HomeMy WebLinkAboutR-97-0302J-97-309
5/5/97
RESOLUTION NO. 9- 3 U
A RESOLUTION, WITH ATTACHMENT (S), ADOPTING
CERTAIN MODIFICATIONS TO THE "CITY OF MIAMI
FIVE YEAR PLAN", DATED APRIL 15, 1997, SAID
MODIFICATIONS SET FORTH IN THE ATTACHMENT,
ATTACHED HERETO AND MADE A PART HEREOF;
FURTHER AUTHORIZING THE CITY MANAGER TO MAKE
ANY AND ALL NON -SUBSTANTIVE CHANGES TO SAID
PLAN NECESSARY FOR THE REPRINTING OF SAID
PLAN.
WHEREAS, pursuant to the Intergovernmental Cooperation
Agreement, dated December 23, 1996, by and among the Governor of
the State of Florida, the Financial Emergency Oversight Board and
the City of Miami, the City prepared the "City of Miami Five Year
Plan"; and
WHEREAS, said plan was adopted pursuant to Resolution
No. 97-297, on April 14, 1997; and
WHEREAS, since said Plan's adoption on April 14, 1997 by the
City Commission, the Administration has continued its efforts to
improve and clarify said document and to incorporate input
received from the City Commission, the Oversight Board, and
technical staff to the Oversight Board; and
WHEREAS, it is necessary for the City Commission to adopt
certain modifications made to said Plan by editing, adding or
ATTACHMENT (S)
<, CONTAINED
CITY COTWSSION
MEETING OF
MAY 0 5 1997
Revolution No.
97- 302
deleting existing sections, all of which are set forth in the
attachment incorporated herein;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY
OF MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the
Preamble to this Resolution are hereby adopted by reference
hereto and incorporated herein as if fully set forth in this
i
Section.
Section 2. Certain modifications to the "City of Miami
Five Year Plan", dated April 15, 1997, are hereby adopted, said
modifications set forth in the attachment, attached hereto and
made a part hereof.
Section 3. The City Manager is further hereby authorized
to make any and all non -substantive changes to said Plan
necessary for the reprinting of said Plan.
Section 4. This Resolution shall become effective
immediately upon its adoption.
PASSED AND ADOPTED this sth day of May 1997.
OE CAROLLO, MAYOR
ATTES - : ,
j WALTER J.,,EOE , CITY CLERK
APPROVED AS TO FORM AND CORRECTNESS:
h i
A4UXNW JON9W, III
CITY ATTORN
BSS:W1599
2 -
97- 302
CITY OF MIAMI
CITY MANAGER'S OFFICE
May 5, 1997
To: Mayor Joe Carollo and
Members of the City Commission
From: Edward Mar u
City Manag r
Subject: Amendments to the Five Year Recovery Plan
•i
Recommendation:
The Administration recommends that the Mayor and City Commission adopt the
modifications to the Five Year Recovery Plan and authorize the City Manager to make
any and all non -substantive changes to the Plan for its reprinting.
Background:
Between the adoption by the City Commission of the Five Year Recovery Plan on April
14, 1997 and today, the Administration has not stopped its efforts to improve and clarify
this document. We have received input from the City Commission, the Oversight Board,
the technical staff to the Oversight Board and from our own internal staff on items for
improvement to this document. We have also meet with Estimating Conference of the
Oversight Board which has reviewed and approved the proposed budget solutions.
While this Plan will be printed and distributed to all interested parties, it is not and will
not ever be a completed document. It will be changed and modified over the five years of
its life several times. What we are requesting to be approved today are some of the first of
these changes.
The changes in the document are in three separate areas. First are the edits and
modifications to existing sections of the Plan; second are new sections and inserts to the
Plan and third are deletions of portions of the Plan. These changes are detailed below:
97- 302
Edits and Modifications
Historic Perspective - This section has been modified to expand the portion on the
anticipated General Fund Deficit at September 30, 1996 and explain how the City will
address this deficit.
Comparison of Miami to Others - This section has been modified to explain the
problems inherent in such comparisons between cities.
Restoring Access to the Credit Markets - This section has been edited to include
suggestions, with which we agree, from the technical advisors to the Oversight Board.
Reorganization Plan - This section has been edited to move the reporting of the Internal
Auditor from the Assistant City Manager to a direct reporting relationship to the City
Manager.
Professionalizing Management - This section has been changed to incorporate
suggestions, with which the Administration agrees, regarding departmental strategic
planning made by the technical group to the Oversight Board.
Financial Plan Introduction - This introductory section has been edited to update the
charts and graphs in accordance with the modifications in the actual Plan.
Fiscal Year 1997 Plan - This section has been retitled Current Year Plan.
Fiscal Year 1998 Plan - This section has been retitled Future Years Plan and explains,
in detail, all of the budget solutions we will implement to balance each year covered by
the Five Year Plan.
Recurring versus Non -Recurring Matrix - this section has been edited to incorporate
the aforementioned budget solutions for all five years of the Plan.
Exhibits I through IV - These exhibits have been modified to incorporate the proposed
budget solutions detailed in previous sections.
Appendix II - Investment Policy - this appendix has been edited to correct a
transposition in the investment objectives.
New Pages and Sections
Estimated Timeline for Managerial Recovery Items - This section will be added to the
Managerial Recovery tab section of the Plan as Section 6.
97- 302
Fire Assessment Fee - Critical Events Schedule - This exhibit detailing the timeline for
implementation of the Fire Assessment Fee will be added as Exhibit III(a).
Deletions from the Plan
Blue Ribbon Task Force - In this section the Memorandum of Understanding is being
redrafted by the City Attorneys Office. As it is not final and since the narrative reflects
the substance of the City Commission action, it has been deleted.
Other Alternatives Considered to Address the 1998 Deficit - This section is being
deleted because the information discussed in this section is now incorporated in the
Future Years Plan section.
Fiscal Year 1999 and Beyond - This section is being deleted as it is now included, in the
Future Years Plan section.
97- 302
Historical Perspective
Introduction
The City of Miami has experienced a period of rapid change in its population over the last
ten years. The average resident of the City has become younger and poorer in the last
decade. These changes along with a stagnant property tax base have placed enormous
strains on the ability of the City to adequately service its residents. However, other
governments in South Florida have experienced the same pressures and have remained
relatively healthy financially. The difference is due to a number of factors, the most
important being past administrations not minding the business of government.
This section will provide an overview of the conditions of the City as a whole and the
City government specifically to provide a basis on which to chart the path into the future.
To use the often quoted line, "those who do not know the past are doomed to repeat it".
After reviewing the history of the financial status of the City, the City cannot afford to
continue the policies of the past. "
Ten Year Analysis
Several financial areas demand immediate attention. The most significant of these is the
continuing deficits from operations in the City's General, Enterprise and Internal Service
Funds. For the ten-year period ending September 30, 1996, the cumulative deficit in the
General Fund (expenditures over revenues) has been $5,389,000, the cumulative deficit in
the Enterprise Funds (net loss) has been $54,398,000 and the cumulative deficit (net loss)
from the Internal Service Funds has been $27,252,000. In total this means that the major
operational funds of the City have produced losses of $87,039,000 over the last ten years.
Simply stated, over the past decade these funds have cumulatively spent an average of
$8.7 million annually more than they have earned.
97- 302
General, Enterprise & Internal Service Funds
Net Income or Loss
Millions
5
0
-5
-10
-15
General
Enterpise
Internal
-2 0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
Fiscal Year
These continuing losses have had a secondary effect on operations. Certain Enterprise
Funds have outstanding,debt with the primary source of repayment being net revenues of
that fund. As can be seen from the above chart, with the losses in Enterprise Funds, a
secondary source of repayment must be called on so that the annually maturing debt can
be paid. This secondary repayment source is a non -ad valorem revenue in the operating
funds. Below is a chart showing the percentage of annual debt service cost paid from the
enterprise funds:
Percent
100
80
60
Revenue Bond Coverage
®Coverage
6
97- 302
As shown in the previous chart, the Enterprise Funds have never covered the annual cost
of the debt service of their bonds. The best showing that they have made is covering 56%
of the cost in fiscal 1990. With annual debt service costs currently totaling approximately
$7.3 million, the call on secondary revenues (which otherwise could be used for General
Fund operations) is approximately $5.8 million.
While recognizing that certain of the Enterprise Funds cannot earn enough to cover
operational costs and debt service because of market conditions, the City can do a better
job of minimizing the annual loss. An example of this case is the Convention Center.
This operation has lost on average $2.2 million annually for the last eleven years. This
loss is not a cash loss but rather a loss produced by not fully funding depreciation of the
Center. This compares favorably to the Miami Beach Convention Center with an
operating net loss of $4.5 million and annual debt service costs of $6 million. The major
difference between the two facilities is the method for funding these losses. The Miami
Beach Convention Center uses a portion of the 3% Convention Development Tax to
subsidize operations and pay debt service. This Convention Development Tax, which is
collected countywide on room rents, is used under the rationale that the facility (like the
Miami Convention Center) is a regional facility and a regional tax base should support it.
The City will work toward the creation of a revenue source which will support all such
facilities like the Convention Center, the Exhibition Hall, and Gusman Center which
draw residents and visitors from at least a countywide area. Such a revenue source may
be from a new revenue created by the State Legislature. It could also be from the State
Legislature's extension of an existing revenue source to provide additional funds for this
purpose. Another potential source of such funding could come from the County's
reallocation of an existing revenue stream to fund such regional facilities for the City and
themselves. Finally, the State might authorize an additional local option revenue to cities
which the City could utilize as this funding source. All of these options are unlikely given
the current mood of the legislature; however, the City will actively pursue such
legislation with a long-term view toward passage.
A Consolidated View of Operations
Had all of the deficits of the Enterprise and Internal Service Funds been consolidated into
the General Fund beginning in 1987, that fund would have created a negative equity of
$64.5 million by the end of 1996.
97- 302
Consolidated General Fund
Annual Net Income and Fund (Equity
Millions
20
0
-20
-4 0
-6 0
-801987 1988 1989 1990 1991 1992 1993 1994 1995 1996
6 Fiscal Year
Fund
Equity
Net
Income
In order to fairly state the financial statements of the City, a consolidation of the
Enterprise and Internal Service Funds into the General Fund is being considered by
management and the City's external auditors. Management believes that the definition of
Enterprise and Internal Service Funds has been misapplied to these funds. This
definitions of Enterprise and Internal Service Funds are:
Enterprise Funds are financed and operated in a manner similar to private
business enterprises - where the interest of the City is that the cost of
providing goods or services to the general public on a continuing basis be
financed or recovered primarily through user charges; or,
where the City has decided that periodic determination of revenues earned,
expenses incurred, and/or net income is appropriate for capital
maintenance, public policy, management control, accountability, or other
purposes.
Internal Service Funds are used to account for the financing of goods or
services provided from one department to another on a cost -
reimbursement basis.
