Years Of Bad Ideas, Poor Decisions, & Questionable Ethics By Daytona Beach Politicians & City Management

Questionable Ethics & Illegal Acts

Daytona Beach Municipal Golf Course (DBMGC)-Enterprise Fund Fraud
The Daytona Beach Municipal Golf Course is an Enterprise Fund operated by city employees. City Municipal Code 46-37 describes as part of the ‘Charter’ of any Daytona Beach Enterprise Fund, ‘the full cost of services provided by the Enterprise Fund must be recovered through fees and charges’ to ‘offset expenses and show a profit as other private or publically held businesses do,’ without being subsidized by the city.
2005 through 2007 profit and loss figures of DBMGC Enterprise Fund included transfers of illegal subsides used to offset shortfalls, artificially improve financial results and aid in the creation of a falsified and fraudulent 2007 city budget. Public records show city management transferred (subsidized) $75,000 to the DBMGC budget for ‘urgently needed equipment,’ $100,000 ‘to absorb some of the municipal golf course expenditures’, and $1,000,000 ‘to provide for ‘an adjustment of expenditures’. These subsidies violated the city’s Enterprise Fund charter and City Municipal Code 46-37 (Fund transfers adopted in city ordinance 05-351 and 07-89).
Prior to 2007, the City of Daytona Beach charged all Enterprise Funds annually for a ‘Payment in Lieu of Taxes (PILOT) at a rate of 6% of gross revenue as required by City Municipal Code, Section
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City Redevelopment Area Audit
An audit of Dayton’s City Redevelopment Area (CRA) funds performed by the State Auditor General, uncovered numerous violations and lack of oversight by Daytona city management. (Click here for the full audit report).
Several CRA expenditures were not authorized or in accordance with state law, resulting in Daytona being forced to pay $611,000 back to the CRA’s from the city budget. Over $700,000 in expenses paid out didn’t have proper receipts or documentation and may also have to be paid back to the CRA’s.
City Manager Chisolm, Finance Director Kisner and City Attorney Brown failed in their responsibility to protect taxpayer interests , follow state laws, city ordinances and generally accepted accounting practices.
The city’s Finance Department is of particular concern. Their budget increased from $3.5 million to $4.4 million (30%) in just three years. Salaries increased from $928,000 to $1.6 million in that time as well, indicating a number of new employees were added. With a $4.4 million dollar budget shouldn’t this department be able to accurately manage our tax dollars while following the law? (Click here for Finance Department budget)
Other major violations include:
Hundreds of thousands of dollars in CRA funds were used and payments made, without having contracts or written agreements specifying the purpose of these payments.
The city purchased real estate without the use of appraisals.
In one instance, the city paid $400,000 more than the highest appraisal obtained for the real estate.
The city awarded a $150 million contract to a developer (Geary), the only respondent to a request for qualifications and proposals (RFQP). The developer failed to provide key financial information as required by city ordinance and still was granted the contract.
Against state law the city used CRA funds for seven special event promotional expenses such as ‘Bike Week’ and ‘The Beach Street Barbeque Festival,’ These promotional expenditures do not qualify as ‘redevelopment’ and violate section 163.340, Florida Statutes.
The City Commissions’ chief responsibility is to protect taxpayers interest and provide oversight in the spending of our tax dollars, as recommended by city employees. The City Commission and city management failed to properly manage our CRA funds and continue to fail regarding the general management of Daytona’s finances.

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City Commissioner Shiver Overpaid $168,000 From Needless Purchase Of His Home By Taxpayers

City management convinces Commission to purchase Commissioner Rick Shiver's home after sewage back flowed into his drive-out garage 'basement' for $368, 000, even though the Volusia County Property Appraiser's office listed his home's 'Just Value' to be only $168,000. The only property appraisal provided was paid for by Commissioner Shiver and is a conflict of interest. Though Shiver had been previously paid $37,000 for remediation (cleaning) of his home and it could have be occupied again, city management chose to buy Shiver's property without him even requesting it, then bulldozed the house after he moved! Commissioner Shiver profited by over $168,000! The city attorney and city commission did nothing to minimize taxpayers' loss and protect their interest. (Click here for the evidence). (Click here for the evidence).

City Violates Law Paying Private Plumbers To Perform Residential Work At LPGA

In violation of Florida state law, city management paid private plumbing contractors to relocate resident-owned back flow valves in the LPGA subdivision, at a cost to taxpayers of $450,000. Back flow valves are privately owned by and the responsibility of the homeowner. The city can't pay for, request, perform or reimburse for work on private property. City management violated it's own ordinance and policy by not putting this project out for any interested plumbing companies to bid on. (Click here for the evidence).

