderdale City Manager Lee Feldman answered “No”….“We did not do a study for the ridership of the (WAVE) Northern Loop”

Commissioner Holness said, I’m confounded by this, that we couldn’t find a way to make it happen….. But a lot of that money is collected on the other side of the tracks. None of that money is going to the people on the other side of the tracks that are paying the taxes.”

A visibly agitated Holness said “That’s not fair at all. That’s totally unfair! It’s not right! It’s not just Dale Holness raising the concern – the community is raising this concern, leaders are raising this concern, even Congressman Hastings.”

Fort Lauderdale Commissioner Bruce Roberts told the County that State Representative and former Northwest Fort Lauderdale Commissioner Bobby DuBose saw the CRA’s $7.5 million eastward expansion of the WAVE Northern Loop as a “precursor” to expansion westward on Sistrunk.

 

Former Fort Lauderdale Commissioner, State Representative Bobby DuBose

“It was championed by him”, Roberts stated.

 

In the third most racially segregated city in Florida, without a study, you can only ride the train on the white side of the tracks.

Fort Lauderdale Downtown Development Authority Audit Predicts Coming Cash Crisis

According to a recent Auditor’s report, Fort Lauderdale’s Downtown Development Authority will run short on cash as early as October of this year unless a revenue shortfall of $425,000 is shored up. To stay afloat for the year, the DDA assessed Downtown property owners the maximum millage allowable under state law. 

 

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The DDA 2016 adopted budget anticipates a $425,000 cash grant from the City.  

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DDA Auditors Keefe & McCullough state in their recent year-end audit:

“The fiscal 2016 operating budget was based, in part, on receipt of a $425,000 grant from the City of Fort Lauderdale to: 1) continue development efforts on the construction of a new Federal Courthouse in the downtown, and 2) the extension of the Wave Streetcar Project to Port Everglades and the Fort Lauderdale International Airport.”

Last year the DDA spent almost $300,000 in high powered D.C. firms lobbying for federal funds to build a new courthouse.

 

Needing more cash, DDA Director Chris Wren proposed a way to continue funding these efforts – the DDA would sign over federal streetscape grant funds to the City in exchange for cash to lobby for more federal funds.

 

The problem with this scheme is that it’s generally illegal to use bricks and mortar grant funds for lobbying. By swapping the funds for Fort Lauderdale’s cash, Wren hoped to bypass those regulations. 

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 Wren and the DDA Board had good reason to believe they would get the City’s $425,000. They knew they  had strong support from City Staff. Former long-time DDA staffer Elizabeth Van Zandt and City Transportation Director Diana Alarcon were offering a deal to exchange $500,000 in City cash for $865,536 in federal streetscape grant funds.

The City would seemingly have an upside of $365,000, along with funding for a project manager staff position.  There was a pony in this pile for everyone.

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The Secret Formula for Government Bullshit

 

 

 

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Former long-time DDA staffer Elizabeth Van Zandt and City Transportation Director Diana Alarcon were offering a deal to exchange $500,000 in  City cash for $865,536 in federal streetscape grant funds.

In September, Fort Lauderdale City Commissioners publicly approved the DDA’s budget including the $425,000 grant. Then, just a few weeks later the City seemed to have changed its mind about the money.  A citizen pointed out that maybe this was a violation of federal law…..

An October 20 email from City Manager Lee Feldman sternly stated:

“We are not engaged in this transaction”

 

 

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Mayor Seiler chimed in: “We will investigate”

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  The DDA auditors state in their report:

“Receipt of these revenues are now in question, and discussions with the City of Fort Lauderdale on obtaining alternative financial assistance is presently underway”

The DDA’s auditors have now publicly raised questions as to how the DDA will continue to operate without a quick infusion of cash from someone:

“The Authority’s ability to operate at the present level of service going into fiscal year 2017 is dependent, in part, on replacing the budgeted $ 425,000 with equal or more funding from alternative sources whether from the City of Fort Lauderdale or elsewhere.

 

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Maybe the DDA should consider outsourcing itself………

DDA Streetcar: $52 Million More Than Promised/4 Years Late

Fort Lauderdale city staff have reported to the City Commission that the latest estimated cost for the WAVE is up $52 million from the cost promised taxpayers when the project was approved. The completion date for the WAVE Streetcar has now been pushed back four years to 4th quarter of 2020.  

 

In Jan 2013 the DDA reported the $142.6mm project would start construction in mid-2014 and the streetcar would carry-passengers in 2016.

DDA records show that by December 2013 the project was running 7 months late.

A DDA Board update in January 2014 brought bad news: DDA Director Chris Wren reported that the end date for the project had been pushed back another year to late 2017. 

Six months ago, in July 2015, Wren reported once again to his Board; now there would be a $7mm shortfall and construction would begin in 2016.

In November 2015 Wren’s DDA WAVE Team announced the project would start in September 2016 and would be “ready to ride on Oct 23, 2018.”

Over the past four years the estimated cost has crept almost 40 percent – from the original $142.6 million promise sold to the taxpayers, to the latest estimate of $192.3 million. The original “ready to ride” estimated service date was to be this year – 2016. As of now, that has been pushed back 4 years, to late 2020. 

The City of Fort Lauderdale CRA borrowed $7.5mm and paid it up-front for a segment of  streetcar that takes an oddly calculated “loop” that seems to serve no purpose other than to parade the car past some prime property in Flagler (who owns that property I wonder??).   The City began paying interest on the loan last year. Interest and principal payments are coming due, and opportunity costs will continue to accrue while the DDA figures out how to deliver the project they promised. 

