Friday, November 27, 2009

City of Miami CFO Larry Spring: close the door please on your way out ... by gimleteye

I don't know Larry Spring, City of Miami chief financial officer, beyond watching him on local TV during one of the final hearings on the Marlins' stadium boondoggle of the century. It was amazing and dumbfounding to watch Spring stammer under questioning. In the end, it didn't matter that Spring lacked answers or facility with the numbers of the deal (George Burgess couldn't have been the ONLY public servant to understand them).

What a surprise, then, to learn that the City of Miami is under scrutiny and possibly a full-blown SEC inquiry for "lax budget practices" according to Bloomberg. Miami officials "had planned to travel to New York on Dec. 7 to meet with underwriters about the bonds, which were to finance parking garages for the new Florida Marlins baseball stadium, the mayor said in an interview." According to Miami Today, CFO Spring is applying to be city manager in North Miami. I wonder who will get there first: Spring to North Miami, or, Miami to bond underwriters. (please click, 'read more')


Miami May Delay $120 Million Bond on Audit, Possible SEC Probe
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By Jerry Hart

Nov. 27 (Bloomberg) -- Miami may delay a $120 million bond sale after an audit showed lax budget practices and the city learned of a possible U.S. Securities and Exchange Commission inquiry, Mayor Tomas Regalado said.

Officials had planned to travel to New York on Dec. 7 to meet with underwriters about the bonds, which were to finance parking garages for the new Florida Marlins baseball stadium, the mayor said in an interview. The $515 million sports complex for the Major League Baseball team is being built with $360 million of public funds.

The internal audit showing the city didn’t comply with its budget standards, and a possible SEC probe, which would have to be disclosed in bond-sale documents, might alter timing of the issue, Regalado said.

“What concerns me about the audit is the appearance of impropriety and whether the SEC will follow up,” Regalado said. “This could affect the sale of the bonds.”

Regalado, 62, took office on Nov. 11 facing declining revenue with property taxes projected to shrink 6.6 percent during the fiscal year ending Sept. 30. He’s seeking to renegotiate a union pension agreement that will cost the city $90.5 million, 18 percent of its 2010 budget. Expense control is necessary for the city to maintain its A+ general-obligation bond rating, the fifth-highest investment grade, and “stable” outlook, Standard & Poor’s said in a July report.

City Manager Pete Hernandez was asked about a possible SEC inquiry two weeks ago, Regalado said in the interview on Nov. 25. Neither he nor Hernandez was aware of a full-fledged investigation, the mayor said.

Attorney Call

Hernandez said he received a telephone call from an attorney representing Charlotte, North Carolina-based Bank of America Corp.’s Merrill Lynch & Co., senior manager of a $65 million issue of Miami street and sidewalk revenue bonds sold earlier this month. The lawyer asked if the city faced any SEC complaints.

“It was a compliance inquiry checking on our practices,” Hernandez said in an interview today. “We called the SEC and they wouldn’t confirm anything.”

Glenn Gordon, assistant regional director of the SEC’s Miami office, wouldn’t elaborate. “I can’t confirm or deny whether there is an investigation,” he said in a telephone interview.

The road and sidewalk bonds maturing in 2039 were priced to yield 5.72 percent on Nov. 19 and sold to a customer for 5.71 percent on Nov. 25, according to Municipal Securities Rulemaking Board data.

The city failed to comply with four of 13 standards governing its budgeting during the fiscal year ended Sept. 30, 2008, Auditor General Victor Igwe said in a Nov. 17 report.

Reserve Requirements

Among shortcomings were reserves $289,510 less than required; some agencies exceeding their budgeted spending and the city using non-recurring revenue such as cost-savings from previous years for pension contributions and other expenses.

Regalado said he would ask officials to explain lapses cited in the audit.

“I don’t think the administration is prepared to make a full disclosure of the finances of the city because we haven’t closed out the fiscal year,” he said.

Miami’s fiscal operations were temporarily taken over by the state in 1996 and its bond rating was cut to high-risk, high-yield “junk” by S&P when unsound budget practices, including using interagency transfers for recurring expenses, created a $68 million budget deficit. The SEC cited Miami for failing to disclose its true financial condition in documents for three bond sales in 1995, before the city asked for state help.

Miami regained its investment-grade rating in 2001, when S&P raised its grade four levels to BBB+ from BB. It was boosted three more steps to A+ in 2004.

To contact the reporter on this story: Jerry Hart in Miami at jhart@bloomberg.net.

Last Updated: November 27, 2009 11:58 EST

26 comments:

Anonymous said...

Amen.

As CFO, Larry Spring sat idly by while outrageous union contracts were negotiated and passed by the commission. He had NOTHING to tell the commissioners about how much the contracts were going to cost the city.

When the costs came through he covered up the deficit created by the fat contracts by transferring money from the capital funds to the general fund. So, forget fixing streets, sidewalks and parks because the money went to pay fat city salaries.

And what did he do after he propped up the general fund through the transfers? He told the commissioners and rating agencies he was a fiscal hawk and despite the challenges of the contracts and lower revenues HE brought the budget in through fiscal control. They patted him on the back as a hero, when all along he was just a charleton.

