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...MINUTES
OF MUING HELD ON -NOVEMBER 15, 199�
• PREPARED BY THE OFFICE OF THE CITY CLERK
C I TY HALL
WALTER FQEMAN
CITY CLERK
r
ITEM
NO.
SUBJECT
INDEX
MINUTES OF SPECIAL MEETING
November 15, 1996
LEGISLATION PAGE
NO.
1. MAYOR CAROLLO EXPLAINS PURPOSE OF
DISCUSSION
SPECIAL MEETING:
11/15/96
A) RECEIVE TASK FORCE'S FINAL
REPORTS / RECOMMENDATIONS;
B) SWEAR IN NEW CITY MANAGER,
EDWARD MARQUEZ;
C) RECOGNIZE PUBLICLY THE SERVICE
OF PRO-BONO EXECUTIVES;
D) APPROVE AMENDMENTS TO
COLLECTIVE BARGAINING AGREEMENTS;
E) RECEIVE FINAL REPORT FROM
OUTSIDE COUNSEL TOM TEW ON LIABIL
ITY BY FORMER EXTERNAL AUDITING
FIRM, DELOITTE & TOUCHE.
2. (A) CITY CLERK WALTER FOEMAN
DISCUSSION
ADMINISTERS OATH OF OFFICE TO
11/15/96
EDWARD MARQUEZ, CITY MANAGER.
(B) MERRETT STIERHEIM READS FINAL
REPORT / RECOMMENDATIONS.
3. DISCUSS CITY MANAGER MERRETT
DISCUSSION
STIERHEIM'S FINAL REPORT /
11/15/96
RECOMMENDATIONS AND APPROVE IN
PRINCIPLE -- CONSIDER INCREASING
SOLID WASTE FEES ON FIRST READING
DURING 11/21/96 MEETING --
DIRECT CITY MANAGER AND CITY
ATTORNEY TO PREPARE / BRING
BEFORE CITY COMMISSION DOCUMENTS
FOR FEE INCREASES -- DIRECT
ADMINISTRATION TO PROVIDE
COMMISSIONER'S WITH DOLLAR AMOUNT
CITY SPENDS ON CASH FLOW
ANALYSIS -- DIRECT ADMINISTRATION
TO STUDY TAX EXEMPT PROGRAMS FOR
NONPROFIT CORPORATIONS -- (SEE
LABEL 5),
1-2
2-3
3-1 3
4.
DISCUSS RECOMMENDATIONS FROM
DISCUSSION
13-16
OUTSIDE COUNSEL, TOM TEW,
11/15/96
CONCERNING LITIGATION AGAINST
DELOITTE & TOUCHE -- DIRECTION TO
TOM TEW BY MAYOR CAROLLO: MEET
WITH CITY MANAGER AND
COMMISSIONERS INDIVIDUALLY TO
DETERMINE DIFFERENT COURSES OF
ACTION AVAILABLE.
5.
APPROVE RESOLUTION ACCEPTING IN
R 96-819
16-18
PRINCIPLE CITY MANAGER'S TASK
11/15/96
FORCE REPORT -- (SEE LABEL 3).
6.
DISCUSS RATIFICATION OF
DISCUSSION
18-19
AMENDMENTS TO FOUR COLLECTIVE
11/15/96
BARGAINING AGREEMENTS: POLICE,
FIRE, SANITATION AND GENERAL
EMPLOYEE.
7.
RE -SCHEDULE COMMISSION MEETING OF
R 96-820
19-21
i
NOVEMBER 21, 1996 TO START AT
11/15/96
8:30 A.M.
8.
PRESENTATION - PRO-BONO
DISCUSSION
21-23
EXECUTIVES.
11/15/96
9.
BILL WALSH THANKS COMMISSIONERS
DISCUSSION
23-24
FOR OPPORTUNITY TO HAVE SERVED
11/15/96
CITY.
[A
MINUTES OF SPECIAL CITY COMMISSION MEETING OF THE
CITY COMMISSION OF MIAMI, FLORIDA
j On the 15th day of November, 1996, the City Commission of Miami, Florida, met at its
special city commission meeting place in the City Hall, 3500 Pan American Drive, Miami,
Florida in regular session.
The meeting was called to order at 4.24 p.m. by Mayor Joe Carollo with the following
members of the Commission found to be present:
ALSO PRESENT:
Mayor Joe Carollo
Vice Mayor Wifredo Gort
Commissioner Tomas Regalado
Commissioner Humberto Hernandez
Commissioner J.L. Plummer, Jr.
Merrett R. Stierheim, City Manager
A. Quinn Jones, I1I, City Attorney
Walter J. Foeman, City Clerk
Maria J. Argudin, Assistant City Clerk
An invocation was delivered by Police Chief Donald Warshaw, after which
Commissioner Humberto Hernandez led those present in the pledge of allegiance to the flag.
----------------------------------------------------------------------------------------------------------------
1. MAYOR CAROLLO EXPLAINS PURPOSE OF SPECIAL MEETING:
A) RECEIVE TASK FORCE'S FINAL REPORTS / RECOMMENDATIONS;
B) SWEAR IN NEW CITY MANAGER, EDWARD MARQUEZ;
C) RECOGNIZE PUBLICLY THE SERVICE OF PRO-BONO EXECUTIVES;
D) APPROVE AMENDMENTS TO COLLECTIVE BARGAINING AGREEMENTS;
E) RECEIVE FINAL REPORT FROM OUTSIDE COUNSEL TOM TEW ON
LIABILITY BY FORMER EXTERNAL AUDITING FIRM, DELOITTE & TOUCHE.
Mayor Carollo: The purpose that we had called this special meeting today, was to receive the
final report and recommendations including those from the task force reports from Manager
Stierheim. And at the same time, to swear in and to have the new Manager take the oath of
office today. I know that some of the individuals that have so graciously helped the task force
are still coming in, Mr. Manager. So, maybe we can begin by swearing in the incoming
Manager and, then, you can give us your report, and then we will hear from them. Mr. Clerk,
can you come up, please so that he can take the oath?
Mr. Walter J. Foeman (City Clerk): Would you raise your right hand and repeat after me.
Mr. Edward Marquez: I, Edward Marquez, do solemnly swear that I will support, protect and
defend the constitution and the laws of the United States of America and of the State of Florida
and of the Charter of the City of Miami In all respects faithfully discharge the duty of City
Manager of the City of Miami.
1 November 15, 1996
777-3
Mr. Foeman: Congratulations.
Mr. Marquez: Thank you.
Mayor Carollo: Let's get a picture taken here, if we could.
(APPLAUSE)
Mr. Edward Marquez (City Manager): Thank you. Merrett just gave me the hot seat.
-------------------------------------------------------- -------------------------------------------------------
2. A. CITY CLERK WALTER FOEMAN ADMINISTERS OATH OF OFFICE
TO EDWARD MARQUEZ, CITY MANAGER.
B. MERRETT STIERHEIM READS FINAL
REPORT/RECOMMENDATIONS.
Mayor Carollo: If we could ask Merrett Stierheim to begin the report and recommendations that
he has here for us today.
Mr. Merrett Stierheim: Mr. Mayor, members of the City Commission. I am sitting there and I
said to the attorney, it seemed like a lot more than two months, since September 13th. I guess it
was Friday afternoon that we went up there and I went through a very similar circumstance and
it's been a whirlwind two months. Very exciting, very challenging, a bit exhausting at times,
but I can say that I've enjoyed it. And I'm just... as I said in my second paragraph I guess, I am
comforted that we've done everything that we could do. And when I said we, I am talking about
a whole team of professionals. I don't want to start mentioning names. I guess I have to say
George Burgess and Bill Hampton here, and Christina who, I call her the "shadow manager"
because she took care of the normal business while I could focus on the problem. And, but there
are so many people, the department directors, the staff and the Finance Department. I listed
everybody on page 23, so I won't be redundant and I won't take a lot of time. But it's heart felt
and very sincere. I am, I hope you've had an opportunity to look at it. We were, the print shop I
think, finally cranked these copies out at sometime in mid -morning. We were endeavoring to get
them delivered to those Commissioners we could reach. Obviously, yesterday being an election
day, that was difficult because all of you were obviously busy. But I'd like to walk through the
report with you and I will try to stick with the pages. What I would like to see you do today, and
I am recommending is that you receive the report and adopt it conceptually and let me explain
' what I mean by that. Approving it conceptually does not mean that you are approving any fee
increases or any of the specific components. It means that you are approving the plan in concept
and in so doing, I think you will send out a very positive signal to our citizens, to the business
community. And I will tell you that I was with a couple of groups just a few days ago
downtown, major investors, major property owners and there is just a tremendous amount of
concern. It is not just in Wall Street. It is not just among bond holders. It is not just among the
Governor and the members of the legislature and the rest of the residents of Dade County. It
really is a rather all inclusive concern. And, I think your action in approving it conceptually and
receiving it will send a signal, that in essence you are saying, "Yes, we acknowledge that we
have this problem. We resolve that we're going to deal with it and we're going to deal with it in
the government and in the family of the City of Miami. Between the Manager, our unions, the
Commission and so forth, and not to look to outside help or let the situation deteriorate further."
