HomeMy Public PortalAbout22-9945 - One Million loan from the General FundSponsored By: City Manager
RESOLUTION NO. 22-9945
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF OPA-
LOCKA, FLORIDA, AUTHORIZING THE CITY MANAGER TO
INITIATE A LOAN OF $1,000,000 FROM THE GENERAL FUND TO
THE WATER AND SEWER FUND; PROVIDING FOR
INCORPORATION OF RECITALS; PROVIDING FOR AN EFFECTIVE
DATE
WHEREAS, the City of Opa-Locka is the Defendant in Case No. 2017 -008285 -CA -01,
George Suarez, et al. v. City of Opa-Locka, Florida, a class action suit in regard to prior water
billing disputes; and
WHEREAS, a tentative Settlement Agreement and General Release, dated September
30, 2021, attached hereto as Exhibit "A", has been entered into between the Plaintiffs and
the City of Opa-Locka; and
WHEREAS, within the 30 days of the Court's order approving this Agreement
becoming final, the City will need to pay $1 million from its Water and Sewer Fund to a
Cash Settlement Account and provide the availability of a credit of $2 million to be
applied towards the accounts receivable balances on City water accounts of class
members for charges incurred during the period from April 1, 2012 through December
31, 2019 for valid claims; and
WHEREAS, the financial condition of the City's Water and Sewer Fund is such that a
$1 million payment from this Fund at this time would impair this Fund's ability to fund
its operational requirements; and
WHEREAS, the City of Opa-Locka's General Fund is in excellent financial condition
with an available fund balance and no compelling requirement that these surplus funds
be spent at this time; and
WHEREAS, the City of Opa-Locka Code of Ordinances, Section 2-651 (3) permits
interfund borrowing for lawful purposes predicated on the Finance Director
determination that these funds will not be needed during the borrowing period and that
the funds for repayment will be available by the end of the second fiscal year after the
borrowing has occurred; and
WHEREAS, the City's Acting Finance Director has determined that $1 million of
General Fund available fund balance will not be required before September 30, 2023 and
that funds will be available to repay this loan by September 30, 2023 based on the
following conditions:
Resolution No. 22-9945
(1) Repayment and funding of the loan repayment from the Water and Sewer Fund to
the General Fund is through the budget;
(2) The City Commission to approve restructured debt payments for the Water &
Sewer Fund;
(3) The City Commission, City Manager and Public Utilities Director reduce operating
and capital expenditures and cost to satisfy repayment; and
WHEREAS, the payment terms are such that the Water and Sewer Fund will repay
the full $1 million by September 30, 2023. This is a non -interest bearing loan.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE CITY COMMISSION OF
THE CITY OF OPA- LOCKA, FLORIDA:
SECTION 1. The recitals to the preamble herein are incorporated by reference.
SECTION 2. AUTHORIZATION
The City Commission of the City of Opa-Locka, Florida hereby authorizes the City
Manager to initiate a $1,000,000 loan from the City's General Fund to the City's Water
and Sewer Fund to be repaid by September 30, 2023 with an annual interest rate of 0% to
be used to pay into a Cash Settlement Account in conjunction with the settlement of Class
Action Case No. 2017 -008285 -CA -01, George Suarez, et al. v. City of Opa-Locka, Florida and
further directs the City Manager to take the necessary action to ensure repayment of this
loan by September 30, 2023.
SECTION 3. SCRIVENER'S ERRORS
Sections of this Resolution may be renumbered or re -lettered and corrections of
typographical errors, which do not affect the intent of this Resolution may be authorized
by the City Manager, following review by the City Attorney, without need of public
hearing, by filing a corrected copy of same with the City Clerk.
SECTION 4. EFFECTIVE DATE
This Resolution shall take effect upon the adoption and is subject to the approval of the
Governor or Governor's Designee.
PASSED and ADOPTED this 12th day of January, 2022
ronica J. William Mayor
2
Resolution No. 22-9945
ATTEST:
('- S.
Joa .a Flores, City Clerk
u
SGC
APPROVED AS TO FORM AND
LEGAL SU,FFFICIENCY:
i
Burnadtte Norris -Weeks, P.A.
Moved by: Commissioner Davis
Seconded by: Vice Mayor Taylor
VOTE: 5-0
Commissioner Bass: YES
Commissioner Davis: YES
Commissioner Dominguez: YES
Vice -Mayor Taylor: YES
Mayor Williams: YES
3
City of Opa-locka
Agenda Cover Memo
Department
Director:
Bob Anathan
Department
Director Signature:
''
City
Manager:
John E. Pate
CM Signature:
Commission
Meeting
Date:
Jan 12, 2022
Item Type:
(EnterX in box)
Resolution
0 i nce
Other
X
Fiscal
Impact:
(EnterX in box)
N/A
Yes
No
Ordinance Reading:
(EnterX in box)
list Reading
tad Reading
X
Public Hearing:
(Enter X in box)
Yes
No
Yes
No
Funding
Source:
Account# :
(Enter Fund &
Dept)
Ex:
See Financial
Impact
Section
Advertising Requirement:
(EnterX in box)
Yes
No
Contract/P.O.
