OIG No. 21-04: First Class Parking Systems, LLC - Compliance Audit
Page 1 of 9
August 11, 2021
TO: Honorable Mayor and Members of the City Commission
FROM: Joseph Centorino, Inspector General
RE: First Class Parking Systems, LLC - Compliance Audit
2015/18 Concession Agreement in effect from October 1, 2015 through September 30,
2018
OIG No. 21-04
As the concession agreement adopted through Resolution No. 2015-28943 was nearing its
September 30, 2018 expiration, the Parking Department approached the then existing Office of
Internal Audit (which was subsumed into the Office of the Inspector General or OIG on November
1, 2019) in April 2018 to conduct an audit of First Class Parking Systems, LLC’s compliance with
the terms of the corresponding 2015/18 agreement.
However, the concessionaire did not provide some of the requested records and needed
information despite repeated requests, and the concession agreement expired before the
requested audit was completed. Further, the concessionaire’s lack of responsiveness was also
communicated to the Parking Department, but the concessionaire still failed to provide all the
requested information.
As OIG staff was waiting for these records, the concessionaire went through the procurement
process, and was awarded a new valet parking agreement with the City, commencing on
November 1, 2018. As a result, a second audit was conducted of this agreement and its annual
amendments that were incorporated into subsequent agreements. More specific on-site testing
was also conducted at the 2018 and 2019 Design Miami and Art Basel Miami Beach events to
better measure the concessionaire’s performance with the terms of the 2018/19 and 2019/20
agreements and its stricter terms where non-compliance with City requirements is frequently tied
to financial penalties.
Consequently, OIG staff prepared two separate audit reports. This audit report covers the
concessionaire’s compliance with selected terms in the 2015/18 agreement, while the second
audit report covers the 2018 and 2019 Design Miami and Art Basel Miami Beach events, plus the
terms of concession agreements in existence from October 1, 2018 through April 31, 2020. It is
recommended that both audit reports be read concurrently to accurately measure the
concessionaire’s performance and the City Parking Department’s monitoring of these
agreements’ terms, as well as to determine any improvements made and/or corrective action
taken during the 55-month combined audit period.
Page 2 of 9
BACKGROUND
On September 15, 2020, the Mayor and City Commission adopted Resolution No. 2010-27474,
authorizing First Class Parking Systems, LLC (concessionaire) to manage and operate the valet
parking services at the Miami Beach Convention Center (MBCC), the Fillmore Miami Beach at
the Jackie Gleason Theater (Fillmore), and other City properties between October 1, 2010 and
September 30, 2013. The concession agreement included many terms, such as monthly fixed
minimum rental payments, required insurance coverage, signage, performance bonds, property
maintenance and others. On September 11, 2013, the City Commission approved a two-year
renewal option under the agreement, valid through September 30, 2015.
On March 11, 2015, the Mayor and City Commission approved Resolution No. 2015-28943,
waiving competitive bidding requirements and authorizing the City Administration to negotiate an
extension to the concession agreement. The City executed a three-year extension on September
22, 2016, with the term of the agreement retroactively commencing on October 1, 2015, and
ending on September 30, 2018, or upon substantial completion of the multiple-year renovation
and expansion project of the MBCC.
In anticipation of the completion of the MBCC renovation and the expiration of the concession
agreement on September 30, 2018, the Mayor and City Commission adopted Resolution No.
2018-30399 on July 25, 2018. This resolution authorized the City administration to enter
negotiations with the concessionaire and recommended that the City extend the existing
agreement on a month-to-month basis until the execution of the new contract. The 2015/18
agreement terminated on October 31, 2018, as the new 2018/19 agreement adopted by the City
Commission commenced on November 1, 2018.
Concessionaire Valet Parking Venues
Section 2.1 of the 2015/18 agreement grants the concessionaire the right to maintain, manage,
and operate, at its sole cost and responsibility, a valet parking concession for the following City
properties:
a) The Fillmore, located at 1700 Washington Avenue, Miami Beach, Florida, 33139; and
b) MBCC, located at 1901 Convention Center Drive, Miami Beach, Florida, 33139; and
c) Such other City properties, as may be authorized, in writing, by the City Manager, in his sole
discretion.
