State Beachfront Management Agreement (State Financial)/"v\IAt\l\1 BE H
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA:
FROM:
DATE:
AUDIT:
PERIOD:
Jorge M. Gonzalez, City Manager(f ~e •
Kathie G. Brooks, Budget and Perforrance Improvement Director;;r::; · ·
James J. Sutter, Internal Audit~!~ci:r
October 14, 2010 /
State Beachfront Management Agreement (#3595) Financial Review
October 1, 2008 through September 30, 2009
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 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 Tourism and Cultural Development.
The following table lists the audited rounded amounts of sand tax collected, 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 $745,625 $186,406 $186,406 $0
Hoteliers and Condo Associations $220,573 $55,143 $55,392 ($249)
Special Events $83,412 $20,853 $20,713 $140
Subtotal $1,049,609 $262,402 $262,511 ($108)
Adjustments ($40,954) ($1 0,238) ($10,238) $0
Total $1,008,656 $252,164 $252,272 ($1 08)
OVERALL OPINION
We we commiftecllo p10vicling excel/en/ public se1vice one/solely Ia oil who live, wo1k, one/ ploy in our vibronl, lropicol, historic community
Internal Audit Report
State Beachfront Management Agreement Financial Review (#3595)
October 14, 2010
Based upon our examination of City records, it has been determined that during the audit period of
October 1, 2008 through September 30, 2009, the City received a total of $1,008,656 in revenues
subject to the State Beachfront Management Agreement. This figure represents a decrease of
$84,766 or 7.75% over the fiscal year 2007/08's total of $1,093,422. Subsequent testing showed
that the City remitted $252,272 which was $108 more than the actual amount due of $252,164
($1,008,655 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. Most of these errors were corrected by a mid-year
adjustment but two went unnoticed resulting in a $108.39 overpayment as shown in the attached
schedule.
Recommendation(s):
The Finance Department has been notified and will deduct this amount in the City's next sand tax
payment. During the course of the audit, the Finance Department corrected procedures on handling
and reconciling payments and retrained existing personnel.
JJS:MC:mc
audit performed by Mark Coolidge
cc: Patricia Walker, Chief Financial Officer
Georgina Echert, Assistant Finance Director
F:\obpi\$AUD\INTERNAL AUDIT FILES\DOC09-10\REPORTS-FINAL\BEACH 09 STATE RPT.doc
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Internal Audit Report
State Beachfront Management Agreement Financial Review (#3595)
October 14, 2010
SCHEDULE OF FEES COLLECTED
BEACHFRONT MANAGEMENT AGREEMENT
FISCAL YEAR 08/09
REMITTED OWED
TOTAL FEES 75%0F 25% DUE
CONCESSIONAIRE TOTAL STATE TO STATE TO STATE
1500 Ocean Drive Associates $3,808.00 $2,856.00 $952.00 $952.00 $0.00
2 2201 Collins Avenue, LLC 6,018.00 4,513.50 1,504.50 1,504.50 0.00
3 3B Productions LLC 2,102.80 1,577.10 525.70 525.70 0.00
4 Alexander Hotel 7,395.00 5,546.25 1,848.75 1,848.75 0.00
5 Beach Hotel Associates LLC 8,236.68 6,177.51 2,059.17 2,059.17 0.00
6 Beta Epsilon/Cadillac LLC 4,471.00 3,353.25 1,117.75 1,117.75 0.00
7 Boucher Brothers 720,416.40 540,312.30 180,104.10 180,104.10 0.00
8 Continuum on So. Beach 5,338.00 4,003.50 1,334.50 1,334.50 0.00
9 Convention Planning Services 1,000.00 750.00 250.00 250.00 0.00
10 CR Miami LLC 2,363.00 1,772.25 590.75 590.75 0.00
11 Crown 2,958.00 2,218.50 739.50 739.50 0.00
12 Crystal Beach Development 1,428.00 1,071.00 357.00 357.00 0.00
13 Dade Community Foundation 3,247.64 2,435.73 811.91 811.91 0.00
14 Days Inn Art Deco 5,139.00 3,854.25 1,284.75 1,284.75 0.00
