State Beachfront Management Agreement (State Financial) FY 201213 to FY 2014-15MIAM,IBEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA
FROM:
DATE:
Jimmy L. Morales, City Manager
Cintya G. Ramos, Budget and ~~;-Improvement Director ~
James J. Sutter, Internal Audito/',.
June 24, 2016
AUDIT:
PERIOD:
State Beachfront Management Agreement (#3595) Financial Review
October 1, 2012 through September 30, 2015
This audit report is being submitted in compliance with the audit reporting requirement of
subparagraph (2) of the original State Beachfront Management Agreement No. 750-0006 dated
February 3, 1982, which 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 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 and Pier Park (Boucher Brothers and Penrods Brothers) who
pay for use of the beachfront as per their respective contractual agreements with the
City.
• Miami Beach hoteliers, apartments and condominium associations, which pay beach
upland fees to the City on an annual basis, 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.
We are committed to providing excellent public service and safely to all who live, work, and play in our vibrant, tropical, historic communily.
State Beachfront Management Agreement Financial Review (#3595)
October 1, 2012 through September 30, 2015
June 24, 2016
OVERALL OPINION
Based upon our examination of City records, it has been determined that during the audit period
of October 1, 2012 through September 30, 2015, the City received a total of $4,906,925.49 in
revenues subject to the State Beachfront Management Agreement. Testing determined that the
City inadvertently underpaid the State of Florida by a total of $11,044.19 during this three year
period due primarily to the incorrect programmed sand tax calculations for beachfront
concessionaires (the appropriate corrections were made prospectively during the 2014/15 fiscal
year), charging state sales tax when the entity is tax exempt and incorrect mathematical
calculations. Of this difference, the $234.06 overpayment from the 2012/13 fiscal year was
corrected and deducted from the 2013/14 fiscal year's payments resulting in the City owing a
net total of $11 ,278.25 to the State of Florida during this three year 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
1. Finding: The State of Florida was Inadvertently Underpaid by a Net Total of $11,278.25
in Sand Tax During the 2012113, 2013114 and 2014115 Fiscal Years
Internal Audit reviewed every reported sand tax transaction occurring during the
2012/13, 2013/14 and 2014/15 fiscal years for accuracy. The table below summarizes
our calculations concerning the amounts of sand tax (under) over paid to the State
annually as well as the totals for the three year period:
Total
Revenue Categories by Revenues Sand Tax Sand Tax Sand Tax
Beachfront Property User Collected Payments Due Difference
Beachfront Concessions $1 ,069,565.04 $267,013.25 $267,391.26 ($378.01)
Upland Fees $128,384.99 $32,096.25 $32,096.25 $0.00
Special Events $192,163.92 $48,654.30 $48,040.98 $613.32
Vehicle Beach Access Fees $69,380.00 $17,343.75 $17,345.00 ($1.25)
Total (10/01/12-09/30/13) $1,459,493.95 $365,107.55 $364,873.49 $234.06
Beachfront Concessions $1,177,026.76 $285,046.27 $294,256.69 ($9,21 0.42)
Upland Fees $298,972.32 $74,743.08 $74,743.08 $0.00
Special Events $205,387.12 $51,058.03 $51,346.78 ($288.75)
Vehicle Beach Access Fees $49.242.00 $12,310.50 $12,310.50 $0.00
Total (1 0/01/13 -09/30/14) $1,730,628.20 $423,157.88 $432,657.05 ($9,499.17)
Beachfront Concessions $1,254,773.92 $311,914.40 $313,693.48 ($1,779.08)
Upland Fees $266,851.62 $66,712.90 $66,712.90 $0.00
Special Events $134,758.96 $33,689.74 $33,689.74 $0.00
Vehicle Beach Access Fees $63,450.00 $15,862.50 $15,862.50 $0.00
Total (10/01/14-09/30/15) $1,719,834.50 $428,179.54 $429,958.62 ($1 '779.08)
Subtotal (10/01/12-09/30/15) $4,906,925.49 $1,216,444.97 $1,227,106.38 ($11 ,044.19)
FY 2012/13 Adjustment $0.00 ($234.06) $0.00 ($234.06)
Grand Total (10/01/12-09/30/15) $4,906,925.49 $1 ,216,210.91 $1 ,227 '1 06.38 ($11 ,278.25)
Page 2 of 4
State Beachfront Management Agreement Financial Review (#3595)
October 1, 2012 through September 30,2015
June 24, 2016
The individual entities that comprise these differences can be found in Exhibit A located
at the end of this audit report.
Recommendation( s):
The City's Finance Department has been notified and will add $11 ,278.25 to their next
quarterly sand tax payment to the State of Florida.
JJS:MC:mc
Audit performed by Senior Auditor Mark Coolidge
cc: Allison Williams, Chief Financial Officer
John Shumaker, Deputy Finance Director
F:\OBPI\$AUD\INTERNAL AUDIT FILES\DOC15-16\REPORTS-FINAL\BEACHFRONT 2013-15 STATE RPT.docx
Page 3 of 4
State Beachfront Management Agreement Financial Review (#3595)
October 1, 2012 through September 30, 2015
June 24, 2016
SCHEDULE OF FEES COLLECTED
BEACHFRONT MANAGEMENT AGREEMENT
10/01/12 -09/30/15
EXHIBIT A
FISCAL YEAR 2012/13 FISCAL YEAR 2013/14
FEE 25% DUE REMITTED OWED 25% DUE REMITTED OWED
ENTITIES CATEGORY STATE TO STATE TO STATE STATE TO STATE TO STATE
Boucher Brothers Inc. Beach Concessionaire $242,995.39 $242,854.91 $140.48 $266,095.02 $266,202.82 ($107.80)
Cl Foundation Special Events $0.00 $0.00 $0.00 $5,038.75 $4,750.00 $288.75
FlU Sports Special Events $0.00 $62.50 ($62.50) $0.00 $0.00 $0.00
Funkshion Special Events $886.68 $1,437.50 ($550.82) $0.00 $0.00 $0.00
Imperial Woodpecker Vehicle Beach Access $413.75 $412.50 $1.25 $0.00 $0.00 $0.00
Penrod Brothers Inc. Beach Concessionaire $13,090.18 $13,058.24 $31.94 $14,516.81 $4,843.45 $9,673.36
Tim Wilcox, Inc. Beach Concessionaire $11,305.69 $11,100.10 $205.59 $13,644.86 $14,000.00 ($355.14)
Subtotal $268,691.69 $268,925.75 ($234.06) $299,295.44 $289,796.27 $9,499.17
Adjustments Completed $0.00 $0.00 $234.06 $0.00 $0.00 $0.00
Total $268,691.69 $268,925.75 $0.00 $299,295.44 $289,796.27 $9,499.17
Page 4 of 4
FISCAL YEAR 2014/15 I
TOTAL
25% DUE REMITTED OWED OWED
STATE TO STATE TO STATE TO STATE
$284,885.93 $283,910.50 $975.43 $1,008.11
$0.00 $0.00 $0.00 $288.75
$0.00 $0.00 $0.00 ($62.50)
$6,087.50 $6,087.50 $0.00 ($550.82)
$0.00 $0.00 $0.00 $1.25
$14,730.71 $13,927.06 $803.65 $10,508.95
$14,076.84 $14,076.84 $0.00 ($149.55)
$319,780.98 $318,001.90 $1,779.08 $11,044.19
$0.00 $0.00 $0.00 $234.06
~780.~$318,001.90 $1,779.08 $11,278.25 -