Valet Operations Process Summary
The MBCC and Fillmore valet operations process begins when a customer arrives to drop-off a
vehicle. A concessionaire employee provides a valet ticket to the customer who is directed to
proceed to the nearby kiosk to pay for the valet service. Once there, a concessionaire employee
informs the customer of the price for the valet service, $20 per vehicle for all venues per Section
15 of the 2015/18 agreement, and the steps required to request the vehicle for pick-up by text
message, telephone number, or in person. The valet attendant then drives the customer’s vehicle
to an assigned storage location where it is parked.
When the customer returns and submits the valet ticket to the attendant at the kiosk, the
concessionaire’s employee scans or manually enters the ticket number into the valet software
(Flash Valet) and requests the vehicle for retrieval. Similarly, vehicle requests made by patrons
through text or by calling an automated telephone line are automatically requested in Flash Valet.
Once the request for the vehicle is sent, it is accepted by a concessionaire employee at the
appropriate valet storage location where the vehicle and its keys are stored.
Page 3 of 9
A valet runner is then assigned at the storage location to drive the vehicle to the valet ramp where
the customer initiated the request. Upon the arrival of the valet runner with the requested vehicle,
the podium attendant either sends a text message to text requests, places an automated phone
call to phone requests, or calls out the vehicle description and ticket number to alert the customer
that the vehicle has arrived at the valet ramp. If the vehicle is not claimed by the customer at the
valet ramp, the concessionaire holds the vehicle at the valet ramp for an unspecified additional
amount of time. If the vehicle remains unclaimed, it may be driven back to the storage location
and re-parked using the same valet ticket number by the concessionaire’s staff. Valet customers
must request the vehicle again to re-initiate the process to retrieve any re-parked vehicles.
OVERALL OPINION
The concessionaire was determined to be compliant with the tested provisions of the 2015/18
agreement, except for the following findings:
• Non-compliance with maintenance/examination of records requirements
• Late payments were submitted for 17 of 39 (43.59%) invoices billed from October 1, 2015
through September 30, 2018
SCOPE, OBJECTIVES, AND METHODOLOGY
The scope of this audit was to evaluate whether First Class Parking Systems, LLC
(concessionaire) complied with selected terms in the 2015/18 agreement and to determine
whether the Parking Department adequately administered said agreements. Accordingly, this
audit focused primarily on determining whether the following objectives were satisfied or
achieved:
• Confirm that the concessionaire complied with selected criteria outlined in the 2015/18
agreement, including, but not limited to, comparing calculated turnaround times to stated
Performance Standard goals, monitoring the rates charged, and assessing the
performance of observed staff toward valet patrons.
• Confirm that the concessionaire has implemented adequate internal controls in its valet
parking operations in following valet parking guidelines established by the City.
• Confirm that the concessionaire is current with its annual business tax receipts and has
maintained at least the required insurance coverage during the audit period.
• Confirm that concession fees have been accurately and timely paid in accordance with
the 2015/18 agreement’s stated terms. If not, determine whether the appropriate amount
of late charges was timely billed and paid.
The OIG conducted this audit in accordance with its Standard Operating Procedures, which
require that the audit be planned and performed to obtain sufficient, appropriate evidence to
provide a reasonable basis for its findings and conclusions based on audit objectives. The OIG
believes that the evidence obtained provides a reasonable basis for the findings and conclusions
in this report based on audit objectives.
Page 4 of 9
The audit methodology included the following:
• Reviewed selected provisions within the 2015/18 agreement between the City and First
Class Parking Systems, LLC.;
• Interviewed and made inquiries of staff to gain an understanding of internal controls,
assessing control risk, and planning audit procedures;
• Performed substantive testing consistent with the audit objectives, including, but not
limited to, examining a sample of applicable transactions and records;
• Drew conclusions based on the results of testing, made corresponding recommendations,
and obtained auditee responses and corrective action plans; and
• Performed other audit procedures as deemed necessary.
