State Beachfront Management Agreement FY12 (City Operational)(9 M.lrAMI BEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division
TO: Jimmy L. Morales, City Manager
VIA:
FROM: James J. Sutter, Internal Auditor ~
DATE: April19, 2013
INTERNAL AUDIT REPORT
AUDIT:
PERIOD:
Kathie G. Brooks, Assistant City~an er
State Beachfront Management Agreement (#3595) Operational Review
October 1, 2011 through September 30, 2012
This report is the result of a regularly scheduled audit of the operational controls surrounding the
City's managing of the State Beachfront Management Agreement No. 750-0006 dated February
3, 1982 (later reassigned No. 3595 by the State's Department of Natural Resources) and the
corresponding amendment whose terms were extended to February 7, 2032. A separate audit
report focusing on our financial review was issued to the State of Florida in accordance with the
agreement.
INTRODUCTION
State Beachfront Management Agreement No. 3595 requires the City of Miami Beach to remit
25% ("sand tax") of any and all monies collected from private concessionaires or other private
concerns for the use of State beachfront property to the Florida Department of Environmental
Protection. Also, in accordance with state statutes, the City collects 7% sales tax along with the
beachfront rental revenue, and remits same to the State's Department of Revenue.
There are four categories of beachfront property users:
• Operators of beachfront concessions seaward of Lummus Park, Ocean Terrace, North
Shore Open Space Park, Pier Park, 21st Street and 46 1h Street (Boucher Brothers,
Penrods Brothers and Tim Wilcox, Inc.) who pay for the use of the beachfront as per
their respective contractual agreements with the City.
• Miami Beach hoteliers and condominium associations, which pay beach upland fees to
the City annually based o.n the number of units, at the same time that they pay their
business tax receipt 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 the City's Tourism and Cultural
Development Department.
• Productions requiring to park essential vehicles on the beach or sand areas of Miami
Beach may purchase vehicle beach access passes from the City's Tourism and Cultural
Development Department. The cost of the pass is typically $150 per vehicle per day
(other discounts may apply depending on the date purchased) unless the vehicles do not
move from a specified location for that permitted use, but the first one per day is free.
The following table lists the rounded total amount of sand tax paid by the City to the State of
Florida for the use of their beachfront property during the past three fiscal years:
We ore com miffed to providing excellent public service and safely to all who live, work, and ploy in our vibrant, tropical, historic communily.
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
Category FY 2009/10 FY 2010/11 FY 2011/12
Beachfront Concessions $184,372 $192,293 $232,344
Hoteliers and Condo Associations $64,177 $42,059 $78,604
Special Events $32,273 $53,288 $36,586
Vehicle Beach Access Passes* $0 $0 $36,488
Subtotal $280,822 $287,640 $384,022
Adjustments ** ($249) $0 $0
Total $280,574 $287,640 $384,022
Total
$609,009
$184,840
$122,147
$36,488
$952,484
($249)
$952,236
* As a result of a previous internal audit, the City's Legal Department opined that sand tax should be paid to
the State of Florida on all received vehicle beach access pass fees.
** The adjustments represent the Finance Department's corrections of previous sand tax payments made on
beach concession fees, inaccurate calculations, prior audit results, etc. and are listed separately as it affects
different customers within the designated categories.
OVERALL OPINION
Miscellaneous Cash Receipts and Payment Vouchers were generally accurately calculated and
separated into the appropriate general ledger accounts. Furthermore, this data along with
upland fee revenues was properly entered into the City's Financial System and the Special
Events Fee Log. Despite these positive findings, the following shortcomings were noted and
are in need of improvement:
• The City inadvertently overpaid the State of Florida by $169.01 due to incorrect general
ledger distributions of special event and vehicle beach access pass payments. Also, ten
of the eighty reviewed upland fee payments were not remitted to the State of Florida in
the appropriate quarterly check.
• The City currently does not have an adequate process by which to confirm the actual
number of units for hotels, condominiums, etc. which affects such calculations as upland
fees, smoke detector fees, etc.
• Incorrect upland fee billings are identified whereby the City did not collect monies that it
was entitled to receive.
• City Bills are created for special event which impacts the sand tax general ledger
account even though the promoter may not pay the balance for months which creates
difficulties in trying to determine when to include these monies in the next State of
Florida quarterly remittance.
• The City did not receive $6,990 due as the Eden System inaccurately billed nine
hotels/condominiums for their 2012/13 fiscal year beach concession fees for food and
equipment.
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%
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Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
of any and all revenues collected from private concerns for the use of State beachfront property.
Also, the beachfront licenses (food, equipment, water sports and sundries) billed to
hotels/condos are examined to ensure that they were correctly calculated.
SCOPE
1. Confirm that State Management Agreement #3595 is valid and its terms complied with.
2. Confirm that updated City policies and procedures exist, are known and followed by
personnel.
3. Confirm that the supporting documentation maintained is organized, sufficient and
complete.
4. Confirm that tested sand tax transactions are complete, accurately calculated and
properly recorded in the City's Financial System.
