By Michael E. Miller
By Allie Conti
By Keegan Hamilton and Francisco Alvarado
By Jake Rossen
By Allie Conti
By Kyle Swenson
By Chris Joseph
By Michael E. Miller
That's what you, as an average Fort Lauderdale resident, paid in property taxes in 2003. You shelled out $116 more than residents of Miami and Jacksonville, $187 more than citizens of Tampa and Orlando, and $321 more than inhabitants of St. Petersburg. And that was before city commissioners slammed you with a 24 percent tax hike in September 2004.
You, dear Fort Lauderdalian, live in the most heavily taxed big city in Florida. And, too bad, you also happen to dwell in the most debt-ridden burg in the Sunshine State. At its financial nadir 18 months ago, Fort Lauderdale was in the hole $21 million. Never mind that new condominium towers were rising like mushrooms after a spring rain, that developers had little trouble selling one-bedroom places for $300,000, and that the once-neglected downtown was suddenly the most desirable real estate in Broward County.
Your city is broke, sucker.
And, despite the building boom, things aren't likely to improve anytime soon.
So go ahead. Spread the blame around.
There's former City Manager Floyd T. Johnson, who left in September 2003 after virtually ignoring rising deficits for years. Then there's former Finance Director Terry Sharp, who departed in summer 2004. When everyone realized the city was swimming in debt, Sharp simply replied, "Oops!" Then there are the politicos. Mayor Jim Naugle and political rival Tim Smith battled and bickered as the city's budget problem turned into a catastrophe.
All the while, incompetence flourished in America's Venice. Lax oversight allowed discrimination cases to cost the city $2 million in jury verdicts in two years. Excessive pension plans and high salaries sapped 75 percent of the city's revenue. An overgenerous health insurance program for municipal workers covered even Viagra prescriptions.
City commissioners have pointed fingers. They've grandstanded. Heads have rolled. Changes have been promised.
And still, three city managers later, Fort Lauderdale continues to spill red ink. Today, it's $13.4 million in debt. Assuming services are cut back to a minimum and you keep paying the highest taxes in Florida, this watery way station should be out of the red in three years, maybe more. That's also assuming the city's newest, relatively inexperienced city manager, George Gretsas, doesn't screw up anything further.
Outraged? You should be.
Right or wrong, stories about Fort Lauderdale's budget crisis seem to begin with Floyd Johnson, a former city manager and Marine Corps captain who had a reputation for establishing rapport with his underlings the way a general builds trust with his troops. A native of Richmond, Virginia, Johnson came to Broward in 1976 as an assistant county administrator after serving as a special assistant to the mayor of Jacksonville. In 1982, Johnson made history when the commission appointed him the first African-American county administrator. Back then, Broward was still considered the sticks -- a predominantly white county of roughly 1 million people.
For four and a half years, Johnson earned $88,200 as the county's top public official. He oversaw roughly $1.2 billion in capital improvements and the expansion of the county workforce from 1,210 to 7,706. Those accomplishments earned him the nickname "Magic Johnson."
But even in the '80s, problems hinted at Johnson's inability to manage the public's money. The new main library on Andrews Avenue cost taxpayers $42 million, twice what the manager had estimated. The $47 million county jail opened late and over budget. Property taxes rose 7.8 percent from 1982 to 1987.
None of those blunders cost Johnson his job. But then in late 1987, Johnson resigned after the County Commission censured his aviation director, Tim Campbell, for not getting commission approval before bringing a runway-expansion plan for Fort Lauderdale Hollywood International Airport to the Federal Aviation Administration. "The issue of loyalty is a real one with me," he told the Sun-Sentinel at the time.
Johnson, who declined to be interviewed for this story, then took a job as Broward County's top social services administrator before becoming city manager of Richmond, California, a San Francisco suburb, in 1994. Only three years later, the commission in Richmond asked for Johnson's resignation after he consistently failed to respond to their directions. "He didn't leave us in financial ruin," council member Richard L. Griffin says, "but he left under questionable circumstances."
That didn't prevent Fort Lauderdale from bringing Johnson back to Broward. In 1998, soon after the commission hired him for its top administrative job, the city went on a spending spree. Parks were created, buildings refurbished, services expanded.
