Miami Gardens - Opa-locka

Steeped in scandal and debt, Opa-locka hands over water billing to county

Merritt Stierheim, a longtime county manager in Miami-Dade, has been appointed help steer the city through its financial crisis.
Merritt Stierheim, a longtime county manager in Miami-Dade, has been appointed help steer the city through its financial crisis.

Plagued by rampant corruption and waste, Opa-locka has turned over control of its troubled water and sewer system to Miami-Dade County in a desperate effort to stem the loss of millions of dollars and restore what was once the city’s most vital source of revenue.

In taking over the utility billing system, the county will assume a critical role in collecting millions each year — and will serve as a watchdog of a department that had been riddled with illicit activities, including employees who shook down residents and business owners for cash in exchange for water services.

The unusual arrangement was approved by the Opa-locka commission on Wednesday night in a plan that could turn the water program into an income generator for a city that has been crushed by debt and under the watch of a state oversight board.

The Miami Herald reported last month that city employees turned the utility program into their own enterprise, waiving hundreds of thousands in water bills each year for politically connected customers — including Mayor Myra Taylor, whose private school racked up $119,000 in bills that were not paid.

The Herald found that some workers even created their own under-the-table collection system, cutting off the water of customers, and then charging cash to turn it back on — pocketing the money.

One of the key members of the scheme: Public Works Supervisor Gregory Harris, who pleaded guilty on Tuesday after being arrested by the FBI last month on charges of taking bribes in exchange for water connections. Former City Manager David Chiverton was charged with a similar crime in the same probe.

The county’s takeover will allow it to monitor the program and look for better ways to collect for a service that’s typically a money generator for South Florida cities. Records show Opa-locka has lost an average of $1.7 million annually over the past three years.

Merrett Stierheim, a former Miami-Dade County manager who was appointed by the state to oversee the city’s operations, said the city is quickly running out of cash and needs the county’s intervention.

“I have no doubt this will considerably increase the city’s revenue stream,” said Stierheim, who noted that the county has a 99 percent collection rate for its own customers.

For the county, the move will not only help the city raise money at a crucial juncture, but protect its own financial interest. For years, it has sold water to the city at wholesale rates and is the largest creditor — $4 million in overdue bills — nearly half of Opa-locka’s entire debt.

Opa-locka may also benefit from a bridge loan provided by Miami-Dade’s government, but that has to be negotiated with county officials. Opa-locka commissioners agreed on Wednesday night to pursue a loan from the county as well as the state.

“We are counting the weeks to make payroll,” Stierheim said.

The move to take over the water billing program comes after weeks of county administrators inspecting the city’s aging system and uncovering vexing problems.

Thousands of meters could not be read properly, forcing the city to estimate water bills.

Delinquencies were skyrocketing, with more than $2 million in overdue accounts — some dating back five years. More puzzling: 663 properties — homes and businesses — didn’t even show up in the city’s billing system.

Jordan Leonard, a former Opa-locka assistant manager who examined the water program when he was in office in 2012, said the county’s findings touch on what he believes is a deeper problem.

Leonard said he found that city employees with access to the billing system were shutting down delinquent accounts, some with overdue payments, and then opening new ones at the same address.

“They were able to actually wipe out the debts,” Leonard said.

Opa-locka police conducted two investigations — in 2008 and 2012 — and found that some public works crews had fanned out across the city to strike their own deals with customers.

By bypassing the city meters and installing illegal feeds known as “jumpers” into homes, they were able to create their own “parallel” water system.

Instead of the city getting paid each month, the customers paid cash — monthly fees of $40 to $100 — directly to the employees, police reports stated.

One woman admitted to police that she agreed to have sex with a meter reader to keep the water running in her home.

In 2012, at least 20 homes were found taking part, and more were suspected. But before police could probe deeper, the case was shut down, said former Deputy Police Chief Antonio Sanchez.

Police were told by then-City Manager Kelvin Baker that the investigation would be handled internally at City Hall, Sanchez said.

The city commission voted to pay for a forensic audit of the city’s 5,800 accounts, but months later shelved the plan.

Leonard, now mayor of Bay Harbor Islands, said the “jumpers” account for only part of the problem in tracking how much money is lost. To capture everything, the county will have to inspect every home and business — and every water line that feeds those properties.

“There is no other way,” he said. “In the long term, they need to perform a forensic audit.”

Jay Weaver: 305-376-3446, @jayhweaver

Michael Sallah: 305-376-2218, @MikeSallah7