5. Confirm that the Finance Department's quarterly sand tax payments are properly
calculated and are timely remitted to the State of Florida.
6. Confirm that the correct number and amounts for beachfront licenses were billed to the
applicable hotels and condominiums.
PROCESS DESCRIPTION
The City's Finance Department mailed its business tax receipts in August 2011 requesting
payment for the 2011/12 fiscal year. In addition to other annual charges, any
hotel/condominium that collects money from equipment rentals and/or food/beverage sales
occurring on the beach should be billed upland fees at a rate of $19 per unit per City Ordinance
No. 2003-3420.
A maximum charge of $10,000 per upland property is applicable for each concession location,
plus any applicable taxes. Therefore, hotels and condos such as the Loews, Fontainebleau,
Eden Roc and Decoplage with more than 526 units (527 x $19 > $1 0,000) would only be
charged the maximum of $10,000 in upland fees during the 2011/12 fiscal year.
In addition, hotels and condominiums subject to upland fees and beachfront concessionaires
will also owe some combination of beach concession fees for food, equipment, water sports or
sundries. The cost of each relevant beachfront license for the 2012/13 fiscal year was $699 and
is billed through the City's annual business tax receipt process.
Payment in full is due by October 1st or the customer may be subject to Code Compliance
citations and penalties. All payments received are to be processed by the City's Central
Cashier and distributed to the corresponding general ledger accounts pre-programmed into the
Eden System's Cashiering Module.
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Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
In addition, beach concessionaires (Boucher Brothers, Penrods Brothers and Tim Wilcox, Inc.)
remit payments based on their respective agreements with the City. For example, Penrods
Brothers and Tim Wilcox, Inc. remit monthly payments whereas the Boucher Brothers pay an
upfront minimum guarantee with a true-up at year end whereby any calculated overages are
due by December 31 81 .
The Finance Department receives these payments and enters the pertinent information in the
Eden System to distribute the monies among the applicable general ledger accounts. Once
completed, the payment is submitted to the City's Central Cashier for processing (similar to the
business tax receipt payment process mentioned earlier).
Lastly, the Tourism & Cultural Development Department is responsible for approving and
monitoring special events occurring in the City as well as the issuance of vehicle beach access
passes. The special event promoter has to meet specified criteria and remit various fees to
stage the event based on a number of factors. Examples may include but are not limited to the
submittal of site plans and insurance; the existence of off-duty police and/or fire personnel; the
payment of application fees, permit fees, security deposits; etc. Meanwhile, vehicle beach
access passes can typically be obtained at a daily fee of $150 per vehicle for those special
events promoters needing to park essential vehicles on the City's beach or sand areas
assuming all required criteria are satisfied.
The Tourism & Cultural Development Department usually creates City Bills to invoice the
customer for any amounts due. At this time, these outstanding monies due are distributed
among the applicable general ledger accounts (sand tax, sales tax, etc.). Any corresponding
monies subsequently received are applied against this City Bill in the Eden System's Accounts
Receivable Module.
The primary exception is for film companies' requested vehicle beach access passes since the
actual amount owed is often unknown until the day of the event. Therefore, Tourism & Cultural
Development Department staff instead prepares pre-numbered Miscellaneous Cash Receipt
forms or MCRs to process any monies received. The MCRs provide such pertinent information
as the payer's name, address, reason for paying and total paid; the general ledger account
number distribution for these monies; as well as the preparer's relevant information. This form
accompanied by the payment is then brought to the Central Cashier for processing and
validation.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSES
1. Finding: The State of Florida was Inadvertently Overpaid by $169.01 in Sand Tax
During the 2011112 Fiscal Year
All sand tax payments received during the 2011/12 fiscal year were tested to confirm
that the City's four quarterly payments to the State of Florida were correct. In doing so, it
was found that ten of the eighty upland fee payments received were not remitted timely
to the State of Florida as they were incorrectly included in the City's next quarterly
remittance. For example, all ten payments were received in June 2012 and therefore
Page 4 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
should have been included in the quarterly payment due by July 20, 2012 but instead
they were included in the quarter ending September 30, 2012.
Finally, testing found that the following seven exceptions, which are separated by
overpayments and underpayments, resulted in the City remitting a total of $169.01 more
in sand tax to the State of Florida than owed:
Overpayments (totals $512.62)
• Two vehicle beach access fee payments received from First Shot Productions
and Select Services erroneously charged 75% to sand tax rather than 25%.
Consequently, the State was overpaid by a total of $450.00 ($300.00 and
$150.00 respectively).
• Sales tax was inadvertently omitted from the U.S. Road Sports & Entertainment's
March 2012 special event payment which caused the sand tax account to be
overstated by $62.62.
Underpayments (totals $343.61)
• Barton G's payment for their Boston Consulting special event was incorrectly
distributed among the applicable general ledger accounts resulting in the State of
Florida's payment being understated by $221.38. Similarly, the State did not
receive $69.45 for Logistic Management Corporation's payment of invoice
number 25963.
