Joint Legislative Auditing Committee

JOE NEGRON RICHARD CORCORAN President of the Senate Speaker of the House Joint Legislative Auditing Committee Senator Debbie Mayfield, Chair Representative Jennifer Sullivan, Vice Chair Meeting Packet Thursday, November 16, 2017 3:45 p.m. to 5:45 p.m. 301 Senate Office Building AGENDA JOINT LEGISLATIVE AUDITING COMMITTEE DATE: Thursday, November 16, 2017 TIME: 3:45 p.m. – 5:45 p.m. PLACE: Room 301, Senate Office Building MEMBERS: Senator Debbie Mayfield, Chair Representative Jennifer Sullivan, Vice Chair Senator Dennis Baxley Representative Tracie Davis Senator Audrey Gibson Representative Randy Fine Senator Kathleen Passidomo Representative Joe Gruters Senator Perry Thurston Representative Roy Hardemon Representative Cyndi Stevenson Consideration of a request for an Auditor General audit of the City of Palm Bay received from Representative Fine Consideration of a request for an Auditor General audit of the City of Gulf Breeze received from Senator Broxson Presentation of OPPAGA’s review of the Florida Development Finance Corporation Presentation and discussion related to the Transparency Florida Act, s. 215.985, F.S. Pursuant to s. 11.40(2), F.S., the Committee is expected to consider taking action against local governmental entities that have failed to file an annual financial report and/or annual financial audit (if required) in accordance with ss. 218.32(1) and 218.39, F.S. The Committee is expected to consider taking action against local governmental entities that have failed to provide the Auditor General with significant items missing from audit reports submitted in accordance with s. 218.39, F.S. 1 City of Palm Bay Audit Request: Rep. Fine Joint Legislative Auditing Committee STAFF ANALYSIS Date: October 27, 2017 Subject: Request for an Audit of the City of Palm Bay Analyst Coordinator White DuBose I. Summary: The Joint Legislative Auditing Committee (Committee) has received a request from Representative Randy Fine to have the Committee direct the Auditor General to conduct a comprehensive and in-depth audit of the operational practices and managerial oversight of the City of Palm Bay. II. Present Situation: Current Law Joint Rule 4.5(2) provides that the Legislative Auditing Committee may receive requests for audits and reviews from legislators and any audit request, petition for audit, or other matter for investigation directed or referred to it pursuant to general law. The Committee may make any appropriate disposition of such requests or referrals and shall, within a reasonable time, report to the requesting party the disposition of any audit request. Joint Rule 4.5(1) provides that the Legislative Auditing Committee may direct the Auditor General or the Office of Program Policy Analysis and Government Accountability (OPPAGA) to conduct an audit, review, or examination of any entity or record described in Section 11.45(2) or (3), Florida Statutes. Section 11.45(3)(a), Florida Statutes, provides that the Auditor General may, pursuant to his or her own authority, or at the discretion of the Legislative Auditing Committee, conduct audits or other engagements as determined appropriate by the Auditor General of the accounts and records of any governmental entity created or established by law. Section 11.45(2)(j), Florida Statutes, provides, in part, that the Auditor General shall conduct a follow-up to his or her audit report on a local governmental entity no later than 18 months after the release of the audit report to determine the local governmental entity’s progress in addressing the findings and recommendations contained in the previous audit report. Request for an Audit of the City of Palm Bay Representative Fine has requested the Committee to direct a comprehensive and in-depth audit of the operational practices and managerial oversight of the City of Palm Bay (City). He stated that he has received numerous calls from constituents in response to multiple media reports regarding two related issues: (1) “the City Council may not be acting in accordance with the City Charter;” and (2) “the Joint Legislative Auditing Committee 2 resulting dysfunction at the Council level has led to inadequate controls and supervision amongst senior city managers, both by the [City] Council and by the individual managers.” Background The City of Palm Bay, Florida, was incorporated on January 1, 1960, 1 as a municipality, is located in Brevard County, and has an estimated population of 109,162.2 The City is governed by a City Council composed of a Mayor and four City Council Members, each elected at-large for a four-year term.3 The City operates under a Council/Manager form of government,4 and the City Council appoints the City Manager, who serves as the City’s Chief Executive Officer and is responsible for day-to-day administration and implementation of the policies established by the City Council. The City provides services to its residents, including general administrative, police