FINDINGS, RECOMMENDATIONS, AND MANAGEMENT RESPONSES
1. Finding: Non-Compliance With Maintenance/Examination Of Records
Requirements
Section 4 of the 2015/18 agreement required the concessionaire to maintain current,
accurate, and complete financial records, on an accrual basis, related to its operations
pursuant to this agreement. Financial records and accounts must include, at a minimum,
a breakdown of gross receipts, expenses, and profit and loss (income) statements.
The concessionaire must also maintain accurate receipt-printing cash registers (or a like
alternative) for each venue, which will record and show the payment for every sale made
or service provided at said venue. Furthermore, the concessionaire was also required to
submit a monthly report of activities to the City Manager’s designee, the Parking
Department, by the 15th of each month, for the activities of the preceding month. At a
minimum, this report must contain a chronological listing of events serviced, including the
event name, date, time, exact location(s), number of transactions (vehicles), gross
receipts per location, and gross receipts totals.
The concessionaire is required to submit an annual statement of gross receipts, in a form
consistent with Generally Accepted Accounting Principles (GAAP), to the Parking
Department within 60 days of the end of each contract year. Such statement is to be
accompanied by a report from an independent Certified Public Accounting (C.P.A.) firm
certifying the report.
Lastly, Section 12 states, “Concessionaire acknowledges that timely acceptance and
return of patron vehicles directly impacts patron’s experience of Venues serviced in this
Agreement. As such Concessionaire agrees to ensure that not less than eighty percent
(80%) of all vehicles parked for any Venue event shall be returned to patrons within twenty
(20) minutes of patrons’ request for a vehicle (the “Performance Standard”). In the event
Concessionaire fails to meet this standard for any Venue event, Concessionaire shall pay
to the City a penalty in the amount of Forty and No/100 Dollars ($40.00) for every vehicle
delivered below the Performance Standard (the “Penalty”).”
OIG staff requested financial records from the concessionaire, starting in May 2018,
including monthly reports of activities and annual statements of gross receipts, to
determine compliance with Section 4. OIG also requested Flash Valet turnaround time
data from the concessionaire to determine whether the established Performance Standard
Page 5 of 9
addressed in Section 12.1 was achieved. The valet data requested included records for
valet operations at all City venues covered under section 2 of the 2015/18 agreement and
locations identified on the concessionaire’s BTR certificates during fiscal years 2015/16,
2016/17, and 2017/18. Although the concessionaire did submit the monthly valet
operations activity reports, a breakdown of gross receipts and some amount of valet data
listed in Section 4, it failed to provide the following records:
a. Financial Records – The concessionaire did not provide the requested breakdown of
expenses or profit and loss (income) statements. While these financial records
required by the 2015/18 agreement had not been received by the end of this audit,
OIG staff does not believe they are needed by the City to determine the
concessionaire’s compliance with the stated terms. The concessionaire’s
expenditures are irrelevant in determining any monies owed to the City. Other than
fixed monthly minimum payments, the City may be due a true-up at the end of each
contract year based on the concessionaire’s annual vehicle volume change at the
MBCC pursuant to Section 3, which does not require either a breakdown of expenses
or the profit and loss (income) statements.
b. Annual Statement of Gross Receipts - The concessionaire did not provide annual
statements of gross receipts certified by an independent C.P.A. firm.
c. Turnaround Time Data – The concessionaire provided requested turnaround time data
from the Flash Valet software for all MBCC and Fillmore events occurring during the
audit period, except for nine events (2,977 valet records) serviced at the MBCC and
sixteen events (1,075 valet records) at the Fillmore for a total of 4,052 valet records.
Among other features, Flash Valet is used by the concessionaire to track all valet
parked vehicles in inventory and to record times such as when the vehicle was
dropped off by the customer, when it was requested for retrieval, when the valet
transaction was completed, etc.
