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City auditor: Fort Lauderdale overcharged for false alarms PDF Print E-mail
Thursday, 13 August 2009

george_gretsas__web.jpgFORT LAUDERDALE – Residents and business owners may be entitled to millions of dollars in refunds from the city of Fort Lauderdale for fees that the city overcharged them to send police and firefighters to false alarms, a South Florida Times investigation has found.



It is unclear what impact the refunds would have on the city’s budget, but considering the current economic climate, the move could be financially devastating for the city.

 

The newspaper’s examination of city records and emails between city officials revealed that in fiscal year 2008 alone, the city improperly charged $453,595.54 to businesses and residents after police responded to false alarms, and $7,000 to residents after the fire department responded to false alarms.

 

The practice has been in place since at least 2004, though no records showing the total overcharges for previous years were immediately available from the city.

 

“This is outrageous and they have no option but to refund this money,” said Scott W. Leeds, senior managing partner in the Miami office of The Cochran Firm. “If they don’t, that’s why the American system is in place and you can bet lawsuits are coming. These are fines, not fees, and it violates the Florida Constitution.”

 

City Attorney Harry Stewart said the city is charging residents and business owners less than it costs for police and firefighters to respond to false alarms.

 

“Yes, I am aware that the allegation has been made regarding the fee. As you know, the fee escalates as the number of false false [sic] alarms increase. While that may sound to some as a penalty, in actuality, the fee charged is far below the actual cost of providing the service for the first 5 calls and only exceeds the cost after the 6th false alarm,” Stewart wrote in an email sent to the newspaper on Tuesday, July 28, 2009.

 

“Taken in its totality, we argue that overall, the cost to provide the service is less than the charge to the citizen and is therefore properly characterized as a fee, not a penalty.”

 

City Auditor John Herbst disagrees.

 

Herbst and other city staff have determined that because the fees the city charged to respond to false burglar and fire alarms have been higher than the city’s actual cost to provide the services, the overcharges were actually fines, and should have gone through a process that would have allowed offenders to challenge them. The city does not have such a process, which may be in violation of state law.

 

Article I, Section 9 of the Florida Constitution states, “No person shall be deprived of life, liberty or property without due process of law, or be twice put in jeopardy for the same offense, or be compelled in any criminal matter to be a witness against oneself.”

 

In fiscal year 2008, the city overcharged or improperly levied fines on businesses and residences 2,480 times for a total of $460,595.54 in overcharges, according to internal city records and email communications between senior managers.

 

“I know it’s being reviewed, but I don’t know any amounts. You can put in a request and I can have someone who is working on it answer that for you,” said Fort Lauderdale Police Department spokesperson Sgt. Frank Sousa.

 

The city did not respond to the newspaper’s request for the exact amount of the overcharges as of press time on Thursday evening.

 

The fee is supposed to cover fuel for emergency vehicles, mailing of violation notices, staff time for processing and legal review, among other costs.

 

According to internal scenarios and projections that city managers compiled, it costs the city only $140.19 for police to respond to each residential false alarm (compared to the maximum $200 charge per incident) and $200 for businesses (compared with the maximum $400 charge per incident).

 

City commissioners first approved Fort Lauderdale’s false-alarm ordinance decades ago. Commissioners voted to revise the language on Jan. 4, 2004, and again on Sept. 13, 2004 with the current fee structure.

 

Since then, the ordinance has remained unchanged. It mandates that all burglar alarms installed in buildings located within the city’s limits must be registered, for a fee of $50.

 

 

 

REPEAT OFFENDERS

 

Residents who are repeat offenders for false fire alarms have been charged as much as $400 per incident, in violation of the city’s ordinance, which does not allow residents to be charged for false fire alarms. Business owners that are repeat offenders also have been charged as much as $400 per incident for false fire and police alarms, consistent with the ordinance.

 

Herbst said he has been trying to warn top city officials about the issue for more than a year, but the matter has yet to be placed on a city commission agenda.

 

In an Aug. 7 email to Assistant City Manager David Hebert, Herbst wrote: “David, Please let me know what the current status of this item [alarm fees] is. As you can see from the attached e-mail, this item is over a year old and we have had no resolution of the issue. Why hasn’t this been brought back to the Commission?”

 

Herbst copied the email to several other senior staff, including City Manager George Gretsas and Stewart, the city attorney. Gretsas and Hebert did not respond to repeated phone calls and emails.

 

“We have already determined that the fees are far in excess of the cost of service,’’ Herbst wrote. “It is therefore no longer a fee, but a fine, without due process. This is potentially exposing us to a lawsuit which could result in us having to refund all of the fees we have taken in.”

