HomeMy WebLinkAboutOIG No. 24-09 David G. Services, LLC dba Garbageman.com - Permit Fee Revenues AuditJoseph M. Centorino, Inspector General
TO: Honorable Mayor and Members of the City Commission
FROM: Joseph M. Centorino, Inspector General
DATE : May 29, 2024
AUDIT: David G. Services, LLC d/b/a Garbageman.com Permit Fee Revenues Audit
OIG No. 24-09
PERIOD: November 1, 2017, through May 31, 2021
INTRODUCTION
This report stems from an audit performed of the permit fees charged, collected, and remitted by
David G. Services, LLC d/b/a Garbageman.com to the City Finance Department during the audit
period of November 1, 2017, through May 31, 2021 . The City of Miami Beach Office of the
Inspector General (OIG) Sanitation Tax Auditor examined the contractor's compliance with
selected provisions in the City Code, including obtaining annual business tax receipts (BTRs),
filing required reports, and maintaining sufficient insurance coverage. The performance of City
staff responsible for monitoring David G. Services, LLC and its processing of all payments
received from the contractor during the audit period was also examined.
The completion of this audit was delayed due to a variety of factors, including the following : non
cooperation from the contractor in providing records to the OIG despite repeated requests from
the OIG Auditor and the contractor's knowledge of the OIG's attempts to serve the owner with
subpoenas for the same purpose1; the contractor's contention that its debris collection activities
did not fall within the applicability of the City's Sanitation Code to roll-off contractors; multiple
meetings involving representatives from the City Administration, Office of the City Attorney, and
the contractor; and the June 28, 2023, adoption by the City Commission of Resolution No. 2023-
32654. This audit and its companion audit of G7 Holdings, Inc. should be read concurrently to
better understand the contractors' compliance with tested requirements in the City Code during
the audit period.
A roll-off is defined as a container with a minimum capacity of ten cubic yards designed to be
transported by a motorized vehicle. Contractors use these containers to collect and dispose of
construction and demolition debris and/or large quantities of trash and/or bulky waste, but not
garbage or commercial refuse. Bulky waste represents large items of household refuse, such as
appliances, furniture, accumulations from major tree cutbacks, large crates and like articles, while
commercial refuse consists of all solid waste produced by commercial establishments.
Refer to the Addendum located at the end of this report for further information regarding the challenges
encountered during the completion of this audit.
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An examination of the EnerGov system, the City licensing and permitting system, indicated 27
roll-off contractors on September 30, 2023, with their 2022/23 fiscal year BTRs in "active" status,
and two roll-off contractors in "pending" status. "Pending" status means that the BTR is not yet
valid or active and missing needed documentation and/or payment. The City fiscal year is annually
from October 1 through September 30, so the 2022/23 fiscal year would represent October 1,
2022, through September 30, 2023.
Roll-off contractors operating in Miami Beach are required to follow the terms outlined in Sections
90-278 (1) and (2) of the City Code, which include the monthly remittance of roll-off fees equal to
the City Commission approved rate (18% from the beginning of the audit period through October
5, 2019 and 20% for the remainder of the audit period) multiplied by the total gross receipts for
each contractor's City operations. City Code Section 90-221 defines gross receipts as the entire
amount of fees collected by the contractor (whether wholly or partially collected) for solid waste
collection and disposal within the City, excluding any taxes, and gross receipts from servicing roll
off and portable containers.
City Code Section 90-278(3) requires that each roll-off contractor provide the City Manager with
a current list of the names and addresses of each account upon its initial application. Upon any
application for renewal of its permit, each contractor must provide the frequency of service, the
permit number and capacity of each roll-off container or dumpster for each account, and the
address serviced by each roll-off container or dumpster. This list of accounts is typically furnished
concurrently with the monthly report to the Finance Department. It is an essential document to
verify the accuracy of the roll-off contractor's filings during the audit process.