Management has determined that, as no net income has been earned for over ten years
and costs have not been reimbursed for the same period, the capital maintenance
approach to accounting for these funds is not appropriate. It is inappropriate as these has
been no capital produced from operations to maintain fund operations. Current
8
?-- 302
management believes that these enterprise and internal service funds were used as a
method to export the general fund deficit and in doing so inflate the general fund equity.
Any public policy, management control, accountability, or other purpose can be
accomplished through maintaining these operations separately within the accounting
system and does not outweigh the inappropriate nature of these fund classification to
these fund groups.
The actual effect on the General Fund equity will not be as extreme as shown above due
to the effect that the elimination of long term assets and long term liabilities will have on
fund equity. The enterprise operations that have outstanding debt which contains a pledge
of the fund's revenue will not be consolidated into General Fund operations (the
convention center fund). However, the fund equity section of the General Fund will be
consolidated with a deficit fiord equity of $28,787,000 as of September 30, 1996. The
unappropriated undesignated General Fund balance deficit as of September 30, 1996 will
be approximately $ 44 million.
The $16.2 million difference between the total General Fund equity and the available
(undesignated unappropriated) 'equity consists of reserves that are required to be
established. These reserves are a $13.53 million reserve for employee retirement benefits
and approximately $2.7 million in reserves for encumbrances, inventories and prepaid
expenses. The $28.8 million deficit amount is composed of an approximate $18 million
deficit in cash and approximately $10.8 million in liabilities.
This $44 million deficit amount will, at minimum, be converted to an $7 million positive
by the end of the Five Year Plan. This will be accomplished in large part this fiscal year.
The City will increase its cash position by $33 million this fiscal year. This increase
consists of the $19 million recovery in the Stierheim Plan of last years estimated loss, the
$4 million cash flow reserve required to be established by the Oversight Board and the
current estimate that the City will end this fiscal year with a $10 million surplus from its
operations. If the City never produces an operating surplus (revenues in excess of
expenditures) again during the Five Year Plan, additional reserves of $18 million are
programmed to be established in the four additional years of the Plan which will more
than offset this cash deficit.
The City anticipates achieving surpluses annually from its operations and believes that by
the end of the Five Year Plan that the $22 million in scheduled reserves will be in place
along with a healthy unappropriated equity.
9
97- 302
Comparison of Miami to other Major Cities in Florida
Introduction
The way to compare various communities and to place them on an equal basis is by using
a per capita cost instead of total costs. In comparing costs in this manner the relative size
of the jurisdiction is not material. This method of comparison is valid to the extent that
cities are the same in the services that they provide. Differences in these service levels are
mitigated by the comparison to an average of a number of cities. This comparison would
not be valid to any specific jurisdiction but may have validity to an average city as
defined by the ten city average.
On the following pages are schedules and analysis comparing the ten largest cities in the
state with their revenues and expenditures placed on a per capita basis. The City of
Miami's income and costs have been compared to an average of the revenues and
expenditures of these ten largest cities (of which Miami is the second largest).
The numbers in this analysis originally come from the State Report filed with the
Comptroller's Office and compiled and published by The Department of Banking and
Finance in their Local Governmental Financial Report. The numbers herein are from the
report for fiscal 1995. We believe that the relative relationships remain the same for these
governments.
The Comparison of Revenues
For revenues the City of Miami is higher than the average in ad valorem taxes, and
federal grants and below average in local option taxes, impact fees, charges for services,
licenses & permits, State & local grants and fines & forfeits. Overall, the City of Miami
produces 77.25% or $533 less than the per capita revenues that the average of the
top ten cities in Florida receive annually for their operations.
11 9?- 302
All Funds Per Capita Revenues
Ten Largest Cities
St.
Fort
Top Ten
Miami to
ategory
Jacksonville
Miami
Tama
Petersberg
Hialeah
Orlando
Lauderdale Tallahassee
Hollywood Clearwater
Average
Average
Valorem Taxes
$327.82
$387.22
$281.98
$223.61
$164.85
$267.87
$342.09
$85.61
$227.19
$207.75
$251.60
153.91
:xes Fees & Licenses
206.51
173.70
267.86
153.86
210.38
307.97
253.11
294.08
211.46
289.96
236.89
73.33%
,ec. Asses. & Impact
0.00
2.82
0.00
9.26
8.75
54.58
0.04
3.90
0.00
0.00
7.94
35.48%
iarges for Services
1447.56
212.91
548.00
636.74
233.79
804.71
670.50
2404.70
598.95
879.44
843.73
25.23%
.deral Grants
51.94
37.52
178.30
17.28
59.72
29.79
94.59
24.22
24.43
15.92
53.37
70.31%
ate & Local Sources
240.63
99.18
142.28
158.68
33.22
367.72
111.05
81.35
108.91
117.53
146.06
67.91 %
vies & Forfeits
13.50
8.96
15.40
9.26
0.00
13.10
33.52
11.35
24.04
20.46
14.96
59.88%
Misc.
574.75
463.23
602.01
378.18
193.67
533.41
507.19
543.18
311.97
402.34
450.99
102.71 %
_her
ierfund Transfers
561.66
424.75
336.87
328.17
150.80
384.37
176.72
653.17
71.46
390.08
337.80
125.74%
$3,424.36
$2,372.70
$1,9®
$1�
$2,763.52
$2,1� 88.81
$4,001.58
$1,578.42 $2,323.47$';ti',}
Page 13
j
Comparing Miami to Other Major Cities in Florida
An Analysis of Expenditures
Is the City spending, on a relative basis, too much on debt service?
The City's cost for annual debt service is approximately 57% higher than the average of
the ten largest cities in the State. The charge has been made in the past that the City was
using some of its long term borrowings to fund operational costs. Such a practice •would
account for the above average debt service costs.
Is the City spending too much, in total, relative to the other large Florida cities?
On an unadjusted basis, the City of Miami spends approximately 79% of what the
average of other large cities spend on a per capita basis. Adjusted for the high cost of
debt service, the percentage spending decreases to only 73% of the average of what other
cities spend.
Does the City spend too much relatively on Public Safety (Police and Fire)?
On an unadjusted basis, the City of Miami spends approximately 41% more of its
operational budget for Public Safety, on average, than the other large cities do on a per
capita basis. Adjusted for the cost of debt service, the percentage actually increases to
52% more since debt service for the City of Miami constitutes a large share of its annual
expenditures. On a dollar basis the City of Miami spends almost $99 more per capita on
public safety than the average of large cities in Florida.
Where does that leave the other operations of the City on a relative basis?
It leaves the other operations of the City severely underfunded. If the City spends 27%
less than the average of the ten largest cities in the state on operations and, it spends more
than the average than those same cities do on public safety then, by definition, it provides
much less service in non-public safety areas than do the other cities.
12
9 7 - 302
Jacksonville
Miami
$382.52
$431.87
352.11
490.11
994.39
68.66
329.98
63.54
65.53
19.27
75.25
0.00
300.72
101.07
254.35
221.91
254.61
175.02
$3,0�09.46 INUZZIE
Per Capita Expenditures by Category
Ten Largest Cities
St.
Fort
Top Ten
Miami to
Tampa
Petersberg
Hialeah
Orlando
Lauderdale Tallahassee Hollywood Clearwater
Average
Average
$122.95
$338.44
$196.99
$396.78
$307.67
$216.73
$384.40
$435.30
$321.37
134.39%
457.69
321.17
216.62
509.48
502.05
294.08
438.87
332.65
391.48
125.19%
436.38
342.03
221.40
414.15
405.33
1879.36
250.51
542.09
555.43
12.36%
100.49
90.91
18.72
213.20
83.54
334.01
72.72
128.24
143.54
44.27%
15.42
27.77
34.46
55.18
107.37
29.36
20.60
94.89
46.98
41.01 %
5.89
3.24
1.05
25.96
0.36
34.12
0.00
7.51
15.34
0.00%
112.39
184.13
35,22
248.21
129.98
90.50
63.25
170.23
143.57
70.40%
210.80
96.07
29.96
269.38
89.55
106.20
47.35
91.65
141.72
156.58%
219.61
321.74
32.90
254.99
300.05
512.80
84.64
170.42
232.68
75.22%
$1,681.62 $1,725.50 $787.33 $2,387.32 $1,925.89 $3,497.17 $1,362.35 $1,972.99 .;- % �
2755.11 _
1470.81
1629.43
757.37
2117.94
1826.34
3390.96
1315.00
,3 e113C
1881.34ff=W
27.22%
18.61%
27.51%
21.34%
26.07%
8.41%
32.21%
16.86%R0 . o
12.78%
31.12%
19.71%
28.60%
24.06%
27.34%
8.67%
33.37%
17.68%.,A
Page 13
Restoring Access to the Credit Markets
The City of Miami cannot continue to properly function and serve the residents of the
City without access to the credit markets. Future infrastructure needs of the City make it
imperative that the City regain the confidence of the credit providers and be able to again
issue long term debt to construct long term assets.
Should cash flow considerations require it, the City will consider a Revenue Anticipation
Note or a Tax Anticipation Note issue in the fall. The City has received assurance that
these bonds will be purchased by the local banking community (see Appendix "I"). The
sale of these bonds, if necessary, will be the initial post crisis financing and may only be
in the private equity market. However, once the City has demonstrated that it has
regained control over its fiscal affairs the access to the credit markets should be restored
and might be as early as this potential Note sale. A first step in the City's comeback has
also received in the form of a proposal from a credit enhancer who is interested in
providing credit support on City debt issues (see Appendix "I").
Another facility which the City will use to regain entrance to the credit markets is
communication with the municipal rating agencies. The two major rating agencies,
Moody's Investors Services and the Standard and Poors Corp., provide their opinions on
the credit worthiness of municipal issuers. These opinions are the basis of many buy or
sell decisions in the municipal securities market. The City has been and will remain in
constant communication with these rating agencies to insure that they are aware of the
actions instituted to correct the problems which resulted in this fiscal crisis. Moody's
Investors Services has already responded to the City's efforts by revising the outlook on
the City's bond rating from negative to stable after their review of the City's future plans.
The City believes that this area of communications with the financial markets and the
rating agencies must be at the highest level. Accordingly, the Assistant City Manager
over the financial areas of the City as well as the City Manager will maintain contact and
communicate whenever anything of note takes place. Additionally, the City plans to meet
with each of the rating agencies and bond insurers to review the plan after its acceptance
by the Oversight Board. The City will, in this Five Year Plan, establish a series of target
dates for the implementation of the various components of the Plan. Also, on a monthly
basis, over the duration of this financial emergency a report will be sent to both the rating
agencies and the Nationally Recognized Municipal Securities Information Repositories
("NRMSIR").
The City has certain advantages in these discussions with the rating agencies. The first is
the strength of the local economy. Miami is the center for travel and trade with Central
and South America. The bulk of Latin American business is conducted in the City. With
this increase in business activity there has been a elimination of the excess office space in
the City. This is causing rents to rise and new construction activity to begin.
33
:37 - 302
The second strength is in the new management of the City. The analysts with these
municipal rating agencies have known the current management for an extended period of
time. One of the more important criteria in the evaluation of a City's credit rating is the
strength and capabilities of management. The long standing relationship that exists
between the management of the City and these agencies will give comfort as to
capabilities to effect the necessary changes.
