Okaloosa County BOCC — February 11, 2013 — Minutes — reading text

existing 14-inch force main located on the north side of SR 20 in Niceville 17. Growth Management: Ratification of Chairman’s initials on revised first page of the Neighborhood Stabilization Program Modification #8 TOURIST DEVELOPMENT - AUDITOR GENERAL’S REPORT AND COUNTY'S RESPONSE Mr. Daniel O’Byrne, Tourist Development Department (TDD) Director, stated this item is to continue discussion on the Auditor General’s final report and the county’s Corrective Action Plan. He stated Special Counsel Greg Stewart with Nabors, Giblin & Nickerson will provide an update to the Board. Mr. Stewart stated he has been asked to update the Board on what has been accomplished so far and what actions are planned going forward. He commented it has been extremely painful the past few months dealing with these issues. Mr, Stewart said the initial scandal came in April 2012 with the purchase of the yacht. The Board acted quickly and approved several changes on May 15, 2012. Those changes included use of the task order process for TDD in compliance with county policy, changing the reporting authority for the TDD Director from Chairman of the Board to reporting directly to the County Administrator as any other department head, mandating that all contracts and expenditures go through the county contracts and leases procedures and purchasing procedures, and authorizing review and amendments to the TDC manual. Other changes were the prohibition of advance payments, prohibiting payments without proper documentation, requiring direct payment by the county, establishing guidelines for special events, and establishing an annual marketing plan. Additionally, quarterly expenditure reports are required and the proper role of the Tourist Development Council (TDC) was re-established. February 19, 2013 ~9- Minute Book 68, Page Okaloosa County Board of County Commissioners Mr. Stewart reported discussions took place with British Petroleum (BP) regarding the illegal use of BP funds and BP agreed that no refund was necessary as long as recovered funds are spent in conformity with the grant provisions. Continuing, Mr. Stewart briefly spoke about the advertising agencies. The Board took action to terminate contracts with the Zimmerman Agency and Lewis Communications. Subsequently, an RFP was issued and the Board entered into contract with the Peter Mayer Company for marketing services. Mr. Stewart stated the county has cooperated with the Auditor General and developed a Corrective Action Plan addressing the findings and recommendations. He said there were 25 findings and the Corrective Action Plan has responded fully and completely to each one. Mr. Stewart noted the operations manual and policy is an evolving document and legal staff will return to the Board to recommend additional amendments to strengthen it. There will be additional oversight with the establishment of a new internal auditing position. An educational plan will be developed for all appointees to county boards and committees. Mr. Stewart stressed the restrictions and implemented changes must be followed to the letter. Mr. Stewart next provided a status report on recovery efforts. Three properties subject to theft were the house, a Porsche, and furniture. He said there were many expenditures not properly authorized or ill thought out. The three listed above were purchased with public funds. e House: The house was illegally purchased for $747,000 with BP funds. BP was notified of the theft and they have agreed that no refund is due as long as recovered funds are spent in conformity with the grant. The house was forfeited by the Federal Government and the county has filed a petition for remission of proceeds less cost. That petition is pending. Mr. Stewart stated he has negotiated with the U.S. Attorney and the Justice Department and indications are they will support the petition. There is a contract pending for sale of the house for $620,000 with a closing set for March 2013. e Porsche: The Porsche was bought in 2010 for $48,000 and the title was acquired in Mark Bellinger’s name. Mr. Bellinger then sold the Porsche and purchased a Subaru with $6,000 coming back to him in that transaction. Mr. Stewart February 19, 2013 ~10- Minute Book 68, Page Okaloosa County Board of County Commissioners reported the Subaru and title have been turned over to the county and will be auctioned off. e Furniture costing $6,258 was bought for and used in the Bellinger house. The furniture was purchased with BP funds. That property has been seized by the county and is being reviewed to see if it can be used for an alternative purpose in the county or listed for sale. Mr. Stewart stated if these items can be sold the proceeds will be used for the purposes of the third BP grant. Mr. Stewart stated additional issues include: e Yacht: Mr. Stewart said the purchase of the yacht was the first item to be brought to everyone’s attention. It was an unauthorized expenditure of $710,000. The county does have title to the boat and a broker has been hired to sale it. The yacht is listed for sale for $519,000. e Overpayment for promotional services: Mr. Stewart stated an overpayment to two individuals in the amount of $25,760 was discovered. He said these were unauthorized expenditures. e American Wind Symphony: Mr. Stewart stated $25,000 was paid to this company for a concert which never occurred. He said they have been in communication with them and it may be necessary to file suit to recover those funds. ® Motorcycles: Mr. Stewart stated the former TDC Director commissioned two very unique motorcycles for $118,100. He advised they are in storage at the builder’s facility. The builder was asked to take them back but because of their uniqueness declined. Mr. Stewart stated he recommends those motorcycles be taken into county control. They could be used for a promotion or sold. Upon inquiry by Mr. Amunds, Mr. Stewart stated the overpayment for promotional services was with BP funds. Mr. Boyles asked for details on this overpayment. Mr. Stewart answered that one individual was a spokesperson and was supposed to make a certain number of appearances but did not. The second person drove the RV to various events. However, several of those events were canceled. The bus driver said he/she was asked to provide alternative services for TDC by Mr. Bellinger when the events were cancelled. Mr. Stewart said they are in the process of verifying whether or not the alternative services were performed. February 19, 2013 -11- Minute Book 68, Page Okaloosa County Board of County Commissioners e BP Debit Cards: Mr. Stewart stated 1,000 BP debit cards were given to Vision Airlines. 