OIG No. 21-23 Inspector General G.O. Bond Quarterly ReportJoseph M. Centorino, Inspector General
TO:
FROM:
RE:
April 21, 2021
Honorable Mayor and Members of the City Commission
Joseph Centorino, Inspector General
Inspector General G.O. Bond Quarterly Report
OIG No. 21-23
INTRODUCTION
This report is written in compliance with Section 2-256U) of the City of Miami Beach Code, which
requires the Office of the Inspector General (OIG), on a quarterly basis, to prepare and submit to
the City Commission a written report concerning the planning and execution of the General
Obligation Bond Program including, but not limited to, progress reports, financial analyses and
potential risks. The review is based on official city records, OIG attendance at implementation and
oversight committee meetings, interviews with staff and other department personnel as well as
regular discussions with the Program Director. This report is intended to provide the Mayor, City
Commission and public with useful information and periodic evaluations regarding the
implementation of the G.O. Bond projects to date.
PROGRESS REPORT
The Program Director and her team continue to advance Tranche 1 projects with significant
savings. Of the 39 projects in Tranche 1, 28 are in an "active posture" and eight have been
completed. The program funds have been distributed as follows:
Parks Infrastructure Public Safety Total
Spent $18,112,203 $7,217,981 $11,064,635 $36,394,819
Encumbered $11,703,612 $7,120,190 $3,986,283 $22,810,085
Available $56,917,138 $13,661,812 $21,355,053 $91,934,003
Future $81,167,048 $168,000,016 $34,809,029 $283,976,093
Total $167,900,000 $196,000,000 $71,215,000 $435,115,000
The total amount of savings as of this writing is $3,252,839.
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IMPLEMENTATION
The Program Director, Maria Hernandez, continues to manage and innovate in ways that hold
staff accountable, improve transparency, and create efficiencies while acknowledging the
evolving needs of the City. This quarter, Ms. Hernandez, in concert with the City's Chief Financial
Officer, John Woodruff, proposed a revision to the original G.O. Bond implementation plan. Both
of them pointed to changes in priorities within the City and lower borrowing costs as providing an
opportunity to re-examine all projects and assess those that could be, or should be, achieved
faster than originally expected, and those that could not proceed as originally planned. According
to Mr. Woodruff, the original interest rates used during community outreach for the G.O. Bond
were set at 4.25%. The actual interest rates applied to Tranche 1 project funding were lower at
3.5%, and the best estimate regarding rates for Tranche 2 are currently about 1.7%. The revised
G.O. Bond Implementation Plan is estimated to save $21.2 million in debt service savings over
the life of the bonds.
Mr. Woodruff met with department staff tasked with implementing projects within the G.O. Bond.
He asked them to conduct new cash flow projections for each of the projects. Based on cash flow
analysis, as well as revised expectations regarding interest rates, Mr. Woodruff and Ms.
Hernandez created the updated implementation plan which proposes to consolidate the number
of tranches from four to three and reprioritize projects that they believe should be advanced
sooner than originally planned. Of the 57 projects in the G.O. Bond, the proposed implementation
plan will affect thirty-one.
Three notable examples include projects #40, #31 and #36. Project #40, the 41 st Street Corridor,
is a $15,000,000 project that originally had been spread across four tranches with an expected
completion date in 2027. The first tranche of money, $1,500,000, is currently being used to design
the project and the remaining, $13,500,000, will be moved to Tranche Two. According to Ms.
Hernandez and Mr. Woodruff, this will allow construction to begin sooner and the entire project to
be completed in 2023. Similarly, G.O. Bond Projects #31 and #36, the Ocean Drive Improvement
Project and Washington Avenue Corridor, not slated for funding until Tranche 2, have become
priorities for the City. The revised implementation plan seeks to transfer money from G.O. Bond
#39 (seawalls) to provide money for Tranche 1 and advance the remaining funding into Tranche
2.
The revised plan was unanimously approved by the Parks Advisory Committee and G.O. Bond
Oversight Committee. When it was presented to the G.O. Bond Oversight Committee, one
member questioned whether the City has the capacity to execute on all the projects within the
new time frames. Possible disruptions to the community were also raised in the Oversight
Committee discussion. Woodruff and Hernandez believe that the City will be able to hire
additional staff to take on and complete the expedited work in a timely fashion without undue
disruption.
The plan was also referred to the Finance and Economic Resiliency Committee for further review
before final approval by the City Commission. While the Committee approved the proposed plan,
Commissioner Arriola was concerned with the re-shuffling of priorities that were of concern to
voters. Mr. Woodruff explained that the City must spend 80%-85% of the money in Tranche 1 in
order to go back to the bond market for additional funds. Arriola cautioned that the City, in meeting
the spending threshold of 80%-85%, could delay projects important to the voters. Arriola will be
looking for changes in projects that suggest the administration is moving projects for reasons in
addition to those stated by Ms. Hernandez and Mr. Woodruff. Commissioner Richardson asked
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staff to continuously revisit the plan and financing options. Mr. Woodruff agreed that they can
revisit as the City moves closer to Tranche Two. The Commission will consider the proposed
plan at its April meeting.
