16

WHO'S IN THE COUNTINGHOUSE

COUNTING OUT THE MONEY?

"A state audit could go a long way toward restoring public confidence in the credibility of this Board, and many people have asked us to have it done," Commissioner Truman Scarborough told The Reporter newspaper as he expressed a lack of confidence in many of the figures Commissioners are provided with and upon which they must make decisions.

After months of turmoil over County spending practices, on March 3, 1992, Brevard County Commissioners had the power to recapture the public's confidence by voting to ask the state Auditor General's Office to audit the finances of the County and the Clerk of the Court.

Concerned taxpayers, addressed the Board, demanding that the buck must stop there. The Commissioners were advised by one speaker, "You have the chance to clean house and restore credibility to your offices. If credibility is not restored, then you can kiss goodbye any chance of a tax increase being approved by voters this fall."

Just seven years ago, in 1985, the Merritt Island Executive Council, an organization representing about twenty-four Merritt Island homeowners associations, asked the Board of County Commissioners to request a state investigation of County Attorneys, including a six year adversarial state audit of County finances. The Commission denied their request.

To the dismay of many, again the Board chose to not ask for a state audit. They even refused to have the County's independent auditing firm of Berman, Shapiro, Crawford and Company, check into many of the improprieties found by concerned taxpayers and the press.

County Administrator Tom Jenkins expressed that the County's auditing firm was already on the county budget for $185,000 to do an annual audit of records for the County and the Clerk of the Court. He felt a state audit would be redundant. At the time however, state auditors were operating from a state fund until July, 1992 and could have been utilized by the county at no expense. A response was heard from the floor, "Even if it costs money how can you put a price on achieving public confidence?"

The Florida Today paper reported that the Board had "decided not to request a state audit because such reviews are granted only when the state sees evidence of gross malfeasance or fraud. Brevard's problems have centered on management and accounting, not fraud," they said.

"Paying 185,000 simply to meet statutory requirements borders on fraud itself," said Graydon Corn, a Mims resident.

The public was demanding an adversarial audit and an independent auditing firm would not take an adversarial role in auditing the finances, they would simply add and subtract numbers. They would check accounting procedures, not the legitimacy of the bills.

The last adversarial state audit of Brevard County was completed May 7, 1979. It was performed by County Comptroller Doug Martin who was a state auditor at the time. It was extremely critical of Brevard County's accounting practices and reviewed how taxpayer money was spent on specific items such as promotion, publicity of Brevard County, a restaurant bill, and limiting membership dues to various associations. Doug Martin was later hired by Clerk of the Court Ray Winstead. So Mr. Martin had the unusual opportunity to reply to his own state audit.

Berman, Shapiro, Crawford and Company did write in their Fiscal 1990 audit, "Because of the inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected."

This disclaimer did not ease the minds of the concerned taxpayers. Especially since the following appearances of improprieties had been discovered:

1. Alex Beasley of the Orlando Sentinel investigated Clerk of the Court Ray Winstead's office. His research revealed that Winstead's office may owe Brevard County an $11.3 million refund. It appears that the Clerk's office had been receiving a budget from the County plus fees for his services. According to the Sentinel, Clerk of the Court offices should receive funds through the fees they charge or by receiving a budget - but not both. At a previous meeting, Commissioner Schmitt-Kirwan commented that this would be something for the independent auditor to check out. However, at this crucial meeting, neither she nor anyone else on the Board requested Berman, Shapiro, Crawford and Company to investigate this matter. It was conspicuous by its absence.

2. The Utility Revenue Bonds Series 1985B were refinanced in February 1990. Bob Nabors' law firm was used as bond counsel without a contract and without competitive bidding. $3,527 of New York air fare and Helmsley Palace Hotel bills were paid without question. Miscellaneous travel of $825.47 was paid to Toby Wagner's firm in March 1990 without itemized receipts to back it up. Concerned taxpayers requested County officials supply copies of canceled checks for miscellaneous personal

expenses from those who went on the trip. None of these documents have been produced. (See Chapter 2)

3. Around March 16, 1990 Comptroller Doug Martin authorized the payment of $41,493.52 to Nabors, Giblin, Steffens and Nickerson without all the proper documentation for all the expenditures.