So, Mr. Manager that would be one recommendation. I don't ask you to do it right now, but
when I am through I would hope that you would consider that. The second major
2 November 15, 1996
recommendation obviously has to do with the Solid Waste fee increase which I think is a very
important part of this recovery plan. I know that's politically tough. I am well aware of that and
I would hope that between now and December 12th, when you might consider it on second and
final reading, if you agree to consider it on first reading on November 21st which I recommend,
that the public can be made aware of why this is vital. Why it is totally and fully justified
irrespective of the financial crisis. And I will explain that in a few minutes. And, then, third,
I'm asking that you direct the City Manager and City Attorney to prepare the necessary
documents to be brought before you for those fee adjustments, fee increases, any other actions
that must be taken by the Commission officially so that you can consider those in due process.
I've already explained to you that time is money, the quicker you begin addressing this problem,
the easier it will be and in the long run the cheaper the solution. And four, and Commissioner
Hernandez was not here but everyone else was, when we adopted the budget on second reading,
we acknowledged publicly, the Commission and I, that the budget was no imbalance. In fact, it
was fifty million dollars ($50,000,000) out of balance. State Law requires that you have a
balanced budget and we committed at that time that we would bring this budget into balance
before the end of the fiscal year.
----------------------------------------------------------------------------------------------------------------
3. DISCUSS CITY MANAGER MERRETT STIERHEIM'S FINAL REPORT /
RECOMMENDATIONS AND APPROVE IN PRINCIPLE -- CONSIDER
INCREASING SOLID WASTE FEES ON FIRST READING DURING
11/21/96 MEETING -- DIRECT CITY MANAGER AND CITY ATTORNEY
TO PREPARE / BRING BEFORE CITY COMMISSION DOCUMENTS FOR
FEE INCREASES -- DIRECT ADMINISTRATION TO PROVIDE
COMMISSIONER'S WITH DOLLAR AMOUNT CITY SPENDS ON CASH
FLOW ANALYSIS -- DIRECT ADMINISTRATION TO STUDY TAX
EXEMPT PROGRAMS FOR NONPROFIT CORPORATIONS -- (SEE LABEL
5).
Mr. Stierheim: So, I am recommending that in due time, and hopefully earlier rather than later,
you will amend the budget ordinance to make it into balance. Now what does that mean? The
budget is a plan, and I underlined that in here. That's what it is. It's a forecast of how you're
going to operate. It's an appropriation of reserves and so forth. And clearly by the end of the
fiscal year, the objective should be that you will not close in the read and in fact, hopefully, have
a positive fund balance. At the bottom of page two, one of our task force members, I think it
was the opportunities task force, asked me a question and I am quoting it almost verbatim. It
said, he said "what kind of medicine is the City really willing to take?" And I said there were
four options, as I saw them to the City. Number one, is to dissolve the City. Do away with it.
Which would involve some form of Metropolitan Dade County takeover. Number two, we can
procrastinate. We can think that somehow this problem will go away by itself or that it will get
handled. And that would only result in further financial deterioration, insolvency and
bankruptcy. Number three, we could request the State to invoke the emergency provisions of
Chapter 218, which essentially means that the Governor could appoint a board over this
Commission. I am told could even remove the Commission. And, essentially the State would
take over the City government, under 218 in one form or another. And there are all kinds of
grades of activity that would be involved. Or four, we can face up to the problem, we can deal
with it forthrightly, and we can solve it. And I, all of my efforts, everybody that I've been
working with has been committed to that fourth option. I don't think that you want to see this
3 November 15, 1996
r
City get any further in trouble. And I know you don't. And I will tell you that you can solve this
problem. I believe that. I think your new Manager believes that. And I think those of us who
have been intimately involved in this, do as well. One of the areas we spent the most time on, is
the issue of recurring revenue, recurring deficit. Because one time infusions of capital only help
you in one fiscal year. If the deficit continues into subsequent years, then you've got to deal
with that either through sustained new revenue or cutting back on your expenses that recur each
year. That is why in my discussions with our labor unions, I was looking really for a two year
package so that we knew that we had recurring savings over a two year period. We've agreed to
target at sixty million ($60,000,000) as a recurring target. And that would be a target that would
be a combination of revenue, new revenue or expanded revenue and reduced expenses. So, that
the bulk of this report is focussed in that specific direction. I want to comment because there are
some who speculated that the problem was bigger than sixty-eight million ($68,000,000), and I
can make an argument for that. Because we have unfunded liabilities that are in excess of two
hundred million ($200,000,000). But, what the fallacy of that is, that while yes, the City ate its
reserves to support the General Fund, and that's essentially what it did. I might digress for a
minute. What's happened here is that the City. You had reserves. I remember when I worked
for the City, we charged three and a half cents a mile, there was a penny for insurance, there was
so much for replacing the vehicle and maintenance, it was all there and there was a fund. And
that's what those reserves were for. And there should be a reserve for self-insurance, for liability
and Workers' Comp., other reserves. The City got into tight straits, and they ate those reserves.
Literally ate them by the General Fund. And, when they got through with that, and there were
no more reserves then they began looking at the capital. And they ate the capital into the
General Fund. Storm Water Trust money was used in Solid Waste and so forth and so on. And
when they ran out of that, they sold bonds. Pension bonds, and the "reserve for Workers' Comp.
in '94." That's another one. It wasn't just the pension. And when those bond monies came in,
boom. They were consumed in the operating budget. And now, we're ready to hit the wall. No
more bond money. There's no more reserves and unless we do some drastic things here, the
City's really in trouble. But we can solve it. Those reserves, incidentally, and unfunded
liability, that's two hundred plus million ($200,000,000) is not something you have to pay in any
one year. It is a projection of the liability and it is paid out over a period of several years,
depending on whichever one it is. The financial forecasts that we have here, are designed not
only to meet the short fall but to provide some excess revenue beginning next fiscal year, and
then on where you can replace those reserves. And at the end of the day, when you have
reserves to meet near term liabilities, then I would say that the City is truly fiscally solvent. And
not until then. That's why I'm suggesting if there are excess revenues because of your cost
cutting and your new revenues that those monies not be spent on new programs. That they be
put into the reserves to build them back up again. And, if you have after the first year, and
Mayor this is important. After the first year, you may have and we've factored in the sale, the
one time sale of assets to get us past this sixty-eight million dollar ($68,000,000) obligation there
is a chunk in there for that. And that's important. But, next year, any sale of assets, in my
judgment, those dollars should be put immediately back into reserves. They should replace
capital funds, storm sewers, you need storm drainage projects, other reserves, not for new
programs. Not until you really get yourself built back up. I want to point out for people that
have a copy and to the Commission, on page five as one might expect. I think this came out of
the print shop at two thirty, three o'clock in the morning. We were down at the River Center at
eleven o'clock last night crunching numbers which we've been doing. And I want you to add, if
it's not in your book now. On fiscal year '98 we, the top line on projected balance was sixty to
sixty-eight million ($60,000,000 to $68,000,000). So you can add the sixty-eight ($68,000,000)
to the right of the sixty ($60,000,000). In other words, the deficit or the short fall, the target is
sixty to sixty-eight ($60,000,000 to $68,000,000). And down at the bottom where it says revised
projected balance, that ranges. This is a positive, this is a plus, seven million ($7,000,000) to
approximately fifteen ($15,000,000). Actually, it's fourteen million nine nine seven
($14,997,000). So, we've just add those two figures there, and that again is not next year, this
year that we're in. It's '98, down the road. So, that was one typo, the only one that I'm aware of
4 November 15, 1996
a
at this point. Page seven, will give you our favorite pie. This is not necessarily the best kind of
pie but it does show you how the fairness matrix, is if you will, on how to meet the deficit has
been divided and you can of course study that at your leisure. I've already talked and reported to
you about the union concessions. I am appreciative of our union leadership. It wasn't easy for
them to go back and ask their membership to give up concessions that had been bargained in
good faith and that had been committed by the City. But, I think they were pragmatic enough to
realize that the City did not have the resources to do that and I, with your concurrence tried to
avoid going into the protracted collective bargaining process, did not think that was in our best
interest nor theirs. Because we (a) didn't have the time, and (b) it would have put them at much
greater risk than if they just gave concessions that would help us and they've done that, and I
compliment them for it. And, I also compliment them, that the union presidents stood up before
the pension boards and asked that there be changes in the assumption rates. Not because of the
crisis per se, but because of the performance of the stock market. Because we knew that there
were no salary adjustments that would be made over the next two years and that it was justified.
