A Message From Steve Bernard and Me

From Steve:

For the First Time Ever, Biscayne Park is About to Borrow Money

Seeing as how no one else (except Commission Barbara Watts - see below) has brought it to your attention, there's a First Ordinance reading tomorrow night (2/3/15) to borrow $350,000. 

The purpose is to pay for the difference between State Grants accepted by the Village and the estimated costs to build a new Administration Building and rehab the Log Cabin. Here's the Agenda item - http://www.biscayneparkfl.gov/vertical/sites/%7BD1E17BCD-1E01-4F7D-84CD-7CACF5F8DDEE%7D/uploads/Agenda_Item_9.a_Regular_Commission_Meeting_02_03_2015.pdf

Our Current Charter, passed in 2006, allows for borrowing, pending certain requirements, and I do think that there are times when a government can borrow responsibly, but the term "responsibly" apparently has different meanings to different people.

There are many questions on this Ordinance (and there will have to be a Second Reading, although I don't know when that might be, by law it has to be at least 10 days from the First Reading), so I'll just put some of them out there, and you all can decide if now is the time to make this decision.

1. As I said, Biscayne Park has never borrowed money before, other than for vehicles, most of which have been lease purchases. Seems like such a momentous occasion lasting 15 years might be worthy of some conversation from our Commissioners (other than at the Commission Meeting), or a newspaper article, an email blast... something to engage the public to get our thoughts. But - nothing but silence, even though the Commission has known about this shortfall since the middle of December. Where's the outreach and transparency?

2. When only one bank responded on 1/22/15 to a 1/14/15 RFP for financing, why didn't we hold off so that we could get more options? The deal CNB is offering us is $350,000 at 4.25% for 15 years - could we do better if we had more than a one week RFP? Is the loan such a problem that no other bank wanted a part of it?

3. The annual cost of the loan, for 15 years, will be $31,876.40. Where is it coming from? According to the backup, $20,000 comes from our Contingency Fund, and $16,577 comes from something called, “Returned to Reserves". Amazing how after years of saying how we're going broke, we can in one month come up with almost $32,000 at the drop of a hat. Maybe more importantly, if anyone knew we'd have this shortfall during our budget season, why didn't we plan for this? Maybe because once again, we're not going as broke as we've been told? And if we didn't know we'd have a shortfall... well, what does that say?

4. There is good news - there's more money in our finances that we thought. As per the backup, pg 5 , "The Finance Director also highlighted that the “½ Cent Sales Tax” revenue is on track to increase from the amount that was projected in the revenue budgeted line item." It doesn't say how much more, but enough that there's no concern about paying an extra $32,000 this year. What about the next 14 years? Is it possible that when this Commission says we have to Annex because we're going broke, they throw around statements to 'prove' we're going broke, but when they want to borrow $350,000, things are going great?

5. And even better news on our reserves? Pg 5 of the backup states, "While the most previous fiscal year audit is to be completed in the spring of 2015, we anticipate returning an estimated $100,000.00 to reserves."  Wow! So instead of our reserves going down (a big part of the Annexation argument, and still no answer from the Manager or Commission about exactly what we've spent our Reserves on in the last  to 10 years), "As of the September 30, 2013 audit, the audited general fund reserves amount for the Village is: $407,685", so this year we're going to add 25% of that amount. Tell me again how we're going so broke we had to outsource Sanitation (and $74,933 of the money is coming from the sale of our Sanitation Trucks) and Annex other areas.

6. What's the planned collateral to the bank for this loan? Page 6 says, "the Finance Director is recommending that the Village pledge its “½ Cent Sales Tax” revenue that is received from the State of Florida as collateral for the proposed loan." I'm sure confused about this - if we need revenue so bad... why are we, and how can we, pledge funds that we need to operate the Village?

7. How did this go so wrong - did we seriously ask for Grant money for a project that the Grant couldn't cover and we had no money for, did we not even attempt to reduce the Scope of Work to stay within that budget, did we not commission the Architect to come in on budget or pay redesign fees, did we not make public the Shortfall until the night we signed a Contract for more than $833,000 (at an un-televised Special Commission meeting), thinking that we could figure out some way to make it work - spending money without know where it was coming from? 

Yes, our Log Cabin needs significant work. Yes, borrowing is now legal and it has it's place. But is this the way it's going to happen? With just one loan bid, with virtually no public notice, without concern for what our collateral is, with a diametrically opposed version of what we've been told our finances have been? Or maybe the tactic of putting our millage rate at 9.7 was purely so the argument for Annexation could be made - because that extra $32,000 a year sure would have gone a long way to 'making Biscayne Park a better place to be'.

