State Joint Legislative Auditing Committee votes to audit the City of Gainesville

BY JENNIFER CABRERA / NOVEMBER 14, 2019

On October 24, State Senator Keith Perry and State Representative Chuck Clemons sent a letter to the Joint Legislative Auditing Committee, asking the committee to “direct the Auditor General to conduct a comprehensive and in-depth audit of the operational practices and managerial oversight of the City of Gainesville.” Today the committee voted to do just that.

In the letter, Perry and Clemons said they’d heard from multiple constituents “who are concerned with the city’s deteriorating financial health under the supervision of the City Commission.” The letter referred to misuse of funds and “increasingly frequent restructuring of bonds and interest rate swaps (including a vaguely defined $1.55 billion restructuring approved by the City Commission October 17).” 

The letter discussed the city’s firing of City Auditor Carlos Holt and GRU’s “lack of financial transparency and stability.”  It also mentioned delays for two consecutive years in the public’s access to the annual financial reports that are prepared by external auditors. 

In response to the notification of the audit, a letter from Gainesville Mayor Lauren Poe said “Our doors and our books are open.” But he also said, “The politically motivated nature of this request is palpable.” He claimed that the letter from Perry and Clemons had factual inaccuracies. 

As examples, he said that the letter said that the Interim City Manager (Deborah Bowie) contracted with the external auditors without informing the City Auditor. Poe said “The email chain confirming the city auditor’s awareness and involvement in this process have been prepared and packaged for those who wish to review them,” but we have received no response to our request (at 1:00 yesterday) for this material, which is supposedly ready to go.

In addition, Poe’s letter says, “There were no significant findings by an external auditor.” 

However, the 2018 Comprehensive Annual Financial Report (CAFR) states, on page 223, “The audit disclosed significant deficiencies and material weaknesses in internal control over financial reporting.”

Gainesville City Manager Lee Feldman’s letter also said, “[B]oth our doors and our books are open. We have nothing to hide, and welcome any and all reviews of our financial operations as we continue to serve Gainesville.”

During the hearing of the Joint Legislative Auditing Committee today, Rep. Chuck Clemons requested a comprehensive audit of the City of Gainesville. During his brief statement, he thanked Poe and Feldman for their statements that the doors and books are open for inspection.  

Former City Auditor Carlos Holt also testified, saying that a “parade of citizens” had asked him to help. He said he was there at his own expense and that Poe and Feldman’s letters minimized the problems that have been found. Holt said the city blamed a staff shortage for the problems (Feldman’s letter mentioned “a time of great transition and turnover in the finance department”), but he said that is no excuse for making entries incorrectly. “You can’t carry on as a government entity with that many accounts mis-stated.”  

Holt said the city keeps rolling over debt; every transaction incurs a cost and pushes the debt down the road. He concluded, “Eventually the citizens of Gainesville will suffer due to insolvency.”

Representative Mike Caruso (R-Delray Beach) asked Holt whether there have been any improprieties in cash funds. Holt said that he has been asked to testify in December in the “Brazilian butt lift” case, in which a city employee charged $93k in personal expenses to a credit card because supervisors did not properly review purchases. Holt also discussed a case in which the city found that too many people had access to cash at RTS. The city couldn’t prove that anything was stolen, but there were significant irregularities in how the cash was managed, and the revenues had been decreasing. After the audit began, revenues started going up.

Holt continued by describing other issues: The city still has an Interim Finance Director and no grants director. There have also been financial irregularities at Reichert House that have been reported to the Department of Justice. Holt was criticized for his audit of Reichert House in April and was fired a few weeks later. He said during the hearing, as he said when he presented the audit, that Reichert House does good work that can transform young men, but the books have to be kept properly.

Brian O’Brien testified next, stating that he attends many city meetings and decided to review the city audit. He said he had found “enormous” inconsistencies. He also said that Mayor Poe tried to block him from getting a copy of the Purvis Gray (CAFR) audit. O’Brien finished his brief statement by saying, “They have an enormous problem in Gainesville.” 

In a concluding statement, Clemons said this is not about specific improprieties but about public trust. “Your yes vote today… will clear the air in the city of Gainesville.” He said it would either show that everything is fine or point the way toward solving any problems that are found. 

Representative Chip LaMarca (R-Broward County) said he knows Feldman and hopes Feldman will help sort this out. Rep. Caruso moved that the state do an audit of the city, with the Auditor General’s office determining the scope of the audit. 

Senator Dennis Baxley (R-Ocala) said the audit would benefit the new City Manager by determining what happened under which administration. Baxley asked Clemons whether the rest of the legislative delegation was aware of this and supported it. Clemons said it didn’t come up at the legislative delegation meeting in September. 

The motion passed unanimously.

In one local reaction, Newberry City Commissioner Tim Marden posted on Facebook: “It shouldn’t frankly have taken the state to get involved. I’m calling on the ENTIRE City Commission to resign starting with Mr. Poe. To let it get this bad is absolutely shameful.”

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