Let’s revisit the purpose of a CRA
163.355 Finding of necessity by county or municipality.—No county or municipality shall exercise the community redevelopment authority conferred by this part until after the governing body has adopted a resolution, supported by data and analysis, which makes a legislative finding that the conditions in the area meet the criteria described in s. 163.340(7) or (8). The resolution must state that:
(1) One or more slum or blighted areas, or one or more areas in which there is a shortage of housing affordable to residents of low or moderate income, including the elderly, exist in such county or municipality; and
(2) The rehabilitation, conservation, or redevelopment, or a combination thereof, of such area or areas, including, if appropriate, the development of housing which residents of low or moderate income, including the elderly, can afford, is necessary in the interest of the public health, safety, morals, or welfare of the residents of such county or municipality.
Citizen Request for CRA Oversight in Brevard County
At the Feb 9, 2016 Brevard County Commission meeting, a citizen’s request was put on the agenda that a Citizens’s Review Committee be formed to review and provide management oversight for Brevard Co. Community Redevelopment Agencies (CRAs), Economic Development Programs and proposals, corporate tax abatements and cash incentive programs.
Commissioner Robin Fisher, in referring to CRAs stated at that meeting:
“They also have an audit of financials, they have to account for their dollars and where they spend it. People will debate about wheter they like how they spend it. There’s a process by Florida Statute that says what a CRA has to do.”
“There are checks and balances in place. If we want to enforce the ones we have, let’s enforce the ones we have. But to put another committee over some volunteers we already appointed by this board I wouldn’t be supportive of that.”
However, is this really true? Do we have all the needed checks and balances in place to police CRAs?
Miami-Dade Grand Jury Report on CRAs
Within a week of that meeting I was alerted to the Miami-Dade Grand Jury Report entitled
CRAs, The Good, The Bad, And the Questionable” that had just been published. Although this Grand Jury was focused on Miami’s CRAs, the report contained many findings that could be applied to CRAs everywhere including Brevard Co.
Here are a few highlights from their report:
- We discovered several examples of CRA boards spending large amounts of taxpayer dollars on what appeared to be pet projects of the elected officials. Additionally, there is, at a minimum, a perception and appearance that certain CRA boards are controlled by the commissioner or councilman within whose district boundaries the CRA operates. Under these circumstances, we believe there is significant danger of CRA funds being used as slush funds for the elected officials.
- Even when misfeasance or malfeasance occurs, we are led to believe that there would be little that anyone could do. There does not appear to be any enforcement mechanisms for violations of the CRA statute or misspending of taxpayers’ money by CRA board members. For that reason, the grand jury strongly believes that there should be additional oversight of CRA board actions as well as additional persons involved in the governing process.
- “But for” the existence of the CRA, those ad valorem general fund tax dollars would be deposited in the coffers of the county’s general revenue fund and used for the benefit of the entire county. If the county had use of that money, what additional services and benefits could be provided to the citizens who live in geographical areas of the county that do not have a CRA?
- Under the Florida Constitution, (Article 7 Section 12), city and county elected officials cannot use ad valorem general fund tax dollars to fund bonds without first obtaining voter approval. A CRA board is NOT required to obtain prior voter approval before issuing bond. It can issue bonds to fund lofty, expensive and/or grandiose projects without any input, discussion or approval from the very people who will be paying taxes to pay-off the debt from the issuance of those bonds.
- Most significantly, we found that CRAs can unilaterally choose to give taxpayer dollars to aperson or company without the exercise of any process of due diligence, without justification and without recourse.
- The statute does not set forth any guidelines for the policies and procedures that CRAs must follow to distribute monies.
- Setting aside policies or procedures for disbursement, we learned that CRAs commonly spend monies that addressed the intent of the statute and benefited the community. However, our investigation uncovered large scale spending on projects that did not address slum, blight or affordable housing. However, the people responsible for the decisions to spend money on such projects can justify it because the statute governing CRAs is written so broadly.
- The State of Florida has specific laws in place that govern the procurement process for various goods and services. The intent of the law is to provide fair competition, reduce opportunity for favoritism and create an ethical process. But CRAs are not bound by many of the laws that govern the procedures by which the state, counties and municipalities can award and distribute money on similar projects. A glaring example is that the CRA statute does not require agencies to engage in a formal bidding process with expending monies. That means those who operate CRAs, or the board members who approve expenditures, are free to solicit a particular person or company to do a specific project without a competitive bidding process. We believe that such lax laws and regulations are fraught with dangers of cronyism, collusion, inflated or exorbitant costs as well as other issues that lead to corrupt practices.