4. The financial adviser was used with an expired contract and overpaid. (See Chapter 1)

5. Clerk of the Court Ray Winstead is custodian of all county funds. Comptroller Doug Martin, who works for Winstead, admitted in a letter to County Administrator Tom Jenkins that his office had allowed monies to be paid without proper Board approval and without proper money in some budgets, but that this would now stop. His office had also paid some bills without question, including those for a boom box, Tootsie rolls, and hairspray, which were submitted by the law firm handling Brevard's law suit against W.R. Grace. In a February 19, 1992 memo written by Ray Winstead he stated that starting now, "all bills are to be verified that they serve a public purpose." How long have they been doing this?

6. The Clerk of the Court's office allowed the Satellite Beach and Palm Bay Library funds to operate $440,000 in the red. The Board transferred $3.6 million from the Links at Lake Poinsett Golf Course into the fund to cover the loss.

7. Travel expenses came under intense scrutiny, especially those for Commissioners' Carol Senne, Thad Altman and Schmitt-Kirwan. Commission Chairman Altman responded, "It is my understanding that everything pertaining to the trips is in order and legal." In 1989 and 1990, it appeared that travel expenses were paid out by department. By October of 1990 this had changed, so Commissioner's travel was no longer paid from each Commissioner's budget, but rather from the Commissioner's administration account. This allowed the Commissioner's budgets, and some other County departments as well, to not reflect their total travel expenses. (See Chapter 29)

8. Public records show that Clerk of the Court Ray Winstead rented Lincoln Continental town cars on at least seven occasions at a cost of over $1,600 to drive to seminars held within the state of Florida.

9. June 16-20 1991, Ray Winstead authorized himself and eight Clerk of Court employees to spend four to five nights at the local Holiday Inn at Cocoa Beach to attend the annual conference of the Florida Association of Court Clerks. It is unclear as to who actually spent the nights but the following people had received confirmed hotel reservations: Ray Winstead, Doug Martin, Tom Berrell, Wayne Mozo, Jerry Turner, Carol Carter, Walter Carpenter, Patti Smith and Loraine Harrison. The hotel bill was $1,960.

Many Brevard voters continued not to trust Brevard County officials to spend the taxpayers' money wisely. The Board seemed to be in a desperate need to clear the air of these seeming improprieties. But given the chance, did not order a state audit to do so.

+ How many times did the Comptroller's office pay monies without proper Board approval?

How do the taxpayers know what other bills have been unnecessarily paid out by the Clerk's office before they started verifying public purpose?

Why didn't the Board want to request a state audit of County finances?

17

CHECKS AND UNBALANCES

"Try to imagine a business with a $583 million annual budget operating with a bookkeeper employed full time by someone else. Sound ridiculous? You bet," comments Florida Today newspaper in a November 1991 editorial. "But that's sort of the way the Brevard County Commission has been working for the past five years, since it abolished its office of management and budget."

In the absence of a Board appointed budget officer, Florida Statute 129.025 provides that the Clerk of the Circuit Court or the County Comptroller shall be the designated budget officer. When Brevard County eliminated its budget office it entrusted fiscal responsibilities to County Comptroller Doug Martin, an employee of Clerk of the Court Ray Winstead.

Dealing with hundreds of millions of dollars and thousands of accounts and special funds can lead to errors and omissions, especially in an office not dedicated solely to it. Although the Clerk of the Court's office is audited each year by a Merritt Island accounting firm Berman, Shapiro,Crawford, & Company, errors were overlooked. "I'm not going to tell you there's not an error here and there," Doug Martin told the Florida Today paper. "When you have a $600 million budget, you're going to have an error once in a while."

