Audit faults Riviera finances
RIVIERA BEACH — A state audit blasts the city and its Community Redevelopment Agency for unpaid sales taxes, commingling of public money, not seeking competitive bids and a host of other poor accounting practices, some of which violate Florida law.
The yearlong look at the city's and the CRA's finances by the Florida Auditor General's Office found widespread mismanagement in which the spending of public money was routinely not supported by receipts or invoices. The audit revealed, for example, that the city's credit cards were used to pay for groceries, gas, clothing and a $2,093 car repair bill, but auditors failed to find receipts for the expenses.
Auditors also found a series of accounting problems that include a $6,000 bill that Mayor Michael Brown has not paid for sponsoring admission to the city's water park during 2005 spring break; a $9,330 donation from the American Heart Association in 2004 for defibrillators for police cars that were still in storage in March 2006; and improperly using portions of half-cent sales tax proceeds to pay off the city's $7 million bond debt for redevelopment.
Brown acknowledged Wednesday that he agreed to cover the cost of admission to Barracuda Bay, the city's water park, during the 2005 spring break. He balked at paying the bill because he questioned the city's documentation of the number of children who attended the park.
"What the city sent me was not reasonable or reliable," said Brown, who has yet to review the audit and reserved comment on the overall document.
In October 2005, Florida's Joint Legislative Auditing Committee voted to audit the city and its CRA after The Palm Beach Post chronicled mishandled finances. Three state lawmakers and two county commissioners joined in the call for an audit.
The 29-page report covered Oct. 1, 2004, to November 30, 2005. Released Dec.'27, it made 25 findings and recommendations.
Mike Gomez, deputy auditor general, said the Riviera Beach audit is final. State auditors will return to Riviera Beach to do a subsequent audit in 18 months to determine whether the city has made any improvements, Gomez said.
Gomez said that although the city violated state law in some instances, no charges or sanctions can be filed. The report will be forwarded to the Joint Legislative Auditing Committee for review.
In its response to the audit, the city said it already has made changes to address the criticisms, and other improvements to policies and procedures are under review by City Manager Bill Wilkins. Wilkins did not return messages left on his cellphone or respond to an interview request through city spokeswoman Rose Anne Brown.
Auditors consistently found that both the city and the CRA lacked good record-keeping. Again and again, auditors were unable to find documents to support explanations for expenditures.
The statement "although requested, the city did not provide documentation ..." was pervasive throughout the report. The lack of records often made it impossible for auditors to determine whether expenses served any "public purpose."
For example, auditors examined 83 purchases on city credit cards and found 56 purchases totaling $20,559 with no receipts. Those charges included $3,430 at restaurants and supermarkets; $2,093 for repairs to a 1992 Lexus SC400 that is not owned by the city; $1,559 for digital cameras, radios and other electronics; $1,127 for clothing and alterations for the mayor and city council; and $430 for oil changes.
Vanessa Lee, vice chairwoman of the city council, said she hadn't reviewed the audit. But its findings support her call for the city to create a staff of internal auditors, similar to that of Palm Beach County government.
"The city should have its own auditors so we can keep track of this year round," Lee said.
The auditors also noted known financial problem areas for the city such as its Jazz and Blues Festival. The report showed the two-day festival on Singer Island lost $120,452 in 2005 and $383,736 in 2006.
When it came to the CRA, where the city is banking on its $2.4 billion waterfront redevelopment plan to revitalize its blighted areas, the city broke Florida law when it pledged a portion of half-cent sales tax revenues for the repayment of a $7 million bond debt, according to the audit.
Auditors found the CRA exercised poor oversight of its consultants. The CRA spent $5.6 million from October 2002 to November 2005 for consulting and professional services although it had no master developer and failed to accomplish projects outlined in the 2001 CRA plan, the audit said.
The city has since hired Viking Inlet Harbor Properties as master developer and recently signed a deal with Dan Catalfumo to redevelop the Ocean Mall on Singer Island. However, the deal with Viking has been stalled because of a new state law that bars the CRA from using the power of eminent domain to acquire property for the project.
CRA Executive Director Floyd Johnson said many of the issues noted by auditors happened before his arrival in 2004. But Johnson said that the CRA has attempted to make improvements by submitting all consultants' invoices to the board for approval instead of doing it at the administrative level.
"I think any entity is subject to making improvements in terms of how they operate," Johnson said. "We've put some of those things in place prior to the audit."
Auditors also found that the CRA leased more office space than it needed, paying $84,235 for unnecessary space from May 2001 to May 2006.
As for undocumented spending at the CRA, auditors could not find invoices, receipts or other documentation to support $317,700 for subcontractors, $51,841 for "reimbursable expenses" and $3,060 for "contractual services." One consultant received $1.2 million without detailed billings indicating the work performed and number of hours worked.
The findings of loose accounting and poor record-keeping have a familiar ring for Tony Gigliotti, president of the Singer Island Civic Association. In 2003, Gigliotti chaired the city's Financial Review Advisory Committee, a five-member advisory board appointed to review the CRA's finances after the agency was found to be millions of dollars in debt.
Gigliotti called the state audit "very disappointing" and said it speaks to a lack of leadership at the highest levels of city government.
"There has to be a new standard for this city," said Gigliotti, one of several residents who pushed for the state audit. "I don't have any confidence it's going to be fixed with the current set of players."