"Johnson didn't balance his checkbook," Mayor Naugle says. "He was asleep at the switch." But that's an oversimplification -- or a way to duck blame for the 14-year mayor. The spending problem predated Johnson. During the four years prior to the manager's arrival in Fort Lauderdale, the city spent $65 million more than it received in revenue. In a memo dated July 14, 2000, Johnson told the commissioners that burgeoning financial problems needed attention. We need to be "more foresighted and strategic in our financial planning," Johnson warned.
What Johnson didn't say explicitly -- and what could be deduced only by poring through annual financial statements -- was that the city had overspent by so much for so many years that its reserves were nearly depleted.
From 1994 to 2003, a time of economic expansion in South Florida, Fort Lauderdale brought in roughly $1.5 billion in tax revenue. It spent about $1.6 billion.
By 2003, arguably the most critical year in Fort Lauderdale's budget crisis, the city's health program was $8.7 million in debt and climbing. Instead of using a health provider such as Travelers or United Healthcare, the city runs and finances its own program.
Fort Lauderdale needed desperately to increase revenues to match expenses. For three years, staff had explained to the commission that the city was digging a deeper and deeper hole. Inexplicably, though, Johnson and Sharp never lobbied the commission for tax increases.
The commission didn't have the guts to do it either. By 2003, a tax hike became politically impossible. In September 2002, Commissioner Tim Smith had challenged Naugle for mayor. And though the commission approved a minuscule tax increase on rental and commercial properties, it was only window dressing. "For political reasons, neither of the candidates wanted to be seen as having raised taxes," recalls Vice Mayor Dean J. Trantalis, who that same year won Smith's old commission seat.
In July 2003, then-Finance Director Terry Sharp told the commission that Fort Lauderdale had a $5.4 million deficit in the general fund in addition to a debt-ridden health program. Fort Lauderdale faced about a $14 million total deficit. One month later, an independent audit by Ernst & Young found the city's financial condition "deteriorating." Moody's Investors Service notified officials in August that it had put Fort Lauderdale on a watch list for a potential downgrade of its credit rating, which would make it more expensive for the city to borrow money.
On September 16, 2003, the City Commission voted 3-2 to request Johnson's resignation. A $308,875 severance package that included one year's salary plus vacation time and benefits was an ironic bonus for a man who had done so poorly.
Now executive director of the Riviera Beach Community Redevelopment Agency, Johnson refuses to discuss his tenure in Broward's largest city. "I'm still a resident of Fort Lauderdale," he says, "and as such, I wish the very best for the city as it moves forward."
Smith, now out of office, says he wouldn't have agreed to fire Johnson. "The commission made him a scapegoat," Smith says.
Adds Leola McCoy, a civic activist and City Hall watchdog: "The City Commission knew the books were a mess for a long time. But they didn't want to do anything about it, so they pretended not to know."
Alan Silva wears thick eyeglasses that he constantly adjusts. When he looks straight ahead, he props them up on the bridge of his nose and looks out over a thick mustache. When he reads, he angles the glasses down toward his nostrils, creating a small window through which he can read blurry letters and words on a page. And when he talks, he makes no effort to disguise the elongated A that comes from growing up in Massachusetts.
Silva sits at a booth at TGI Friday's in North Fort Lauderdale on a March afternoon. To his right rest a legal pad, the city's most recent budget, and an audit report. "When I arrived at City Hall," Silva recalls, "I told everyone, 'Guys, I'm a liberal Democrat from Massachusetts. I'm also a fiscally conservative Democrat. You will have no better friend in City Hall than me. '"
If the city escapes the present financial dilemma -- and that's still a big if -- much of the credit should go to Silva, who was the first person to discuss Fort Lauderdale's budget problems in language everyone could understand. A 54-year-old, openly gay intellectual with a master's degree from Harvard and a former city administrator in Fall River, Massachusetts, Silva was for five years a director of the U.S. Agency for International Development, an organization that provides economic and humanitarian assistance worldwide. Until 1996, Silva, who speaks six languages fluently, oversaw all humanitarian relief and social programs in the former Soviet bloc.
In 1997, after retiring from federal employment, he and his partner, fellow federal government retiree Ed Barranco, moved to Fort Lauderdale and purchased a $171,000 house in Imperial Point that has since tripled in value.
"We were looking for a gay-friendly place with warm temperatures," Silva recalls. "It was either Fort Lauderdale or California, and I hate earthquakes."