Through his tenure he brought the city from surpluses to huge deficits. The only thing I can give him a hand for is the way in which he covered it all up without anyone uttering a peep. But political correctness probably helped him a great deal on that score.

You're right, hope the door doesn't hit him in the ___ on the way out.

Anonymous said...

Has anyone seen the recent audit?

Anonymous said...

Larry Spring is absolutely the worst CFO a City could have. He overspent during good times and he overspent during bad times.

Spring was at the forefront cheerleading and pushing every sleazy stupid deal some lobbyist or connected insider craved.

Spring demanded the commissioners pass the Marlins bailout immediately and without requesting any concessions. When asked Spring told the commissioners the City was in great financial shape and it could easily afford to bailout the privately owned Marlins. (One month later it was disclosed the City was actually facing a $118 mil deficit.)

When Mayor Regalado was a commissioner, in 2006, he requested that the Department of Economic Development be defunded. The employees in that department were useless. The vote was 5 to 0 to defund. Nonetheless, Larry Spring kept the useless employees on the city payroll. 6 no-show jobs thanks to Spring.

When Jungle Island failed i.e. its expenses far exceed its revenues, Spring was there to demand this money losing scam, that already owed the taxpayers $45 mil, get another $2 mil from the taxpayers.

Now an audit describes possibly illegaly moving money to cover up massive deficits in 2007 and 2008.

What a terrible CFO. His boss should have fired him years ago.

Anonymous said...

The audit is dated November 17th, 2009 and it should be available online. It makes whoever is in charge of the City's finances look like a Bernie Madoff in training.

Here Be Monsters, again. said...

With the problems with Spence-Jones and Carey-Schuler, one wonders just how funds are overseen and navigated through Miami governance. It's a good post...! Haven't investigations been going on and off for the last seven years concerning the direction of funds? Or am I mistaken? By the city commission?

Anonymous said...

I am not in government, dont want to be and this sniping is why. Spring is being measured by non-economists/financial folks who are referring to stammering to answer questions boy commissioners who are cross examining with no financial skills themselves to extract answers they want for policy positions they hold. Does anyone really have any facts to wag around that Larry was responsible for misrepresenations to the SEC? Do you think maybe, just maybe, bond counsel was not hired to button down every single representation? Stop the theater and be fair to a guy who did not cause the recession, did not make policy, and implemented policy with grace and backed by the education required to do the job. In all candor, I know Larry personally and think the world of his integrity and skills as a former bank comptroller and now government financial officer.

Anonymous said...

Larry Spring is the guy who told the public the City of Miami's balance sheet was great and its credit rating was great when he wanted the commissioners to vote to approve the Marlins bailout. One month later, after the vote, it was disclosed the City was facing a $118 mil deficit from its $520 mil budget. Now it is not so easy to sell the City's bonds. Surprise, surprise.

Further, it was Larry Spring who was the CFO while the City's reserves were being used and abused from $140 mil down to maybe $70 mil. Maybe? What is the accurate number?

Larry Spring might not have been elected but elected officials count on getting truthful and accurate information to make decisions. Obviously that never happened on Larry's watch.

Why does Larry keep people in no-show jobs? While the City is flirting with bankruptcy?

Anonymous said...

And you are living in a dream world, anonymous friend of Larry Spring.

It is precisely because the commissioners do not understand finance that Larry Spring was able to get by with what he did.

It is precisely their lack of financial knowledge that made it incumbent upon Larry to explain to them the FACTS about the union contracts and their devastating impact on the city. He did not attempt to let them know even when the expenses were crushing the city.

It is precisely the commissioners' lack of accounting acumen that allowed Larry to claim to have balanced the general fund through expense cutting when in fact he did it through questionable fund transfers. And why would he do it? So he could look like a "financial genius" to the commissioners all the while looking for another job (first Coral Gables CM and now North Miami CM) so he could get outta Dodge before it hit the fan.

In his position, it was Larry's responsibility and duty to keep the city on sound financial footing. Instead, he "found money" to great accolades for every hair-brained initiatve the commissioners and mayor wanted and then had to cover up the losses through accounting tricks.

When the SEC is done with the investigation, I think you will be very disappointed in your friend.

Anonymous said...

I KNOW LARRY PERSONALLY AND SIR YOU ARE NO LARRY! LARRY IS GOOD! LARRY HAS INTEGRITY! PLEASE BE FAIR TO LARRY!

Anonymous is correct! Spring is being measured by non-economists, (that is a person who is not an economist), and who are not financial folks. In all fairness to Larry he should be measured by financial economic type folks. Folks like they employ at the United States Securities and Exchange Commission. Let them measure his integrity and how gracefully he has implemented policy. It's only fair. Larry is good!

Anonymous said...

North Miami Beach is reconsidering hiring Larry Spring, Miami's C.F.O. since he currently is in the 'cross-hairs' of the S.I.C. and under the microscope of new City of Miami Commission!

Anonymous said...