City Code Section 90-278( 4) requires that monthly reports, accompanied by payment of any owed
fees, be submitted to the City Finance Department by all authorized contractors at the end of the
month after the month in which the gross receipts were generated. For example, the monthly report
and any associated roll-off fees owed for December 2023 are due by January 31, 2024. Any unpaid
permit fees that are not timely received are subject to penalties of 10% per month up to a
maximum of 50%, plus the highest legal rate of interest permitted by law on the amount of the
fee, exclusive of penalties, from the date the permit fee first became delinquent until paid.
When the contractor has annual gross receipts reported to the City greater than $200,000, the
contractor is required to deliver to the City Finance Department a statement of annual gross
receipts generated from accounts within the City prepared by an independent Certified Public
Accountant (C.P.A.). These statements of annual gross receipts are to be delivered within sixty
days following the close of the contractor's fiscal year pursuant to City Code Section 90-278(4).
David G. Services, LLC exceeded this annual threshold during the 2018 calendar year, and,
therefore, was required to submit the related statement.
Lastly, City Code Section 90-196 details the required insurance coverage to be maintained by
qualified licensed roll-off contractors, and Section 90-193 addresses the need to obtain permits
for all accounts serviced in the City.
OVERALL OPINION
On May 20, 2021, the Code Compliance Department issued Notice of Violation (NOV) SV2021-
14636 to David G. Services, LLC for performing roll-off services in Miami Beach without obtaining
the required permit. In addition, the contractor had not obtained the required annual BTR from the
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City Finance Department.
Consequently, the OIG Sanitation Tax Auditor sent an Audit Notification letter to the contractor on
June 1, 2021, informing its representatives of its intent to audit the contractor's books and records.
Multiple requests were subsequently made to the contractor over the following months for the
records needed to perform the audit. The contractor ignored some requests or requested time
extensions for varying reasons. As a result, the OIG issued subpoenas numbered 21-11, 23-02,
23-03, 23-04, and 23-05 which were successfully served to David G. Services, LLC
representatives in an effort to obtain compliance. Some records were provided, but not all of those
requested, so the audit was completed with the best available information. To date, the contractor
has remained non-compliant and has not obtained the required annual BTRs, permits or filed
monthly Roll-Off Permit Fee returns with all monies due to the City.
The following deficiencies, separated by the deficient party(ies), were identified during the audit
process:
A. Findings pertaining solely to David G. Services, LLC
1. Unreported permit fees collected, but not remitted, totaling $17,029.80 (including
interest and penalties) are due to the City.
B. Findings pertaining to both David G. Services, LLC and the City
2. G7 Holdings, Inc. d/b/a "Garbageman.com" with FEIN 65-1037789 improperly
shared its BTR with David G. Services, LLC d/b/a "Garbageman.com" FEIN 47-
1733962.
3. David G. Services, LLC did not file its 2018 annual statement of gross receipts
prepared by an independent CPA as required by City Code Section 20-278(4).
PURPOSE
The purpose of this audit was to determine whether tested required contractor filings were
complete and accurate; whether corresponding remittances were correctly calculated using the
City Commission approved permit fee rate: whether filings and monies were timely received and
correctly recorded by the City Finance Department; and whether the contractor was compliant
with other designated City Code sections.
SCOPE
1. Determine whether the contractor maintained sufficient records to determine the taxability
of identified Miami Beach transactions.
2. Determine whether the contractor timely submitted tested monthly reports of gross receipts
and remitted full payment of any corresponding permit fees due to the City. If not,
determine whether the appropriate penalties and interest charges were assessed pursuant
to City Code Section 90-278(6)(a-d).
3. Determine whether the contractor timely obtained its required annual BTRs during the audit
period.
4. Determine whether the contractor complied with other tested reporting requirements listed
in City Code Section 90-278.
5. Determine whether the contractor maintained the required insurance coverage pursuant
to City Code Section 90-196.
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6. Determine whether tested monthly permit fee payments remitted were accurately recorded
in the City Financial System .
FINDINGS, RESULTS/RECOMMENDATIONS, AND RESPONSES
The findings below are separated by those pertaining solely to the contractor, and any pertaining
to both the contractor and the City.
