OIG No. 21-13: First Class Parking Systems, LLC - Compliance Audit
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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
2018/19 and 2019/20 Concession Agreements in effect from October 1, 2018
through April 30, 2020 (the end of the audit period)
OIG No. 21-13
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 for compliance
with the terms of the corresponding 2015/18 agreement.
As OIG staff were waiting for these requested records to be furnished, First Class Parking
Systems, LLC went through the City’s procurement process and was awarded a new concession
agreement on November 26, 2018. This agreement included an initial one-year term, which
commenced retroactively on November 1, 2018, and ended on October 31, 2019, with the option
to extend the agreement for four additional one-year renewal terms at the City’s sole discretion.
Although the initial agreement commenced on November 1, 2018, the City Attorney’s Office
indicated that the agreement’s start date would be changed to October 1, 2018, to ensure that
the agreement’s start date would be consistent with the new rates instituted by the concessionaire
and the Parking Department’s enforcement of the Excess Transaction Fee as provided in Section
3.2.2 of the agreement during October of 2018. As a result, Amendment No. 2 adopted by the
City Commission and entered into on September 25, 2020, modified the initial term of the
agreement to commence on October 1, 2018, and end on September 30, 2019. Meanwhile, the
first renewal term was approved and executed in November of 2019, and the concession
agreement was amended as to fees, uses, and compliance measures.
Given the adoption of the 2018/19 and 2019/20 agreements and their inclusion of significant
financial penalties for noncompliance, the OIG decided to perform additional testing of the
compliance of First Class Parking Systems, LLC with the terms of these new 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.
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BACKGROUND
The Mayor and City Commission adopted Resolution No. 2018-30399 on July 25, 2019,
authorizing the administration to enter into negotiations with First Class Parking Systems, LLC
(concessionaire) to manage and operate the valet parking services at various City properties.
The concession agreement covered the period of November 1, 2018 through October 31, 2019,
and included many terms, including, but not limited to, monthly fixed minimum rental payments,
insurance coverage, signage, performance bonds, and property maintenance.
On November 1, 2019, the City Commission approved a one-year renewal option under the
agreement, valid through October 31, 2020. The amendment also included adding Section 28.13
on quality assurance, amending the price schedule, excess transaction fees charged, etc.
Concessionaire Valet Parking Venues
Section 2.1 of the 2018/19 and 2019/20 agreements grant 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 at the Jackie Gleason Theater (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) Lincoln Road, at designated locations established upon the mutual agreement of the City and
concessionaire, following consultation with the Lincoln Road Business Improvement District
(BID); however, if the parties cannot reach an agreement, the decision of the City Manager's
designee shall be final; and
d) Such other City properties, as may be authorized, in writing, by the City Manager, in his sole
discretion.
Valet Operations Process
The 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 the nearby
kiosk to pay for the valet service. Once there, a concessionaire employee informs the customer
of the price (see Tables 1 and 2 for the 2018/19 and 2019/20 valet fees respectively) for the valet
service 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.
Table 1
2018/19 Valet Fee Schedule:
1 MBCC: $ 25.00
2 Fillmore: $ 25.00
3 Lincoln Road:
a. Event days at MBCC, Fillmore, New World Symphony: $ 20.00
b. Non-event days at MBCC or Fillmore: $ 10.00
4 Other City Properties: $ 15.00
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Table 2
2019/20 Valet Fee Schedule:
1 MBCC:
a. Sponsored Events: * $ 25.00
b. Standard Event Fee: $ 30.00
2 Fillmore:
a. Standard Event Fee: $ 30.00
b. Pre-Paid Tickets: $ 30.00
3 Lincoln Road:
a. Event days at MBCC, Fillmore, New World Symphony: $ 20.00
b. Non-event days at MBCC or Fillmore: $ 15.00
4 Other City Properties: $ 15.00
* Sponsored MBCC events shall mean events held in ballrooms or catered at the MBCC.
When the customer returns and submits his/her valet ticket to the attendant at the kiosk, the
concessionaire employee present scans or manually enters the ticket number into the valet
software (Flash Valet) and requests the vehicle for retrieval. Similarly, vehicle requests made by
customers 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.
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.