Required:
(Enter X in box)
Yes
No
RFP/RFQ/Bid#:
X
Strategic
Plan Related
(Enter X in box)
Yes
No
Strategic Plan Priority
Enhance Organizational
Bus. & Economic Dev
Public Safety
Quality of Education
Qual. Of Life & City Image
Communication
Area:
III
Strategic Plan Obj./Strategy:
(list the spe�flc objective/strategy this
item will address)
X
•
MI
•
•
0
Sponsor
Name
City Manager
Department:
City Manager
short Title:
General Fund Loan To Water And Sewer Fund In Conjunction With
Settlement Of Utility Billing Legal Case
Staff Summary:
Issue / Recommendation: As part of the settlement of the utility billing legal case, the City has agreed to
make a cash $1,000,000 payment as soon the Court order becomes final. Staff recommends that the City
Commission authorize the City Manager to initiate a $1.0 million loan from the General Fund to the Water and
Sewer Fund to enable this payment to be made by the Water and Sewer Fund, and to take the necessary actions
to ensure repayment of this loan by September 30, 2023.
History: Due to alleged problems of utility bill accuracy in the past, in 2017 the City became a defendant in a
class action suit, Case No. 2017 -008285 -CA -01, George Suarez, et al. v. City of Opa-locka, Florida, where the
plaintiffs alleged that the City failed to provide accurate water billing to its utility customers, causing them to
suffer an economic loss as a result of the billings. This was ongoing case until tentative resolution was reached
on September 30, 2021
Current Activity: The City has been engaged in a Water Utility Class Action case whereby the Plaintiffs pled
damages of $20,000,000. After years of litigation, including two appeals to the Third District Court of Appeal
and the two attempts by the Plaintiffs to obtain Florida Supreme Court jurisdiction, the parties reached a
mediated settlement in advance of the trial, which was scheduled to begin on October 25, 2021. On
September 30, 2021, the parties signed a Settlement and Release Agreement, which has been approved by
the Opa-Locka City Commission and the Florida Oversight Board. Under the Settlement Agreement, the
Plaintiffs have agreed to dismiss the Water Utility Litigation and the City has agreed to fund a $1Million cash
fund to pay valid claims and to provide for up to $2Million in accounts receivable credits for valid claims of
class members who have an accounts receivable balance on their water utility accounts with the City. (The
class members are not entitled to a credit against balances on County administered accounts).
The Water and Sewer Fund is currently operating at a loss due to the heavy debt service burden (principal and
interest) on the Fund. Approximately $0.8 million of the FY 22 debt service is attributable to loans the City
previously received from the State Revolving Fund to invest in infrastructure. Another $1.6 million is
attributable to Miami -Dade Water and Sewer Department debt related to previously unpaid goods and
services and additionally for the recent installation of an entirely new meter system on behalf of the City. Staff
is working with these agencies to stretch out this debt service to provide the Water and Sewer Fund with
sufficient current liquidity to meet its operational requirements while adhering to the terms of the settlement.
Conversely, the General Fund is in excellent financial condition with a very strong available fund balance
(reserves). Section 2-651 (3) of the City's Code of Ordinances permits interfund borrowing for lawful purposes
predicated on the Finance Director determination that these funds won't be needed during the
borrowing period and that the funds for repayment will be available by the end of the second
fiscal year after the borrowing has occurred.
The City's Acting Finance Director has determined that $1 million of General Fund available fund balance won't
be required before September 30, 2023 and that funds will be available to repay this loan by September 30,
2023 based on the following conditions:
(1) Repayment and funding of the loan repayment from the Water and Sewer Fund to the General Fund is
through the budget.
(2) The City Commission is to approve restructured debt payments for the Water & Sewer Fund once a plan
has been finalized with the County and the State.
(3) The City Commission, City Manager and Public Utilities Director reduce operating and capital expenditures
and cost within the Water and Sewer Fund to satisfy repayment.
Financial Impact;
This interfund loan will allow the Water and Sewer Fund to fulfill the cash payment portion of the settlement.
The rescheduling of the City's Water and Sewer Fund debt service will allow repayment of this borrowing
within the prescribed period while providing the Fund with sufficient liquidity to meet its operating
requirements.
Staff recommends that the City Commission direct the City Manager to initiate the appropriate action to permit
the Water and Sewer Fund to borrow $1,000,000 for the General Fund, subject to repayment by September
30, 2023 and further direct the City Manager to take the necessary actions to ensure repayment of this loan by
September 30, 2023.
Attachment:
1. Resolution