The concessionaire also stated that it did not use the Flash Valet software or provide
receipt-printing cash registers (or a like alternative) to OIG staff, pursuant to the
2015/18 agreement for the following venues:
i. Miami Beach Botanical Gardens - 2000 Convention Center Drive
ii. The Bass Museum - 2100 Collins Ave
iii. New World Symphony - 1672 Drexel Ave
iv. 1000 Lincoln Road & Lenox Ave
As a result of the concessionaires’ failure to provide all the needed supporting
documentation/information, OIG staff was unable to determine if the concessionaire
complied with Section 12.1’s Performance Standard for the identified nine MBCC events,
16 Fillmore events, and the four other venues serviced.
Recommendation(s):
No further action necessary as the 2015/18 agreement expired on October 31, 2018, and
its terms are no longer applicable.
Page 6 of 9
Concessionaire’s Response:
See Exhibit A which contains the Concessionaire’s Responses in their entirety.
Parking Department’s Response:
Findings in this section relate to the failure of the concessionaire to submit documentation
required by the contract and Parking staff’s apparent failure to document requests for
concessionaire compliance. While reports were not available, staff did make efforts to
obtain the required documents. The former Department Director met with the
concessionaire on multiple occasions and two (2) Notices to Cure were issued. However,
the City found itself in a difficult position due to the uncertainties related to the construction
at the Convention Center and its impact on valet demand, which made issuance of an
RFP at that time undesirable. Additionally, there were no second or third ranked
companies to assume the contract. Consequently, the Department worked cooperatively
with the Concessionaire, ensuring all events were covered and excellent customer service
was delivered. Additionally, the Parking Department took the initiative to incorporate
penalties and late fees on the New Contract to ensure future concessionaire compliance.
The following RFP process called for one-year terms and the City ranked companies in
second and third place providing alternatives for the City should the concessionaire
awarded the contract not comply with the terms.
Regarding the lack of turn-around time information for The Bass Museum, Lincoln Road,
New World Symphony, and the Miami Beach Botanical Garden, these were smaller events
and were not part of the Flash Valet system. Regarding missing information for nine (9)
MBCC events and sixteen (16) events at the Fillmore, staff has documentation for some
of these events and could possibly document more or all of them. In fact, information for
events are listed on a monthly report. It is strange that one entry listed as missing is
included in the monthly report along with all events that month.
OIG Audit Observation:
The 2015/18 agreement states that the concessionaire must maintain accurate receipt-
printing cash registers (or a like alternative) for each venue, which will record and show
the payment for every sale made or service provided at said venue. It does not mention,
as referenced above in the Parking Department’s response, that smaller events held at
venues other than the MBCC and the Fillmore, are excluded from this requirement. As
such, the Parking Department should have timely notified the concessionaire of this
omission and had them comply with the requirement. Consequently, the concessionaire
could have recorded all transactions occurring at approved venues in Flash Valet pursuant
to the agreement.
Upon request, the OIG sent several emails to the Parking Department concerning the
missing transactional information in Flash Valet for the nine MBCC events and 16 Fillmore
events. As a result, the Parking Department provided some daily summaries (as shown
below) on February 3, 2021, but the Flash Valet supporting transactional information was
never furnished.
Sep-17
09/01/17 MBCC Home & Design 129204 129310 106
09/02/17 MBCC Home & Design 129311 129715 404
09/03/17 MBCC Home & Design 129715 130125 410
09/04/17 MBCC Home & Design 130125 130433 308
Page 7 of 9
Although these daily summaries add some value, they have many limitations. For
example, there is no means to verify the accuracy of the listed data and one cannot
determine how may valet transactions occurred within/outside the 20-minute benchmark.
2. Finding: The Concessionaire Submitted Late Payments For 17 Of 39 (43.59%)
Invoices Billed From October 1, 2015 Through September 30, 2018
The 2015/18 agreement specifies the criteria by which concessionaire payments
submitted to the City are determined to be either on-time or delinquent. The 2015/18
concession agreement required the submittal of concession fee payments by the 15th day
of each month and established late payment interest, 18% per annum, to be charged to
the concessionaire for payments submitted after the due date.