15 Days Inn Oceanside 4,655.00 3,491.25 1,163.75 1,163.75 0.00
16 Decoplage Condo Assn. 10,000.00 7,500.00 2,500.00 2,500.00 0.00
17 Delano Hotel 7,322.00 5,491.50 1,830.50 1,830.50 0.00
18 Dorothy L. Nevitt 467.28 350.46 116.82 116.82 0.00
19 Doubletree Surfcomber Hotel 3,872.00 2,904.00 968.00 968.00 0.00
East Atlantic Gardens
20 Condominium 1,750.00 1,312.50 437.50 437.50 0.00
21 Eden Roc Hotel 10,782.00 8,086.50 2,695.50 2,695.50 0.00
22 Exclusive Sports Marketing 6,519.60 4,889.70 1,629.90 1,629.90 0.00
23 Four Points/Sheraton 7,182.00 5,386.50 1,795.50 1,795.50 0.00
24 Holiday Inn Miami Beach 8,693.00 6,519.75 2,173.25 2,173.25 0.00
25 II Villaggio Condo Assn. 2,771.30 2,078.47 692.82 692.82 0.00
26 Katrina's/The Bath Club 3,400.00 2,550.00 850.00 850.00 0.00
27 King Richard Condominium 623.24 467.43 155.81 155.81 0.00
28 Lane/Green Wedding 214.96 161.22 53.74 53.74 0.00
29 Loews 10,000.00 7,500.00 2,500.00 2,500.00 0.00
30 Logistics Management Group 19,065.40 14,299.05 4,766.35 4,766.35 0.00
31 Marriott Fairfield Inn 7,140.00 5,355.00 1,785.00 1,785.00 0.00
32 Marseille Hotel 3,978.00 2,983.50 994.50 994.50 0.00
33 Miami Beach Marriott 4,059.00 3,044.25 1,014.75 1,014.75 0.00
34 Michael Epstein Productions LLC 2,089.96 1,567.47 522.49 522.49 0.00
35 Mosaic On Miami Beach 1,462.00 1,096.50 365.50 365.50 0.00
36 MP6 Publishing Corp. 560.76 420.57 140.19 140.19 0.00
37 Nautilus Club 4,317.00 3,237.75 1,079.25 1,079.25 0.00
38 North Carillon Beach Condo 1,734.00 1,300.50 433.50 433.50 0.00
39 Oscar/Ana Barbara 6,565.40 4,924.05 1,641.35 1,641.35 0.00
40 Palms South Beach 4,231.00 3,173.25 1,057.75 1,057.75 0.00
Penrod Brothers (Beach
41 Concessions) 25,208.20 18,906.15 6,302.05 6,302.05 0.00
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Internal Audit Report
State Beachfront Management Agreement Financial Review (#3595)
October 14, 2010
42 Penrod Brothers (Special Events) 21,170.08 15,877.56 5,292.52 5,292.52 0.00
43 Polo Life LLC 2,033.84 1,525.38 508.46 508.46 0.00
44 Quality Inn 7,744.00 5,808.00 1,936.00 1,936.00 0.00
45 Red Bull North America, Inc. 3,350.48 2,512.86 837.62 837.62 0.00
46 Revolution 6,682.24 5,011.68 1,670.56 1,670.56 0.00
47 Richmond Hotel 1,926.00 1,444.50 481.50 481.50 0.00
48 Ritz Carlton 13,160.00 9,870.00 3,290.00 3,290.00 0.00
49 Riutel Florida 9,997.00 7,497.75 2,499.25 2,499.25 0.00
50 Sagamore GP Corp. 105.12 78.84 26.28 26.28 0.00
51 Sagamore Hotel 1,582.00 1,186.50 395.50 395.50 0.00
52 Shelborne Beach Resort 4,572.00 3,429.00 1,143.00 1 '143.00 0.00
53 South Carillon Beach Condo 1,462.00 1,096.50 365.50 365.50 0.00
54 South of Fifth Condo Association 476.00 357.00 119.00 119.00 0.00
55 South Seas Hotel 4,095.00 3,071.25 1,023.75 1,023.75 0.00
56 Sunshine Restaurant Merger 0.00 0.00 0.00 248.58 (248.58)
57 The Bentley Beach 3,837.00 2,877.75 959.25 959.25 0.00
58 The Michael Alan Group 0.00 0.00 0.00 (140.19) 140.19
59 The National 5,440.00 4,080.00 1,360.00 1,360.00 0.00
60 The Raleigh Hotel 1,961.00 1,470.75 490.25 490.25 0.00
61 The Savoy on South Beach 1,152.00 864.00 288.00 288.00 0.00
62 The Setai Resort and Condo 4,806.00 3,604.50 1,201.50 1,201.50 0.00
63 The Shore Club Hotei/Philips 5,590.00 4,192.50 1,397.50 1,397.50 0.00
64 Westgate Resort 782.00 586.50 195.50 195.50 0.00
65 Wyndham Miami Beach Resort 15,101.00 11,325.75 3,775.25 3,775.25 0.00
Subtotal $1,049,609.38 $787,207.03 $262,402.34 $262,510.73 ($108.39)
Adjustments ($40,953.88) ($30,715.41) ($10,238.47) ($1 0,238.47) $0.00
Total $1,008,655.50 $756,491.62 $252,163.87 $252,272.26 ($108.39)
*Excludes sales tax
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