A. Findings pertaining solely___to David G. Services, LLC
1. Unreported Permit Fees Collected, But Not Remitted, Totaling $17,029.80 (Including
Penalties and Interest) Are Due To The City.
The Notice of Audit letter was sent to the contractor on June 1, 2021, after the OIG
Sanitation Tax Auditor became aware that it was performing roll-off services without
obtaining the required BTR and/or permits from the City.
Examination of the Munis system found that David G. Services, LLC did not file any Roll
off Permit Fee returns or remit all corresponding monies due to the City during the audit
period. Furthermore , the EnerGov system indicated that David G. Services, LLC had not
been issued any required permits or BTRs from the City during the audit period from
November 1, 2017, through May 31 , 2021 .
On February 15, 2022, Mr. Gregory Davis, Manager of G7 Holdings Inc., provided invoices
and a USB with an Excel spreadsheet for David G. Services, LLC. The OIG Sanitation
Tax Auditor examined the provided documents and identified several roll-off transactions
in which the contractor collected permit fees from Miami Beach customers but did not remit
the associated monies to the City pursuant to City Code.
As shown in the table below, the OIG Sanitation Tax Auditor concluded that David G.
Services, LLC collected Miami Beach permit fees totaling $8,872.18 during the audit
period that were not remitted to the City Finance Department. The related unreported and
unpaid permit fees due, including associated penalties and interest, totaled $17,029.80.
Period Unreported Roll-Off Penalties Interest Total Amount
Gross Receipts Fees Due ** ** Due
Nov. 2017 -Dec. 2017 $40,874.27 $772.20 $386.10 $535.82 $1 ,694.12
Jan. 2018-Dec. 2018 $254 ,057 .29 $4 ,764 .60 $2 ,382 .30 $2 ,998.94 $10 ,145.84
Jan. 2019-Dec. 2019 $101 ,361.36 $1 ,136.20 $568.10 $571 .58 $2,275.88
Jan. 2020 -Dec. 2020 $144 ,526.97 $1 ,713.40 $186.70 $141 .93 $2 ,042 .03
Jan. 2021 -May 2021 $98,920.06 $485.78 $242 .89 $143.26 $871 .93
Totals $639,739.95 $8,872.18 $3,766.09 $4,391 .53 $17,029.80
• City Commission approved permit fees equaled 18% from the beginning of the audit period, November 1, 2017, through
October 5, 2019, and 20% from October 6, 2019, through the end of the audit period, May 31 , 2021 .
•• Penalties and interest were waived and not charged for deficient payments received during the period of March 1, 2020,
through November 30, 2020, pursuant to City Resolution Nos. 2020-31237 and 2020-31390.
Results/Recommendations:
The OIG recommends that the City Finance Department invoice David G. Services, LLC
$17,029.80, including penalties and interest, related to permit fees charged and collected
from Miami Beach customers but not remitted to the City. Upon request, the OIG will make
its supporting documentation related to the assessment available to the City Finance
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Department so that its staff can review the corresponding analysis before creating the
invoice.
The amount due was calculated as of September 30, 2023, and stems from penalties and
interest related to the permit fees collected but not remitted during the audit period.
Although the City Administration may choose to update these figures and increase the
amount due, the OIG recommends that the invoice not be updated because of the
complexities associated with this audit.
Upon receipt of the invoice, the contractor should timely remit the corresponding permit
fees due to avoid additional penalties available under the City Code. David G. Services,
LLC should also consistently and accurately file its future monthly Roll-off Permit Fee
returns to the City and timely remit all associated monies due under Section 90-278(4) of
the City Code .
Lastly, the Finance Department may also invoice the contractor for audit-related costs
under City Code Section 90-278(6), pending further guidance from the Office of the City
Attorney.
David G. Services, LLC Response :
Please see Exhibits A and B located at the end of this report
City Administration Response:
The Finance Department will invoice David G. Services, LLC $17,029.80, including
penalties and interest, related to the permit fees still owed to the City for the audit period
of November 1, 2017 through May 31, 2021.
The Finance Department will bill the contractor for audit-related costs/fees once it receives
further recommendations/ instructions to do so.