When an investigative press brought details of improprieties to light, County Commissioners challenged the Finance Department in November 1991. During the Summer and Fall budget process, Commissioners expressed frustration and lack of confidence in information provided to them. They questioned the department's authority to set bond closing policy and to continue paying financial advisers whose contracts had expired. "It is apparently news to the County Attorneys, the County Administrator, and the Commissioners that fees and expenses for the County's financial advisers and bond counsellors have been negotiated since 1987 solely at the discretion of County Comptroller Doug Martin. The financial details of bond issues have not been discussed at public meetings and have not been subject to Board approval," described Carol Hayes in the Reporter newspaper.

Lease-purchase financing of property and buildings should have been discussed in open meetings by someone from the office of Clerk of the Court Ray Winstead, but it wasn't - not even when it was approved as an emergency ordinance in 1989. The County simply read the ordinance by title only, omitting mention of the key provision that property tax revenues would be used for those lease payments.

Expenses for the bond closings were all handled through the Comptroller's Office, including invitations for New York City trips to attend bond closings. The County's financial advisers were allowed to host the bond functions and to later bill taxpayers for them. In some cases, County checks for expense reimbursements were issued without supporting detailed documentation. (See Chapter 2)

County Finance Director Steve Burdett acknowledges that in four bond closings this year the County overpaid the financial adviser by almost $13,000 more than the fees stipulated in their expired agreement.

Based upon research by Carol Hayes of the Reporter, the County may have also overpaid Bond Counsel Nabors' firm $20,733 for the April 1991 bond closings. The firm billed the County for that amount, six days after the county had submitted its final Bond Disclosure Forms to the state. Payment was approved by the Comptroller's office even though the Disclosure Forms are required to contain a complete final accounting. The Board requested restitution of the unauthorized money from the Clerk's budget for the overpayment made by the Comptroller.

Also during last year's budget hearings, a $1.6 million bookkeeping error was made by County Comptroller Doug Martin's office. The Tax Collectors' office was expected to turn over to the County about $1.6 million in excess taxes, and they had been counted twice.

As a result of this criticism of their office, County Comptroller Doug Martin and Clerk of the Court Ray Winstead stiffened their interpretation of their duties and relinquished many they had been performing for the Board. For example, Comptroller Martin had been transferring funds and issuing certain checks in response to department requests without requiring the Board to follow statutory procedures. He felt he could no longer issue certain checks for the County unless the money was in the budget and available within the appropriate fund, or until the Board held two public hearings required and recorded their actions in official minutes. Also he abstained from making any budget transfers without prior Board approval at a public meeting and recorded in the minutes, administering the annual budget process, and to negotiate bond transactions.

In a November 25, 1991 memo to County Administrator Tom Jenkins, Doug Martin stated the Finance Department was "flexible and cooperative in the interpretation of (its) responsibilities" in rendering services to the Board which were not specifically authorized by law.

Comptroller Martin and Clerk of the Court Winstead said they would discontinue these practices because "recent actions of the Board indicate an uncompromising insistence that County Finance act only within the most exacting interpretation of the law."

Commissioner Thad Altman wrote a letter to Comptroller Martin asking that he reconsider dropping the duties. "You have always been most professional and competent in the multitude of services you provide the County Commission," Altman wrote. "I would hate to lose the ability to utilize your skills in present and future financial negotiations affecting Brevard taxpayers."

"If there is anything I can do to assist in improving communications between your office and the County Commission...please let me know."

Many taxpayers were pleased that Comptroller Martin and Clerk of the Court Winstead abandoned their budgetary functions. It is believed that the Board should not allow the same department that pays the bills to also produce the statements justifying those expenditures. Trying to repair the hole in the County's system of checks and balances in spending, for more than two years the Citizens Budget Review Committee recommended the Board rectify the situation with a separate Budget Manager.

Due to a public perception of the Finance Department possessing a serious lack of accountability, Commissioner Truman ScarboroughÙ and Karen Andreas encouraged the Board to join the other large counties in Florida and consider the creation of budget office.

On January 7, 1992, the Board voted unanimously to form a new budget office. The estimated cost for operation for the remainder of the fiscal year was $138,000. Since his office would no longer have to perform budgetary functions, concerned taxpayers asked that the needed funds to run the new office be taken from the budget of the Clerk of the Court. Naturally, Winstead's office opposed any reduction in their budget. The Board disagreed with the taxpayers and chose to take the funds from contingency money. The taxpayers got some needed accountability but it cost them.

