Commentary: 'Criminal Enterprise' Accusers Now on Record With FBI

By Chip Ross

For years a few individuals have publicly stated that the city of Fernandina Beach is a “criminal enterprise for its violation of state impact and building fee laws.” These few individuals appear to believe there is an “illegal enterprise” involving the collection and disbursement of impact and building fees, which has existed for more than 20 years.

Most recently these individuals opined that “state auditors and law enforcement should investigate the city’s administration of state impact and building fees and the administration of the funds those fees generate.”

Their allegations stem from the city’s purchase of the potable water facility from Florida Public Utilities in 2003. The city commission passed Ordinance 2003-06, which imposed a water capacity fee, or impact fee. Money from the fees was to help finance the bond to purchase the system.

Some years later, in 2011, a class action case was filed, which challenged the imposition of those specific impact fees. The city filed a separate case to validate the lawfulness of the fees to pay the bonds. In the city’s case, the court found that the use of impact fees was legal, but the city’s method for creating the impact fee did not follow state requirements, and that the fees were not solely used to accommodate the expansion of the system for new customers.

The class action case was settled, which required the city to pay back the impact fees into a class settlement fund (specifically to new residents and users).

To continue to shift the burden of funding new growth of the water system to new residents with impact fees, the city hired a professional, national firm, Burton & Associates, to rewrite the utility impact fee ordinances and conduct a capacity study. This met the first test of state statutes and the existing case law, that the fee must be “proportionate to the benefit.” The firm also conducted the financial analysis component, which was the second test of the statute.

Not to be confused with water and sewer impact fees, since 2004 the city has also imposed impact fees on new construction to cover a percentage of the costs of new construction required to support the public infrastructure needs of new residential or commercial building. Those infrastructure needs include: parks and recreation; fire and rescue; police protection; public buildings and facilities. The validity of these fees was based on two separate studies in 2004 and 2015 by Dr. James Nicholas, a recognized international expert in natural resource and land use management, Florida growth management legislation, urban land economics, urban and regional planning, and environmental and urban problems.

Building fees are separate and not related to impact fees. Building fees are collected and only used to fund the Building Department activities to assure compliance with the Florida Building Code. None of the building fees collected go into the general fund. This is confirmed yearly by the city auditors.

Building fees are approved every year by the city commission. The previous city commission, which included the current mayor and vice-mayor, voted unanimously to approve the current fees. The building fees are set yearly and can be increased, decreased, or eliminated by the city commission.

For the last 15 years more than 15 city commissioners, two city managers, one city attorney, two comptrollers, two audit committees, two CPA firms that conduct annual audits, more than eight building officials, and more than 20 city staff members have been involved in collecting and disbursing  impact and building fees.

Because allegations of “criminal” activity accuse the above city staff, chartered offices and elected officials, as an elected official I contacted Mr. Derek Noonan, audit manager and auditor general of the state of Florida.  He recommended that I contact the Florida Department of Law Enforcement, the State Attorney’s Office and the Department of Justice if citizens believe a “criminal enterprise” is truly occurring.

As a result, a packet of materials containing various articles containing the allegations, written by specific members of the public, were sent to Mr. Josh Mead, Special Agent Supervisor of the Florida Department of Law Enforcement, Mr. Chris Huband, Deputy Director, Nassau County State Attorney’s Office and Sean T. Ryan, Assistant Special Agent in Charge, the FBI Criminal and Administrative Branch, Jacksonville. All three agencies acknowledged the receipt of the materials.

The Florida Department of Law Enforcement, State’s Attorney Office, and the FBI have all been given notice that certain members of the community believe the members of the city government have been involved in “criminal activity."

Any individual now has the opportunity of directly communicating with the above law enforcement agencies to expand on any details concerning these allegations. Any further investigation by law enforcement agencies is at the agency’s discretion.

For further questions or concerns, I can be contacted at cross@fbfl.org.