B. Findings pertaining to both David G. Services, LLC and the City
2. G7 Holdings, Inc. Improperly Shared Its BTR With Another Business Entity, David
G. Services, LLC
City Code Section 102-371 Application procedures:
(a) Procedures for issuance. No license shall be issued or granted to any person to
engage in any business named, identified or encompassed by this article unless an
application is filed with the city manager or his designee on forms provided for that
purpose ...
City Code Section 102-378, "Lapse of insurance, bond:
(a) Those occupations requiring insurance as a prerequisite to the issuance of a tax receipt
must submit an original certificate of insurance at the time of application, to be approved
by the risk manager. It is the taxee 's responsibility to ensure that an updated original
certificate of insurance is forwarded to the city's business tax section prior to the expiration
date of the certificate currently on file. If, at any time during the tax year, a taxee fails to
maintain the insurance and/or bonds required by this article for the taxed business, the
tax receipt issued to such business shall become null and void. Such businesses that
continue operating without a valid tax receipt shall be subject to enforcement procedures
as set forth in section 102-377, including business tax receipt revocation.
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The OIG Sanitation Tax Auditor determined that David G. Services, LLC d/b/a
Garbageman.com with Federal Identification Number2 or FEIN 47-1733962 has submitted
monthly Roll-off Permit Fee returns under G7 Holdings, Inc. d/b/a Garbageman.com with
FEIN 65-1037789 and Munis customer ID 17666. Despite being a separate business entity
operating on Miami Beach, David G. Services LLC had not submitted the required BTR
application or certificate of insurance to the Risk Manager as of October 31, 2023.
Mr. Greg Davis, owner of G7 Holdings, Inc. verbally informed the OIG Sanitation Tax
Auditor that he provided a franchise to David G. Services, LLC. Moreover, the City Code
Compliance Department issued NOVs CC2021-10844 ( operating without a valid BTR) and
SV2021-14636 (operating without a valid permit) to David G. Services, LLC during the
audit period.
Recommendations:
David G. Services, LLC should not work under a BTR issued to another legal entity, G7
Holdings, Inc. Each legal entity performing roll-off services within Miami Beach should
comply with all requirements in the City Code, including obtaining BTRs and permits,
maintaining sufficient insurance coverage, timely filing Roll-off Permit Fee returns and
remitting all associated monies due to the City, etc.
David G. Services, LLC Response:
Please see Exhibits A and B located at the end of this report
City Administration Response:
David G. Services, LLC should comply with City Code Section 90-192 requirement by
applying for a Business Tax Receipt.
3. David G. Services, LLC Did Not File Its 2018 Annual Statement of Gross Receipts
Certified by an Independent Certified Public Accountant as Required by City Code
Section 20-278(4)
City Code Section 90-278(4) includes the following provision:
... Contractors having annual gross receipts reported to the city over $200,000.00 shall,
on or before 60 days following the close of their fiscal year, deliver to the finance
department a statement of annual gross receipts (generated from the city) certified by an
independent certified public accountant, reflecting gross receipts within the city for the
preceding fiscal year.
David G. Services, LLC exceeded the threshold amount for requiring certified statements
of gross receipts for the 2018 calendar year, but the required document was not submitted
to the City Finance Department. Furthermore, no evidence was presented by City staff to
the OIG Sanitation Tax Auditor indicating that the contractor was notified of this deficiency.
The furnishing of these required statements, verified by an independent certified public
accountant, would allow City staff to verify the contractor's related gross receipts
independently.
Recommendation(s)
David G. Services, LLC should comply with City Code Section 90-278(4) requirements by
FEIN is a unique identifying number that the federal Internal Revenue Service (IRS) uses to identify a
business based on payroll and tax records.
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2
timely submitting its certified annual statement of gross receipts for each year that it
exceeds the designated threshold.
The City Finance Department should designate an employee(s) to monitor each
contractor's annual gross receipts to ensure that each is compliant with Section 90-278( 4 ).
If the notified contractor does not take timely corrective action, then the City may apply all
disciplinary actions available in the City Code.
