BRADENTON, Fla. – Florida Gov. Rick Scott has declared the small city of Opa-locka to be in a financial emergency, for the second time in its history.
Scott issued an executive order late Wednesday saying that the state will take over the city's finances, which have been declining for several years, according to state and local documents.
From this point, the governor's approval will be required for the city to enact its budgets.
A financial emergency oversight board will be appointed to essentially govern the city, and make all financial decisions.
Scott did not say when he would appoint the board members.
The governor's order said that City Commissioners met in a special meeting Wednesday and requested the state's help.
Opa-locka, a suburb in Miami-Dade County with 16,000 residents, also cannot issue any bonds or take out any other kind of long-term debt without Scott's approval.
The governor's written authorization is also necessary in order for the city to file for bankruptcy.
The city had total long-term debt outstanding of $11.6 million, including $6.56 million of revenue bonds and state loans, according to the fiscal 2014 audit, the latest available.
The bonds were placed with a financial institution in 2011, city documents indicate. Most of the proceeds were used to refund bonds issued in 1994.
Documents obtained by The Bond Buyer indicate that reserves set aside for bonds may have been diverted for other purposes, and bond covenants may have been violated.
State and city officials did not respond to requests for comments.
In addition to Florida's financial intervention, the FBI has an ongoing corruption probe into the activities of several city commissioners.
On May 25, City Commissioner Terence Pinder died in a single-car wreck a day before he had agreed to surrender on bribery charges.
Authorities believe Pinder, 43, committed suicide.
Opa-locka's finances have been in turmoil for several years, partly because of declining tax values and overspending, according to state and local audits.
Miami-Dade County began pursuing the city for back payments for water and sewer services, and found that the city used tax revenues collected for transportation projects to pay operating costs.
A financial assessment conducted by Miami-Dade County Auditor Cathy Jackson found that as the city's fiscal crisis worsened there were numerous irregularities with the city's use of restricted funds.
"Debt service reserves, general contingency funds, and other restricted monies were used in violation of Interlocal Agreements, Debt Covenants, City Ordinances, and other Trust Agreements," Jackson said in a March 8 memorandum outlining her office's findings in the financial assessment.
"We are concerned the city is in violation of these legal and fiduciary agreements, and is unable to replenish reserves without third-party assistance," Jackson wrote.
Opa-locka was also placed under a state emergency in 2002, and emerged about three years later.
The city wasn't the first to be placed under the state's supervision.
In 1996, then-Gov. Lawton Chiles issued the state's very first financial emergency declaration for the city of Miami, which is 12 miles south of Opa-locka.