• II Villaggio located at 1455 Ocean Drive was incorrectly charged $18 per unit for
their 2011/12 fiscal year payment in the Eden System as the entry was
overridden by management. Instead, the condominium should have been billed
$19.00 per unit (127 listed units) which resulted in the City's payment being short
by $31.75.
• MDGLCC Foundation, Inc.'s payment of invoice number 26072 incorrectly
calculated the sand tax on the non-beach portion; therefore, the State was
underpaid by $21.03.
Exhibit A located on pages 12 through 14 of this audit report compares the amount of
sand tax due for each applicable beachfront property user with the corresponding
amounts actually paid to the State of Florida.
Recommendation(s):
The City's Finance Department was notified of the seven identified errors listed above in
the bullet points and is in the process of correcting the misstated general ledger
accounts via journal entry. Also, the City's next quarterly sand tax payment due by April
20, 2013 should be reduced by the aforementioned $169.01 ($512.62 -$343.61)
overage.
Management Response (Finance):
The Finance Department has received notification of the aforementioned errors listed
and will subsequently post the necessary journal entries to adjust the general ledger.
Also, the next quarterly sand tax payment remitted to the Department of Environmental
Protection (DEP) will be reduced by the overpayment in the amount $169.01.
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Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April19, 2013
2. Finding: Difficulties in Verifying the Number of Upland Units to be Billed Continues to be
Unresolved
City Ordinance No. 2003-3420 states that beach upland fees are to be based on the
number of units but no definition could be found thereby making it more difficult to
calculate and to explain to property owners. Inquiries found that units are distinguished
by the number of fire separation walls which may or may not equal the number of rooms
in the building. Another definition heard was that it represents the number of rooms
excluding bathrooms and kitchens which might be difficult to calculate if true.
Although business tax receipts have limited the upland fees to a maximum of $10,000
per property since their inception, it has and will continue to affect more hotels and
condominiums as the per unit price increases by 5% every two years per Ordinance No.
2003-3420. For example, the $10,000 maximum initially affected properties with more
than 666 units when the per unit price was $15 in 2003 but it has now decreased to 526
units as the per unit price has increased to $19 for the 2012/13 fiscal year and is
scheduled to increase again to $20 next fiscal year.
A beachfront concession agreement is to be prepared each fiscal year by the Office of
Real Estate, Housing and Community Development as it defines such important terms
as the permitted beach concessions, the amount of upland fees due, etc. Their stated
standard practice is to prepare this necessary signed agreement only upon the entity's
purchase of the property or upon notification of a material change as its annual
preparation, mailing and receipt is a time consuming task.
Internal Audit's review of the Office of Real Estate, Housing and Community
Development files found that the oldest beachfront concession agreements were
prepared and signed during the 2001/02 fiscal year for eighteen different properties
including the Shelborne Hotel, 1500 Ocean Drive Condominium Association, etc. Some
of these properties have been sold since and others were noted to contain some
outdated information (no longer non-commercial entities and are not exempt, incorrect
upland fee amounts, etc.).
It is important to accurately determine the number of units annually as it affects such
business tax receipt calculations as their upland fees, hotels (smoke detector) fees, etc.
Currently, the City primarily depends upon the honesty of the property owner in
completing their annual business tax receipt documentation so concerns exist about the
accuracy of the billed number of units.
The Office of Real Estate, Housing and Community Development's Field Monitor was
tasked with researching the number of units to confirm the upland fee calculations during
last year's audit. In doing so, numerous differences were found between the counts in
the City's Eden System and those calculated by the City's GIS Manager, by the City's
Building Department per certificates of occupancy and certificates of completion, Dade
County Property Records, and the City's Permits Plus System from completed building
re-certifications. With uncertainty as to which unit figures are correct, few changes were
made in the amounts billed as continued reliance exists on the established process.
Page 6 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
Recommendation( s):
The City Administration should consider presenting the City Commission with a specific
definition of units for upland fees, increasing the $10,000 upland fee cap per property,
etc. to help reduce confusion and to facilitate enforcement. Once determined, the City
Administration and applicable departments should determine the optimal means to
determine the number of units in City buildings annually so that the corresponding fees
can be accurately and consistently calculated for all properties.
Although the signed beachfront concession agreement is a valuable document detailing
the current agreed upon beach upland and beachfront concession fees, etc.; much of
the same information can be obtained through the business tax receipt process.
Consequently, one option to consider is to have the Finance Department incorporate an
updated beach concession agreement annually into the business tax receipt process.
Another is to have the Office of Real Estate, Housing & Community Development
monitor the properties for any changes in ownership, units, beachfront licenses, etc. and
then prepare new beach concession agreements for only those identified properties as
their files should continue updated and accurate information.
Management Response (Office of Real Estate. Housing & Community Development):
RHCD is in the process of reviewing and comparing the Hotel Inventory List (prepared
by the Greater Miami Convention and Visitors Bureau) and the Hurricane Preparedness
Hotel Directory and will provide Finance with a list containing the number of units per
hotel. Finance will reconcile RHCD's list with the number of units contained on the BTR
applications. Finance will send Code to address any discrepancies and provide an
actual count of the units if necessary.
