HomeMy WebLinkAboutMemo FR/SRSecond Reading Ordinance
SR -3
Gallastegui, Elvi
From:
Alexander, Koteles
Sent:
Tuesday, March 02, 2010 11;53 AM
To:
Agenda Office; Gaiiastegui, Elvi; Lopez, Vanessa
Cc:
Carswell, Keith; Chiaro, Maria J
Subject:
AGENDA SUMMARY MEMO ORDINANCE - FR.3
AGENDA SUMMARY MEMO
Date: March 1, 2010
Commission Meeting Date: March 11, 2010
Sponsor: COMMISSIONER RICHARD P. DUNN II
Agenda Item: ORDINANCE —FR.3
Subject: AMENDING SECTION 18-176, ENTITLED "METHODS AND PROCEDURES FOR SALES AND LEASES", TO
REQUIRE A FOUR VOTES OF THE CITY COMMISSION TO APPROVE DEFERRALS, ABATEMENTS, CREDITS, OR
OTHER REDUCTION IN PAYMENTS ON LEASES OR OTHER AGREEMENTS RELATING TO THE USE OF THE CITY OF
MIAMI'S REAL PROPERTY
Impact: CITYWIDE
Purpose of the Item:
In the past granting such abatements, credits, or other reduction in payments on leases or other agreements by
the commission required only a simple majority and little or no assessment of the economic impact on the city's
financial circumstances. Given the gravity of the city's financial circumstances, which requires the city
preserve as much of its revenue stream as possible, it seems prudent to require a super -majority of four
affirmative votes of the city commission to approve such abatements, credits, or other reduction in payments on
leases or other agreements by the commission. Additionally, the ordinance would require that the lessee
requesting a reduction would provide, along with the request, audited financial statements, which the ordinance
defines what such statement should include.
Background Information:
This amendment is prompted by the city's financial circumstances, and its history of deferring, abating, or
allowing credits or other reduction in payments on leases or other agreements relating to the use of the City of
Miami's real property. History suggests there is a high probability that such a request will come before the city
commission again. What this amendment does is increase the threshold on both the commission and the lessee
for granting such an economic reduction.
The threshold for the commission is that it will take more than a simple majority to grant such an economic
reduction, it will require four votes, which is the equivalent of four -fifth (4/5) of charter established membership
of the commission. In essence, granting a reduction, which would impair or jeopardized revenues to the city,
will be treated as requiring extraordinary permission.
The increase threshold for the lessee is that they must provide audited financial statements that meet GAAP
requirements and all that such requirements entail. The provision of audited financial statements of promotes
the reliability of the financial condition of the lessee and transparency. This transparency and reliability allows
the commission and the public to openly access whether the need for sacrificing city revenue is in the best
interest of the public.
The City's lease payments for the use of its property represent economic value for the use and enjoyment of the
leased property during the lease term, and such economic value represent revenue to the city, which in this
economic environment revenues are critical. Despite the appearance of no budget outlays, deferrals,
abatements, credits, or other reduction in payments represent a foregone revenue stream. In order to preserve
the City's revenue stream it seems prudent to send a message to the public that the commission is serious about
addressing its financial problems. This does not mean that the commission cannot grant such abatements,
credits, or other reduction in payments on leases or other agreements; it simply means that such action will be
both transparent and require extraordinary action by the commission.