U.S. prosecutors to decide if
charges warranted in Riviera
RIVIERA BEACH — When federal prosecutors probe the city's redevelopment agency, they will see that consultants made millions off planning the $2.4 billion waterfront redevelopment, but the city has few projects to show for it.
In fact, the U.S. Attorney's Office, which launched its investigation in August, will see that the city borrowed $7 million on behalf of a cash-strapped Community Redevelopment Agency. City officials told Wachovia Bank that the money would go for demolition, construction, buying land and a year's worth of operations at the CRA.
It went to consultants, instead, state auditors concluded. And auditors determined the city broke Florida law when pledging a portion of its half-cent sales tax revenues to repay the loan.
Federal prosecutors must now determine whether the actions of the city or the CRA warrant criminal charges. If they use the state audit as a road map, federal prosecutors will wade through a pattern of spending where consultants were paid without adequate documentation for bills.
In some cases, consultants were overpaid by the CRA, auditors said. And one company was paid twice because the agency lacked the proper financial checks and balances, according to the state auditor general's report released last December.
Rolando Garcia, spokesman for the U.S. attorney's West Palm Beach office, said federal prosecutors had no further comment on the Riviera Beach investigation. In August, federal prosecutors acknowledged they were reviewing the state audit.
Both the city and the CRA have taken steps to follow the audit's recommendations.
With billions at stake, former Mayor Michael Brown came up with a plan to redevelop about 400 acres along the city's Intracoastal Waterway into a CityPlace-like waterfront. Brown believed that the tax money generated by transforming the blighted waterfront would create jobs, reduce crime and eliminate poverty.
In 2001, he persuaded the CRA board, which consists of the city council, to pick Kimley-Horn and Associates, a national engineering firm, to craft his vision.
Kimley-Horn's Paul Cherry was tapped as the Riviera Beach project manager. The two men met in the late 1980s when Brown, an eminent-domain attorney, and Cherry, an engineer, worked to develop Mizner Park in Boca Raton's CRA district.
In 2002, the city asked and received its first loan from Wachovia Bank. The $5 million the city borrowed on behalf of the CRA was backed by bonds.
Also in that year, the CRA hired a little-known construction and program management firm, PSA Constructors. The Orlando-based company was run by Patrick Aliu, who met Brown years earlier at the groundbreaking for CityPlace.
While Kimley-Horn worked on a series of reports ranging from drainage to cultural significance, PSA looked over the engineers' shoulder. Each billed the redevelopment agency for its work.
Among the payments questioned by auditors is $1.2 million paid to Kimley-Horn between September 2002 and September 2003. Auditors said that the engineering firm didn't provide staffing levels, the numbers of hours worked or the rates it charged as part of its invoices for the payments.
Charlie Geer, a Kimley-Horn senior vice president based in West Palm Beach, initially insisted that the engineering firm wasn't linked to the $1.2 million listed in the audit. However, Geer acknowledged the payments in question after researching Kimley-Horn's invoices to the CRA.
Still, Geer maintained that Kimley-Horn provided adequate supporting documents to receive the $1.2 million in payments.
"All payments received from the CRA by Kimley-Horn including those mentioned by the auditor are fully supported and documented by detailed invoices and completed deliverables which are in the possession of the CRA," Geer wrote in an email response to questions regarding the audit. "Kimley-Horn offered to provide documentation to the Joint Legislative Audit Committee months ago that supports all payments but we have not yet been contacted by the auditor."
State auditors, however, said the $1.2 million was a sample of the payments made to Kimley-Horn by the CRA.
"We're not saying Kimley-Horn didn't do the work," said Marilyn Rosetti, the state auditor general's audit supervisor for local government audits. "We looked at whether the CRA had sufficient records to make these payments."
Although the audit doesn't identify the consultants, Rosetti agreed to disclose the companies and the check numbers associated with the payments discussed in the report. Many of problems found by auditors were also documented by the city's Financial Review Advisory Committee, a five-person volunteer group appointed by the council to examine the CRA in 2004.
The payments questioned by auditors also include a $1 million check. During this time, with the CRA strapped for cash, Kimley-Horn officials agreed to work without pay on the condition that the CRA would cover the costs once the agency received the bond-backed loan.
But that didn't happen, at least not until Kimley-Horn asked Brown to intervene.
Brown concedes he called City Manager Bill Wilkins, who at the time was also acting CRA executive director, to pay Kimley-Horn. A check was eventually cut without CRA board approval.
When city officials went to Tallahassee earlier this year to discuss the audit with state lawmakers, Councilwoman Liz Wade claimed Brown bullied the CRA staff to cut the check to Kimley-Horn. Wade's outburst was key to getting the Joint Legislative Auditing Committee, a bipartisan committee that oversees state audits, to refer Riviera Beach's audit to State Attorney Barry Krischer.
Mike Edmondson, Krischer's spokesman, said he can't comment on the status of the investigation.
Brown continues to deny Wade's claim.
"When they reached out to me, they did nothing more than any other resident or vendor when I was mayor," Brown said. "A guy who does work for the city or the CRA and doesn't get paid is going to call the mayor."
CRA records also show that the payment was delayed by PSA, the consultant hired to watch other consultants. PSA questioned some of Kimley-Horn's billings related to the $1 million check.
Even now, the CRA and Kimley-Horn are trying to settle a dispute where the engineering firm said it's still owed $824,875.
State auditors also were critical of the agency's oversight of PSA. They found that PSA was overpaid $849,042 between January 2003 and November 2005. Auditors found records authorizing $760,000 in payments, although PSA was paid $1.6 million during that time frame.
"The CRA paid this firm for accounting and administrative assistant services ... which may have been more cost-effective if these services had been provided by staff employees of the CRA," auditors wrote.
Of all the CRA's consultants, PSA reaped the most, earning $2.6 million from 2002 to 2007, according to agency records. PSA declined requests for comment.
State auditors also questioned why the CRA paid Florida Acquisition and Appraisal Inc. $1.6 million for appraisals when it wasn't ready to buy land. A reported 412 appraisals sat unused from September 2002 to August 2003, and auditors never got documentation on which properties the CRA bought.
"If too much time elapses, new appraisals would likely be necessary due to changing market and economic conditions," auditors wrote.
Eventually, Florida Acquisition sued the CRA to get paid for billings disputed by the agency. In 2004, they settled the case for $462,000, a move also questioned by auditors. Auditors concluded: "Consequently, it does not appear that the majority of moneys expended for real estate appraisal services has been spent prudently."
A representative from Florida Acquisition said the firm declined to comment.
Meanwhile, the former mayor maintains that consultants such as Kimley-Horn are getting a bad rap. Brown said the engineering firm agreed to work in Riviera Beach - despite its rancorous reputation - because of him and the opportunity to develop a good project.
"They knew I was honest and hard-working. I knew law and development," Brown said. "Many of them said, 'I know Michael Brown.' That's why we came to Riviera Beach."