The actuaries are looking at that. The one pension, JESSE has taken action, the police and fire
board FIFO, is scheduled, I believe on the 19th or next week, I believe. But, that could represent
about seven million ($7,000,000) and the union concessions is twelve ($12,000,000). That's
nineteen million dollars ($19,000,000) that immediately is available to go to address this
problem. One of the provisions that the unions asked for, and I really have to impress on you, I
have met with about 1,500 of our employees, almost half the work force in four separate
meetings. Give and take, some of them were a little tough. Repeatedly, Mr. Mayor and
Commissioner, the employees and their representatives wanted to know, will the Commission do
what it has to do? I am not making this up, they're here, they can speak for themselves. The
question was "will the Commission bite the bullet, if we do it? Why do we have to do it first?
Why do we have to give this up, when we don't know whether they will?" And I represented
that I felt that the Commission would face up to the realities of this situation. And I am putting a
bit of a load on you right now but I am doing it purposely and consistent with what I said to the
union members and leadership. There are a host of nonunion expense reductions that you can
read at your leisure. I will not go into detail. I wish in a way that we had time and maybe, Mr.
Mayor, this is something that you and the Commission will want to do. Is sit down and go
through this in a very leisurely way. There are a lot of things in here that are tough. Reducing
NET offices, tough. Taking money away from your nonprofit organizations that you
traditionally have, gone. You need to look at those things. I mean, there are functions that you
have funded for years, that we are recommending that you cut back. And J.L., it maybe that you
may want to set a system up, similar to what we have in the Tourist Development Counsel where
you take a sum, let everybody come in with a new application, have it reviewed by staff and the
Commission then says Yes, we'll do this and we'll do that. But a smaller amount. And I've
suggested that in the report.
Mayor Carollo: Yeah. One of the things that I'd like for the administration to provide to each
member of the Commission, is the approximate amount of dollars that the City is spending on
the average month, in salaries and everything else that we spent. So, we can get an idea of how
much money we need on a monthly basis.
Mr. Stierheim: I have that in here, Mr. Mayor.
Mayor Carollo: It's in here.
Mr. Stierheim: It's in your monthly. You have a cash flow analysis.
Mayor Carollo: What page do you have it in, Merrett? We got this, this morning and we
haven't been able to go through it.
Mr. Stierheim: I am going to draw your attention now. In fact it's timely. Turn to tab four,
please.
i
5 November 15, 1996
i
Mayor Carollo: Tab four?
Mr. Stierheim: Yes, sir. I will tell you one of the results of our review is, that we've developed
the first comprehensive cash flow analysis at least in 17 years. I don't really don't know how the
City functioned without one, but you're looking at a comprehensive cash flow analysis on this
chart. And you can look at October, and you will note that up in the upper left hand corner, on
October, you start out with a beginning balance of minus nineteen million ($19,000,000). You
recall the deficit?, that's what you started the year with, nineteen million ($19,000,000) in the
hole. And then you go on down and you can see that we're short. This is where we needed the...
either the Tax Anticipation Notes or the Governor's money or the County's money or Florida
Power and Light and Southern Bell because we had a revenue short fall to start with. Go to the
bottom line, you'll see the cash position and you will notice that we don't start picking up cash
until December. You move from a deficit in October or November to a cash position in
December. That's because you're getting your property tax in, all right? And you can see each
department, the revenue sources and so forth Mr. Mayor. And then you will notice that your
cash balance combined begins to decline and this includes the eighteen million ($18,000,000)
per capital. And you hit the wall, right now and this is very important, in March. You have no
cash, you can't quite make your payroll in March, if we do nothing. And it just gets worst
thereafter. And, you can see it build until you get out to September and you're sixty-eight
million ($68,000,000) in the hole. Now, turn to tab six, this will show you the results with the
strategic financial plan. In other words, if the components of the recovery plan are adopted, tab
six is a combined cash position on the bottom. Again, you start with the nineteen million
($19,000,000) short fall and you will note that you begin to build. You do not have a negative
position and in fact at the end of September you wind up with a fund balance, something that
you haven't really had. What you'd been given in the past has been artificial. You really didn't
have a cash balance. You have seven million dollars ($7,000,000) in the bank on September
30th. And you have overcome the sixty-eight million ($68,000,000) short fall. That's what this
recovery plan means to you. And unless you have alternatives as to how you can do this. And I
am glad you asked the question because I wanted to draw your attention to this. This is a
comprehensive cash flow analysis. And I am recommending to you, and in fact you have to
report to the Governor every month, pursuant to the agreement that we signed. The Manager,
you should have scheduled meetings on the status of what kind of progress are you making, how
are you doing, how are you doing related to these numbers?
Mayor Carollo: One of the questions that I have and I know that Mr. Marquez has also been
very involved with you in the last few weeks, is, how in the world did the former administrators
in charge of these projections, think that we could get by, if basically in the first six months of
this new fiscal year, we were going to be hitting a wall? You're saying in March?
Mr. Stierheim: Yes, sir. Well, February.
Mayor Carollo: February or March.
Mr. Stierheim: Right.
Mayor Carollo: I just find it...
Mr. Stierheim: Well, I think the plan was to sell more bonds. Mr. Surana came in and asked you
for blanket authorization...
Mayor Carollo: I remember that. Which we said, no.
6 November 15, 1996
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Mr. Stierheim:... to sell two hundred million dollars ($200,000,000) in bonds. That was the
plan. We'll just go out and we'll hock the City some more to buy another year or two and just
get you further down in the hole.
Mayor Carollo: Yeah, yeah. I remember that. They had asked for a blanket approval by this
Commission so they could sell bonds whenever they need to.
Mr. Stierheim: You will later in the meeting, Mr. Mayor, there was one other item that was on
the agenda and that was a report from attorney Tom Tew who has finished his research on the
question of liability and he may have some comments on your question more specifically. But
that's essentially how. I mean that's the only thing I can figure, Mr. Mayor. I don't know, short
of selling bonds, and we've all of the finance here, and if there's anyone who disagrees with
what I am saying, there is no way. We don't have a printing press, and there's no way you could
have survived.
Commissioner Regalado: Merrett, on the question of liability. Would that be a long term or a
short term view?
Mr. Stierheim: Well, we've taken a two year perspective in this report. I think in two years,
with diligence and sticking pretty close to this or something comparable, you're not going to be
totally out of the woods but you're going to be in a lot better position. You're going to have
positive cash fund balances at the end of the year. You would not have built up your reserves to
the extent that you could. On the other hand, you know, the City does have tremendous assets
and somewhere down the road, you may have the infusion of capital that can help get your
reserve picture back. Two to three years, then you can start talking about new programs.
Commissioner Plummer: Who? After you leave, are we going to be dealing with Ed as to the
answers? Let me just give you one quick question. In here, the few pages that I have been able
to read, you talk about closing the north substation and the south substation. I assume when you
say close them, you are going to also say sell them.
Mr. Stierheim: Yes, sir.
Commissioner Plummer: OK. Is that the case?
Mr. Stierheim: There is only one that you can...
Commissioner Plummer: You don't say that. And that's the reason I'm...
Mr. Stierheim: No, there is only one that you can sell, the other one is on leased property, but it
could be subleased. There has been a lot of misconfusion on this because the truth is that police
protection will not suffer. Will not go down. If anything, the Chief believes that it will be
higher. But, when a television stations runs around, sticks a microphone and says "how do you
feel about losing this police substation?" then, people without knowing are going to say that
well, I am very concerned." And the Chief will be able to go into detail on that. But yes, there
is one that you can sell, if I am saying it correctly, and the Chief is in the affirmative. And there
is another one...
Commissioner Regalado: That will be the south, right? The south.
Commissioner Plummer: The south could be sold and the north is on lease.
Mr. Stierheim: In fact the Chief, I mean, I don't want to get you in trouble but I am going to tell
you he wasn't in favor of them to start with but...
7 November 15, 1996
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Commissioner Plummer: You're also looking at one other vote that voted against it.
Mr. Stierheim: Thank you.
Commissioner Plummer: There were five million dollars ($5,000,000) for each and they never
came within the five million dollar ($5,000,000) category.
Mr. Stierheim: And I hope that the press gets it straight that if they do, if the Commission does
this in the opinion of the Chief, there'll be certainly just as good or better protection. Let me go
on Mr. Mayor. Another major component of this recovery package is the fire assessment fee you
have authorized and we are currently negotiating. Chief Gimenez is here. I have kind of let that
one go because the new Manager is going to have to deal with it, he and the Chief. And I think
they're very close to a contract and that will be presented back to you. I believe we have the
authorization to sign it but we will advise you of the contract. That study will take a month, two
months. And, essentially, it is designed to shift the fire service, you call it fire rescue, I'd say
fire suppression and rescue, to a fee basis. You, I believe, can do this in my judgment and
provide approximately a two mill property tax reduction Citywide. Yes, there will be a fee but I
believe that it can be structured equitably so that the average homeowner will not really feel any
great difference. There may be a few dollars one way or the other. One of the objectives of this,
and this is a tough one,is to bring some of the 33, 34 percent of the tax base that is exempt under
the fee system. You collect garbage fees from tax exempt and so forth and so on. I believe that
there are many exempt properties that should be paying a fee. I also think that there are many
that should be paying a payment in lieu of taxes. Because what is happening here, is the rest of
the tax payers of the City are subsidizing the Federal government, the State government, the
County government, the School Board, Jackson Memorial, Mercy Hospital, etcetera, etcetera.
