Margate to Foreclose on Alzheimer’s Center. Uses CRA to collect debt

In failing to recoup more than $500,000 in taxpayer monies misappropriated to the Family Alzheimer’s Center in Margate, the City has agreed to foreclose on the Center and evict the non-profit by January. _________________________ In two back-to-back meetings Monday - the first a special meeting of the city commission and the second a special meeting of the Margate Community Redevelopment Agency - city commissioners were unanimous in their decision to buy the Center’s $308,000 mortgage in return for erasing $500,000 in Alzheimer allocations from City books. The $500,000 came about as a financial oversight by the city when Margate’s finance department acted as bookkeeper to the Center. The City was supposed to get reimbursed annually for monies it fronted to the Center, but in losing track of an arbitrary $75,000 cap the City kept paying bills until accounts receivable reached half a million. Because the Center cannot afford to pay the city back, the Center has agreed to allow the city to satisfy its mortgage and take the property. Though the acquisition requires the Center to vacate the premises by December 31st, the settlement allows the Center to avoid a lawsuit and to continue operating. “I believe that this is the best alternative, it isn’t perfect, but it’s what we have. You cannot get blood from a turnip you cannot blood from a stone. The center did not make a windfall from this; the city did not make a windfall from this,” said Alzheimer’s Center Vice President, Dr. Randy Brooks. City officials said it was the best deal they could make. By paying off the Center’s $308,000 mortgage the city would acquire property with a market value of $500,000 or better - netting city coffers $200,000 before closing costs and expenses. But the City wasn’t going to buy the Center. The City’s Community Redevelopment Agency (CRA) was. This would alleviate the need for the City to reach into its general fund while at the same time fulfill the CRA's need for office space. Margate resident, Rich Popovic, was perplexed by the deal. “What does the CRA have to do with purchasing the Alzheimer’s Center to recoup our money?” Popovic asked. “You’re taking our taxpayer money and you’re purchasing the property when you already lost money because you weren’t paying attention. Then you’re purchasing it with our [CRA] money again. I don’t understand this. Good money after bad is terrible.” Margate Mayor, Joanne Simone, referred to the situation as a “no win.” “Are we going to get it back right now? No, but in ten years we should get our money back. It’s going to take time,” said Simone, acknowledging that the land would not be owned by the City until the Margate CRA was dissolved in 2026. “I would love to play hardball, I really would, because I think this money is owed to us, but I also understand from speaking with the city manager, city attorney and finance director that this is really our best option,” she said. Margate resident, John Hall, said he didn’t think elected officials had enough information to make a decision to acquire the property. The city didn’t know the condition of the building, nor how much it might cost to fix. He also didn’t think it was appropriate for the CRA to purchase the property as a means of settling a debt for another branch of government. “To involve them is just insult after injury,” Hall said. Resident, Anthony Caggiano agreed. “We are using taxpayer dollars for the CRA to bail out the city for bad decision making,” he said. Margate City Attorney, Eugene Steinfeld said that no decision will be made to purchase the property until a title search and final inspection of the premises is conducted. If the building needs significant work, the City may have to revisit the terms of the settlement. Strangely, CRA officials suggested the City’s Economic Development Department share the building with the CRA, pay rent, and partner to repair it - an arrangement that would cost taxpayers beyond the already lost $500,000 and reduce returns on the $308,000 to buy the building. The math didn’t add up for Margate resident, Tony Spavento. “So we’ve lost $500,000 and we’ve spent $300,000 more. We’re still losing a massive amount of money here,” he said. Commissioner Lesa Peerman, asked the Center to publicly admit to owing the city money. She wanted on the record whether the money is missing, owed or misappropriated. Counsel for the Center, William Cea, would not. “I don’t want to be misconstrued if ever this matter is in a courtroom I would not want my own words used against me. Clearly there was an agreement in 2007 when the city took on the role as the bookkeeping service. What amount beyond $75,000 was funded? I don’t have personal knowledge of that accounting function. That’s a forensic function. I’m not trying to not answer your question commissioner but I don’t know the answer to your question,” he said. Commissioner, Frank Talerico, said he thought foreclosing on the Center was the best solution to resolving the debt. “To me this is the only alternative. We could get nothing,” he said. “At least we have a chance the city will be able to utilize it [building]. We need to move forward with this thing.” Talerico said if there were more people from the public at the meeting, he might have thought differently about the settlement. “We have 55,000 people in Margate and I’m hearing from only five people that only represent five people. Not 55,000 [people]. So when I see a big crowd in here then I might pay a little bit better attention. But right now this is the thing to do unless somebody comes up with another alternative," he said. Talerico accepted responsibility on behalf of the city for the Alzheimer’s debacle, but said it’s pointless to point fingers. “Obvious mistakes were made, but when mistakes are made you try to correct things. What should we do in the meantime, just start blaming everybody for this, that, and the other? Then we get nothing?” Talerico said. Still, others, like Rich Popovic, want to know how the financial oversight occurred and who in the city was responsible. “There’s [$500,000] that is missing and nobody is being held accountable. And now we’re using more tax money to replace lost tax money. Do you people know what you’re doing? he said. Commissioners approved moving forward with the settlement 5-0. The agreement will come back to the CRA and the City after a final inspection of the building and closing costs are determined. Vice Mayor, Tommy Ruzzano, suggested the CRA list the building for sale as soon as the Agency acquires it. This way the CRA turns the asset into cash and collects TIF (Tax Increment Financing) revenues sooner than later from whoever buys the building or develops the land. “I think this is a step in the right direction," Ruzzano said. " But I don’t think it is the ultimate answer to what’s going on.”