The Administration will continue to review options for increasing the $10,000 upland fee
cap. One such option is to increase the $10,000 cap by 5% every two years, at the
same time the per unit fee is increased by 5%. Increasing the cap will require discussion
with the hotel industry.
3. Finding: Incorrect, Unbil/ed or Lengthy Unpaid Upland and any Associated Beach
Concession Fees
The Eden System's Licensing Module calculates the amount due for an entity's business
tax receipt for the fiscal year based on the data received and entered. Consequently, if
the entered data is inaccurate and goes undetected (ex. the number of units), then the
corresponding entity will be billed incorrectly. Testing conducted on hotels/condos
discovered the following upland and associated beach concession fees' billing errors or
unpaid amounts whereby the City is not receiving the listed monies due (excluding
interest and penalties):
• The Royal Palm Hotel located at 1545 Collins Avenue was billed and has not
paid the past three fiscal years business tax receipts totaling $57,439.44 which
among other categories includes $23,352 in upland fees. Further review of the
Eden System's Licensing Module found that these business tax receipts have
been cancelled and apparently no new ones have been billed. Yet, the entity
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Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
continues to operate and has not been cited by the City's Code Compliance
Division accordingly.
• The Ritz Plaza Hotel located at 1701 Collins Avenue was not billed upland fees
(135 units x $19 per unit= $2,565) for the 2012/13 fiscal year.
• The Deauville Beach Resort located at 6701 Collins Avenue was not billed
$9,720 in upland fees (540 units x $18) on their 2010/11 fiscal year business tax
receipt. Consequently, the hotelier was manually billed a total of $19,980.00 for
the 2010/11 ($9,720) and 2011/12 ($10,065) fiscal years to correct the
aforementioned oversight. However, business tax receipts have limited the
upland fees to a maximum of $10,000 per property since their inception so the
Deauville Beach Resort was overbilled by $65 during the 2011/12 fiscal year.
• The Continuum located at 100 South Pointe Drive is currently being billed for 340
upland units or $5,960 on their annual business tax receipt. However, the City's
Field Monitor has determined after review of their folios that they actually have
520 units ($9,880 in upland fees) and are therefore being under billed by
$3,920.00 ($9,880 -$5,960) for the 2012/13 fiscal year. Prior fiscal year
business tax receipts would also be affected and would need to be recalculated.
• Tourism & Cultural Development personnel annually perform a reconciliation of
the received security deposits and the special event fee log which tracks the
billing and receipt of monies. As a result, they requested that a journal entry be
completed via email on February 7, 2012 to defer and reclass monies between
general ledger accounts as listed in the attachment. Internal Audit discovered
that this journal entry was not completed as the sand tax general ledger account
was not adjusted by the needed $150 but no one noticed that the adjustment had
not been done. Therefore, a second email request was made for the journal
entry on January 29, 2013 where it was to be done shortly thereafter by the
Finance Department.
• The reviewed general ledger sand tax entries were typically not very descriptive
to facilitate the review and reconciliation process. For example, the Eden
System's reviewed description fields typically stated "LI receipt posting", "A/R
invoice posting" or the Miscellaneous Cash Receipt number rather than providing
the more informative customers' names.
These amounts are not included in finding #1 because the State of Florida properly
received 25% of all upland fees collected by the City in accordance with State
Beachfront Management Agreement No. 3595. As additional upland fee monies are
paid or refunded/credited to the hotels and condominiums identified above, the City's
sand tax payments to the State of Florida will be adjusted accordingly.
Recommendation(s):
The corresponding hotel and condominium owners identified above should be sent
updated business tax receipt invoices explaining the reasons for the difference with a
time frame upon which payment is due. Any credits should either be applied against any
outstanding amounts or carried forward to offset any amounts owed for future business
tax receipts. Also, the Finance Department should closer scrutinize the upland fee
billing process to determine the root causes of the listed breakdowns to help prevent
future inaccuracies from occurring.
Page 8 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April19, 2013
Going forward, the department/division requesting the completion of journal entries
should always confirm that they were done. If not, additional emails should be sent with
the appropriate parties copied.
Lastly, the Central Cashier's Office should enter the more informative customer's name in
the description field during posting to facilitate subsequent identifications and
reconciliations.
Management Response (Finance):
The Finance Department will follow up with the hotel and condominium owners
mentioned, and in the future, further review the annual business tax receipts to ensure
that inaccuracies are addressed. Revisions to the business tax receipts, however,
cannot be changed at the moment (i.e., the number of units) since there is a process
that must be followed. Prior to correcting any potential discrepancies, the City's
regulatory departments will be notified for follow-up. Once the follow-up process is
completed, and any inaccuracies confirmed, the customer's business tax receipt will be
updated.
The Cashier's Office utilizes general posting descriptions such as those previously
mentioned since they are done in batches rather than by individual licensee. However,
the Finance Department will explore utilizing alternative descriptions in the general
ledger postings to facilitate the identification/reconciliation process.
