The Florida Department of Financial Services has released its findings from an audit into the now-infamous “Taj Mahal” courthouse in Tallahassee, noting 17 instances of what “appear to be violations of and/or are inconsistent with Florida Statutes, the Florida Administrative Code, or acceptable internal control practices” regarding the planning and construction of the new 1st District Court of Appeals.

The 48-page report, made public Tuesday, was produced at the request of CFO and Democratic gubernatorial candidate Alex Sink after a series of articles by the St. Petersburg Times revealed the lavish nature of the building and the fact that it was heavily lobbied for by Chief Justice Paul Hawkes.

Some highlights from the report:

  • The Department of Management Services did not award the construction contract through a competitive bid process, as required by Florida statutes.
  • While Florida statutes stipulate that DMS is responsible for the design, financing, construction, maintenance and leasing of the new courthouse, emails show that 1st District Court of Appeals judges asserted control over the process, with Judge Hawkes listed as the contact person for questions/concerns relating to the construction contract.
  • DMS authorized construction to begin before establishing a Guaranteed Maximum Price, “which greatly diminished the State’s ability to effectively negotiate a price most favorable to the State.”
  • “The total costs of the building significantly increased during the planning phase due to the expanded scope in square feet, custom fixtures and high-end finishes such as granite, etched glass and ornamental woodwork.”
  • “DMS made no attempt to renegotiate any of the contracts for the new 1DCA courthouse as required by law.”
  • The payment of sales tax for materials used in the project was avoided, with DMS utilizing an exemption for a total of $589,000 which was used to cover other costs associated with the project, as opposed to reducing overall cost.
  • Lease payments will be insufficient to cover the costs of debt related to the project, with an annual projected rent of $1.6 million and debt service on the building at $2.5 million.
  • Judges from the 1DCA took two out-of-state trips to visit other courthouses, the first costing $2,400, which was paid out of project funds, and the second involving a chartered private aircraft for a day trip, at a cost of $12,800. Email records indicate that representatives from Peter R. Brown Construction expressed concern about the legality of the second trip being paid for by the taxpayer.
  • In violation of Florida Statutes, DMS is obligated to pay more than $500,000 for artwork and related services for the 1DCA. Statutes state that appropriations for acquiring art are not to exceed $100,000.
  • “The Audit team noted extraordinary use of African Mahogany (Sapele) wood throughout the new 1DCA courthouse. Records disclose that approximately 102,000 board feet of Sapele (approximately 20 miles) were procured for the Project. We also noted an extensive use of granite throughout the building. The finish schedule for the office space in this Project is markedly different than that for the office space contemporaneously constructed for the Department of Revenue located across the street.”

View the audit in full:

“Taj Mahal” Audit

Update:

Alex Sink held a press conference Tuesday after releasing the audit.

“Instead of executing their legally mandated duties, the project managers abdicated control of the project to the judges of the 1st DCA, leaving the design construction and cost control up to their over-indulgent whims,” Sink said in a press conference Tuesday.

“This is an outrageous example of an overactive judge who was lobbying the legislature and then became, in effect, the personal contract manager to build something outrageous like this building full of 20 miles of mahogany, private facilities for judges, a 120,000-square-foot building to house 120 people,” Sink said. “It’s more than an embarrassment.”

Update II:

Sink sent a letter to Gov. Charlie Crist and Chief Justice Charles Canady, along with a copy of the audit, seeking action from the Inspectors General:

The Honorable Charlie Crist
Governor of Florida
The Capitol
Tallahassee, Florida 32399

The Honorable Chief Justice Charles T. Canady
Florida Supreme Court
500 South Duval Street
Tallahassee, Florida 32399-1925

Dear Governor Crist and Chief Justice Canady:
Enclosed is a copy of the Department of Financial Services’ audit report concerning the Department of Management Services (DMS) Fixed Capital Outlay Project to construct the new First District Court of Appeal (1DCA) courthouse.  This audit, conducted by my Bureau of Auditing, shows that DMS lost control of the project and spent millions more of taxpayer dollars than was necessary to build this courthouse.  The audit lists 17 findings that appear to show actions inconsistent with Florida Statutes, the Florida Administrative Code, or acceptable internal control practices.