+ How many errors and indiscretions occurred that a free, investigative press did not uncover?

How long would this system have continued without public pressure to create a budget office?

 

18

TEA FOR TWO

"When Florida Today built the building, it put beautiful black marble on the face of the building," commented Jack Wall of Merritt Island at a September 13, 1989 Board meeting. "The County hired a contractor to take the marble off the building so it is not level any more, it had to hire someone to put cheap stucco on it, and a painter to spray paint the building. What it has done is taken a Cadillac and turned it into a Ford." He wanted to know "what happened to the Cadillac parts" and "who has the black marble?"

During February 1986, District 4 Commissioner Sue Schmitt-Kirwan, headed up the Commission-appointed Central Site Selection Committee which was assigned the task of finding a suitable location for a central reference library. Her committee chose to buy the old Florida Today newspaper building in Cocoa, that contained asbestos. Florida Today was moving from that site to a large parcel of vacant land just north of Melbourne on

U.S.Highway 1.

Brevard County had already been dealing with the costly problem of removing asbestos from the other County buildings, including the six story Titusville Courthouse. (See Chapter 12)

On February 3, 1987 Commissioners Schmitt-Kirwan, Roger Dobson, Andrea Deratany, and Charlie Roberts voted yes on this purchase. Commissioner Thad Altman voted no. So the County paid $2.1 million for the building, a house on the river, and 5.56 acres of land.

Why would the County buy another building laden with asbestos, when they had more asbestos trouble than they could handle?

To quote a high ranking County library official who spoke privately, "Florida Today was stuck with the building. Commissioner Sue Schmitt-Kirwan thought it was a good idea to buy it and renovate the building for a new central reference library."

The News Observer newspaper of Titusville covered this story at the time and posed the following question, "Is it possible for a daily newspaper to objectively report on County government activities when that same government has helped the daily newspaper get rid of an unwanted piece of real estate?

Florida Today publisher Frank Vega told the News Observer that his newspaper had remained entirely objective in spite of the deal with the County. "This transaction was absolutely ethical," Vega said, "The County bought the property for the same price it was offered to the public which was slightly less than the appraised value."

Vega acknowledged that there had been no offers for the property containing the buildings.

"County Commissioner Sue Schmitt-Kirwan whose District 4 encompasses both the new and the former Today properties said she saw no ethical conflict in the County buying the building."

"No," Schmitt-Kirwan replied. "I don't think you have a conflict. In the eyes of the law conflict exists only if you, or a spouse or something, have a personal interest in the transaction."

Commissioner Thad Altman voted no on the purchase of this building and questioned the large expenditure of money and recommended that the Board pool its resources with Brevard Community College and other institutions to provide a much higher level of service for reference materials at a shared cost.

After the County bought the building, they began the complex renovations. The asbestos extraction cost around $63,000. But taxpayers were angered most by what many considered not only unnecessary but tragic - the removal and replacement of the beautiful, black marble front with stucco and paint.

The County spent a total of $5.1 million to refurbish the former Florida Today newspaper building. The cost of construction for the new, beautiful Melbourne Public Library on Fee Avenue and the new Franklin DeGroodt Memorial Library on Minton Road in Palm Bay averaged around $2 million each. By the time renovation was complete on the Central Reference Center in Cocoa, the total expense to convert and open the library was over $8 million.

This new library may have cost the taxpayers more than it should, and not just the $8 million. By buying an existing building, the County also removed it from the tax rolls and lost annual property tax revenues of over $42,000.

While Brevard County seemed to be wasting money on the renovation of this centralized library, citizens in other parts of the County were fighting for their fair share of libraries.

According to the minutes of the February 7, 1991 Palm Bay City Council meeting, Council member John Scianna updated the Council. He stated that he had attended the Brevard County Commission January 22, 1991 meeting. He expressed his concerns that the south end of the County was being short-changed as far as parks and library facilities were concerned. He commented on the quantity of money spent on libraries in other cities. He felt that the County owed Palm Bay two libraries and the enhancement of its parks. Meantime the library officials said they just didn't have the money.

