Marco Island audit crisis prompts resignations, tension

After two heated meetings over Marco Island’s 2024 audit, accusations prompted the city finance director and city manager to hand in their resignations.  

But on July 14, City Council voted 4-3 not to accept City Manager Mike McNees’ resignation and to work on a transition plan; Chair Erik Brechnitz, Vice Chair Stephen Gray and Councilor Tamara Goehler voting yes. Supporters told him they need his help to finalize the city budget in September. 

“If 30 days from now, we can’t find a way to move forward collegially … with you all continually at war … I’d rather put a fork in my eye if we can’t … arrive at some level of collegiality,” McNees said before the vote. “Frankly, if you don’t act in good faith, I’ll be here in a month begging you to let me go.” 

The vote came nearly a week after the chair announced at council’s July 7 meeting he’d lost confidence in McNees and suggested not renewing his contract. 

A day later, Finance Director Guillermo “Gil” Polanco tendered his resignation in a one-sentence, handwritten letter to McNees, saying the city “would be better served” if he left. He’d been director since 2012 after nearly six years as director of accounting services at Edison State College, nearly five years as the Florida Attorney General’s lead senior auditor and two years at PricewaterhouseCoopers as an auditor. He could not be reached for comment. 

Councilors were dismayed that a “terrific employee” had resigned. 

Audit completed without alerting council 

The drama began July 7, when Brechnitz asked to add the audit to the agenda, noting it had a “material weakness,” was sent to the Florida Auditor General’s Office, a municipal bond platform and posted to the city website without Council’s knowledge. He read a list of 15 concerns he had, including: 

• The city manager knew about the material weakness since the first week in June and didn’t inform council. 

• The financials were uploaded to EMMA, the municipal bond platform that all bond holders and ratings agencies can access, which brings concerns that we could be in violation of our bond covenants. 

• The audit advisory committee has not met since April 2024; it’s required to meet three times a year with the auditor.  

“The thing that bothers me most is that the moment that this material weakness was discovered, the Council should have been notified,” Brechnitz said. “… These folks have known about it for over a month, and we haven’t been told, and I’m curious as to why not. They obviously didn’t want us to know.” 

But Polanco maintained the audit was a “clean opinion,” despite auditor CliftonLarsonAllen citing a “material weakness” in internal controls. Although CLA cited concerns over the 2023 audit by the prior firm, Polanco called it a “modified clean opinion.”  

For years, Brechnitz had pushed for a new auditor, and CLA was hired after the city had used Mayer Hoffman McCann for 10 years. Brechnitz and McNees had cited concerns over having the same auditor for a decade and McNees wanted a new auditor to “dig deep.” The city received the audit June 26 and it was due to the state June 30 but wasn’t provided to McNees and Council. 

Polanco said problems with the 2023 audit involved grants, including a Federal Emergency Management Agency disaster grant and how and when it should have been reported. “He was perfectly comfortable with how we accounted for it, so it’s just a different way of looking at the same transaction and how to account for it,” Polanco said of CLA’s auditor, Chris Kessler. 

Brechnitz maintained Polanco should have emailed Council about the material weakness, but Polanco said it’s the auditor who explains the findings. And, he said, the issues don’t affect Marco’s bond rating. 

Brechnitz said two Fortune 500 executives told him if this happened at their companies, top management would be replaced. Councilor Rene Champagne, a former corporate executive, agreed a material weakness is serious, “but you don’t fire people necessarily.” 

The attacks on McNees upset some councilors, with Councilor Deb Henry saying it was “sneaky” to bring it up without speaking to staff, and Councilor Darrin Palumbo calling it “backstabbing and wrong.” However, he noted that under Florida’s Sunshine law, it should be aired in public, so he put it on an overhead projector. 

Councilor Bonita Schwan, who has an accounting background, said it was inappropriate to bring this up before discussing it with staff and noted Brechnitz ignored rules on what items could be added to an agenda at a meeting. Councilors agreed releasing the audit to the public without telling Council was “unsettling, shameful and troubling,” but some called it necessary and supported Brechnitz. 

McNees said the discussion was bait-and-switch about firing him, calling it an “ambush” and pointed out the audit couldn’t have been placed on the agenda because it wasn’t complete until the state deadline. He said he’d been on emails with the auditor and Polanco “multiple times a day” for weeks.  

“There were points of accounting being argued, there were changes being made that affected many different schedules on the audit, there were esoteric issues being pointed out that were beyond even my MBA training to understand,” McNees explained, adding he was concerned. 

“If you want to know why you haven’t seen the audit letter … it’s because I haven’t seen it yet,” he said. “There’s no intent to withhold it.” 

He contended some concerns on Brechnitz’s list were “double jeopardy,” issues over six years that were dealt with during an annual performance evaluation. He pointed out it was he who had uncovered some of those issues.  

Since he joined Council in March, Champagne said, he’d met with McNees and Assistant City Manager Casey Lucius to discuss Marco’s financial status and audit and heard the new auditor found “sloppiness.” The audit was submitted on deadline because the auditor kept finding issues that needed to be corrected, he said, questioning if that was McNees’ fault; Brechnitz contended “the buck stops at the top.” 

Brechnitz reminded Council that a few months ago, he suggested the city hire an internal auditor to “review our internal controls. I was shot down. No one wanted to do that.” 

After the meeting, Brechnitz penned a letter to the editor, condemning McNees, saying he planned to write to the Florida Auditor General and Gov. Ron DeSantis.  

Auditor explains errors 

On July 14, the auditor told Council that two prior years’ audit statements contained errors, so 2024 beginning balances were adjusted to reflect those corrections, including for grants involving Hideaway Beach Tax District and FEMA.  

“If you make an error, it’s because your [internal] controls did not detect it, or they failed or they were not in place,” Kessler said, noting a grant payment was mistakenly paid twice. “… It was not caught until we noted it in the audit. It also caused the budget to go over in that category.” 

He said the city can work on internal controls and compliance issues, noting, however, “You all are in a strong financial position. …The numbers are accurate and the numbers are good.” 

Brechnitz seeks McNees’ resignation 

Without Council’s knowledge, Brechnitz and City Attorney Allen Gabriel had approached McNees the morning of July 14 to work out a resignation and severance package. At a meeting following the auditor’s findings, Brechnitz announced McNees had resigned, shocking Council. It was a special meeting to consider renewing McNees’ contract.  

McNees choked up when saying goodbye, thanking supporters and employees. He denied issues they’d cited were his responsibility and called the accusations hurtful. 

“Those are your responsibility and your predecessors and their predecessors. These people in this room have done an unbelievable job of preserving a level of service given the resources they have, and they deserve better than to watch me go down because of their failures, which are my failures,” he said of staff. 

Brechnitz apologized for the strong language in his published letter. Some councilors noted Brechnitz, who once supported McNees, wanted him to leave and agreed it might be time for a change, while others urged him to remain.  

Henry noted there were five new councilors who have never done a city budget. “We’re rookies,” she said. “We need a hand of steadiness, and I believe Mike McNees has the experience to help us through this process.” 

Councilor Darrin Palumbo questioned whether they could heal and move on after all this and doubted McNees would want to remain. Councilors apologized to McNees after a resident called it a lynching.  

McNees admitted this was causing duress.  

“What would I prefer? I think we’ve still got a lot of work to do,” he said. “… But is this relationship tenable? I think that’s a decision for you all sitting up there. That’s not a decision I can make. I serve at your pleasure. I give it my all every day.” 

After lengthy, heated discussions, residents speaking for and against, and councilors urging McNees to stay, he agreed. 

The audit committee is scheduled to meet July 17, after more than a year.