Management Response (Office of Real Estate, Housing & Community Development):
RHCD is in the process of reviewing and comparing the Hotel Inventory List (prepared
by the Greater Miami Convention and Visitors Bureau) and the Hurricane Preparedness
Hotel Directory and will provide Finance with a list containing the number of units per
hotel. Finance will reconcile RHCD's list with the number of units contained on the BTR
applications. Finance will send Code to address any discrepancies and provide an
actual count of the units if necessary.
4. Finding: Special Event Sand Tax Calculation Difficulties Originating from Timing
Differences in Payments Received versus the Creation of City Bills
Tourism & Cultural Development Department's staff creates City Bills in the Eden
System's Accounts Receivable Module to better monitor any balances owed by the
special events promoters. One noted drawback was that the sand tax (601-7000-
229068) and 7% sales tax (601-7000-229032) general ledger accounts are credited at
this time which usually means that the corresponding monies are owed to the State of
Florida in the next reporting cycle. However, it may be months until the special events
promoters actually remit the owed monies (if ever).
To compensate, a Financial Analyst I has been tasked with monitoring the accounts
receivable aging schedule to determine when these monies were actually received since
the sand tax account would not be impacted (the debit would be to a cash account while
the credit would be to an accounts receivable account). If the special event is
subsequently cancelled, then the initial entries made when the City Bill is created are
Page 9 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
reversed.
Upon receipt of any monies, the Financial Analyst I would then have to remember to
include these monies in the next sand tax payment to the State of Florida. Although no
discrepancies were noted with these City Bill payments, this is a time consuming
process that complicates the reconciliation process and that could easily lead to future
mistakes.
Recommendation(s):
Although the City would have to remit monies to the State of Florida before they are
received from the special events promoters, the Finance Department should consider
always paying based upon the entries to general ledger account number 601-7000-
229068. Any cancelled special events would have sand tax reversed through the Eden
accounts receivable system. This practice should help save staff time and reduce the
likelihood of mistakes but does rely upon the accuracy and timeliness of the pertinent
general ledger entries.
Management Response (Finance):
Although sand and sales tax liabilities are generated when a City Bill is posted in the
respective 601-7000-229068 and 601-7000-229032 general ledger accounts, many
times payment for that City Bill is not received within the same quarter where the liability
was created, and in some cases, it is never received at all. If the City were to remit its
quarterly payment based on the posting in the general ledger instead of the bill receipt,
the City would potentially put itself at risk of paying for monies it never received.
The process by which the Financial Analyst I has been tasked with monitoring the
accounts receivable aging report to determine when monies were actually received and
applicable portion is remitted to the State is cumbersome. The Finance Department will
explore alternative options to make the reconciliation process more efficient while
ensuring timeliness and accuracy of the required payments to the State.
5. Finding: Beach Concession Fees Were Incorrectly Charged Resulting in Nine Entities
Being Under Billed by a Net Total of $6,990 During the 2012113 Fiscal Year
Hotels and condominiums subject to upland fees along with beachfront concessionaires
will also owe some combination of beach concession fees for each type (food,
equipment, water sports or sundries). At Internal Audit's request, the Office of Real
Estate, Housing and Community Development's Field Monitor reviewed the Eden
System's 2012/13 fiscal year's beach concession billings and found the following
deficiencies:
• Three hotels were incorrectly not billed $699 each for needed beach concession
equipment fees. Conversely, one hotel was incorrectly billed $699 for beach
concession equipment fees that were not needed.
• Eight hotels and condominiums were each incorrectly not charged $699.00 each
in beach concession food fees.
Exhibit B located on page 15 of this audit report provides a detailed listing of the affected
Page 10 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
hotels/condominiums.
Recommendation(s):
The Finance Department's Licensing Section should adjust the $6,990 current fiscal year
business tax receipts found in Exhibit B accordingly. Also, the beach concession fees'
billing process should be reviewed to determine the reasons for these differences so that
they can be prevented in the future since differences are found during each audit.
Management Response (Finance):
The Finance Department will generate adjustments for the current FY 2012/13 business
tax receipts noted in Exhibit B. Further review of the annual business tax receipts
process will be performed to ensure that inaccuracies are addressed going forward. As
previously mentioned, revisions to the business tax receipts, however, cannot be
changed at the moment. Before correcting any potential discrepancies, the City's
regulatory departments must be notified for follow-up. Once the follow-up process is
completed, and any inaccuracies confirmed, the customer's business tax receipt will be
updated accordingly.
Management Response (Office of Real Estate, Housing & Community Development):
RHCD is in the process of reviewing the beach concession fees. Once the beach
concession fees for each type of permit are determined (i.e. food, equipment, water
sports or sundries), the concessionaire's license will be updated with the appropriate
information and the fees will be calculated accordingly.
