Miami audit questions development authority's expenditures
By Susan Stabley
A City of Miami audit of the Downtown Development Authority shows questionable expenditures, inadequate records and a lack of controls on the authority's budget.
It describes an authority where food was purchased with the public dollar nearly every day and $18,000 was spent in a year on parking for a staff of 10.
The Miami Office of Internal Audits prepared the audit for Oct. 1, 2000, through April 30, 2002, and on selected transactions and controls through Sept. 30, 2002.
Former director Patti Allen, who led Miami's effort to promote economic development in its commercial business district for the past seven years, resigned suddenly in March, just weeks after the public agency's chairman changed.
By law, the chair of the five-member board of directors is a Miami commissioner - a seat now held by Johnny Winton. Ms. Allen's departure is attributed to a "difference of philosophies" between the two.
When asked last week about the audit, Mr. Winton said he had no idea of the extent of the mismanagement of money.
"I did not know these kinds of details when I came in, but it is precisely why I wanted an independent audit that was more than just a financial audit," he said.
The audit tells the board "the good, the bad and the ugly" about the operations of the development authority, which operates on just more than $1 million and has taxing authority of an extra half mil in property taxes per year in the downtown and Brickell areas.
Mr. Winton said he hopes the authority's new executive director, who has not yet been chosen, as a result of the audit will be armed with the information to correct the deficiencies.
Discrepancies reported in the audit include:
The authority disbursed more than $150,000 from Oct. 1, 2000, to April 30, 2002, to a computer consultant that did not have to competitively bid for the job. No written agreement was found for his services of $50 an hour nor were time and attendance records. Equipment bought from the consultant's companies, Primtech Corp. and Digiwerks, Inc., was marked up 12% and sales tax was applied. As a government agency, the development authority is exempt from sales tax.
Former executive director Patti Allen spent more than $22,700 from Oct. 1, 2000, to April 30, 2002, on food, car rental, gifts and other items. "The public purpose of these expenditures was not documented," according to the audit. "Therefore, we could not determine how these expenditure items, which were charged to the corporate card and paid for with DDA monies, enhanced growth and development of downtown."
Both an expense of $6,582 to Kinko's in March 2002 and $956.12 of Federal Express-related expenditures were deducted from Ms. Allen's severance pay. Charges made on the corporate credit card after Feb. 15 totaling $8,639.39 were deducted from her severance pay. Ms. Allen had been paid slightly more than $98,000 a year and left with a severance package worth $83,156.
Documentation was absent for the authority's 10 full-time employees, including I-9 immigration forms required by federal law.
The audit also reported that bank statements were improperly reconciled, there was a lack of controls over the authority's budget and the current office lease payment is not cost-effective.
The Office of Internal Audits conducted an analysis of comparable office space downtown and found rents ranging from $12.90 to $23.50 per square foot. The authority pays $29.15 per square foot for its space in the Wachovia Financial Center for a total of $125,113 annually for 4,288 square feet. The authority also spent $18,000 for employee parking during the past fiscal year.
Expenses for office space and parking constituted 14% of the authority's total operating expenditures, the audit said.
The audit also determined that the authority had excess office space. Two non-profit organizations operated out of two empty offices and used authority office equipment, supplies and clerical support at no charge.
Interim executive director Alonso Menendez, who was chief of staff under Ms. Allen, said the authority has since tightened procedures, a process that began before Ms. Allen left. He downplayed the audit's findings and said the financial problems were really a reflection of the "casual" manner the authority used to operate.
He said Ms. Allen did keep records of her expenses, by writing them on the back of her credit card slips.
"If you look through it all," Mr. Menendez said of the audit, "you will find no money going astray."