Nevertheless these agencies are already looking toward a general strengthening of the
City's internal controls and mid -managerial expertise and will keep a watchful eye as to
how the community will respond to welfare and immigration reform in the coming
months. These municipal rating agencies always adopt a long view of the standing of a
City similar to the duration of the debt that on which they are giving their opinion. The
structural changes that the City is making are the type of changes most desired by the
rating agencies as these changes will have a beneficial long-term effect on the City and its
finances.
The City has adopted two additional documents which will show the determination of the
City to honor its obligations. These two documents are the Escrow Deposit Agreement
and the Investment Policy.
The Escrow Deposit Agreement will assure all bondholders that the funds necessary to
pay the cost of the debt service has and will be set aside in an orderly manner annually.
Any concern over the City's ability to pay should be calmed by the execution of this
document.
The Investment Policy sets forth a conservative and rational approach to the investment
of City funds. While more restrictive than it could be, it does provide the City with
additional investment options with limits on the amounts which can be invested in each
investment type. It specifically restricts the City Manager's ability to enter into any
derivative transaction without specific approval by the City Commission. This limitation
is important because the cities that have experienced major losses from derivative
transactions have not had this oversight or disclosure (see Appendix "II").
An additional document that the City will formulate of the near term is a policy statement
on debt management. This policy will address the acceptable uses for debt, procedures for
the issuance of debt, expenditure control over debt proceeds and the establishment of
procedures for monitoring and repayment of the debt.
34 97- 302
Police
)et and
ent Analysis
City Manager
Assistant City Manager
Finance &
Administration
nprovements
Finance Human Resources
(1)
Audits and _
iews (1)
Informatlon Technology
Labor Relations
• Telecommunications
State Liaison • Cable TV contract
(2)
Purchasing
opportunity Planning and (3)
O/Dp) Development
(3)— —— " Lease Management
• Planning
" Land Development
ty Information ' Community Community
(2) Redevelopment Agency Development
_- — (5) (2)
Net 9
Permitting " Housing
Jobs Program
Office of the Hearing •CDBG
Boards
302
C
Fire -Rescue
es are in hand and selection process is underway.
ectorship or position will be permanently filled through an open/competitive process.
ectorship or position will be filled with an in-house candidate.
operations will be analyzed for privatization options.
nsfer of the CRA to under the City Manager requires City Commission approval.
r Coordinator will be a NET Administrator with added duties.
tmiva i
Assistant City Manager
Operations
(2)
NET Coordination
(3) (6)
Building & Zoning
(2)
Public Facilities
Parks & Recreation
" Grounds Maintenance
Public Works
(2)
Solid Waste
(2) (4)
General Service -
Administration (GS
--------------
Fleet Manageme
Insurance Mgm,
- Safety program
Group Benefits
- Risk
• Building Mgmt.
Radio
Communications
(3) (4)
Professionalizing Management & Changing The
Internal G6Culture" At The City of Miami
Overview
With a historical lack of key performance indicators and no systematic approach to
evaluating budget needs and related productivity analysis, implementing results -oriented
training initiatives throughout the City will be a priority in the months and years ahead.
As a minimum onto which these performance indicators, productivity analysis and
results -oriented training can be based, Departments need to complete three tasks. These
are:
1. Undertake a review of personnel and job descriptions to insure that the right
people are being hired and assigned to staff the functions of the City.
2. Review the policies" and procedures of Departments to address any
deficiencies identified in the Stierheim Report or any of the technical reports.
3. Develop Departmental Strategic Plans to define the priorities, goals and
objectives of these City Departments.
City Departments have not reviewed and updated their various job specifications and
classifications due to the rigidity of the rules under which the personnel system of the
City operates (see "management rights"). Additionally, Citywide and Departmental
Policies and Procedures need to be reviewed and updated in accordance with the
Steirheim Report and the technical reports to correct the deficiencies identified in those
reports. Also, City Departments do not, to date, strategically plan their activities into the
future. As an initial step in the training effort, the City will undertake with a review of job
descriptions, where it can (unclassified employees), update policies and procedures and
develop Departmental strategic plans so that this training effort can be directed for
maximum benefit to the City, the Department and the personnel.
Training for performance improvements is extremely important to the City of Miami
where, as an organization, it must both improve service levels while containing costs.
Quite simply, the City's "customers" —taxpaying citizens --express growing concern
with both the quality and cost of public services.
The major purpose of all training and development programs is to remove performance
deficiencies, whether current or anticipated, that cause employees to perform at less than
the desired level. Training and development thereby enables employees to be much more
productive.
This is one area in which the City should borrow greatly from its counterparts in private
industry and academia. By implementing some of the same training tools the private
sector has used to improve productivity and quality, as well as to increase returns to
43
97- 302
investors, the city can best use its people resources as well as taxpayer dollars. Currently,
the Gore Commission, the International City/County Management Association, and the
Urban Institute have developed materials for use in implementing "results oriented"
training initiatives. For the City of Miami, there needs to be a commitment to further
professional ization and ""state of the art" management initiatives. The culture of
bureaucracy needs a new perspective and "results -oriented" management moves in this
direction.
Proposed Management Training
Milan Dluhy, Ph.D., Director of the Florida Institute of Government (IOG), Florida
International University (FIU), has graciously volunteered to assist the City in creating
and conducting a series of seven (7) training modules —spanning 14 days of intensive
instruction —of which representatives from all departments, divisions and offices would
be required to attend and complete over the next 12 months.
Dr. Dluhy, and two doctoral students, will provide classroom materials, study guides,
exercises and classroom instruction for a number of modules, all of which are intended to
create a "Results -Oriented" Government structure and culture within the City. Other
professionals from the community will assist with the training.
Core subjects to be addressed during the workshops include the following:
Strategic planning: setting a vision and mission for government, analyzing strategic
strengths and opportunities, and developing strategies for achievements of goals.
Benchmarking Best Practices: "learning from the pros" to improve government
processes and services.
Performance Measurement: developing outcome -based performance measures for every
department that are tied to the strategic vision and supported by both managers and
customers.
Using Performance Results: institutionalizing a results -oriented management approach
that ensures that performance information is utilized in a timely, ongoing and effective
way.
Performance -Based Budgeting: improving accountability for results by incorporating
performance into the budget process. This element is critical to making the "results -
oriented" approach work.
Contracting for Performance: implementing competitive contracting, including
contracting procedures, performance specifications, and contract monitoring and
enforcement. This will be implemented city-wide.
Creating and Sustaining a Supportive Environment: Transforming the organization prior
to and during the implementation of a performance measurement system.
44
9 t 0 �+
The City will implement Performing -Based Budgeting between its FY 1998 and FY
1999 budgetary cycles. Once performance standards are developed, managerial ratings
and departmental structure and staffing levels will be dependent upon how successful
actual results measure against such standards.
Other Training Initiatives
Once the Results -Oriented Government Training Program is well underway, it is this
Administration's intent to introduce other relevant performance -related training modules.
Specifically, safety training and communications skills workshops will be developed and
offered within all departments. It is believed that by heightening attention to these key
areas, the City will succeed in reducing Workers' Compensation Claims and project a
more consistent, professional appearance to its customers.
The safety components will attempt to:
1. Orient employees to safety rules, penalties for unsafe behavior, and incentives for
good safety records.
2. Teach safe work procedures.
3. Provide instruction in how to uncover or identify safety hazards.
The Communications module, which will be modified to be relevant for specific job
classifications, will focus on:
1. Developing phone/customer contact skills.
2. Encourage respectful conflict resolution.
3. Enhance verbal and written skills.
4. Designing Customer -driven services.
Changing Technology: One factor that is stimulating an emphasis on and commitment to
training is technological change. The skills of today will not be sufficient for the future.
Hence, computer tutorials and workshops will also be offered to employees. It is
believed that by fully understanding and utilizing the tools available, the City will be able
to improve productivity and efficiency while creating a more fulfilled work force. It is
paramount that Internet training, e-mail, government information systems, and other
technologies be widely used in city government.
Professional Certifications/ "Refresher" Applications: Providing for continuing
professional education, particularly among key staff functions, is critical to ensuring that
the latest, most efficient applications are being exercised within the City. In the past, the
City has not encouraged nor funded training sessions that guarantee a "state of the art"
management team (e.g. changes in EEO laws, tax code, maintain job -required
45 97-= 302
certifications, etc.). The current Administration has provided for a modest level of
funding to cover these training related expenses in FY98 that cannot be accomplished
through the Results Oriented initiative. To ensure that all external training is critical,
however, all such requests will be funneled through the City Manager for administrative
review and approval.
Relationships with Internal Environments
Top -Management Support: The current City of Miami Administration is committed to
both offering the above mentioned training and in requiring it as an ongoing development
objective. As a result, the module entitled "Performance -Based Budgeting" will be
conducted within the next 45 days, which will allow all department directors to
incorporate the lessons learned in the compilation and production of their respective
FY98 budgets, due to the City Commission for consideration by July 1, 1997.
Furthermore, once all senior staff has completed the modules, the City's Human
Resources Department will assume responsibility for continuing the program and will
offer -it at least annually for all newly hired and promoted supervisors, managers and
above, as well as offer "refresher" applications to those who have graduated from the
program.
The Institute of Government (funded by the State of Florida) at Florida International
University, is committed as part of its mission to assist local governments in South
Florida. In this case, the IOG will assist the Administration in designing and delivering
all professional training and will identify resources within the university and the
community to accomplish the transition to a more professionalized city government.
46
97-- 302
The City has addressed the initial problems identified and solutions offered by the Interim
City Manager, Merrett Stierheim in his report to the City Commission dated November
15, 1996. This report identified a shortfall of $68 million to be addressed in fiscal 1997.
After due consideration by the City Commission, accepting or modifying the solutions
offered in that plan and considering additional solutions offered since that date, the
shortfall has been corrected primarily with expenditure reductions or revenue
enhancements. The correction of fiscal 1997 was effected in the following manner:
FY 1997 Financial Recovery Plan
Expense Red.12.d%
Pension Chg.9.0%
Union Agree.16V
Cost Contain.7.0%
Pammnue Inc9s.o%
une Time Revmu-to
These changes to the Fiscal 1997 General Fund Budget (prior to any effect of combining
any enterprise or internal service funds) will produce revenues of $250 million and actual
expenditures of $240 million which includes a $19 million recovery of the prior years
operational deficit and a $4 million cash flow reserve.
90
'�-- 302
General Fund Revenues and Expenditures
Millions
250
200
150
100
50
0
Revenues d Expenditures
Other
®General
Government
®Public
Facilities
Public
Safety
® Transfers
® "va
Revenue
®charges
& Fines
Intergov-
ernmental
® Taxes
The estimated revenue budgets for fiscal years 1998 through 2001 are summarized below
and show modest increases for this period. Initially the revenues decline as the one time
revenues which repaid the fiscal 1996 operating deficit are no longer included. The trend
as shown is to reduce the reliance on one time revenue sources and create streams of
recurring revenues to finance ongoing operations.