EXIT CONFERENCE
An exit conference was held on March 22, 2013 in the Office of Budget and Performance
Improvement. Participants included Assistant City Manager Max Sklar; Office Associate V
Natasha Diaz-Rojas; Assistant Finance Director Georgina Echert; Revenue Manager Manny
Marquez; Financial Analyst Ill Richard Ajami; Office of Real Estate, Housing & Community
Development Director Anna Parekh; Leasing Specialist Mark Milisits; Internal Auditor James
Sutter and Senior Auditor Mark Coolidge. Management responses were solicited and included
above. All parties were in agreement as to the contents of this report.
JJS:MC:mc
Audit performed by Senior Auditor Mark Coolidge
F:\OBPI\$AUD\INTERNAL AUDIT FILES\DOC12-13\REPORTS-FINAL\BEACHFRONT 2012 CITY RPT.docx
cc: Patricia Walker, Chief Financial Officer
Georgina Echert, Assistant Finance Director
Anna Parekh, Office of Real Estate, Housing & Community Development Director
Page 11 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
SCHEDULE OF FEES COLLECTED
BEACH FRONT MANAGEMENT AGREEMENT
FISCAL YEAR 11/12
EXHIBIT A
75% OF 25% DUE REMITTED OWED
CONCESSIONAIRE TOTAL FEES* TOTAL STATE TO STATE TO STATE
1500 Ocean Drive Condo Association $2,128.00 $1,596.00 $532.00 $532.00 $0.00
2 2201 Collins Fee LLC (VBAs) $300.00 $225.00 $75.00 $75.00 $0.00
3 2201 Collins Fee LLC (Special Events) $400.00 $300.00 $100.00 $100.00 $0.00
4 2201 Collins Fee LLC $19,824.00 $14,868.00 $4,956.00 $4,956.00 $0.00
5 Act Productions Inc. $7,450.00 $5,587.50 $1,862.50 $1,862.50 $0.00
6 Accord TV Properties $3,250.00 $2,437.50 $812.50 $812.50 $0.00
7 Alexander Hotel $4,370.00 $3,277.50 $1,092.50 $1,092.50 $0.00
8 Barton G $5,275.52 $3,956.64 $1,318.88 $1,097.50 $221.38
9 Beach Access Parking $57,525.00 $43,143.75 $14,381.25 $14,381.25 $0.00
10 Beach Access Special Events $28,200.00 $21 '150.00 $7,050.00 $7,050.00 $0.00
11 Beta Epsilon/Cadillac LLC $4,997.00 $3,747.75 $1,249.25 $1,249.25 $0.00
12 Bobby Kapp $450.00 $337.50 $112.50 $112.50 $0.00
13 Broder Productions $1,050.00 $787.50 $262.50 $262.50 $0.00
14 Boucher Brothers $854,353.04 $640,764.78 $213,588.26 $213,588.26 $0.00
15 Caribbean Condominium $1,976.00 $1,482.00 $494.00 $494.00 $0.00
16 CBS/CSI Miami $150.00 $112.50 $37.50 $37.50 $0.00
17 CBS Eye $1,500.00 $1,125.00 $375.00 $375.00 $0.00
18 Cinema! $2,400.00 $1,800.00 $600.00 $600.00 $0.00
19 Competitor Group $23,325.00 $17,493.75 $5,831.25 $5,831.25 $0.00
20 CR Miami LLC $32,493.00 $24,369.75 $8,123.25 $8,123.25 $0.00
21 Crown $6,612.00 $4,959.00 $1,653.00 $1,653.00 $0.00
22 Crystal Beach Development $3,192.00 $2,394.00 $798.00 $798.00 $0.00
23 Curious Pictures $1,500.00 $1,125.00 $375.00 $375.00 $0.00
24 David Segui $450.00 $337.50 $112.50 $112.50 $0.00
25 Days Inn Oceanside $2,527.00 $1,895.25 $631.75 $631.75 $0.00
26 Delano Hotel $7,904.00 $5,928.00 $1 ,976.00 $1,976.00 $0.00
27 DK the Messenger $150.00 $112.50 $37.50 $37.50 $0.00
28 Doubletree Surfcomber Hotel $2,090.00 $1,567.50 $522.50 $522.50 $0.00
29 East Atlantic Gardens Condo $1,900.00 $1,425.00 $475.00 $475.00 $0.00
30 Eden Roc Hotel (VBAs) $600.00 $450.00 $150.00 $150.00 $0.00
31 Eden Roc Hotel (Special Event) $1,500.00 $1 '125.00 $375.00 $375.00 $0.00
32 Eden Roc Hotel $20,000.00 $15,000.00 $5,000.00 $5,000.00 $0.00
33 Epica $75.00 $56.25 $18.75 $18.75 $0.00
34 Fernwood $525.00 $393.75 $131.25 $131.25 $0.00
35 First Shot Productions $1,050.00 $787.50 $262.50 $562.50 ($300.00)
