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ARTHUR E. TEELE JR.
COMMISSIONER
December 28, 1997
Dear Colleague:
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P.O. BOX 330708
MIAMI, FLORIDA 33233-0708
(305)250-5390
FAX (305)250-5399
REVISED FIVE YEAR
FINANCIAL RECOVERY
PLAN (THE PLAN
As you are aware, on December 15, 1997, Mayor Suarez, appointed me to serve as the
liaison to the Governor's Emergency Financial Oversight Board (The Board). This
appointment, has required that I spend significant hours with the interim City Manager
(Frank Rollason), his staff, the City Attorney (A. Quinn, Jones), his staff, the External
Auditors (Jose Rodriguez, KPMG, Peat Marwick), the Financial Advisor (David Kaplan,
Prudential Securities), and the City's consultants (Nabors, Giblin & Nickerson, P.A.,
Government Services Group, Inc., and David M. Griffin & Associates, Ltd.). I can
personally attest to the professionalism, technical competence, and sincere dedication of
all parties mentioned. I specifically, commend Bob Nachlinger, Assistant City Manager,
Carlos Gimenez, Fire Chief, Deputy Fire Chief Wheeler, and George Wysong, Assistant
City Attorney. I am equally impressed with the technical and administrative support staff
provided to our effort by numerous City employees. Additionally, the City's pro bono
financial advisor, external auditors and consultants, whose work is ongoing deserves
commendation and accolades for their prompt and selfless response to the burden placed
upon them during this holiday season. Many of our City employees, specifically, those
mentioned earlier, have worked throughout Hanukkah, Noche Buena, Christmas,
Kwanzaa, and the New Year's season. Their families deserve our gratitude and
commendation for such sacrifice which was "above and beyond" the call of duty.
In this regard, it should be noted that Mayor Suarez, Jose Garcia Pedrosa (the City
Manager nominee), the financial advisor, and Rodriguez, Trueba and Company (the
accountant consultant) have all offered valuable insights for The Plan. Further, they have
been afforded the opportunity to "weigh in" on each and every element of The Plan. I
understand that the Mayor may offer an alternative to portions of the proposed Plan. If
so, collectively, I urge that we give serious consideration, and weigh carefully each
proposal that the Mayor may submit for inclusion in the revised Plan. To date, the Office
of Mayor has been reluctant to propose any changes or additions to the Plan; I believe
this to be a serious mistake, in that, the Mayor's dynamic approach to address
neighborhood and city wide issues is not included in The Plan (the Core Intiatives) which
is before us today.
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neighborhood and city wide issues is not included in The Plan (the Core Intiatives) which
is before us today.
I invite your close attention to the "Core Initiatives" contained in The Plan at pages 4-6.
The Core Initiatives are designed and intended to constitute the work plan for the Mayor,
the Manager, the Commission, and all instrumentalities of the City. The Board expects
and requires that if the City intends to ndertake an extensive effort in any area, particularly
if it will incur'a cost or expend considerable -city resources , it must be included in The
Plan.
This Dear Colleague letter is designed to memorialize and raise for your perusal and
review, issues that the Office of the Vice Chairman, identified pursuant to the Board, the
Mayor and City Commission's desire to expedite the City's financial recovery.
Our overall goal was to maximize the City's revenue streams, This goal is achievable in a
variety of ways;
I. The implementation of the stated management and operational goals.
(See Page 4, and Chapter III of The Plan)
II. Enhance the City's recurring revenue streams.
(See Page 6, 56-59 of The Plan)
III. Pursue strategic investments for the City of Miami.
(See Pages 63-65)
IV. Establish a positive partnership with the Governor's Financial Emergency
Oversight Board. (The Board)
I. The Implementation Of The Stated Management And Operational Goals
ADDITIONAL AND EXPANDED CORE INITIATIVES
Currently, there are 15 stated Core Initiatives, As we move toward
implementation of The Plan, more initiatives are likely to evolve, and we must
insure that The Board is fully apprised of these priorities in a timely manner.