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WAVE! There goes The Little Engine That Couldn’t

This WAVE is starting to look like the “Little Engine that Couldn’t”

Fort Lauderdale invests Pension Funds in Latin American Loser

We couldn’t make this S*#% up if we tried……..

The City of Fort Lauderdale invested $2.5 million from its General Employees Retirement Fund into a $68mm Latin American Timber Fund. The Fund has investments holdings in Brazilian Eucalyptus, and Guatemalan Teak and Mahogany. The City has lost $1 million so far. The investment is currently valued at $1.5 million.

 

 The Timber Fund managers recently notified the City that they may run out of cash as early as mid-2016. They want to use some of the Guatemalan tree farms as collateral to borrow $4mm in operating capital from the Guatemalan Agri-Bank. Otherwise the business will have difficulty continuing to operate. They have about $1million left in the bank. Adding to the risk, if 100% of the investors don’t agree, the firm will begin to sell off its assets. The Brazilian Market is in turmoil. The Pension Fund could lose the entire $2.5 million. 

 The Pension Fund’s investment of $2.5mm into the Timber Fund is operated by a Brazilian Investment firm called BTG. BTG is known as the “Goldman Sachs of Brazil.” That alone should give pause……

BTG’s charismatic founder Andre Estevez was arrested last November and shortly thereafter, he ceded control of the nation’s largest independent investment bank. As BTG leaders began selling assets to stave off liquidity concerns, the bank’s shares and bonds continued to slide, bringing those of rivals down with it.

According to Bloomberg Business: “Markets already are unnerved by an economy that has slumped into what Goldman Sachs Group Inc. declared an “outright depression” and by President Dilma Rousseff’s battle against attempts to oust her. The Nov. 25 arrest of BTG founder Andre Esteves in a nationwide corruption probe and the subsequent downgrade of the firm to junk are giving investors more to worry about”

 

The City’s Fund Advisor says he doesn’t anticipate any impacts from the recent arrest of BTG Chairman and told the City Commission (contrary to Bloomberg’s report), “He was not arrested, he has never been indicted.”

 

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Commissioner Bruce Roberts (a City retiree himself) said, “I think it’s a little bit of a roll of the dice so to speak…… I think it’s maybe a little bit over the top for a comfort level with me.”

The good news: according to the Pension Fund Investment Advisor, while currently unmarketable, the trees themselves are doing fine. 

 

Maybe the City can use the trees for its free giveaway program?

 

Lauderdale Auditor Proclaims: “A Complete Breakdown in the Tone at the Top”

Fort Lauderdale City Hall has an unprecedented number of audits and investigations underway. Over the past two months we have reported on instances in several departments where key leaders have operated outside the law.

 

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City Auditor John Herbst found Senior Managers in the Department of Sustainable Development had concocted a fraudulent scheme that caused the City to pay inflated rates for temporary staffing. Some of the overpaid staff were related to the full-time staff. Herbst referred in his report to “a complete breakdown in the tone at the top”. We think that’s an accurate assessment.

33 Employees in the City’s Public Works Department submitted complaints of Hostile Work Environment, Discrimination, and Retaliation. Lawsuits have been filed.

The City’s HR Department investigated the Director of Public Works and the City Engineer’s conduct and found evidence of Official Misconduct, Theft of Confidential Information, Bid Tampering, and more. The Officials resigned and the City closed the case. We asked the State Attorney to investigate.

The City’s Downtown Development Authority is going broke. We found them trying to sell an $865,000 Federal Streetscape Grant to the City Transportation and Mobility Department for $425,000 in cash. This was intended to cover the costs of their high-priced Washington Lobbyists trying to get funds for Mayor Seiler’s Federal Courthouse. The Feds have launched an investigation into these dealings between the City and the DDA.

After the DDA got caught trying to illegally swap the grant for cash, the City backed out of the deal. The DDA Bosses were not happy about not getting their money. Now they are threatening to sell-off a hunk of the Riverwalk to a high-rise developer if the City doesn’t meet their financial demands. In other words, pay the ransom, or we’ll pave over your park.

 

Speaking of Washington Lobbyists, those DDA guys like to flex their influential muscles. Undaunted by a Congressional Ethics Investigation, they recently doubled-down on the no-bid Security Ambassador contract with Congresswoman Lois Frankel’s dear friend Willie Perez. The DDA board just increased Willie’s no-bid contract from $100K to $1.2 million.  Willie’s boss has donated at least $11K to Frankel’s campaign accounts since the first contract was awarded.

DDA bosses ordered that the all the Security Ambassador money stay “east of the railroad tracks”. Of course they did. We reported on a City initiated study that found Fort Lauderdale to be the third most racially segregated city in Florida. Our deeply religious Mayor (could not support same-sex marriage for “catholic” reasons)  promoted a plan to arrest people for feeding the homeless which led to negative international attention.

 

Last week revelations surfaced regarding mismanagement of funds, non-compliance with State Law, and questionable conduct in the City’s Community Redevelopment Agency.  Mayor Seiler observed:I think we’ve created an agency that doesn’t have anybody where the buck stops. We’ve got….24 people with their hand in the pocket….24 people that are cooking in the kitchen…with nobody that’s the head chef……”

As the Mayor of Fort Lauderdale Jack Seiler is responsible for the “tone at the top”.

As the Chairman of the CRA Board, Jack Seiler is supposed to be the person “where the buck stops”. Executive Director Lee Feldman is supposed to be the “Head Chef”. Seiler, Feldman and the other Commissioners have the fiduciary obligation to oversee the CRA.  

No chef in the kitchen? Nobody where the buck stops?

Yes. There is a breakdown in the tone at the top.