36 Fontainbleau $20,000.00 $15,000.00 $5,000.00 $5,000.00 $0.00
37 Four Points/Sheraton $3,705.00 $2,778.75 $926.25 $926.25 $0.00
38 Gansevoort $6,346.00 $4,759.50 $1,586.50 $1,586.50 $0.00
39 Go Scout $950.00 $687.50 $262.50 $262.50 $0.00
40 Goryland $10,000.00 $9,962.50 $37.50 $37.50 $0.00
41 Grand Beach Hotel $8,170.00 $6,127.50 $2,042.50 $2,042.50 $0.00
42 GSW Design LLC $4,370.00 $4,295.00 $75.00 $75.00 $0.00
43 Harbour Films $2,166.00 $2,053.50 $112.50 $112.50 $0.00
44 HG Producer $3,750.00 $2,812.50 $937.50 $937.50 $0.00
Page 12 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
45 Holiday Inn Miami Beach
46 Holmes Defender
47 II Villaggio Condo Assn.
48 IMG/Action Sports (VBAs)
49 IMG/Action Sports
50 Karla Events (VBAs)
51 Karla Events
52 Katrina's/The Bath Club (Special Event)
53 Katrina's/The Bath Club
54 King Richard Condominium
55 Kurt Gardener Photos
56 Loew's Hotel
57 Logistics Management Group (VBAs)
58 Logistics Management Group
59 Marriott Fairfield Inn
60 Marseille Hotel
61 MDGLCC Foundation, Inc.
62 MESP, Inc. (VBAs)
63 MESP, Inc.
64 Miami Beach Marriott
65 Miami World Cinema
66 MM Productions
67 National Marine Manufacturers, Inc.
68 Nautilus Club
69 North Carillon Beach Condo
70 Palms South Beach
71 Penrod Brothers (VBAs)
72 Penrod Brothers (Beach Concessions)
73 Penrod Brothers (Special Events)
7 4 Picture Perfect
75 Polo Life LLC
76 Pop Miami
77 Pro One
78 Quality Inn
79 Radical Miami
80 Radisson Deauville
81 Richmond Hotel
82 Ritz Carlton
83 Ritz Plaza
84 Riutel Florida
85 Robot Films
86 Route 7
87 Rum Bum
88 Sagamore Hotel (VBAs)
89 Sagamore Hotel
90 Seagull Hotel
91 Select Services
92 Shelborne Beach Resort
93 Shoot Collective
94 Six Degrees Productions
95 Soho House Beach House LLC (VBAs)
96 Soho House Beach House LLC (Special Event)
97 Soho House Beach House LLC
$4,674.00
$1,200.00
$2,413.00
$600.00
$1,865.00
$300.00
$1,590.00
$1 '125.00
$2,166.00
$1,040.02
$150.00
$20,000.00
$12,450.00
$29,975.44
$3,876.00
$4,294.00
$1,484.12
$900.00
$8,400.00
$4,484.00
$600.00
$1,050.00
$10,937.48
$4,769.00
($1 ,734.00)
$9,348.00
$1,200.00
$35,428.32
$21,000.00
$1,200.00
$24,675.00
$150.00
$300,00
$4,180.00
$900.00
$30,240.00
$2,033.00
$7,144.00
$4,884.00
$5,396.00
$150.00
$1,650.00
$300.00
$300.00
$3,496.00
$2,774.00
$3,825.00
$4,826.00
$600.00
$300.00
$450.00
$650.00
$950.00
$3,505.50
$900.00
$1,809.75
$450.00
$1,398.75
$225.00
$1 '192.50
$843.75
$1,624.50
$780.01
$112.50
$15,000.00
$9,337.50
$22,481.58
$2,907.00
$3,220.50
$1,113.09
$675.00
$6,300.00
$3,363.00
$450.00
$787.50
$8,203.11
$3,576.75
($1 ,300.50)
$7,011.00
$900.00
$26,571.24
$15,750.00
$900.00
$18,506.25
$112.50
$225.00
$3,135.00
$675.00
$22,745.00
$1,524.75
$5,358.00
$3,663.00
$4,047.00
$112.50
$1,237.50
$225.00
$225.00
$2,622.00
$2,080.50
$2,868.75
$3,619.50
$450.00
$225.00
$337.50
$487.50
$712.50
Page 13 of 15
$1,168.50
$300.00
$603.25
$150.00
$466.25
$75.00
$397.50
$281.25
$541.50
$260.00
$37.50
$5,000.00
$3,112.50
$7,493.86
$969.00
$1,073.50
$371.03
$225.00
$2,100.00
$1,121.00
$150.00
$262.50
$2,734.37
$1,192.25
($433.50)
$2,337.00
$300.00
$8,857.08
$5,250.00
$300.00
$6,168.75
$37.50
$75.00
$1,045.00
$225.00
$7,495.00
$508.25
$1,786.00
$1,221.00
$1,349.00
$37.50
$412.50
$75.00
$75.00
$874.00
$693.50
$956.25
$1,206.50
$150.00
$75.00
$112.50
$162.50
$237.50
$1,168.50
$300.00
$571.50
$150.00
$466.25
$75.00
$397.50
$281.25
$541.50
$260.00
$37.50
$5,000.00
$3,112.50
$7,424.41
$969.00
