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Miami auditors: Jungle Island falls short on job creation pledges

Jungle Island employs hundreds fewer workers than required under the terms of a $25 million federal loan, and only a fraction of them are low- and middle-income employees despite a separate loan pledge made by the aviary attraction.

The findings, part of a stinging draft audit by the park’s landlord, the city of Miami, are another black eye for Jungle Island, which made headlines last summer when its owners said they could not afford a $2 million payment due on the federal loan.

Miami auditors found that Jungle Island has only 426 full-time employees — a far cry from the 714 required by the U.S. Department of Housing and Urban Development. Federal standards require that loan recipients create at least one full-time post for every $35,000 they receive, in a bid to spur urban development.

The aviary park also fell short on a promise to award more than half of all jobs to low- and middle-income workers, according to the audit. Jungle Island officials told Miami that 38 percent of park positions were held by workers who live in low- and middle-class neighborhoods. Auditors found the figure to be closer to 4 percent.

Park owner Bern Levine said he had not yet seen the city audit, but contested its findings.

“We have met and exceeded [the requirements],” Levine said, arguing that the park is actually responsible for creating about 1,200 jobs, including positions at nearby hotels and work for wedding photographers on the grounds. “Some are indirect jobs, but they are directly related to the Jungle.”

Levine also disputed the auditors’ figure that only 4 percent of Jungle Island jobs are held by workers who live in low- and middle-class neighborhoods.

“Our employees are definitely from low- to moderate income areas,” he said.

Miami Mayor Tomás Regalado, convinced that Jungle Island is on shaky financial footing, said he wasn’t surprised by the auditors’ concerns.

When the $2 million loan payment came due over the summer, park officials said a secret investor was willing to foot the bill, but only if the city commission would approve a public referendum to expand the park and extend its lease. After commissioners said no, Jungle Island ultimately ponied up the money and put its expansion plans on hold.

“That’s why we were so firm when they asked for the extension and the referendum,” Regalado said. “We couldn’t keep asking voters to continue betting on a place that’s losing and that has so many serious problems. And that was before knowing they weren’t meeting all those requirements.”

The auditors also noted that the park’s independent accountant had “expressed doubts of its ability to continue.”

Jungle Island has been in a financial morass since moving from Pinecrest to city-owned land on Watson Island nearly 15 years ago. The number of annual visitors has never quite hit the 750,000 mark that was forecast, leaving Jungle Island unable to pay down the federal loan that financed its move.

As guarantors of the loan, Miami and Miami-Dade County have shelled out more than $26 million in principal and interest. But even that hasn’t been enough to keep the park afloat.

In 2009, the city loaned Jungle Island $800,000 — and agreed to defer $1.9 million in rent payments. That was the deal that also required Jungle Island to award half of all park jobs to low- and middle-income workers.

Two years later, Jungle Island commissioned an economic impact study in which the Washington Economics Group consulting firm found that 1,169 jobs exist because of Jungle Island.

“In total, operations of Jungle Island, along with the associated visitor expenditures, generate almost $41 million in labor income for workers in the city of Miami each year — a significant contribution,” the consultants wrote.

It was not clear how or if the city audit findings could affect the $25 million federal loan. HUD did not immediately respond to questions.

Miami Auditor General Theodore Guba asked for a legal opinion on the matter in an Oct. 26 email to City Attorney Julie O. Bru, records show.

On Tuesday, Bru said she had not yet weighed in. She declined further comment, saying the audit was still in draft form and considered confidential.

City Manager Johnny Martinez also declined to comment.

Commission Vice Chairman Marc Sarnoff said he was troubled by the findings.

Sarnoff, who had not yet reviewed the audit report, pointed out that Jungle Island has had issues upholding its end of the bargain in the past.

Jungle Island “is an area that has always been weak for us,” said Sarnoff, whose commission district includes the aviary attraction. “If there are more issues out there, that’s just further reason for concern.”

City auditors found the park’s financial records appeared to be “reasonably stated” overall, according to the draft of the report obtained by The Miami Herald.

But, in a separate issue, the park overstated its payroll expenses, according to the audit.

In 2010, Jungle Island said it spent $5.5 million on its employees, city auditors found. Strategic Outsourcing Inc., the company that handles payroll for Jungle Island, said the expenses were closer to $4.7 million.

Jungle Island explained the discrepancy by saying it had paid separate vendors for parking personnel and performers.

That did little to satisfy the auditors, who chided park officials for improperly reporting expenses.

“As of this date, we were not provided with an explanation by Jungle Island for including vendor payroll costs in their payroll expenses,” they wrote. “Including vendor payroll expenses with those of Jungle Island overstates Jungle Island’s payroll expenses and may mislead financial statement users.”

El Nuevo Herald staff writer Melissa Sanchez contributed to this report.