Because they are being asked in their property taxes and their other fees to provide that
protection to a third of the tax base, and I submit to you that it's inequitable.
Commissioner Plummer: Well, as you know in the last legislative session, Ana Proenza and I
spent a great deal of time change because of a thing called "public purpose." And, many profit
making companies enjoy tax exemption because of the fact they can declare that exemption. My
only question is, would the State of Florida, will they pay a fire fee?
Mr. Stierheim: Well, I think some of that's going to be. The answer maybe no, but I think
you've got to go and sit down and discuss it with them. The same thing with the County. I
mean I can tell you that the CEO (Chief Executive Officer) of a major hospital in this
community shared with me that he was prepared to sit down and discuss payments in lieu of
taxes, voluntarily. So, I mean it's not going to be easy. But, whatever you pick up there is going
to be new money to deal with this problem. At any rate, you're going to be grappling with this
in the months ahead. And there is a possibility that you could adopt this during the current fiscal
year. But I did not put it in prudently, and I think properly, because there is going to be a lot of
legal questions and so forth. I mean this is a great town for lawsuits and I think if...
Commissioner Plummer: For my colleagues attention, we were able last year to get them to do a
study. Willie Logan was the one who put the money in the budget to do the study on the tax
exempt programs, primarily on profit making corporations. We felt that that was the place to
start. We will and we hope to get it addressed in this upcoming legislature. Anna, we're still
pursuing that, yes.
Mr. Stierheim: It should be a priority. I agree with you Commissioner. OK, I... Several of our
task force members are here and I can't thank them enough. You, when you read the task force
reports and I urge you to do it. They're really go into tremendous detail and these people gave of
their time. These were corporate commitments. These reports are outstanding. You couldn't
8 November 15, 1996
have gotten these studies for less than half a million ($500,000) and probably a million bucks
($1,000,000). And they're truly significant. When you read these studies, I think you'll
understand why and the new Manager is already at work on many of the recommendations that
are in there. So, I don't mean to pass over them, but I know the hour is late and I don't want to
keep the Commission here any longer. So, please read that and I think Ed, that this is something
that when you do have work sessions that you should go through and really highlight for the
Commission because they're dynamite. I have a section on Longer Term Enhancements and
Cost Initiatives that is self-explanatory. City management responsibilities. The little squib in the
paper today was a pretty good quote. I said to Ed, there is no honeymoon. He's got to hit the
deck running and I don't see him stopping for at least two years. So, he's got an awesome job
ahead of him. I would encourage you to read this section on Perception and Image. I have
already touched on that a little bit. And I would also say to you that if you look at New York
City and Cleveland, are two cities that come to mind which also face terrible and awesome... I
spoke to some of the leadership in New York City, just to find out how they dealt with that
problem. And those cities have come back stronger than ever. They are respected. They are
admired because they bit the bullet. They dealt with the problem and there is no reason that the
City of Miami cannot emulate that kind of initiative and courage. I say rather candidly that the
present management structure of the City is impractical and dysfunctional. That's pretty strong
language, I believe it. And that does not say... That is not a denigration of any employee, of any
department director or whatever, but I mean there's book and verse in here as to how this City is
disorganized, dysfunctional and I have to spend some time on the Manager's office. I mean, I
came in and aside from Christina, who I already said was the "shadow manager", there is no
research staff capability in the Manager's office at all. No analytical ability. You've got
Assistant City Managers who are essentially department directors. They're not in City Hall,
they're not in the Manager's office. They're running a department. And I mean, it can't work.
And I have recommended too, that a portion of this money and expenditure be made by the
manager to beef up the Manager's staff. That investment will yield millions in better services to
the public, in better revenue sources and I can prove it. And you can prove it in any City in the
country. And I am not suggesting excessive. But the Manager has to have support personnel so
that he could manage, so that he can work with the policy makers. What you have today is, I
mean just impractical, to put it bluntly, and the language speaks for itself. On management
issues, I spent a lot of time. Here's another one. I talked about management abdicating its right
to labor in the bargaining process. Now, the thing that I am going to say should that be offensive
to any leader of the four unions, because they did their job, they got good contracts. I have
nothing but praise for them and admiration and respect. But it's a two sided process. Collective
bargaining means management and labor coming together and hopefully out of that process
comes something better. Not an abdication by management. I want to read this because part of
the problem is, the Manager has no middle management. There is no confidentiality. The
unions had the memos, every single memo that I had, since I have been here, they had before I
did. Is that true? Anybody want to deny it? I mean, I go to a meeting and I'd sit down to
discuss and they'll pull out, well, you appointed this one and you did this and they bring in a file
cabinet about this big and... I mean, I was at a disadvantage. Because as soon as something was
typed to be sent to me by a department head, bingo, they went right over to AFSCME (American
Federation of County and Municipal State Employees) or went some place else. And, you know,
and that's fine. God bless 'em. Good intelligent system. But, there has to be confidentiality and
the Manager, the whole principle of serving at the will and pleasure - - this man serves at your
will and pleasure; department directors serve at his will and pleasure - and when you give away
the management or exempt service below the Assistant Department Director level, that means
division heads, section heads, administrative assistants/confidential executive secretaries, they're
not in the management team. They're in AFSCME (American Federation of State, County, and
Municipal Employees) or in some other union. And it is not right. I am going to read this. This
is a memo from the City's Labor Relations Officer and I am quoting. "In November of 1991, as
a result of labor management cooperation, the City and AFSCME entered into a memorandum of
understanding transferring 186 class ificalions, 275 employees, to the AFSCME bargaining unit."
9 November 15, 1996
Those 275 employees, Mr. Mayor and Commissioners, were members of the "exempt" or
"unclassified" service that were accountable to and reporting to the manager or department
directors or assistant managers. That was part of the management team. "Essentially," oh, this
left the City with 47 after 275 employees were transferred out of the management categories into
AFSCME and Civil Service. Left the Manager with 47 managerial, confidential employees in 26
categories. "Essentially, this left every department in the City with no managerial, confidential
employees below the level of Assistant Director except for the personnel management, internal
audits and computers." It's got to be changed and you can go right on up to PERC (Public
Employees Relations Committee) and the State. The Attorney should advise the Manager and I
recommend that you do it and that you get balanced. It's not going to be at the expense of the
unions because you have a management team that is loyal to management, and you don't have
divided loyalty between the union, Civil Service, etc. I've got a chapter in here on the one that
the press loves so much "The Friends of the Friends" and the nepotism. I didn't have time, nor
was I appointed to come in here like the grim reaper and begin firing people. That is not why I
was here, I didn't think it was my job. I didn't have the time. When I found out about this
deficit, I just did not have the time to do that.
Mayor Carollo: And if I may Merrett, I am sorry to interrupt you. When I went to you and
asked if you can come in and help the City and be City Manager for the interim time. I asked
you to concentrate in one and one area only, the City's finances. I didn't expect you nor do I
think anybody else up here did. Nor do I think it was right, nor did you have the time to
concentrate on some of these other areas.
Mr. Stierheim: But, I can tell you that when I stood before the employees at these meetings and
they would say "Why haven't you done anything with the friends and friends?" I was a bit at a
disadvantage because I mean, in the one hand I would have liked to. On the other hand, I didn't
have the time to find out who was working and who wasn't. The department directors, by in
large, were or have been schooled to retermination, they were reluctant to do the things that they
should have done as directors. That's going to change because you've got a professional
Manager and we have a Civil Service system and if there is an employee that is not carrying their
weight, and I am not talking about employees that are loyal and hard working, and dedicated,
that is not... I don't care if they are a friend of a friend, if they are hard working, no problem.
But, if they are there and they think they're insulated because of who they know, or who helped
I get them the job, then, they're fair game. And the process should be implemented, and enough
said. Commissioner.
Mayor Carollo: Vice Mayor Gort, go ahead.
Vice Mayor Gort: Let me ask you a question. When I had to go into this in '94, my experience
with labor management at that time, I was told we needed to reduce their budget. We had a
series of workshops at the Orange Bowl where this labor management component was put
together. We were able to reduce the budget by thirty million dollars ($30,000,000) at that time.
We were praised by many other municipalities because of this labor management relationship
and what we were able to do. Are you saying that we should not continue that or?
Mr. Stierheim: I think there is absolutely...
