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CRESPOGRAM REPORT

NOVEMBER 19, 2012

WOULD YOU TRUST THE CITY OF MIAMI WITH YOUR BANK ACCOUNT
THE DISCOVERY OF $39 MILLION IN NEW MONEY, THE  PORT TUNNEL BOND ISSUE AND A MEMO FROM TOMAS RELADO ARE ALL CONNECTED.  YOU’LL NEVER GUESS HOW!

There are two major problems that were revealed last week as a result of the discovery that the City had $45 million in new found money, and with the continuing debate over the how to deal with the Port Tunnel debt.


Here they are.


EVERYBODY LIKES DANNY


Everybody says they like Budget Director Danny Alfonso. The Mayor likes him, The City Manager likes him. The City Commission likes him.


Given the history of incompetence, stupidity and outright malfeasance exhibited by all of these people, the fact that they claim that they all like Danny Alfonso, should be reason enough to  fire him on the spot.


Nobody should “like” the Budget Director.  They should respect his judgement.  They should respect his ability to create a workable budget.  They should respect his ability to keep the budget from going in the red.


But liking the Budget Director is superfluous to the question of whether or not he is competent.


The fact that this Budget Director, less than two months after presenting budget information that was used as the basis to conduct what now amount to little more than fraudulent union negotiations as well as using those figures to deal with other financial issues related to the coming year’s budget discovered that his calculations were off by as much as 8% or 9% of the entire City Budget indicate that you cannot respect his judgment, nor his professional skills.


If you can’t keep track of 8% or 9% of a $500 million dollar budget, then what the hell can you keep track of?


What if instead of discovering that the City benefited from this 8% or 9% windfall, Alfonso would have announced that the City had suffered an additional 8% or 9% deficit in last year’s budget?


Would all of the morons in City Hall still have proclaimed their like for Danny Alfonso then?


The truth of the matter is that the City’s Financial Department is in a cataclysmic free-fall, and as embarrassing as Alfonso’s failure to keep track of the budget numbers is, the real reason for the financial problems now facing the City are in large part the result of the City hiring, and then refusing to fire, looney tunes Chief Financial Officer Janice Larned.


I have talked to people who have been in meetings with her, and even people in the city who themselves have been labeled crazy say that she’s the craziest person they’ve ever seen in the MRC building.


She cries, she screams, she throws tantrums, she’s rude, she’s abusive and worst of all she abused her position by hiring Stephen Petty!


You do not loose 15-16-17-18 people in a department, like what has happened inside the Finance Department since Larned has been the Chief Financial Officer, without this being a problem of such magnitude that not only have all these people left, but the morale of those who have remained has become so bad that I’m willing to predict that the City will probably be faced with additional accounting problems this year because the people who just can’t leave no longer give a flying fuck about doing anything but the minimum amount of work to keep their jobs.


If you are the Chief Financial Officer, then YOU are the one who’s ultimately responsible for the City’s finances, including the budget.


At last week’s Commission meeting, her failure to forcefully step up to the plate and take responsibility, instead allowing Alfonso to diplomatically fall on his sword by allowing him to claim the full responsibility for this screw up, is just an indication that this woman would throw the Baby Jesus under the bus.


But that’s just problem one.


THE PORT TUNNEL BOND


I started writing about this issue in December of 2010.


It was a clusterf**k then, and it continues to be one now.


Rather than rehash all of the old history, let’s look at what might possibly happen - or perhaps not happen - when the Commission meets on Monday evening.


To begin with here are three pieces of information that were - and continue to be - largely unknown. The dates associated with these bits of information are important to remember.


The first bit of information was revealed by Commissioner Suarez at the last Commission meeting when he said that his knowledge of the $45 million surplus first came when he saw it mentioned in the copy of the proposed Port Tunnel Bond documents that he had received two days before the Commission meeting.


Here is that page from the Bond documents.

These documents are not necessarily put together in sequence, and the way in which this page was paginated, it would seem that it was inserted as a replacement for another page. You can see that there still remain several blank spaces where additional information will be inserted.


The big question not revealed in this document was when was this page inserted.


