I know I haven’t done much blogging about our “Now More Beautiful” City lately. I have to admit I’m fascinated by the blatant corruption going on south of our border in North Miami. But, it’s time to jump back in and get back to North Miami Beach business.
Someone suggested that I watch the recent Council Conference meeting on February 21, 2012. And, so I did. As a result, you’re getting two blogs in one.
The first item on the agenda was quite entertaining. The second item was long and boring, but a necessary evil and a must watch for any resident in North Miami Beach who is interested in the financial state of our city.
Blog #1: Just because there’s an “R” after your name, doesn’t mean I give you a pass!
Starting with the first item, the discussion was an update on the situation at the Mavericks High School. Apparently, the security situation there hasn’t improved since late last year, forcing our City Manager to take action. His solution was to place additional police presence at the school for which the school would pay.
A Mr. Ralph Arza addressed the Council. He is the former Hialeah Republican State Representative and the current director of governmental affairs for the Florida Consortium of Public Charter Schools. In other words, he’s a Lobbyist.
According to a Miami Herald political column, Ralph Arza: A window into the revolving door of legislator to charter school lobbyist, dated September 13, 2011, “The former high school teacher and coach was a point-man on education issues while former Gov. Jeb Bush was governor and helped draft the legislation that opened the doors to the profileration of charter schools in Florida. Now, Arza’s gone to work for the non-profit association that advocates for and promotes charter schools.” Well, isn’t that convenient?
While many charter schools are above board and operate at a level commensurate with the Miami-Dade County Public School system, there are far too many that have proliferated in recent years with the sole purpose of making money at the expense of the students who are not being educated properly. The Mavericks High Schools have a questionable record and are currently the subject of an extensive expose series by investigative reporter Lisa Rab of the Miami New Times, which you can read here, here and here.
The Miami Herald column closes with, “As for Arza, he didn’t seek re-election in 2008 after he clashed with former Miami-Dade schools chief Rudy Crew, allegedly called him a racially charged word, and was later charged with witness tampering. But last spring, he hinted that he may want to get back into the legislature.” Lucky us.
Francisco Alvarado of The Miami New Times also published a column about Ralph Arza back on August 2, 2010 entitled, Political Vulture Ralph Arza Hovering Around Perla Tabares Hantman.” The column states, “We can’t blame [Miami-Dade County School Board Member/Chair] Tabares Hantman for putting some distance between herself and the man whom land use lawyer Stanley Price Stanley Price once dubbed the 800-pound gorilla of Doral. Ever since he was forced to resign from the Florida House in 2006 for making expletive-laced threats to another state representative, Arza has been trying to regain relevance.” Okaaaaaaay!
This is the same Mr. Ralph Arza who spoke to the North Miami Beach Council on behalf of the Mavericks High School. When finally asked by Councilwoman Beth Spiegel if he worked for the management company that runs the school, he advised that he is an outside consultant for the management company. When pressed, again by Ms. Spiegel, Arza admitted that he does not have authority to bind the management company to any agreement with the City. Beth then stated she wanted to hear from someone who does have the authority. The Principal came forward. Beth’s concern was that since a large amount of the security issues do not occur on campus, she wanted to know how he was going to handle the situation off campus in order to protect the surrounding community. Beth also asked the Principal how many students are actually from North Miami Beach, to which he replied that “about 45 to 50 percent are from North Miami Beach and North Miami.” The Principal gave the standard, politically correct response that he supports our city and will work with us to make sure our community is safe from the tyrants and bullies who attend his school. “Tyrants and bullies” being my words, not his.
Councilman Frantz Pierre piped in by stating that he “personally values” the type of work being done by Mavericks. Does that “type of work” include the fact that a school principal was accosted by a student on her way to work? I’m just saying.
(Oh, by the way, Frantzie. I heard that the illegally placed Jersey barrier in the alley next to your home was finally removed. Guess you’re not so freaking important after all. Just saying.)
In closing, Lobbyist Ralph Arza stated he would get the Council a letter from the school’s board of trustees, advising the council who he is and authorizing his capacity to represent the school’s board of trustees. Beth told him she knows exactly who he is stating, “I’ve read about you in the paper for years.”
Yeah, haven’t we all?
