State Beachfront Management Agreement (State Financial)BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA:
FROM:
DATE:
AUDIT:
PERIOD:
Jorge M. Gonzalez, City Manager
Kathie G. Brooks, Budget and Perf9Pill.J;;JnCe Improvement Director
James J. Sutter, Internal Audit~~{Jd7
/ March 31, 2008
State Beachfront Management Agreement (#3595) Financial Review
October 1, 2006 through September 30, 2007
This audit report is being submitted in compliance with the annual audit reporting requirement of
subparagraph (2) of the original State Beachfront Management Agreement No. 750-0006 dated
February 3, 1982. This management agreement was subsequently reassigned No. 3595 by the
State Department of Natural Resources. Furthermore, amendment number 1 was signed on August
9, 2007 extending the original terms for an additional twenty-five years until February 7, 2032.
INTRODUCTION
State Beachfront Management Agreement No. 3595 requires that the City of Miami Beach remit to
the Florida Department of Environmental Protection 25% ("sand tax") of any and all monies the City
collects from private concerns for the use of State beachfront property. There are three categories
of beachfront property users:
• Operators of beachfront concessions seaward of Lummus Park, Ocean Terrace, North
Shore Open Space Park and Pier Park (Boucher Brothers and Penrod Brothers,) who pay
for use of the beachfront as per their respective contractual agreements.
• Miami Beach hoteliers and condominium associations, which pay beach upland fees to the
City on an annual basis, at the same time that they pay their Occupational License fees.
• Members of the public who run organized, usually one time only, events on the beach, such
as weddings, volleyball tournaments and corporate affairs. These are called Special Events,
and payments are remitted to Tourism and Cult~ral Development.
The following table lists the audited amount of sand tax due and paid to the State by the three
categories of users during the audit period:
Category Total 25% Sand Amount Difference
Revenues Tax Due Remitted
Collected
Beachfront Concessions $600,443 $150,111 $150,111 $0
Hoteliers and Condo Associations $134,656 $33,664 $33,124 $540
S_Q_ecial Events $91,425 $22,856 $22,856 $0
Total $826,524 $206,631 $206,091 $540
OVERALL OPINION
Based upon our examination of City records, it has been determined that during the audit period of
October 1, 2006 through September 30, 2007, the City received a total of $826,524.12 in revenues
\Ne ore commilted lo providing excellent public service ond sole/)l to oil l·vho live, worl:, unci ploy in our vibtont, ttopicol, historic community.
Internal Audit Report
State Beachfront Management Agreement Financial Review (#3595)
March 31 , 2008
subject to the State Beachfront Management Agreement. This figure represents an increase of
$61,075.10 or 7.98% over the fiscal year 2005/06's total of $765,449.02. Subsequent testing
showed that the City only remitted $206,091.45 which was $539.591ess than the actual amount due
of $206,631.03 ($826,524.12 x 25%). See the attached supporting schedule for revenue details by
concessionaire during the audit period.
PURPOSE
The purpose of this audit is to determine whether the City complied with State Beachfront
Management Agreement No. 3595 by accurately calculating, timely remitting and properly recording
sand tax monies to the Florida Department of Environmental Protection equal to 25% of any and all
revenues collected from private concerns for the use of State beachfront property.
FINDING AND RECOMMENDATION
Finding: State's 25% portion of sand tax not paid correctly
Internal Audit's testing found a variety of calculation errors causing both sand tax underpayments
and overpayments to the State of Florida. The net result is a $539.59 underpayment as shown in
the attached schedule.
Recommendation ( s ):
The Finance Department has been notified and will include this amount in the City's next sand tax
payment.
