An $11 million dilemma: City of Daytona has to quickly spend millions or lose the money

DAYTONA BEACH — The city of Daytona Beach has been under state audit since 2021 because its permits and license fund level has climbed too high, and the city could be forced to forfeit some of those funds to the state government if they're not used soon, The News-Journal has learned.

State law says governments in Florida can't let too much of their permits and license revenue go unspent year after year, and the city has found itself in that situation. The fund currently has a balance of about $22 million.

Top city staffers have come up with an $11 million plan to draw down the revenue. But at least some city commissioners have been unaware of the accumulated permits and licensing funds, the state laws governing their use, the ongoing audit, and the constraints of buying a nearly $1 million mobile command vehicle with permits and licensing funds.

In a May 8 email sent to several top city employees including the fire chief, police chief and chief building official, City Manager Deric Feacher wrote that the mobile command vehicle could "be beneficial" for both permits and licensing and city operations dealing with "Code, Building, Fire Inspectors and during major disasters/events for Police and Fire."

But state law indicates permits and licensing fund dollars have to be used for permits and licensing functions.

The proposed $11 million solution

The state auditor general and Joint Legislative Auditing Committee have been involved in an effort to bring the fund into compliance. An audit report for the 2021-22 fiscal year concluded that the city's unexpended building permit funds at the end of the budget year exceeded the city's average operating budget for the previous four fiscal years by $10.97 million.

In early December last year, the 11-member Joint Legislative Auditing Committee made up of state senators and state representatives directed the city of Daytona Beach to provide a written update explaining the status of its corrective actions. The city's response was due by March 29.

On March 25, Feacher sent a letter to the committee's chairman and vice chairman detailing the city's updated plan to reduce the amount of unexpended fund balance.

Feacher's letter said the growth in Daytona Beach has created a need to expand the city's permits and licensing staff, acquire additional workspace and buy new equipment.

The letter shows the city plans to spend $4 million acquiring property in Daytona Beach for a new permits and licensing office; $1.5 million to renovate a new permits and licensing facility; $500,000 for IT setup and rewiring of a facility; $200,000 for new furniture and equipment; and $160,000 for IT equipment.

The list of projects contains several more items, and tallies just over $11 million. Also listed is $1 million for a mobile command center vehicle, $750,000 for renovation of a permits and license training facility, $750,000 for acquisition of a marine unit staging platform, $660,000 to buy 11 Ford F-250 trucks to perform building inspections, and $600,000 for construction of a permits and license coordination center.

Two new $175,000 staff positions are also included for a fire inspector for new buildings and a building code enforcement staff liaison officer.

Back to the mobile command vehicle

The mobile command vehicle acquisition had been slated to appear on the May 15 City Commission agenda, but Feacher said in the May 8 email that he thought commissioners needed to huddle in a separate workshop meeting so the proposal could be fully discussed.

The workshop, which will be held next month, could also include discussion of how commissioners want to spend the permits and license revenue that has risen above allowable limits.

Feacher's suggestion for the workshop appears to be a reaction to questions being raised by at least one city commissioner.

"It appears there is confusion on how these funds can be expended as well as the need to provide more detailed information to the elected officials," Feacher wrote in the email. "It is not my desire ever for an elected official to denote the appearance of impropriety in the work we do. Our goal is to always provide the facts for the elected officials to be able to make the best decision for the residents of Daytona Beach."

Feacher agreed last week to talk to the News-Journal about the permits and license mobile command vehicle purchase, but then said he was requesting more information and didn't believe it was "prudent to have an interview."

In his May 8 email to 11 city staffers – including a deputy city manager, the city attorney, fire chief and police chief – he instructed that any media inquiries should be directed to city Communications Manager Susan Cerbone, who would respond in writing. Cerbone has responded to the News-Journal's questions.

Residents could get permits and license fee rebate

Mayor Derrick Henry said he has been aware of the need to spend more permits and licensing funds, but he's not sold on using some of the money for a permits and licensing mobile command vehicle.

"I'm not hunky-dory on this project to buy a vehicle for $1 million," Henry said.

City Commissioner Stacy Cantu said state law makes it clear permits and licensing funds can only be used for permits and licensing functions. So if a mobile command vehicle funded by permits and licensing was also used by other city departments, it appears that would violate the statute.

A law passed in 2019 also says the permits and licensing funds have to be spent within four years of being collected. Cantu said she would like to see the money used to give residents a break on permit fees.

Read more: Should Daytona Beach spend close to $1 million on a mobile command vehicle?

Since property insurance companies are threatening to drop Floridians with roofs 10 or more years old, Cantu suggests the city rebate residents on their permit fees when they complete those roof replacements. Her idea is to only offer the rebates for new projects, not for roofs replaced anytime before this month.

"We might be able to give rebates for a few years," she said.

At Wednesday night's City Commission meeting, Cantu said she was "very surprised" to find out this month that the city had an audit of permits and licensing funds that's been going on for three years. And she added that she only found out about it by chance when she was digging around for other information.

All of the commissioners should have been told about the audit, she said. Feacher responded that the information has been available online for the past few years, but Cantu said she wants "more communication next time."

Cantu has been asking Feacher since the end of last week how much the city has to spend each year to come into compliance with the audit. She asked Feacher again at this week's commission meeting, and he said she would get the information when the rest of the commission does at the workshop.

Cantu also said commissioners, not the city manager, should have been the ones deciding how the $11 million in permits and license fees will be spent.

"I'm in agreement with that," the mayor said.

You can reach Eileen at Eileen.Zaffiro@news-jrnl.com

This article originally appeared on The Daytona Beach News-Journal: An $11 million dilemma: City of Daytona has to quickly spend millions or lose the money