Blog #2: Show me the Money!
Now the boooooooring part of the meeting started. I warn you: You might want to drink some coffee before you read this! Finance Director Janette Smith came before the Council to address an “Analysis of Bank Indebtedness.” City Manager Lyndon Bonner announced, “We are now moving into budget mode.” That was an understatement.
Ms. Smith announced that her report was about the city’s debt as of December 31, 2011 that resulted from the ongoing operations of the city. She made it very clear that this debt did NOT include “the obligation to pay future employment or post employment (retirement) benefits or insurance that may arise out of litigation matters, or estimated claims.” You can see the entire slide presentation on the City’s website in full, gory detail. For the sake of brevity, and not boring you to death, I’ll give you a synopsis here.
There are six (6) outstanding Revenue Bonds, as follows:
Bond #1: Original amount $1,950,000.00. Issued for “capital improvement.” Matures 10/1/12. Balance at 12/31/11 $395,000.00.
Bond #2: Original amount $1,000,000.00. Issued for “capital improvement.” Matures 10/1/13. Balance at 12/31/11 $480,000.00.
Bond #3: Original amount $11,510,000.00. Issued for “expansion of police station and various neighborhood improvements.” Matures 5/1/24. Balance at 12/31/11 $8,600,000.00.
Bond #4: Original amount $66,385,000.00. Issued to “fund construction and improvements to Norwood Water Treatment Plant.” Matures 8/1/32. Balance at 12/31/11 $64,700,000.00.
Bond #5: Original amount $7,765,000.00. Issued for “various transit and transportation projects,” (a/k/a “Hanford Boulevard Project”). Matures 12/1/19. Balance at 12/31/11 $4,479,000.00.
Bond #6: Original amount 5,400,000.00. Issued to “fund improvements to the water utility system, bike path, lighting and traffic calming devices.” Matures 4/1/20. Balance 12/31/11 $4,800,000.00.
There are five (5) outstanding Promissory Notes, as follows:
Promissory Note #1: Original amount in 2000, refinanced in 2011 for $14,835,000.00. Issued to “fund improvements to the Proud Neighborhood plan.” Matures 11/1/30. Balance at 12/31/11 $14,900,000.00.
Promissory Note #2: Original amount $1,672,000.00. Issued to “fund various stormwater capital improvements.” Matures 5/1/21. Balance at 12/31/11 $1,700,000.00.
Promissory Note #3 (CRA Non-Taxable Revenue Note 2007A): Original amount $3,000,000.00. Issued to “fund various capital improvements.” Matures 2/1/27. Balance at 12/31/11 $2,500,000.00.
Promissory Note #4 (CRA Taxable Revenue Note 2007B): Original amount was $5,000,000.00. Issued to “acquire certain properties within the CRA.” Matures 2/1/27. Balance at 12/31/11 $4,200,000.00.
Promissory Note #5 (Line of Credit): Original amount was not to exceed $2,000,000.00. Issued to “fund general operating expenses.” Matures 4/21/12, when all principal and interest becomes due. Balance at 12/31/11 is zero ($0), but it costs us $15,000.00 a year to keep this line of credit open.
There are two Capital Leases (which are really loans to purchase equipment), as follows:
Capital Lease #1: Original amount $973,000.00. Issued to “fund purchases of capital equipment.” Matures 11/4/12. Balance at 12/31/11 $260,000.00.
Capital Lease #2: Original amount $1,346,000.00. Issued to “fund purchases of capital equipment.” Matures 2/11/14. Balance at 12/31/11 $781,000.00.
Finally, there are eight Revolving State Loans, as follows:
Revolving State Loan #1: Original amount was $454,500.00, with an additional $2,550,000.00 of principal forgiven due to an ARRA grant as long as we comply with the terms of the grant. Issued to “fund the Volatile Organic Compounds (VOC) Removal Project.” Matures 8/16/30. Balance at 12/31/11 $446,000.00.
Revolving State Loan #2: Original amount was $3,010,300.00. Amendment 1 to this Loan added an additional $585,389.00 of debt, with $2,000,000.00 of principal forgiveness; and Amendment 2 added an additional $5,281,009.00 of debt, with $1,000,000.00 of principal forgiveness. Issued to “fund the Volatile Organic Compounds (VOC) Removal Project.” Matures 8/16/32. Balance at 12/31/11 $3,200,000.00.
