BRADENTON, Fla. - A south Florida city in a state of financial emergency is under investigation by the Securities and Exchange Commission, according to the Miami Herald.
Opa-locka received a letter from the SEC requesting documents and emails relating to bonds that were issued for the May 2015 purchase an $8 million building, the paper reported Tuesday. The SEC may be examining whether the city properly disclosed its declining financial situation to bondholders, the paper said.
The Herald reported that the city attorney denied the paper a copy of the letter, while confirming the inquiry. The SEC declined comment to The Bond Buyer, and city attorney Vincent T. Brown couldn't be reached.
The SEC probe wasn't mentioned Thursday during the first meeting of a panel appointed by the governor to take charge of Opa-locka's books.
"We have an important job here to do," chairman Melinda Miguel, who is chief inspector general for Gov. Rick Scott, said at the webcast meeting.
Scott declared Opa-locka to be in a financial emergency on June 1, for the second time in its history.
Acting manager Yvette Harrell, giving the financial emergency board an overview of the city's finances, described the city's situation as "dire."
Recently discovered information showed that the city failed to budget a "$1.7 million prior debt obligation required to keep the city moving," Harrell said, presenting no other details.
Harrell also said the city failed to budget extra money for staff it hired, that the city continued to budget and spend revenues it would not receive even though property values declined, and that the cash-flow deficit has fluctuated wildly, from $1.42 million to $4.5 million to $1.89 million in a matter of weeks.
Opa-locka needs help "to figure out where we are," she told the board, adding that officials are working to correct and address issues, such as ramping up efforts to collect past-due bills.
Opa-locka is in Miami-Dade County, which is generally experiencing a booming economy and rapidly rising property values.
Harrell said the city, for unknown reasons, has seen a consistent decrease in property values by as much as 60%, and staff has learned that some of the 100% property tax exemptions granted by the county tax collector were incorrect.
Harrell concluded her statement by urging financial emergency board members to contact her for any information they needed, as opposed to relying on "outside sources" such as the media.
Miguel, who appointed committees to examine different aspects of the city's budgets and contracts, said a lot of work needs to be done before the board submits a financial plan to the governor Aug. 1.
The city has not begun work on its 2015 audit, and questions were raised during the financial board meeting about the need to hire a new, independent auditor.
Opa-locka had total long-term debt outstanding of $11.6 million, including $6.56 million of revenue bonds placed with a financial institution and state loans, according to the fiscal 2014 audit.
Details about the bond proceeds that were used to buy a building in May 2015 weren't immediately available, and the bonds do not appear under the city's name on the Municipal Securities Rulemaking Board's EMMA filing system.
A financial assessment conducted by Miami-Dade County Auditor Cathy Jackson earlier this year found that as the city's fiscal crisis worsened, there were numerous irregularities with the city's use of restricted funds, including debt service reserves.
The Miami Herald on Tuesday said that as recently as last week the city dipped into bond reserves to cover payroll expenses.
The city manager didn't mention that to the financial emergency board.
