Miami Gardens - Opa-locka

On brink of financial collapse, Opa-locka seeks state help

Renovations on Opa-locka's iconic old Moorish Revival-style City Hall have stopped, and the contractor has walked off the job because the bills weren't being paid. A view of City Hall on Wednesday, Nov. 4, 2015.
Renovations on Opa-locka's iconic old Moorish Revival-style City Hall have stopped, and the contractor has walked off the job because the bills weren't being paid. A view of City Hall on Wednesday, Nov. 4, 2015. wmichot@miamiherald.com

For Opa-locka government leaders, the signs of financial distress came abruptly last month: The phone service to City Hall was shut off.

Then came the complaints: The city owed thousands in rent payments for police satellite offices and $100,000 to a contractor who walked off the job while restoring the historic City Hall.

The city even stopped paying life insurance premiums for its workers.

Just two weeks after a corruption scandal embroiled Opa-locka’s leaders, the city is faced with another grim development: Opa-locka is edging toward financial collapse.

After years of mounting debts, city officials will talk to the state Thursday about declaring an emergency to resolve a deficit that has reached $8 million — more than half its entire budget.

“All year long, I’ve been sounding this alarm,” Commissioner Terence Pinder told the Miami Herald. “I knew we were in dire straits. It’s not unusual or surprising to me where we’re at.”

Ironically, two of the leaders expected to discuss the crisis with Gov. Rick Scott’s office — City Manager Steve Shiver and Mayor Myra Taylor — are steeped in their own controversy from weeks ago, when a contractor accused the manager of soliciting a $150,000 bribe from him on behalf of the mayor.

I’m getting calls from them every day, asking when they are going to get their money. We don’t have the money to pay them.

Steve Shiver, city manager

The allegation by contractor George Howard has yet to be resolved, but Shiver, who has declined to discuss the matter, said “it will all come out in the end. I am not at liberty to say anything right now.”

A former county manager who was hired by Opa-locka in September, Shiver is leading the effort to resolve the city’s crisis under a state program that bailed out the city of Miami two decades ago when it was awash in corruption and faced a cash shortage of millions.

The city will hold a conference call with the governor's office today at 10 a.m. to talk about an emergency plan.

If Opa-locka moves forward with the state, it would mark the second time the city has gotten help in paying down debts that have spiraled out of control for the community of 16,000 people in north-central Miami-Dade. In 2002, the city budget was taken over by the governor’s office for three years.

The crisis comes as the city faces other issues, including an ongoing inquiry by federal agents and the Miami-Dade Ethics Commission of alleged corruption by city officials.

Law enforcement agents have not commented on the probes, but a detailed letter sent to the state by the city manager’s office Wednesday raised serious concerns about money that was not being paid for water and sewer services — about $1.5 million — by thousands of residents and businesses.

One of the delinquent accounts: the Vankara Christian School, operated by Mayor Taylor and family members, which shows a deficit of $112,000 for bills dating back years.

The mayor did not respond to requests for an interview about the school or her house in Opa-locka, which showed a delinquent account of $974 until Wednesday, when a family member paid the bill.

In a letter sent by Shiver on Wednesday to the governor’s office, the manager raised other concerns about what he called “a shadow government” of outside forces — people he described in interviews as lobbyists and political operatives who work to steer contracts to benefit themselves.

Shiver said that after he arrived in Opa-locka two months ago, he found the city’s debts had been mounting, but officials managed to conceal the shortfalls by transferring money from different funds.

Some of the money to fill the budget gaps — nearly $2 million — may have come from a special fund set aside under state law strictly for building projects.

As the city’s expenses soared — including a payroll that peaked at 236 jobs — the revenue from property taxes and other sources declined, including a 27 percent plunge in property tax values in years leading up to 2014. By this year, it was nearly impossible to pay hundreds of vendors.

“I’m getting calls from them every day, asking when they are going to get their money,” said Shiver in an interview on Wednesday. “We don’t have the money to pay them.”

Among the lapses in payments: health insurance premiums for the city’s workers — a surprise to some employees who were getting bills for medical procedures that were supposed to be covered.

On Oct. 13, the city’s phones were turned off — for nearly an hour — after city workers failed to pay the bill. And until two weeks ago, the city had stopped paying life insurance and savings plans for workers — money that already had been taken from their checks. The plans are now being paid.

Underlying the city’s dire financial health is a badly deteriorating water and sewage system that city officials believe is a major drain on the city’s economic vitality.

The city’s biggest creditor: Miami-Dade County, which is currently owed $3.4 million for water, sewer and other charges, including $679,000 in utility fees the city already collected from residents but never passed onto the county. By December, the debt will be $4 million.

The city controls and owns its own water lines, but pays the county for treating the sewage and water delivered to thousands of businesses and homes.

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

During an emotional meeting on Wednesday at Miami-Dade County Commissioner Barbara Jordan’s office, several Opa-locka commissioners said they did not know the money owed to the county was so steep.

“It’s bad,” said Vice Mayor Timothy Holmes. “I’m willing to do whatever is necessary to correct that, to change that, bring about a better day.”

Jordan pointed out to the Opa-locka representatives that the money owed to the county, including $964,000 in outstanding sewage treatment costs, would not be forgiven.

Joseph Kelley was a commissioner a decade ago when the city was last under state watch. “I never thought I’d have to go through this again, and I’m really frustrated by it right now,” he said. “After seeing all the numbers and seeing how they lay out, the [state] in my opinion takes total control.”

If the state agrees to take over the city’s finances, there would be several options for oversight. The governor’s office could require the city to provide an action plan to get out of debt. The state may also establish an emergency board and appoint members to oversee the city’s spending.

The money owed to the county also has created other problems. Miami-Dade has imposed what amounts to a ban on any new building until a significant amount of the money owed to the county is paid.

During the meeting with Jordan, city leaders were told a precious metal refinery in Opa-locka wanted to expand, but can’t do so because of the ban. The move would create 40 more jobs.

“I’m very disturbed about this,” said Vice Mayor Holmes. “We have to pay our bills in some kind of way.”

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