In March 2003, at the request of newly elected Commissioner Christine Teel, Silva analyzed the city's books. That's when he realized how disastrous the finances were. The budget that year was $2.6 million short, he remembers. Johnson's staff made the books balance by including an asterisk that noted the city would negotiate furloughs and pay reductions with the unions to make up the difference. But the city had already negotiated its union contracts. The savings implied by the asterisk were highly unlikely. Johnson had cooked the books.
"I harkened back to the days of David Stockman," Silva says, referring to President Ronald Reagan's former budget director who used similarly deceptive accounting practices as the nation's deficit ballooned.
In the months preceding Johnson's termination, Silva began to submit memos to Teel describing the city's finances as "fiscally irresponsible." Teel then passed on the memos to the rest of the commission.
"I was the only one saying, 'The emperor has no clothes,'" Silva recalls. "At the time, Fort Lauderdale was at the height of fiscal mismanagement."
On October 7, 2003, Teel nominated Silva as interim city manager -- with a bizarre twist. After having to shell out a ridiculously expensive severance package to remove Johnson from the city payroll, commissioners needed to find someone cheap. The commission unanimously approved Silva when he agreed not only to do the job for nothing but to forsake the $1,000-per-month expense account the commission offered. "It was time to give back to the community," he says. "After working in humanitarian aid for so long, public service comes naturally."
Silva knew he would have to make cutbacks and layoffs, but to fully understand what was going wrong and where, he offered department heads immunity from being fired. Assuming they hadn't done anything illegal, Silva said he would protect their jobs. "A lot of people said, 'Who allowed this? Get rid of the finance people! Get rid of this person! Get rid of that one! They should have told us!'" Silva remembers. "I told these people to come clean, that I needed to know everything. After doing that, I couldn't say, 'OK, because you told me everything, I'm going to get rid of you.' If they were straight with me, I was straight with them. This was a new day."
Silva discovered that the situation was even worse than initially reported. He expected a roughly $14 million deficit. In reality, Fort Lauderdale was in the hole $21 million. Uncapped overtime expenses were costing the city $8 million per year. Departments were inefficient. The pension plan -- whose benefits the City Commission had agreed to increase substantially only two years earlier -- was out of hand.
"We had to go cold turkey," Silva says. "I couldn't have cared less about how popular or unpopular I was, so I decided to hit everyone between the eyes with all these facts that showed we weren't fiscally sound."
The interim manager put Fort Lauderdale on a strict diet. Overtime was slashed. Employees would not get raises. Hundreds of unfilled positions stayed empty, since salary, health care, and pensions accounted for 75 percent of the city's $215 million annual budget. Services were reduced as a result.
Silva proposed eliminating 14 jobs, including guard positions at the recently shuttered jail. But terminating city employees wasn't easy. A seniority provision in the labor union's collective bargaining agreement made layoffs excruciating. Effectively, the last person hired would have to be the first to go.
"The unions had created a system that caused layoffs to be so painful that you would never think of laying off anyone," Silva says. He remembers how the walls in a large conference room in City Hall were covered with paper. City personnel employees created an enormous flow chart, showing who was bumping into whom and whose jobs would be lost.
"I don't think people realized how emotional all of this was," Silva says, describing the budget crisis' toll. Then he leans back. His chin quivers. A tear streams down his right cheek. Two more follow on the other side of his face. He props his elbows on the table, curls his index fingers, and jabs them below his glasses and into his eyes.
The job that was supposed to be six months turned into ten. In less than a year, Silva did the dirty work that Johnson and the commission had refused to do. "In many cases, people perceived that the commission didn't want to hear bad news," he explains. "There was a culture. I tried to change that culture."
Among the changes Silva made was forcing the police union, coddled by previous administrations and commissions, to share the city's burden. He even proposed closing the Police Department and contracting with the Broward Sheriff's Office. But then city officers protested outside City Hall holding a large drawing depicting Sheriff Ken Jenne lying in bed with Silva, his penis erect.
That proposal -- and Silva's inability to hammer out a collective bargaining agreement with the police and fire unions -- made him persona non grata at City Hall. By the time budget-crunched Fort Lauderdale hired a new city manager in June 2004, Silva was battered and bruised politically. "He was run out of town with torches," Naugle says.
But none of that past turmoil has prevented Silva, now an area director for the Broward Democratic Party, from becoming the foremost authority on what went wrong in Fort Lauderdale and what needs to be done to fix the ailing city.