Additionally, this quarter Ms. Hernandez implemented a new practice of providing the G.O. Bond
Oversight Committee, with a list of Commission, Committee, Board and community meetings
during which G.O. Bond projects will be discussed. These notices will be sent to members on a
regular basis for their participation. The intent is to provide Oversight Committee members with
current information as G.O. Bond projects move through committees and boards between their
monthly meetings. This practice was established as a result of staff attending various meetings,
but not communicating impacts to the rest of the implementation team. In some instances,
committee members asked staff to perform tasks that were not conveyed to Ms. Hernandez. In
an effort to keep track of these activities, improve communication among the different
departments, and provide opportunity for G.O. Bond Oversight Committee members to contribute
to the discussions at City meetings, the communications team will compile all items related to the
G.O. Bond projects and disseminate them to G.O. Bond Oversight Committee members. The OIG
will receive notifications as well and attend meetings when possible.
URBAN FORESTRY MASTER PLAN AND POTENTIAL IMPACT ON PROJECTS
In October 2020, the City Commission adopted the Urban Forestry Master Plan, a 30-year plan
to improve the tree canopy in the City and mitigate the impact of climate change. Part of the plan
includes the removal of palm trees, a topic of concern with Commission members and the
community. The Program Director, along with department staff, has been analyzing how the
Urban Forestry Master Plan may impact G.O. Bond projects and has identified seven projects
which could be delayed, in part, because new design plans may be required. These projects could
potentially be impacted by a moratorium of palm removals extended beyond 90-days or any
changes to the City Code related to canopy and palm requirements. The projects are:
1. Brittany Bay Park
2. 72" Street Complex
3. Bayshore Park
4. Maurice Gibb Park
5. Fire Station 1
6. 41°Street Projects
7. Lummus Park
In a presentation to the Oversight Committee, it was suggested that projects in design/planning
all have tree relocation or mitigation components. The 72 Street Complex, Bayshore Park and
Maurice Gibb Park are already experiencing delays due to the regulatory process. The potential
for additional delay is possible if new designs have to be created. It was also suggested that Fire
Station #1 could become unbuildable because of the tree plan.
The Oversight Committee made a motion to expeditiously execute the planning, design, and
construction of any voter-approved G.O. Bond project, and, as required by City Code and
consistent with the City's Urban Forestry Master Plan, proceed to remove, relocate, or reestablish
any palm or other tree while making every effort, consonant with those projects, the Code and the
Master Plan, to preserve palms which are iconic to Miami Beach's culture and history. The
Commission will consider the motion at its April meeting.
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PROJECT UPDATES
The OIG continues to monitor the larger projects in Tranche 1. Some of those projects facing
delays are mentioned below:
72nd Street Complex: As previously reported in prior OIG quarterly reports, this project has a
budget of nearly $65 million. A total of $53.8 million comes from general obligation bonds and
the remaining $1 O million from other sources. On January 29,2021, an evaluation committee was
convened to rank proposals from three Design-Build firms. The top ranked bidder submitted a
price of $90 million dollars and the second and third bidders submitted bids closer to $80 million.
The evaluation committee did not know about pricing when making their selection. This process
has raised some doubt about the City's ability to build this project within the time frame and
budget.
In his Commission Memorandum dated March 17, 2021, the Acting City Manager explained the
$30 million difference. He stated that, "The Project programming as described in the Design
Criteria Package includes a multi-level mixed-use parking garage requiring the program
components of a 500 space parking structure, 50-meter competition pool with support amenities,
25-meter multi-purpose pool, 7,500 SF Miami-Dade County library, 5,000 SF commercial/retail,
700 SF fitness center, 5,000 SF community center, 60,000SF active green space and a jogging
path." He also noted that "the Design Criteria Package included Project Enhancement
components that could be considered by the proposers as desired (but not required) project
elements with the intent to be included within the proposed project budget." It was these
enhancements that contributed to the $30 million differential between budget and proposals.
According to the acting City Manager, the top ranked technical proposer, the Haskell Corporation,
was selected not only based on the firm's experience but also having the largest footprint and
least overbearing design. The design envisioned a complex oriented to enhance the well-being
of the community. The City has now hired a cost estimator to assist them with revisions.