In addition, Section 3.1 details an annual true-up credit or payment, that is to be paid to
the City or the concessionaire as applicable, within 30 days of the City’s transmittal of
written notice regarding the true-up calculation to the concessionaire. This true-up
calculation is based on the vehicle volume change which means, “the change between
the actual number of vehicles serviced at the MBCC Venue during the previous Contract
Year as compared to the total number of vehicles serviced during the Contract Base Year,
based upon the percentage of change which Concessionaire experienced during the
previous Contract Year, as compared to the Base Contract Year ("Vehicle Volume
Change").”
An analysis was done of all payments submitted by the concessionaire to the City for the
October 1, 2015 through September 30, 2018 audit period whereby the following results
were obtained (see Table 1 below):
Table 1
Invoice Categories Billed Paid Invoices Unpaid/(Overpaid) Abated/Adjusted
Concession Fees and
True-Up Payments $ 333,900.88 $ 338,703.84 38 $ (4,802.96) $ (12,007.41)
Late Payment
Interest $ 3,252.77 $ 3,252.77 17 $ - $ -
Abated Invoices $ - $ - 3 $ - $ (42,254.40)
Penalties and Misc.
Contract Fees $ 8,046.40 $ 8,046.40 1 $ - $ -
Grand Total $ 345,200.05 $ 350,003.01 59 $ (4,802.96) $ (54,261.81)
Table 1 – The information in this table was retrieved from Munis (current) and Eden (previous), the City’s
current and previous enterprise resource planning systems.
a. The concessionaire submitted late payments for 17 of 39 (43.59%) invoices billed for
the reviewed 36 monthly concession fees, two “true-up” and one “penalties and
miscellaneous contract fee” billed.
b. The total amount of late payment interest billed to the concessionaire during the audit
period equaled $3,252.77.
c. The total amount of concession fees billed to the concessionaire during the audit
period was $333,900.88 (excluding the $12,007.41 in abated/adjusted amounts
displayed in the table above).
d. The total amount of penalties and miscellaneous contract fees billed to the
concessionaire during the audit period was $8,046.40.
e. The Parking Department created and abated, or voided, three invoices totaling
$42,254.40 during the audit period, due to invoice calculation errors, invoice allocation
Page 8 of 9
errors and duplicate invoices.
f. The concessionaire overpaid $4,802.96 in concession fees to the City stemming from
the month of May 2016, which remained unused as of June 24, 2021 according to the
concessionaire's Munis system customer account.
Recommendation(s):
The Parking Department should request that the Finance Department credit the
concessionaire’s Munis account for the $4,802.96 overpaid in concession fees for invoice
#164 related to May 2016. Although the concessionaire has continuously remitted any
associated late fees stemming from its late payments, it should timely remit all future
payments or risk being placed in default.
Concessionaire’s Response:
See Appendix A which contains the Concessionaire’s Responses in their entirety.
Parking Department’s Response:
In accordance with the Contract the monthly amount due for December 2016 was to be
reduced from $12,007.41 to $4,802.96 due to construction and the Convention Center
having few to no events. Parking submitted an adjustment invoice for $7,204.45 in
December, leaving a balance of $4,802.96. Research shows Finance may have applied
the credit twice in error. Consequently, no credit is due to the concessionaire. Finance
has been made of aware and is conducting their own research.
OIG Audit Observation:
The Parking Department contacted the Finance Department in a January 22, 2021 email
requesting the supporting documentation for the adjustment addressed in their above
response. The Finance Department responded in a February 4, 2021 email to the OIG
and the Parking Department as follows:
I have tried to searched all the boxes we have in the office but could not locate any
document to support the adjustment. It seem that it was done in error but I have no way
of confirming that since I cannot locate the invoice adjustment form from 2016. It is my
understanding at the time of conversion into Munis there were issues with the system
which was subsequently fixed. The email from parking is stating what they believe
happened which I am somewhat in agreement with only based on the fact that we cannot
locate the invoice adjustment form.