George Gretsas began down the path to Fort Lauderdale about a year ago, when a friend handed him a help-wanted ad published in the New York Times. "It was seeking a city manager of Fort Lauderdale," he explained recently to about 50 members of the Edgewood Civic Association. "Let me read you what the city was advertising: 'furloughs, layoffs, budget deficit, huge tax increase, union problems, backlogs, poor morale, lack of cohesion, homeless problem, panhandling.' I began to think to myself, 'Do these people need a city manager or an exorcist?'"
At the time, the scrawny, bespectacled, 36-year-old Gretsas was executive officer in White Plains, New York, a city an hour north of Manhattan and one-third the size of Fort Lauderdale. During his roughly six years in White Plains, the New York University Law School grad (who never passed the bar) served under Mayor Joseph Delfino. "We had a father-son relationship," Gretsas recalls. "We were really inside each other's heads. He knew where I was going; I knew where he was going."
Gretsas' role in White Plains amounted to a chief-of-staff position. Unlike in Fort Lauderdale, where the city manager is the city's top administrator but must please the mayor and four independently elected commissioners, Gretsas served only Delfino. The pair made their first priority turning around the decaying city. Delfino quickly changed the building height restriction to allow 350-foot towers downtown. He courted developers to build a large entertainment complex and luxury apartment buildings, including a 21-story high rise and 260-unit luxury apartment complex. In 2003, five years after Delfino and Gretsas took the reins, the New York Times published an article headlined "The Renaissance of White Plains."
"I could look out my window at City Hall and see the fruits of my labor," Gretsas remembers. "Things were popping up all over the place."
But Gretsas saw a new challenge when he held the advertisement for Fort Lauderdale city manager. "If you fear failure, you become mediocre," he says with the dry conviction of an infomercial host.
In June 2004, the City Commission voted unanimously to hire Gretsas on a three-year contract starting at $180,000 per year, roughly $3,000 less than Johnson earned. Despite scoring the lowest on the city's leadership tests, Gretsas beat out candidates from Augusta, Georgia, and Johnson City, Tennessee.
Gretsas started fast. He broke the city's nine departments into 16 -- a change he claims saves $250,000 per year -- and fired or asked for resignations from Personnel Director John Panoch, Assistant City Manager Bud Bentley, Communications Director Leslie Backus, and Finance Director Terry Sharp. All four were replaced by Gretsas cronies from New York and New Jersey without a substantial change in salary costs. New Assistant City Manager Kathleen Gunn earns $123,000, while her predecessor took in $140,000. Interim Finance Director Ray Mannion makes $130,000, compared to Sharp's $123,000.
A handful of other senior-level government workers has left voluntarily. More than 300 positions in the city have been left unfilled, and employees for months have worked overtime to compensate for being shorthanded. Many of the midlevel managers who remain have begun to form a management union, fearing they no longer have job security under Gretsas.
"Gretsas isn't a great delegator," says John F. Bailey, who runs a website covering news and politics in White Plains. "He wants to control everything."
All the upheaval at City Hall is part of a plan, Gretsas says as he places both hands palms down on the table at his seventh-floor office at City Hall. He recalls a story about his father, a painting contractor in Manhattan. "There was a tree in our front yard that was dying," Gretsas says. "One Saturday, my father went out there with a saw, and he chopped up that tree. There was hardly anything left -- just a stump... The tree looked terrible."
"Why would you do this?" Gretsas asked his dad.
"For this tree to become healthy," he replied, "you need to cut off the dead branches. You need to have all its energy concentrated on the parts of the tree that still have life left. If the dead branches stay, the tree will die."
Gretsas pauses. "Government is the same way," he explains.
But Gretsas hasn't always chosen appropriate branches to cut. In December, he ordered code officials to investigate Northwest Fort Lauderdale, sparking a U.S. Department of Justice probe into whether the enforcement was racially selective. Additionally, following a well-publicized midnight stroll through Fort Lauderdale's nightlife district, Gretsas brokered a deal with bar owners in Himmarshee Village to stop selling Jell-O shots and beer bottles from minibars. Among Gretsas' obsessive concerns while touring Himmarshee were pieces of dried gum splattered on sidewalks, inspiring Sun-Sentinel columnist Michael Mayo to dub the new manager "Gumshoe Gretsas."