Councilman Scianna asked Richard Diamond, City Manager, for an analysis of libraries by city and by population and discovered that in 1991 Palm Bay ranked number one in city population (around 67,000 people), out of the seven major cities in the County, but ranked seventh or last in receiving library funding.

If it had not been for the persistent effort of Friends of the Library, the Palm Bay Library Advisory Board, and people like John Scianna, the Brevard County Commissioners would not have kept the Palm Bay Public Library on Port Malabar Boulevard open once the new library was built.

+ Could the County have built a new Reference Center in Cocoa for less?

19

THE GRASS IS ALWAYS GREENER

WHEN THE COUNTY PAYS FOR IT

"Public attention focused on the Savannahs project in 1989 when public records revealed that the County had purchased 13.9 acres of land for $257,160.50 and deeded it to the developers for $10," wrote Carol Hayes in The Reporter on July 2, 1992. Regarding the construction of the County's Savannahs Public Golf Course she continued, "Two Commissioners subsequently acknowledged that they knew nothing about the transaction. No recorded minutes could be found to document discussion of the financial arrangement at Commission meetings."

One of the advantages of a centralized system of government is that it can afford high ticket items its residents alone cannot. Most county governments provide their residents with recreational facilities such as parks, auditoriums, libraries, and tennis courts. In Florida, some of the most popular and financially successful recreational projects are county golf courses. All of these projects are built not only for the pleasure of the residents, but also to improve the quality of life in the county. Recreational facilities also act as an attraction for new residents to an area, increasing the size of its tax base. However, problems can arise when these seemingly innocent projects are built more to benefit individuals than the taxpayers who pay for them.

In early 1988, the Board of County Commissioners, consisting of Thad Altman, Sue Schmitt-Kirwan, Roger Dobson, Charlie Roberts, and Andrea Deratany, ordered a feasibility study on the prospects for building an additional County golf course in the central part of Brevard. The National Golf Association completed the study at a cost to the taxpayers of $28,700.

The study asserted that the County need not have to purchase land for a new public golf course, nor foot the entire bill for its construction. The study cited that in mutually satisfying negotiations between counties and developers, the developers would gladly give the counties land for the courses and cash toward construction. In exchange the developers would receive a rapid escalation in selling prices of their developed lots because the properties would then lie adjacent to golf courses.

The study cautioned the County to be wary of the natural tendency of "developers to offer their least suitable land for golf course development...and that low lands such as marshes...are costly to develop..."

Based in part on the information contained in the National Golf Association study, the Board decided to build two golf courses: the Savannahs at Sykes Creek on Merritt Island and The Links at Lake Poinsett west of Cocoa. However, in building these two golf courses, the County did not respect everything contained in the study. (See Chapter 20)

The Savannahs at Sykes Creek, Inc., a 288 lot housing project, was launched in 1989 by developers Brian Bussen and Peter Hayes. They offered the County 170 acres for an 18 hole public golf course to be the centerpiece of their development. Peter Hayes was a former Brevard County Administrator until he was fired in April 1985 for what Commissioner Charlie Roberts described as resisting implementation of Commission policy and not being responsive to the public.

The first two phases were financed by First Federal Savings and Loan Association of Osceola County. The third phase was financed through the Merritt Island based American Bank of the South. Some of the American Bank's Board members at the time were Leonard Spielvogel, attorney for the Savannahs developers; Val M. Steele, former County Commissioner when Hayes was County administrator; and Lewis H. Berman, of Berman, Shapiro, Crawford and Company, the County's independent auditing firm. Repeated phone calls for confirmation of Board members were not returned.

On June 17, 1988, Savannahs attorney Leonard Spielvogel wrote a letter to Commissioner Roger Dobson on behalf of Brian J. Bussen, Trustee. In it he requested a waiver from the County of a $2,250 rezoning fee for the development. The County complied and the fee was later waived.

