CITY OF LAUDERDALE LAKES TALKING POINTS January 29, 2013 The following correspondence addresses concerns outlined in a letter

written by County Commissioner Stacy Ritter. Citys Use of CRA funds In 2010, the City utilized CRA funds in excess of $2.5 Million without proper approval by the Community Redevelopment Agency (CRA) and in conflict with Florida Statute (FS) Chapter 163. In 2011, this issue was investigated through an independent CRA Forensic Audit that was requested by the CRA Board of Directors. In 2011, the issue was also investigated further by the Broward County Office of the Inspector General (OIG). According to the OIG Report, there were three City employees who played a possible role in the documented improper utilization of CRA funds all of whom were no longer employed by the City at the time the report findings were finalized and released. In response, a repayment agreement (i.e. Forbearance Agreement) between the City and CRA was prepared and executed to ensure that the City would repay the CRA for all funds due. The City and CRA acted and initiated corrective actions for all the major findings listed in the independent CRA Forensic Audit and the OIG Report.

City/CRA Forbearance Agreement Prior to the completion of the OIG report, the City and CRA negotiated, approved and executed a binding Forbearance Agreement under which the City will, over time, repay the CRA all monies owed to the agency. The repayment of funds by the City to the CRA will ensure that the CRA and Broward County residents receive the benefits intended under the CRA plan through the utilization of these funds for approved CRA activities in the future. All actions taken by both the City and the CRA in investigating/documenting/reporting and structuring the Forbearance Agreement were initiated with public notice and with proper published agendas and recorded minutes of all proceedings.

Rollover of Funds and Waiver of Interest The CRA, in accordance with FS 163 Part III, properly adopts annual budgets, including the re-appropriation of prior year fund balance amounts, and follows all required standards for the reallocation of CRA funds remaining unspent at the close of each Fiscal Year. Waivers of interest amounts due have not taken place although the Forbearance Agreement is structured and was properly approved and executed to require principal payments only. The CRA Board has, in accordance with FS 163, approved the waiver of late payment penalties in relation to receiving the annual CRA Tax Increment Fund (TIF) payment from the City after the required payment due date of January 1st. This is proper conduct for a CRA and the approval was provided at a noticed public meeting as well.

Fund Balance Annually, the CRA adopts a budget that re-allocates unspent prior year CRA funds (Including re-appropriation of annual fund balances) in accordance with Florida Statute 163. CRA line item budget entries are approved for specified eligible activities. The reported failure on the part of the CRA to properly re-appropriate fund balances is not accurate. We do not, based upon our budget adoption process and the structure of the adopted budget as published, believe that the appropriation of CRA resources has been done improperly and certainly. We do not believe that any sort of refund would be due to the paying agencies including Broward County based upon the facts presented herein.

Financial Irresponsibility and Mismanagement The documented actions undertaken by prior City Staff relative to the improper utilization of CRA funds by the City have been thoroughly documented and reported to the proper authorities. The current City Administration has taken great strides forward in addressing documented past financial mismanagement or conduct by developing the Forbearance Agreement. Both City and CRA staff provide current and fully transparent accountability for all fiscal processes. It is standard/adopted policy that staff provide regular (monthly) and comprehensive fiscal reporting to all interested parties including: Elected Officials, members of the community, Tax Increment Fund paying entities (such as Broward County) and our lenders who are, as they should be, on high alert for assurances of fiscal integrity and for documentation relative to the ongoing financial stabilization in the City of Lauderdale Lakes.

For more information, please contact the Office of the City Manager.