OIG No. 24-07: State Beachfront Management Agreement (#3595) Financial Audit ReportJoseph M. Centorino, Inspector General
TO:
FROM:
DATE:
PROJECT:
PERIOD:
State of Florida Department of Environmental Protection
Joseph M. Centorino, Inspector General
May 17, 2024
State Beachfront Management Agreement (#3595) Financial Audit Report
OIG No. 24-07
October 1, 2021 through September 30, 2022
This audit report is 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 the Florida Department of Natural Resources subsequently assigned No. 3595.
Amendment number 1, signed on August 9, 2007, extended the original terms for an additional
twenty-five years until February 7, 2032.
INTRODUCTION
State Beachfront Management Agreement No. 3595 requires the City to remit to the State of
Florida Department of Environmental Protection (State) a 25% "sand tax" of any and all monies
the City collects from concessionaires for the use of State-owned property. Pursuant to Florida
Statutes, the City also collects Florida Sales tax along with the beachfront rental revenue and
remits the same to the State of Florida Department of Revenue.
There are currently four related categories of beachfront property users:
• Operators of concessions seaward of Lummus Park, Ocean Terrace, North Shore Open
Space Park, 21° and 46" Streets, and Pier Park who pay for the use of the beachfront
according to their respective contractual agreements with the City.
• Miami Beach hoteliers, apartments, and condominium associations located on the
beachfront pay beach "upland" fees to the City annually based on its corresponding
number of units. This category also includes "non-upland" fee properties that have
negotiated an agreement with nearby upland fee properties whereby their residents can
use the beach amenities of the upland properties.
• Special Event permits are granted to members of the public who run organized, usually
one-time only events on the beach, such as weddings and volleyball tournaments. The
payments from these special events are remitted to the City Tourism and Culture
Department.
• Special Event and Film and Print productions requiring the parking of essential vehicles
on the beach or sand areas must purchase Vehicle Beach Access passes from the City
Tourism and Culture Department.
The City remitted the following four sand tax payments totaling $639,397.68 to the State of Florida
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based on the revenues collected during the 2021/22 fiscal year:
Check Date Period Check Number Check Amount
01/21/2022 Oct-Dec 2021 471250 $241,903.61
04/19/2022 Jan-Mar 2022 474322 $134,434.38
07/19/2022 Apr-Jun 2022 477512 $221,746.92
10/18/2022 Jul-Sep 2022 480899 $41,312.77
TOTAL $639,397.68
OVERALL OPINION
Based upon the City of Miami Beach Office of the Inspector General (OIG) Auditor's examination
of available City records, it was determined that the State of Florida was inadvertently underpaid
by a total of $238,810.21 from October 1, 2021, through September 30, 2022, audit period.
PURPOSE
The purpose of this audit is to determine whether the City complied with State Beachfront
Management Agreement No. 3595's terms by accurately calculating and timely remitting all sand
tax monies due to the State of Florida Department of Environmental Protection equal to 25% of
any and all monies collected from concessionaires for the use of State-owned property.
FINDINGS
The OIG Auditor reviewed all transactions recorded in the sand tax general ledger account during
the City's 2021/22 fiscal year and all provided departmental supporting documentation. As a
result, it was determined that the State is due a net total of $238,810.21 ($239,219.36
underpayment in finding #1- $409.15 overpayment in finding #2) in sand tax, as shown in the
findings below.
1. Sand Tax Total Underpayment Of $239,219.36 Related To The 2021/22 Fiscal Year.
a. A sand tax underpayment of $127,750.75 occurred due to an incorrect distribution
of payments among the appropriate general ledger accounts. The related
payments were distributed 100% to the concession's beachfront revenue account
instead of 25% being applied to the sand tax account and 75% to the appropriate
revenue account.
b. A sand tax underpayment of $111,254.42 occurred due to an incorrect payment
distribution among the City's general ledger accounts related to the 2022 true-up
received from Boucher Brothers Miami Beach, LLC. Instead of calculating the sand
tax due by multiplying the corresponding amount by 25%, a 2.5% sand tax rate
was mistakenly input in the Excel formula used.
c. A sand tax underpayment of $214.19 occurred due to an incorrect computation of
the 2022 true-up received from Boucher Brothers Miami Beach 21°& 46 Street,
LLC. It was determined that the total balance due to the City was mistakenly
calculated due to a mathematical error in the sales tax rate applied to the beach
displacement fee subtracted from the true-up calculation as being waived by a
City's Resolution. In addition, an incorrect payment distribution among the City's
general ledger accounts resulted in the $214.19 sand tax underpayment.
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2. Sand Tax Total Overpayment Of $409.15 Related To The 2021/22 Fiscal Year.
a. Eleven identified Miami Beach businesses overpaid sand tax by $409.15 due to
incorrect upland fee invoicing through the annual business tax receipt process.
Although those businesses are not upland properties, each was incorrectly
charged and remitted sand tax to the Florida Department of Environmental
Protection.
Respectfully submitted,
Mark Coolidge, Chief Auditor
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Dat'T 7
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Date
Norman Blaiotta, Deputy Chief Auditor Date
cc: Rickelle Williams, Interim City Manager
Jason Greene, Chief Financial Officer
Ricardo Dopico, City Attorney
OFFICE OF THE INSPECTOR GENERAL, City of Miami Beach
1130 Washington Avenue, 6" Floor, Miami Beach, FL 33139
Tel: 305.673.7020 • Hotline: 786.897.1111
Email: CityofMiamiBeachOIG@miamibeachfl.gov
Website: www.mbinspectorgeneral.com
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5/17/2024 | 2:30 PM EDT