- In addition to there being no strict laws governing bidding processes (or even requiring a bidding process), there are no laws or guidelines for distributing monies in the form of grants, which is a common method CRAs use to distribute hundreds of thousands and even millions of dollars.
- While several of the CRAs that we studied have policies and practices that mirror the formal requirements associated with counties and municipalities, using such formal policies and practices is completely discretionary with the CRA. It is clear that the lack of formal bidding requirements and the lack of guidelines for awarding grants can lead to (and has led to) mismanagement, waste, collusion and corruption.
- While there are some CRAs that utilize policies and procedures that insure the best use and handling of the public monies, we have several concerns with the lax laws that govern CRAs expending money and how CRAs interpret these laws when spending public monies. In very broad terms, Florida Statute 163.387 sets forth how monies can be spent by CRAs and it is being interpreted to permit the expenditure of funds for anything even tangentially related to the community redevelopment plan. FOR THIS REASON, WE BELIEVE THERE SHOULD BE MORE OVERSITE OF CRAs.
- While the law speaks to the different auditing reporting requirements, there is nothing in the statute that addresses what review is to be undertaken by those who receive the audit or what remedies exist if the information contained in the audit or report is found (if reviewed) to be questionable or deficient. To put it simply, the law does not set forth any standards for review of the information. The reporting requirements appear to be more form over substance.
- We find that there is no significant oversight for specifying on which projects, programs or services CRAs choose to spend monies. The boards can decide where to distribute monies and in what method to distribute monies without any consideration for the best practices in the industry.
- It is important to note that in the CRAs where slum or blight was substantially or completely eradicated, we found there is no apparent danger of the area regressing to a slum or blighted area. This is important because the CRAs that continue to operate in the areas where slum or blight has been eradicated rely on the part of the statute that provides CRAs can be used for the “prevention” of slum and blight or rely on examples of slum or blight that do not represent the overall condition of the area within the CRAs boundary. As a result, the amount of money going to those CRAs far exceeds the remaining necessity. We think that this result is inconsistent with the statute and the statute is being interpreted in an overboard manner that enables such areas to continue to receive public tax dollars that could be better spent elsewhere.
So who’s watching the store?
As you have read from excerpts in the Grand Jury report, they too have concerns about the lack of oversight on CRAs. Although they did a great job in finding many of the problems with CRAs, I do disagree with their recommendation that oversight of CRAs should be provided by Florida League of Cities/FRA or by adding a Brevard Co. Commissioner to the Board. As you read on, I believe you will see why.
After the County Commission meeting turned down the request for additional oversight, I went down the same path I did a few years back and started my internet research to see what reporting structures I could find on CRAs.
My internet research took me to the website by the Florida Redevelopment Association (FRA), upon which I found a CRA annual checklist for reporting and compliance. It states:
- Florida’s Chief Financial Officer oversees the local government Annual Financial Reporting system, which every city, county and special district (CRA) must participate in each year. www.myfloridacfo.com/sitePages/services/flow.aspx?ut=Local
- CRA must submit their yearly audit to the Auditor General, who is authorized to audit CRAs as directed by the Legislative Auditing Committee. ww.myflorida.com/audge
- The Florida Special District Accountability Program is in charge of registering/monitoring compliance/publishing each CRAs profile online (as dependent special districts providing guidance on state requirements and collecting annual special district fees.
On the surface this all sounds great because you are led to believe that there are State agencies monitoring what is happening on CRAs. However, my two phone calls, one to the Chief Financial Officer and one to the Auditor General, informed me that they themselves perform no audits and only check that a report has been filed. I was informed auditing and policing is the responsibility of the governing authority of the CRA.
Two down, and one to go. An email reply from the Florida Special District Accountability Program stated:
“If you’re talking about the annual report to taxing authorities that is required by Chapter 163, Part III, F.S., the state does not have involvement with that report. I think the Florida Redevelopment Association has information on their website, including examples. Carol Westmoreland (1-800-616-1513) can answer any questions about that report.”
Here’s what is important about that email. The Florida Redevelopment Associaton (FRA) is a not-for-profit organization dedicated to assisting Florida professionals and volunteers in community revitalization efforts. They operate under a contract with the Florida League of Cities. The Florida League of Cities is group of city officials of municipal governments. Their mission is to shape legislation, share the advantages of cooperative action, and exchange ideas and experiences. I guess you could call them lobbyists for their cities. So why wouldn’t they want CRAs to give them additional funding or “free money”? This is why I am so concerned that the Grand Jury made the recommendation for the FRA to be appointed as additional oversight for CRAs. Kind of like putting a fox in the hen house.