In a special session on August 24, 1988 the Board of County Commissioners met in Titusville to approve the Links at Lake Poinsett and the Savannahs Public Golf Course project. By unanimous decision they authorized the sale of $8.96 million of bonds to build the two golf courses. $20,000 was paid to Bond Counsel Bob Nabors' firm and $16,096 was paid to Financial Adviser Toby Wagner's firm as consultants.

Of the $8.96 million of bonds, $3.65 million was for the construction of the Savannahs Public Golf Course. The County gave the developers a $3+ million contract to build the course.

As the National Golf Association study had cautioned, a Development Review Plan of the Savannahs golf course dated October 26, 1988 showed drainage to be a problem. The County staff was advised that the County owned the land, had agreed to accept the drainage, and to proceed with construction. After the golf course was finished, areas around the 11th hole were frequently submerged. On at least one occasion standing water was such a critical problem that a pump was used to drain the water into an adjacent swamp that feeds directly into Sykes Creek. Developer Peter Hayes was in such good favor with the County that on January 1, 1989 Commissioner Carol Senne appointed him to serve as a member of the County Planning & Zoning Board.

Then on January 17, 1989 the Savannahs at Sykes Creek, Inc. requested the appointment of a Trustee to handle the County's land transaction to the Savannahs. County Attorney Bob Guthrie was chosen who just happened to have been Peter Hayes' former college roommate.

The following day, the 18th, the County purchased 13.9 acres of land which was to fall within the Savannahs of Sykes Creek development. The Board of County Commissioners issued a $257,160.50 check to "Spielvogel and Goldman, P.A. Trust Account" described as "Land Purchase For Savannahs Golf Course" and it was deposited. Commissioner Roger Dobson and Clerk of Court Ray Winstead signed the check. Later that same day the County deeded over the parcel to the Savannahs of Sykes Creek for $10. The 170 acre gift of land actually cost the County more than a quarter of a million dollars.

Land the County had purchased and traded away was then used for collateral for more development financing. According to The Reporter, "The same day the County deeded the 13.9 acres to the developers, the developers mortgaged the property (and other parcels they held options on) for $4.5 million. They then bought the other eight parcels necessary for the golf course community." Commissioner Thad Altman told the Orlando Sentinel that he was not aware that the county had purchased the 13.9 acre parcel for $257,160.50 and sold it for $10 to the developer. He was also unaware that the construction of the golf course was awarded to the Savannahs developers without competitive bidding. Altman claimed that "I left it in the hands of the county attorneys to make sure all that was followed up."

No minutes from any County Commission Meeting were ever produced to show that there had been a public County Commission discussion in reference to the Board authorizing:

the expenditure of $257,160.50 of County money to purchase land

the purchased land to be sold to the developers for $10

Since the Savannahs at Sykes Creek development was receiving some negative press for their transactions with the County, in April of 1989 Peter Hayes resigned from the County Planning and Zoning Board. Stating he may have a conflict of interest, Commissioner Carol SenneÙ replaced him with Patsy Kurth.

The $3.045 million construction contract for the Savannahs Public Golf Course was given to Brian Bussen and Peter Hayes and the Savannahs at Sykes Creek by the County without receiving competitive bids because "the developer would not agree to donate the golf course property unless it was involved in the golf course construction," per Assistant County Attorney Ken Crooks. According to Crooks the developers reasoning for this was, "Basic economics..."

Needless to say, the events surrounding the construction of the Savannahs Golf Course were quite controversial. A Titusville newspaper, the News Observer, ran several articles critical of the Savannahs Public Golf Course project. Brian Bussen and Peter Hayes brought libel suits against the paper, editor and publisher Fred Krupski, and two reporters, Jay Smith and Brad Silliman.

The punitive damages being sought from editor and publisher Fred Krupski were dismissed by the Judge. In May of 1992 all action against Jay Smith was halted, but the libel suit against Brad Silliman and the News Observer is still open.

The controversy did not stop once the public knew about the developers' deals with the County. The taxpayers wanted to know more - they wanted to know the sources of the funds connected with the Savannahs project. The Board of County Commissioners publicly held that golf course fees paid the expenses, not taxpayer dollars. "Not one dime of taxpayer money has ever funded anything to do with the Savannahs Golf Course," Commissioners Carol Senne and Sue Schmitt-Kirwan claim.

