The Stierheim Report

An old pro is recruited to undertake a very disagreeable mission: Dig into the stinking mess at Miami City Hall. Here's what he found.

Do you have a preference?
Personally? I think the manager form of government is the best form of government in America. Now, that is a generic statement. Is it the best form of government for a large, complex, diverse metropolitan area? I'm thinking: No. Metropolitan government will be better served by a strong mayor, in New York, Chicago, Los Angeles, San Francisco, Atlanta -- all large, diverse cities. But other cities all over the United States are very effectively managed by a mayor-council-manager form of government. Miami is no exception, in my judgment. And so I guess my preference would be to maintain the form of government Miami has -- only get a professional, well-trained, competent manager to serve the commission. Someone with strength. Someone who doesn't draw a line in the sand on every single issue, but knows when to say no.

When you arrived at city hall on September 13, a gathering of Cubans in the parking lot protested that the Justice Department charges against Odio were an orchestrated attack on Cuban leadership. Since you have so thoroughly criticized the management of the city, your name has been thrown in as part of the conspiracy. How do you respond to those charges?

[Laughs] Well, that's ridiculous. I'm not part of any conspiracy. I mean, I didn't ask for this; I was recruited. And it didn't take but 24, 48 hours to find out that this city was in serious trouble. I am not aligned with anyone, any organization, or any faction. I am not aligned with Anglos any more than I am Hispanics or blacks. I have served this community in a variety of ways. In fact, I love the diversity of this community! Anyone who knows me either by reputation or personally knows how ridiculous such a charge is.

Why did you come back?
It wasn't an easy decision. I spoke with my chairman, Richard Fain, CEO of Royal Caribbean, and other members of the executive committee. It wasn't an easy decision for them because clearly I have a job and a new profession that I am really enjoying: promoting the city for the visitor industry. On the other hand, this is the core city. When you say Dade County, it means Miami. And when the core city is in trouble, and the mayor of that city reaches out and says, "I need help," it is very difficult -- or I think it would be almost irresponsible -- to say no. That's the way chairman Fain felt, and that's the way I felt.

I am not interested in the job on a permanent basis, okay? There has been speculation on that. I want to make that very clear. So we said, Let's put a time certain [on the job]. Chairman Fain and I also felt that I should not go over if it isn't a unanimous vote. The third condition was that the mayor and the Miami commission immediately start a search for a professional, permanent manager. All of those conditions were acceptable to Mayor Carollo and the commission, and here I am -- for better or worse, and I hope it is better.

You noticed problems within 24 or 48 hours. You have stated before that the budget-review process normally takes between four and five months. How could you identify the problem so quickly?

I was sworn in on Friday afternoon. From Saturday morning there started a procession of people to my house that didn't end until 11:30 Sunday night. The people that I knew or that I had confidence in were willing to come and sit down and talk about the city. In between, for bedtime reading beginning Friday night, I read the budget from cover to cover. And I read the city's '94-'95 annual financial statement, which was the last one.

What triggered it for me was the $72 million pension bond issue. It is very simple. Anyone could do it -- it's not rocket science. The city sold a $72 million bond in December of 1995 after the books closed for the '94-'95 fiscal year. Those books close on September 30th. From the proceeds of that pension bond issue they took approximately $25 million and moved it back into the '94-'95 fiscal year to replace money that had come out of the general fund to meet the normal pension contributions to the two pension plans.

So they were taking the proceeds and moving them back into a prior year to help balance the books in '94-'95! Then they took $45 million in '95-'96 -- the year that just ended on September 30th -- to meet the operating pension payments required by the actuaries and so forth for that year. Okay? Now the proceeds from the sale of the bonds are largely gone. There was only like three million dollars left, and they took another ten million to cover the early retirements and the incentives when the city had its downsizing. Question: Where's the $35 million to pay for the current fiscal year? The answer: It ain't there. Well, if you couldn't pay for it in the two previous years, how are you going to pay for it this year unless there were some huge reductions in the budget or they found some money some place? I went through all the budget and I couldn't find it.

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