Marco Island Finance Director Resigns Amid Audit Dispute with City Council Chairman#

Background and Audit Dispute#

• Audit Findings: The FY2024 audit, conducted by CliftonLarsonAllen, identified material weaknesses in internal controls, specifically in state and federal grant reporting, detailed from pages 120–136 of the report posted on the city’s website. Brechnitz emphasized the severity of the term “material weakness,” noting it was unprecedented in his five years on the council (web:0, post:2). Polanco countered that the audit’s unmodified opinion—stating the financial statements were fairly presented per U.S. GAAP—constituted a “clean” audit, a position he defended at the July 7 meeting (web:0).
• Council Meeting Tensions: Brechnitz added an 18-point list of concerns to the July 7 agenda, approved by council vote, and moved to fire McNees, accusing him and Polanco of withholding audit information. McNees claimed he was unaware the audit was posted and had not seen the auditor’s letter of concern, with the presentation scheduled for August 4. A special meeting was set for July 14 at 2:30 p.m. for CliftonLarsonAllen to present findings (web:0, post:1).
• Polanco’s Resignation: Polanco, hired in 2013 and interim city manager in 2013, 2017, and 2019, submitted a handwritten resignation letter on July 8, confirmed by Assistant City Manager Casey Lucius. Councilor Deb Henry called it “the right thing,” while Councilor Bonita Schwan criticized Brechnitz for “inappropriately ambushing” Polanco and McNees, accusing him of misrepresenting Polanco’s performance (web:0).

Key Players and Context#

• Guillermo “Gil” Polanco: As finance director since 2013, Polanco oversaw Marco Island’s financial operations, contributing to its AAA bond rating in 2021, per Fitch Ratings (web:14). His interim city manager roles in 2013 (after Roger Hernstadt’s resignation), 2017 (after Lee Niblock’s termination), and 2019 (after David Harden’s leave) reflect his deep involvement in city governance (web:12, web:16, web:19). Polanco’s resignation letter was not publicly detailed, and he did not respond to inquiries (web:0).
• Erik Brechnitz: A Marco Island resident since 1995, Brechnitz has served on the city council since 2018, re-elected in 2022, and is in his final term due to the city’s eight-year limit (web:3, web:22). With a 55-year financial services career, including senior roles at Morgan Stanley and Raymond James, Brechnitz chaired the council multiple times and previously served as Decatur, Illinois, mayor (web:5, web:8). His aggressive stance on the audit and call for McNees’ ousting drew criticism from councilors like Schwan, who called it “backstabbing,” and Stephen Gray, a former banker, who was blindsided by the audit’s release (web:0).
• Mike McNees: City manager since July 2019, McNees faced scrutiny for not informing the council of the audit’s issues, despite being copied on emails between Polanco and auditors in early June. He argued the one-week gap between audit submission and the council meeting left insufficient time to agenda the issue (web:0, post:5). Brechnitz’s motion to fire McNees was not acted upon, with councilors like Rene Champagne seeking more information from auditors (web:0).
• Council Dynamics: The council, with four new members elected in November 2024 (Goehler, Gray, Henry, Schwan) and Rene Champagne appointed in March 2025, has faced divisiveness, including ethics complaints against Schwan, Palumbo, and Henry, dismissed by the Florida Commission on Ethics (web:7, web:22, web:23). Brechnitz’s leadership style, criticized for lacking transparency, has fueled tensions, notably over Sunshine Law disputes and a failed 2023 proposal to change “chairman” to “mayor” (web:6, web:21).