Concessionaire Valet Parking Operations at the 2018 and 2019 Design Miami and Art Basel
Miami Beach
The 2018 and 2019 Design Miami and Art Basel Miami Beach events were both held in a specially
constructed tent located in Pride Park (formerly known as the preferred parking lot) and at the
MBCC respectively. First Class Parking Systems, LLC offered valet parking services to the
estimated 38,000 Design Miami and 83,000 Art Basel Miami Beach attendees in 2018 and the
reported 42,000 Design Miami and 81,000 Art Basel Miami Beach attendees in 2019. Details
regarding the concessionaire’s valet operation scheduled hours, valet vehicle storage locations,
and valet ramp locations are listed below:
• Scheduled Hours of Valet Operations - The 2018 Design Miami event opened on Tuesday,
December 4th, and continued to operate concurrently with Art Basel Miami Beach from
Wednesday, December 5th through Sunday, December 9th. Similarly, the 2019 Design Miami
event opened on Tuesday, December 3rd, and continued to operate concurrently with Art
Basel Miami Beach from Wednesday, December 4th through Sunday, December 8th. The
concessionaire provided valet services for both event years throughout the following
scheduled event hours: Tuesday – 12 PM to 8 PM, Wednesday – 11 AM to 8 PM, Thursday
– 11 AM to 8 PM, Friday – 12 PM to 8 PM, Saturday – 12 PM to 8 PM, and Sunday – 12 PM
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to 6 PM. In addition, the concessionaire’s Flash Valet software data showed that valet tickets
for vehicle drop-offs were issued before and retrieved after scheduled event hours to satisfy
customer demand.
• Valet Vehicle Storage Locations – During the 2018 events, the concessionaire stored vehicles
in the 4th through the 7th floors of the City Hall Garage, in the P29 parking lot located at 1701
Convention Center Drive, or in the construction vendor parking lot of the current public green
space (Pride Park) west of the MBCC. For the 2019 events, the concessionaire stored the
valet parked vehicles in the MBCC’s rooftop parking lot.
• Valet Ramp Locations - The first day (Tuesday) of the 2018 Design Miami valet
concessionaire operations consisted of a customer vehicle drop-off and pick-up valet ramp
located just south of the southeast corner of Meridian Avenue and 19th Street. For 2019, the
concessionaire’s Tuesday operations consisted of a customer vehicle drop-off and pick-up
valet ramp located at the north side of 19th Street between the Miami Beach Botanical
Gardens and the Holocaust Memorial. The City and the concessionaire agreed to make this
valet ramp location change to accommodate the Design Miami tent’s relocation from the west
side of Pride Park in 2018 to the east side of the park facing the MBCC’s main entrance in
2019.
Valet operations from Wednesday through Sunday consisted of the following valet ramp
locations:
2018 Design Miami and Art Basel Miami Beach
o The west side of the P29 lot, on Convention Center Drive, was used for vehicle drop-off.
o The east side of Convention Center Drive, just south of the MBCC entrance, was used for
vehicle pick-up.
o The north side of 19th Street, between the Miami Beach Botanical Gardens and the
Holocaust Memorial, was used for vehicle drop-off.
o The driveway located at the northeastern end of the MBCC on Washington Avenue was
used for vehicle drop-off and pick-up of vehicles dropped off at this specific location.
2019 Design Miami and Art Basel Miami Beach
o The east side of Convention Center Drive, just south of the MBCC entrance, was used for
vehicle drop-off and pick-up.
o The north side of 19th Street, between the Miami Beach Botanical Gardens and the
Holocaust Memorial, was used for vehicle drop-off and pick-up.
o The driveway located at the northeastern end of the MBCC on Washington Avenue was
used for vehicle drop-off and pick-up.
All valet ramps were initially assigned to retrieve only vehicles dropped off at each respective
ramp during the 2019 events; however, the concessionaire accommodated valet customers
who mistakenly arrived at the incorrect valet ramp to retrieve their vehicles.
Historical Valet Vehicle Volume During Design Miami and Art Basel Miami Beach
Table 3 shows the daily amount of vehicles valet parked by the concessionaire during the past
seven Design Miami & Art Basel Miami Beach events. Figure 4 displays the information found in
Table 3 as a trend line and a daily activity bar chart.
