Opa-locka spent millions on parties, pet projects, bonuses; ignored warnings of financial collapse

In a city seized by one of the most dramatic economic downfalls in Florida history, Opa-locka officials decided to throw a party.

For the city’s 89th birthday last year, caterers rolled out canapés — costing thousands of dollars —followed by an elaborate cake shaped like the historic former City Hall. Local officials rented a white Belgian horse for $500 and a costumed sheik to greet guests. They spent $790 to hire a photographer and twice that amount for a band.

In Opa-locka, the money kept flowing.

While the city was fending off creditors threatening to sue for unpaid bills, officials spent hundreds of thousands on parties, travel and bonuses since 2012 — with few controls on how the tax dollars were spent, the Miami Herald found.

They doled out $300,000 in holiday bonuses for city employees, despite repeated warnings the city would have to lay off workers. They gave out raises that cost hundreds of thousands in additional expenses just in the past six months.

Using a city credit card, Mayor Myra Taylor charged airfare for family members to join her on trips across the country, while she was spending thousands on dinners and fruit baskets that she sent to supporters.

“It’s beyond comprehension,” said Keith Carswell, a former city budget director. “Some of this stuff, you just can’t believe.”

The spending by Opa-locka officials in the years leading to its fiscal emergency in June represents the most troubling example of what went wrong in one of Florida’s poorest cities and the practices by elected officials that undermined its financial future.

Corruption arrests

The FBI has investigated corruption involving local officials for three years, leading to the recent arrests of City Manager David Chiverton and Public Works supervisor Gregory Harris for extorting payments from business owners in exchange for permits and water hookups.

But the extraordinary spending since 2012 — at times in violation of city law — provides the most complete picture of why the city might become the first in Florida to file for bankruptcy.

The spending took place while auditors were warning the city that it was showing a mushrooming deficit and not making any effort to track the “deteriorating conditions.” Basic bookkeeping was almost non-existent, auditors wrote in September 2014.

Yet, three months after the warning, commissioners approved $500 bonuses for every city employee in an extravagant display that troubled even their own manager, who urged them not to do it.

The Herald reviewed hundreds of financial reports, credit card statements and receipts and found that city officials were spending millions on pet projects and personal expenses — including $400 restaurant charges — even while the city was failing to pay medical insurance premiums for its employees.

One of the key figures who led the city through the era of excess: Taylor, Opa-locka’s most recognized politician.

Year after year, the 68-year-old mayor was assigned a personal driver and a leased, white SUV Ford Expedition in addition to her own city-issued Ford Taurus.

Taylor dined at restaurants — 100 times — spending thousands without documenting why she was using her city credit card at places like Benihana in North Bay Village and Tamura Japanese Seafood in Miami Lakes.

Under local ordinance, officials can use their cards only for city business and must provide detailed reports to verify the reason for the spending. But records show the mayor and others had engaged in questionable spending that violated nearly every provision of the law.

Again and again, city officials ran up charges at restaurants and other places without submitting receipts, or in other cases, with no justification for the expenses. Taylor did not respond to repeated interview requests.

In a written statement, she addressed her travel costs, saying she has “the same rights and privileges” as any other mayor. “As a married woman and a female, I do not travel out of town alone and I am always accompanied by one of my sisters.” She “always” reimburses the city for their costs, she said.

However, there are no records to show she reimbursed the airfare and other costs for one sister to join Taylor on a trip to Washington, D.C., last year and another to accompany her to Alabama in 2013 for a conference. The combined amount: $1,029.

The spending took place during one of the city’s toughest economic periods: plunging property values and breakdowns in city enterprise operations — water and sewer services — that drained the community of more than $1 million a year.

Experts say Opa-locka could have adjusted the shortfalls had it been tracking its finances. “When the market starting surging downward, they just kept [spending],” former City Manager Steve Shiver said.

In 2012, commissioners agreed to dole out holiday bonuses to each city employee, costing at least $100,000. The next two years, they followed suit with the same amounts.

At one point, local activist Alvin Burke pleaded with commissioners to consider the consequences of their decisions. “It does not make sense,” Burke said in 2014. “I’m sure they would rather have their jobs than $500 for Christmas.”

For a city with a budget of $13 million, the bonuses were costly. But other projects took place that would shake the city’s financial foundation.

They spent about $1.5 million on drainage projects that they predicted would be covered from state and federal sources between 2011 and last year, but the funds never came.

Irregular bidding

Shortly after the Sherbondy Village community center broke ground, local officials learned they would have to bear the costs — $2 million. The reason: County officials found irregular bidding, prompting them to cut off critical funding.

Just months after auditors warned the city of a possible state takeover, Taylor led the drive to buy what’s now the new City Hall, pledging $8.5 million from future utility taxes and rental income.

In other cases, the city spent money on ventures for which records are incomplete and, in some cases, non-existent. There is no way to trace all the spending, county auditors say.