1) The Mavor's Cleanup and Beautification Program
The Mayor initiated a city wide "campaign" to make Miami the most beautiful
city in the nation. It is clear that a majority of Miami residents and business
owners enthusiastically support the Mayor's goal to clean and maintain, our
streets and neighborhoods. I urge the City Administration to develop creative
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The Mayor's Cleanup and Beautification Program (cont'd)
proposals, and concepts to adequately support this important quality of life
initiative. It is appropriate to note that earlier this month the City Commission
established funding priorities for the CDBG program whixh includes an
allocation for physical improvements. To the extent that general funds and
Community Development Block Chants become available, and are eligible to
fund beautification activities, we should continue to fund the Mayor's Clean up
and Beautification Program as a Core Initiative.
2) CDBG Grant Compliance Review
The City takes serious note of a draft U.S, Department of Housing and Urban
Development (HUD), Office of Inspector General, Audit Report of the City of
Miami's Community Development Block Grant (CDBG) Program. If left
unresolved, the potential negative financial impact could be significant. I believe
it is imperative that the City seek all available outside resources, including but
not limited to the Governor, HUD officials (federal and local), and the private
sector to undertake a comprehensive compliance review of the City's CDBG,
HOME, and HOPE grant programs. This compliance review is critical to insure
that the City remains an eligible grant recipient of federal, state, and foundation
funds. Additionally, this effort will seek to minimize reimbursements to grantor
agencies, Because of the time sensitivity of this issue, and the potential
financial impact, I urge that the CDBG Grant Compliance Review be added to
The Plan as a Core Initiative.
3) Extensive Training, Certification, Basic and Continuing Education
Employee Initiative (see page 6 of the Plan)
(A) The City must undertake an extensive "bottoms -up" training initiative, to
insure that each City employee is afforded the opportunity to become
computer/Internet literate, a high school graduate or General Equivalency
Diploma, and have the opportunity for "certified" training programs, and
professional licensing. Funds for this initiative are dependent upon general
funds available from the proceeds generated by the Solid Waste Fee.
(B) In addition to training our current workforce, it is important to study the
feasibility of a tiered executive incentive programs to recruit, and retain
qualified candidates and employees. The External Auditor is directed to
conduct a thorough study to determine the feasibility of a tiered
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4.
4) Boundaries Function to the Charter Review Committee:
(See Page 5 of The Plan)
This committee should include the review of proposed municipal boundary
adjustments. The boundaries function of this committee should include a
thorough review of the feasibility and financial impacts that the adjusted
boundaries will have on the delivery of municipal services, and the City's
revenue streams, This Committee should advise and gage the citizen, business,
and governmental entity support and impediments to the boundary adjustments,
It is important to note, that the boundaries of the Community Redevelopment
Area should be expanded to capture the positive revenue streams that will result
from the major development activities which will be commence immediately
contiguous to the CRA's current boundary, over the next 12-18 months.
5) Strengthen Management. Audit. and Legislative Oversight:
Utilizing a portion of revenues from the solid waste fee, the City will strengthen
and enhance the Office of the City Clerk, the Office of Budget, the Finance
Department, Internal Auditing, the Office of Information Technology, and the
creation of the Office of Legislative Budget and Support (LBO), and provide
for additional contract compliance resources in the Departments of Solid Waste
and Community Development.
Pursuant to the City's Charter change a number of refinements to the
organizational structure are necessary. Most notably in budget matters, the
City Attorney, and City Clerk will require a greater degree of autonomy from
the Office of the City Manager. Pursuant to the revised table of organization,
these two offices are accountable to the City Commission.