A federal investigation and a gum patrol? Not bad for less than one year on the job.
When it comes to the most important issue the city manager must tackle -- paying down the city's seemingly insurmountable debt -- Gretsas has so far been only marginally effective. The city is now spending less than it was during the same time last year, but Fort Lauderdale's insurance deficit remains around $14 million. Although overtime expenses remain over budget, Gretsas has already locked in a $1.6 million surplus for his first fiscal year and could bring it up to as much as $3 million. He says he'll pay off the insurance deficit in two years and, during that time, would like to raise the contingency fund balance from the current $4 million to $15 million or as much as $40 million.
One of the difficulties is that, although Fort Lauderdale enjoys an $18 billion tax base, skyrocketing property values have little effect on the city's bottom line. Home sales are down, and most of Fort Lauderdale's properties are homesteaded, meaning they bring in only a fraction of their potential tax revenues.
What's more, many of the soaring condominium towers and revitalized neighborhoods are taxed under Community Redevelopment Agencies (CRAs), minigovernments intended to facilitate redevelopment that divert new tax revenue away from the city's squeezed general fund. Thus, taxes from places like Nola Lofts, Avenue Lofts, and Jefferson Place are kept in separate coffers that can be used only for services in their immediate area.
"I'm still not used to this," Gretsas admits. "In White Plains, the government was the government. We didn't have these niche organizations and special tax-assessment districts."
Gretsas walks to his desk in City Hall and pulls out a cartoon published in the Sun-Sentinel not longer after he took the top job in Fort Lauderdale. It depicts two U.S. Army soldiers defusing a roadside bomb in Iraq. "It could be worse," one of the soldiers says. "We could be the new Fort Lauderdale city manager."
Gretsas laughs. "Keeping your head down and hoping you'll get through the day is a very depressing thought," he says. "I've never been afraid to accept a new challenge, and Fort Lauderdale offers a great one."
The city is debt-ridden. Services have been cut. Morale is low.
Naugle isn't likely to lead the city out of its mess. When Gretsas' first budget, which included a 24 percent tax increase, came before the commission in September 2004, the mayor voted against it.
And after less than a year on the job, it's beginning to seem that Gretsas can't do the job either. Fort Lauderdale's new city manager has allowed personal biases to get in the way of city business. Gretsas' most ardent critic is his predecessor, Silva, who has publicly questioned Gretsas' commitment to fixing the insurance and reserve-fund problems.
The city manager's distaste for Silva became apparent at a March 1 City Commission conference meeting. Leaning over a table surrounded by Gretsas, Naugle, and the rest of the commission, Vice Mayor Trantalis offered his nomination for the audit advisory board, a citizen's budget oversight group that Silva created when he was interim city manager.
"Don't shoot me for this, George," Trantalis said, addressing Gretsas, "but for the audit advisory position, Alan Silva."
Gretsas stared at Trantalis angrily for a long three seconds, then nodded his head and scribbled on a legal pad. A few hours later, at Gretsas' request, Trantalis privately withdrew his nomination of Silva.
"Sometimes wounds have to heal," Gretsas explains. "I'm not sure that the best way to heal is to have Alan Silva on an advisory board... Alan Silva and I have different styles and different philosophies. [He] has to accept the fact that [he's] gone."
But by muscling out his predecessor, Gretsas may have violated Florida laws that require open government, says Barbara Peterson, director of the First Amendment Foundation in Tallahassee. "It's troubling that a commissioner would make a nomination at a public meeting, have a private meeting with the city manager, and then privately withdraw that nomination," Peterson says. "It might not be a technical violation of the Sunshine Law, but it does raise questions about the intent and spirit of the law. The intent is to make the public aware of the entire deliberative process. If the city manager has a problem with the nomination, why didn't he say something at the conference meeting?"
Silva agrees. "Are the other city commissioners opening themselves up to a situation where the city manager can withdraw their nomination?" he asks. "It sets a precedent."
Moreover, Silva believes Gretsas is courting disaster. The new manager has refused to implement plans that are essential to preventing another financial calamity in Fort Lauderdale. Among them: pushing a financial stability ordinance mandating that the city manager build up the reserve fund by 2007 and that the commission vote at least 4-1 before dipping into reserves. These policies would keep both the commission and the manager in check.
"There's no accountability right now," Silva says. "You can't hold George Gretsas to any sort of accountability."