For that, we go to the next bit of information.


On November 6th AND 7th I received emails from two separate individuals informing me that Janice Larned was telling some people high up in the administration that the City had a surplus of anywhere between $25-$40 million dollars.


At the time I was focused on the election and other stories, and didn’t give it all that much attention, but the fact that Larned was telling folks high up in the administration about the discovery of this money a full week or more before the Commission meeting not only undercuts Danny Alfonso’s representations of when he found out, but puts the date of this information becoming known at least on the 6th, and most likely 2-3-4 day prior to that.


The third piece of information is the most important.  Sometime during the week of November 5-9, Regalado sent a Memo to City Manager Johnny Martinez with a new idea on how to handle the Port Tunnel Bond problem.


THE REGALADO PLAN


That idea was NOT to issue a bond, but rather to use the newly discovered surplus to pay off the Port Tunnel obligation immediately.


Here’s how I understand Regalado’s plan would work.


(NOTE: I HAVE REWRITTEN THIS PARAGRAPH BE IS WAS CONFUSING WHEN I FIRST POSTED IT AROUND 8:20 PM.) The City pays off the bank loan. In turn, because the obligation for covering this debt has been the OMNI CRA’s from the beginning, the City would DEMAND that the OMNI CRA sign a contract where the City would start collecting the principle, plus the interest that they would have paid to the investors.


In in the future if the City needed to raise any additional money, they could then go to the bond market and use the same collateral that they would have used to issue the Port Tunnel Bonds.


The plan has a simplicity and straightforwardness that immediately seems appealing, not to mention the sizable saving of money to the taxpayers, and perhaps that is why perhaps City Manager Johnny “The Doormat” Martinez, did not, from what I can gather, submit the idea to the City Commission.


In a round about way Commissioner Spence-Jones brought it issue up as you can see in this clip from last week’s Commission meeting.


I put these video clips up because I think it is important that you, the reader, see and hear what people say, rather than what I many try to describe. 


Therefore I urge you to take the time, or come back when you have the time to look at these video clips, because they are of critical importance in trying to understand what is really going on.


With the clips in this story I have tried to cut these clips to be very precise. You can go on the city’s website and see the whole discussion.


So here is CLIP I, where Spence-Jones ask Danny Alfonso why wasn’t there any recommendation to take a portion of the surplus money and pay off at least part of the Port Tunnel debt.

So first, you see that Spence-Jones was smart enough to figure out the first part of the deal - because that’s the most obvious part that would leap out at you, but she failed to see, or make the connection that for the City to pay off the debt, the only way it really made sense would be if the City then got the OMNI CRA to pay the City back, along with the interest they would have paid to the investors.


What’s missing from this explanation provided by Alfonso about the City’s obligation to maintain $93 million in reserves, and the City’s failure to do so during the last 2.3.4 years, is the argument he made earlier in the day when he told the Commissioners, after the unions spoke about waiting the City to renegotiate their contracts, that the Commissioner could forgo putting this money into the reserves, because the ordinance that they were violating was one that could be overridden by a decision of the Commission.


Now here is CLIP II, where Commissioner Sarnoff gives the reason why the City should go forward with issuing bonds for this money instead of trying to pay off all or a portion of the debt now.  IF YOU DON’T WATCH ANY OTHER CLIPS, WATCH THIS ONE!!!

Yes, you heard that right! But just so you really comprehend what her said, here it is in writing:


        “Bonds are the most advantageous investment

        for investors, bar none.”


We must have hit a crease in the universe that took us back to the past, because Sarnoff’s claim is a variation on the 1950’s claim that what’s good for General Motors, is good for America.


We now know that that turned out not to be true.


When pressed to explain why he supports issuing bonds, versus paying off all or part of the debt immediately, Sarnoff’s focus is on what’s good for investors, not what’s necessarily good for the citizens of the OMNI CRA District, whose special assessment tax dollars are the ones obligated to pay off these $45 million in bonds as well as an additional $31 million in interest - which is definitely good for investors.


