Miami Inc.

Infamous for living 'la vida loca,' Miami now answers to a business beat.
by | January 2004

Something exceedingly strange occurred in the city of Miami on election day last fall: Voters passed a ballot measure that delivered to the city's five commissioners a huge raise--from $5,000 a year to $58,200.

It would be an unusual vote under any circumstances in any city. But Miami isn't just any city. For more than a decade it served as something of a model of social, political, administrative and financial dysfunction. There were kickback busts and mayoral election- fraud convictions. A succession of city managers were fired, left city hall in handcuffs or just quit in disgust. Adding to the general municipal misery was the discovery in 1996 that the city was nearly $70 million in debt. On top of that, the city had as its mayor the mercurial Joe Carollo, best known for spending a night in jail after bouncing a cardboard box of tea off his wife's head.

The result of all these political, personal and fiscal shenanigans was predictable. "It caused tremendous gridlock," says H.T. Smith, a local attorney and community activist. "Nobody wants to partner with chaos, conflict and controversy."

It also caused widespread voter disgust. So giving city commissioners a 1200 percent raise last fall signified a major turnaround in voter confidence, confidence based on a new management team that came to power vowing to run the city in a business-like way. While the positive vote can be read as a sign that Miami has recovered from its disastrous 1990s, how solidly the city has actually rebounded and how effective the business mantra is in managing a major--and very diverse city--are still central questions facing Miami.

Certainly there are ample outward signs of real recovery: Downtown is enjoying its biggest building boom in decades. Crime has come down and stayed down. The city's bond rating has been upgraded from junk to investment grade, and the state fiscal oversight board put in place in the wake of the 1996 debt crisis has been disbanded. More recently, the city looked steady when all international eyes focused on it in November during the potentially explosive meeting of the 34-nation Free Trade Area of the Americas. By handling potentially volatile demonstrations reasonably well, Miami helped boost its prospects in the international competition to be the FTAA's ultimate headquarters.

But even as the city seems to be doing well, the past is still fresh in many Miamians' minds. There is a palpable sense among long-time city watchers that a return to the dysfunction of the mid-1990s--when Miami was dubbed a Banana Republic in an interview on CBS's "60 Minutes"--is just one scandal away. It's a sense of trepidation summed up by Miami Herald reporter Oscar Corral when asked about the city's currently upbeat situation. "You are catching Miami on a very good day," he says.


How long that day lasts is being pinned squarely on the shoulders of an unlikely threesome of political novices, all former businessmen who came to Miami government fed up with business as usual. They include city commissioner Johnny Winton, a real estate investor, who in 1999 unseated J.L. Plummer, a 29-year incumbent; Manny Diaz, a restaurateur and attorney, who ousted Carollo as mayor in 2001; and Joe Arriola, a marketing and printing magnate, who was named by Diaz last year to take over as city manager.

Together, the three have vowed a complete break with the city's tumultuous past. Their solemn promise is to "run Miami like a business." In part, that is being done through the new political civility and stability represented by Winton and Diaz, and in part through a thorough administrative shakeup, mostly engineered by Arriola.

Of the three, Winton seems the most passionate about breaking the old Miami mold. In fact, Winton says the reason he got into politics was his frustration with the lack of action on the part of and appalling dysfunction among key city officials during the 1990s. He had a close- up view of what was happening, serving on the executive committee of the Greater Miami Chamber of Commerce and on the boards of the Downtown Miami Partnership and the Downtown Development Authority. He also served as chairman of a group called the Downtown Ad Hoc Property Committee. "All these organizations were advocating for rebuilding downtown," Winton says, "and we kept dealing with city and dealing with city and dealing with city. I woke up one day and started scratching my head and said, 'Why aren't we getting anything done?'"

His frustration boiled over when the scandals that led to state fiscal oversight broke in 1996. It was a classic Miami mess involving city manager Cesar Odio, who was accused of soliciting kickbacks for city contracts, and who was ultimately convicted of obstruction of justice. In the wake of the scandal, it was also discovered that Odio had been disguising the city's fiscal plight through a variety of deceptive and questionable accounting and fund allocation schemes. Winton was so angry about the incident that he helped found an organization devoted to dissolving the city of Miami outright. His group didn't really have any idea what they were going to replace Miami government with. "We just knew we wanted this one to go away," he says. When that didn't work, he figured he might as well try to bring about change from the inside by running for office.

Winton has been a breath of fresh air. His low-key, thoughtful and inclusive style as chairman of the commission has brought a newfound civility to the formerly fractious body. And he has a strong ally in Mayor Diaz. "Everyone was fighting with everyone else," says Diaz of Miami's unglorious days. "And for what? This was a city that was operating in spite of itself. There was no direction and no vision."

For the first time in a long time Miami is enjoying the fruits of "a cohesive leadership team," says Neisen Kasdin, who served as mayor of nearby Miami Beach from 1997 to 2001. "You now have a city administration that works together and that puts the interests of the city first."


If there is a bomb thrower among the three newcomers, it is Arriola, who says he arrived in city government with clear marching orders: "The mayor asked me to run the city like I would my own business."

