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After the hurricanes, Vero’s paperwork disaster

STORY BY LISA ZAHNER, (Week of July 7, 2011)

When federal auditors came to town to peer into the City of Vero Beach's handling of expense reimbursements  related to hurricanes Frances and Jeanne, the staff said there was nothing to worry about.

The probe was called “routine.”

Now, Vero taxpayers – not the employees who messed up the reimbursement paperwork – might be on the hook for about $3.6 million in federal disaster recovery money the Office of the Inspector General of the Federal Emergency Management Agency thinks should have never been paid to Vero.

To put that number in perspective, Vero collects about $4 million annually in property taxes.

C. David Kimble, director of the Eastern Division Office of the Department of Homeland Security, Office of Emergency Management Oversight, issued two reports May 12.

The inspector general audited the city's books and all reimbursements received through December 2010. After spending several months camped out at City Hall, auditors concluded that the city's accounting for what it spent on projects in the aftermath of Frances and Jeanne was a disaster on top of disasters.

Many expenses were not accounted for on a project-by-project basis. The city submitted expenses for reimbursement that were not allowed by FEMA regulations. City staff submitted some receipts to both FEMA and the city's insurance company – and that’s not allowed.

The bottom line is that nearly $4 million in expenses the inspector general says should be “disallowed” now sit on someone's desk at FEMA waiting for a verdict.

Did city staff have any explanations? Some excuses were given but those didn’t fly with the inspector general’s auditors.

The rationale city staff gave to the auditors should sound familiar to the Vero Beach City Council; it’s the same rationale council members get every time it tries to corner the staff about getting something done.

Here is a summary of the auditors' concerns and the city staff's excuses (questions and answers are paraphrased, except where in quotation marks).

Q: Why weren't the expenses kept separate by project?

A: We did it the way we had always done it and thought that would be OK.

Q: Why did you submit $2.9 million to FEMA for reimbursement when those losses were covered by the city's insurance?

A: We have been “working diligently” to get the information from the insurance carrier – for more than six years.

Q: Why did you not retain supporting documentation for $840,000 in expenses?

A: Because FEMA and state officials approved the reimbursements on a project close-out; we never thought they would come in and audit us.

Q: Why did you pay contractors $63,000 in overtime with no cost analysis and no competitive bidding and then charge FEMA for the expense?

A: FEMA and state officials approved those costs on a project close-out; we never thought they would come in and audit us.

Q: Why did you charge FEMA for $104,000 in small project building repairs and then you never completed the repairs?

A: “City officials said that FEMA told them of their obligation to complete the repairs and that small projects were to their advantage because they did not require audits or close-outs.”

To the city staff's explanations, the inspector general’s office replied: “We disagree.”

The FEMA audit comes as absolutely no surprise to Vero City Councilman Brian Heady. In 2004, Heady was what some would call a professional gadfly, frequently rising to the podium to call the Vero City Council and especially the city staff “liars, cheats and thieves.”

Heady is on record literally jumping up and down, vehemently protesting the city's handling of the hurricanes and the aftermath. To help the auditors, he compiled all his data from that period and wrote a long letter to the inspector general’s staffers to tell them what to look for and where to look.

The results of the audit also come as no surprise to city hall insiders at that time.

Apparently, when Jim Gabbard took over the city manager's office after the council ran David Mekarsky out of town, each department was handling its own FEMA paperwork and there was no rhyme nor reason to any of it.

Reportedly, there were gigantic stacks of unfiled, uncategorized receipts and forms all over city hall and a few extra-large stacks on Mekarsky's (subsequently Gabbard's) desk to be dealt with.

To be fair, Vero is not alone in its problems with FEMA paperwork. For example, the audit of the City of Deerfield Beach found about $3.9 million of reimbursed expenses that were recommended by the inspector general to be disallowed.

But Deerfield Beach has a population of 75,000 to absorb that cost, in contrast to Vero's 17,000.

When reports of the audit findings surfaced, Vero Beach 32963 submitted a public records request to Vero City Clerk Tammy Vock for the documents.

Vock said she could not fulfill the request because the city had not received any reports from FEMA.

After pressing the matter, Interim City Manager Monte Falls called to say that yes, he had received the report for Hurricane Frances, but that the inspector general’s office specifically told him the document was to be kept confidential pending a review by FEMA.

“We don't even have the paperwork on Jeanne yet,” Falls said.

Vero Beach 32963 requested the documents directly from the inspector general and, the next day, got a response from Kimble, referring questions to the inspector general’s public affairs office.  A couple of days later, after calls and e-mails, FEMA responded.

“FEMA is currently reviewing the recommendations that the Office of the Inspector General provided in its audits of public assistance funds FEMA awarded to Vero Beach, Florida as a result of Hurricanes Jeanne and Frances. When FEMA's review is completed, it will respond to the Office of Inspector General,” wrote FEMA spokesperson Mary Hudak.

So Vero taxpayers still don’t know whether the $3.6 million must be paid back – and if so, how long the city would have to make the repayment.

The most surprising detail from the audit report?  Nearly seven years after the September 2004 hurricanes, the city has still not submitted all the required paperwork to the Florida Department of Emergency Management to account for nearly $20 million in expenses.