JJS:MC:mc
audit performed by Mark Coolidge
F:lobpii$AUD\DOC07-08\REPORTS-FINAL\BEACH 07 STATE RPT.doc
Page 2 of 4
Internal Audit Report
State Beachfront Management Agreement Financial Review (#3595)
March 31, 2008
SCHEDULE OF FEES COLLECTED
BEACHFRONT MANAGEMENT AGREEMENT
FISCAL YEAR 06/07
75% OF 25% DUE
CONCESSIONAIRE TOTAL FEES* TOTAL STATE
1500 Ocean Drive Associates $1,792.00 $1,344.00 $448.00
2 2201 Collins Avenue, LLC 5,664.00 4,248.00 1,416.00
3 Alexander Hotel 3,680.00 2,760.00 920.00
4 Arden Savoy 1,200.00 900.00 300.00
5 Art Center South Florida 6,308.40 4,731.30 1,577.10
6 Avista Studios 5,887.84 4,415.88 1,471.96
7 Best Western Atlantic Beach 3,264.00 2,448.00 816.00
8 Beta Epsilon/Cadillac LLC 4,208.00 3,156.00 1,052.00
9 BGW Design Limited 3,785.04 2,838.78 946.26
10 Blue and Green Diamond 0.00 0.00 0.00
11 Boucher Brothers 583,457.40 437,593.05 145,864.35
12 Continuum on So. Beach 5,024.00 3,768.00 1,256.00
13 Crystal Beach Development 1,344.00 1,008.00 336.00
14 CSC Traymore 1,376.00 1,032.00 344.00
15 Days Inn Art Deco 2,336.00 1,752.00 584.00
16 Days Inn Oceanside 2,128.00 1,596.00 532.00
17 Deco Productions 1,373.84 1,030.38 343.46
18 Decoplage Condo Assn. 10,000.00 7,500.00 2,500.00
19 Delano Hotel 3,328.00 2,496.00 832.00
20 Double tree Surfcomber Hotel 1,760.00 1,320.00 440.00
21 East End Volleyball 446.52 334.89 111.63
22 Eden Roc Hotel 5,600.00 4,200.00 1,400.00
23 Exclusive Marketing Inc. 3,709.08 2,781.81 927.27
24 Fontainebleau Hotel 10,000.00 7,500.00 2,500.00
25 Four Points/Sheraton 3,456.00 2,592.00 864.00
26 Frere Independent 747.68 560.76 186.92
27 Hello Florida Inc. 2,989.72 2,242.29 747.43
28 Holiday Inn Miami Beach 3,968.00 2,976.00 992.00
29 Hospitality by Brenda Gordon, Inc. 175.24 131.43 43.81
30 II Villaggio Condo Assn. 2,032.00 1,524.00 508.00
31 Innovative Events 560.76 420.57 140.19
32 Katrina's/The Bath Club 3,200.00 2,400.00 800.00
33 Lead Dog Marketing Group 140.60 105.45 35.15
34 Marseille Hotel 1,808.00 1,356.00 452.00
35 Miami Beach Marriott 3,776.00 2,832.00 944.00
36 On Board Entertainment 8,859.80 6,644.85 2,214.95
37 Palms South Beach 3,936.00 2,952.00 984.00
38 Penrod Brothers 58,999.40 44,249.55 14,749.85
39 Polo Line LLC 4,759.04 3,569.28 1,189.76
40 Quality Inn 3,600.00 2,700.00 900.00
41 Regency Party Rentals 1,404.68 1,053.51 351.17
42 Riande Continental Hotel 4,016.00 3,012.00 1,004.00
43 Richmond Hotel 1,712.00 1,284.00 428.00
44 Riutel Florida 4,544.00 3,408.00 1,136.00
45 Ritz Carlton 6,016.00 4,512.00 1,504.00
Page 3 of 4
REMITTED OWED
TO STATE TO STATE
$362.63 $85.37
1,416.00 0.00
920.00 0.00
300.00 0.00
1,577.10 0.00
1,471.96 0.00
816.00 0.00
0.00 1,052.00
946.26 0.00
158.50 (158.50)
146,498.35 (634.00)
1,256.00 0.00
0.00 336.00
344.00 0.00
584.00 0.00
532.00 0.00
343.46 0.00
2,500.00 0.00
832.00 0.00
440.00 0.00
111.63 0.00
1,400.00 0.00
927.27 0.00
2,500.00 0.00
864.00 0.00
186.92 0.00
747.43 0.00
992.00 0.00
43.81 0.00
430.12 77.88
990.69 (850.50)
800.00 0.00
35.15 6.00
452.00 0.00
944.00 0.00
2,214.95 0.00
984.00 0.00
14,749.85 0.00
1,189.76 0.00
900.00 0.00
351.17 0.00
1,143.75 (139.75)
(1,154.13) 1,582.13
2,645.75 (1 ,509.75)
1,504.00 0.00
Internal Audit Report
State Beachfront Management Agreement Financial Review (#3595)
March 31, 2008
SCHEDULE OF FEES COLLECTED
BEACHFRONT MANAGEMENT AGREEMENT
FISCAL YEAR 06/07
75% OF 25% DUE
CONCESSIONAIRE TOTAL FEES* TOTAL STATE
46 Royal Palm 0.00 0.00 0.00
47 Sagamore Hotel 1,472.00 1,104.00 368.00
48 SC Collins LLC 4,711.68 3,533.76 1,177.92
49 Shelborne Beach Resort 4,080.00 3,060.00 1,020.00
50 Soiree Miami Inc. 280.36 210.27 70.09
51 South Seas Hotel 1,872.00 1,404.00 468.00
52 TBA Global Events 3,271.04 2,453.28 817.76
53 The Bentley Beach 1,744.00 1,308.00 436.00
54 The National 2,560.00 1,920.00 640.00
55 The Raleigh Hotel 1,824.00 1,368.00 456.00
56 The Setai Resort and Condo 4,272.00 3,204.00 1,068.00
57 The Shore Club Hotei/Philips 5,200.00 3,900.00 1,300.00
58 Wyndham Miami Beach Resort 6,864.00 5,148.00 1,716.00
Total $826,524.12 $619,893.09 $206,631.03
*Excludes sales tax
Page 4 of 4
REMITTED OWED
TO STATE TO STATE
(917.30) 917.30
586.58 (218.58)
1 '177.92 0.00
1,020.00 0.00
70.09 0.00
468.00 0.00
817.76 0.00
436.00 0.00
640.00 0.00
456.00 0.00
1,068.00 0.00
1,300.00 0.00
1,716.00 0.00
$206,091.45 $539.59