General Fund Revenue Budget Projections
Millions
250
200
150
100
50
0
1998 1999 2000 2001
Year
MIsc.
Transfers
Charges
for Service
Permits &
Fines
Intergov-
ernmental
®
Taxes
The expenditure budget projections for the General Fund for Fiscal Years 1998 through
2001 are presented below.
91 97-- 302
General Fund Expenditure Budget Projections
Millions
300
250
200
150
100
50
0
1998 1999 2000 2001
Years
,s
ASpeciai
Programs
®Parks
&
Recreation
Public
Works
®
Finance
General
Government
Public
Safety
The expenditure growth, of the City is limited to an inflationary level over the next several
years. This expenditure growth of approximately $7 million annually is funded primarily
by increases in property tax collections. This increase in collections is based on an
estimate of a 2.5% annual growth in the taxable property value within the City. This
contrasts with the actual experience of the City over recent years. The total taxable value
has been stagnant since 1990 in the City.
Taxable Property Values
Historical and Projected
Billions
14
12
10
8
6
4
2
0 1987 1989 1991 1993 1995 1997 1999 2001
1988 1990 1992 1994 1996 1998 2000
Fiscal Year
Historic
Value
❑Projected
Value
92
9?- 302
The City can make such a growth assumption based in part on the amount of value
represented in building permits issued within the City and the balance of the increase
being a general price increase. Since usually an amount greater than the value reflected on
the building permit appears on the tax roll two to three years after the issuance of a
building permit, building permits can be considered as a leading indicator of property
values. It should be noted that even at an assessed valuation of $11.5 billion as the City
has, a $178 million issuance in building permits is equivalent to an increase of 1.5% of
the tax base. There is an estimate of $2 billion in building value to appear on the tax roll
for the first time over the next several years. The building permit information is presented
below:
Value of Building Permits Issued
Millions
400
300
200
100
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
Fiscal Year
Permits
Issued
Another leading indicator of tax base growth is the vacancy rates in the office sector of
the City. These office vacancy rates which approached 25% after the Savings and Loan
collapse in the late 1980's have trended downward to approximately 10% today. This is
causing, for the first time in many years, rental rates to increase for this office space. As
these rates increase the profitability of the buildings increase which increases their value
and consequently their taxable value. This trend will continue the growth in the tax base
which will have been started with the new building activity.
Looking at the City of Miami on a total basis including the General Fund, Special
Revenue Funds, Enterprise Funds, Internal Service Funds and Trust and Agency Funds,
the City anticipates receiving revenues of $509.8 million in Fiscal 1997 and to spend an
estimated $476.8 million. The $33 million in increase in fund equity is from the $19
million repayment of the prior years deficit, the anticipated $10 million in operating
surpluses ftom this fiscal year and the $4 million cash flow reserve established by the
Oversight Board.
93
302
City of Miami
All Funds Revenue & Expenditures Fiscal 1997
Millions
600
500
400
300
200
100
0
Revenues Expenditures
Trust &
Agency
Internal
Service
Enterprise
®
Debt
Service
Special
Revenue
General
For the balance of this five year plan, the revenues and expenditures of the City as a
whole are presented in the following chart:
All Funds Revenue & Expenditures
Fiscal 1998 thru 2001
Trust &
Agency
Internal
Service
Enterprise
Debt
Service
®Special
Revenue
General
There are numerous positive trends which will provide the economic growth necessary
for the City to achieve its goal of fiscal health. One of these trends is the convention
travel industry. Convention activity has shown consistently positive growth annually over
the ten years. The number of conventions, number of delegates, number of room nights
94 � 7— 302
and the total estimated expenditures from these convention attendees is presented below
for the last ten years.
800
600
400
200
Convention Activity
550
500 MU
1,600
1,200
800
400
0
0 1 IrA M" UE W In 1W I'm 16A 1m Isar 1 1987 1989 1991 1993 1995
1987 1989 1991 1993 1995 1988 1990 1992 1994 1996
1988 1990 1992 1994E 1996
romNumber of
Number of Delegates
Conventions
Amount in Thousands
Convention Activity
3.5
3
2.5
2
1.5
1
0.5
0
1987 1989 1991 1993 1995
1988 1990 1992 1994 1996
®Room
Nights
Amounts in Millions
95
l ,buu
1,200
800
400
0
1987 1989 1991 1993 1995
1988 1990 1992 1994 1996
raMIEstimate
Expenditures
Amounts in Millions
A second positive trend is the tourism in general. Dade County as a whole hosted almost
9.6 million visitors last year. The traveler to Miami is not only the domestic traveler, but
even more likely to be an international traveler. Below is a breakdown of the number and
origin of these visitors to Miami:
Millions
10
8
6
4
2
0
(dumber and Origin of Visitors
1993 1994 1995 1996
Year
Other
International
®Latin
America
Europe
Domestic
An industry which is fairly new to South Florida is the film industry. This segment of the
local economy has shown a consistent growth over the last eight years in the City of
Miami. The estimated 1996 impact on the local economy is almost $83 million from the
film industry. Feature films such as "True Lies", "Just Cause", "The Perez Family", "Fair
Game", Too Much", "Striptease", "Up Close and Personal", "The Specialist" and many
others have used Miami as a backdrop for their story. The film permits issued within the
City of Miami for the last eight years is presented below:
96
9'7- 302
1,400
1,200
1,000
800
600
400
200
Film Permits Issued
1989 1990 1991 1992 1993 1994 1995 1996
Calendar Year
97
Film
Permits
97- 30-
Current Year flan
(Fiscal Year 1997)
As reported in the Stierheim Report, the City faced an operating fiscal crisis in the
amount of sixty-eight million dollars. The sixty-eight million dollar deficit is comprised
of a $19.4 million carryover deficit, a $30.4 million FY 1997 operating deficit and an
$18.2 million Capital Improvement Program funding shortfall.
On December 30, 1996 the Miami City Commission adopted the "1997 Plan" which
complied with the requirements of the Financial Oversight Board as outlined in the
Intergovernmental Cooperation Agreement. The main tenets of the "1997 Plan" were to
eliminate the approximately sixty-eight million dollar deficit, eliminate at least 60% of
the recurring deficit with recurring revenues or recurring expense reductions, and base all
underlying assumptions and information on the Stierheim Report.
The major components of the "1997 Plan" include the following:
Citywide Expenditure Reductions
Emolovee Related
A) Eliminate all funded vacancies $ 3,579,600
B) Eliminate non -union executive benefits 372,300
C) Other employee related cutbacks 1,071,913
Sub -Total 5,023,813
Union Concessions
A) LIUNA 233,500
B) AFSCME 1,668,918
C) FOP 5,006,146
D) IAFF 2,833,800
Sub -Total 9,742,364
Pension Contribution Adjustments
General Employees and Sanitation Employees (GESE) 1,300,000
Firefighter's and Police Officers (FIPO) 3,872,000
Sub -Total 5172,000
Citywide Expenditure Reductions 19,938,177
Departmental Reductions 10,404,947
Total Reductions in Expenditures $30,343,124
90 9?— 302
Revenue Enhancements
Land Sales
MSEA
Police Grants and Seizures
CDBG Funds Reprogramming
Solid Waste back billing & Bedminster payment
Revenue sweeps
Other Departmental
Total Revenue Enhancements
Add -Backs for Operation and Capital Items
Total - Positive Adjustment to FY 1997 Budget
Impact of the Current Year Plan on City Workforce
4
7,175,000
12,951,511
8,000,000
1,774,232
2,000,000
2,148,000
7,191,443
41,240,186
3,329 112
$68,254,198
The City Commission took a brave step in adopting the "1997 Plan" and supporting the
administration in helping to resolve the immediate fiscal crisis. However,
implementation of the necessary actions resulted in a substantial impact to the city's
workforce.
Since 1990 the number of budgeted employee positions have dropped from 4,067
positions to 3,307 positions for a total of 760 employee positions or an 18.7% decrease.
The reduction in employee positions is primarily due to two retirement incentive
programs which occurred in 1991 and 1995 and the abolishment of 251 vacant positions
as part of the FY 1997 Recovery Plan.
Due to budgetary constraints, the City has been unable to promote from within or hire
new employees which has led to many city employees performing various job functions.
As a result of the decrease in budgeted employee positions, the majority of the City's
departments cannot afford new reductions in employee positions without further
deterioration of City services.
The Current Year Plan was budgeted to generate a $311,603 surplus by the end of the
fiscal year. Many items, that have adjusted this forecast, have come to light since the
plan was accepted by the City Commission and State Financial Oversight Board in
January. These adjustments, predicated on our earlier budgeted assumptions, will change
the forecast of year end surplus to approximately $14 million.
91 97- 302
The major items that account for the change from the original projections are:
Additional Land Sales
Decrease in CIP Programming
Other
$ 8.1 million
3.0 million
97 millinn
fi?1�i�:11fiM
The City's agreement with the State Financial Oversight Board requires the funding of a
Working Capital Reserve, in the amount of $4 million by the end of September 30`h,
1997. The surplus available for re -appropriation into fiscal year 1998 amounts to $10
million ($14 less $4 million). See Table I below.
FY 1997
FY 1997
Revised
Year End
Description
Budget
Projection
Revenues
$ 509,620,632 $
503,619,177
General Expenditures
490,873,029
480,770,430
Capital Improvements
18,436,000
16,795,000
Sub -Total
` $ 311,603 $
6,053,747
Budeet A.diustments
Assessment Lien Revenue
$
- $
(687,536)
Personnel Changes
-
(225,000)
Legal Fees
-
(100,000)
Stormwater Sewer Utility Fees
-
2,975,000
Debt Service - Fund Balance
-
580,275
Consolidated Chargeback
-
420,612
Program Compensated Expense
-
1,300,000
Risk Insurance - Liability
-
1,150,000
Telephone Tax & Sales Tax
-
262,517
Risk - Property Liability
-
350,000
Police Grant Revenues
-
1,131,899
Police Grant Expenditures
-
(311,403)
Solid Waste Scale Fees
-
520,000
GESE / FIPO Pension
-
645,782
Recycling Grant
-
464,814
Utilities
-
(450,000)
Sub -Total
$
- $
8,026,960
Total Balance
$
311,603 $
14,080,707
Reserves
Working Capital
$
- $
(4,000,000)
Total Reserves
$
- $
(4,000,000)
Total - Surplus / (Deficit)
$
311,603 $
10,080,707
Table I
92
97- 302
Future Years Plan
(Fiscal Years 1998 - 2001)
Introduction
A number of cost -saving efficiencies and new revenue generating initiatives are planned
for Fiscal Years 1998 - 2001. Including changing the way the City collects solid waste
and trash, introducing major league soccer the Orange Bowl, increasing revenue on future
leases, and privatizing various City enterprises. Additionally, savings will accrue from
reducing pension administrative costs and introducing greater efficiencies in handling
Risk Management.