6. The Creation of the Office of the Legislative Budiet and Sunnort
(LBO),
This Office is required to effectuate the separation of powers between the
executive and legislative branches of the City Government, The Legislative
Budget Officer, 2 budget analysts, and administrative support and security will
insure a check and balance as contemplated by the City Charter's change,
Initially, the Legislative Budget Officer will focus on progress toward
operational implementation, enhancement of recurring revenue through contract
compliance and the analysis and evaluation of options to insure a reserve for
strategic investments,
The LBO will have primary oversight responsibility, in cooperation with the
City Manager, for the coordination of budget submissions from the City
Attorney, -City Clerk, Bayfront Park Trust, Miami Exhibition and Sports
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Authority, Off -Street Parking, the Community Redevelopment Agency,
Downtown Development Authority, and all other semi -autonomous City
agencies.
--The LBO will coordinate and report directly to the City
Commission on the implementation of the annual findings and
recommendations of the External Auditor.
--The LBO will monitor and apprise the City Commission of the
recommendations of the City's Financial Advisors.
--The LBO will monitor and coordinate, and jointly with the City
Manager will insure that the City Commission is fully apprised of
the financial Oversight Board's requirements.
H. Enhance the City's Recurrine Revenue Streams
(A) Transfer Tax Exempt Properties to Taxable Status: (see page 6 of the Plan)
Pursuant to the Mayor and City Commission's desire to maximize positive
recurring revenue sources for the City of Miami, the City will initiate all prudent
actions required to convert all ("County Land Use Code [Cloc 90]) properties,
The City currently has liens on between 350 to 375 CLUC 90 properties and has
identified nearly 1,000 parcels of vacant government -owned land ("VGOL").
Conservatively, CLUC 90 properties cost the City approximately $100,000 to
$200,000 per year in maintenance.
For each sale of a CLUC 90 property, the City might realize: (1) a reduction of
expenses of approximately $300, (2) the proceeds from the sale of approximately
$7,000 less expenses of cost to quiet title and cost to close of approximately of
$3,500 for net proceeds of approximately $3,500, (3) an addition to the tax rolls of
a home with an approximate value of $50,000 yielding recurring property taxes of
approximately $250, (4) an undeterminable increase in the property values of the
homes in the surrounding neighborhoods, and (5) an addition to in -fill initiatives.
Multiply these amounts by the total amount of actual CLUC 90 properties that
might be sold and the result is a formidable strike to combat urban blight.
(B) The Laredo Texas Plan:
The City Manager, jointly with the Community Redevelopment Agency, shall
explore the feasibility of implementing the Laredo, Texas Plan to develop the
converted Cloc 90 parcels to the City's active tax rolls. Federal assistance will be
sought to fund the implementation of the "Laredo Texas Plan." This Plan utilizes
a housing corporation to develop the Cloc 90 parcels.
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(C) Federal, State and Foundation Grant Monies
Pursuant to the City's desire to maximize all opportunities to avail itself of federal,
State, and foundation grant monies, the Mayor, City Commission, and City
Administration will, on an ongoing basis, commit the necessary resources to
aggressively seek said grant opportunities in Tallahassee, Washington, D,C,, and
all other venues that are lucrative. The City will immediately establish a
relationship with the Governor's Budget Office to craft a FY '98 legislative
strategy to insure additional revenue streams for the City of Miami.
(D) Proposed Fire Rescue Assessment: (see page 56 of The Plan)
In recognition that the potential legal challenges by the assessed property owners
in Miami, I strongly urge the establishment of a formal hearing process, with
appointed Hearing Officers, to review all appeals to the assessed fire rescue fee.
By ordinance, I recommend that the City of Miami create a hearing process in
which 1-3 Hearing Officers, appointed by the City Commission, will be paid on an
hourly basis, and their qualifications shall be established by ordinance, The
Hearing Officers will render written opinions and recommendations to the City
Manager, The City Manager will review the Hearing Officers' findings, and make
recommendations to the City Commission. The City Commission may hear the
appeal in a quasi-judicial forum, or absent a decision to hear the case, the property
owner may seek remedy in the appropriate court of jurisdiction.