The OIG also recommends revising the City Code to include a provision allowing the
levying of penalties, interest, and/or other actions against related non-compliant
contractors that do not timely file the required annual audited statements of gross receipts.
This would lead to greater compliance with this requirement and reduce the City's reliance
on audits to oversee this process.
G? Holdings, Inc. Response:
Please see Exhibits A and B located at the end of this report
City Administration Response:
The Finance Department has designated employees who are responsible for the
monitoring of reported and unreported roll-off customers and related filings.
In FY 2023, the Finance Department instituted an internal control process including an
analysis of reported filings which are reviewed for timeliness and accuracy. Included in
this process is a review of those customers with receipts in excess of $200,000 that are
required to comply with the submission of their annual statements of gross receipts
certified by an independent Certified Public Accountant. A comparison of total monthly
receipts and annual reported receipts is performed to ensure completeness of reported
receipts.
As part of the internal process a list of all roll-off customers who have obtained a roll-off
BTR with the City is reviewed and customers with delinquent filings are notified of
unreported filings with the City and applicable fines and fees are billing accordingly.
In addition, the Finance Department along with the City's Information Technology
Department has initiated the process to implement an electronic filing system for monthly
roll-off submissions. This project is currently ongoing.
The Finance Department enforces compliance of code regulations related to fees, fines,
interest and penalties.
All auditee responses received pursuant to City Code Section 2-256(h) are included in the issued
final report. Those received via email from the City Administration were included after each
pertinent finding and recommendation in the body of this report due to its format.
Since the email received from Rafael Andrade, Esquire, submitted on behalf of David G. Services,
LLC, and containing its response to the draft report were not finding specific, they have been
included in their entirety in Exhibit A, located at the end of this report. The OIG has added its own
reply to the contractor's response (see Exhibit B).
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cc: Rickelle Williams, Interim City Manager
Eric Carpenter, Deputy City Manager
o~/~1/:to~ y
Date
Joe Gomez, Public Works Department Director
Bradford Kaine, Sanitation Division Director
Jason Greene, Chief Financial Officer
Ric Dopico, City Attorney
Rob Rosenwald, Chief Deputy City Attorney
Steven Rothstein, Deputy City Attorney
David Gardoqui, Manager, David G. Services, LLC
Rafael Andrade, Esquire representing David G. Services, LLC
OFFICE OF THE INSPECTOR GENERAL, City of Miami Beach
1130 Washington Avenue, 6th Floor, Miami Beach, FL 33139
Tel: 305.673.7020 • Hotline: 786.897.1111
Email: CityofMiamiBeachOIG@miamibeachfl.gov
Website: www.mbinspectorgeneral.com
Page 8 of 14
ADDENDUM:
The OIG Sanitation Tax Auditor made multiple requests to the contractor for records and issued
several subpoenas during the audit process, but many went unanswered or were not fully
satisfied. The following paragraphs provide a summarized timeline of the events related to the
performance and completion of this audit.
The Notice of Audit letter was sent to the contractor on June 1, 2021, after the OIG Sanitation Tax
Auditor became aware that it was performing roll-off services without obtaining the required BTR
and/or permits from the City.
On June 29, 2021, the OIG issued subpoena number 21-11 to request testimony, Metro Process
Service, Inc. was unable to serve on July 6, 2021, at 8600 NW 36 Ave. suite #200 . Then,
subpoena number 21-11 was successfully served at Mr. David Gardoqui's home address.
On July 16, 2021, Mr. David Gardoqui requested via email an additional 30 days to comply with
subpoena 21-11 .
On August 31 , 2021, Mr. David Gardoqui sent an email to authorizing Mr. Ralph Andrade, Esquire,
to represent his company during the audit.
On September 2, 2021, Mr. Andrade stated via email that "I am not authorized to accept service
on my client's behalf' in reference to the subpoena's delivery. On September 3, 2021, Mr. Andrade
stated via email to the OIG Sanitation Tax Auditor that "David G. Services, LLC, is represented
by counsel and that he should not be contacting him or copying him on emails".