Again, what needs to be focused on here is that while Sarnoff is all too happy to make an argument that the investors would be the ones who would benefit from buying the bonds, he demonstrates an amazing lack of concern for the taxpayers of the City of Miami who themselves are the biggest investors in the City, and that in any deal that rewards investors, the citizens should be the ones that are always put in first position.


Without making this into an Opus, here are some of the other issues that continue to be used to misdirect, confuse, or distract from focusing on the issues that should have been addressed dealing this this Port Tunnel debt years ago.


  1. 1. The original loan taken out by the City - and not by the OMNI CRA, was in 2009.  The loan activity that I first wrote about in 2010, was actually a roll over of that loan.  In my story then I included a memorandum written by Carlos Migoya, the City Manager, on December 11, 2010.


Here is the 2nd paragraph of that memorandum.

The reason given in this paragraph for why the OMNI CRA could not take on this obligation directly by issuing bonds was, that:


        “...the City Attorney’s office, has determined that the

        proposed OMNI CRA bonds should be validated by

        the courts given the multiple legislative changes to

        the District over the years.  The validation process

        can take six months to two years to complete depending

        on challenges, in any are made.”


Last week, Sarnoff claimed the reason why the OMNI CRA couldn’t issue the bonds was because they couldn’t find a couple receipts from 1981.


This is all bullshit. If you believe the argument in Migoya’s memorandum, then the OMNI CRA couldn’t issue any bonds in 2009, 2010, 2011, and 2012 because they needed to get a Court to rule that it was okay for them to do so, but the only way a Court could do that would be if somebody decided to sue them.


So, it’s now the end of 2012, and nobody has decided to sue the OMNI CRA for jack-squat, and it’s the City whose being forced to issue the bonds, using the City’s collateral to do so.


Meanwhile, Sarnoff and the OMNI CRA are still waiting for that mysterious lawsuit so they can get an okay from the Court to issue their own bonds.


This is a circle jerk of insanity, that only a schemer like Sarnoff could  exploit.


  1. 2. At every opportunity Sarnoff continues to claim that the OMNI CRA in anticipation of “Murphy coming to visit,” had set aside a lot of money to cover this Port Tunnel debt.


The only problem is that he’s never divulged just how much money he’s set aside? Is it 1 million, 5 million, 10 million?


Inquiring minds should have been all over that months ago when he first started spouting that claim. It would really be helpful if everyone knew just how much money the OMNI CRA has put aside to cover this debt.


  1. 3. Sarnoff  keeps trying to claim that “it’s in best interest of the     citizens of Miami,” to issue these bonds. “because if you pass these obligations on,” meaning that if the City pays the bonds off,” it works well” for him and the OMNI CRA.


I originally couldn’t understand what he was implying, because Sarnoff often fails to speak plainly on purpose, but what I’ve concluded is that what he’s saying is that if the City were to pay the debt off instead of issuing bonds, then the OMNI CRA would no longer be obligated to paying the debt, and could therefore keep the $45 million, plus the interest. 


Again, it’s important to keep focusing on the fact that the only way that the City should or would pay the debt is if the OMNI CRA were made to commit to repay the City, with interest for paying THEIR debt.


But to Regalado’s credit - and you know I’m never hesitant to give credit when credit is do - the only way that the City should even think about paying off the debt is to handcuff the OMNI CRA into a deal that they would pay back the City for doing so, and WITH INTEREST!


ALL OPPOSED SAY EYE


So who beside Sarnoff would be expected to oppose such a deal?


First off, Wells Fargo Bank, who stands to make a pretty nice chunk of change from this deal. Ditto that to the bond underwriters, who also would make a nice chunk of change if the debt were paid off in full.


And lets not forget Carlos Migoya, who still has his tentacles wrapped around the City.  In my original story about this issue in 2010 I raised the question of whether Migoya was engaging in a conflict of interest by dealing with Wells Fargo Bank when they had taken over Wachovia Bank, where Migoya had been a very senior executive, and where he obviously still was connected through his pension plan.


Because this is Miami, neither Migoya or anyone else has ever bothered to address that vexing issue, but it is one that should concern folks.