I urge the establishment of a "no exemption, full collection" requirement for all
buildings that receive fire rescue service, other than churches, synagogues,
temples, health care facilities and social service agencies provided, said entities are
not for profit, institutional tax exempt properties in accordance with Florida State
statute. This provision specifically will not exempt federal, state, local, or
governmental institutions, including, but not limited to the City of Miami's General
Services Administration, the Miami Sports and Exhibition Authority, Downtown
Development Authority, Off Street Parking.
(E) Fire Inspection Fee (see page 57 of The Plan)
Although the previously approved Plan assumed that the Fire Inspection Fees of
approximately $1 million would not be collected, the City Commission reserves its
option to repeal (as approved by the Oversight Board) or to leave the Fire
Inspection Fee in place.
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7.
(F) Solid Waste Fee: (see page 56 of the Plan)
The Solid Waste Fee is an independent fee assessed to property owners. Its
increase or decrease is the prerogative of the City regardless of the imposition
of any other fees or taxes. It is recommended that the Solid Waste Fee be
reduced to $55 per year, with an annual Cost of Living Adjustment (COLA),
from $160, instead of its complete abolition. The revenues generated from this
fee would yield approxiamtely $3.5.million.
The receipts of the proposed solid waste fee can support in part, the costs
associated with the Core Initiatives to provide "Extensive Training,
Certification, Basic and Continuing Education Employee Initiative."
Additionally, this fee will assist in the support of creation of the Office of
Legislative Budget and Support. This solid waste fee should be linked to the
changes in the City's boundaries,
(G) Restore the Community Redevelopment Authority to a Quasi -Autonomous
Entity. (See Page 86 Of The Plan)
A) The Community Redevelopment Authority (CRA) is restored to its status
as a quasi -autonomous entity as contemplated under State law. The City
Commission will continue to serve as the Board of Directors of the CRA. The
CRA will primarily utilize the private sector and contract resources,
Additionally, the City will fully reimburse the CRA for March 31, 1997,
unilateral sale of the Miami Arena land to the Miami Sports and Exhibition
Authority. (see City Manager's memo dated December 5, 1997). This was
intended as a loan to the City's general fund, which must be repaid to avoid the
CRA's default on its bonds.
B) A study and plan to adjust the CPA boundaries must be accomplished
before September 30, 1998.
(H) The Neighborhood Jobs Program exists as division of the Community
Development Department. As the City of Miami, the fourth poorest city in the
nation, is on the brink of transitioning thousands of welfare recipients to work
program, it is wise to examine closely the roles, resources and responsibilities of the
Neighborhood Jobs Program.
III. Pursue Strategic Investments for the City of Miami:
A) The City must re-evaluate and restructure its relationship with Off -Street Parking
B) Parking Garage Number Four. Upon the defeasance of the Convention Center
Bonds, the Parking Garage to the Convention Center would be an asset available for
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sale. The cost of the Parking Garage was $15 million in 1980. The sale of this asset
could yield approximately $17 million.
C) MRC Building. The MRC Building was purchased at a cost of approximately
18 million from the issuance of $22,000,000 City of Miami Special Obligation Bonds
(the "FPL Bonds"). It is recommended that the City Manager examine the possibility
of a sale -lease back of the property to a developer interested in leasing out the unused
portions of the property, If the property were to yield $18 million, then the City
could elect to use these funds to either defease a portion of the debt or for any other
purposes permitted by the issuance. The City would become a tenant, but cash flow
would improve dramatically as the principal and interest portions attributable to the
building would no longer drain revenues and property taxes on the portion of the
building not being utilized by the City would be added back into the budget. This
sale -lease back must remain off budget until it can occur with certainty.
IV. Establish a Positive Partnership with the Governor's Financial Emergency
Overnight Board
We must nuture our partnership with the Governor's Financial Emergency Oversight
Board at this time it is one of the most important weapons in our arsenal to
reestablish Miami's fiscal health and positive image. A positive working relationship
with the Board requires the Office of the Mayor, the Office of the City Manager and
the entire City Commission to immediately establish a renewed mindset and attitude.