$1,073.50
$350.00
$225.00
$2,100.00
$1,121.00
$150.00
$262.50
$2,734.37
$1,192.25
($433.50)
$2,337.00
$300.00
$8,857.08
$5,250.00
$300.00
$6,168.75
$37.50
$75.00
$1,045.00
$225.00
$7,495.00
$508.25
$1,786.00
$1,221.00
$1,349.00
$37.50
$412.50
$75.00
$75.00
$874.00
$693.50
$1,106.25
$1,206.50
$150.00
$75.00
$112.50
$162.50
$237.50
$0.00
$0.00
$31.75
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$69.45
$0.00
$0.00
$21.03
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
($150.00)
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
98 South Beach Tow $825.00 $618.75 $206.25 $206.25 $0.00
99 South Carillon Beach Condo ($1 ,462.00) ($1 ,096.50) ($365.50) ($365.50) $0.00
100 South of Fifth Condo Association $1,064.00 $798.00 $266.00 $266.00 $0.00
101 Spike Productions $300.00 $225.00 $75.00 $75.00 $0.00
102 Starz $1,050.00 $787.50 $262.50 $262.50 $0.00
103 Stonehenge $1,500.00 $1 '125.00 $375.00 $375.00 $0.00
104 The Bentley Beach $4,142.00 $3,106.50 $1,035.50 $1,035.50 $0.00
105 The Michael Alan Group $560.76 $420.57 $140.19 $140.19 $0.00
106 The National Hotel $6,080.00 $4,560.00 $1,520.00 $1,520.00 $0.00
107 The Raleigh Hotel $8,436.00 $6,327.00 $2,109.00 $2,109.00 $0.00
108 The Production Factory $150.00 $112.50 $37.50 $37.50 $0.00
109 The Savoy on South Beach $1,273.00 $954.75 $318.25 $318.25 $0.00
110 The Setai Resort and Condo $10,146.00 $7,609.50 $2,536.50 $2,536.50 $0.00
111 The Shore Club Hotei/Philips $12,350.00 $9,262.50 $3,087.50 $3,087.50 $0.00
112 Tim Wilcox, Inc. $39,594.92 $29,696.19 $9,898.73 $9,898.73 $0.00
113 TVM Productions $6,000.00 $4,500.00 $1,500.00 $1,500.00 $0.00
114 Univision $225.00 $168.75 $56.25 $56.25 $0.00
115 US Road Sports & Entertainment (VBAs) $1,500.00 $1,125.00 $375.00 $375.00 $0.00
116 US Road Sports & Entertainment $3,578.52 $2,683.89 $894.63 $957.25 ($62.62)
117 Vendome Place Condominium $1,539.00 $1,154.25 $384.75 $384.75 $0.00
118 Westgate Resort $1,748.00 $1,311.00 $437.00 $437.00 $0.00
119 Winter Music Conference (VBAs) $300.00 $225.00 $75.00 $75.00 $0.00
120 Winter Music Conference $2,400.00 $1,800.00 $600.00 $600.00 $0.00
Total $1,551,207.14 $1,167,354.35 $383,852.76 $364,021.79 ($169.01)
*Excludes sales tax
Page 14 of 15
Internal Audit Report
State Beachfront Management Agreement Operational Review (#3595)
For the Fiscal Year Ending September 30, 2012
April 19, 2013
SCHEDULE OF BEACHFRONT CONCESSION FEES
BEACHFRONT MANAGEMENT AGREEMENT
FISCAL YEAR 11/12
EXHIBIT B
BEACHFRONT BEACH FRONT
PERMIT CMB CONCESSION CONCESSION
NUMBER CONCESSIONAIRE ADDRESS EQUIPMENT FOOD
RL 02002000 Royal Palm 1545 Collins Ave $699.00 $699.00
RL 00000574 Ritz Plaza 1701 Collins Ave $699.00 $699.00
RL 96226348 Gansevoort (The Perry) 2301 Collins Ave $699.00 $699.00
RL 01000790 Sokolov Ltd (Marriott Fairfield Inn) 4101 Collins Ave $699.00
RL 03000189 King Richard Condominium 4141 Collins Ave $699.00
RL 03000188 Vendome Place Condo 4301 Collins Ave $699.00
RL 06001715 Eden Roc 4525 Collins Ave ($699.00)
RL 07003785 Crystal Beach Development 6985 Collins Ave $699.00
RL 10002001 South of Fifth Condo Association 121 Ocean Dr $699.00
TOTAL $1,398.00 $5,592.00
ANY POSITIVE AMOUNTS LISTED ABOVE INDICATE THAT THE CITY UNDERBILLED THE ENTITY, WHILE
ANY NEGATIVE AMOUNTS MEAN THAT THE ENTITY WAS OVERBILLED AND IS DUE A REFUND
Page 15 of 15
TOTAL
FEES
OWED
$1,398.00
$1,398.00
$1,398.00
$699.00
$699.00
$699.00
($699.00)
$699.00
$699.00
$6,990.00