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Table 3
Event Day (Actual
Dates Vary Per Year)
2013 2014 2015 2016 2017 2018 2019
Tuesday 86 79 51 136 39 94 106
Wednesday 635 487 494 547 320 651 525
Thursday 492 542 497 588 347 633 575
Friday 550 580 563 663 379 730 737
Saturday 777 622 735 846 450 810 782
Sunday 596 578 561 623 425 595 624
Grand Total 3,136 2,888 2,901 3,403 1,960 3,513 3,349
Figure 4
FYI: The concessionaire’s valet operations at the 2017 Design Miami and Art Basel Miami Beach
events were significantly affected by the closure of a portion of Convention Center Drive from 19th
Street to Dade Boulevard, limited access to 19th street from Meridian Avenue, construction
closures around the MBCC, and the relocation of the event’s main entrance to the east side of
the MBCC on Washington Avenue.
OVERALL OPINION
Based upon this audit, OIG staff determined that internal controls over the concession
agreements, in effect for the period of October 1, 2018 through April 30, 2020, need improvement.
Parking Department Administrative personnel did not always timely monitor the concession
agreements to ensure the concessionaire’s compliance with its contractual obligations.
Additionally, the concessionaire did not consistently comply with selected provisions established
in its concession agreements with the City. The following deficiencies were noted:
• Non-compliance with maintenance/examination of records requirements
• Non-compliance and enforcement of Section 28.5’s Return Performance Standard
• Lack of compliance and enforcement of Section 3.5 and 29’s Business Tax Receipt
requirement
0
1000
2000
3000
4000
2013 2014 2015 2016 2017 2018 2019
Valet Vehicles Parked Daily By First Class Parking Systems, LLC During Design
Miami & Art Basel
Tuesday Wednesday Thursday Friday
Saturday Sunday Grand Total
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• Early implementation of new valet prices resulting in $19,960.00 in excess transaction
fees due to the City
• Lack of compliance and enforcement of the State sales tax and late payment interest
requirement
• Late payments submitted for 21 of 52 (40.38%) invoices billed during the October 1, 2018
through April 30, 2020 audit period
• Lack of compliance and enforcement of Section 9’s insurance requirements
SCOPE, OBJECTIVES, AND METHODOLOGY
The scope of the audit was to evaluate whether First Class Parking Systems, LLC
(concessionaire) complied with selected terms in the 2018/19 and 2019/20 concession
agreements and to determine whether the Parking Department adequately administered said
agreements. Additionally, the OIG assessed the concessionaire staff’s performance during the
2018 and 2019 Design Miami and Art Basel Miami Beach events with the results communicated
to the Parking Department. 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 2018/19
and 2019/20 agreements, including, but not limited to, comparing calculated turnaround
times to stated goals, monitoring the rates charged, and assessing the performance of
observed staff toward valet patrons.
• Confirm through observations that the concessionaire implemented adequate internal
controls in its valet parking operations and that it followed 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 concession agreements’ 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.
The audit methodology included the following:
• Reviewed selected provisions within the concession agreements 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, examination on a sample basis of applicable transactions and records.
• Drew conclusions based on the results of testing, making corresponding
recommendations, and obtaining auditee responses and corrective action plans.
• Performed other audit procedures as deemed necessary.
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FINDINGS, RECOMMENDATIONS, AND MANAGEMENT RESPONSES
1. Finding: Non-Compliance With Maintenance/Examination Of Records
Requirements
Section 4 of the 2018/19 and 2019/20 agreements 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 statements. All
accounting records must be open to inspection, copying, and audit by the City upon
reasonable verbal or written notice.
The concessionaire was also required to submit a monthly report of activities at each
venue, including applicable Price Schedules to the City’s Parking Department Director by
the 15th of each month, for the preceding month. At a minimum, this report shall contain
a chronological listing of events and functions serviced, including the event/function name,
date, time, exact location(s), number of transactions (vehicles), gross receipts per location,
and gross receipts totals.
Furthermore, the concessionaire shall submit an annual statement of gross receipts, in a
form consistent with Generally Accepted Accounting Principles (GAAP), to the Parking
Department Director within 60 days of the end of each contract year. Such statement shall
be accompanied by a report from an independent Certified Public Accounting (C.P.A.) firm
certifying the report. A penalty of $500 and $100 per month thereafter for each report not
submitted.
