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North Florida Broadband Authority
$30,000,000 Stimulus Project On Death Row

Richard Powell of Powell & Jones presents the FY2013 audit to the NFBA. It was a year late.

LAKE CITY, FL – The North Florida Broadband Authority made a brief appearance on the Lake City, City Council agenda last night to formalize a backroom decision designed to cover up City Manager Wendell Johnson's failure to advise them of the downward spiraling difficulties of the Authority, when without a word, they voted to withdraw from the Authority. What the secretive Johnson, along with his silent City Council, didn't tell the public was that last Monday in City Hall the fate of the failed $30,000,000 Obama Stimulus funded broadband project was sealed and the NFBA was put on death row.

What did the City Manager keep from the public?

stories are here

Last Monday's September 29th North Florida Broadband Authority (NFBA) meeting began with a presentation of the Fiscal Year 2013 audit by Richard Powell. FY2013 ended on September 30, 2013. Neither City Manager Wendell Johnson, who had previously complained about the lateness of the NFBA audits, nor anyone else asked why it took Powell a year to prepare the audit.

After Mr. Powell's difficult-to-follow in the extreme audit presentation he was asked some questions.

On October 18, 2013, the NFBA entered into an agreement with Affiniti Florida which authorized the transfer of the operation of the network and its assets to Affiniti. At that time the NFBA had overspent its budget by approximately $2.5 million dollars.

Affiniti was to take on some of the NFBA debt. The $750,000 TD Bank unsecured loan was not a part.

Responding to questions regarding the repayment of the NFBA debt Mr. Powell said, "We weren't able to ever get information directly from Affiniti. The next step -- the board would prepare a response to the audit. It would possibly be improper to include that verbiage in a response. I think I said three times, recognizing the situation, the board went and entered into an agreement with the private company and the point of that was to pay off the obligations and operate the system and almost a year later that hasn't happened yet."

NFBA Attorney Jennifer Springfield addressed Auditor Powell, "I should have asked you this previously. Under liabilities and net position. Can you explain $539,228 amount of intangible right of use payable. Is that -- oh I know what that's for. That's the umm -- umm -- what's it called?"

Had Mr. Powell read his audit and done a little research he would have realized that the “intangible right-of-use” should have been “indefeasible” right to [or of] use. This is the bandwidth that enables folks on the network to get connected to the Internet.

The $539,228 is money that the NFBA still owes Level 3 and should have been paid off from the grant some time ago.

The total amount and circumstances surrounding the IRU ($6,000,000 plus) is something on which the NTIA, NOAA, the Dept. of Commerce OIG, Wendell Johnson and the NFBA just looked the other way. 

Chairman Reams tried to help, "It is the towers? Is it related to the towers?"

Attorney Springfield, "No. It's the stuff that we have in Orlando and Tampa."

The Chairman tried again, "The data centers? I'm not sure what that is."

Attorney Springfield, "Right. Mr. Powell?"

Auditor Powell makes his attempt, "It is a component of the intangible asset. It's the amount that isn't earned -- I think."

Attorney Springfield, "That isn't what?"

Auditor Powell, "That hasn't been earned yet. So it offsets the intangibles as an asset. And that is because of the contributed assets and so it's a portion that hasn't been earned by the Authority at this point. It's a computation. It's not something you pay in cash."

Chairman Reams, "Right."

Attorney Springfield, "Right."

Auditor Powell concludes "You're puttin' me on the spot there."

Mr. Powell's bill for the Audit was $28,000.

"Gestures" Communicated a Pay-Off: City Manager Johnson

Richard Powell of Powell & Jones reviews the FY2013 audit.

City Manager Wendell Johnson asked Auditor Powell if the TD Bank lawsuit would be against the NFBA, Affiniti, or both.

Mr. Powell responded, "The loan officer told me it would be against NFBA. His words exactly was 'imminent'."

City Manager Johnson opined, "It's been about a year since we entered into a contractual agreement with Affiniti... If we get a lawsuit from TD Bank to NFBA it's like tryin' to get blood out of a rock because I know what the balance is, we all do."

Mr. Johnson continued, "I was led to believe by Darol Lain in his many communications, at least in his gestures, that they were gonna to pay these things off, to include a negotiated contract with TD Bank."

Attorney Springfield told the Board, "The remaining debt, under the agreement, that's in place with Affiniti -- they were and they did initiate the process of trying to resolve those debts through settlement negotiations with individual vendors, some of which they did, but there is still the bulk of it remaining... They have lately indicated that they don't intend to pay the TD Bank loan."

In an earlier meeting, City Manager Johnson moved that any debts under $50,000 didn't have to be reported to the Board.

Financial Emergency

According to the audit, the NFBA is in a state of Financial Emergency and must report that to the State of Florida.

Attorney Springfield told the Board, "They [the state] might do their own independent investigation audit or that sort of thing. I have placed a call to the Governor's Office and -- and as of the middle of last week it hasn't been returned."

City Manager Johnson said the state can't help, "First off, the state's gonna  be involved with an agency that they are just absolutely not familiar with and there's not gonna be any assistance that they can give us that I'm aware of. Our problem is that we're in debt. We have no money to pay for it. Now that is the NFBA. I guess where I'm really kinda confused is why -- Where's the Feds? The NTIA’s got a – they're stakeholders in this and I'm sure and I have to believe that we're not the only BTOP recipient that has this kind of problem."

Mr. Johnson continued, "I've been here since day one and I know everything for the most part in this, as far as the dynamics of how the plan has worked from day one and what it has cost and contributed -- I won't say cost, but certainly contributed to where we are at today. And the NTIA is damaged -- they have got a -- they're accountable for part of this. There is no question in my mind about that.

City Manager Wendell Johnson was involved in every major decision affecting the North Florida Broadband Authority, including voting to approve the agreement with Affiniti, which included the terms for termination.

Thursday in part II of NFBA on Death Row: The termination

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