Special to South Florida Times
The Miami Gardens City Council voted to hedge its fiscal bets by approving a plan for a $5 million standby loan in case a hole appears in the city’s new budget.
Approval of a measure authorizing the Tax Anticipation Note or TAN, as the debt obligation is called, came over the objections of two council members.
City Manager Danny O. Crew presented a resolution for the council to approve the TAN to help the city keep the general fund in the black during its meeting on Oct. 27.
The city will have to repay the short-term debt obligation by the end of January 2011, once funds from property taxes are received.
Since the city does not have a utilities department, some months the revenue collected doesn’t cover the monthly expenses, including payroll, Crew said.
Shortfalls during October, November and December are not uncommon, Crew said, but added, “Normally, we haven’t had to do that because we’ve always had plenty of money in the reserve.”
Another reason for a projected shortfall, he said was that the city had yet to receive more than $6 million in grant money. The way grants work, the city has to pay for a project up front and then send in a request to be reimbursed.
The city is waiting for $3.6 million in various grants from Miami-Dade County and $1.6 million from the Community Development Block Grant which provides funding for the community for a variety of needs.
With the TAN, the city can borrow up to $5 million to cover various expenses, including payroll for November, December and January. The interest on any money used would be 1.76 percent.
However, if some or all of the grants are reimbursed in a timely manner, the city will not have to draw on the TAN and will pay only 0.4 percent in interest.
On average the city receives about $19 million in December from property taxes.
Councilman Andre Williams interpreted the TAN request as a budget shortfall and decided to vote no on the measure.
“My job is to make sure that we go through a thorough budget process so that we don’t have trouble like this,” Williams said.
But Vice Mayor Aaron Campbell said that regardless of any hole in the current budget, city operations have to continue.
“We don’t know when Dade County is going to send us our grant money. You don’t know if people are going to pay us on time,” Campbell said. “You still have to pay our employees and, in order to do that, we have to borrow money.”
Councilwoman Sharon Pritchett said the city should have planned ahead for the financially tight months.
“If we know those cash flows are going to be a negative balance, is there nothing we can do to plan better?” Pritchett said.
In the end, the council approved the resolution 4-2, with Pritchett and Williams casting no votes.
Also at the meeting, the council consented to receive the Paul Coverdell Forensic Science Grant, for $98,316, to purchase an automatic fingerprint identification station for the Miami Gardens Police Department.
“It will significantly enhance our ability to identify criminals,” said Paul Miller, deputy chief of police. “Similar to what you see on CSI, but a lot less glamorous job.”