Waste Management of FloridaMIAMI BEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA:
FROM:
DATE:
AUDIT:
PERIOD:
Jorge M. Gonzalez, City Manager fo
Kathie G. Brooks, Budget and ~rerf_Ance Improvement Director
James J. Sutter, Internal Audito7~ ·
September 22, 2009
Waste Management of Florida, Inc. (Non-Exclusive Franchise Contractor)
October 2005 to May 2009
This report is the result of a regularly scheduled audit of the Franchise Service Agreement with
Waste Management, Inc. (Waste Management) It includes any revenues reported for Franchise
Waste, Public Right-of-Way and Roll-offs.
INTRODUCTION
Chapter 90, Article IV Solid Waste of the City Code provides for the City to have Non-Exclusive
Franchise Waste Contractor Agreements and Service Agreements with five waste contractors.
These contractors provide waste collection and recycling services for Commercial and Residential
for multi-family residences with eight (8) or more units in the City of Miami Beach. According to the
Non-Exclusive Franchisee Waste Contractor Agreement, the waste contractor is granted the
franchise and is required to undertake and perform each and every obligation set forth in this
Agreement. The "Service Agreement" covers the provision of additional solid waste collection and
disposal and recycling services at certain City owned facilities and properties. The Service
Agreement is intended to have a term that will run concurrent with the terms of the Non-Exclusive
Franchise Waste Contractor Agreement.
The City Commission under resolution 2003-25385 renewed Waste Management and the other
waste contractor's franchise service agreement on October 15, 2003 for an additional five-year term
expiring September 30, 2008. Subsequently, the City Commission adopted Resolution (#2008-
26923) authorizing the further renewal of the City's existing four franchise waste contractors
including Waste Management for the collection and disposal of solid waste, to also included
recycling services. The waste contractors' renewal was for three years, commencing retroactively
on October 1, 2008 and ending on September 30, 2011.
For the past several years, the City had franchise waste contractor and service agreements with four
waste contractors to provide commercial service within its boundaries. On May 25, 2009 the City
Commission by resolution 2009-27020 approved a new waste contractor to be the fifth hauler.
Section 90-221 City Code 1964, 14A-16 (a) requires each franchise waste contractor to pay the City
a franchise fee consisting of a percentage of the licensee's total monthly gross receipts established
by resolution of the City Commission. Effective October 1, 2007 as required pursuant to section 90-
278 of the City Code, the franchise fee paid to the city by its franchise waste contractors was raised
from 16% of the franchisee's total monthly gross receipts for waste removal in the city, to 18% of
said gross receipts. However, the Public Right-of-way franchise fees remained the same (2%).
Section 90-278 City Code1964, 14A-7(c) requires each Roll-off waste contractor to pay the City a
franchise fee consisting of a percentage of the licensee's total monthly gross receipts established by
resolution of the City Commission. Effective October 1, 2008 the on-street and off street permit fee
for Roll-off waste containers serviced by licensed contractors was raised from 16% to 18%.
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Internal Audit Report
Waste Management, Inc. (Non-Exclusive Franchise Waste Contractor)
September 22, 2009
Waste Management reported to the City of Miami Beach $40,854,929.60 in gross receipts for
Waste, Public Right-of-Way and Roll-offs. The franchise fees Waste Management remitted
amounted to $7,685,275.46 for the services performed within the city limits in compliance with the
City Code. The following table summarizes the total amount of gross receipts reported and related
fees paid:
2005 2006 2007
(Oct-Dec) (Jan-Dec) (Jan-Dec)
FRANCHISE WASTE & PUBLIC RIGHT -OF-WAY:
Audited Gross $2,251,921.49 $10,228,990.89 $11,056,541.51 Receipts
16%/18%
Franchise fee $360,307.44 $1 ,636,638.54 $1 ,805,011.06
n"irl
2%Public
Right-of Way $45,038.43 $204,579.81 $221 '130.85 Franchise fee
paid
ROLL-OFF·
Audited Gross $135,637.60 $565,672.77 $420,121.57 Receipts
16%/18%
Roll-offs $21,702.01 $90,507.65 $68,358.28 Franchise fee
paid
2008
(Jan-Dec)
$11.637,839.42
$2,094,811.09
$232,756.80
$273,243.40
$49,183.82
2009
(Jan-May)
$4,197,924.73
$755,626,46
$83,956.70
$87,036.22
$15,666.52
Totals
$39,373,218.04
$6,652,394.59
$787,462.59
$1,481,711.56
$245,418.28
Footnotes: On October, 2007 as requ1red pursuant to sect1on 90-278 of the C1ty Code, the franchise fee paid to the c1ty
by its franchise waste contractors was raised from 16% of the franchisee's total monthly gross receipts for waste removal
in the City, to 18% of said gross receipts. However, the Public-Right-of Way franchise fees remained the same (2%). In
addition, the Roll-offs permit fee was raised from 16% to 18% on October 2008.