To further prove my point, back in October 2015, the Budget Review Committee was to present to the Board of County Commissioners their recommendations regarding the budget. One of the recommendations was to take an in-depth look at money going to CRAs. When the FRA caught wind of this, they sent out an high alert email to all those in charge of CRAs. On the day of the meeting the room filled up with those who wanted to protect their cash cow. I was forwarded a copy of that email:
Hello, the attached report is really negative to city CRAs in Brevard – all of them. Generalizations without backup, misstatements, misleading conclusions and inaccuracies abound. Apparently done by a “citizen’s committee”. Would like to see the membership of that committee. The report is going to be presented to the County Commission on Thursday, October 1. I would be happy to draft some points/responses for the record, for your use. Feel free to pass on!!!
Carol Westmoreland, Executive Director, Florida Redevelopment Association
According to Brevard Co. Attorney Scott Knox, we currently have 15 core CRAs in Brevard Co, several of which have been expanded over the years. Of the 15, four (Cocoa Village, Titusville, Melbourne Historic Downtown and MIRA) were created prior to July 1, 1994. Because the Board of County Commissioners authority over CRAs within cities is the result of a statute that did not apply until the date of the county charter was adopted (7/1/94), of the four CRAs created before that date, only the Merrit Island Redevelopment Agency is subject to the jurisdiction and control of the Board of County Commissioners at this time.
Of the remaining eleven CRAs, ten CRAs were created after July 1, 1994 by various cities and one through join action of the City of West Melbourne and the County. The ten created by the cities all involve the Board’s delegation of the County’s authority to create the CRA to each city.
As stated in the beginning of this article, the reason for CRAs was to address issues of slums, blight and the shortage of affordable housing within a designated area. I do believe that there are areas that CRAs can do some good and Miami-Dade is probably one of those places. But just how much blight or slum can be found in Brevard County? And if it did exist at one point, how long does it take for those 20+ year CRAs to achieve their objectives? Has even one penny of an CRA money in Brevard gone to affordable housing?
Another thing that rarely gets attention are the additional expenses of the administration fees. The Grand Jury report discovered that a CRA board in Miami was spending $300,000 in salary and benefits for three employees who were managing the remaining $100,000 in TIF funds! In Brevard, Troy Post, director of the North Brevard Economic Development Zone makes approximately $105,000 and the director of Merritt Island Redevelopment Agency director makes approximately $93,500, not including benefits. It is hard to find the true administrative costs are for the other CRAs because expenses are many of them are commingled with the city expenses.
The Grand Jury report also recommends that every CRA board appoint a commissioner. I see this only as a bigger concern for cronyism. Take a look at the N. Brevard Economic Development Zone in which Robin Fisher is the sitting Commissioner on the board. Other members of the board are his business partner in Colefish, Inc; his accountant; his neighbor appointed to Board; his attorney, another former business partner; and the Titusville Planning Director whose wife is a former business partner of Robin Fisher’s wife. Rather than oversight being supplied by the Commissioner, this is more like a neighborhood baseball team with Robin Fisher as the coach.
Where do we go from here?
I believe due to the loose language in the law and lack of oversight, CRAs in their current form are unmanageable and they lack public transparency. There is much evidence that other counties in Florida are running into CRA problems and causing financial difficulties because of the lack of oversight. They drain the general fund and take tax payer money that could be better used for road maintenance, county employee salary increases, pensions, libraries, etc. As long as CRAs are in existance, your tax dollars will be directed more towards wants, rather than needs. As a matter of fact, that’s what started this discussion on CRAs, the lack of funding to help fix our roads.
If CRAs are to remain, there is much work that needs to be done. (see end of this article) The Florida Legislature should begin work on a a major overhaul of FS 163 Part III. Taxpayers need to have some insurance their tax dollars are being spent with more accountability and an transparent process. Financial reporting of CRAs need to be independent of the municipality reports, done in a uniform and timely manner and posted with easy access for all to see. The agreement by the Brevard County Commissioners to standardize the reporting structure of CRAs is a good start. Let’s go from there.
Before one penny is given to a CRA, we need something in place that would ensure compliance with FS 163 and restrict redevelopment plans to its true purpose. This would eliminate a good deal of the wasteful spending or the creation of CRAs every time a city needs additional funds. And in cases where when non-compliance is found on existing CRAs, major penalties should be put in place for not adhering to the statute.
Another solution would be that if CRAs are so important to a city, then maybe they should fund them themselves and stop taking money from the county general fund. If they have to use money from their own city budget, then possily they would pay more attention to how the money is being spent. As long as they keep getting this “free money” with no oversight in place, then you will keep seeing CRA boards spending it for palm trees, parks, lift stations, etc.
