CRA Problems in Southern Florida
This is the third blog post on the West Palm Beach Community Redevelopment Agency (CRA) matter. This post considers the matter in the context of a wide range of problems affecting CRAs throughout southern Forida, which can be seen in reports in the area's newspapers and blogs. Several CRAs have
also been investigated by various offices and commissions.<br>
<br>
A CRA is, as <a href="http://webworks.typepad.com/lakecountyfiscalrangers/cras-understanding-…; target="”_blank”">described
in the Lake County Fiscal Rangers blog</a>, "A legal entity
allowed by Florida law to be created usually by a city or county to
divert normal future property tax revenue to a separate fund used
for renovating older downtown or residential areas." The usual term
for such areas is "blighted area." CRAs are not meant for
development of normal business areas. They are meant for
areas that are doing very badly.<br>
<br>
On April 18, the Broward County inspector general filed <a href="http://www.broward.org/InspectorGeneral/Documents/OIG11-020HallandaleFi…; target="”_blank”">a
report on the "Gross Mismanagement" of public funds</a> by the
city of Hallandale Beach and its CRA. There is also <a href="http://www.broward.org/InspectorGeneral/Documents/OIG%2011-020%20Status…; target="”_blank”">a
status report</a> dated July 16. And just last month, the IG's
office filed <a href="http://www.broward.org/InspectorGeneral/Documents/OIG12007DaniaBeachClo…; target="”_blank”">a
memorandum on allegations</a> relating to procurement violations
by the Dania Beach CRA.<br>
<br>
According to <a href="http://daytonatimes.com/2013/06/06/is-daytona-misusing-cra-funds/#comme…; target="”_blank”">an
article in the Daytona <i>Times</i> this June</a>, the Volusia County
Property Appraiser said that some cities in the county have used the
CRA designation more as an economic development tool than as a fix
for blighted areas. There have also been allegations about this and other
problems, such as self-dealing, with respect to New Smyrna Beach's
CRA.<br>
<br>
There are likely many more problems with CRAs than are known to the
public, because they are independent organizations that are not
regularly monitored. The Lake County Fiscal Rangers blog has a good
list of potential and actual CRA problems:<blockquote>
1. They divert future property taxes (based upon taxes on increased
property values from the current values) from properties within a
defined "CRA boundary map" to uses not approved by voters.<br>
<br>
2. The State of Florida has absolutely no oversight system on
these CRAs or on how the funds are spent by the governing
committee. Some people believe the spending really
benefits downtown Chamber of Commerce objectives and subsidizes
property maintenance of building owners.<br>
<br>
3. Excessive abuses could include use of eminent domain to seize
land or buildings belonging to small business owners, in order to sell
them to favored realtors, officials' relatives,
or big box stores. <br>
<br>
4. Funds could be used to subsidize new businesses.<br>
<br>
5. Long time CRAs in high-growth areas divert funds, leading to
the reduction of funding of schools, fire departments, libraries,
etc. This has happened in California.<br>
<br>
6. Funds are used to buy land for parking lots, etc. from officials' relatives
at prices much higher than market prices.</blockquote>
The big problem is the lack of oversight. It is always dangerous to
create independent agencies funded by taxes and yet without
sufficient transparency or accountability. However, it can be
equally problematic when a city treats a CRA fund as just another
fund, when its expendtures are not clearly described in the budget. This was the problem
in Hallandale Beach. In either situation, a fund such as this can be
seen, and used, as a slush fund for the benefit of officials and of
those seeking special benefits from the government.<br>
<br>
The question is, does there need to be a separate fund for
redeveloping blighted areas? Can't this be something a city or
county does as part of its normal operations? What is the advantage
to the public or even to blighted areas if a pool of funds is
created and spent without sufficient oversight and, therefore, not
necessarily to benefit blighted areas? <br>
<br>
These issues are not new. CRAs were created by state legislation in
1969. In 2004, an MPA student named Keely N. Brown at the Askew
School at Florida State University wrote <a href="http://askew.fsu.edu/current/masters/actionreport/sp2004/Keely%20Brown%…; target="”_blank”">a
paper entitled "Community Redevelopment Agencies</a><a>: An
Analysis of Policy Options</a>." The paper was sent to the Florida
Redevelopment Association, with clear recommendations for reform,
and was posted online. The executive summary of the paper notes many
CRA problems, as well as their recognition by state legislative
committees:<blockquote>
Unfortunately, the adoption of CRA legislation has raised a number
of issues including, but not limited to: improper delegation of
authority to the CRA commission, insufficient number of the findings
of blight, overly broad blight definitions, lack of
intergovernmental relationships, lack of public influence, lack of
accountability, housing and business gentrification, and the straying away of the intended
uses of the CRA designation (Florida Legislative Committee on
Intergovernmental Relations, 2003; Chapin, 2003; Man, 2001; Florida
Senate Committee on Community Affairs, 1991). As a result, these
issues have caused disputes between city and county governments,
taxing authorities, and citizens. In addition, these unsettled
concerns have caused the lack of redeveloped communities and the
inappropriate use of limited funds (Florida Legislative Committee on
Intergovernmental Relations, 2003).</blockquote>
When there are so many real and potential problems with an
institution, the best way to deal with the problems is not singly by
different boards or offices. Some are within the jurisdiction of an
ethics commission or inspector general, others within the
jurisdiction of a council or board of county commissioners, and yet
others within the jurisdiction of the attorney general or state
legislature. The institutional problems fall between the many cracks.<br>
<br>
These problems must not be ignored. If the state legislature and executive branch are unwilling to respond to the problems,
this might be a good opportunity for southern Florida's ethics
commissions and inspectors general to work together to prepare a
report on the CRAs' problems and potential solutions. Such a report
would be hard to ignore.<br>
<br>
See the first two parts of this three-part look at CRAs:<br>
<a href="http://www.cityethics.org/content/timing-and-content-withdrawal-partici…; target="”_blank”">The Timing and Contact of Withdrawal from Participation</a><br>
<a href="http://www.cityethics.org/content/post-employment-government-contracts&…; target="”_blank”">Post-Employment Government Contracts</a><br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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