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North Bay Village commissioners weigh using developer payment to plug $2M budget gap
Summary
At an Aug. 20 workshop, staff disclosed $4 million of misclassified prior receipts and proposed counting a $2,022,600 developer community contribution as unrestricted revenue to close this year’s shortfall; commissioners pressed staff to await an independent audit and warned against relying on one-time developer money for recurring expenses.
North Bay Village commissioners reviewed a revised FY2025-26 budget on Aug. 20 after staff discovered roughly $4 million in prior contributions and fees that had been improperly recorded as available general-fund cash.
Village Manager Frank Rullison told the commission the misclassification arose from earlier development-related receipts tied to several development agreements and that staff adjusted the proposed budget to reflect the correct treatment of those funds. Rullison said the adjustments include removing $3.6 million in anticipated transferable-development-rights (TDR) sales and $2.4 million held in escrow, and counting $2,022,600 from the Related project as an unrestricted community contribution contingent on approval of the development agreement (DA).
"We now recognize that that was not general-fund money, but it was contributions and fees…that had landed in the general fund and had not been removed," Rullison said. He warned that without the anticipated $2,022,600, the village would face about a $2 million shortfall that would require personnel actions and other cuts.
Commissioners pressed staff on the wisdom of using a developer payment that depends on the DA’s approval as recurring revenue. The mayor and several commissioners said it is premature to include the Related contribution in the general-fund baseline while negotiations and the DA remain unresolved.
"Since it is Aug. 20…we still have not negotiated or approved the development agreement for the Related Group project. It’s premature to have a figure anywhere in the budget," the mayor said.
Rullison acknowledged the timing risk but said staff prepared a two-year plan to smooth the impact: include the developer money in the budget for FY2025-26, then make further reductions in FY2026-27 if needed. He advised that removing the contribution now would force immediate deeper personnel changes, including furloughs or layoffs.
Staff presented specific reductions already made to close the gap: about $827,004 in personnel savings (across police, code enforcement, the village clerk and other departments) and approximately $1,000,003 in nonpersonnel cuts. Rullison also said some police travel and equipment expenses—about $1,052,632—would be reimbursed from forfeiture funds in the short term, while cautioning that forfeiture proceeds are one-time and should not be relied on for ongoing costs.
Health- and retirement-related obligations also contributed to pressures on the budget: Rullison noted a large actuarial increase in the Florida Retirement System contribution and a reported 26% rise in the village’s health-insurance costs (about $346,804), which staff have budgeted as unavoidable increases.
Commissioners urged patience while an independent audit proceeds. Rullison said auditors were in their second week and staff asked for a solid audit result at least one week before a Sept. 16 first reading related to budget items; the commission must adopt a budget that is effective Oct. 1.
A commissioner who spoke during the workshop urged that staff prioritize protecting current employees and explore nonfinancial benefits and operational efficiencies—such as pilot work-from-home policies and better use of technology—to reduce turnover if cuts are necessary. Rullison and other commissioners warned that cuts to uniformed staff could risk losing officers to neighboring agencies offering higher pay or hiring bonuses.
Separately, a commissioner publicly criticized a colleague (Commissioner Acosta) for previously dismissing concerns about the budget and for resisting a follow-up sunshine meeting; the speaker said that behavior undermined public trust and thanked the mayor for scheduling the extra public review.
No formal budget votes occurred at the workshop. The mayor asked for a motion to adjourn, a commissioner moved and seconded, and the meeting closed. Staff said they will continue to refine the budget, respond to audit findings, and present final figures during the formal readings in September ahead of the Oct. 1 effective date.
