An audit released last week showing the city is owed at least $3.1 million from a wetlands partnership gone slightly awry drew the attention of a City Council committee this week seeking more information.
Council Auditor Kirk Sherman told the Finance Committee on Wednesday there wasn’t enough interaction between the city and contractor.
He said how the deal was handled was, in many cases, a “good moving-forward arrangement” without having anything documented well.
Between the lack of formalizing changes and the company operating outside the agreement, Sherman’s office determined Loblolly Mitigation Preserve owes the city at least $3.1 million. However, the figure approaches nearly $5 million if the city monetarily pursued every discrepancy.
The city and Loblolly opened a wetlands mitigation bank in 2003 for credits to offset roadway and drainage projects, many associated with the Better Jacksonville Plan.
Excess credits were sold to the public and have netted the city about $8 million.
“It was definitely a win-win for everybody,” Sherman told the committee.
Yet, he said the issues found were “substantial” and there was “considerable” money and value that should go to the city.
The auditors revealed Loblolly borrowed credits from the city to earn a share of sales but never repaid the city.
For example, Loblolly initially couldn’t cover its half of a credit sale in December 2006. Overall, that happened 11 times, the audit said.
Loblolly largely denied many points of the audit.
Committee member Matt Schellenberg let out a sigh after Sherman briefed the group.
He has been a proponent for using mitigation revenue to improve parks around the city. Last year, he authored a bill that provided $1 million spread throughout the 14 districts to spend on park projects.
After those allocations, the dedicated park fund has a little more than $1 million, he was told.
But he led off the council discussion wanting to know from Mayor Lenny Curry’s administration what steps were being taken to address the situation.
“We are on it,” replied Mike Weinstein, Curry’s chief financial officer.
He said Sam Mousa, Curry’s chief administrative officer, has been involved “almost since we walked in the door.”
Weinstein said the administration is meeting with attorneys to see what options are legally allowed and the issue could end up in court.
Committee member Bill Gulliford said he hoped that wasn’t the case. Instead of a costly court battle, he would like to think there could be some type of mediation.
Geoff Sample, intergovernmental coordinator for the St. Johns River Water Management District, was asked about any oversight the district might have had on the situation.
He told the committee the district tracked permits for the credits and oversaw how many were issued and sold. The issue the city has with Loblolly, said Sample, is not something the district would have been involved in.
The audit comprised all 177 transactions for the mitigation bank from 2003-13.
There hasn’t been an additional review to see if other issues have cropped up since 2013, something Finance Chair Anna Lopez Brosche questioned.
Instead, the administration has relied on the audit as its starting point and will be providing monthly updates on the situation.
Brosche said the issue was a complex one — and the lengthy report is a way to start learning about mitigation banks, an issue that isn’t going away anytime soon.
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