Given the Finance Department’s response in this email and that no evidence has been
provided to refute giving the concessionaire a credit during the six months that have
elapsed since, the audit was concluded, taking the position that the concessionaire is due
and should receive a credit. If the Parking and/or Finance Department manages to
subsequently locate the invoice adjustment form and verify that the credit was performed
in error, then First Class Parking Systems, LLC should be billed accordingly.
January 27, 2021
Via E-mail to JosephCentorino@miamibeachfl.us
Mr. Joseph Centorino
Inspector General
Office of the Inspector General
City of Miami Beach
1130 Washington Avenue, 6th Floor
Miami Beach, FL 33139
Re: Concessionaire’s Response to Compliance Audit of 2018/2019 & 2019/2020 Valet
Parking Services Concession Agreement – OIG No. 21-04
Dear Mr. Centorino:
Our firm represents First Class Parking Systems, LLC (hereinafter, “Concessionaire”) in the above-
captioned matter. Concessionaire is in receipt of the draft audit dated December 17, 2020 prepared by the
Office of Inspector General (“OIG”) and provides the following correspondence by way of response to the
findings set forth in Audit No. OIG No. 21-04 (the “Audit”) which is styled as an audit of the
Concessionaire’s Valet Services Concession Agreement for the period of Oct. 1, 2015 – Sept. 30, 2018
(“Concession Agreement”) with the City of Miami Beach (“City”). Below are our responses to each of the
findings:
Finding No. 1 – Non-Compliance with Maintenance/Examination of Records Requirements
Concessionaire routinely submitted its monthly report of activities to the Department on or before
the 15th of each month. Its transmittal of the same can be corroborated as such records were sent via e-mail
to the Department each month.
Turnaround time data for events held at Miami Beach Botanical Garden, Bass Museum, New
World Symphony and 1000 Lincoln road were not taken by concessionaire during 2015- 2018 as the Flash
Valet system was not deployed at those locations. Such data was collected only at the MBCC during the
term of the Concession Agreement.
Records required by OIG were sent by email on June 25th, 2018. There was an additional request of
information by OIG on September 6, 2018 that was fulfilled on September 11, 2018. Concessionaire
provided all the information available at the time to audit department.
Finding No. 2 – Impairment to the Performance of Audit Procedures
The Concession Agreement had been in effect for approximately 3.5 years and all prior audits by
OIG (or its predecessor) had been limited principally to the Concessionaire’s performance in its handling
of the Art Basel-related events. This Audit was initiated in the middle of the City’s formal solicitation
Exhibit A
process for a replacement valet services contract. Hence, OIG’s requests conflicted with the
Concessionaire’s participation in the solicitation process and the timelines for record production and for
the same. Concessionaire understandably focused the time of its limited financial and management staff
on the immediate challenge of responding to the City’s solicitation. Delays in the transmittal of records
were born of said conflict and Concessionaire strongly objects to OIG’s finding that such delays were
designed to limit the audit’s scope or timely completion. At all times, the Concessionaire was available to
OIG for meetings (which took place within the first three (3) months of the Audit’s initiation,
notwithstanding the on-going solicitation process) and provided OIG access to concession records,
including the provision of direct access to Concessionaire’s Flash Valet records system as early as October
1, 2018.
Finding No. 3 – The Concessionaire Submitted Late Payments for 17 of 39 (43.59%) Invoices
Billed from October 1, 2015 through September 30, 2018
Concessionaire acknowledges the accuracy of the finding and has implemented procedures to
comply with the due dates of the invoice provided by the City in a timely manner.
Concessionaire appreciates the opportunity to respond to the findings and looks forward to
continuing to provide the Department, the City, and its customers & patrons excellent valet services
throughout the balance of the term of the Concession Agreement.
Respectfully submitted,
/s/ Javier E. Fernández
Javier E. Fernández, Esq.
For the Firm
Enclosures (5)
Cc: Mark A Coolidge, Chief Auditor
Monica Beltran, Parking Director
Jorge Zuluaga, First Class Parking Systems, LLC