Broader Implications and Trends#

• Governance and Transparency: The dispute reflects Marco Island’s history of contentious governance, with short city manager tenures (1.3 years vs. a 5-year average for similar cities) and public accusations of Sunshine Law violations (web:16, web:20). Brechnitz’s claim that McNees and Polanco withheld audit information aligns with his prior concerns about transparency, yet his approach drew accusations of undermining council trust (web:0, web:6).
• Financial Oversight: The material weakness in grant reporting, involving 2 million, contrasts with Marco Island’s strong financial record, including a AAA bond rating in 2021 (web:14). The 2021 CAFR, presented by Polanco, received an unmodified opinion, highlighting past competence (web:14). The current audit’s issues suggest lapses in internal controls, critical in a city reliant on grants for infrastructure like water quality projects (web:8).
• Local Sentiment: Posts on X from @ndn and @TheNewsPress (July 8–9, 2025) reflect public and media focus on the audit controversy and Polanco’s resignation, with Brechnitz’s motion to fire McNees sparking debate (post:0, post:2, post:4). Councilor Schwan’s defense of Polanco underscores polarized views on Brechnitz’s leadership (web:0).
• Regulatory Context: The global fragmentation of financial regulations, costing 780 billion annually per the OECD, underscores the importance of robust internal controls, as highlighted in the BPI-GFMA-IIF paper (previous context). Marco Island’s audit issues, though local, mirror broader challenges in ensuring compliance and transparency.

Opportunities and Risks#

• Opportunities:
  • Strengthened Controls: The July 14 special meeting with CliftonLarsonAllen offers a chance to clarify audit findings and implement corrective measures, preserving Marco Island’s AAA rating (web:0, web:14).
  • Leadership Transition: Polanco’s resignation and the council’s review of McNees’ role could prompt a reassessment of financial governance, aligning with Brechnitz’s push for accountability (web:0).
  • Community Engagement: Transparency initiatives, like live-streamed council meetings, can rebuild trust, addressing Sunshine Law concerns raised by councilors and residents (web:4, web:6).
• Risks:
  • Council Instability: Ongoing divisiveness, evidenced by 3-3 voting deadlocks and ethics complaints, could hinder effective governance, as seen in the four-month delay to appoint Champagne (web:20, web:22).
  • Reputational Damage: Public accusations and Polanco’s abrupt exit may erode confidence in Marco Island’s financial management, impacting its bond rating and investor trust (web:14).
  • Legal Exposure: Brechnitz’s confrontational approach risks further Sunshine Law scrutiny, as past accusations of collusion highlight compliance challenges (web:20, web:23).

Recommendations#

• City Council:
  • Convene the July 14 meeting to transparently address audit weaknesses, ensuring actionable steps to strengthen grant reporting, as recommended by the Audit Advisory Committee, where Polanco served as liaison (web:24).
  • Foster collaboration through monthly meetings with department directors, as proposed by Champagne, to improve oversight and communication (web:18).
• City Management:
  • Appoint an interim finance director promptly to maintain continuity, drawing on Polanco’s precedent as interim city manager (web:12, web:16).
  • Implement AI-driven audit tools, as seen in financial crime prevention, to enhance internal controls and compliance (previous context).
• Residents and Stakeholders:
  • Attend the July 14 meeting (live-streamed at cityofmarcoisland.com) to engage with audit findings and advocate for transparency (web:4).
  • Monitor council actions via the city’s website and local media like Naples Daily News for updates on leadership changes.
• Regulators:
  • Support municipalities like Marco Island with guidance on grant reporting compliance, aligning with FSB recommendations for coordinated oversight (previous context).

Conclusion#

Guillermo Polanco’s resignation as Marco Island’s finance director on July 8, 2025, followed a contentious dispute with Chairman Erik Brechnitz over a FY2024 audit revealing 2 million in grant reporting errors. Brechnitz’s accusation of withheld information and motion to fire City Manager Mike McNees exposed governance tensions, amplified by a polarized council. While Polanco defended the audit’s “clean” status, the material weakness underscores the need for stronger controls. The July 14 special meeting offers a chance to address issues, but ongoing divisiveness risks further instability. Residents should engage via cityofmarcoisland.com, and council must prioritize transparency to maintain Marco Island’s financial reputation. Contact gpolanco@cityofmarcoisland.com for audit inquiries or certified advisors for governance guidance.