Then of course there’s Johnny Martinez. Since he had Regalado’s Memo for almost a week, if not longer, before last week’s Commission meeting, why didn’t he mention it during the meeting when the whole issue of the $45 million and the Port Tunnel Bond was discussed for several hours?


This is more than kind of serious, it’s absolutely the first thing that someone on the City Commission should ask him when the meeting starts tonight!


Then you got to look at who on the Commission might be expected to get a taste of that through the numerous circuitous and mysterious ways that money flows from deals like this.


And lastly, you’ve got the unions.  While this deal would ultimately benefit the citizens, it doesn’t do much for the employees if the the new found money is used to pay off the bond, and not given back to them in contract concessions.


Given the way that Regalado has tried to lay off all of the City’s financial problems on the unions over the last 3 years, they are rightfully entitled to be pissed over the discovery of the $45 million 2 months after they had to give up more concessions.


As stakeholders they believe they have a right to demand an opportunity for some of that money back.


SO WHAT’S TO DO?


In the end though, the final decision is one that goes beyond politics to some deeper fundamental issues of long-term public policy.


The big problem is that even at this late date,  it doesn’t appear that anyone has any idea of what the real numbers are.


That’s perhaps the biggest problem.  No matter how you look at it, the City of Miami seems incapable of dealing with it’s finances in an open, responsible and competent manner.


For instance, no one except for Sarnoff knows how much money he has squirreled away in the OMNI CRA bank account, and he’s not been willing to reveal it up to now.


Nor does anyone know how much of a surplus the City really has: Is it $39 million? $29 million?


If the decision was made to pay off all, or part of the debt with a check on Tuesday morning, no one knows how much of the debt could be paid off without actually knowing that figure.


Then, there’s the deal with Johnny Martinez, and his refusal - at least openly - to reveal the contents of Regalado’s memo.  What’s the deal behind that?


Are they on the outs?  If so, it’s not necessarily a surprise, since Regalado and all of his City Managers eventually have a falling out, but this is certainly not a good time for it to happen.


The City Manager is supposed to be always looking out for the interests of the citizens and taxpayers. His refusal, for whatever reason, to not divulge the existence of Regalado’s memo, should be enough to fire his ass immediately!


And then what’s the relationship between Sarnoff and Suarez this week?  More importantly, how does Suarez look at this deal, and how does he try and figure a way to make it work for him?


He’s running for Mayor, and everything that he does will be colored by that decision. 


Given that at least 2, if not 3 Commissioners at this point could be considered as his supporters, that also will have a impact on the decision that is made whether to float the bond, or try and pay it off.


I call the Mayor stupid, and in many ways he is,  but he is also very cunning, and he’s managed to frame a number of issues in a way that benefit him in the upcoming campaign.


While I’m sure that I was being used when someone sent me multiple emails explaining Regalado’s plan I accept that EVERYONE who sends me information is using me to one degree or another - I’m sure that I wasn’t the only one getting this information this weekend.


I’m not necessarily committed to Regalado’s plan, although I came up with pretty much the same idea last week in talking with several folks in the City, but I do believe that it has enough merit that it should have been revealed and discussed openly at last week’s Commission meeting, and the fact that it wasn’t only adds to my belief that besides being a “Doormat,” Johnny Martinez is a back stabber, and not necessarily to Regalado, but to the taxpayers who pay his salary!


Then of course there’s the unions.  Do they risk betting on the City’s financial condition improving, or do they figure that they go for what they can get immediately.  All of a sudden the 2 year contract all of them entered into a couple months ago doesn’t look so good anymore.


Lastly, we come to Sarnoff, who is all too happy to see “investors” walk off with $31 million in interest payments, but probably will not be as happy to see the City’s taxpayers enjoy the benefits from those same $31 million, or any portion thereof.


So that’s it. 


Will there be a REAL, honest, open discussion at the Commission meeting? I doubt it, because you can’t do that without real information, and in Miami, the crooks and schemers have always operated on the principle that “The One-Eyed man Is King,” and they’ve done their best to keep everyone else blind.


The best that I can suggest is to buy some popcorn and either show up at City Hall, or tune in on Channel 77, Monday night to watch the show.


Ah yes, it really is Miami, Bitches!

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