At the February G.O. Bond Oversight Committee meeting, the Directors of Procurement and
Capital Improvement Projects explained the status of the procurement process and the work
moving forward to negotiate with the bidders. The Commission, at its March 17 meeting,
authorized the administration to begin negotiations with the top ranked proposer and referred the
matter to the Finance and Economic Resiliency Committee to look for options to increase the
budget.
The renderings were made public on the internet for the community to see. The G.O. Bond
Oversight Committee expressed concern that residents, after seeing the proposals, may be
disappointed if the proposed budgets and scope of services are reduced. Recently, the City had
its first negotiation with the Haskell Corporation. At this time, it is unknown whether progress has
been made on the project's expense. The administration wants to discuss the project and the
funding issues with the new City Manager. The Procurement Director cannot rule out another
Request for Proposal should negotiations with the bidders fail and the project is delayed.
Fire Station #1: The total G.O. Bond budget for this project is $1 O million. The first issuance of
$7 million was to be spent in Tranche 1 and the remaining $3 million in Tranche 2. However,
according to the proposed revised Implementation Plan, the Administration is recommending $4
million in Tranche 1 and $6 million in Tranche 2. Regardless of the funding strategy, the design
consultant's cost estimator's construction cost estimate far exceeded the project budget during
the initial design phase. At the March G.O. Bond Oversight Committee meeting, CIP Director,
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David Martinez, explained the budget issue and reported that the 911 call center increased the
cost of the project by several million dollars and, therefore, would no longer be part of the plan.
Like the 72° Street Project, the scope had been expanded to include the call center without the
budget adjustment needed to accommodate it. Martinez advised that they were working through
the 30% design plans and making revisions. The documents have been provided to the
Construction Manager at Risk for pricing and additional value engineering suggestions. A new
estimate is expected by mid-April. In an effort to avoid delays in the project, Martinez reported to
the Oversight Committee that there will be no further design efforts until the historic preservation
board reviews the current design plans. Construction is still expected to begin in late 2022.
The OIG conducted a financial analysis of this project and noted a discrepancy between the G.O.
Bond project dashboard and e-Builder. e-Builder reflected a total spent to date of $173,724.83
and the dashboard reflected a total spent of $185,960. This was discussed with the capital
Improvement Projects Office which agreed to perform a review of the transactions in e-Builder.
One pending transaction was identified that had not been entered for the G.O. Bond Program
management fees in the amount of $26,600, and another amount of $7, 182 entered as a positive
rather than a negative amount. It was corrected and now E-builder and the dashboard are in
alignment.
Bayshore Park: On September 1, 2020, the project was reviewed and approved by the Design
Review Board. The design drawings were submitted to DERM for permitting. DERM required
the installation of additional monitoring wells and water sampling. The City submitted responses
to DERM on February 2, 2021. DERM has 90 days to respond. The pending DERM permit,
according to David Martinez, is critical because it relates to contamination in the ground. All other
permits will follow once this is approved.
The consultant submitted a cost estimate which, once again, exceeded the project budget and
has now been directed to value engineer the project. Martinez plans to meet with the new City
Manager to discuss ideas for bringing the project within budget.
Finally, during the design phase, it became apparent that conflicts with the underground utilities
would need to be resolved during construction. It is expected that the contractor selection process
will begin in the summer of 2021. At the April Commission meeting, the administration is
recommending the Commission pass a resolution to provide additional funding from the City's
resiliency fund for project utility relocation in an estimated amount of $3.5 million.
Maurice Gibb Park: This project is also being confronted with delays attributed to the regulatory
process. In this case, the Army Corps of Engineers has approved the plans, but the project
requires the approval of the National Marine Fish and Wildlife as well, which has not yet
happened. If the permitting process is not completed, the selection of the contractor will be
delayed. The Chair of the Oversight Committee asked if the Committee could help with the
permitting issues. The consensus from staff was that this process must proceed as designed.
CONCLUSION
The G.O. Bond Oversight Committee continues to thoroughly assess the work being done on the
Tranche 1 projects and raise issues regarding their implementation. Although not detailed above,
the Committee did request and receive a complete briefing regarding the public safety projects
contained in the G.O. Bond. The Oversight Committee chairperson and the Program Director are
in regular communication with each other and staff remains responsive to questions related to
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project progress. This productive working relationship will be needed as the City navigates
anticipated challenges to schedules as a result of the delays attributable to permitting,
procurement matters, design issues, the urban forestry plan and budget matters tied to changes
in project scope.
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Date
cc: Alina T. Hudak, City Manager
OFFICE OF THE INSPECTOR GENERAL, City of Miami Beach
1130 Washington Avenue, 6" Floor, Miami Beach, FL 33139
Tel: 305.673.7020 • Fox. 305.587.2401 • Hotline: 786.897.1111
Email: CityofMiamiBeachOIG@miamibeachfl.gov
Website: www.mbinspectorgeneral.com
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