Lax oversight tied to over-billing in Miami-Dade tax districts

Residents living in some special taxing districts were over-billed through an arm of Miami-Dade government that was top-heavy with managers and other professionals, failed to scrutinize vendor bills and sat on revenue surpluses rather than refund the money to taxpayers, according to a new audit.

The report by the county’s Audit and Management Services Department offers the most detailed look yet at the numbers behind a top headache for the administration of Mayor Carlos Gimenez, who has already apologized for mismanagement of the county’s 1,068 special taxing districts.

County commissioners are set to vote on the 2016 rates Tuesday, with about 118,000 property owners initially facing higher fees. In June, the administration said the fee increases were needed to correct chronic under-billing for dozens of districts.

This week, the administration announced a much rosier picture for property owners in the district thanks to cost cutting and rethinking some of the surpluses criticized in the audit.

In June, the administration said 231 districts faced increased fees for 2016. On Tuesday, the administration will ask for increases for only 140 districts, according to a Gimenez memo. The increases affect about 36,600 properties, down from June’s total of 118,000. In an even more dramatic turnaround, 64 percent of districts will see some sort of fee decrease in 2016. In June, none were slated for decreases.

“More people were over-charged than under-charged,” said County Commissioner Daniella Levine Cava, a top critic of the Gimenez administration’s initial fee-hike plan.

“I know this year it will be difficult for the people who are going to see an increase,” she said. “But as far as going forward, I believe that people will be charged the actual costs.”

The fee increases are particularly sensitive for Gimenez as he champions a $6.8 billion budget that includes no hikes in tax rates but boasts a string of service enhancements and spending increases.

The former city manager of Miami is running for reelection next year largely on a platform of competent administration and lower taxes. Tens of thousands of notices went out in the spring notifying homeowners of the proposed new rates, which the Gimenez administration blamed on past lapses by mid-level managers.

County commissioners pushed back on the proposed fees. In a memo this week Gimenez detailed a string of cost savings that included cutting in half the anticipated growth of street-lighting fees, dialing back county administrative fees and contingency reserves, and reducing overhead by 18 percent to about $2.9 million.

“I think we’ve done a pretty good job of cleaning this up already,” said Alina Hudak, the deputy mayor who also serves as director of Public Works, which supervises the special taxing districts. “Historically, the management that needed to be there wasn’t there.”

Along with lowering some rates, the administration plans to refund property owners for over-billing in past tax bills. Current property owners would receive the refunds, but Hudak could not offer a dollar figure for the total. The paybacks would be approved by commissioners later this year, Levine Cava said.

Often created for developers, the special taxing districts manage security gates, street lights and lawn maintenance for communities. Rather than paying for the services through homeowner’s associations, residents are charged in their yearly tax bill for the services, which Miami-Dade provides.

When districts ended a year significantly short of money or flush with cash, the audit said, county administrators did not always adjust the fee schedule to reflect what property owners actually needed to pay.

“As further analyzed below, annual assessment rates were not always timely adjusted to mitigate significant fund balances or deficits,” read the audit report. “According to the County Code, annual [fees] should not exceed the cost of benefits received by the property owners.”

The analysis noted “the overall financial condition of most Districts was positive.” More than 90 percent of the districts recorded surpluses at the start of the current budget year on Oct. 1. In total, the districts with deficits recorded a combined $1.7 million total shortfall as of Oct. 1, while surpluses topped $13.7 million. An unknown amount of that extra cash would be earmarked for future projects and rainy-day funds.

Cathy Jackson, the county’s chief auditor and a department head under Gimenez, declined to be interviewed on the record about the report. It looked at the last five years of the district division’s operations and ticked off a string of questionable staffing decisions and management lapses that coincided with the faulty rate setting. Among them:

▪ An “excessive” amount of engineering staffers. The engineering staff made up about half of the 26-person office overseeing the districts, yet did not appear overly involved in new projects.

“When questions were raised regarding the status of Lighting District installations, Staff, including the engineers, was unable to produce status reports,” the audit stated. “It was apparent that field inspections were not being performed, and communications with [Florida Power & Light] were limited.”

▪ Billing districts too much for vehicles. Maintenance crews run by the Parks Department handle grass cutting and other landscaping duties for the taxing districts. The department typically charges the districts installment payments for new vehicles, but the audit found the charges well exceeded the actual purchase prices.

The audit listed a sampling of trucks and trailers it said was mostly purchased between 2006 and 2008. The report said that districts typically were charged enough to pay for the vehicles entirely within three years, but that the installments continued much longer than needed.

Districts paid $31,752 for one 2006 Ford F-250 between 2011 and 2013 alone. Cost of the truck: $21,000. A trailer worth $10,000 ended up costing the districts almost $19,000 over those three years. And another F-250 resulted in $41,510 worth of fees to the districts — almost double the $21,000 listed as the vehicle’s actual cost.

▪ An excessive amount of supervision for private security-guard operations, yet a lack of supervisor scrutiny when it came to expenses. Private security companies operate guard houses at 45 districts, and Miami-Dade employed two full-time supervisors to oversee the work. The report stated “monitoring could be done more cost-effectively on a limited basis with part-time and/or non-supervisory personnel.”

The audit also noted supervisors did not appear to be providing much oversight on expenses. “Supervisors do not review monthly vendor billings, yet they have the best knowledge of whether services have been provided,” the audit stated. “The signature stamp used to approve invoices was kept in an unsecured location until recently.”

This story was originally published August 31, 2015 at 7:04 PM with the headline "Lax oversight tied to over-billing in Miami-Dade tax districts."