City Employees Perpetrate Beach Street Condominium Fraud

A major fraud was perpetrated by employees of the Daytona Beach Redevelopment and Planning Departments during the summer of 2007. It involved a density bonus increase for Beach Street Condos Site Plan Dev-2006-140-Residential Planned Unit Development (RPUD). City employees deliberately falsified the Staff Report provided to the City Commission changing “Public Benefit” statements and illegally adding “points” to assist BOCA Developers in adding 97 more condominium units to their Beach Street project. Comments such as “Project is not providing any additional public benefits” on page five were simply deleted. This project has 25% less parking than required by the State, a tiny public park and the developer only paid $1.5 million to the city for sewer/utility work, additional parking and 97 additional condominium units. Since the “land value” of each condominium unite is approximately $80,000, taxpayers are losing over $6 million inland value density trades as well as being underpaid for the additional parking and public utility costs this project requires. When a resident pointed out these fraudulent changes during a city commission meeting, the issue was put on hold. Eventually one city employee was fired, another quit and a third retired form the departments involved. The city attorney’s office did nothing to investigate this matter fully including the potential of filing criminal charges against city employees that conspired in this fraud. They again failed in their responsibility to minimize taxpayers risk and loss. (Click her for fraudulant changes made by city employees.) (Click her for evidence)

Bad Ideas & Poor Decisions 2003-2005

Desperate for redevelopment, City Management and Commission. overlook past and present legal problems of potential Boardwalk developer. Developer's promises and plans still not implemented by 2007, even after receiving huge tax increment financing deal.

City Commission attempts to pay for fiscal mismanagement by instituting a 'Fire Tax.' Residents arrive in force at Commission meeting to voice their opinions. Commission decides against 'Fire Tax.'

Los Angeles advertising company uses pictures of Daytona Beach Shores condominium skyline in job advertisement for new City Manager of Daytona Beach.

CRA 'giveaways' cause huge 25.7% increase in property taxes, giving Daytona the highest tax rate in Volusia County. Adding previously passed 10% water tax gives Daytona Beach some of the highest taxes in the state.

2004-City commission votes $1.5 million in CRA funds for a private yacht club project on Ballough Road. 2006-City management, Mayor and Commissioners accept free yacht club memberships then give them back, after story was printed in the Daytona Beach News Journal. (click here for story)

Commissioner George Burden and Mayor Bud Asher stated during a city commission meeting. "If anyone challenged the Main Street Blight Study that the CRA is based on, it would, 'Open a can of worms,' that they didn't want to think about." This seems to indicate the study is fraudulently based.

After leaving office, Commissioner George Burden admitted on the Mark Bernier show 'They (The City Commission) had been misrepresenting for years that they hadn't raised property taxes" and "That high property taxes are the 'kiss of death' in attracting new business to a community."

During the same show Burden erroneously stated, "Eminent domain isn't so bad because they pay your business value as well as property value." Apparently some if not all of the city commission was voting to take people's property and business without knowing the basics of Florida eminent domain law.

Successful U-Haul business on International Speedway Blvd. is threatened with eminent domain to accommodate a developer, because it's in a CRA. City Economic Director Suzanne Kuhen admits publically, "If you have a business in a CRA, you're at risk for eminent domain seizure and sale." Politicians continue to wonder why new businesses won't move to Daytona Beach.

City Commissioner Mike Shallow fails to pay property taxes for two years and has his property foreclosed on. Publically admits to not understanding the city budget.

City management takes years to complete east ISB road project, ruining business for merchants there.

Six Halifax Harbor Marina restaurants fail. Since marina was built with CRA money, taxpayers are stuck with the bond payments that restaurant leases were to cover.

City management and employees resign at an alarming rate. Eight department heads leave in three years. (Click here for story)

City Commission donates $2 million of waterfront real estate for new Lively Arts Center, though local university built similar center one year earlier and offered to share use with the city.

City management 'borrows' $6 million from the water fund with no apparent plan to repay it. Three weeks later they announce the water fund is short of money and institute a 10% water tax to make up the difference, while continuing to over-charge residents by 170%, making $12 million in profit from 'publically' owned utilities.

City's South Atlantic CRA makes national news as one of the most outrageous examples of CRA/eminent domain property rights abuses in the country.