The County became so sensitive that the Manager of Brevard County's Recreation and Parks Division wrote a guest column in Florida Today that stretched the truth, "...the Savannahs 18-hole championship public course now under construction in Merritt Island, was not financed by local dollars."

However, County records show that the money to pay for the initial study itself came from three different County accounts: $9,000 from the property tax generated General Fund, $14,000 from the Recreation Budget and General Fund, and $5,700 from the Sarno Landfill Enterprise Fund. Enterprise funds are separate revenue accounts to be used for only that particular enterprise's expenses.

In order to secure the bond financing for the construction of the golf course, the County pledged the 5th cent sales tax revenues as security; therefore, they could not be pledged for any other project. But that increase in State Sales Tax was supposed to be used primarily to finance law enforcement and jails according to the intent of the 1982 Florida Legislature. (See Chapter 11)

Because of public disapproval that sales tax money was pledged for a nonessential golf course instead of for critically needed jails, even closer public scrutiny arose concerning the finances connected with the course. According to the County finance department, the Savannahs Public Golf Course "experienced cash flow difficulties since shortly after opening in 1990."

Based upon County financial records, $5,087,639 was spent to construct the Golf Course from the Savannahs Public Golf Course Enterprise Fund. In 1991 the Savannahs Golf Course was valued at $2,204,370 by the County Property Appraiser's office. Even taking into account that properties are not assessed at full market value, Brevard taxpayers now own a business that cost twice as much to build as it is currently worth.

But none of these figures include repayment on the yearly debt service on the bonds of $430,372.48 nor the payment of the course's approximate annual maintenance and operations cost of $650,000. This makes the approximate annual needs over 1 million dollars. Due to the shortage of revenues at the course, in October of 1991 the Board authorized the Savannahs Public Golf Course Enterprise Fund to borrow $171,000 from the Spessard Holland Golf Course Enterprise Fund to help make the bond payment. As of July of 1992, none of the funds have been paid back.

With all the surrounding controversy and lingering drainage problems, the golf course did not bring in the golfers or the revenues the County expected. In 1991, Florida Today, in an editorial criticized Brevard County's failure to promote the Savannahs Public Golf Course. Oddly though, there was no mention of the secrecy involving the transaction or any of the many problems associated with the course.

It seems the County also wants to keep details concerning the Savannahs project out of sight and out of mind. At the May 19, 1992 Commission meeting, Sue Schmitt-Kirwan asked County staff to research the consolidation of the three golf course enterprise funds accounts: Spessard Holland in Melbourne Beach, the Savannahs on Merritt Island, and the Habitat in Valkaria. Although the reasoning is that it will save taxpayers money, in reality it means that any transfers of funds from one course to another will not have to come before the Board or the public for scrutiny.

As late as June of 1992, County officials are still saying drainage problems at the Savannahs Public Golf Course are under control, but golfers still complain of water standing on the 11th hole.

The Savannahs at Sykes Creek project was initially approved for onsite sewage disposal. According to existing contracts, the developers appear to have been responsible for the installation of all necessary utilities for the project. But the County Commission recently let a $2.535 million contract to extend service lines out to the project.

In June of 1992, First Federal Savings and Loan of Osceola County took over the first two phases of the Savannahs at Sykes Creek development because Brian Bussen and Peter Hayes had unpaid loans totalling $1.64 million. A spokesman for the American Bank of the South denied that the third phase was also in trouble, saying their loan with the Savannahs at Sykes Creek was current.

+ Would a golf course have been more successful financially if it were located elsewhere in the County?

 

20

ONE GOOD GOLF COURSE

DESERVES ANOTHER

"Brevard County could very well get a reputation as a generous provider to those seeking free financing," began Dale Young in his January 24, 1991 front page story of the Brevard Citizen Journal.

The "Links at Lake Poinsett" was conceived by the Brevard County Commission to be the second of three planned County golf courses. The 18 hole course was to be built on land donated by Orlando developer David A. Smith in the heart of his proposed 720 acre Sabal Hammocks housing development located off Highway 520 west of Cocoa.

