Lauderdale Lakes is in some hot water, and not all of it is old news.
A preliminary report dated yesterday outlines the findings of the Broward Office of the Inspector General regarding the "gross mismanagement of public funds" in Lauderdale Lakes. The OIG says preliminary reports aren't public record until the affected parties have a chance to respond, but "
Most notably, the report alludes to additional findings of ...
... "newly-discovered misconduct by the City administration" that are outlined in a separate report; the OIG says it's still a preliminary report and not subject to public records requests.
Check out the first report below; I'll be adding highlights as I go through it.
The report doesn't ease into anything -- the second sentence says "the nation-wide economic downturn hurt all governmental entities, but no other Broward municipality has realized the level of financial distress encountered buy the City, which -- in less than four years -- went from having over $6 million in general fund reserves to being unable to satisfy $9 million in debts."
It also blames city administrators and commission members for a lack of effective communication.
"The City Commission, as a whole, was misinformed and unaware of the City's deteriorating financial condition until the situation was beyond repair using normal budgeting measures," the report says. "Multiple commissioners admitted to OIG staff that they did not comprehend the written reports and information they were provided."
And now nobody has any money.
The OIG also confirmed the city misused $2.5 million in Community Redevelopment Agency funds "to pay City operating expenses, a practice with the Chairman of the CRA Board ... described as a 'shell game.'"
City revenue declined by 20 percent when the economy tanked in 2008, but the OIG found revenue estimates never changed. Revenue estimates were $514,000 off in 2008, $1.5 million in 2009, $3 million in 2010, and the 2011 revenue budget was almost $4.2 million more than what they actually raked in.
The report faults former city Finance Director Larry Tibbs (who either resigned or was fired in 2010, depending on whom you ask) for proposing "consistent, unrealistic, and unsupported revenue estimates." It says Tibbs and former City Manager Anita Fain-Taylor ignored the "indisputable indicator of the City's impending financial crisis" in 2009, when the city lost 79.4 percent of its general fund -- a drop from about $4.5 million to just over $900,000.
"Even if no one had been tracking actual revenues," it says, "a decline of almost 80% in the City's fallback should have raised concerns."
It looks like Tibbs knew it, too -- the report says Tibbs admitted to OIG that he purposefully inflated revenues because the commission didn't want "bad news." (The report then goes into the specific ways Tibbs screwed with the numbers; that's a whole separate blog post for tomorrow morning.)
Then, when city commissioners asked for details about the numbers, the report says they were simply lied to.
For the 2010 fiscal year, for example, budgeted revenues added up to about $1.9 million. Tibbs reported the expected "'actual' collected revenue" a month before the end of the fiscal year to be just over $1.6 million. In reality, Lauderdale Lakes took in $442,774 -- less than 24 percent of what was budgeted.
"The OIG was unable to find any information in the City's accounting system which would have substantiated Mr. Tibbs' report to the City Commission," the report says. "When confronted with the data indicating the impossibility of the amounts listed as 'actual,' he acknowledged that perhaps he should not have included them in his report."
Perhaps not, sir. If this report is accurate, you probably also shouldn't have told the city commission in September 2010 that the city would have $1.7 million at the end of the year when it actually had negative $1.4 million. It is likewise inadvisable to try to get a line of credit by telling Bank of America the city has $3.1 million when it has around $921,000.
It's impossible for this to all be Tibbs' fault, though -- he reported directly to Fain-Taylor, who said she "relied upon and trusted" Tibbs when she probably should have actually been looking at the numbers every once in a while. The report also faults independent auditors, one of him submitted a written report that said the general fund had $921,000 in it but, confusing line items, said in in the oral presentation that there was actually $5.8 million.
More to come.
(I called Tibbs for comment; he said he'd only received his copy of the report today and would be writing a "lengthy rebuttal" for the final report.)