Let's talk about this before jumping into a 15 year commitment.

Sincerely,

Steve Bernard

Steve and I are not pleased.  We're both concerned about the Village borrowing money.  I don't share Steve's complaint about the fantasy that Village residents didn't have an opportunity to hear about this.  It was on the Commission Agenda for December, and anyone who wanted to listen or express an opinion had an excellent opportunity.  I'm sorry if Steve was busy that day, and didn't come to the meeting, but that was the chance to "talk about this."*

And it's not really the first time the Village has borrowed money.  But I can see that Steve makes a more dramatic point if he claims it is.  I like a good story as much as anyone else, so I thought it was an engaging enough hook.  Steve clearly states that this is the first time the Village has borrowed money, except for the other times we borrowed money.  I hope this leaves no ambiguity.

Steve agrees, and I agree with him, that "our Log Cabin needs significant work."  It's a shame Steve didn't have that insight when he was on the Commission, or when a majority of the Commission were people he particularly favored, for two years until the end of 2013.  If he'd realized the needs of the log cabin then, he could have led a campaign to make those improvements when it would have been cheaper and easier.  Oh, well.  Better late than never, perhaps.  Although if it were that simple, Steve wouldn't be complaining.

I'm not sure what Steve means when he says Commissioners should discuss these things, but not only at Commission meetings.  I agree Steve has done a good deal of talking about things outside Commission meetings, but he should know about the Sunshine Law, and that some of us take it seriously.

Steve is whining that only one lender responded to an RFP.  Was there a point?  As many lenders responded as wanted to make the loan.  As long as the number of respondents was at least one, we have solved our problem.

But then, Steve gets real.  He points out that we are about to incur debt that we don't have an improved way to settle.  This is important.  What we want the loan for is something that will not make the Village any more money than it already has.  This is a risky business.  We create more expense without creating more revenue to cover it.  That's why I was against borrowing.  I agree with Steve here.  Steve gives us a little elbow, and reminds us about that reserve that's getting juicier.  I'm all over it, Steve.  That's exactly where I thought we should take the cost of the annex building overrun, so we wouldn't have to borrow.**

I also agree with him when he reports the "good news" that Village finances are improving.  Yes, that is good news.  Steve is tempted to conclude that maybe it's such good news that it may mean we don't have to annex other land usage across the tracks.  No, the news is not that good.  We still can't do what this Village needs to do, even if we're moving in the direction of some increase in revenue.  Not only can't we afford median improvement, we can't even afford the cost of a landscape architect to tell us what that improvement should be.  Fix the streets?  Um, I sure don't think so.  And we're still bemoaning the skanky and dirty mulch at the tot lot, because it costs $30K to replace it with a good surface.  A barrier wall along the track?  Ooh, in our dreams.  Not without a major infusion, like what might result from annexation.  But Steve is not wrong.  Even modest improvement is good news.

I can see Steve's point about pledging Village revenues as collateral.  If we need money, which we do, isn't it a risk to pledge revenue as collateral?  Sure it is, but you don't give up the collateral, unless you default on the loan.  If you feel confident about your ability to repay, you can pledge any collateral you want.  You're not going to lose it.  So Steve is twisting this unnecessarily, but he's given himself good exercise.  I imagine the lad is very fit by now.

Steve and I agree that if the job costs more than we have, we should consider not doing the whole job.  Steve realized this possibility, and so did I, and so did David Coviello.  Dave and I talked during a Commission meeting about holding back part of the job, and proceeding once we had more funding in hand, but we got outvoted by the rest of the Commission.  If I recall, Steve got outvoted a time or two on the Commission, and his three Commission puppets sometimes outvoted the other two Commissioners, too.  That happens.  All I can say to Steve is that you learn to take it in stride.

Finally, Steve and I agree that the millage is wrong.  I've advocated for 10 mills, and so has Steve, when he was on the Commission.  I got outvoted, and Steve did, too.  But I still say we're right.


*Inexplicably, despite all the questions Steve was so careful to ask, he did not come to the Commission meeting last night where answers were available.  That was another opportunity to "talk about this."  Since he clearly did not want the answers, it is unclear what he meant by posing the questions.

**I had prepared to request that if we were to borrow any money, we at least take part of the amount from the reserves.  A number of our neighbors, in their public comments, spoke persuasively about what they considered the inadvisability of taking anything from the reserves, and they urged relying entirely on a loan instead.  They convinced me, and I agreed to support borrowing.