We are not alone in our journey, we must begin to view those who have an
investment in our community, the residents of Miami, the citizens of Miami -Dade
County, Federal and State Legislators, and the Governor's Oversight Board, as our
partners.
The Board shares our goal and quest to return the City to financial stability. I have
personally observed the Board's frustration with the City's failure to apprise it of
certain substantive federal audit findings. Many of the Board Chairman's concerns
are similar to those expounded by Mayor Suarez. The Board Chairman wants to
expedite Miami's financial recovery, and thereby, absolve the Board of its oversight
responsibilities. Clearly, the Board does not have an interest to become a permanent
fixture of the City of Miami government. With this realization, we must use the
"good offices" of the Board to positively contribute to the City's reestablishment of
our financial well being. More specifically:
A) The Governor's Financial Emergency Oversight Board should be briefed and kept
fully informed of the City's efforts to use the Uniform Method to collect the proposed
Fire Rescue Assessment.
B) In consultation and coordination with the Board, the City should insure that the
State of Florida makes early and prompt payment of the City's proposed Fire Rescue
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Assessment which will be imposed on all State owned property which receive fire
rescue service in Miami.
C) The City Administration shall enlist the Board and the Office of the Governor to
enlist the Board and the Office of the Governor to encourage the federal government,
Miami -Dade County Government, and the Dade County School Board to voluntarily remit
the proposed Fire Rescue Assessment fees which will be imposed on them.
D) In consultation with the Board, the City -will seek the support of the Governor's
Budget Office to propose legislation in the upcoming session to address the cities
unfunded mandates, and secure state support to assist in the City's recovery from its
financial emergency
The City's team of experts, staff, consultants, and the volunteers who produced the
Stierheim Report, and the Blue Ribbon Task Force Reports, have dedicated thousands of
person hours to outline the recovery efforts for the City of Miami. Ultimately, it is
encumbent upon us as the City Commission to demonstrate the political courage to make,
what may be unpopular decisions in our respective districts, but for the benefit of our
citizens and those yet unborn citizens of Miami.
Faithfully,
Arthu Tee
Vice -Chairman
Miami City Commission
Enclosure
cc; The Honorable Xavier Suarez
The Honorable Chairman and Members of the
Governor's Emergency Financial Oversight Board
Mr. Frank Rollason, Interim City Manager
Mr. Walter Foeman, City Clerk
Mr. A. Quinn Jones, III, City Attorney
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WHITE PAPER -- FOR DISCUSSION ONLY
REVISED FIVE YEAR FINANCIAL RECOVERY PLAN
Arthur E. Teele, Jr., Vice Chairman, Miami City Commission
1. The Department of Off -Street Parking. In each of the last three fiscal years,
the Department of Off -Street Parking ("DOSP") has generated net income in
excess of $2 million, The City currently has outstanding parking facility bonds (the
"Parking Bonds") issued for the benefit of DOSP in the aggregate principal
amount of approximately $15 million. It is recommended that the Parking Bonds
be defeased in order to release the payment of ext;ess net revenues to the City and
to free itself of the onerous conditions of the Bond Legislation.
DOSP maintains restricted reserves of approximately $10 million, Of this amount, DOSP has
designated $3 million for debt service on the Parking Bonds and $5 million for a proposed parking
garage in Coconut Grove. [It is recommended that] DOSP surrender $8 million of the $10 million
in restricted reserves (placing the construction of the proposed parking garage in temporary
abeyance) as a partial repayment to the City for its defeasance of the Parking Bonds. Assuming
continued excess net revenues equal to the past three years, plus the amount of debt service that
no longer would be required to be paid, the City could expect an annual return of approximately
$3 million to $3.5 million. The City Manager is requested to have all calculations and assumptions
verified by the City's Assistant City Manager for Finance and Administration in conjunction with
the auditors of DOSP and concurrence of the City's Bond Counsel and the City's Financial
Advisor.