For instance, the city spent hundreds of thousands on an elaborate digital display with cascading fountains on a busy corridor — more than $750,000 to promote Opa-locka. But it’s unclear how much of the money came from county transportation taxes and how much from the city’s own coffers.

To cover the shortfalls each year, city officials began engaging in a risky practice that would later get them in trouble: moving dollars from restricted funds. They transferred $2 million from a water fund in 2012, and the following year, it was nearly double.

When Shiver arrived as city manager a year ago, he noticed bundles of checks in a corner of City Hall written to vendors — plumbers, carpenters, caterers — that could not be mailed because they would bounce.

In the mornings, he was greeted by contractors clamoring for their money. “It was crazy,” Shiver said. “One guy was practically crying because he needed to make his payroll.”

At the time, Taylor had just finished renovating her office for $26,000, including an etched glass door emblazoned with the city logo, Shiver said.

When a city employee asked the manager to pay for the door, he refused. “I told her no, we just can’t do it,” he said, “as if it were the East Wing of the White House.”

Shiver, a former county manager, said he was struck by the spending practices at a time when the city was bleeding revenues.

After the first budget shortfall in 2013, city commissioners and others continued to drive leased SUVs, costing a total of $50,000 a year. Department directors continued to fly across the country to attend conferences, charging tens of thousands on hotels and dinners, records show.

Again and again, the mayor and other officials charged expenses at restaurants and other places with no justification for the costs.

Chiverton, 51, who pleaded guilty last week to shaking down local business owners for cash bribes, spent thousands on lunches for his staff, including $622 in March alone while the city was just months from a financial emergency.

Kelvin Baker, a former city manager who resigned last year, spent thousands on lunches, including staff meetings at Soyka in Miami, the Cheesecake Factory in Aventura, and Shula’s 2 in Miami Lakes. Last year, he traveled to Garcia’s Seafood Grille in Miami for a “sunshine meeting” with the mayor, he noted. The bill: $111.

Four times, Taylor dined at Benihana’s in North Bay Village for a total cost of $371, including a dinner three days before Christmas 2013 — on a Sunday evening — for herself and three guests. On that receipt, she wrote “city” across the top.

She spent nearly $1,500 on flowers and fruit baskets to her supporters, including school board member Dorothy Bendross-Mindingall and City Commissioner John Riley. She even sent a floral arrangement to Chiverton in May on the same day he took a leave of absence after he improperly cashed in nearly $40,000 in payroll benefits.

Shiver, 50, a former Homestead mayor, said the charges represent a deeper problem: There were few checks and balances to keep the costs down. “No internal controls,” he said. “It became a culture of spending that permeated the entire organization.”

In October, Shiver alerted the governor’s office to the problems, saying the city was unable to pay its bills — including $4 million to Miami-Dade County.

Citing differences with Shiver, the mayor led a drive to fire him in November, saying he revealed the city’s issues to the state without consulting her and the commission. Despite pleas by local activists, he was dismissed in a 3-1 vote.

‘Not intimidated’

Two months later, during her state-of-the-city address, Taylor implored the crowd not to pay attention to the news about Opa-locka’s fiscal problems. Amid the festivities at Sherbondy Village that cost thousands, including $625 in rented palm trees for decorations, Taylor took to the lectern.

“We are not intimidated by this present condition, but seize it as a season of shifting into a higher gear of progress,” she said. “You can’t stop a moving train.”

In the ensuing months, the spending continued.

Despite recommendations by the outside auditor to cut costs, city officials not only resisted the changes, but gave out hefty raises to a broad circle of employees, many close to the mayor and Chiverton.

Gregory Harris, 44, the public works supervisor, was granted two raises to reach $87,000 a year — nearly a 30 percent increase — in just three months while he was under investigation by the FBI for extorting business owners for cash bribes.

In all, 22 employees were given pay boosts that cost the city hundreds of thousands in additional salary expenses a year. Merrett Stierheim, who has been deputized as a state inspector general by the governor’s office to examine Opa-locka’s operations, said he was stunned by the decisions.

The city had been put on notice two years earlier that it was in serious trouble, he noted in a meeting last week. In a report issued Friday, he said the mayor and commissioners ignored those warnings so long that the debts have become insurmountable.

Now, the city is faced with the specter of bankruptcy, said Stierheim, a former Miami-Dade County manager. The problems, he said, were not just caused by excessive spending, but an “unhealthy culture” that has “existed for several years.”

A state oversight board that took control of the city’s finances in June when the financial emergency was declared took the first step to halt the spending by ordering the mayor and commissioners to turn in their SUVs — and credit cards.

They were also told that they could no longer get free gas from the city’s fuel depot.

“I’m done asking people to do the right thing,” said Frank Rollason, a board member who is city manager of North Bay Village. “The message here is everyone has to tighten their belt. … We’re at the tipping point.”

This story was originally published September 17, 2016 at 6:59 PM with the headline "Opa-locka spent millions on parties, pet projects, bonuses; ignored warnings of financial collapse."