By the end of Fiscal Year 1997, the City is anticipating a $14 million surplus, $4 million
of which will be earmarked towards a Working Capital Reserve as agreed with the State
Financial Oversight Board. 4
The i°Future Years Plan" (Fiscal Years 1998 to 2001) is predicated on the passage of
the Fire Rescue Assessment Fee. This important new revenue item is projected to
generate $24 to 26 million annually. As a result of the Fire Rescue Assessment Fee, the
Administration is recommending eliminating the solid waste fee currently charged to its
residents. The impact of this and other solid waste operational changes amounts to $12.1
million annually. Furthermore, the plan includes $11.15 million in Capital Improvement
Projects to be funded in FY 1998 and to be standardized at $7 million annually thereafter.
The City intends on selling lands totaling $5.8 million in Fiscal Year 1998 to cover part
of this non -recurring expense. Next, the plan addresses the importance of building up
reserves by funding $1.1 million in reserves for Risk Management, $1 million for
contingencies and an added $2.26 to $2.8 million towards the Working Capital Reserve.
The Administration is also recommending that the costs associated with the pension
administration be reduced by $1 million. Finally, the Future Years Plan also addresses
the deficiencies of middle management by funding $1.2 million to be used towards
management recovery.
All of the above items that compose the Future Years Plan are crucial for the continued
fiscal recovery of the City. With them, the City anticipates a $5 million surplus by the
end of the FY 1998, plus a cumulative reserve of $14.4 million, totaling $19.4 million in
reserves carried forward to Fiscal Year 1999. (See Exhibit I)
93 1117.— 302
Fire Rescue Assessment
The City of Miami has entered into a professional services agreement with Government
Services Group, Inc. ("CSG"), David M. Griffith & Associates ("DMG") and Nabors,
Giblin & Nickerson, P.A.. ("NG&N") to provide specialized services in the development
and implementation of a non -ad valorem assessment program to fund fire and rescue
services within the City of Miami ( the "Fire Rescue Assessment Project").
The objective of this Project is to study and develop a non -ad valorem based assessment
which will generate recurring revenues to fund the Department of Fire Rescue. The City
has worked closely with CSG, DMG and NG&N to develop this program over the last 4
months. The methodology utilized in calculating the special assessments for fire rescue
services included the following steps:
• The full costs to provide fire rescue services were functionalized and identified.
• The percentage of fire rescue calls were allocated to property use categories that
conform to the Dade County Property Appraiser's database utilized in the real
property assessment roll.
• The percentage of specific fire calls by property use category were calculated and
used to cost apportion the pro -forma budget to the appropriate category.
• A parcel apportionment methodology was determined for each category. and
assessment rates were calculated for each property use category.
Exhibit II represents the preliminary categories and rates as identified to this point.
Additional categories or sub categories may be developed as additional information is
analyzed. The preliminary rate table shown indicates a funding rate of approximately
62% of the Department of Fire Rescue budget. Single family residential properties
include single family homes, duplexes and condominiums. Multi -family residential
properties include apartment buildings with 3 or more units. Public housing (Multi-
family) consists of Metropolitan Dade Housing Agency properties. Housing properties
are assessed on a per unit basis. All other properties have been grouped into Commercial,
Industrial/Warehouse and Institutional categories. These categories of properties are
assessed on a square footage basis.
Exhibit III represents the expected revenue from the Fire Rescue Assessment Project if
properties are assessed for 62% of the Department of Fire Rescue Budget.
The Administration is currently anticipating assessing all properties in the City with the
exception of Institutional service type agencies, which provide services to citizens which
the City may otherwise be compelled to provide and Public Housing, with which the City
94 97-- 302
has had an interlocal agreement for payment in lieu of taxes since 1969. At this time,
health providers are also excluded, however, additional analysis of run and property data
may indicate to the Administration that these properties should be assessed as well. Some
governmental and educational facilities have been excluded for budgetary reasons only,
as these institutions may be compelled to pay after a legislative or contractual process.
The Administration, however, recommends assessing these entities as well. Items shown
in parentheses are excluded as a result of policy directives and for budgetary purposes.
As can be seen from Exhibit III, the expected revenue from the Fire Rescue Assessment
Project is anticipated to be $26.16 million. However, for budgetary purposes a collection
rate of 92% for fiscal year 97-98 is forecasted, which will result in net revenues of $24
million. The Administration recommends that this fee be billed by the City through the
normal billing process in January 1998. See Exhibit IIIa for a critical events schedule.
This will give the City sufficient time to conduct the necessary field work to assure that
the property data is accurate. In subsequent years, the Administration recommends that
the Fire Rescue Fee be assessed on the yearly property tax bill. Coupled with better
collection methods, liens on delinquencies and growth factor of three percent, the
Administration anticipates revenue-s of $27.3 million in Fiscal Year 1999, $25.87 million
in Fiscal Year 2000 and $25.9 million in Fiscal Year 2001.
See Exhibit VII for a legal analysis by Nabors, Giblin & Nickerson.
High Impact / Usage Fee
The Administration is recommending the drafting of a Fire Rescue High Usage Fee
ordinance for Commission action. This fee will be imposed on those non -fire fee
assessed properties such as health-care providers, governmental agencies, or educational
facilities that, due to their high demands for fire rescue services adversely impact the
Department of Fire Rescue. The fee will be $200 for each property with more than 5 uses
a year, and $150 for non -address specific calls. This fee is projected to generate
$500,000 in its first year (FY 1998), and $1 million each year thereafter.
Fire Inspection Fee
The South Florida Fire Prevention Code requires inspection before certain certificates of
use and/or occupancy are issued. Ongoing annual inspections are also conducted for fire
safety permit renewals. Currently, there is a fee for issuing fire safety permits based on
square footage of the premises. With the inception of the Fire Assessment Fee, the
expenses associated with inspections will be covered in a more comprehensive way,
obviating the need for a separate fire permit fee. Thus, starting in Fiscal Year 1998 and
beyond, revenues in an amount of $1 million annually will be abated.
95 9?-- 302
Land Sales
Three land sales are contemplated this coming fiscal year. These include the following:
Police South Substation, Manuel Artime Center and the former Parks Administration
Building. The estimated sales price for these three properties amounts to $5.8 million in
one time revenues.
Management Recovery
With the exception of the Police and Fire Departments, one of the most obvious
deficiencies of the City is the complete lack of middle management. There is a huge void
between the department director, or assistant director, and the next level of management.
In many instances, employees of lower management have been forced to step up and
assume responsibilities for which they were neither qualified nor trained. It is imperative
that this void be addressed and rectified.
Accordingly, it is the recommdndation of the Administration that $1.2 million be
appropriated in FY'98 for management recovery. It is believed that at least 20 middle
managers need to be hired as quickly as possible. These new positions would start to
alleviate the problem related to lack of middle management and provide the resources to
address the operational deficiencies of the City. Included in this figure are resources for
training which has been largely absent over the last few years.
Pension Administration Costs
The requested Fiscal Year 1997-98 estimated combined budget for the City's two pension
boards is $2,661,740. The requested administrative budget for the Firefighters and Police
Officers (FIPO) Pension Board is $1.22 million or a 18.27 % decrease over the Fiscal
Year 1997 budget. The projected administrative budget for the General and Sanitation
Employees (GESE) pension office is $1.44 million or a 32.08 % increase over the Fiscal
Year 1997 budget.
A review of various public sector pension offices suggests that the staffing level for each
of the City's pension offices should more appropriately consist of one administrator and
three staff employees (see Exhibit IV). Currently, the GESE pension office has one
administrator, 7 full time employees and 1 part time employee. GESE is requesting to
increase its staff by one additional full time employee. The FIPO pension office currently
has one administrator and five full time staff. FIPO is not requesting additional staff.
It is recommended that the combined administrative budgets of the two pension offices be
reduced by $1 million. Further, the Administration also intends to study the issue of
future funding of pension plans and will provide recommendations at a later date (see
Exhibit V).
96 9 7- 302
Solid Waste Fees
While, the Department of Solid Waste has historically been budgeted as an Enterprise
Fund, in reality, the operations of this Department have never been financed primarily
through user charges. Its operating costs, capital expenditures and costs of depreciation
have been heavily subsidized by the General Fund throughout the years.
In light of these facts, the City proposes to fully fund all expenses of this department
through the General Fund by significantly reducing all user fees currently charged to it's
citizens. Specifically, the current fee of $166 for a single family homeowner will be
reduced to $33 annually, contingent on the passage of the fire assessment fee.
Solid Waste Service to Multi -Family Units
The City currently provides solid waste disposal services to all single family and duplex
occupancies. In addition, the City also provides service to 3 and 4 unit apartment
buildings who chose to pay for these services. (currently approximately 4,400 units).
Private solid waste services are prbvided to all other commercial properties.
In order to assure equitable service to its citizenry, the City proposes providing solid
waste disposal services to approximately 7,500 additional units in 3 and 4 unit apartment
buildings not currently receiving solid waste disposal services.
A breakdown of the financial impact of this policy is as follows:
Forgone Solid Waste Fee Revenues $ 10,295,420
Additional Cost For 3-4 Unit Apts. 1,828,000
Total Cost $ 12,123,420
Increased Solid Waste Enforcement
In order to better enforce the City's solid waste code the Administration is recommending
the expenditure of an additional $250,000 annually, be appropriated towards hiring
qualified solid waste inspectors. This added enforcement will keep the City cleaner and
will work to combat illegal dumping.
Curbside & Trash Fick -up
Currently, Solid Waste Department services are being reconfigured to assure a smoother
running operation. Curbside recycling as well as separate trash pickup will cease on
January 1, 1998. Accessible recycling centers will be available where residents can drop
off their recyclable materials. To further reduce costs, pickups of bulky trash will be
done once a month, although bundled or bagged trash including yard waste that has been
containerized will be picked up along with the garbage on a twice -weekly basis. This
compares favorably to once a year bulky trash pickup in Metropolitan Dade County.
Homeowners will also be allowed four special trash pickups yearly at no cost. These
MA
97- 302
actions will generate $1.3 million in savings annually. However, communities that
require additional city services, such as curbside recycling may elect to form a special
assessment district in their neighborhood.
Blue Ribbon Task Force
The City's arrangement with the Blue Ribbon Task Force charged with investigating best
business practices and their respective applications for the City, requires that $300,000 be
provided annually for additional consulting services or for the costs of implementation of
the Task's Force recommendations. The actual disbursements of such funds will be
specifically approved by the City Commission on an as -needed basis.
Major League Soccer
Professional Soccer is coming to Miami in less than a year. These games will be played at
the Orange Bowl Stadium. At this moment, the City is negotiating an agreement with
Major League Soccer (MLS) and Ken Horowtiz. The soccer agreement will be for 10
years which includes 20 homy` games and will produce revenues to the City of
approximately $850,000 per year starting in Fiscal Year 1998.