OIG staff requested financial records from the concessionaire, including monthly reports
of activities and annual statements of gross receipts, to determine its compliance with
Section 4. OIG also requested Flash Valet turnaround time data from the concessionaire
to determine whether they achieved the performance standard established by the
agreement in Section 28.5. The valet data requests included records for valet operations
at City venues covered under Section 2 of the agreement. Although the concessionaire
did submit the monthly valet operations activity reports and some amount of valet data,
they did not provide the following records:
a. Financial Records - The concession agreement required that the financial records
maintained should include a breakdown of gross receipts, expenses, and profit and
loss (income) statements. The concessionaire provided a breakdown of gross
receipts, but not of expenses. Lastly, profit and loss statements were not provided for
the audit period.
While these financial records required by the 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. For example,
the City may be owed 12% of the concessionaire’s annual applicable gross receipts
pursuant to Section 3.2., which does not require a breakdown of expenses.
Furthermore, the gross revenues figures presented in the concessionaire’s profit and
loss statements can be obtained from the more reliable source data contained in Flash
Valet software.
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b. Annual Statement of Gross Receipts – Although the concessionaire submitted to the
City an Accountant’s Compilation Report as prepared by an independent C.P.A. for
the 2018/19 fiscal year, it does not satisfy Section 4 because the report is not certified.
More specifically, page 1 of the C.P.A. report states, “I have performed a compilation
engagement in accordance with Statements on Standards for Accounting and Review
Services promulgated by the Accounting and Review Services Committee of the
AICPA. I did not audit or review the City of Miami Beach Schedule of Gross Revenue
nor was I required to perform any procedures to verify the accuracy or completeness
of the information provided by management. I do not express an opinion, a conclusion,
nor provide any assurance on the City of Miami Beach Schedule of Gross Revenue.”
Although the 2019/20 fiscal year statement of gross receipts provided by the
concessionaire contained several detailed supporting schedules, it was similarly not
certified by an independent C.P.A. firm.
The 2018/19 and 2019/20 fiscal year statements of gross receipts were both submitted
after the due dates listed in Section 4.3 of the agreement. As a result, the Parking
Department issued penalty invoice numbers 30138 and 31009, which were paid in full
by the concessionaire.
Recommendation(s):
The Parking Department should review the relevant agreement to ensure that all financial
records needed to substantiate the concessionaire’s compliance are included. As
necessary, the terms related to financial records should be amended and presented to the
City Commission for approval. This practice takes on added importance with the
establishment of financial penalties for non-compliance under the terms of the 2018/19
and 2019/20 agreements. In the interim, the concessionaire should timely provide all
financial records required in the agreements to the City or be subject to the stated financial
penalties and/or disciplinary provisions.
Concessionaire’s Response:
See Exhibit D which contains the Concessionaire’s Responses in their entirety.
Parking Department’s Response:
The Parking Department will remove the expense and profit loss statement from the
contract as they are irrelevant to payment calculations. The Parking Department will
continue to work with the Concessionaire in obtaining the CPA report for the years 2018/19
and 2019/20. While the Concessionaire was invoiced and paid for applicable penalties,
to date they have not complied with this requirement. Communication is ongoing with
Concessionaire, who has retained CPA service and has committed to submitting required
reports.
2. Finding: Non-Compliance and Enforcement Of Section 28.5’s Return Performance
Standard
Section 28.5 of the 2018/19 and 2019/20 concession agreements state, “Concessionaire
must maintain a service level for vehicle returns consisting of 15-minutes-or-less,
calculated from the time the customer submits the valet parking ticket and the request for
the vehicle is submitted in the Flash Valet system, until the time the customer actually
takes possession of the vehicle and Concessionaire closes out the corresponding
transaction in Flash Valet (the “Return Performance Standard”).
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City and Concessionaire both acknowledge and agree that the 15-minutes- or- less Return
Performance Standard shall only apply to the MBCC Venue following the issuance of a
temporary certificate of occupancy (“TCO”) for the MBCC garage. Prior to the issuance
of a TCO for the MBCC Garage, a 20-minutes or less Return Performance Standard shall
apply.
With respect to events where Complimentary Parking Services are being provided, a 20-
minutes-or-less Return Performance Standard shall apply.
Penalty: Concessionaire must maintain a threshold of 80% of vehicle returns within the
applicable Return Performance Standard per event. Failure to do so results in a $40
(double valet user fee) penalty for each vehicle returned beyond the applicable Return
Performance Standard.”
