BRADENTON, Fla. — A Florida audit of a $48 million appeals court building financed with $33.5 million of bonds Tuesday listed 17 findings that “appear to be inconsistent” with Florida statutes, state operating policies, or generally acceptable internal control practices.
The 47-page report by the Florida Department of Financial Services does not allege that any bond proceeds were misused.
The audit, ordered by Chief Financial Officer Alex Sink, details the involvement of judges in the project, its increased cost due to its expansion from 87,000 square feet to 108,000 square feet, and the purchase of expensive decorative items “such as granite, etched glass, and ornamental woodwork.”
Auditors also noted the “extraordinary use of African Mahogany,” pointing out that around 20 miles of mahogany was purchased for the building, which is nearing completion at the state capitol in Tallahassee.
Sink, a Democrat running for governor next month, on Tuesday sent the audit and a letter asking for further investigation to Gov. Charlie Crist and Florida Supreme Court Chief Justice Charles Canady.
The audit shows that the Department of Management Services “lost control of the project and spent millions more of taxpayer dollars than was necessary to build this courthouse,” Sink wrote. “The audit findings strongly suggest that DMS officials acceded to actions by judges that were inconsistent with the prohibitions of … the Florida Constitution.”
In a statement released Tuesday, the First District Court of Appeal said it had not fully reviewed the audit report but that DMS worked closely with the court in its oversight of the project.
“The court did not and could not legally assert control of the project, but was appropriately consulted by the department throughout the process,” the statement said. “We trust that, in managing the construction of the new courthouse, the Department of Management Services followed all applicable laws and regulations, including those concerning procurement of contractors and materials.”
“The project has come within the budget appropriated by the Legislature and, upon completion, we expect to return close to $1 million to the state treasury,” the statement concluded.
The Florida Division of Bond Finance sold $36.6 million of state agency facilities pool revenue bonds in 2008 to finance most of the courthouse construction. Bond proceeds provided $33.5 million for construction with the remainder being used for costs of issuance and a debt service reserve.
When the courthouse bonds were sold, there were $375.5 million of outstanding pool bonds. All the pool bonds are subject to annual appropriation by the Legislature.
Sink’s audit said that the courthouse project’s annualized rent is $1.66 million, while the debt service on the building is about $2.5 million a year.
“Because the annual lease payments for the new courthouse space will be insufficient to cover the debt service for the bonds that finance the construction of the courthouse, the other members of the pool will subsidize the debt service for these bonds,” the audit said. “The courthouse will be the only facility in the pool with a debt service which is subsidized by pool lease payments.”
The courthouse pays the same rental rate as all buildings in the pool, which is how state lawmakers established the program in the mid-1980s, according to Ben Watkins, director of the Division of Bond Finance.
“The financing was very straightforward and normal,” said Watkins, who had not seen the audit as of Tuesday.
“This isn’t so much about a finance issue as it is about how [the courthouse project] got authorized,” he said, adding that the pool financing program is a strong credit containing a total of 5.9 million square feet of state office facilities.
In addition to a uniform rental rate, the facilities pool program includes buildings that have no outstanding debt, according to the official statement for the 2008 pool bond sale.
The courthouse bonds were the last bonds sold under the facilities pool finance program.
There is no authorized but unsold debt for the program and no new financings are currently planned, Watkins said.