''The developer had worked on other prospective uses of the property, and like any other development, those expenses had to be paid,'' McArdle said.

But in the audit, Jackson said she ''unequivocally'' disputes that argument. Hometown Station signed a lease with the county that stated the $5 million was to be used only for the construction of the new headquarters, she said. The audit found Hometown Station paid hundreds of thousands of dollars for expenses that had nothing to do with the building, while funneling money to other questionable costs, including:

• Paying Masvidal's company $493,000 to manage the project, even though no building was built. Of that, $258,000 was paid for oversight before the Housing Agency had signed on to the project. In invoices, the fees were justified as ``land costs.''

• Paying Masvidal's business partner, Henry Marks, $281,513 for project management, again before the Housing Agency got involved. Hometown Station could not provide documentation for Marks' work.

* Using $355,351 to pay a second mortgage on Masvidal's $1.8 million home in Coral Gables. • Paying $287,000 for a bronze sculpture of teacups called Space Station. The audit said Hometown Station had promised to donate one-of-a-kind artwork to the project as a gesture of goodwill.'' But the county paid anyway. Making matters worse: Auditors found an identical sculpture by the same artist that sold last year in Boca Raton for $150,000. Hometown Station did not submit an appraisal to substantiate the $287,000 purchase price.

• Spending $778,000 on architect, engineering and consulting services performed before the Housing Agency got involved in the project. Prior concepts included a hotel, movie theater and municipal building for the City of South Miami.

Said Jackson: ``The absence of clear leadership and oversight significantly diminished county control over [the] project.''

McArdle countered that Bank of America oversaw spending of the Housing Agency's $5 million, and that the county approved a budget outlining how the money would be spent. 'When the auditor comes in after the fact and looks back, the auditor can say, I don't like the way this deal is negotiated' and advise the county not to do this again,'' McArdle said. ``But that's the way this deal was negotiated.''

THE HOME MORTGAGE

McArdle defended the $355,000 in county money that went to pay down a second mortgage on Masvidal's home, saying Masvidal essentially was reimbursing himself money he had earlier contributed to Hometown Station expenses. ''This is not a situation where someone is reaping personal gain,'' he said.

But auditors questioned why the mortgage money went directly to Masvidal and his wife - not to Hometown Station. McArdle said the loan was made that way because the bank needed extra collateral, so Masvidal agreed to put up his house.