by Bradley Parsons
Staff Writer
A City Council audit of the First Coast Black Business Investment Corporation revealed bad business practices but nothing illegal, several Council members and their auditor said Thursday. Although there are questions about how City money has been spent in the past, the group’s request for another $300,000 has largely found Council support.
The Council will vote on the FCBBIC’s request for a Public Service Grant on Tuesday. The money would come out of the Jacksonville Economic Development Commission reserves to finance the group’s mission to encourage economic development in poor areas.
Three Council committees approved the request by a combined vote of 14-0. Council members said they held up the money while their auditor reviewed the group’s books. After the auditors and the General Counsel’s Office decided no laws had been broken, there was no reason to hold back funding, they said.
“It was one of those things where there were a lot of concerns and a lot of people talking and calling us about this, but when you really got in there, there were some things that should have been done different, but there was no smoking gun,” said Council member Faye Rustin, who sponsored the FCBBIC’s request.
Council Auditor Richard Wallace agreed the group hadn’t broken any laws with the City’s money, but he said some of it could have been put to better use. The City gave FCBBIC $890,000 in grants from 1999 to 2002. The City also gave Urban Core Enterprises — a private not-for-profit with the same president, address and many of the same employees — more than $3.6 million in grants and loans.
Sharing an address and employees made it difficult at times for the auditors to determine where both groups spent their money, said Wallace. In at least two instances, the audit revealed FCBBIC leasing office space to Urban Core at what appeared to be marked-up rates, which the City paid for.
The audit showed FCBBIC paid $5,578.76 to rent a pair of West Adams Street suites for a year. The City reimbursed that cost. The FCBBIC then rented one of the suites to Urban Core for an annual fee of $74,000, a cost the City also paid.
Wallace said it appeared the FCBBIC made $74,000 from the transaction. No laws were broken, he said, but the public service grants weren’t intended to be profit makers.
“There’s no prohibition on doing this, it’s not an unlawful practice that we can hold them responsible for, but I don’t see this as a good business practice,” said Wallace.
According to a FCBBIC response in the audit, they rented an empty room at the lower cost and provided a fully-furnished office to Urban Core at the higher cost. The extra money paid for computers, furniture, including a copier and office supplies. The FCBBIC said it charged market-rate rent for the suite.
The audit also reported several times where Urban Core accepted too much money on City reimbursements. Urban Core acknowledged those errors and returned the excess money.