Citywide Efficiencies
The City has reorganized certain functions including purchasing to achieve greater levels
of operating and financial efficiencies. These initiatives include automation,
centralization of purchasing functions, and combining purchases of different departments
into term and blanket contracts. Other Citywide initiatives will include reengineering,
and the utilization of technology to reduce operating expenses and enhance service
delivery. The Administration conservatively estimates savings of $500,000 in Fiscal Year
1999, $800,000 in Fiscal Year 2000, and $1.2 million by Fiscal Year 2001.
Solid Waste Efficiencies
The City is studying various options to enhance efficiency of the solid waste operation
including privatization. Costs from private waste haulers and a plan from the solid waste
employees' union are being examined. Beginning Fiscal Year 1998, the City will accrue
a minimum savings of $1.1 million annually.
Risk Management Efficiencies
The City of Miami is anticipating the improved control of claims based on several
proactive measures. Including a City-wide Safety Program Committee that is committed
to the safety of our employees and citizens alike. As a result of their efforts, workers
compensation claims have dropped from 422 to 295 during the first six months of this
fiscal year as compared to the same period last year.. The Administration anticipates _
further reductions during Fiscal Year 1998. In addition, the City is inspecting and
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repairing sidewalks in an effort to reduce slips/falls claims throughout the City. The
Administration is also addressing safety issues in City parks. Additionally, the City has
realized a significant reduction in General Liability claims, from 224 in Fiscal Year 1996
to 75 in Fiscal Year 1997, year to date.
Management has approved hiring additional adjusters and support staff to more
appropriately handle the City's claim load. As a result, each adjuster will have a more
manageable workload to assist injured employees in their rehabilitation and prompt return
to work. This translates to savings in the medical and indemnity aspect of a workers'
compensation claim. As a result, the City can project, barring any catastrophic injury,
savings of at least 10 percent on new claims.
Therefore, with the start of a citywide safety program, upkeep of sidewalks and parks
equipment, and added claims adjusters, the City is projected to save $1.2 million in Fiscal
Year 1999, $1.6 million in Fiscal Year 2000, and $2.1 million in Fiscal Year 2001. .
Parking Revenues - Virginia Key
_ 4
A management agreement will be presented to the City Commission in June to allow for
public parking of approximately 300 to 1000 vehicles to serve existing facilities and
planned uses for the isfand, including, for example, the Marine Stadium and the vicinity
of the basin, public recreation areas, potential sports fields facilities and adjacent public
attractions on remaining areas of Virginia Key. Income from the initial phase of parking
improvements is projected to be in excess of $125,000/year.
Docking Agreement - Watson Island
The City is currently preparing docking agreements for up to a three-year period that will
enable large public excursion vessels to locate at the present Watson Island Marina. It is
anticipated that by FY 2000 the City will be in a position to enter into a long-term lease
for the complete redevelopment of the marina and associated upland area. Until that
time, it is anticipated that the docking agreements will generate revenues of $100,000 in
Fiscal Year 1998 and $200,000 thereafter.
Future Lease Revenues
The Department of Planning and Development will be beginning the RFP process for the
development of several City -owned properties over the next three months, which will
result in the development of certain market -rate lease agreements. The Administration
currently preparing the following properties prospectus' for joint public /private
developments for presentation to the private sector: Virginia Key Hotel and Yacht Club,
Virginia Key Eco-campground, the Coconut Grove Convention Center Hotel, Miami
Marine Stadium and marine recreational center. Additionally, it is anticipated that the
City will receive a minim of $4 million in Fiscal Year 1999 and onward from the
FECBicent ase for Jib new downto roject. The City will be
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using an expedited RRP process in order to assure that projected revenues are received as
planned. Other projects, like the Miami River development, will also be initiated in
Fiscal Year 1998 to assure lease revenues in Fiscal Year 2000.
Convention Center ConversiowTarking System Privatization
In regard to the Convention Center, there currently exists $6 million in annual debt
service payments which makes it unattractive for a potential purchaser. The strategy for
its disposition is to put together a real estate disposition package which will include this
property and others to make it financially feasible for an investor to assume control of the
Center. Staff is currently in the process of identifying other properties that might be
added to a Convention Center "package".
The privatization of the parking system would enable the City to access approximately $8
million in reserves that currently exist and a future stream of income from parking
revenues which currently due not accrue to the City. The feasibility of this privatization
is currently being studied, and if it is found to be beneficial to the City, discussions will
begin with the Offstreet Parking Authority to work out the best management and
operational arrangement for the City.
The City has anticipated savings and revenues in the amount of $7.9 million in Fiscal
Year 2000 and $7.9 million in Fiscal Year 2001 from a combination of both of the above
noted projects.
Working Capital
Per the City's agreement with the State Financial Oversight Board, a Working Capital
Reserve in the amount of $6.8 million is required by January 25, 1998. An amount of $4
million had already been reserved in Fiscal Year 1997; $2.8 million is budgeted for Fiscal
Year 1998 and $2.26 a year thereafter.
Contingency
This reserve of $1 million per year, in addition to the Working Capital shall provide
additional flexibility for the City to address other potential issues that may arise during
the fiscal year.
Risk Management Reserve
It has long been recognized that a reserve should be established to address the outstanding
liabilities of the City in both General Liability and Workers' Compensation. In an effort
to attain a reserve which will grow over a period of time and will not adversely impact
the City's financial posture, the City plans to budget $1.1 million per year for the next 5
years over and above any actual payments to establish a $5.5 million cushion for a
catastrophic event. The City will continue the $1.1 million per year allocation thereafter
100 97- 302
until it reaches a reserve of at least $15 million, which will represent approximately 20%
of the estimated total liability (approximately $75 million). Also, over time the City
expects the liability to decrease due to staff working the liability from the front-end (i.e.
by challenging cases and settling claims in an efficient manner).
Capital Improvement Program
In many different areas the City has woefully inadequate capital assets. A survey of the
capital needs as defined by department directors amounted to $25 million for Fiscal Year
1988. The City Manager reviewed this list and funded $11.15 million of necessary
capital needs. (see Exhibit VI) The City has standardized capital projects funded from the
general fund to $7 Million a year through the Fiscal Year 2000, with the exception of
Fiscal Year 1999 where $1.3 million was forwarded to Fiscal Year 1998 for the purchase
of necessary Fire Department apparatus. Other capital projects will be funded from
Federal Grants ($12.5 million), State Grants ($1.5 million), City Bonds ($11.5 million),
Private Funds ($150,000) and other Capital Improvement funds ($6.5 million).
Other Alternatives
The above mentioned items are necessary for the success of the Five Year Plan. However,
the City has other alternatives, that can be utilized to cover other factors which may come
upon in the future. These options include the following: implementing a hiring freeze in
any given year for non -critical positions, reducing non essential General Funded Capital
Improvement Projects and, as a last resort, the utilization of the built up reserves.
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Schedu, of Recurring Revenues and Exp... iditures
Per Revenue Conference (PFM) 1997
1998
1999
2000
2001
Recurring Revenues $416,891,623
$412,346,996
$422,205,125
$424,724,816
$424,852,448
Recurring Expenditures 424,320,755
412,191,515
433,131,326
441,528,198
447,691,771
Excess I (Deficit) (7,429,132)
155,481
(10,926,201)
(16,803,382)
(22,839,323)
% Recurring 98% 100% 97% 96% 95%
Five Year Plan Budqet Solutions
Revenues:
Fire Assessment Fee
- 24,072,384
27,322,077
25,873,740
25,901,772
High Impact / Usage Fee
- 525,000
1,050,000
1,050,000
1,050,000
Fire Inspection Fees
- (1,000,000)
(1,000,000)
(1,000,000)
(1,000,000)
Solid Waste Fees
- (10,295,420)
(10,295,420)
(10,295,420)
(10,295,420)
Major League Soccer
- 850,000
850,000
850,000
850,000
Parking Revenues Virginia Key
- 125,000
125,000
125,000
126,000
Docking Agreement Watson Island
- 100,000
200,000
200,000
200.000
Future Lease Revenues
- -
4,000,000
5,437,500
5,525,000
Convention Center Conversion /
Parking System Privatization
- -
-
7,946,633
7,892,417
Sub -Total
- 14,376,964
22,251,657
30,187,453
30,246,769
Expenditures:
Management Recovery
- 1,224,000
1,224,000
1,224,000
1,224,000
Pension Administrative Costs
- (1,000,000)
(1,000,000)
(1,000,000)
(1,000,000)
Solid Waste Service -Multi Family
- 1,828,000
1,828,000
1,828,000
1,828,000
Increased Solid Waste Enforcement
- 250,000
250,000
250,000
250,000
Curbside & Trash Pick-up
- (1,304,000)
(1,304,000)
(1,304,000)
(1,304,000)
Blue Ribbon Task Force
- 300,000
300,000
300,000
300,000
Citywide Efficiencies
- -
(500,000)
(800,000)
(1,200,000)
Solid Waste Efficiencies
- (1,100,000)
(1,100,000)
(1,100,000)
(1,100,000)
Risk Management Efficiencies
- -
(1,200,000)
(1,600,000)
(2,100,000)
Sub -Total
- 198,000
(1,502.000)
(2,202,000)
(3,102,000)
Total Solutions -
14,178,964
23,753,657
32,389,453
33,350,769
Excess / (Deficit) (7,429,132)
14,334,445
12,827,456
15,586,071
10,511,446
% Recurring 98%
103%
103%
104%
102%
102 513197 12:24 PM
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EXHIBIT I
CITY OF MIAMI
FIVE YEAR PLAN
Budgetary Summary
FY 1997
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
Revised
Year End
Estimated
Estimated
Estimated
Estimated
ription
Budget
Projection
Budget
Budget
Budget
Budget
nues
$509,620,632
$ 507,091,758
$454,446,551
$461,602,934
$462,150,074
$462,105,694
ral Expenditures
490,873,029
479,191,051
457,915,716
477,981,805
484,406,126
490,397,687
al Improvements
18,436,000
13,820,000
11,155,600
5,700,000
7,000,000
7,000,000
Sub -Total $ 311,603
$ 14,080,707
$ (14,624,765)
$ (22,078,871)
$ (29,266,062)
$ (36,291,993)
let Solutions
%ssessment Fee
$ -
$ -
$ 24,072,384
$ 27,322,077
$ 25,873,740
$ 25,901,772
Impact / Usage Fee
-
-
525,000
1,050,000
1,050,000
1,050,000
nspection Fee
-
-
(1,000,000)
(1,000,000)
(1,000,000)
(1,000,000)
Sales
-
-
5,805,000
-
-
-
igement Recovery -
- (1,224.000)
(1,224,000)
(1,224,000)
(1,224,000)
Ion Administrative Costs -
- 1,000,000
1.000,000
1,000,000
1,000,000
Waste Fees -
- (10,295,420)
(10,295,420)
(10,295,420)
(10,295,420)
Waste Service to Multi -Family -
- (1,828,000)
(1,828,000)
(1,828,000
(1,828,000)
ased Solid Waste Enforcement -
- (250,000)
(250,000)
(250,000)
(250,000)
aide & Trash Pick-up -
- 1,304,000
1,304,000
1,304,000
