As pressure builds to balance its budget, the city of Miami is staring down another potential financial calamity: Come January, the city must pay off $45 million on a short-term loan that helped fund the PortMiami tunnel dig.
The Omni Community Redevelopment Agency, a city board that assumed the debt, is working to secure private financing to pay off the loan, executive director Pieter Bockweg said Thursday. But if the CRA comes up short, the city will be on the hook.
It could drive the city into bankruptcy, Miami Commission Chairman Francis Suarez said.
The tunnel loan payment is but the latest crisis-du-jour for Miami, which is already trying to plug a budget hole, replace key finance managers, negotiate with restive federal securities regulators and placate nervous bond raters.
Some City Hall observers and former employees say its another sign Miami is hurtling toward a financial meltdown and an urgent reminder of the days when Miamis finances were so dire that Gov. Lawton Chiles appointed a state board to oversee the citys budget.
Its a mess, and its only getting worse, said former Assistant City Manager Frank Rollason. The city is on the brink of a financial emergency.
Mayor Tomás Regalado downplayed concerns Thursday, saying there was no chance Miami would face financial ruin.
We will have a balanced budget, one way or another, he said, noting that the city manager can use layoffs or furloughs as a last resort to balance the books.
For the tunnel loan, Regalado said he is confident the CRA can obtain financing, either through a bond issue or engaging a private equity firm.
The city will not be on the hook for the payment, he said.
Miami is already struggling to close a $40 million gap in its $485 million operating budget. So far, efforts to negotiate concessions from the four labor unions have been unsuccessful.
City Manager Johnny Martinez tried to declare financial urgency, a legal maneuver that would have allowed the City Commission to force employee concessions. But last week, a Miami-Dade circuit judge said the city commission not the city manager has the authority to invoke the law. The commission has not taken any action since.
If that werent enough, three key money managers resigned their posts. And on Wednesday, Moodys Investors Service announced plans to review the citys budget and its long-term financial stability. The private credit agency has already warned it may downgrade Miamis credit rating because of a U.S. Securities and Exchange Commission probe into city bond issues.
The city has limited options moving forward, mostly because last month, the commission voted to lower taxes. The new rate, $8.47 for every $1,000 of taxable assessed property value, has already been advertised to property owners as required by law.
Commissioner Michelle Spence-Jones wants to try to reverse that decision.
If we have the opportunity to raise the [tax] rate, which we do, we should open it up for discussion instead of slashing salaries and making cuts that could hurt our employees, Spence-Jones told The Miami Herald.
City Attorney Julie O. Bru said the commission could have raised the tax rate earlier this month, but the window outlined in state law has now closed.