Arriola's first priority was to shape the leadership team below him in his own image. Within hours of taking the job, Arriola fired both the city's financial and capital improvements directors. He ordered other members of his top management team to ask for letters of resignation from a whole cadre of long-time, upper-level city administrators, replacing those he viewed as non-contributors with a new team drawn primarily from the private sector.

One look at the city's new leadership and it's easy to see how Diaz's directive is being carried out. Miami is being run in large part by ex-business people. The new team ranges from former Florida Power & Light executive George Canos, who heads up the city's Capital Improvements Department; to the economic development director Keith Carswell, who came from banking; to Larry Spring, a certified public accountant and banker who has been put in charge of strategic planning, budgeting and performance for the city.

In keeping with the run-it-like-a-business theme, Spring's overall task, he says, is to bring a "balanced scorecard" approach to Miami governance, including a full set of performance measures by which the various city departments and their directors will be judged. As an example, Spring points to managing federal grant money.

The mention of managing federal grant money is not accidental. It is another one of those areas in which Miami seemed to be doing an especially sloppy job for years. And it is an area that illustrates how the concept of operating in a more business-like fashion is trickling down in Miami government today.

Currently in the hot seat on the question of managing federal grants is Barbara Gomez-Rodriquez, the high-energy director of Community Development. When Gomez-Rodriquez took over, community development was in deep trouble. Her department was sitting on nearly $40 million in outstanding federal loans, a huge percentage of which was in arrears. The U.S. Department of Housing and Urban Development was demanding $20 million back in what it saw as flat out bad loans. Rodriguez's first job was to negotiate that number down and then overhaul the city's collection and loan policies.

By convincing HUD that the city was serious about collecting on bad debt, Gomez-Rodriquez managed to get the HUD repayment reduced by 75 percent. At the same time, she hired her own former banker to chase down deadbeats. Collections have doubled now that the city actively threatens laggards with foreclosing on property and reporting them to national credit-rating agencies. Meanwhile, the task of deciding who is worthy of a loan has been completely overhauled. The job is now handled by an 11-member, all-volunteer committee of private-sector banking, real estate and community development experts.

Public officials such as Gomez-Rodriquez are also on the line if they don't perform. Another thing Joe Arriola brings from his extensive business background is a heads-will-roll approach to managing his staff. So far, his current crop of department heads seems to thrive under it. "Joe gives you a lot of autonomy," says Carswell, the economic development chief. "If you need help you can pick up the phone and give him a call. If you mess up, you say, 'Hey, I messed up,' and you move on. He let's you know where you stand; he doesn't pull any punches."


Not everyone is convinced that the city needed such a top-to-bottom shakeup, however. Some long-time community activists believe the city lost a lot of institutional memory and dedication with the widespread turnover in management--people with a good feel for the city, its history, its quirks. Clearly, there were areas that needed overhauling, such critics acknowledge, but the sweeping changes have lacked precision when it comes to what parts of city government really needed the full broom.

In particular, Diaz's dismantling of neighborhood enhancement teams-- multi-disciplinary teams of officials, from police to building inspectors, stationed in neighborhoods throughout the city--is disturbing to those who viewed the teams as effective in bringing both government attention and a better quality of life to neighborhoods.

Mayor Diaz has a ready answer for such complaints. "The NET offices had turned into mini-bureaucracies in themselves. People got comfortable being out there sitting in their air-conditioned offices." Diaz says he wants central dispatch and coordination of city employees such as cops and inspectors to make sure "they're out on the streets" and not manning the parapets of "their own little kingdoms."

Besides, there are plenty of other more serious problems to occupy Miami these days, including some that may frustrate city ambitions when it comes to the quick fix. Leading the list are the city's unemployment and poverty rates, which are among the highest in the country for cities of Miami's size. Miami's pockets of poverty, the majority of which are in African-American neighborhoods, are a source of racial tension, particularly as Hispanics rise in the ranks of municipal leadership and make up a majority of the population. "Blacks are not stakeholders in Miami, not in politics, not in the economy, not in the culture," says H.T. Smith, who is African American. "You sometimes get the sense that the group that makes up 51 percent of the population thinks it's entitled to 100 percent of the spoils 100 percent of the time." Smith is doubtful whether the city's current go- go growth is benefiting everyone in town equally, especially its predominantly black neighborhoods.

At the same time, considerable internal challenges loom. Labor contracts for all four of the city's unions--police, fire, sanitation and rank-and-file employees--are set to expire this year. Arriola is vowing to get tough with the unions over what he says are the city's "out of control" labor costs. Labor, for its part, thinks Arriola has his facts wrong and vows to fight back. Whether or not negotiations erupt into a disruptive labor-management war will depend on the skill and the restraint of the principals, none of whom are known for tempering their positions.

As tough as some problems might be or as messy as labor-management relations might get, these are arguably the sorts of issues and problems that ought to be occupying a city such as Miami in the year 2004. They are the stuff of routine municipal management--and a vast improvement over headlines about government officials on the make or on the take.

Whether the city can avoid the headlines of the past and continue to focus on the business of running a government on the move depends to a large extent on how much influence Winton and Diaz can continue to bring to bear on the city commission and whether Arriola can be a force for reason and cohesion, if not always peace. But one thing is clear in this scandal-worn southeast city by the bay: Every day without a scandal is, indeed, a good day. So good, in fact, voters seem willing to pay for it.