ZEPHYRHILLS — The 50,000- square-foot industrial building was supposed to lure new businesses to the airport industrial park.
The city joined with a private company in 2007 to build a "spec building," with the goal of providing ready space for new companies. Officials even obtained a $400,000 interest-free loan from Progress Energy for the venture.
But when the economy tanked, city officials reconsidered the $2.2 million project.
They doubted there would be any tenants for the building, at least anytime soon.
So the City Council decided to pull the plug on the project in 2011.
The city was out about $95,000 for the site plans and geological work. But the unbuilt building exacted other costs, too.
Former City Council member Manny Funes has raised questions about oversight and overbilling in the project. His allegations prompted a Florida Department of Law Enforcement investigation, which remains open, and now cast a shadow over the city's April 9 elections.
The target of Funes' allegations is also his opponent in the election: City Council member Lance Smith. It was Smith's company, CLS LLC, that partnered with the city on the spec building project. Smith wasn't on the council when the city picked his firm, though he was serving as a member of the city's planning commission.
CLS beat another company's $4 million proposal to construct the building. When Smith later joined the council, he abstained from any votes on the project.
Funes, a Realtor and retired cop, questions Smith's ethics for doing business with the city while serving as a planning commissioner. He also questions how the $95,000 was spent — and whether the city was overcharged.
"Lance Smith must have something to hide," Funes told the Tampa Bay Times. He said he requested copies of records from Smith's company, but an email from Smith said his partners maintain that company records are not public.
Smith, who has hired the Tampa law firm Fowler White Boggs, declined to comment on Funes' allegations, but he said he talked with FDLE agents last summer.
He also said he is considering filing a defamation lawsuit against Funes.
"I guess I'm on a long list of people Manny is out to get," Smith said, noting that Funes has launched crusades against city employees in the past.
Funes fired back at Smith's threat of a lawsuit, saying "he can consider it all he wants."
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Smith and his partners — Steffen Aziz, then a Temple Terrace businessman, and investor Chris Tsokos, a math professor at the University of South Florida — created two separate companies to execute the project.
CLS won the bid with the city to construct the building. About eight months later, a second company, LSC LLC, was created to coordinate with the contractors on the project.
"Why would you create a second company?" Funes asked.
Smith and Aziz both said city attorney Joseph Poblick told them to do so. Poblick told the Times he did advise for a separate company, but that was to manage operations after the building was up and running.
The two companies worked hand-in-hand. LSC lined up vendors for the project, then submitted the invoices to CLS, which billed the city.
Along the way, Funes said, some of the costs ballooned.
Concrete Constructioneers billed $23,000 to LSC, which sent an invoice to CLS for $46,800 of concrete work.
Universal Engineering Sciences charged $1,200 to LSC, which sent an invoice to CLS for $4,800 for Universal's work.
Funes was not able to track down the original bills from three other vendors. But city records showed CLS was ultimately charged $33,400 for work by engineer John L. Laliotis; $1,400 for advertising and marketing work by Neezo Renders; and $186.30 for work done by Tampa Blueprint.
Funes said Laliotis told him that he no longer had his original records. Laliotis did not return calls from the Times.
Funes questioned the disparity in the billing.
"I can understand some markup, but this is high," Funes said.
Jeff Nelson, a longtime local contractor whose firm does government work, told the Times that construction markups typically range between 5 and 20 percent, depending on the complexity of the work.
With the soft economy, Nelson said, "these days I'm seeing some work go below costs, but not in my company."
Smith told the Times he wasn't involved in the billing and that his role was mainly serving as a liaison to the city. His partner, Aziz, said the company was entitled to a profit to cover its time and expenses.
The bid specified that the building would cost $2.2 million, and that was the amount that mattered, Aziz said. He said projects usually require a 10 percent deposit that is used to pay vendors in the beginning. In this case, the amount would have been $200,000. The company spent significantly less than that, he said.
"The person who's questioning this obviously doesn't know anything about the construction process," said Aziz, now based in Lutz.
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Under the original contract, the city and CLS would each spend up to $800,000 on the building, plus the $400,000 loan from Progress Energy. The city would cover the last $200,000 on top of that, and CLS would be responsible for any overruns.
Once the building was complete, the agreement said, the city and CLS would form a joint company to manage operations. CLS would make its money on the project by receiving 5 percent of the gross income generated by leasing the building to tenants.
When the council pulled the plug on the project, the city decided to reimburse CLS for its half of the bills — about $47,200.
In return, city officials got to keep the schematics for the project, which they could use if they ever decide to build the building.
Funes, who lost his council seat in April 2011 to Charlie Proctor, urged the council that November to postpone its vote to sever ties with CLS and pick up the firm's tab. He quizzed the newer council members on their knowledge of the project, and said the city shouldn't pay CLS for a venture that lost the city money.
As he had in the past, Smith recused himself from the discussion as a council member. At one point, though, he left the council chambers and returned with a stack of papers and large rolled plans to show what the city was getting for its money.
The rest of the council agreed to end the contract and pay CLS for its share of the bills.
Funes, who once worked as a Florida Department of Law Enforcement Agent, did his own research into the billing. Then he took his findings in February 2012 to FDLE, which launched an investigation.
FDLE spokeswoman Deborah McDonald said the case remains open and would not comment further.
The city's top staffers say they don't know whether anything happened and are eager for FDLE to finish its work.
"I'm curious as to what they will find after having had this open for more than a year," said Poblick, the city attorney who among those questioned by FDLE. He recently submitted a public records request to the agency, which it declined.
Steve Spina, who was city manager when the spec building agreement was approved, called Funes' allegations "baseless."
He said Funes had a reputation for causing controversy.
In 2010, Funes leveled official misconduct charges against Spina in connection with an investigation of a police officer involved in an improperly notarized land deal. Funes said the matter should have been handled by police. The council voted down Funes' request to investigate Spina's handling of the situation, and Smith even called out Funes on the matter.
In 2009, Funes proposed hiring trapper Tim Wilcox to provide animal control services for the city, instead of using the county's services. But Funes became so involved in pushing Wilcox's proposal that Poblick asked him to recuse himself from the vote, in which the council opted to stay with Pasco Animal Services.
City Manager Jim Drumm — who inherited the spec building project four years after it was approved, and just a few months before it was killed — said he has seen no evidence of anything improper. But he acknowledged it could have been handled better.
"Should it have had more oversight?" he said. "Probably."