Vice Mayor Gort: Because my experience in that one was very favorable just like you've had
your experience in working with the unions now. The unions sat down, they analyzed there was
a problem, they were willing to work with me at that time, like they're willing to work now.
I
i Mr. Stierheim: I think that management and the leaders of the bargaining units must work
closely together. I mean if I was staying here, I think my relations with the unions would be
excellent. I really do. Because I Zm not. I mean I love the employees, and I don't want to hurt
10 November 15, 1996
them, I want to help them. I don't like taking away a COLA (Cost of Living Adjustment). I told
everyone of them this isn't fair. Not fair for me to come here and ask you to give up something
that you've already been approved. There is nothing fair about this to anyone. Not fair to this
Commission, either. But, you know, we have to sacrifice. And I think the workforce should be
well paid. We should have safety standards, we should have training standards. The park task
force, and I've got a chapter in here on this, empowered the park managers, and I sat in on a
meeting, and these people they were down. The Parks Department is like the tip on the tail of
the dog of this City. I suggest that the Manager get a tour for all of you and you should go
through those parks and see them, and see the condition and the problems and hear first hand
from those Park Managers. That whole area needs a lot of help. So, yes, I think that the labor
management... But management still has its prerogatives and at the end of the day, management
is accountable for the running of the City. And, you look to the management to do that. And if
they don't do it, then you change the management. And you can't disarm the Manager by (a) not
giving him an adequate staff so that he can't do the job that needs to be done. And (b) taking
j away all of his management personnel so that they're loyal to AFSCME or another union or
` Civil Service. I mean, you know, it just makes the job difficult, if not impossible. But, you can
have good relations with the labor unions, and it's a subject of communication -give and take.
The only thing I would comment on is that... I had another task force which was called the
Strategic Planning Task Force. We had one meeting. We concluded that it would be far better
to get all of the other task force reports in to finish this report and present it to the Commission,
and, then, to have an ongoing task force or a committee. And, here, Mr. Mayor and
Commissioners, I would recommend that you discuss this with your Manager. That you think
about bringing a well respected, you know corporate CEO (Chief Executive Officer),
representatives from the City, the neighborhoods and so forth and so on. But, also some high
powered, very bright people to work with the Manager and the Commission on an ongoing basis
to develop strategic strategies on your future. On your financing, on your growth, on policies
and program that deal with the resolution of this problem but go beyond that. And everyone
there concurred. There were several people that served pro bono that were willing to stay on and
help the City. I know that the Empowerment Team sitting right here said they would go and go
into other departments, if the Manager wanted them to. So, you've got a lot of talent out here
that's invested time, they're not going away, they're here for you. And I think you could utilize
them in that way. Sorry, this maybe took a little longer. I really would have liked to maybe had
eight hours or four hours to sit down short sleeves and really go through it line by line and trash
it out. That's what you're going to have to do.
Vice Mayor Gort: Or, we might call you back to do that.
Mr. Stierheim: Pardon?
Vice Mayor Gort: We might call you back and we'll do that.
Mr. Stierheim: Well I mean, I am not going out of town. I am going to be here and I've got
another job but, I have assured the Manager that I would try to be responsive.
i
jCommissioner Plummer: We have a whole lot of pizzas running from the car into the...
Mr. Stierheim: Thin crust.
Mayor Carollo: Mr. Manager, I, personally, on behalf of this Commission and the residents of
Miami want to thank you for stepping forward and taking a position that has been a thankless
decision. Something that you didn't have to do, but you did it for the good of Miami. Few
( people would have been able to have accomplished in such a short time what you have, if any. I
i shudder to think what would have happened to the City if you hadn't come in. If things would
have gone as they were going, as some wanted them to go, and, then, we would have been faced
11 November 15, 1996
I come February or March, hitting a wall where we ran out of money or worst. Other shenanigans
that might have gone on to get additional funds without the Commission knowing what was
going on and getting deeper into the hole. One of the other problems that we still have hanging
over us, and this goes beyond the sixty-eight million dollar ($68,000,000) deficit, is the
investigation that the City is under by the Securities and Exchange Commission. We are going
to have to face the reality sooner or later that those bond monies that were spent in the General
Fund is going to come back and bite us. And, that's one that we don't have a price tag for. But,
I assure you as sure as I am sitting here today, that that's one that we're going to be facing.
1 There is a couple of other areas of the country that did the same thing, sold bonds under one
pretense and then did something else with them and they are facing up to the realities of having
done that, and we will soon, too. Hopefully, the City of Miami will not be facing the brunt of the
fines, but that's another problem that we have to deal with and that's one that we don't have a
price tag for. But, I again, Merrett, just on a personal level, want to thank you because when I
j spoke to you, I noticed the last thing that you had on mind, unlike what some people have being
saying that this is all a plot. That I knew everything that was going to happen, and that i have
been planning on it and, in fact, you and I had discussed you coming in weeks before people
were taken out of City government. That is not true, it's an absolute lie. You know well that,
yes, we had a meeting planned for several weeks, but you brought the agenda in as a public
record of everything that we were to discuss in that meeting, until I asked Bill Talbert, your
assistant, if he could give us some breathing room so that I could ask you if you'd consider
coming to our aid. And, thank God for that. Because at least, no matter how ugly, no matter
how much hurt we have here, we have the reality of what's happened to our City. It's sad, it
should never have happened. Miami is a great City. Miami has a lot of magic to it but I guess
the person that said it best was the former Chief of Police, Clarence Dixon. When he said, as I
understood that he was quoted "that what happened here is what happens when you combine
incompetency and corruption and put it under a blanket." And that's the bottom line of what
happened to Miami. And we could either do away with it all. Where if we want to finish killing
the City off, then, we follow the other blueprints of incompetence and corruption and I assure
you as sure as I am sitting here too, that then we will finish killing the City off. But, I think that
there are enough people that care about Miami; that believe in Miami; that want to see Miami
succeed, and won't let Miami follow the old footprint. It's going to follow the new one. We're
going to follow the recommendations that can bring Miami out of this crisis. That will bring
professional management back to Miami and that would give Miami another chance and that will
make the next 100 years, the best 100 years Miami ever had. But, that could only be done
through a lot of sacrifice, a lot of pain, a lot of suffering. It's not going to be easy. It's not going
to be easy having to deal with the demagogues. Some of those individuals that have a fifth, sixth
grade education but have access to other things that can try to confuse people. Try to lie to
people and give the impression that what we're saying here is not a reality. That all that we're
trying to do is, pull something over someone's eyes so that we could raise taxes, we could raise
garbage fees, and do other things that nobody likes to see. I don't think there's a single person
out here or anywhere else that... Forget about liking to see their taxes hiked whether in the form
of a garbage fee or other forms. But, are plainly not satisfied with the present taxes that they're
paying today. I know I am not. But, we have to face the realities of what we have. It's not
going to be easy the next several years. But, Miami can get out of this and Miami can become
much greater. I also would like to take the opportunity to thank Bill Hampton that's here,
George Burgess that is also here. These were Merrett's right hand people. Christina did a
wonderful job. I am not going to use the expression you did because that's the one that I used to
use for her before you came in. So, she's basically been doing the same thing as before. There
were many others that did a tremendous work in helping. Many others that were on loan on to us
that came here and helped. And, particularly, those in the private sector. You know, this is the
first time that the private sector has come forth in the way that it did, and with the amount of
people, the amount of talent that has been provided to the City of Miami. And, we couldn't say
enough in thanking all or you to come and assist us. Frankly, I think Merrett was quite
conservative in the amount of dollars that we or any other City would have had to have paid for
12 November 15, 1996
r
the kind of assistance that we have received from you. And for that, Miami will always be
grateful. But, in the meantime, I'd like to see Merrett, if there is anyone else that will be
representing the task force that would like to touch upon any of the areas or key points that the
task force has presented to you.
----------------------------------------------------------------------------------------------------------------
4. DISCUSS RECOMMENDATIONS FROM OUTSIDE COUNSEL, TOM TEW,
CONCERNING LITIGATION AGAINST DELOITTE & TOUCHE --
DIRECTION TO TOM TEW BY MAYOR CAROLLO: MEET WITH CITY
MANAGER AND COMMISSIONERS INDIVIDUALLY TO DETERMINE
DIFFERENT COURSES OF ACTION AVAILABLE.
Commissioner Plummer: I'd like to hear from Mr. Tew. Tom Tew.
Mr. Stierheim: He's not exactly pro bono.
Mayor Carollo: Well, I was getting all excited Tom, I figured you came on board, too.
