A preliminary audit of the Bahama Conch Community Land Trust is setting off alarms by revealing serious concerns about organization's financial solvency.
Charles Whetstone of the Clearwater-based accounting firm Carr, Riggs & Ingram conducted the preliminary audit. Among leading concerns, the audit indicates the land trust cannot fund normal operating expenses. It shows the BCCLT is some $35,000 in arrears in payroll and payroll taxes, and that only one of the 41 units it owns has windstorm and flood insurance -- a breach of a 2001 grant agreement between BCCLT and the city. The trust has indicated it is selling assets to replenish its operating budget.
This is not good news for an organization that stewards taxpayer dollars.
The Key West City Commission ordered this preliminary audit, and now should determine whether the initial smoke indicates a more serious fire.
In order to do this, the commission must approve additional funds, because a more thorough audit will exceed $20,000 -- the maximum amount the city manager may spend without commission approval.
The commission meets Wednesday, one day after Election Day. This will be the last meeting for outgoing Commissioners Joe Pais and Bill Verge, as the winners of the District 1 and 3 races will soon replace them. The outcome of the mayor's seat is reliant on one of four candidates reaching 50 percent plus one vote; otherwise it'll be a runoff between the top two vote-getters.
The District 6 race, ground zero of the BCCLT political battle, finds current Commissioner Clayton Lopez challenged by James Marquardt. Lopez has expressed serious concerns about the financial practices and management of the BCCLT. Marquardt, on the other hand, is a past president of the land trust and lives in a BCCLT home.
We recommend the commission -- as one of its final decisions -- authorize additional funds for a forensic audit, as outlined by the accounting firm. This audit should delve deeper into the land trust's financial transactions, including a comprehensive review of housing renovation projects, investigating expenditures of tax dollars and record-keeping. A complete audit could exceed $32,000, plus out-of-pocket expenses.
A year ago, we supported the decision of the City Commission when it severed its nine-year contractual relationship with the BCCLT as the city's authorized agent to administer Tax Incremental Funds (TIF) in Bahama Village. At that time, we encouraged the land trust to work to restore confidence in its processes.
In recent months, we urged the BCCLT board either to find a qualified deputy director with authority over fiscal management, or replace Executive Director Norma Jean Sawyer with a director whose qualifications and track record can restore confidence in the agency's ability to fulfill its mission.
BCCLT Board President Cecil Bain recently stated, "Corners may have been cut, but our executive director has assured me that nothing illegal has been done."
Taxpayers have lived far too long with allegations of questionable accounting practices including "cutting corners," wasteful spending, or in the worse case, misuse of public funds. Trust and transparency is paramount in handling public funds, no matter how noble or important the mission of an organization is.
This latest concern over BCCLT's financial solvency and fiscal management doesn't bode well for its attempt to secure a Truman Waterfront lease authorized by voters nearly two years ago. Voters granted the BCCLT the right to enter a 99-year multipurpose lease with the city for 6.6 acres of Truman Waterfront. The lease, however, is contingent on the BCCLT meeting city terms, specifications and conditions.
It would be premature for the city to reject BCCLT's request for the Truman Waterfront lease on grounds it is financially incapable of proceeding. However, if the final audit doesn't establish that the agency is financially sound and fiscally trustworthy, the city should strongly consider avoiding any agreements or financial transactions until there are major changes in the land trust's board and management.
-- The Citizen
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