City manager drops plan to use general fund money on Marlins stadium garage
By Yudislaidy Fernandez
Objections from commissioners forced Miami City Manager Pete Hernandez to kill a request to borrow $9 million from the general fund reserve to pay for Marlins stadium garage pre-construction costs.
"Because of the perception we'll stay away from anything that has connection to the general fund," Mr. Hernandez said Tuesday.
He said he will look for other funding sources for the garages, on which construction is to start in May or June 2010.
Mr. Hernandez wanted to borrow $9 million from the $94 million general fund reserve to cover garage design costs, promising to return the money from the garage construction financing.
"I stand by my commitment of not using the general fund for construction of any of the components of the stadium," he said.
The city has received advances in the past for other projects such as street and Homeland Defense bonds, Mr. Hernandez said. In the case of the garage, he said, the advance would allow initiating the design process.
The city is scheduled to approve today (4/23) Omaha-based Leo A. Daly's $4.9 million architectural and engineering contract to do the work on the ballpark's four garage facilities and six surface lots. The advance was in part to pay those services.
Mr. Hernandez said he could have issued $100 million in bonds for that project, but he said because all he needed was $4.9 million for the design contract the rest of the money would sit accruing interest.
"I don't need the bulk of the money until about March or April" of 2010, he said.
Bonding the project now, he said, would have left the city paying interest for about nine months before construction began.
"By delaying the issuance I end up saving like $4 million," he said.
Under the resolution, he said, the $9 million borrowed would be reimbursed after issuing the revenue bonds backed by hotel bed taxes.
Chief Financial Officer Larry Spring said Monday the city is looking to go to market with the garage bonds in December or January, pledging tourism tax revenues. He said the city's current bond rating is A-plus by all three major rating agencies.
Commission Chairman Joe Sanchez sent a memo to Mr. Hernandez on Tuesday tossing the resolution from the agenda.
Mr. Sanchez said Tuesday he had numerous reasons for removing the item — a power he has as chairman.
"When the deal was approved we were assured the general fund was not going to be touched," he said. "We have a fiduciary responsibility to protect the general fund," adding those are dollars used for police and fire services.
Mr. Sanchez has long been a supporter of the $633-million-plus, 37,000-seat ballpark, slated for his district in Little Havana, but said he has to protect the general fund or others will want to tap it.
For example, last month the commission approved lending theme park Jungle Island $800,000 from the general fund to help owners pay overdue taxes.
Mr. Sanchez asked the administration to find another funding alternative, he said, "but it should not come out of the general fund."
Aside from building the garage estimated at $94 million for the ballpark, the city is also responsible for paying half of the $25 million in infrastructure costs and is pitching in $13 million to build the stadium.
Mr. Sanchez and other commissioners say they are irritated at the tardy way the item ended up on the final agenda. It did not appear in the draft agenda and commissioners' briefings were scheduled for Tuesday — two days before the vote.
Mr. Sanchez said that was not enough time to examine the item.
"That item should have never been in the agenda," he said. "In my opinion, it was snuck in, and I don't appreciate that."
Other commissioners agreed on the lack of time to review the resolution and voiced concerns that Mr. Hernandez and Mr. Spring were breaking the promise made during two public meetings to vote on the Marlins deal — the general fund would not be tapped.
Commissioner Tomás Regalado said Monday he had serious issues with taking money from the general fund.
"I don't understand the rush because the garage is not the first structure that has to go up," he said.
Mr. Regalado also had concerns with the administration calling it borrowing when there could be obstacles to returning the money.
"You don't know when you are going to sell the bonds and we have an upcoming budget with a huge deficit already," he said.
For example, the costliness of the bond markets prompted the Miami Parking Authority to hold off on plans to build a $14 million mixed-use garage at 120 NE Second St. until the agency can get more competitive rates.
Plus, Mr. Regalado argued, starting design work on the stadium's garages was not an immediate need.
"To me is irresponsible to even suggest the general fund should even be used for this kind of work that is not an emergency."
Commissioner Marc Sarnoff agreed that the city needs to stay away from tapping into the reserve and general fund.
He, too, recalled the administration's promises not to dip into the general fund, adding it was mentioned about 11 times at the two Marlins deal commission meetings.
Mr. Sarnoff agreed with Mr. Regalado that borrowing the money was risky if the city got ready to bond and there were no buyers.
"You don't know what the market's appetite is for our bonds," he said.
He also fears that allowing the advance would have prompted other demands for general fund monies.
Recalling his yes vote to lend Jungle Island the $800,000, he said, it was "one of the most displeasing votes I have ever made."
City Manager Hernandez said he appreciates the concerns.
"I understand the concerns the chair has because when you use the word general fund reserve there is concern you are using money that is operational," he said.
But he clarified the money was to come from the $94 million reserve — the fund balance the city uses for one-time contingencies.
Now, Mr. Hernandez said, the city is to look at other alternatives to fund the garage facility's design costs in order to keep the project on schedule.