Milton Friedman, an American economist who received the 1976 Nobel Memorial Price in Economic Sciences said it best:
- You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. So when you spend your money on yourself you bargain hard and get almost exactly what you wanted.
- You can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.
- I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!
- I can spend somebody else’s money on somebody or something else. And if I spend somebody else’s money on somebody or something else, I’m not concerned about how much it is, and I’m not concerned about what I get.
Almost all government agencies, but especially evident with CRAs, does it’s best work at number four!
Recommended changes to statutes and practices
The following are some of the recommended changes that should be applied to CRAs:
- Restrict CRA redevelopment plans to true purposes of 163.355,163.340 (7) & (8); actual necessity.
- Mandate that plan resolution will address specific ”blight” condition. (Parking, Transportation)
- Review statutory “blight” definitions for relevancy. Open to any interpretation as written.
- Compliance review annually by designated oversight agency: A new Community Redevelopment Administration for all Brevard CRA’s; State IG, Financial manager in Clerk’s office; State Attorney?
- Enforcement of compliance by withholding of all funding until corrected.
- Budget submitted to County under same schedule as other departments.
- Cap administrative costs at no more than 10% of budgeted revenues. 90% must go to the enabling Plan .
- NO elected officials to sit on boards…only residents of the CRA area appointed by Commissioners and councils. It is their taxes on their property, and their concerns for their community.
- NO bonding without local referendum.
- CRA sunsets when initial projects plan is completed, or abandoned. No more than 48 mos permitted for start of projects. Failure is dissolution.
- All board members must have some area of expertise that relates to the board duties, complete a two day course of the requirements of FS 163, 189 and limits of authority of agencies; course may be conducted by the local authority attorney, or a STATE AGENCY FRA; or designated certifier by Florida legislature. This would be in addition to the 4hr ethics class for officials.
- All CRA’s to provide long-range projections of funding, revenues, expenditures to ensure viability.
- NO CRA term longer than 20 years; allowable extensions for finishing projects begun; revenues go to debt service to dissolve CRA.
- TIF (Tax Incremental Funding) funding to exclude new construction ad valorem revenues; only assessment increases. *
- CRA must conduct in-depth due diligence for any corporate grants to ensure performance. Must reflect positive results to community (jobs, taxes, redevelopment, etc)
- Non-performing grants will result in money being returned to general fund of local authority.
- ALL other affordable housing resources must be tapped and exhausted (FEDERAL housing, Doc Stamps, etc.) prior to establishment of CRA.
- Prohibited from spending CRA resources on services being provided by local authority under assessed millages. Double taxation.
- Procurement of goods and services must conform to state bidding and procurement guidelines; Open to all qualified suppliers, maintain competitive restraints.
- Annual audit of all CRA activities for performance, forensic, accuracy, and conformance with plan. See FS 163 for requirements.
- FRA should be a state agency, not a division of the League of Cities if given duties of oversight, education, guidance, and credibility in CRA administration. Current performance deplorable in factual representation of limits and scope of legitimate CRA’s. Cities are the main proponent of CRA’s since they receive their portion from the County General Fund. Ergo Carol Westmoreland’s vigorous promotion. They have consistently ignored their own Code of Ethics in the presentation of “false and misleading information”.
- TIF funding is currently available to all governmental authorities to perform every aspect of a CRA without creation of a CRA. Avoid the depletion of general fund monies by taking direct action to accomplish the same programs. CRA’s deprive the county of revenue increases to pay for inflationary and long-term benefit commitments.
- Under no circumstance should CRA boards contain the same officials, or contracted attorneys who vote to create, manage, and appoint cronies to the CRA. Responsible residents/businesses of the CRA zone should determine the expenditures of the TIFF property tax moneys.
- A full review of FS 163 and 189 should be done to correct obvious personal and official conflicts, ethical deviations, and exceptions to Florida statutes and the Constitution.
- CRA fund balances shall not exceed the requirements for completion of planned projects. Surpluses returned to the proper General Fund.
- Renewal or extension of a CRA require an updated finding of necessity.
- “Blight” condition to require at least three of the conditions listed in 163.387(2), “a” through “o”.
- Boundary changes would require a new finding of necessity, and full compliance with statutes.
- ALL board members would be required to declare conflict if voting on any issue in which an extended family member or business associate in any capacity would be a party to the issue.
*TIF funding captures all the new construction increases local governments use to pay for inflation, benefit commitments, expansions, new hires, etc. Only recourse is higher taxes, fees, assessments. Entire concept is illogical in government planning. Serves no worthwhile purpose that cannot be done in regular session by local authority.
Miami-Dade Grand Jury Report: CRAs, The Good, The Bad and The Questionable:
Brevard Co. 101: The Creation of CRAs