South Florida

Opa-locka facing shutdown, Miami-Dade leaders tell Gov. Rick Scott

Opa-locka's iconic, old Moorish style City Hall photographed in November.
Opa-locka's iconic, old Moorish style City Hall photographed in November. MIAMI HERALD FILE

At Opa-locka City Hall, the lights were turned off for several hours after the bill wasn’t paid.

City workers abruptly lost their medical coverage when the city failed to pay the premiums.

When Opa-locka stopped paying its fuel supplier, police officers were forced to use credit cards to buy gas to patrol the city’s streets.

Just months after elected leaders were warned their city was close to financial collapse, Miami-Dade County leaders have asked the state to declare a financial emergency and consider taking over the distressed city’s operations.

With Opa-locka struggling to pay basic costs — including its payroll — Miami-Dade Mayor Carlos Gimenez urged the governor’s office for the second time in as many months to place the city of 16,000 people under its control.

“We believe the city’s financial condition continues to deteriorate,” Gimenez and County Commissioner Barbara Jordan wrote in a letter on May 3 to the governor’s inspector general. “If the state does not take immediate action, there could be a shutdown of city government.”

With no formal recovery plan in place by Opa-locka leaders, top county officials say they do not believe the city is capable of saving itself from insolvency. Already, Miami-Dade police have been put on notice that they will be mobilized to provide police services if municipal operations cease.

So desperate is the city for help, Mayor Myra Taylor wrote a handwritten letter to Gov. Rick Scott this week, asking for a state loan and consultants to provide financial advice.

The county’s alert to the state was made as the FBI carries out a sweeping corruption investigation targeting the city’s most powerful leaders, including Mayor Taylor, Commissioner Luis Santiago, as well as the man negotiating Opa-locka’s future with the state: City Manager David Chiverton.

The Miami Herald published a story on April 24 that profiled a local business owner who was an informant for the FBI, recording secret meetings with Chiverton, Santiago and other influential leaders while he said he paid them tens of thousands in bribes.

Frank Zambrana, a 47-year-old heavy equipment dealer, said he doled out about $30,000 to the leaders in parking lots, city offices and even a local night spot to get a business license that cost just $150.

The Miami-Dade mayor’s letter to the governor’s office cited the FBI probe, noting “allegations of corruption among public officials.”

Under state law, the governor is empowered under rare circumstances to step in when cities are in danger of financial failure, even to take over municipal operations. In 2002, Opa-locka fell under state control for three years when it ran into fiscal trouble.

The governor’s inspector general, Melinda Miguel, has yet to respond to the county’s request. But she complained as recently as last week that her demands for crucial information from the city had not been met to help the state better assess the future of Opa-locka.

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In a series of emails to Chiverton last week, Miguel said she was still waiting for a detailed recovery plan and a formal request from the city to declare an emergency.

“I am very concerned about the state of affairs as reported in the Miami Herald,” she wrote on April 29.

For the past year, the city’s finances have been deteriorating in a remarkable series of failures that have forced city officials to take extreme measures, including dipping into water and sewer funds to make payroll.

Hundreds of vendors — including car dealerships, caterers, carpenters and police suppliers — have not been paid for months at a time.

The phone lines to City Hall were shut down last year and in one case, a police motorcycle was repossessed by a dealer when it was brought in for servicing.

The medical coverage for employees was eventually reinstated, but only after the city paid the delinquent accounts.

We believe the city’s financial condition continues to deteriorate. If the state does not take immediate action, there could be a shut-down of city government.

letter from Miami-Dade Mayor Carlos Gimenez, Commissioner Barbara Jordan

Former Manager Steve Shiver said he discovered millions in mounting debts when he took the job last September. But when he tried to bring the issue to the state, he was fired in a controversial vote led by Mayor Taylor, who accused him of revealing the problems to the governor without first consulting her.

Before leaving office, Shiver identified at least $8 million in debts — some of the shortfalls covered up by prior city officials who improperly tapped into restricted funds like county surtax and police forfeiture funds to cover the gaps, records show.

“Poor decisions over recent years have led to today’s major cash flow problems,” Shiver wrote in a letter to Gov. Scott on Oct. 22.

County officials say they have been perplexed by the city’s lack of action over the past year to address the crisis, including a failed 3-2 vote last week to shorten the work week for about 180 government employees to 32 hours.

Despite the money woes, the city is still spending about $50,000 a year on leased SUVs for commissioners, records show. To this day, hundreds of checks have been written to pay vendors, but the checks remain in bundles at City Hall because there is not enough money to cover them, according to sources who spoke to the Herald on the condition of anonymity.

At a meeting on Monday, Chiverton told commissioners he could balance the budget, which shows a $1.4 million shortfall, by the end of the fiscal year. However, budget records reviewed by the Herald show the city is still carrying up to $8 million in overall debts from the prior year that were not addressed by the city manager.

Those debts, including $4.4 million owed to the county, mostly for water and sewage fees, overshadow the city’s entire $13 million budget.

“Now is the day of reckoning,” Mayor Taylor said during the meeting on Monday.

Opa-locka commissioners took turns at the last meeting criticizing Chiverton for failing to come up with a recovery plan to send to the state.

However, local activist Alvin Burke told commissioners at the meeting that it was their responsibility to fix the problems years ago.

“It’s inexcusable,” he said. “You knew we had problems a long time ago. You are just now calling the state for help?”

Taylor said the financial problems were not caused by the current commissioners, but previous leaders. “It did not start with us,” she said. “It happened to fall on us.”

However, audits over the past five years noted gradual deteriorating conditions that worsened over time, with city officials attempting to camouflage the losses. As the amount of tax revenue decreased with a decline in property values — 27 percent over the past seven years — city officials began dipping into restricted funds, including county surtax money.

Nearly all of the practices took place after Taylor took office as mayor in 2010.

County officials say they have been perplexed by the city’s lack of action over the past year to solve the problem, including a failed vote last week to shorten the work week for about 180 government employees.

The mayor formed a financial review committee in 2015 to study the problems before Shiver was hired. One of those panel members, Roosevelt Bradley, said the members proposed several solutions, including slashing jobs in the public works department.

“They were way over budget, and they didn’t want to listen,” said Bradley, the former Miami-Dade transportation director. “They need to clean house over there. It has gone from bad to worse to catastrophic. The residents deserve better.”

Tom Marko, a former assistant city manager who was hired by Shiver to help balance the budget, believes the financial condition has worsened even further from last year when the problems were uncovered.

“They have debts that are years old,” he said. “They are using [property tax money] to pay off those debts and they don’t have any new money to pay off the debt from this year.”

WLRN reporter Katie Lepri contributed to this report.

Michael Sallah: 305-376-2218, @MikeSallah7

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