CLEARWATER — Two Pinellas County housing finance agencies threw an $8,000 bash at St. Petersburg's historic Mirror Lake Lyceum to celebrate one group's 25th anniversary.
Who footed the bill? The same firms that do business with the two county agencies.
Such a practice, a new audit found, smacks of "pay to play" for government business.
The audit also criticized the agencies — the Community Development Department and the Housing Finance Authority, which hit the anniversary — for buying lavish departure gifts with public money.
Gifts for retiring officials included a $144 crystal decanter on a government credit card that fell outside standard review, as well as a $115 silver bracelet.
And as internal auditors tried to examine that spending and other issues, community development director Anthony Jones and other officials sandbagged them over the past three years, a new internal audit said. The extra time cost taxpayers an extra $117,000 for the audit.
The Inspector General Division, which is under Clerk of Courts Ken Burke, found 87 ways to improve the two agencies, which share a staff lead by Jones. Their mission is to help develop affordable housing.
The auditors reported lax oversight and weak approval processes that do not reach the County Commission.
While no fraud was found, the audit said the Community Development Department forgave $8.2 million of $17.2 million in rental development mortgages it handled, but had too little documentation to explain its reasoning or methods.
The 117-page audit also cited a potential conflict of interest with Jones leading both agencies. Auditors recommended that the county separate the agencies or replace staffers with noncounty workers.
Jones said Tuesday that the excoriating report surprised him. The two agencies have received clean audits from state and federal auditors, he said, and the dual roles of staff foster efficiency.
"We believe we provided them all the information they asked for," Jones said, adding procedures and programs are well documented.
The 2007 party expenses and gifts — including at least five $50 gift cards — were part of usual marketing practices, according to a 461-page response to the audit findings. The decanter went to retiring board member Mark Mahaffey and the bracelet to Jones' finance authority predecessor, Darlene Kalada. The agency compared them to departure gifts other county departments give.
The event was paid for with donations from nine firms, including $2,000 from U.S. Bank Home Mortgage, and $1,000 from the Johnson, Pope, Bokor, Ruppel & Burns law firm, a powerhouse group. Small refunds were given to the groups when costs came in lower than expected, according to records provided to the St. Petersburg Times.
The bank helps service loans, and the firm does legal work for the authority.
The report said having the firms pay for the party could be interpreted as "pay to play," and that if the event is justified, then government money should be used.
The agencies plan to improve some record keeping, Jones said, but much of the broader criticism was misguided and lacked the knowledge of how well the two agencies work.
In fact, he said the Housing Finance Authority was originally not part of the audit, and might have objected less if the county had asked to audit it, too.
Why ask? Because Jones suggested the Housing Finance Authority doesn't have to participate in internal audits, citing an opinion from the Attorney General's Office exempting constitutionally elected officials such as the sheriff. An agreement between the authority, which is overseen by a board, and the county doesn't include the audit.
However, the County Commission has power over the authority under state law.
"It's not appropriate for him to question it — they're a department of the Board of County Commissioners," Burke said.
County Commissioner Nancy Bostock found the audit and the agency's response worrisome, saying she'll call for a board meeting to address the findings and improve the agencies. In past requests for information from the Community Development Department, she said she has gotten answers that left her uncomfortable.
"I've read a lot of excuses rather then a lot of ways to improve," Bostock said of county staffers' response.
County Administrator Bob LaSala was less aggressive. He said he plans to meet with top staffers to review the findings, but has not yet seen them.
While he wants agencies to welcome such audits, he said some findings are interpretations, not undeniable wrongs.
The internal audits have long provoked resistance among some county managers, who complain they venture into policy, not process. But this audit had personal overtones, too.
LaSala and Jones took issue with the involvement of Inspector General Hector Collazo, whose wife, Joyce, resigned a $50,000-a-year planning job in community development in 2006. The departure, Jones said, was not "pleasant or mutual" and she was "not a good fit."
Jones said he saw signs of Collazo being involved, although auditors agreed to keep him out.
Collazo and Burke insist Collazo's role was limited and there was no conflict of interest.
Auditors said the housing agencies' response was "self-serving in an attempt to overshadow the county's risks."
David DeCamp can be reached at email@example.com or (727) 893-8779,