On September 9, 2021, Mr. Andrade stated via emailJ. "please note my client is no longer rendering
services in the City of Miami Beach."
On February 15, 2022, Mr. Gregory Davis, Manager, G7 Holdings Inc., provided invoices and a
USS with an Excel spreadsheet for David G. Services, LLC containing the following 17 schedules
ranging from January 2018 through May 2021: Schedule 1-P&L Reconciliation, Schedule 2-
Entries-Reconciliation, Schedule 3-Inv. Revenue Sum, Schedule 4-CMS Franchise Fee Sum,
Schedule 5-CMS Cale -Dump Trail, Schedule 6-CMS Cale-Other Garb, Schedule 7-CMS Cale
-Roll Off, Schedule 8-List by David G Class, Schedule 9-P&L Schedule, Schedule 10-Dump
Trailer CMS, Schedule 11-Other Garbage CMS, Schedule 12-Roll Off CMS, Schedule 13-
Demolition, Schedule 14-Write Offs, Schedule 15-Non Garbage, Schedule 16-G7 Holdings, and
Schedule 17-CMS Fees Paid. Several transactions were identified in which David G. Services,
LLC collected permit fees from Miami Beach customers and did not remit the associated monies
due to the City.
Furthermore, Schedule 17-CMS Fees Paid included roll-off transactions performed to the same
customer by both David G. Services, LLC and G7 Holdings Inc. from January 2018 through
September 2020 in which the permit fee was filed by G7 Holdings Inc. During the examination, it
was noted that David G. Services, LLC d/b/a Garbageman.com was providing removal of C&D
debris (hauler services) within the City of Miami Beach. Also, this company shared the same
d/b/a, logo, and business address with G7 Holdings Inc. Despite multiple requests, David G.
Services, LLC failed to provide its detailed General Ledger to the OIG Sanitation Tax Auditor.
Audit results were based on the best available records.
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In Schedule 5-Calculation of the City of Miami Beach Franchise Fee-Dump Trailer_ the following
notes were found "Note: We note that per discussions with David Gardoqui, Owner of David G
Services, in many instances the amount that was collected from the customers for the CMB
franchise fee was recorded within the dump trailer revenue accounf'. This statement confirmed
to the OIG Sanitation Tax Auditor that David G. Services, LLC charged and collected permit fees
from Miami Beach customers.
On February 23, 2022, Mr. Gregory Davis, Manager, G7 Holdings Inc., provided an Excel
spreadsheet with transactions/gross receipts generated by David G. Services, LLC related to
Miami Beach roll-off services provided during November and December 2017.
On November 1, 2022, the OIG issued subpoena number 23-02 to request records, Metro
Process Service Inc. was unable to serve on November 16, 2022. Finally, it was served by Metro
Process Service Inc. on December 12, 2022.
On December 5, 2022, the OIG issued subpoena number 23-03 requesting records , it was served
by Metro Process Service Inc. on December 12, 2022 . On December 17, 2022, Mr. Andrade sent
an email with objections related to subpoena 23-03.
On December 16, 2022, a discussion was conducted with staff from the Office of the City Attorney
related to the OIG's issuance of subpoenas to David G. Services, LLC.
On December 20, 2022, the OIG issued subpoenas numbered 23-04 & 23-05 to request testimony
and records, which were served by Metro Process Service Inc. on January 4, 2023.
On January 17, 2023, the OIG issued subpoenas numbered 23-06 & 23-07 to request testimony
and records; they were unable to be served by Metro Process Service Inc. on February 8, 2023.
On February 23, 2023, the OIG issued subpoenas numbered 23-13 & 23-14 to request testimony
and records; they were unable to be served by Metro Process Service Inc. on March 21 , 2023.
Despite multiple requests, the contractor did not provide its detailed General Ledger related to
the audit period. Consequently, the permit fee audit assessment included in this report was based
on the best available records provided by Mr. Gregory Davis .