46 cards were used by four individuals and 1 was a prize in a golf tournament. Mr. Stewart stated there were other undocumented uses of the cards. He advised that Vision Airlines is not being cooperative. Mr. Stewart stated the county has filed a law suit against Vision Airlines for non-payment of fees at the Airport. He clarified the State Attorney’s law suit is separate from the county’s. Mr. Stewart did confirm receipt of $117,000 from Vision for passenger facility charges as outlined in the law suit. He advised they feel other costs and attorneys’ fees should also be paid. Mr. Stewart stated they are looking at all BP cards to see if there are remedies and will bring that information back to the Board. Upon inquiry by Mr. Boyles, Mr. Stewart confirmed that Mr. Bellinger did use debit cards in lieu of Eiling for reimbursements. He said the cards were also used to take people out to lunch and other unauthorized purposes. Some cards were used by Mr. Bellinger to purchase personal items, such as furniture for his home, and items for the TDC office. He stated there are no assets to go after with regard to the Bellinger estate. Mr. Stewart told the Board they will seek reimbursement where appropriate. e Aramark: Mr. Stewart stated issues were discovered with Aramark at the Emerald Coast Convention Center. Funds were advanced to Aramark for certain marketing services and used for a variety of non-promotional expenditures. A request was made to Aramark for return of remaining funds and they cooperated. A demand letter for reimbursement to the county for the non-appropriate expenses will be sent. Mr. Boyles asked when the contract with Aramark will expire. Mr. O’Bryne stated it was just renewed for three years in August or September 2012. e Lewis Communication: Mr. Stewart stated he has sent them a letter putting them on notice the county will seek damages for the house. Also a refund for computer maintenance services will also be sought. He advised the final payment to Lewis is being held pending final reconciliation. Mr. Stewart stated he is not seeking authorization to file suit at this time and wants to see where we are after the sale of the house. e Zimmerman Agency: Mr. Stewart reported two payments (July and September 2012) are being withheld pending final review of invoices. Zimmerman has failed to provide various February 19, 2013 -12- Minute Book 68, Page Okaloosa County Board of County Commissioners materials (final documents) to the county. He referred to the AGO findings which determined overpayments on invoices and the AGO has been asked to supply that backup documentation. Mr. Stewart said Zimmerman has been put on notice concerning reimbursement to the county for any shortfall resulting from the Porsche. He also reported to the Board he has received communication from Zimmerman they intend to file suit regarding the withholding of payments for the July and September invoices. Mr. Stewart said the direction given to the firm is to aggressively go after funding where appropriate. He stated they are seeking authorization to file a counterclaim against Zimmerman. Mr. Parisot made motion to authorize Special Counsel to file a counterclaim against Zimmerman and to pursue action against the American Wind Symphony. Mr. Boyles interjected that he would like to take this item by item. Mr. Amunds concurred. Mr. Stewarts said they are not asking to go forward on the three items they have identified as stolen or the overpayment issues for the spokesperson and RV driver. He stated they are requesting direction on the American Wind Symphony. Mr. Boyles made motion, seconded by Mr. Parisot, to authorize Nabors, Giblin & Nickerson to pursue filing litigation in whichever jurisdiction is necessary regarding American Wind Symphony. Mr. Stewart pointed out if it becomes necessary to file suit in Pennsylvania, they will have to seek an attorney licensed in that state. 5 yeas. Mr. Stewart said the second item they are seeking direction on is the Zimmerman Agency. Mr. Parisot made motion, seconded by Mr. Boyles, to authorize Special Counsel to file a counterclaim as appropriate if Zimmerman files suit regarding the withheld July and September 2012 invoices. Mr. Boyles expressed his concern that Zimmerman is threatening to sue and requested Mr. Stewart to be exceedingly aggressive. 5 yeas. Mr. Stewart stated at this point that is all the direction he is seeking. He said legal counsel will continue to work other Matters and will return to the Board on any unresolved matters. Mr. Stewart reported that he has received communication from several attorneys in the area who care about the county and want this to be made right. They have volunteered to assist, saying February 19, 2013 -13- Minute Book 68, Page Okaloosa County Board of County Commissioners he thinks it is appropriate to talk with them. He said no decision needs to be made on that tonight. Mr. Boyles suggested a timeline of 30 days or 60 days be given for response to the other issues. Mr. Stewart replied that is acceptable. Mr. Harris requested clarification. Mr. Stewart stated the action would apply to the overpayment to the spokesperson and RV driver and to Lewis Communication regarding the difference in the money paid for the house and