OVERALL OPINION
Waste Management of Florida remitted the correct amount of franchise fees for Waste, Public
Right-of-Way and Roll-offs; based on the records provided in adherence to the City Code and
Service Agreement. The waste contractor properly and timely obtained an annual business tax
receipt, submitted the required certificate of liability insurance and timely submitted their annual
Certified Public Accountant (CPA) Statements of Gross Receipts to the City. In addition, they
provided the In-Kind Services to the City and complied with a new section of the Service Agreement
(8.3) by purchasing recycling receptacles for the City. The contractor's franchise returns were timely
filed and correctly recorded in the City's Financial System.
PURPOSE
The purpose of this audit is to determine whether the franchise waste contractor reported all gross
receipts to the City, were correctly calculated, received timely and accurately recorded by the City,
and the contractor was in compliance with designated sections of the City Code and related
Ordinances.
SCOPE
1. Review the private waste contractor's books and records to confirm that their billings were
correct; their gross receipts were correctly calculated and support the monthly franchise fee
and public right-of-way payments submitted to the City.
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Internal Audit Report
Waste Management, Inc. (Non-Exclusive Franchise Waste Contractor)
September 22, 2009
2. Confirm that the private waste contractor timely sent the City the required reports in
adherence with the terms listed in the City Code.
3. Confirm that the private waste contractor is timely sending the required Monthly Report of
Gross Receipts along with their remittance to the City.
4. Confirm that the private waste contractor timely obtained their required annual City business
tax receipt.
5. Confirm that the private waste contractor timely submitted their annual Certified Public
Accountant (CPA) Statements of Gross Receipts to the City, and that amounts reported
therein agree with corresponding totals reported on the waste contractor's Monthly Reports
of Gross Receipts.
6. Confirm that the private waste contractor has obtained the required insurance in adherence
with Section 90-223 of the City Code and the signed service agreement.
7. Confirm that all monthly franchise and public right-of-way fee payments were timely and
correctly recorded in the City's Financial System.
8. Confirm that the private contractors are purchasing recycling bins for the City.
FINDINGS AND RECOMMENDATIONS
There were no reportable findings. Waste Management of Florida remitted the correct amount of
franchise fees for Waste, Public Right-of-Way and Roll-offs; based on the records provided in
adherence to the City Code and Service Agreement. The waste contractor properly and timely
obtained an annual business tax receipt, submitted the required certificate of liability insurance and
timely provided their annual Certified Public Accountant (CPA) Statements of Gross Receipts to the
City. In addition, they provided the In-Kind Services and complied with a new section of the Service
Agreement (8.3) by purchasing recycling receptacles for the City. The contractor's franchise returns
were timely filed and correctly recorded in the City's Financial System. Waste Management should
continue to comply with the above audit requirements and adhere to the City Code and Service
Agreement.
EXIT CONFERENCE
Audit findings were e-mailed on September 14, 2009 to Waste Management. We confirmed their
agreement to our findings on September 18, 2009.
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC08-9\REPORTS -\WASTE MANAGEMENT AUDIT FINAL REPORT.doc
cc: Fred Beckmann, Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
Don Zimmerman, (Financial Analyst for Waste Management)
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