Additional Pertinent Matters:
City Resolution No. 2023-32654 and the removal of C&D
Several discussions were held with representatives from the contractor and the Office of the City
Attorney related to the taxability of the removal of construction and demolition debris during the
performance of demolition contracts pursuant to Section 90-280, Use Restrictions: Roi/off,
portable containers, or dumpsters are to be used for the removal of construction and
demolition debris or for the removal of large quantities of bulky waste. Construction and
demolition debris, and bulky waste, is never to be stored directly on the ground, as ro/foff and
portable containers must be used at all times. Roi/off and portable containers shall not be used
for the removal of garbage or commercial waste (Emphasis added).
Meetings were held on March 10 and April 11 , 2023, with various Office of the City Attorney and
City Administration staff, whereupon it was concluded that the Sanitation Chapter 90 needs
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updating to resolve possible ambiguities. In the interim, it was agreed that the removal of C&D by
demolition contractors would not be pursued under the provisions of the current City Code.
On June 28, 2023, Resolution No. 2023-32654 was approved by the City Commission, which has
had a negative impact on roll-off receipts reported to the City by limiting the reporting of receipts
from C&D debris removal to the use by a contractor of a metal container of 10 cubic yards or more
without wheels. Based on an interpretation of the Resolution by the Office of the City Attorney,
this limitation undercut a previous opinion from that office, which included wheeled containers,
including dump trucks, within the definition of a roll-off container. The effect of the Resolution is
to base the City's receipt of sanitation taxes for debris removal on the type of equipment used,
not on the nature of the transaction, i.e., the removal of C&D debris.
This change has begun and is expected to continue to decrease the future collection of permit
fees by the Sanitation Division. Additional guidance was requested from the Office of the City
Attorney and should include discussion with the City Commission regarding these effects on
receipts.
The OIG Sanitation Tax Auditor examined the limited records provided and captured the
unreported transactions (see finding #1) related to the City of Miami Beach. 1,326 unreported
transactions related to the removal of C&D were identified totaling $639,739.95 on Schedule 10-
Dump Trailer CMS, Schedule 11-Other Garbage CMS, and Schedule 12-Roll Off CMS.
Prior to the adoption of City Resolution No. 2023-32654 and the related opinion received from the
Office of the City Attorney, the OIG Sanitation Tax Auditor had estimated that the contractor would
have been assessed $190,997.57 including penalties and interest under the prior City Attorney
interpretation of the roll-off definition. Also, the tax assessment on David G. Services, LLC would
have been much steeper, and the contractor considered an illegal hauler.
This audit was concluded by levying an assessment of $17,029.80, including penalties and
interest, related to Miami Beach transactions, whereby the permit fee was separately charged on
the customer invoice and the corresponding monies were received by the contractor. As a result,
the City Sanitation Division did not collect related revenues of $173,967.77 ($190,997.57 -
$17,029.80). Also, Resolution No. 2023-32654 allowed the contractor to not file all the gross
receipts from removing C&D related to their demolition contracts, resulting in an additional
$44,299.30 in untaxed revenues.
At the request of the OIG for an interpretation of the scope of the Resolution, the Office of the City
Attorney provided an email on September 1, 2023, opining that Resolution No. 2023-32654
applied to all OIG audits not yet finalized. Consequently, its limiting terms were extended to both
current and prospective audits of all contractors, including those using wheeled containers, dump
trucks and grapple services and previously considered by the City Attorney's Office to be covered
by existing Code provisions.
Impact of the Resolution
As mentioned above, Resolution No. 2023-32654 disregards the nature of the transaction and
only focuses on the type of equipment contractors use to remove the debris when determining
taxability under the City Code. As a result of the adoption of Resolution No. 2023-32654 and the
subsequent legal opinion, the OIG believes the following results will occur:
• Contractors who do not use "conventional" roll-off containers to remove construction and
demolition debris and/or bulky waste will have an unearned competitive advantage, as
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long as the City excludes debris removal by wheeled containers, including dump trucks,
from the roll-off definition.
• More contractors may be expected to transition to non-taxable means to collect
construction and demolition debris and/or bulky waste instead of conventional roll-offs to
avoid having to remit any related permit fees to the City.
