October 23, 2014

Finances: Readjustment- Southeast- Dec. 2003

Pat Dunnigan | 12/1/2003
The weather outside may be beautiful this time of the year, but the financial forecast in Fort Lauderdale is mostly cloudy. Expenses are out of control, reserves are depleted and commissioners have to replace the city manager they forced out in September -- and convince the bond market that their credit is just as good as ever.

Moody's Investors Service notified the city in September that it had been placed on a "watch list" with an outlook of "negative," meaning a better than 50% chance that the city's rating will drop from Aa2 for general obligation bonds. A lower rating means it will cost the city more to borrow money, though a rating one notch down is still considered high quality.

Moody's is most concerned over the city's general reserves, which have dwindled in recent years to about $3.5 million, or about 1% of the total budget.

"We expect that the situation is not going to be correctable in one year," says John Incorvaia, a senior vice president with Moody's southeast division.

Finance director Terry Sharp says the city's financial situation is not much different from what many other Florida cities face following the downturn in tourist revenue.

The city has also been hit hard by losses to its pension funds, Sharp says, doubling the cost of its contribution to police and fire department employees' pensions and increasing the contribution costs for general employee pensions by more than a third.

But the biggest problem, says Mayor Jim Naugle, is a budget that has swelled out of proportion to city needs and revenue. He blames former City Manager Floyd Johnson and past commission members. "Every time there was a budget problem, they piled on more expense," he says.

Revenue, Naugle says, is extremely healthy, including the state's highest per capita property tax values for cities over 100,000. Another $2 billion in taxable value will come onto the rolls in the next two years from downtown projects.

Among the expenses Naugle says are "out of whack" are labor costs that have the city paying average wage and benefits packages of $71,000 and some of the highest police and firefighter salaries in the state. In addition, Naugle says, the number of city employees grew by 20% while the number of residents grew by only 10%.

To bring costs back in line, the city's recently adopted $377-million budget assumes some serious shrinkage, including across-the-board wage concessions of about 2.5%. Layoffs are also possible, along with outsourcing some city services.

"In the long run, I think it will be judged as a course correction that was very much needed," Naugle says. "This will be viewed as a period of time in the city where we got back on track."

IN THE NEWS

BOCA RATON -- The Tolly Group, which conducts independent testing of information technology products, has moved its headquarters from Manasquan, N.J., to Florida Atlantic University's research park.

DAVIE -- The U.S. Geological Survey will open offices at Nova Southeastern University as part of an agreement that may include a collaboration with Florida Atlantic University and the University of Florida to conduct research and environmental restoration.

DELRAY BEACH -- The Washington, D.C.-based International Downtown Association has awarded the Delray Beach community redevelopment agency a Downtown Achievement Award for its master plan.

FORT LAUDERDALE -- Supervisor of Elections Miriam Oliphant has asked Attorney General Charlie Crist to look into the county's purchase of touch-screen voting machines last year. Oliphant is seeking an inquiry into the lobbying fees paid by the company that won the $17.2-million purchase contract. Oliphant's critics say the move is an effort to divert attention from problems in her office. She has been under pressure from the state to improve her office.

HOLLYWOOD -- The Hollywood Fashion Center, vacant for 10 years, has reopened as Hollywood's City Place, a nearly 1-million-sq.-ft. discount shopping center. Plans call for an entertainment area, including an ice rink, carousel and bumper cars and an expansion from 700 stores and booths to 2,000.

Avianca Airlines has announced plans to begin offering daily flights between Fort Lauderdale-Hollywood International Airport and Bogota, Colombia.

The U.S. Department of Justice has begun an inquiry into the long-running dispute between the city and a Lubavitch synagogue operating in a residential neighborhood. City officials responding to neighborhood noise and parking complaints have ordered the synagogue to stop operating. Synagogue officials have sued to stay.

PALM BEACH -- A Forbes magazine survey of the country's most expensive homes for sale found three of the top 10 in Palm Beach, led by the Maison de l'Amitie, owned by entrepreneur Abe Gosman and priced at $48 million. The 43,000-sq.-ft. oceanfront house was ranked fifth.

PALM BEACH COUNTY -- County business development officials are hoping to lure a new headquarters for Belgium-based express delivery company DHL, which is scouting south Florida for locations. The company's relocation is expected to create 600 jobs.

The county transportation board has agreed to contribute $24 million of the approximately $160 million needed to expand the Tri-Rail commuter train service to Jupiter.

As the sugar harvest got under way in mid-October, U.S. Department of Agriculture officials were projecting a record 2,135-ton harvest when the season ends next spring. Sugar producers say warm, wet weather that extended into fall produced an excellent growing season.

SOUTH FLORIDA -- Two south Florida companies, Rent Rite and Cross Match Technologies, are among Inc. magazine's top 10 fastest-growing companies. Rent Rite, a retailer based in Boca Raton, is ranked No. 4, with a five-year sales growth of 12,359%. Cross Match, a biometrics security company based in Palm Beach Gardens, is ranked No. 5, with an 11,517% growth rate.

SUNRISE -- Netherlands-based mortgage lender ABN Amro plans to add 500 employees to its Sunrise office to handle increased demand as the result of a new program that provides guaranteed closing cost estimates. The new hires would double the size of the current staff. The company has contracted for 100,000 square feet of office space in the Sawgrass Pointe building.

STUART -- Fort Lauderdale-based Flanigan's Enterprises plans to open an 18th Flanigan's Seafood Bar and Grill outlet on U.S. 1 at the beginning of the year.

WEST PAM BEACH -- Chris Curbello, former vice president of Paragon Golf Construction, a subsidiary of Golden Bear Golf Inc., has been sentenced to 3 1/2 years in federal prison for securities fraud. Curbello and Paragon President John Boyd are accused of misleading investors about the revenues and costs of golf construction projects.

The Florida Department of Juvenile Justice has sent in three state employees and is closely monitoring the privately run prison Florida Institute for Girls following two cases in which inmates' arms were broken while under restraint. In late October a state grand jury was still investigating complaints of sexual misbehavior between staff and inmates at the prison, which is run by Premier Behavioral Solutions, according to department spokeswoman Catherine Arnold.

Economic Development
PAVING THE WAY FOR SCRIPPS

PALM BEACH COUNTY -- County officials have agreed to buy a 1,920-acre orange grove for $57.6 million -- with a 100-acre parcel slated for a branch of the California-based biomedical concern Scripps Research Institute. The county has offered the company $200 million to pay for the construction of a research facility. State and county officials believe the deal could be a catalyst for luring other biotech companies to Florida.


FLORIDA TRENDLINE?AGRICULTURE
Grove PricesThe value of Florida's citrus land declined for the second consecutive year in 2002 while all other agricultural land continued to increase, according to a University of Florida study. The drop is attributed to a decrease in prices that growers received for their fruit and the threat of diseases such as canker.CITRUS LAND VALUE - SOUTH VS. CENTRALSouth FloridaCentral FloridaGroves% dropValue/acre% dropValue/acreOranges-11.2%$5,687-11.4%$5,437Grapefruits-15.6%$3,658-14.8%$3,614Source: University of Florida


Tags: Southeast

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