Mr. Tom Tew: Well, he's a very engaging personality and left alone, he would be pro bono, I
am afraid. My name is Tom Tew, and pursuant to an ordinance of this Commission on October
24th, our firm was engaged in a first phase analysis. The first phase to determine whether or not,
in our opinion, your prior independent accounting firm, Deloitte and Touche had a claim that the
City could assert against it for professional malpractice and or breach of contract under which it
was engaged to perform your audits. Our firm has concluded that the City has such claims
against such an auditor. I should add at this point that we are currently in the process of doing
two additional tasks. The scope of the potential damages which I know might be on many of
your minds, will require some significant analysis under the theory that had there been
professional malpractice, what did that malpractice cause in the way of damages, Commissioner
Plummer? And that is an esoteric, difficult thing to do in a short term. We have commenced
that analysis. That analysis will require more documentation in depth than we've had today. But
we have concluded that the City does have a claim both for professional malpractice and for
breach of contract. I also want to stress that we have not had access to all of the work papers
from Deloitte and Touche. After a little difficulty in the beginning to obtain those work papers,
we think we have worked it out and we have assurances from their counsel that all of our
requested work papers will be made available Monday of next week. The review of those work
papers may lead to additional issues and claims that we may find. I want to go back and just
respond briefly to a question that the Mayor had and a comment that the Mayor had that will be
involved in our investigation and claim. And, then, I'll tell you what I think I would like you all
to take action on. I could not agree more that we will have to deal as the City and your counsel
with the Securities Exchange Commission. The same issues and work papers that we're are
proceeding to review, have been demanded by the SEC, and under your engagement contract
with your auditors, you have to supply those to a regulatory official upon request. We have been
asked to do so. Mr. Hammond will pick up and go forward with Mr. Marquez. I have acted as a
Securities Exchange Commission receiver on many occasions. They're top flight outfit and they
are going to, on a national basis, look very carefully at the issue of municipal of finance. I've
talked to some of the senior people on other occasions. Municipal finance and the clarity of the
audits under municipal bond financing is a high, high priority for the Securities Exchange
Commission. As it should be, because not only is the money being raised form the public, it has
been spent on the half of the public and the public's taxes pay for those bonds. So, that is an
issue that is of vital importance to the Securities and Exchange Commission, and I applaud the
Commissioners, the Mayor's attitude, that we must be forthright with that agency before we can
13 November 15, 1996
ever expect to get our respect back on the street. Financial statements that I've been asked to
look at from 1989 when Deloitte was first engaged to 1995, will be, in tact, some of the same
statements that the SEC will review in the official statements that were put out in the public
market place. So, you're absolutely right, Mayor, we will be having to work with them on that
issue. Now, at this point another response to your question. I need only remind the Commission
that if you read the financial statements since 1989, the best year the City has had from an
operating standpoint, revenues less expenses, is a seventeen million dollar ($17,000,000) loss.
Best year, since 1989. Now, when you get into municipal finance and municipal accounting
several things happen that are not clear on its face. And I am concerned that the SEC ultimately
may change some of these issues. But, if you look at your 1995 audit on page 23, you will see
that your revenues less your expenditures left you with a thirty-three million dollar
($33,000,000) loss. Thereafter, through a series of transactions we have begun to investigate and
looked at carefully, you turned that loss miraculously into a twenty-six million dollar
($26,000,000) positive fund balance. Now, dealing with the General Fund is somewhat like
auditing your family check book. It's a modified accrued basis accounting system, but it's
basically auditing a check book. Your payroll check goes into the check book. You write your
household expenses. You can at that point look at the beginning balance of the check book, and
that should be where you stop. Unfortunately, in municipal accounting what has crept into the
practice that we have under investigation, are what they call "other financing sources" or
transfers into the General Fund or from your other enterprised non -General Fund categories.
And as you heard the interim manager mentioned, over the years those funds have been stripped
of all of their cash and assets and basically, supporting the deficits in the General Fund running
as a minimum of seventeen million dollars ($17,000,000). And last year, thirty-three million
dollars ($33,000,000). So, you don't have to he a rocket scientist to figure that that's where
we're going to spend a lot of time looking at those transfers. Whether or not they are valid
transfers under a general acceptance accounting principles and under government accounting
principles. And, under another layer of regulation that we must face which is the State Auditor
General. As you are aware, the Auditor General has determined that a condition of financial
emergency exists in the City of Miami because for two successive years under their rules you
have had a "budget deficit." We are examining the financial statements back to 1991, and we
believe that there may be evidence that you had a financial emergency since at least that time,
under the rules of the Auditor General. And we're going to examine that as well. At this point
mister... We've spent a lot of time together but only yesterday gave Mr. Marquez a copy of our
initial proposal. That proposal as you might recall, set off multiple types of fee arrangements the
City could consider, all the way from a reduced hourly to a full contingency. Ed and I have not
had a chance to talk about that, and I would ask this Commission to empower him to interview
us or anyone else that he may wish to proceed with on a formal retainer basis to proceed with
this litigation, obviously subject to this Commission's review of whatever that negotiation may
be, Mr. Mayor.
Mayor Carollo: Thank you, Mr. Tew. I think the most important thing that this Commission
could begin to do is to immediately look forward to which course of action that we want to take
and how we want to proceed about that. I suggest, Mr. Manager, that you meet with each
member of the Commission separately. I don't know if we could have the Commission as a
whole meet with Mr. Tew, if that will be acceptable in finding a way of doing under any of the
procedures that...
Mr. A. Quinn Jones, III, Esq. (City Attorney): You don't. As I...
Mayor Carollo: That does not meet any of the criteria.
Mr. Jones: No, you don't have a pending litigation for which you could invoke an executive
session to discuss it.
14 November 15, 1996
En
�A
Mayor Carollo: We would have then to file suit for us to be able to meet.
Mr. Jones: So you would have...
Mayor Carollo: OK, then, the proper way would be for the Manager to meet with each member
of the Commission. I would like to ask you, Mr. Tew, for you also to do the same. Maybe both
of you, the Manager and yourself can do that.
Mr. Tew: Mr. Manager, I would think that's the exact course of action. I acted as a special
counsel for the County of Palm Beach, and they have nine. And the only way you can
intelligently brief each Commission is to meet one on one. I want to make sure that you
understand that until I see a definite cost benefit to the City to proceed after we finish the
damage analysis, I would not recommend that even suit be brought. So, I think the more prudent
course of action, is to take the time one on one, answer the questions, lay out the issues, and let
you all reach an independent decision as to this litigation without proceeding on any other basis.
Mayor Carollo: Sure.
Commissioner Regalado: I understand that you have a case, the City of Jacksonville. With the
City of Jacksonville, was it?
Mr. Tew: No, sir. We had a... For six years, I was a special outside counsel to the Florida
Department of Insurance. Whenever an insurance company failed I was brought in to determine
whether or not there had been any professional or other malpractice. In the case you're
mentioning, that the insurance company failed in Jacksonville, we with our co -counsel in
Jacksonville settled the case with a national accounting firm and a national investment banking
firm. And, but that was essentially the same issue. Had the accountants done their duty timely,
would the damage had been limited? Under that theory if you stop a problem when it's a million
dollars ($1,000,000) that's one thing. If it's professional malpractice and the problem continues,
can you show a causal connection to a greater deficit that the entity faces. In that case, we
received over one hundred million dollars ($100,000,000) from the defendants to fill what
started out to be a small hole and turned into a very large deficit in this insurance company
because of our allegations that the accountants had committed malpractice.
Mayor Carollo: Mr. Tew, how long is it going to take for them to provide you with all the
additional materials that you and your firm need to review?
Mr. Tew: Mr. Mayor, as again. We have communicated with their counsel this week, and their
counsel has confirmed in writing upon request to make all the work papers available. As you
know, we had a little difficulty getting started, I think we've got that behind us. I think they've
been made available to your successor auditing firm and the representation is Monday morning,
they'll be available to us. And I accept them at their representation. This is a fine accounting
firm and I think they'll live up to that representation to make them available.
Mayor Carollo: How much longer do you think it might take you to analyze everything else and
obviously, you don't know how much they're bringing you. But, do you think that maybe in one
month you might be able to conclude what sort of damages that you feel we might be able to
claim?
Mr. Tew: Well, if I may, Mayor. Let's say that the issue of the work papers will go more to
addressing the potential claims for professional malpractice.
Mayor Carollo: Sure.
15
November 15, 1996
Mr. Tew: The analysis of potential damages will rest on what was the earliest year that we can
establish there was professional malpractice? What was the deficit perhaps in all these funds in
the City on a consolidated basis at that time, against what we have now? List a very clear
provision and the question will be asked by all auditing firms, "well they wouldn't have done
anything anyway, had they known the truth." Now, I don't think that's the law, I think the law,
for instance if we were in violation of the Florida Law under the Auditor General's rules, then
that would have been it. We believe that the loss after that date should be the responsibility of
the professionals. So, examining the scope of the damages it may well turn on the debate as to
what corrective action would have been taken and how timely would that action been taken to
cut off the loss.
Mayor Carollo: Thank you. Any further questions from any members of the Commission?
Hearing none, I thank you for your presentation and if you can make arrangements with the
Manager to start meeting with the members of the Commission at your earliest convenience.