Bad Ideas & Poor Decisions 1999-2001

Commission gives City Manager Carey Smith gets a 70% salary increase in just three years-from $84,000 to $143,000 while property taxes increased by over 40%. Smith is later blamed by City Commission for all of Daytona's financial problems after he resigns.

City Commission rejects private management offer of Peabody Auditorium from Volusia County, costing taxpayers $800,000 for improvements. Air conditioning still doesn't work well in 2007.

City management spends $3 million in cost overruns for new City Hall phone and computer systems.

City management and Commission incur $10 million in new bond debt for Adam's Mark hotel expansion plus $15 million for Ocean Walk Resorts. Adam's Mark owner sells three years later, makes a profit and leaves residents stuck with bond debt.

Millions spent on beach side parking garage that operates at a loss. Poor planning of garage means residents must arrive hours early to park for high school graduations at the Ocean Center or concerts at the Peabody Auditorium. Parking Garage becomes high crime area with assaults and robberies almost daily.

City owned golf course can't support itself and loses over $100,000 annually. City management transfers Halifax Harbor CRA money into golf course budget to make it look profitable. Golf course employee steals $75,000 due to poor computer financial controls. Golf course budget increased by 24% in 2007.

$4.2 million lost on the property purchase of canceled Pinnacle Square Apartment project. that was found to be contaminated by previous dry cleaning and auto repair businesses. Will take 60 years to retire the bond debt. No city employees were terminated for multi-million dollar error.

Mayor and City Commission vote themselves a 30% pay raise against the Salary Review Boards recommendation.

City Management & Commission spend $138,000 to attend seminars, $150,000 for outside printing service, $39,000 for city employee association memberships, $15,000 for a 'Dog Park' and $8,000 for the city employee picnic.

City management and Commission spend $700,000 on a Lobbyist in attempts to get state to return some of the sales tax Daytona pays. Lobbyist fails.

Claimed 'grant funded' improvements of $500,000 for the Aquatics Center and $672,000 for Derbyshire Park were actually funded from city's capital budget. Teen Center supposedly funded by 'donations' actually funded from city's capital budget. $17,500 Daytona Metro Bridge beautification 'donations' actually funded from city's capital projects budget

2003 City Budget contained following undefined expenses: City Clerk-$4,000 for promotional account,City Clerk $34,000 for community support account, $50,000-Downtown Development Authority, $68,700-Downtown Development Authority promotions, $10,000-Main Street Authority, $20,000 Main Street Authority promotions, $101,000-Leisure Services promotions, $15,000-Friends of the Band Shell, $205,000-Cost of Goods Sold GA, $200,000 Cost of Good Sold DI, $214,130-Leisure Service (professional services), $470,000 Payroll reimbursement, $33,000 Police Contingency, 115,000-Communications Services and on...and on...Total 2003 undefined expenses with no explanation: $1,414,830.

$2 million spent on water meter project over five years to lower number of employees needed in the utilities department, results in a 50% increase in total number of department employees.

City vehicle repair and replacement plan not followed, costing taxpayers additional $301,500.

City staff spends $24,000 on three plasma TV's which disappear and are never found.

City management loses $200,000 on bottled water business venture, the City Store and printing of the 'Mayor's Newsletter.'

City management forgives $350,000 in future rent from KMC Telecom, who moves out of Halifax Harbor Plaza, sticking taxpayers with the bill.

City management and Commission pledges $500,000 for construction of the 'privately-funded' News-Journal Lively Arts Center. Daytona Beach News-Journal owner Tipton Davidson sued by partner for spending company money on Lively Arts Center, loses lawsuit in 2006, dies in 2007. Daytona taxpayers now stuck with Lively Arts Center's $300,000 yearly operating expense. Residents forced to pay $10 parking fee when they go to Lively Arts Center they already funded and pay for to operate.

Over 7,000 taxpayers sign petition to lower property taxes. City management sues to keep amendment off the ballot.

City management spends hundreds of thousands of dollars to move past Mayor Josie Roger' s house to prime river front property. House now in the way of planned butterfly garden. Costs hundreds of thousands more to move house a second time.

City management ignores national offshore power boat race for two years. Loses opportunity to lock in an event that costs nothing for the city, brought wealthy tourists from all over the U.S., didn't cause traffic jams and drunken street parties.

Daytona's water park built with a $15 million CRA funds closes. Later resold for $5 million. Taxpayers stuck with paying for the $10 million loss.