To the Anonymous "friend of Larry" who extols his aledged virtues, like his education. (What eduction?) Even low IQ high school dropouts know if you spend more than you make you end up bankrupt.

To the suggestion that Larry be judged by "financial economic type folks at the SEC". I suggest Larry be investigated by out-of-town forensic accountants hired by the City of Miami and by the holders of City of Miami bonds and by the investigators who sent the Enron criminals to prison.

Anonymous said...

Do you know if Larry Spring ever worked for 'Arthur Little'?

Anonymous said...

Does anyone know if Larry Spring worked for Enron or Adelphia Communications or is he training for an Enron or Adelphia ending?

Anonymous said...

This seems to me to be a disgraceful campaign by two people who are out to destroy Larry Spring. People know the truth! If you think Larry was/is running the show at City Hall, you're crazy. Also, dont forget who was budget director, CFO and Commissioner during most the past 8 years - LINDA HASKINS???

Anonymous said...

Linda Haskins was no better. But she left 4 years ago. Isn't the CFO the CFO?

Anonymous said...

Larry Spring is destroying himself; he needs no help! He did make the finalist for the City Manager of North Miami Beach. If selected he will then be running a city. OMG!

Anonymous said...

Following from Dan Rickers Watchdog Report:

>>> Commissioner Martinez asks about county liabilities, with Miami financial instability and Marlins Stadium bonds



Joe Martinez, the county commissioner representing District 11 fired off a memo Nov. 25 to County Attorney Robert Cuevas, Jr., asking if the city of Miami’s financial woes will affect the different bonds that are being issued, for the Florida Marlins Stadium and the Port of Miami Tunnel by the municipality. The commissioner cites The Miami Herald www.miamiherald.com story done by veteran Miami beat reporter Michael Vasquez. The story concerned an audit done by the Miami commission auditor Victor Igwe that showed real financial problems. Martinez asks the question to the attorney, if the “various concerns that the findings of the audit may have a direct affect on Miami-Dade County” and if the city’s “ability to secure bonds has been compromised,” and if it is, “what is the potential impact on the Marlins Stadium project, the garage” and also the “impact to the Port Tunnel project,” he wrote. He then asks for an explanation of possible “legal consequences, if any, would be for both contracts,” he closed.



The Watchdog Report briefly reviewed the audit on Wednesday and there is enough in it to suggest concerns that also have brought in the SEC to look at the city’s books and how the city described its financial state when selling its municipal and GOB bonds during past offerings. The city further has been blazing through its reserves and have dropped to its lowest level in almost a decade. The rainy day fund had around $141 million back in 2003 but that reserve has since dropped to about $70 million this year, and monies for capital projects, $26 million was shifted to the city’s reserve account to hit that higher number. Manager Pete Hernandez has stated in the paper that these moves were “fine,” but the report has stirred–up some financial dust and readers should wait and see how this plays out, and any impact this has on the two mega-projects the city and county are involved in.

Rae C. said...

I wish Geniusofdespair and Gimleteye would do some research on the Budget Committee the city has in place, which is made up of local citizens. Mr. Spring is Assistant City Manager and CFO, ask yourself who his boss/es are and then you'll find some answers. Have any of you worked in government agencies? Elected officials, in this case, commissioners and mayors, do not care what the black and white say. They want to hear what they want to hear and they know eventually they'll have someone to use as an scape goat. Shame on you Eye On Miami, you should know better than to go off on a rant like this on a city employee who reports directly to the crazies we elected.

Anonymous said...

Mayor Diaz did not have the balls to fire the city manager along with the C.F.O. and the budget director. Let's see if Mayor Regalado has the balls. He should fire the city manager and the budget director but demote the CFO. He will want to 'keep' him around to answer the questions that the S.I.C. will have of him. No way will he become the City Manager of North Miami Beach with that investigation hanging over his head.

Anonymous said...

Here is a link to the audit report:

http://www.miamigov.com/internal_audits/audits/2009_2010/010-005%20Report%20on%20Financial%20Integrity%20Principles%20111809FINAL.doc.pdf

Anonymous said...

As of this morning,(Thursday, December 03, 2009) Mr. Spring has withdrawn his name from consideration,(For City Manager of North Miami). He has accepted a new position with the City of Miami and will be remaining in their employ.

Anonymous said...

City Manager Peter Hernandez:

It is our understandning that your C.F.O., Larry Spring this morning withdrew his name from consideration for the City Manager of North Miami. He has indicated to the City of North Miami that he has accepted a new position with the City of Miami and will be remaining in your employ. Mr. Hernandez what is Mr. Spring's new position and who have you replaced as the City of Miami's new C.F.O.?

Anonymous said...

Larry Spring, chief financial officer, $233,525 annual salary, $43,000 special compensation. Total: $276,525

Anonymous said...

Larry Spring. Another massive waste of taxpayer money.

Who is the new CFO? How much will the City overpay him?

Anonymous said...

Larry Spring laughs all the way to the bank.

Anonymous said...

The SEC is now investigating Larry Spring's wild promises to rating agencies in New York City in 2009. Did Larry Spring fudge the numbers?