• Fewer BTRs related to roll-off activities will be required, thereby decreasing City regulation
and oversight of the process.
• The Sanitation Division, which is funded primarily through service fees, will lose revenue,
its customer-based fees may have to be increased to offset the lost revenue, or currently
filled Sanitation employee positions may be downgraded and/or lost.
Charging of Audit Costs to Non-compliant Contractors:
The Office of the City Attorney provided legal opinions supporting the levying of audit costs when
an assessment results from an permit fee revenue audit, pursuant to City Code Section 90-278(6)
which states, "If the contractor fails to timely pay the full permit fee as set forth in subsections (1)
and (2) of this section, the contractor shall pay any and all of the city's expenses for collection of
such fees, including, but not limited to, court costs, audit costs and reasonable attorney fees ."
This legal opinion was relied upon and followed by the OIG and the Finance Department in
assessing audit costs, when appropriate, to non-compliant contractors at the conclusion of audits.
The Office of the City Attorney has been consulted in connection with the audit costs, penalties
and interest assessed in this audit report.
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Exhibit A (Response received from David G. Services, LLC)
From: ralph@randradelaw.com
To: Centorino, Joseph
Cc: Rosenwald, Rob; Coolidge, Mark
Subject: RE: David G. Services, LLC Audit
Date: Monday, April 22, 2024 9:24:32 AM
You don't often get email from ralph@randradelaw.com. Learn why this is important
·IEs \C CO 1, 0 I ~ CAL' flOI\ WHEi\
P G \· D OPENING Ll'.'IKS OR ATTACHMENTS I
Mr. Centorino:
I represent the interests of David G. Services, LLC regarding the Permit Fee Revenue
Audit during the period of November 1, 2017, through May 31, 2021 ("Audit").
The Audit is fatally flawed for several reasons. First, the Audit is premised entirely on
the mistaken notion that my client is a rolloff contractor that used rolloff containers in
the provision of its services. My client is not and has never been a rolloff contractor
and has never used a rolloff container in the provision of its services. Second, the
amount my client purportedly owes the City ($17,029.80) is calculated and founded
upon unverified financial documentation provided by a third-party.
Based upon the foregoing, my client does not owe any permit fees or sums to the City
and the concocted and misguided Audit is rejected in its entirety.
The statements in this letter are made without waiver of any of David G, Services,
LLC, rights, claims, or defenses regardless of whether they are expressly stated
herein.
Regards,
Rafael E. Andrade, Esq.
Law Offices of Rafael E. Andrade, P.A.
1688 Meridian Avenue, 7th Floor
Miami Beach, Florida 33139
t 305.531 .9511
f 305.67 4.8965
C 305 .216.2028
e ralph@randradelaw.com
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Exhibit B (OIG's Reply to Response received from David G. Services, LLC)
Based on available records, the contractor collected funds from its customers pursuant to the
City's Sanitation Code which it has no right to retain.
The contractor did not respond to multiple requests and issued subpoenas during the audit
process to provide all the records needed to complete the audit. However, contractor invoices
were provided by G? Holdings, Inc., a related party to David G. Services, Inc., while both
companies were operating concurrently under the same d/b/a, Garbageman.com. These invoices
contained a separate line item entitled "Miami Beach Fee" charging its customers an additional
18% or 20% (depending on the date of transaction) of the applicable gross amount collected, the
same percentage as the City Commission adopted roll-off permit fee for the audit period.
The amount now due from the contractor pursuant to Finding #1 in this report--$17,029.80--stems
from permit fees collected by the contractor but not remitted during the audit period, including
associated penalties and interest, and is not based on any debris removal activity or funds
collected from that activity after the passage of the City Commission Resolution.
The OIG contends that the contractor charged and collected the roll-off permit fee from its Miami
Beach customers, and obviously has no intention of returning any funds to its originating
customers. These funds were collected for the sole purpose of remitting them to the City. The
contractor has no right to be unjustly enriched by retaining them. Therefore, the City Finance
Department should invoice the contractor for the permit fees it collected but failed to remit to the
City, plus interest and penalties due during the audit period.
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