Winter Springs faces stern warnings at audit committee meeting

Florida’s state Joint Legislative Auditing Committee (JLAC) nearly referred the City of Winter Springs to the governor’s office to determine if the city is in a “financial crisis” – what the mayor called the nuclear option – at an audit committee hearing on Dec. 4.

State Sen. Jason Brodeur made a motion to refer the city to Florida Chief Inspector Melinda Miguel to decide if there are conditions of a financial emergency in Winter Springs. The motion came after state lawmakers grilled Winter Springs’ mayor and city leaders about an audit finished by JLAC, which you can read here. 

“The great thing about that is the inspector general’s office has broad subpoena powers,” Brodeur said at the hearing. “This will allow for the city to get the resources they need to make sure they are on the up and up, and we’re gonna get this thing fixed as soon as possible.”

Florida law requires local governments and charter schools to alert the state if they are in a financial crisis: if, for example, a city can’t make bond payments, doesn’t have enough money to cover payroll, or can’t make pension payments. None of those things have happened in Winter Springs, and city officials told state lawmakers they have $93 million in cash on hand in the bank – more than an entire year’s budget. 

But the problem is Winter Springs is late filing its fiscal year 2021-2022 audited annual reports.

“I fully comprehend the devastating nature of what we’re going through,” Winter Springs Mayor Kevin McCann said, referencing Brodeur’s motion to refer the city to chief inspector. “And now we’re talking about extending it. I’m shaking in my boots.” 

According to a letter written by Winter Springs Interim Finance Director Donna Bruno to Florida’s Auditor General Sherril Norman and obtained by Oviedo Community News, the reasons for the delay are primarily staffing. There has been high turnover in management and at all levels of the finance department. 

That’s on top of Hurricane Ian causing flooding in Winter Springs. And then there are the two other audits the city had to complete: One from the Seminole County Clerk of the Court and Comptroller of the city’s spending of discretionary penny sales tax, and the JLAC audit. 

“My team and I are committed to overcoming these recent challenges and appreciate your consideration of the magnitude of these challenges and the effects that it has had on the City and its ability to report timely and accurate financial data,” Bruno wrote in the letter, which you can read at the end of this story. 

At Monday’s JLAC hearing, Bruno was more blunt.

“It is killing me that this is not done,” Bruno said. “2022 has been a tremendously challenging year. The fiscal year ended with a major hurricane affecting the city of Winter Springs and myself personally because I live on one of the creeks that flooded. I just this week had the last of my repairs done.”

Still, state lawmakers said they can’t take the city’s word for its financial position and set a deadline of Dec. 31 to get the fiscal year 2022 audited financial documents in.  

“I’d like to withdraw my motion (to refer Winter Springs to Florida’s Chief Inspector General) under the promise that we have that audit by December 31,” Brodeur said. “At the next meeting, if we don’t have it, we’ll send you to the inspector general.”

McCann said he was worried that the city’s auditor wouldn’t be able to get it done in time and also about getting it approved by the City Commission in time.

“Mayor, we’ll call the firm for you,” Brodeur said. “Say yes and thank you.” 

“Yes and thank you,” McCann said. “Done. Yes, sir.”

Chapter 218 of Florida Statute, which Brodeur referenced when making a motion to refer Winter Springs to Florida Chief Inspector, primarily deals with what conditions trigger local governments and charter schools to notify the Chief Inspector that they are in financial distress. It doesn’t reference JLAC recommending an investigation. 

After the meeting, by text message, Oviedo Community News asked Brodeur if JLAC had referred a local government to the governor’s office to investigate if a city is in financial distress. 

“We haven’t, but it’s legally possible and if they don’t produce an audit, we can refer them to them,” Brodeur responded. He didn’t make himself available for an interview before deadline.

Water woes probed by committee, and what’s next

The committee also asked pointed questions about Winter Springs wastewater issues – which continue to rise.

According to an audit from the Florida Auditor General, the city and its contractor Veolia North America have paid $318,372 in costs and penalties since 2021 to the Florida Department of Environmental Protection. The city has been on the hook for $68,100 and the contractor has incurred $250,272 in costs. Those costs can include fines and penalties, or improvements to infrastructure meant to prevent future issues. 

On Nov. 16, Winter Springs voted to extend its contract with Veolia. But on Dec. 1, the city got yet another warning letter from the Florida Department of Environmental Protection that the Winter Springs West Wastewater Treatment Facility had 13 possible violations of state statute that hadn’t yet been corrected – including several “fecal coliform exceedances.” 

“Why would you rehire this contractor with all these penalties and fines and violations and most important the polluting of Florida’s water?” asked Alternating Committee Chairman Mike Caruso. 

McCann said changing contractors this close to replacement would set the city back “years.”

“A major blowup of those antiquated plants that were neglected for decades is the single biggest thing that keeps me awake at night,” McCann said. “This will not be the end until we get those SRF (State Revolving Funds) funds.”

Winter Springs is looking at raising its water rates, which would double the average homeowner’s bill over the next five years. The meeting to finalize those rates is Dec. 11. 

This means Winter Springs isn’t done with state lawmakers. And once the city’s responsibility with its audited financial report is done, there will be a check-in at the 18-month mark to see if the corrective actions proposed by the audit have been fixed. 

Ultimately, McCann told Oviedo Community News he was only aware of one city being taken over by the state because of failing finances. 

“I’m only aware of it happening once in Florida history,” McCann said after the meeting. “It would have been the nuke button.”

Read the letter to the state from Winter Springs city officials: