Jan. 28, 2011
I always read the Saturday papers in detail because they usually contain articles about government screwups, and the government agency releases the information late on Friday, hoping no one reads the Saturday paper or watches the Saturday TV news.
Oooops...I found a BIG government screwup...
But, fortunately, this $28-million attorney caused screw up was not in Lake County, but in Osceola County. We have written or provided public input about the lack of business sense in Lake County attorney led contract writing issues in Lake County (and recently the Lake County School District construction contracts), but this one in Osceola takes the cake. The Osceola County legal department cost their taxpayers about $28-million more than budgeted for road project land buys.
It seems Osceola County wanted to launch seven road projects using local property based impact fee taxes for a total of $200-million.
So the Osceola County Attorney's office somehow decided that all land purchases should be accomplished not by negotiations, but by suing the owners of 360 parcels of land they needed. AND, the Assistant Attorney followed that plan without she or anyone keeping track of the running costs or comparing the final costs of all the lawsuits to the land purchase budget. According to the Sentinel article below, staff at nearby Orange County say it is less costly to negotiate first, then go to mediation for needed land purchases, and finally, as a last resort, launch a lawsuit.
And, the former head of Osceola's Public Works Department said they wanted to negotiate first for the land purchases, budgeted at $19-million, but "the request was rejected", and the result was that the land cost over $41-million and 1/3 of the lawsuits are not settled yet. No name was provided regarding WHO rejected the less costly process.
The Assistant County Attorney who handled the lawsuits, Sherry Hopkins, is quoted by the Sentinel as saying "that staying within the land acquisition budget WASN'T HER RESPONSIBILITY". Talk about a poor attorney, who isn't even smart enough to watch total costs of her litigation activities, and who was not smart enough to ask what the budget was. Every County meeting usually discusses budget issues, so why didn't she even compare her projected lawsuit costs to a budget line item?
However, reading between the lines, the article did not say exactly WHO rejected the Public Works request to negotiate first for the land. I am sure there are some documents that indicate that possibly the former County Manager, the County Attorney, or an elected official got involved and that is being covered up. Or, possibly a law firm that benefitted from outsourcing of the lawsuits was involved. So, Hopkins could have been ordered to only file lawsuits, but if so, who ordered it, and WHO benefitted from the decision and ignoring budget limits? As they say in Police TV shows, they look for means, motive and opportunity, and investigators need to find what the motive was.
I looked at the Osceola County website to see if they have an internal audit function, and there are pages on the website but nothing on them, no names are listed, and the "Reports" page has nothing on it. So, if they don't even have an auditor, it seems they have a really bad management problem at Osceola County, and they might need one (and some new Attorneys).
Osceola County needs a forensic audit and should call in the Attorney General or Auditor General for the State. The amount of loss is too great not to have a professional, objective review of how the losses happened.
And, as an experienced auditor, here are some internal audit industry gobbledegook recommendations:
1) ANY government employee, even County Attorneys, need to always know what the projected (not just actual) cost of their activities are, and on a monthly and project to date basis, compare them to an authorized budget line item account using a "percentage of completion" method. Thus, if their attorney settled the first 10% of the lawsuits and costs were 3 times that allowed by the budget for 10% of the land buys, they should have known then and stopped further work until either more budget was approved or reduced spending was approved.
2) In construction or other work, it is normal to use "work orders" and I am sure in government work, they include the relative line item from the budget. It seems like the legal department did not follow such a process, or their written authorization for the lawsuits would have also specified the budget line item, total approved amount, which should have been used to compare to projected costs. This would ensure that even poor attorneys couldn't say they didn't know what the maximum budget was.
Someone needs to be personally investigated and put in jail over this $28-million loss of taxpayer funds.