2. City of Miami/University of Miami James L. Knight International Center.
The Convention Center currently operates at a net operating gain of $1 million, but a net loss after
debt service of approximately $5 million. The pledge used to pay the debt service on the
Convention Center Bonds includes an excise tax and a tourist development tax. The proportional
amount of the net loss attributable to each of these sources is approximately $3 million and $2
million, respectively. The market value of the Convention Center is approximately $20 million to
$35 million, given its current condition and possible use. [It is recommended that] the City place
into escrow for the repayment of the Convention Center Bonds an amount equal to approximately
$20 million to be derived from the sale of the FEC property and the repayment of funds from the
restricted reserves of DOSP as mentioned above. [It is further recommended that] the Convention
Center be sold for an amount not less than the - remainder required after such deposit to fully
defease the Convention Center Bonds and make such repayments (see above) as may be deemed
necessary to convey the property to the purchaser. The result to the City from the sale and the
funding of the escrow would be the defeasance of the Convention Center Bonds, thereby reducing
the total debt of the City, and the release from a net loss of $5 million per year, plus a one-time
payment of any overage that might result from the sale over the amounts required to be deposited.
The City Manager is requested to have all calculations and assumptions verified by the City's
Assistant City Manager for Finance and Administration in conjunction with the auditors of the
City and concurrence of the City's Bond Counsel and the City's Financial Advisor.
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3. Parking Garage Number Four. Upon the defeasance of the Convention Center Bonds,
the Parking Garage to the Convention Center would be an asset available for sale. The
cost of the Parking Garage was $15 million in 1980, The sale of this asset could yield
approximately $17 million,
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WHITE PAPER -- FOR DISCUSSION ONLY
REVISED FIVE YEAR FINANCIAL RECOVERY PLAN
Arthur E. Teele, Jr., Vice Chairman, Miami City Commission
CLUC 90 Properties and Vacant Government -Owned Lands. The City currently has liens on
between 350 to 375 County Land Usage Code •90 ("CLUC 90") properties and has identified
nearly 1,000 parcels of vacant government -owned land ("VGOL"). CLUC 90 properties have
fallen into states of extreme disrepair and should escheat to the appropriate municipal or county
government. Collectively, CLUC 90 properties cost the City between $100,000 to $200,000 per
year in maintenance. VGOL is underutilized property that generally serves no useful purpose.
The result of the sale of CLUC 90 properties and VGOL would be the reduction of the
expenditure per annum on such properties, a portion of the proceeds from the sale of such
properties to flow to the City, the inclusion of such properties on the tax rolls, the provision of
affordable housing in targeted areas and the overall reduction of urban blight. For each sale of a
CLUC 90 property, for example, the City might realize: (1) a reduction of expenses of
approximately $300, (2) the proceeds from the sale of approximately $7,000 less expenses of cost
to quiet title and cost to close of approximately of $3,500 for net proceeds of approximately
$3,500, (3) an addition to the tax rolls of a home with an approximate value of $50,000 yielding
recurring property taxes of approximately $250, (4) an undeterminable increase in the property
values of the homes in the surrounding neighborhoods, and (5) an addition to in -fill initiatives,
Multiply these amounts by the total amount of actual CLUC 90 properties or VGOL that might
be sold and the result is a formidable strike to combat urban blight.
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WHITE PAPER -- FOR DISCUSSION ONLY
REVISED FIVE YEAR FINANCIAL RECOVERY PLAN
Arthur E. Teele, Jr., Vice Chairman, Miami City Commission
Budgeting For Asset Sales and Privatization. In order to facilitate possible near term
asset sales and privatizations that may occur in more than six months from the date of this
of this white paper, it is recommended that the City Manager withhold in a separate
account $500,000 from the sale of the. FEC tract for the use by the City in hiring
consultants to conduct appraisals and feasibility studies in order to prioritize and bid out
asset sales and possible privatizations. This amount would be in addtion to those amounts
suggested by the current draft of the five year plan,
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