1,304,000
Ribbon Task Force -
- (300,000)
(300,000)
(300,000)
(300,000)
* League Soccer -
- 850,000
850,000
850,000
850,000
,ide Efficiencies -
- -
500,000
800,000
1,200,000
Waste Efficiencies -
- 1,100,000
1,100,000
1,100,000
1,100,000
Management Efficiencies -
- -
1,200,000
1,600,000
2,100,000
ng Revenues - Virginia Key -
- 125,000
125,000
125,000
125,000
ing Agreement - Watson Island -
- 100,000
200,000
200,000
200,000
e Lease Revenues -
- -
4,000,000
5,437,500
5,525,000
ention Center Conversion / Parking System Privatization -
- -
-
7,946,633
7,892,417
Sub -Total $ - $
- $ 19,983,964
$ 23,763,667 $
32,389,463
$ 33,350,769
rves
ing Capital
$ - $ (4,000,000) $ (2,800,000) $
(2,266,667) $
(2,266,667) $
(2,266,667)
ngency
- - (1,000,000)
(1,000,000)
(1,000,000)
(1,000,000)
Aanagement Reserve
- - (1,100,000)
(1,100,000)
(1,100,000)
(1,100,000)
rve for Future Year Deficit
- - (5,500,000)
(500,000)
-
6,000,000
Total Reserves $ - $ (4,000,000) $ (10,400,000) $
(4,866,667) $
(4,366,667) $
1,633,333
over Balance
- - 10,080,707
5,039,906
1,848,025
614,760
Total - Surplus / (Deficit) $ 311,603 $ 10,080,707 $ 5,039,906 $
1,848,026 $
614,760 $
306,869
Page 1 of 1
EXHlui,x vi
CITY OF MIAMI
CAPITAL IMPROVEMENT PROJECTS
FISCAL YEAR 1998
ARCHIVES RECORDS FACILITY P-1
ORANGE BOWL RAMPS
MIAMI CONVENTION CENTER RENOVATIONS
COCONUT GROVE CENTER RENOVATIONS
MIAMI CONVENTION CENTER ROOF
MIAMARINA DOCKMASTER OFFICE
FLOATING DOCK MIAMARINA
WATSON ISLAND MARINA RENOVATIONS
NEW FIRE RESCUE APPARATUS
FIRE DEPT. COMPUTER ENHANCEMENT
STATION RENOVATIONS
CITYWIDE EMERGENCY OPERATIONS CENTER
HEAVY EQUIPMENT FACILITY CLEANUP
HEAVY EQUIPMENT PLUS WASH REPLACEMENT
SECURITY AND LOCATION CONTROL FOR FLEET
NEW COMPUTERS FOR ALL DEPT.'S
A-17 SYSTEM SOFTWARE 5 YR. RELICENSE
WORK ORDER &PROJECT MANAGEMENT SYSTEM
INTEGRATED VOICE RESPONSE SYSTEM
UPGRADE THE PC SOFTWARE & HARDWARE
CITY WIDE DOCUMENT MANAGEMENT SYSTEM
TAKE HOME VEHICLE
REPLACEMENT CARS AND LIGHT TRUCKS
CITYWIDE FLEET
HEADQUARTERS BUILDING RENOVATIONS
NORTH SUBSTATION
350.0
250.0
420.0
500.0
200.0
70.0
300.0
300.0
1,300.0
30.0
100.0
375.0
500.0
1,342.0
20.0
500.0
325.0
_ 200.0
125.0
500.0
100.0
1,558.5
700.0
650.0
400.0
40.0
TOTAL $ i
97- 302
CITY OF MIAMI
INVESTMENT POLICY
CITY OF MIAMI
INVESTMENT POLICY AND PROCEDURE
97-- 302
CITY OF MIAMI
INVESTMENT POLICY AND PROCEDURE
TABLE OF CONTENTS
SUBJECT
PAGE
Background.....................................................................................................................
1
GeneralOverview...........................................................................................................
1
InvestmentObjectives.....................................................................................................
1
InvestmentEthics............................................................................................................
2
InvestmentProcess.........................................................................................................
2
Authorized Investments..................................................................................................
3
Prohibited Investments ...... :................................................................. .............................
6
Maturity & Liquidity Requirements...............................................................................
6
PortfolioComposition.....................................................................................................
7
CustodialAccount...........................................................................................................
7
MasterRepurchase..........................................................................................................
7
Investment Transaction Authority ..................................................................................
7
InternalControls.............................................................................................................
8
InvestmentReporting......................................................................................................
9
Recordkeeping and Performance Measurement.............................................................
9
PensionInvestments.......................................................................................................
10
BondFunds.....................................................................................................................
10
i
97- 302
I. Background
The Florida Legislature passed CS/SB 2090 (CS/HB 1795) on May 4, 1995. Among other
provisions of this legislation each local government entity is required to create, adopt and
maintain comprehensive investment policies, incorporating fourteen required elements. The
investment policy is required to be adopted by the governing body of the jurisdiction.
II. General Overview
The City of Miami has established policies relating to the investment of excess funds. Excess
funds are defined as funds not required to meet short term expenditures of the City. The
policy governing investments is set forth below.
III. Investment Policy
Short term expenditures are defined as all daily operating expenditures excluding payroll and
debt service. For short tefm expenditures, the City maintains an overnight funds sweep
program collateralized by Full Faith and credit instruments of the U.S. Government and its
Agencies with the City designated as collateral beneficiary. The City complies with State of
Florida "Public Deposits Law" Chapter 280 Florida Statutes. Chapter 280 insures the City
against investment principal loss on certificates of deposit and demand deposits in excess of
$100,000 per institution. FDIC insurance covers demand deposits up to $100,000 per
institution. The City will utilize only financial institutions qualified under Chapter 280, a
listing of which is received by the City and reviewed on a quarterly basis. The City also
complies with Chapter 280 by filing all required reports annually with the State.
A. Investment Obiectives
The City of Miami's investment objectives are set forth below in order of
importance:
1. Safety of capital
2. Liquidity of capital
3. Return of capital
Investment returns are important and can make a significant contribution to
the City's operations and capital projects. Therefore, every effort is made to
select the most advantageous investment vehicle and term of investment to
maximize earnings. However, safety and liquidity, in that order, take
precedence over the return.
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B. Investment Ethics
The City of Miami selects all investments by means of a competitive process.
In no case does the City invest funds or place idle funds in financial
institutions as compensating or courtesy balances. The standard of prudence
to be applied by the investment officer shall be the "prudent person" rule,
which states: "Investments shall be made with judgment and care, under
circumstances then prevailing, which persons of prudence, discretion and
intelligence exercise in the management of their own affairs, not for
speculation, but for investment, considering the probable safety of their
capital as well as the probable income derived.: The "prudent person" rule
shall be applied in the context of managing the overall portfolio.
The investment officer and staff, acting in accordance with the written
procedures and exercising due diligence, shall not be held responsible for a
specific security's credit risk or market price changes, provided that the
security is "from the list of approved investments, these deviations are
reported immediately and that appropriate action is taken to control adverse
developments.
C. Investment Process
The formal bidding process for investment instruments consists of the
following procedures:
1. Maintain a bid list of approximately five major financial
institutions qualified under Chapter 280 and two major
brokerage firms. This bid list is adjusted periodically to delete
bidders who are non -responsive or non-competitive over a
period of time, replacing such institution(s) with other qualified
institutions which have expressed an interest to bid on City
funds. Qualified institutions are defined as financial institutions
governed by Chapter 280 of the Florida Statutes with a branch
location in The City of Miami, Florida.
Brokerage houses must maintain an office in The City of Miami
and are selected based on the amount of equity in the firm,
number of years the firm has been in operation and reputation.
2. Place telephone calls requesting a bid from each institution on
the bid list either on the day of the transaction or the afternoon
immediately preceding the transaction date.
3. Receive and note all bids on a standard form designed for this
purpose and retain on file for each transaction.
2
9'7- 302
4. Select the highest winning bid.
5. Transfer funds in exchange for evidentiary receipt from winning
bidder.
This process should prevent influence being experienced by either City
personnel or the financial institution in the selection of the institution chosen
for the purchase of City investments.
D. Authorized Investments
The City has established a list of authorized types of investments. The
authorized cash management investment and the allowable percentage of
those investments of the total portfolio are as follows:
l . Time Deposits
Duration N/A
Maximum % of Portfolio 100%
Maximum % of Combined Asset Group 100%
2. Certificates of Deposit
Duration 0-3 yrs.
Maximum % of Portfolio 100%
Maximum % of Combined Asset Group 100%
3. U.S. Treasury Bills
Duration N/A
Maximum % of Portfolio 100%
Maximum % of Combined Asset Group 100%
4. U.S. Treasury Notes
Duration 0-7 yrs.
Maximum % of Portfolio 100%
Maximum % of Combined Asset Group 100%
5. U.S. Government Agency Securities
Duration 0-3 yrs.
Maximum % of Portfolio 50%
Maximum % of Combined Asset Group 50%
6. Obligations issued by any state or territory of the United States,
which are fully insured or rated in one of the two highest rating
categories by Moody's Investors Service, Inc. or Standard and
Poors Corporation or their successors.
3
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Duration 7-10 yrs.
Maximum % of Portfolio 50%
Maximum % of Combined Asset Group 50%
7. Fixed Term Repurchase Agreement
Duration 0-3 yrs.
Maximum % of Portfolio 20%
Maximum % of Combined Asset Group 100%
8. Overnight Repurchase Agreements
Duration N/A
Maximum % of Portfolio 100%
Maximum % of Combined Asset Group N/A
9. Bankers Acceptance
Duration N/A
'Maximum % of Portfolio 20%
Maximum % of Combined Asset Group 30%
10. Commercial Paper with a rating of A-1 or P-1 only, rated by
Moody's or Standard and Poors
Duration N/A
Maximum % of Portfolio 20%
Maximum % of Combined Asset Group 30%
11. Corporate notes, corporate bonds, medium term notes, Yankee
notes, and Yankee bonds with terms of one year or less rated by
2 or 3 designated rating agencies in one of the two highest rating
categories.
Maturity 0-2 yrs.
Maximum % of Portfolio 20%
Maximum % of Combined Asset Group 30%
12. Corporate notes, corporate bonds, medium term notes, Yankee
notes, and Yankee bonds, with terms of in excess of one with a
maximum of 5.0 years rated by 2 of 3 designated rating agencies
in one of the two highest rating categories.
Maximum Maturity 3-7 yrs.
Maximum % of Portfolio 20%
Maximum % of Combined Asset Group 30%
13. Money market mutual/trust funds which substantially conform
with this policy as follows:
Duration N/A
Maximum % of Portfolio 100%
Maximum % of Combined Asset Group 100%
4
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State of Florida Local Government Surplus Funds
Trust Fund
b. Mutual/trust funds sponsored by the Florida League
of Cities
C. Private money market mutual funds backed entirely
by "Full Faith and Credit" U.S. Government
Securities not to exceed 25%.