Revolving State Loan #3: Original amount $2,531,511.00. Issued to “fund the Automated Meter Reading (AMR) Project.” Amendment 1 to this Loan added an additional $3,967,591.00 of debt, and Amendment 2 added an additional $4,367,670.00 of debt. Matures 9/13/32. Balance due at 12/31/11 is $0 because no funds have been drawn down.
Revolving State Loan #4: Original amount $1,561,120.00. Issued to “fund the Highland Village Sewer Connection Project.” Amendment 1 to this Loan reduced the debt to $1,208,704.00. Matures 11/15/30. Balance at 12/31/11 $1,187,000.00.
Revolving State Loan #5: Original amount $262,706.00. Issued to “fund the Highland Village Sewer Connection Project.” Amendment 1 to this Loan added an additional $141,699.00 of debt Matures 11/15/30. Balance at 12/31/11 $299,000.00.
Revolving State Loan #6: Original amount $512,064.00. Issued to “fund the Major Sewer Rehabilitation Design Project.” Matures 9/13/33. Balance at 12/31/11 $361,000.00.
Revolving State Loan #7: Original amount $6,044,200.00. Issued to “fund the Major Sewer Rehabilitation Construction Project.” Matures 9/13/33. Balance at 12/31/11 is $0 because no funds have been drawn down.
Revolving State Loan #8: Original amount $4,284,596.00. Issued to “fund Infiltration and Inflow Reduction and Sewer Rehabilitation Program.” Matures 9/13/32. Balance at 12/31/11 is $0 because no funds have been drawn done.
If I added right, and feel free to check my calculations, as of December 31, 2011, the City of North Miami Beach was in debt the amount of $112,856,000.00.
Yeah. That was the short version.
Now remember, this debt was incurred to only pay for “ongoing operations of the city.” It does not include current or future pension payouts for which we are also in debt, which I’ve been told is somewhere around the neighborhood of $100,000,000.00.
I can’t even begin to calculate what the actual debt is for the employment and retirement benefits are for the employees of the City of North Miami Beach. Apparently, the actuaries can’t, either. Or, rather, make that “won’t.” When one actuary had the audacity to tell the truth to the Trustees of the Police & Fire Pension Board, he got his ass fired by the three Cop Members of the five member Board.
But, I digress.
In summary, City Manager Lyndon Bonner presented a graph of the “Debt Service Payments by Year of Maturity”, which shows that the City of North Miami Beach will be paying upwards of $11,000,000.00 in debt payments until the year 2019. Then the amounts of the payments slowly start to decrease until the year 2033, when our current level of debt will be finally paid off. And that’s assuming we incur no more after today. Not gonna happen.
This also does not include the pension debt of approximately $100,000,000.00 which, if added to the above loans, would bring our total real debt as of today to approximately $212,856,000.00. Plus interest, of course. Since employee pensions are an ongoing expense of running a city, if we continue to borrow money to pay these expenses, they will never be paid off. Never is a very long time.
Considering that, according to the Council Adopted Budget, our expected revenue for the fiscal year 2011/2012 is $37,360,354.00, at this point it would take nearly six years’ worth of today’s revenue to pay off the current debt WITHOUT SPENDING A PENNY ON ANYTHING ELSE!
Does that sound “sustainable” to you? Not to me, it doesn’t!
Common sense dictates that you can’t spend more than you make. DUH! If you continue to do this, you’ll end up in a deep financial hole. This is just as true for companies and municipalities as it is for people. A mess is a mess.
The question is: How did the City of North Miami Beach end up in such dire straights? The answer to that is easy enough: Years and years of fiscal mismanagement. During days of plenty, far too many council members spent the bounty like there was no tomorrow. Well, guess what? Tomorrow has arrived. Unfortunately, even though four out of seven current council members are not responsible for the mess created by some of the previous administrations, they now have to clean up that mess.
They’re certainly not gonna make any friends along the way.
I certainly don’t envy them.
In my next column, I’ll tell you what I believe the real problem is and how I would fix it if I ran the world. Stay tuned…
Stephanie Kienzle
“Spreading the Wealth”
