In a report released Tuesday, the Jacksonville Inspector General found some major irregularities regarding Jacksonville’s Access to Capital program.
“The Office of Inspector General (OIG) received a complaint alleging that the $1.2 million loan pool from the city of Jacksonville’s, Jacksonville Small Emerging Business Access to Capital Program, Jacksonville Ordinance Code, Section 126.602 was missing and/or unaccounted for. The complainant was designated as a Whistle-blower based on the information provided. The allegations were coordinated with the State Attorney’s Office for possible theft of funds, however, the OIG discovered that the loan pool funds (totaling $932,032.65) had been returned to the city in 2014, and subsequently initiated a management review in April 2015,” read the executive summary.
The Access to Capital Program was established, the report states, “to provide capital to Jacksonville Small Emerging Business vendors in order to successfully perform construction, contractual service/supply and professional jobs with the city of Jacksonville or one of its participating independent agencies.”
What went wrong?
According to the IG report, the Office of Economic Development “did not understand its responsibilities” related to the ordinance.
The last Access to Capital loan was issued in July 2012 by First Coast Micro Loan, a subsidiary of Essential Capital. In 2013, Essential Capital wanted out of the program. Meanwhile, $932,032.65 returned during the months of July and August 2014 by Essential Capital Finance Inc., formerly known as Jacksonville Economic Development Co. Inc. has laid dormant in Jacksonville’s “unidentified remittance liability account.”
The report goes on to say that OED officials were “not forthright with the return of the Access to Capital Program loan pool with various independent authorities, who contributed.”
Access to capital dates back to a 2004 COJ ordinance. From 2005 to late 2012, there was oversight: first from the COJ ombudsman, then from the Equal Business Opportunity Office. After November 2012, there was no oversight.
Its ordinance clearly assigned oversight of the program to the Office of Economic Development.
In testimony, OED staff asserted that they did not realize the AC Program was still their domain.
According to a former accountant for Essential Capital, the program stopped because Essential Capital was not getting any requests for loans.
Conflicting claims from Brown administration employees with oversight responsibilities include assertions that, as of 2013, the program no longer existed, and a claim from Paul Crawford, the Deputy Director of the OED, that oversight responsibility belonged to the ombudsman.
Three corrective steps were suggested by the Inspector General office.
“Determine whether the Access to Capital Program should continue and take appropriate steps based on the decision, and update the COJ website accordingly.
“Pursuant to the future of the Access to Capital Program, appropriately address any distribution of funds per the terms of the Access to Capital Program master contract and the Interlocal Agreements.
“Based on the findings of this Management Review take any corrective action deemed appropriate.”
Given that there are measures for oversight in the 2004 ordinance, including biannual reports to the Mayor and the City Council Audit Committee that were supposed to identify the size and the number of businesses assisted in the two previous quarters, one wonders where it all might have gone wrong. Testimony in the Inspector General’s report speaks to a lack of accountability across departments regarding the ultimate dispensation of this program, infused with a cavalier attitude regarding fulfilling the program’s actual purpose.
Florida Politics contacted the Lenny Curry administration for comment.
“We thank the Office of Inspector General for doing this important work,” Curry spokesman Bill Spann said. “Mayor Curry and his team will be addressing this type of mismanagement and lack of procedural controls from the Brown administration in the coming months.
“The Access to Capital Program (ACP) is important to our city’s small businesses and one that we would like to continue. While we review the internal processes and controls of the ACP, we will suspend it. During the suspension, we will reorganize ACP to implement a program which works for both our small businesses and our partners at the independent authorities. The end result will protect the taxpayer’s investment.”
Check back with us for updates on this important Jacksonville story.