and fire, public works, planning and zoning, permitting, parks and recreation, and water and sewer.5 Recent Concerns, Events, and Other Information Concerns As previously mentioned, Representative Fine has received numerous calls from citizens of the City relating to: • The City Council may not be acting in accordance with the City Charter. Specifically, there are concerns that “the Mayor, who under the City’s Charter is merely a Councilman and meeting Moderator, appears to be operating in a “Strong Mayor” form of government. The Mayor has, by his own admission, attempted to unilaterally put city employees on ‘probation,’ stated on behalf of the City that employees were ‘deemed…unfit’ to be employed by the City, and used the official seal of the City to put a City-approved imprimatur on his individual opinions, which under the Charter have no more legal weight than any other Councilman.” • The resulting dysfunction at the Council level has led to inadequate controls and supervision amongst senior city managers, both by the City Council and the managers. There are also concerns that “the City Attorney is operating independently of the City Council and multiple additional mid- level managers are operating without appropriate oversight of senior managers or the City Council.” In addition, Representative Fine stated that it has been reported that the Florida Department of Law Enforcement (FDLE) and the Federal Bureau of Investigation (FBI) are “actively investigating conduct that may have resulted from this lack of appropriate oversight, and it is not the purpose of this request to be duplicative of any criminal investigation. But criminal conduct, should it have occurred, can only exist in an environment of inadequate controls and oversight. It is not criminal to be a bad supervisor or 1 Note 1.A. to the Financial Statements, City of Palm Bay Comprehensive Annual Financial Report for the Year Ended September 30, 2016, page 40. 2 University of Florida, College of Liberal Arts and Sciences, Bureau of Economic and Business Research, Florida Estimates of Population 2016, page 5. 3 Letter of Transmittal, City of Palm Bay Comprehensive Annual Financial Report for the Year Ended September 30, 2016, page ii. 4 Id. 5 Id. Joint Legislative Auditing Committee 3 to be a dysfunctional Council – but it can create an environment where criminal activity can flourish.” He further stated that he is concerned this is what is occurring in the City. He also referenced the audit of the City of Archer conducted by the Auditor General and stated that the audit “laid out many non-criminal failures of internal controls and provided a road map for that town to recover.” He further stated that he “believes that Palm Bay requires a similar outside, top-to-bottom review,” and “[a]ll indications are that Palm Bay is in crisis, and it is [his] hope that an independent, non-criminal audit can help them remedy these failings so they can administer their locality as designed by our Constitution and the Legislature.” Investigations by FDLE and FBI According to local news articles: • May 2017:6 FDLE confirmed that it was investigating several allegations related to activities inside City Hall, but would not confirm the investigation was related to the SHIP grant and/or Homes for Warriors, a City program funded by a SHIP grant and administered by City officials. The City’s veterans affairs and business specialist was visited by a FDLE agent and a FBI agent in early May without warning, who asked questions related to the City’s Community Development Block Grant (CDBG) and State Housing Initiatives Partnership Program (SHIP) grant programs. See the Financial Audit section below for further information related to the CDBG and SHIP programs. An FBI spokesperson stated that it was the agency’s policy to neither confirm nor deny if it is conducting an investigation. • August 2017:7 The City’s “handling of federal and state grants still is under investigation by the FBI and Florida Department of Law Enforcement.” • September 2017:8 “[O]ne of the deputy city managers just resigned under the cloud of an FBI and Florida Department of Law Enforcement investigation.” If the Committee directs the Auditor General to conduct this audit, staff of the Auditor General will consult with the investigators to ensure that the audit fieldwork does not interfere with an ongoing investigation. Events and Other Information Since the spring of 2017, there have been numerous news articles regarding various issues and controversies at City Hall, including the following: Governance • The Mayor wrote an official letter to the City Manager in April 2017 stating, in part, that: (1) the City Manager misled the City Council relating to the raise they had just voted to give him, (2) the 6 Wayne T. Price and Rick Neale, FDLE investigating ‘several allegations’ inside Palm Bay City Hall, Florida Today, May 11, 2017/updated May 12, 2017.

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