I called for the audit under the authority of Section 17.03, Florida Statutes following reports in the St. Petersburg Times that pointed to profligate spending of taxpayer dollars on this project; which is particularly notable at a time when our court system – and our state – continues to make cuts to meet budgetary constraints.

I am transmitting a copy to each of you in your capacity as heads of the executive and judicial branches, and I strongly urge you to turn this matter over to your Inspectors General for further investigation of the failures outlined in this audit.  The audit findings strongly suggest that DMS officials acquiesced to actions by judges that were inconsistent with the prohibitions of Article V, Section 13 of the Florida Constitution that all justices and judges shall devote full time to their judicial duties.  Mr. Chief Justice, I urge you to convey our audit record to an investigative panel of the Judicial Qualifications Commission to determine what disciplinary action is warranted for the questionable conduct revealed by the audit.

Florida laws provide common sense internal controls to ensure that state-owned buildings are constructed in the most cost-effective manner possible.  In the case of this courthouse, our audit shows that these controls were circumvented and the interests of the state and the taxpayer were not protected.  Two significant categories of failures were found by the audit:

First, the Department of Management Services did not use the time-tested process of competitively bidding out this project and also began construction on the project without a set maximum price, which was not determined for more than a year after construction had commenced.  Instead, DMS gave itself an exemption from the statutory requirement for competitive bidding of large state construction projects.  Contrary to the statute and its own administrative rule, DMS offered no written justification for its abandonment of the competitive bid process.

Second, this audit reveals that key decisions regarding the courthouse by DMS were ceded to a few powerful 1DCA judges whose level of involvement raises questions of exercising good judgment and potential ethical considerations.  DMS ultimately abdicated to the judges its statutory authority in making decisions related to the construction of the courthouse and operated from the outset without a guaranteed maximum price to protect the state’s interests, while the contractor received both a guaranteed maximum profit in addition to fees for services as the construction manager.  With no guaranteed maximum price established until more than a year into the project, costs escalated quickly with taxpayers footing the bill.

The lion’s share of those funds – $33.5 million dollars in Florida Facilities Pool bond proceeds – were borrowed money, making the project the only courthouse ever built by the state of Florida with bond proceeds. It is also worth noting that the first two years’ worth of interest on these bonds — approximately $5 million dollars — was taken from the Workers’ Compensation Trust Fund rather than the Florida Facilities Pool.  In 2008, $5.5 million in extra funding for the courthouse project was taken from the Workers’ Compensation Trust Fund, over and above the bond funding and despite resolute objection from my office.  The Workers’ Compensation Trust Fund is set to fund the costs associated with regulating and adjudicating Workers’ Compensation cases.  Especially in these trying economic times, it is not appropriate for any portion of the assessments paid by Florida’s employers and insurers to contribute to the lavish appointments at an appellate courthouse facility.

This audit determined that the annual lease payments due from the 1DCA for the new courthouse will be insufficient to cover the annual debt service, making it appear to be the only facility in the pool with a debt service that is subsidized by all other agencies in the pool.  Since this building is nearly complete and the taxpayers’ money has already been committed, I recommend that the best possible use of this space be identified before the building is allowed to open, taking into consideration the needs of other state agencies and the public.

The audit clearly shows that without compromising in any way the functional aspects of the new courthouse facility, this project could have been – and should have been – constructed within the budget of the original legislative appropriation.  Taxpayers are entitled to expect that officials responsible for construction of new state-owned facilities exercise proper stewardship of funding, and as this audit shows, that due measure of stewardship was absent here.

Sincerely,

Alex Sink
Enclosure
cc: Chief Judge Paul Hawkes
Secretary Linda South
Senator J. D. Alexander
Representative David Rivera

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