A contract between the County and Smith's Lake Poinsett Development Company specified the course would be completed by July 15, 1990 and that payments were to be made by the County on a percentage of completed construction. The contract was a model of generosity to the developer. Without competitive bids, it awarded Smith $3.45 million for construction of the course and clubhouse. It also graciously gave a $500,000 per year maintenance contract for 10 years to Smith or his appointee. According to local experts, Smith could conceivably pocket half that amount by subcontracting to a lower bidder.

To facilitate the financing of the adjacent planned subdivision, the entire contract amount was to be deposited in a bank by the County. And if the County ever wanted to give up the golf course, ownership of the acreage could not be sold but would revert back to the developer. The fact that Smith was unlicensed to perform the construction was considered a minor point that could be remedied before he started.

Much opposition to the development arose when it was learned that 243 of the 720 acres slated for construction were environmentally sensitive wetlands. Although the acreage had been diked, pumped, and drained, it is believed to be state owned former marshlands by the S.A.V.E. the St. Johns organization and the Florida Department of Natural Resources. (See Chapter 22)

However, even though no construction was ever started on the golf course, in early 1990 David Smith received two payments from the County for $276,075.52 to pay for architectural, engineering, and permitting fees.

Seeing the project as too controversial, the County abandoned the plan to build the Links Golf Course at Lake Poinsett. In August of 1990, Smith was notified by the County that the contract had been canceled, and that the payments should be returned.

In a letter to the County received at the end of October, Smith's attorney, Leonard Spielvogel, acknowledged Smith's indebtedness of more than a quarter million dollars to the County, promising to arrange a meeting to work out repayment. He also reported that they were still pursuing the necessary permits for the golf course.

The Brevard County Commission and the St. Johns Water Management District approved permits clearing the way for construction of the Sabal Hammock development. Continuing to fight the spoilage of land sensitive to the river's preservation, S.A.V.E. the St.Johns River filed with Florida's First District Court of Appeals against the St. Johns River Water Management District. However, an outcome is yet to be reached.

Nearly two months after acknowledging the debt, David Smith advised Assistant County Administrator Pete Wahl that he was temporarily short of funds and would expect to return the money by September 30, 1991 - a year and a half after having received the County payment.

County Attorney Bob Guthrie proposed a payment plan to David Smith through his attorney, Leonard Spielvogel of Spielvogel and Goldman, which the Board agreed upon October 15, 1991. The County would receive an initial payment from Smith of $50,000 and execute a promissory note for the remaining $226,075.52, plus 9 percent quarterly interest payments. The $50,000 was paid around October 1991 and interest payments were made January 17, 1992 and April 14, 1992 of $5,086.70 each. Another interest payment was due in July, 1992. The final payment of $226,075.52 is due by September 30, 1992.

Assistant County Attorney Ken Crooks, when asked if David Smith received any preferential treatment from the County replied, "The major misconception is that we've given this guy some benefit. Really, he has no contractual obligation to do what he has agreed to do."

The County abandoned the idea to build the Links at Lake Poinsett due to pressure put on by taxpayers who opposed it as an unwise and costly venture. They were right. County residents may not be able to enjoy themselves on a new 18 hole golf course at Sabal Hammock, but the arrangement cost them anyway. Taxpayers' money is being used by David Smith each day that his total debt to the County goes unpaid. Also, the County extended a main water line and a reuse line to the project site at a cost of over $700,000.

+ How many County projects have been built under similar contracts, without benefit of the competitive bidding process?

Sometimes a gift of land for a County project can be beneficial to everyone - the County gets free land and the developer gets an asset next to his project - but when is it determined that the balance of favor has tipped to private interests?

Why would the St. Johns River Water Management District and the Governor's Cabinet want to approve the permits for a housing development in a flood plain when at the same time over $165 million of public funds was being spent to buy similar Brevard wetlands along the St. Johns to reconvert to natural marshes?

If the appeals court approves this development, will this open up the whole St. Johns flood plain to development?

 

CHAPTERS 11-15 CHAPTERS 21-25