Investigation of Winter Springs could jeopardize grant money

As an investigation of Winter Springs continues, the city has hired an outside law firm to represent the city. Meanwhile the city’s dealing with the governor’s office as fallout from the state’s Joint Legislative Audit Committee [JLAC] audit continues to grow.

City commissioners voted 3-2 on Monday night to sign off on Winter Springs Interim City Manager Philip Hursh’s decision to put an outside law firm on retainer to handle the JLAC audit and the referral to Florida’s Inspector General. The firm – Weiss Serota Helfman Cole + Bierman PL – is on retainer for $50,000, with the primary attorney Jamie Cole being paid $500 per hour. 

It comes after a surprise JLAC meeting in December where the committee asked the state’s inspector general to determine if Winter Springs is in a “financial emergency.” The week prior, the city had been given until the end of the year to send documentation that its finances and reserves were in good working order.

On Dec. 11, committee members said the city’s financial numbers didn’t match what was said during the meeting the week before. 

“We weren’t there to refute it,” Hursh said at Monday’s meeting. “We were caught off guard. At that point I told the mayor yes, we need to get legal counsel. What’s going on is not normal procedure. You don’t have surprise meetings without announcing it to the people being affected by it and taking votes.”

Commissioner Victoria Bruce and Commissioner Cade Resnick voted against hiring the firm. Resnick said he wanted a law firm that had specific experience dealing with the state’s inspector general’s office, and not just the governor’s office. 

Meanwhile, emails obtained by Oviedo Community News show Winter Springs faces a Jan. 15 deadline to get its 2022 audited financial documents submitted to JLAC. Thirty days after that deadline, Florida’s Department of Revenue and Department of Financial Services can withhold state money, including state grants and reimbursements.

“While certain state revenues, once withheld, are available to be distributed to the municipality if it becomes compliant by the end of the State of Florida’s fiscal year (June 30, 2024, for purposes of this letter), certain other state revenues, once withheld, will not be distributed to the municipality,”  JLAC staff members Kathy DuBose and Debbie White wrote in an email to the city. “One example is the local government half-cent sales tax proceeds; these monies will be returned to the State as required by law.”

Mayor Kevin McCann said the city’s final audit will be in by the end of January at the latest. He said the audits haven’t found any malfeasance.

“This is pure politics,” McCann said. 

The biggest issue flagged by state auditors is serious infrastructure problems related to wastewater. The city has voted to eventually double the current water rate, and also to spend an estimated $166 million on major construction projects, including $116 million for wastewater treatment facilities. 

Winter Springs continues to get fines from the Florida Department of Environmental Protection for issues related to its aging wastewater infrastructure. 

So how much money does Winter Springs have on hand? McCann told the JLAC the city had $92 million in reserves, or more than a year’s budget. But in reality, the city has that much money in investments – not all of which are unrestricted reserves. 

Interim Finance Director Donna Bruno told commissioners Monday the city has about $14 million in unrestricted general revenue reserves and about $20 million in business operation reserves (or reserves for services like water and sewer), or $35 million total. Scroll to the bottom to see the unaudited financial statements sent to JLAC. 

“We’re not broke,” McCann said. 

Another issue raised by state auditors is high turnover in key city positions, such as city manager and finance director. The city was on the verge of hiring a city manager, doing interviews with five top candidates. But the highest ranked candidate withdrew after a heated city meeting, and the number two candidate wasn’t able to get the four votes needed to get the job.

Winter Springs city commissioners voted 3-2 to fire Korn Ferry, the firm that was hired to find a new city manager. The city will now restart the process.

The city has already paid Korn Ferry more than $80,000 to find a new city manager. 

Below, download or view accounting firm Purvis Gray’s unaudited, preliminary financial statement, which was preformed at the request of the state for the audit of Winter Springs. There’s also a list of municipalities that are behind in submitting financial reports to the state from JLAC.

Here’s the list of municipalities that are behind in submitting their financial reports to the state, including Winter Springs.