Mr. Tew: Thank you, Mr. Mayor. Thank you, Mr. Manager.
----------------------------------------------------------------------------------------------------------------
5. APPROVE RESOLUTION ACCEPTING IN PRINCIPLE CITY MANAGER'S
TASK FORCE REPORT -- (SEE LABEL 3).
Mayor Carollo: Now we've got one presentation. Before Mr. Stierheim we... Before we begin
to personally meet and we have a small presentation that we would like to give to the members
of the task force that are here present. If we could go over any additional unfinished business
that we need to take care of. If there is a...
Mr. Stierheim: The...
Mayor Carollo:... resolution that any member of the Commission would like to make?
Mr. Stierheim: The recommendation to accept the report...
Commissioner Plummer: In principle?
Mr. Stierheim: ... and approve it in principle or conceptually.
Commissioner Plummer: So move.
Mayor Carollo: Moved by Commissioner Plummer.
Commissioner Regalado: Second.
Mayor Carollo: Second by Commissioner Regalado.
Commissioner Plummer: And let the record be very, very clear as the former City Manager said,
that this is in no way adopting what is in this but merely accepting it in principle for this
Commission to be able now to go forward, look into this and to be able to say, we have at least a
start of a plan which has merit, from Merrett to be what we need.
Commissioner Regalado: It's important, J.L., to say that because the press will be taking a look
at the report. And, on the report there are things that will be presented as a matter of fact, done
16 November 15, 1996
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by the Commission. So, it's important that we say that this, it's being approved in principle and
that we're going to take issue by issue.
Mr. Stierheim: In principle or conceptually. And I want the record to be clear that I have no
doubt that as you go through this, you will adjust it. You will change this; you may agree with
that. The Manager may not agree with all of the recommendations. That will be a process but it
goes on. At least you have a plan in front of you. You've got a target.
Commissioner Plummer: The plan is in paper not in concrete.
Mayor Carollo: Any further discussions? Then if you call the... Well, excuse me. Mr. Goenaga
would you like to make a statement? You certainly have the opportunity.
Mr. Manuel Gonzalez-Goenaga: Yes. Good afternoon, my name is Manuel "Watchdog" (from
now on) Gonzalez-Goenaga. ` And I want to congratulate Mr. Marquez. I met him when we,
when I ran. Always in the bottom for Dade County Manager and he really impressed me. And
to Mr. Stierheim, I want to thank him for, after all, he lost his beard during the months he was
here and you did a good job. But, the only mistake that you said that there were no red flags. If
the previous Mayors starting from Xavier Suarez, would have heard me and continuing with Mr.
Clark would have heard me, maybe a little more than two minutes instead of laughing and
throwing the police at me like the ex -City Manager, we wouldn't be where we are now. So, I am
going to finish by saying "I told you so, guys." Start respecting me and there is not doubt that
the SEC (Securities Exchange Commission) needs, and they are better cops than the police of
the City of Miami. You can rest assured of it. And they should not be. I should not even
compare them with the job that the City police have done in my own investigations. But, just
one statement. Last statement. Yes, I have to face reality, and the reality that I have faced
already, and we have not increased anything here, is that my rent has gone up by forty dollars
($40) a month. For the particular reason that the assessment value of the little, humble house
that I live in the Little Havana pays two thousand plus dollars ($2,000). My family, in
comparison, live in a mansion in Puerto Rico, half an acre, right in the center of town and pays
less taxes than what I have to pay here in the City. That includes the School Board, also the
trash pickup and so, let's face reality, that we are the first, poorest City in the nation and the one
that best pays its employees. Don't cry, don't cry for any employee. I mean, if they want to go
on strike, let them. There are plenty of people who is willing to work including me. Thank you
very much. And for much less salary and less, even less pension. Thank you very much.
Mayor Carollo: Mr. Clerk, can you call the roll please?
;
Mr. Walter J. Foeman (City Clerk): Roll call.
Mayor Carollo: On voting yes, I would like to congratulate the Commission on the first vote that
we've taken together in this Commission, that it's been five zero. And I hope that's a sign. of
tr
things to come.
I
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t
17 November 15, 1996
j
The following resolution was introduced by Commissioner Plummer, who moved its adoption:
RESOLUTION NO. 96-819
A RESOLUTION ACCEPTING, IN PRINCIPLE, THE STRATEGIC FINANCIAL
RECOVERY PLAN ("THE STIERHEIM REPORT"), DATED NOVEMBER 15, 1996,
PRESENTED TO THE MAYOR AND CITY COMMISSION BY CITY MANAGER
MERRETT R. STIERHEIM.
(Here follows body of resolution, omitted here and on file in the Office of the City
Clerk.)
Upon being seconded by Commissioner Regalado, the resolution was passed and adopted
by the following vote:
AYES: Commissioner Tomas Regalado
Commissioner Humberto Hernandez
Commissioner J.L. Plummer, Jr.
Vice Mayor Wifredo Gort
Mayor Joe Carollo
NAYS: None.
ABSENT: None.
----------------------------------------------------------------------------------------------------------------
6. DISCUSS RATIFICATION OF AMENDMENTS TO FOUR COLLECTIVE
BARGAINING AGREEMENTS: POLICE, FIRE, SANITATION, GENERAL
EMPLOYEE.
Mr. Merrett Stierheim: Mr. Mayor, can I make, can I bring up one other item? I don't want to
wear out my welcome.
Mayor Carollo: Yes, certainly. You never will, Merrett. The agreements with the collective
bargaining units, the four. I sent you a memo on the 12th. And, those votes Sanitation, yes.
AFSCME (American Federation of State, County, and Municipal Employees), yes. Fire
Fighters, yes. We should get a call hopefully in a half hour or so because Police voted today. I
do not know the results of that election. These agreements require your ratification so that the
Manager can sign them along with the president of the union. I know one member of the
Commission said, had some concern. And I respect that and I don't disagree. But, you just got
the resolutions and haven't had an opportunity to read them, but obviously I urge your adoption.
It represents twelve million dollars ($12,000,000) towards a solution of this problem. And if
you're uncomfortable in acting on it. It also commits the City Commission, so that I do not fully
inform you that the Commission will, in other words I will quote from the agreement with
AFSCME. "In other words, AFSCME is willing to meet its fair share as specified within this
agreement provided the City Commission and City Manager fulfill its obligations as set forth in
the agreement. They were referring to the matrix plan in the agreement. So, if you don't want to
approve these agreements today, then, they certainly should be on your agenda for the first
meeting coming up and I strongly recommend your...
18 November 15, 1996
Commissioner Plummer: And I have no problem with that. I am the one who said that I am not
willing to vote on something that is handed to me as I walk in the door without having the
opportunity to go through it. I usually do my homework.
Mr. Stierheim: Yes, sir. I respect that and we've been, all of us have been kind of going at 90
miles an hour. Tab "Y has each of the agreements, so you can read them at your leisure. I don't
see any problem with adopting these at your meeting on the...
Commissioner Plummer: Well, even on Thursday, we'll have the one from the Police
Department...
Mr. Stierheim: Yes.
Commissioner Plummer: ... which I would hope you would furnish to us, no later than Monday
morning.
1 Mr. Stierheim: That's in here also. The one they're voting on.
Mayor Carollo: I think that would probably be the best route to follow for each member of the
Commission to be able to read the bargaining agreements. And, if we could place that as the
first item in the agenda for the next meeting. I would appreciate it, Mr. Manager.
I
N ----------------------------- -------------------- --------------- ------ ------------------ ----;------- ------
------
7. RE -SCHEDULE COMMISSION MEETING OF NOVEMBER 21 1996 TO
START AT 8:30 A.M.
----------------------------------------------------------------------------------------------------------------
Commissioner Plummer: Why don't you start the meeting at eight thirty, in case there are
questions?
Mayor Carollo: We'll start it earlier if you like?
Commissioner Plummer: Eh?
Mayor Carollo: We'll start it earlier if you like?
Commissioner Plummer: Well, no. That's no problem. I am just... the reason I am saying it is,
the agendas were delivered today, so you know you can't.
Mayor Carollo: Why don't we start the meeting at eight thirty?
Commissioner Plummer: That's... Then we can handle that item exclusively at eight thirty.
Mayor Carollo: Yeah, that will be fine. Is that all right for the rest of the Commissioners?
Commissioner Regalado: It is. Do we have any zoning business in the afternoon? Yes, we do.
Commissioner Plummer: You've got a full afternoon. You've got two agendas.
Mayor Carollo: Yeah, that's another thing that we are going to have to discuss. You know, this
Commission to be trying to do both zoning and regular commission business in the same day and
try to still hove two meetings a month the City's has gotten too big for that. And, when you're
19 November 15, 1996
here 12 hours or more you can't concentrate on business like you normally would. That is not
right or proper to run City business where you're just going so quickly through agenda items that
you do not have the time to really go through them thoroughly, where it's impossible if you're
going to even come close to finish a meeting. You have to limit the public on the issues. I think
we're going to have to go to four meetings a month, or at least three. But, it's up to this
Commission. I think it's becoming too, too difficult to accomplish everything in two meetings a
month
Commissioner Plummer: Well, let's look at it.