Be sure to forward this to your favorite elected official and government managers as a warning about their fiscal management responsibilities to the taxpayer.
vj
HERE is the Osceola story in the Saturday, Jan. 28, 2011 Orlando Sentinel
OrlandoSentinel.com
Osceola commissioners want to know how $30 million was overspent on buying land for road projects
County's aggressive land purchases for roads amass huge costs
By Jeannette Rivera-Lyles, Orlando Sentinel
10:21 PM EST, January 28, 2011
It was billed as Osceola's own stimulus package: Seven road projects launched simultaneously at a cost of $200 million that would inject needed cash and jobs into the economy.
Three years after the program was launched, the county's public works officials estimate that more than $28 million in impact-fee funds were overspent in the process to acquire land for the projects.
County Commissioners want to know how that happened and why they are just finding out.
"I can't imagine in my wildest dream that someone knows there's a [almost] $30 million overrun and kept it to themselves," Commissioner Frank Attkisson said. "That's money we could've used to continue to pay for building roads in Osceola County, and we can't do that now....I think that's almost criminal."
Commissioner John Quiñones said the overrun was "negligent and irresponsible."
Impact fees, paid by developers to the county to help build roads and other infrastructure to accommodate new growth, are often passed on to new homebuyers. The county had set aside $19.9 million for land purchases but now public works officials estimates it needs $48 million to complete it, an increase of 141 percent.
County Manager Don Fisher, at the county helm since April, said he's not sure yet exactly how much was overspent and who is responsible. Fisher is scheduled to report Monday to the commission. The manager, however, pointed out that the bottom line of the road projects won't be affected because the county saved enough in construction costs to make up for the overspending on land.
"That's the good news," Fisher said.
Quiñones said that doesn't excuse blowing the budget.
"How can $30 million that is now gone not have an impact?" he said. "Even if these projects are completed, we have a long list of failing roads and other transportation projects that have not been funded. We could've used that money for those."
Osceola has dozens of roads listed as failing by the state Department of Transportation. County officials in November attempted to pass a referendum that called for an increase of 7 percent to 8 percent on the local sales tax to raise money for roads. It was overwhelmingly rejected by voters.
Departments point fingers
The seven targeted road projects required the acquisition of 360 parcels. But the costs quickly surpassed the budgeted $19.9 million, in part because the county chose to sue property owners rather than negotiate sales prices. The county made land owners offers that were mostly less than market value and gave them 30 days to accept the terms. None of them did, so the County Attorney's Office sued to acquire the land by eminent domain — the taking of private property for public use.
The aggressive strategy resulted in additional costs and delays. Property owners ended up with more than what was originally offered, and the county became liable for the owners' legal fees and expenses such as land surveys and expert opinions. Under Florida law, if the final settlement on an eminent domain property is more than the original offer, the government becomes responsible for the other parties' fees.
When asked about the overspending, Assistant County Attorney Sherry Hopkins, who handled the land transactions, said that staying within the land acquisition budget wasn't her responsibility.
"Public works [department] controlled the budget," Hopkins said. "No one ever told me or my boss that we were spending too much money."
Hopkins added that she sued 100 percent of the property owners because those were her marching orders. Of the 360 parcels, one-third have still not been settled.
"The way Public Works directed this to happen was that they wanted us to acquire," Hopkins said. "They didn't want us to go through negotiation."
Not so, said Gregg Hostetler, the county's former public works deputy director, who now works in the private sector. His team, he said, asked the county attorney to let them handle the land acquisition — the standard procedure in Orange County and at most local governments — so that they could negotiate instead of suing. The request was rejected, he said.
Going to court is not the best way to acquire land for public projects, said Ron Ribaric, an Orange County Public Works Department assistant project manager.
"That's a very last resource," Ribaric said. "It's very expensive and time-consuming. It can bust your budget and delay your projects."
Ribaric said Orange County first attempts to buy properties at market value. If the owner doesn't agree on the price, it moves to mediation. If that doesn't succeed, the county sues, about 25 percent of the time.
Osceola Commissioner Michael Harford said he wants to change the process "so that we're not here ever again," he said.
Jeannette Rivera-Lyles can be reached at [email protected] or 407-420-5471
Copyright © 2011, Orlando Sentinel