 

He continued: “So far this year, we have collected $634,064. At what rates? There is $928,752 included in the budget for next year. That was projected using a fee schedule that we have already determined was inappropriate. Why was it done in this manner? I spent a lot of my time working with PD [Police Department] staff to develop a rate that was appropriate and substantiated. I am extremely disappointed to see that no action has been taken after all that effort.”

 

Herbst’s email concludes, “When is the new fee schedule going to be brought back to the Commission?”

 

Other internal city emails and documents obtained by the South Florida Times further detail managers’ concerns about the program, including the possibility and impact of losing revenue, if Herbst’s recommendations are implemented.

 

“Gentlemen, please be sure that the CAR [Commission Action Request] on fee settlements moves forward to Commission on the next Agenda. Also, when time permits please see what the implication would be to our revenue if we follow the Auditors [City Auditor John Herbst] recommendations of the fees,” Hebert wrote to fellow managers in a Dec 3, 2008 email.

 

“Remember that according to the Auditor, there remains the option of seeking a revision to the ordinance that would make the “fee” a “fine” and thus avoid the Florida statutory issue that the amount charged must not exceed the approximate out-of-pocket costs to the department.”

 

ESCALATING CHARGES

 

For residential dwellings, according to the ordinance, the first false alarm for police is no charge. The second incident is $50. The third incident is $75. The fourth one is $100, and the fifth one is $200. The charge for every subsequent false alarm is $200 within a 12-month period.

 

For police to respond to businesses, the initial false alarm is no charge, the second event is $100. The third is $150. The fourth is $200. The charge for the fifth and each subsequent event in a 12-month period is $400.

 

The ordinance also mandates an escalating fee structure for businesses when the fire department responds to false alarms. Those fees are: no charge for the first offense, $100 for the second, $200 for the third and $400 for the fourth and subsequent incidents within a 12-month period.

 

Although the ordinance does not allow the city to charge residents when the fire department responds to false alarms, those charges also have been improperly levied against residential units.

 

“I didn’t do the analysis myself, but if we accept the cost structure they [staff] compiled, then I believe the fee is too high. If they want to make it a fine, then we need to create a process with a special magistrate so they can be challenged,” Herbst explained in an interview with the newspaper.

 

Experts who examined the city’s internal records and ordinance say Fort Lauderdale has a problem on its hands.

 

“WORSE’’ THAN MIAMI FIRE FEE

 

“The internal auditor is trying to do his job, but the response by the city attorney is clearly a defensive one. What they are doing is walking into a re-run of Miami’s fire assessment fee catastrophe,” said attorney Thomas Tew, a financial expert and senior partner in the Miami-based Tew Cardenas, LLP law firm.

 

“I followed the Miami fire assessment case, and this is worse. If there is not aggressive action by the elected officials, it will default to the courts and to enforcement people. It’s ripe for a class action evaluation and if that occurs, it should embarrass the elected officials and the sharks will be circling,” Tew said.

 

The city of Miami endured years of litigation from a class-action lawsuit filed over its implementation of fire assessment fees from 1997 through 2007. The lawsuit alleged that since the assessments also funded emergency medical services, they were improper because emergency medical services do not benefit property, as state law requires. At a July 26, 2007 meeting, city commissioners approved a $15,500,000 settlement that went toward refunds for property owners.

 

“These commissioners should learn from Miami. Staff, meaning the city manager and the lawyer, should stand up and remind the elected officials that just because we are in tough budget times, they can not overlook the law,” Tew said.

 

In Fort Lauderdale, city officials did not immediately make available the actual names of those residents and business owners who have been improperly charged.

 

The South Florida Times is one of the false-alarm violators. The business was cited at least three times in 2007 for false burglar alarms at its former address, 105 NE Third St., for a total of $850.

 

ISSUE NEVER CAME BEFORE COMMISSION

 

Records show that Fort Lauderdale city managers held numerous meetings to discuss the overcharging issue, and compiled detailed exhibits to support the argument for changing the ordinance. That information has never made it before commissioners.

 

City spokesman Jeff Modarelli said the issue will be placed on a city commission agenda for possible changes “some time in the fall, but I’m not exactly sure when.”

 

The managers’ exhibits include language for proposed new ordinances, revised fee schedules, and a new slate of fines and revenue loss projections, if implemented.

 

Leeds, of The Cochran Firm, said, “The consequence for this type of behavior, which is a constitutional violation, is legal action if the commissioners don’t act. A city, as always, should do the right thing, and in this case that means abandoning this ordinance, and charging the actual cost, or face lawsuits.’’

 

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Pictured above is Fort Lauderdale City Manager George Gretsas.


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