Vice Mayor Gort: Mr. Mayor, what was done in the past is, you had one meeting that was for
general purpose and, then, you have one meeting for zoning. What's happening is in December
and I don't know the reason why, we combined both meetings into one. The same as in
November. And that's where we've gotten into a lot of...
Commissioner Plummer: Because of the holidays.
Vice Mayor Gort: Because of the holidays, I guess. But I don't mind. I'll look at it.
Mayor Carollo: Well, you know, we can see how things go. Obviously, a lot of what happened
too, there were a lot of items that were being kept and kept because we never had a full
Commission until recently.
Commissioner Plummer: That's right.
Mayor Carollo: And that got us really backlogged but, I think this is something we have to look
at. If we're in a situation that we keep running into the same thing, where we're having meetings
until midnight, it can't be, gentlemen. You know, we're only humans.
Commissioner Plummer: Can I make a suggestion so that when we come back on next
Thursday, that we consider in December that the 12th meeting be both meetings. If that's
agreeable. At least check your schedules for those Thursdays.
Mayor Carollo: If and only if the items that we have are such that we could finish in one day.
Commissioner Plummer: All right.
i
Mayor Carollo: But, if it's the kind of items that we're going to be going through only half of
them in the meeting, it's no sense in calling one meeting if we can't finish it all in one meeting.
Commissioner Plummer: Only because of the fact that it's the holidays.
Mayor Carollo: Well...
Mr. A. Quinn Jones, III, Esq. (City Attorney): Excuse me, Mr. Mayor.
Mayor Carollo: Yes,
Mr. Jones: You need a motion to change the meeting for next Thursday to eight thirty because
it's advertised now at nine.
Commissioner Plummer: So moved.
Commissioner Regalado: Second.
20 November 15, 1996
;g.
Mayor Carollo: There's a motion, there's a second. All in favor signify by saying "aye."
The following resolution was introduced by Commissioner Plummer, who moved its adoption:
RESOLUTION NO. 96-820
A RESOLUTION RESCHEDULING THE FIRST REGULAR CITY COMMISSION
MEETING OF NOVEMBER TO COMMENCE AT 8:30 A.M. ON NOVEMBER 21,
1996.
(Here follows body of resolution, omitted here and on file in the Office of the City
Clerk.)
Upon being seconded by Commissioner Regalado, the resolution was passed and adopted
by the following vote:
AYES: Commissioner Tomas Regalado
Commissioner Humberto Hernandez
Commissioner J.L. Plummer, Jr.
Vice Mayor Wifredo Gort
Mayor Joe Carollo
NAYS: None.
ABSENT: None.
----------------------------------------------------------------------------------------------------------------
8. PRESENTATION -- PRO-BONO EXECUTIVES.
Mayor Carollo: At this point in time, I'd like to ask Merrett Stierheim to come up here and I
don't know if Judy's still here or not. I saw her, there she is. And have Judy here too because,
you know, Merrett, we also work him until late. He gave a lot of his time but the person who was
there by him also was his wife. So, I think she deserves to be part of this also. If you'll could
come up? Well, I am sorry, we don't do here like the County used to do.
Commissioner Regalado: Mr. Mayor, just for the benefit of the press. I think that somebody
should tell some members of the press, I believe they are outside, that we are going to start the
process of swearing in the new Manager, so they will be able to...
Mayor Carollo: Well, that we did already. We're done with all that right now. You mean to the
presentation, yeah.
Commissioner Regalado: No, I mean with the presentation.
Mayor Carollo: Sure. If... I don't know if there's any body left outside or not, but regardless
we'll begin.
Commissioner Plummer: Pepperoni and Sausage...
Mayor Carollo: Merrett, it would only be proper to give you the key to the City, so in case you
were ever around the neighborhood again, you can get in here.
21 November 15, 1996
Mr. Merrett Stierheim: I'll keep that key to the City Hall.
(APPLAUSE)
Mr. Stierheim: I have. May I, Mr. Mayor?
Mayor Carollo: Absolutely.
Mr. Stierheim: I have to say that I have one from the City of Miami, 35 years ago or whenever it
was. I think it was Athalie Range that gave it to me on top of the Columbus when I had my
going away party, in 1967. So, I'll put this with it and I thank you so much.
Commissioner Plummer: It fits the lock.
Mr. Stierheim: What?
Commissioner Plummer: It fits the lock.
Mr. Stierheim: I am very honored, thank you, Mr. Mayor. It's been a pleasure too.
i
Mayor Carollo: Thank you, Merrett.
Stierheim: Thank you, sir.
Mr. S y ,
(APPLAUSE)
Mayor Carollo: If Vice Mayor Gort can help me, we have presentations for many, many others
that were able to help. We have a list here. I don't know how many people are here but, Vice
Mayor if you could be calling out the names and we'll, you know, it's no room up here. But,
maybe if everybody could start coming to the front, and we'll start giving them a small token of
our appreciation.
(APPLAUSE)
NOTE FOR THE RECORD: At this point, Certificates of
Appreciation were given to: Larry Adams, Jim Atkinson, Rachael
Baum, Thomas Bradley, Corinne Brody, George Burgess, Chase
Burritt, Judy Cannon, Glen Cardwell, Roger Carlton, Daniel
Coughlin, Tony Crapp, Orlando Cruz, Jr., Gorman Daniels, Olga
Diaz, Dr. Milam Diluhy, Bart Douglas, Ramon Ferrer, Joseph
Fletcher, Dr. Howard Frank, Ray Gallardo, Mark Glaiber, Vince
Grimm, Dexter Groose, Lynn Hambright, Bill Hampton, Gerald
Heffernan, Art Heggen, David Hopps, Leland Hunter, Cathy
Jackson, Wayne Johnson, Dr. Antonio Jorge, June Kamp, Gail
Krinsky, Anne Marie Lemoire, Kevin Lynskey, Dean Mielki, Dick
Montalbano, Victor Monzon, Bob Nachiinger, Dr. Linda Neider,
Michael Rey, Jose Rodriguez, Georgia Ruiz, Joe Ruiz, Bob
Schomber, Sol Stamm, Mike Stein, Ronald Stone, Geoff Swan,
John Vodernicker, Bill Walsh, Howard Whitaker, Michael
Wilkenson, Leon Zucker.
22
November 15, 1996
[A
Vice Mayor Gort: Mr. Mayor, I want to take this opportunity to thank the team that has been put
together. And, let me tell you, I can tell you about this because back in 1994, we tried to do
something very similar and one of the reasons we were not able to implement it at that time, the
price tag and it was not the team that you had put together. But, the price tag at that time was
anywhere from half a million dollars ($500,000) to eight hundred thousand dollars ($800,000).
So, on behalf of the City of Miami, I'll like to thank you all for the work. And this shows one
more time, that when we are in need all of us come together and we find a solution. This is a
problem that has been going on for a long time. But I can promise you, this Commission here is
going to make sure that whatever solution we apply today, and the criteria and that your work
will not go in vain, because this is the future of the City and we are going to make sure we live
up to it. Thank you all very much.
(APPLAUSE)
----------------------------------------------------------------------------------------------------------------
9. BILL WALSH THANKS COMMISSIONERS FOR OPPORTUNITY TO HAVE
SERVED CITY.
Mayor Carollo: Come up, please.
Mr. Bill Walsh: My name is Bill Walsh and I am here with Ron Stone. We were members of
the task force that Merrett put together. We share with you a name and that is the University of
Miami. Me, as an employee there and Mr. Stone as a colleague and as a trustee of that
institution. And, I want to tell you in the name of both of us and of our institution, we
considered it an honor of singular proportions to be asked to participate in this. And we thank
you as much as you thank us. Thank you.
Mayor Carollo: Thank you, sir.
(APPLAUSE)
Mayor Carollo: Again, on behalf of not only all of us here in the City Commission but on
behalf, most of all, the residents of Miami, this City will have an eternal gratitude to all of you,
to all of your firms and to you, Merrett Stierheim. We're very grateful for the help that you've
given this City in the time of need. And, you all came to us at the top of the ninth when the ball
game was almost going to be over, but it ain't over and Miami does have a bright future. I truly
believe that the best magic that the City of Miami has is yet to come. Thank you.
(APPLAUSE)
23 November 15, 1996
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THERE BEING NO FURTHER BUSINESS TO COME BEFORE THE CITY
COMMISSION, THE MEETING WAS ADJOURNED AT 6:05 P.M.
JOE CAROLLO
MAYOR
ATTEST:
Walter J. Foeman
CITY CLERK
Maria J. Argudin
ASSISTANT CITY CLERK
24
November 15,1996