Miami Gardens - Opa-locka

Miami-Dade government urges state to take over debt-ridden Opa-locka

Old Opa-locka City Hall.
Old Opa-locka City Hall.

Miami-Dade County's top officials are pressing the state to take over Opa-locka's collapsing government, saying in a letter sent out on the same day of an FBI raid at City Hall that they “have serious reservations” about its financial health.

“We strongly urge the state of Florida to intervene in the financial operations of ... Opa-locka,” County Mayor Carlos Gimenez and Commissioner Barbara Jordan wrote in letter sent to the state's chief inspector general on Thursday. “We are concerned that the city will not be able to function without state assistance.”

The letter was bolstered by a detailed report of the city's dire financial condition, in which county auditor Cathy Jackson highlighted $4.4 million in debts owed to the county mainly for sewer and water services along with millions more due to other contractors. County officials first stepped into the fray in November after then-City Manager Steve Shiver had written a letter to Gov. Rick Scott alerting him to the escalating financial crisis in Opa-locka — all amid an FBI public corruption investigation.

“To avert financial collapse, state intervention is needed,” Jackson concluded, after reviewing the city's debts now totaling more than $8 million. She noted that Opa-locka, one of the county's poorest cities, was in a “similar predicament” back in 2002 when the state provided assistance during a “declaration of financial emergency.”

If the state does come to the rescue of Opa-locka, it is unclear whether Florida officials would do so before a Miami federal grand jury returns an expected indictment this spring charging certain city officials with participating in suspected kickback schemes with contractors, according to sources familiar with the FBI probe. It is possible that state officials would wait until after the FBI, which carried out a search warrant at Opa-locka City Hall on Thursday, makes arrests in the two-year-old case.

The timing of the FBI’s raid and the county’s letter to the state inspector general happened to be a “coincidence,” said the mayor’s spokesman, Michael Hernandez, adding that Gimenez spoke by phone with the inspector, Melinda Miguel, last week.

Several city officials, including Mayor Myra Taylor, did return calls or emails seeking comment. But at least one city commissioner conceded Opa-locka could use the state’s assistance.

“I think we do need to get the state involved, but I don't think we need the oversight board,” Commissioner Joseph Kelley said on Friday, referring to a panel that would be appointed by the governor to oversee the city’s budget decisions. He also acknowledged he was not surprised by the county's concerns.

“It is frustrating,” said Kelley, who has served as both a commissioner and mayor in Opa-locka over the past decade and a half. “We should not be spending at the rate we are spending.”

Former Commissioner Steve Barrett said Opa-locka’s elected officials must relinquish their authority for the sake of the city’s residents.

“The mayor and commission cannot run this city,” Barrett said. “These are the same people that have been on the dais for the last ten years. It's getting worse and worse. The state needs to authorize the county to take over to protect the citizens of Opa-locka and the business people in this community. We are tired of suffering.”

Opa-locka’s financial problems have been mounting for years. Records show that as the city was losing massive amounts of revenue, driven partly by plunging property values, officials were trying to make up the deficit by engaging in a series of troubling practices.

Year after year, city officials unlawfully plugged budget holes by shifting millions reserved for roads and police to make it appear the city could pay its bills, such as payroll costs at City Hall, records show. They turned to county surtax money — $800,000 restricted for road and sidewalk repairs to cover everyday bills without telling Miami-Dade officials.

Opa-locka officials played the same game with forfeiture money — $340,000 seized during police investigations, draining that fund, too, in violation of federal law. That money must be spent on police equipment, weaponry and training.

To this day, city officials cannot provide a breakdown of how the surtax and forfeiture funds were spent.

Shiver, who served as city manager from only September to November, accused Opa-locka administrators and politicians of playing a “shell game.” Mayor Taylor, who accused him of reaching out to the governor's office for help without consulting her and the City Commission, led the effort to fire Shiver.

On Friday, he said the county’s action — coupled with the county auditor’s report — amounted to a “validation” of his concerns about the city’s finances.

Taylor did not return calls or emails for comment.

Miami-Dade auditors were so stunned by revelations about the city's irregular financial practices that the county cut off any further transportation money until the city gets its house in order.

County auditors raised questions about the city's disclosures, finding that local officials were “unable to explain accounting inconsistencies" for the year ending Sept. 30, 2014.

In reality, the city had lost $3 million in property and water and sewer revenues at a time when most Miami-Dade cities were rebounding from a real estate crash. Poor collection of water bills was a major part of the problem.

In November, city officials had no choice but to take out hundreds of thousands of dollars from the water and sewer fund to cover the city's payroll, internal emails show.

“To cover general government cash shortfalls, the city has historically borrowed monies from its water and sewer and storm-water funds,” the county’s auditor, Jackson, noted in her report to Mayor Gimenez and Commissioner Jordan. “It is unclear how these inter-fund borrowings will be eliminated or repaid, given the city’s dire financial condition.”

Hundreds of checks have piled up on a fourth-floor City Hall office to pay local businesses, including bills for city car leases. Officials couldn't mail them because they would have bounced.