14. Fixed income mutual funds sponsored by the Florida League of
Cities which substantially conform with this policy as follows:
Duration N/A
Maximum % of Portfolio 25%
Maximum % of Combined Asset Group 25%
d
15. Externally managed funds requiring specific approval by
Commission with investment limited to City policy and rating
criteria.
Duration 3-7 yrs.
Maximum % of Portfolio 20%
Maximum % of Combined Asset Group 20%
16. Interest rate Swap agreements between the City and a counter
party to pay/receive a fixed interest rate payment in exchange for
a variable rate payment over a specified term with the
requirement that all "Swap" agreements be approved by City
Commission prior to execution.
Duration N/A
Maximum % of Portfolio 10%
Maximum % of Combined Asset Group 20%
All repurchase agreements are fully collateralized and the collateral is held in
the City's name by a third party custodian.
Derivatives (defined as a financial instrument the value of which depends on,
or is derived from, the value of one or more underlying assets or index of
asset values) shall be utilized only if specifically authorized as part of the
investment plan and the Finance Director or his designee has sufficient
understanding/expertise to invest in derivatives. All proposed derivative
investments (including "SWAPS") will be analyzed by the City's Financial
Advisor and will be presented to the City Commission for approval.
Repurchase Agreements (an agreement between an investor and a security
dealer whereby dealer agrees to buy back the security at a specified price in
the future) will be limited to transactions in which the proceeds will be used
5
97- 302
E.
F.
to provide liquidity. Any investment which is not issued in "Book Entry
Only" form is physically held by the City in a secure vaulted area and
surrendered only when invested funds and earnings are received by the City
at maturity.
Prohibited Investment
Finds to be invested in cash management investments may not be invested in
the following:
Common Stock
Preferred Stock
Convertible Bonds
Venture Capital
Options and Futures
Warrants
Commodities
Short Selling
Real Estate
Maturity and Liquidity Requirements
Private Placements
Unregistered or Restricted Stock
Margin Trading
Limited Partnerships
Oil and Gas Wells
IO or PO strips or inverse floater
mortgage backed securities
Foreign Exchange
Any Inverse Floating Rate Securities
The City selects investments whose terms compliment the need to make the
major expenditures set forth below.
Biweekly Payrolls
2. Periodic Debt Service Payments
3. Capital Project Needs
For each expenditure event, investments are selected whose maturities occur
at a date close to the date that funds will be needed. Investments also are
selected based on the highest yield for the particular type of investment. In
the case of capital projects, in which the exact date that expenditures will
need to be made is unknown, the City selects several investments with
varying maturities so that monies are available each month to cover all
capital expenditures. Any unused capital investment funds are then placed in
investments of one year or more to maximize return potential.
As mentioned earlier, the City maintains an overnight investment program of
approximately $10,000,000, which provides funds needed to cover daily operating
expenses, excluding item #'s 1-3 above. Interest yields on these investments are
competitive though somewhat lower than longer term instruments.
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G. Portfolio Composition
Diversity of investment types is highly desirable. Such diversity is necessary
in cases where securities are traded frequently and not held to maturity and
where volatile securities are traded.
H. Custodial Account
All City investments, except for swap agreements, must be held in an
independent custodial account within the trust department of a major
financial institution with a branch located in Dade County, Florida. The
custodian will not be utilized to buy or sell investments for the City. All City
investments must be registered in the City's name in book entry form
evidenced by transaction tickets maintained by the custodian with a copy
provided to the City. Physical possession of securities by the City should be
avoided. The investment held by the custodian must be reconciled monthly
to the City'9 general ledger. The City will carry investments at cost but will
maintain a record of portfolio market value each month.
I. Master Repurchase Agreement
A "Master Repurchase Agreement" has been developed, reviewed and
accepted by the City and is part of the contract established with the City's
main depository bank. This agreement is a standard Public Securities
Association ("PSA") form agreement offering all recommended protection to
the City. This agreement is scheduled to be in effect for the duration of the
contract with the City's main depository.
J. Investment Transaction Authority
The Finance Director has designated the Treasury Manager as the individual
responsible for managing the City's investments. The Treasury Manager
discusses investments with upcoming maturities with the Assistant Finance
Director and the Finance Director if there is a question as to new maturity
target dates or type of investment vehicle to be used. Based on these
discussions, the Treasury Manager executes the transaction and completes an
"Investment Transaction Report" for each investment transaction. The
Assistant Finance Director and the Finance Director then review and approve
the Investment Transaction Report. The fully executed Investment
Transaction Report contains all information pertinent to the investment and
contains the approval signatures of the Finance Director, Assistant Finance
Director and Treasury Manager. Funds related to each investment are
transferred according to authorized funds transfer procedures and limits
established under the provisions of the City's contract with its main
depository bank. —
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K. Internal Controls
The City has established a number of internal controls to prevent loss of
funds by fraud, employee error, misrepresentation by third parties, or
imprudent actions by employees of the City. The internal controls are as
follows:
Investment transactions authority is limited to specific persons
within the Finance Department.
2. Wire transfer of funds authority is restricted to specific
individuals with specific dollar limits within the Finance
Department. All non -repeat type wire transfers require
confirmation authorization by a second individual specified in
wire authority documents executed with the City's main
depository.
4
3. All investment transactions require the approval of the Finance
Director and Assistant Finance Director on the Investment
Transactions Report for each investment.
4. A monthly report titled "Investments by Banks/Funds" is
prepared by the Assistant Finance Director and distributed to the
Finance Director early in the subsequent month for review. In
addition, a Financial Analyst in the Finance Department receives
a copy of this report and reconciles these investments with the
City's general ledger on a monthly basis.
5. A clerk in the Finance Department reconciles the City's general
depository account on a monthly basis by comparing the City's
general ledger with the applicable bank account statements. The
reconciliation of the general depository account would reveal
any difference in investment transaction recording and the
actual movement of funds.
6. Each month, the Assistant Finance Director reconciles
investments reflected in the custodial statements with the City's
records.
7. Each year both internal auditors and the City's external auditors
review existing internal controls as well as investment
transactions by examining data on a random basis.
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L. Investment Reporting
As discussed previously, the Finance Department maintains several types of
information and reports on investments. The records relating to investments
are as follows:
1. Investment Transaction Report - A recording/approval form for
each investment transaction, regarding both active and matured
investments. This form also indicates all bids obtained where
applicable.
2. Investment bid sheet, where applicable, for each investment
3. Investment Log - a document listing, in chronological maturity
order, pertinent information on each investment
4. -investments by Banks/Funds report generated monthly and
reconciled with the City's general ledger
5. Annual summary of average investment returns which is
subjected to external audit for reasonableness of average stated
yield for the fiscal year.
M. Recorkeeping and Performance Measurement
Comprehensive records of each investment transaction are maintained in the
Finance Department. These records include bid sheets where applicable,
investment transaction reports, investment bank advises, the annual
investment log, and a quarterly compilation of total returns for the preceding
fiscal quarter by City fund type (e.g., General Fund, Capital Projects,
Enterprise, Internal Service). Annually, the City's external auditors review
the calculation of investment yields prepared by the Finance Department for
comparison to indices and comparative data maintained by the external
auditors. They then determine the reasonableness of the average yield
calculated by the Finance Department. If no problem is indicated, the Finance
Department then compares its average annual yield to yields of surrounding
local governments when such information becomes available. While yield is
not the primary concern of th4e City's investment manager, it should be noted
that the City has consistently enjoyed an average yield competitive with other
major local governmental entities while assuming lower risk.
V. Pension Investments
The City does not manage the cash or investments of the City's pension systems. Each
pension system has elected or appointed members to its pension Board of Trustees who
exercise oversight over money mangers engaged to manage pension fund investments in
accordance with policies and guidelines established by each pension system. The Boards,
therefore, have oversight authority over investments for pension systems and the City does not
actively participate in the process.
VI. Bond Funds
Notwithstanding anything to the contrary contained in these investment guidelines, the
provisions pertaining to investment of monies under all ordinances, resolutions, trust
indentures and agreements adopted or entered into by the City in connection with bonds issued
by the City or other debt incurred by the City will control and supersede the provisions herein
contained with respect to the investment of such monies.
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iorganizatlon Plan
--velop and Communicate Job Specs
rganize Review Committees
andldates Interviewed and Selection
;claiming Management's Rights
una Contract Negotiations
iring of r iid-management personnel
-SCME Contract Negotiations
.FF Contract Negotiations
aP Contract Negotiations
^tition PERC for mgmt. designations
rofessIona IIzation of Management
tegralion with Chamber of Commerce
rganizational meeting with FIU's
Institute of Government
esearch of Best Practices re: Budget
-alning of Top Execs re: Performance -
Based Budgeting
-alning of staff via seven modules
evelopment of Peformance Standards
and Data bases
.iplementation Into Budget Cycle
harter Revisions
elect Charter Review Task Force
ask Force Deliberations
IN Commission Review
Business Practices
iizational meetings
ion and work of Expert Panels
Force Deliberations
mmendalions from Task Force
mentation of recommendations
Estimated Timeline for Management Recovery Items
1997 1998 1999
May Jun. Jul. Aug. Sep. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
s`
i
J
2000 2001
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
11 I
EXHIBIT IIIA
CITY OF MIAMI
FIRE RESCUE ASSESSMENT PROJECT
CRITICAL EVENTS SCHEDULE
Event Date
Final Assessment Report May 1997
Workshop/Briefings with City Officials regarding
Final Assessment Report May 1997
Policy direction from City Commission May 1997
Approval by Budget Oversight Commission May 1997
Draft Ordinance authorizing non -ad valorem
assessments 44
June - July 1997
Comments From City staff regarding Ordinance
authorizing non -ad valorem assessments
June.- July 1997
Property Appraiser provides assessment information
June 1997
Field Work by City staff completed
June - September 1997
First reading of Ordinance authorizing
non -ad valorem assessments
August - September 1997
City advertises Ordinance authorizing
non -ad valorem assessments
August - September 1997
Second reading of Ordinance authorizing
non -ad valorem assessments
September - October 1997
Development of Preliminary Assessment Roll
September - October 1997
City Commission adopts Initial Assessment
Resolution
October - November 1997
Advertise Notioe of Intent to Use the Uniform Method
October - December 1997
Print and stuff Bills
November - December 1997
Adopt Notice of Intent to Use Uniform Method
December 1997
9 1- 302
Event
Date
Draft Final Assessment Resolution
December 1997 - January 1998
Publish Notice of Public Hearing to adopt
Final Assessment Resolution
January 1, 1998
Mail Bills to affected property owners
January 1, 1998
Public Hearing to adopt Final Assessment Resolution
January - February 1998
Update Fire Rescue budget for FY 98-99
May 1998
Update Assessment Roll for FY 98-99
May - June 1998
Calculate Annual Assessment Rates for FY 98-99
May - June 1998
4
Initial Assessment Resolution
June - July 1998
First Class Notices
June - August 1998
Published Notice
June - August 1998
Preliminary Assessment Roll
June -August 1998
Final Assessment Resolution
July -August 1998
Final Assessment Rates
July -August 1998
Certified Assessment Roll
by September 15. 1998
b7- 302