The Parking Department administers the concession agreement on behalf of the City per
Section 2.2; therefore, it is responsible for calculating the RPS to determine whether the
concessionaire is complying with Section 28.5. When questioned by OIG staff, the
Parking Department stated that the RPS measurement was intended to apply only to the
MBCC and not the other City venues serviced by the concessionaire (Fillmore, Lincoln
Road, Botanical Gardens, etc.).
OIG staff interpreted Section 28.5 to mean that only Complimentary Parking Services and
the MBCC, if it has not been issued a TCO, are to have a 20-minute RPS. All other
designated venues serviced by the concessionaire, including the MBCC, if issued a TCO,
are to have a 15-minute RPS. As the agreement’s wording appears to differ from the
Parking Department’s intended meaning, OIG staff spoke with a Senior Assistant City
Attorney on June 18, 2021 regarding the differences, who agreed with the OIG’s
interpretation of Section 28.5, and recommended amending its terms to better reflect the
Parking Department’s intentions.
As the City did not issue a TCO for the MBCC rooftop parking lot for the 2018 and 2019
Design Miami and Art Basel Miami Beach events, the RPS was 20 minutes for both events.
The RPS measurement begins when the customer requests a vehicle by submitting a
valet parking ticket to the attendant, who enters the ticket number in the Flash Valet
software. The timing of the transaction ends when the customer takes possession of the
vehicle, and a valet employee closes the corresponding transaction in Flash Valet. The
software was used by the concessionaire to track valet vehicles parked by the
concessionaire, provide valet customers with the ability to pay in advance, as well as to
request their cars from valet employees (in person or through text message) and monitor
vehicle requests, so that valet customers know their position/status during the vehicle
retrieval process.
OIG staff requested access to Flash Valet to determine whether the concessionaire
complied with the RPS measurement. In response, the concessionaire provided the City
access on October 1, 2018, whereby OIG generated valet data reports for December 4,
2018 through December 9, 2018. The reports included 3,513 vehicle records for all valet
ramps associated with the 2018 Design Miami and Art Basel Miami Beach events located
at the MBCC.
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On December 12, 2018, the concessionaire sent an email to OIG staff advising that a
specific time measurement (Accepted Retrieval Time) should be used by the Parking
Department to determine its compliance with Section 28.5’s RPS goal. Additionally, the
email contained a previous email from a Flash Parking representative supporting the
concessionaire’s claims. The stated intention of the email was to provide OIG staff with
an accurate time measurement to determine the concessionaire’s compliance with the
RPS goal.
The concessionaire had met previously with the Parking Department, which included Audit
staff, to discuss how the RPS was to be calculated from the Flash Valet data. City staff
was unaware of the features and functions of Flash Valet and relied on the accuracy of
the information presented by concessionaire management.
Although a consensus was apparently reached to use Flash Valet’s calculated Accepted
Retrieval Time between the concessionaire and the Parking Department, the terms were
not memorialized or approved by the City Commission. Furthermore, the associated
Parking Department Director is no longer employed by the City, and some of the remaining
individuals who were present have different recollections of the verbal consensus reached.
OIG staff generated Flash Valet Data reports for 2018 Design Miami and Art Basel Miami
Beach valet operations to ascertain how the Accepted Retrieval Time was calculated and
whether the RPS measurement was achieved. On January 15, 2020, OIG staff confirmed
the following information with Flash Parking representatives, the developers of the Flash
Valet software regarding the four timestamps that appear in Flash Valet generated reports
for vehicles requested:
a. Requested - This timestamp is generated when the customer submits the valet
parking ticket to the valet attendant or successfully texts the valet ticket number to the
valet SMS request number. The “Requested” timestamp is generated once the ticket
number has been submitted in Flash Valet.
b. Accepted - This timestamp is generated when the valet storage location or whoever
is holding the parked vehicle accepts the vehicle request.
c. Assigned – This timestamp is generated if the valet operator chooses to use this
function to assign a valet employee to drive the vehicle to the customer.
d. Completed - This timestamp is generated when the “Done” button is pressed on a
customer vehicle request in Flash Valet. A window with a question, “Mark ticket
###### as done?” pops up after “Done” has been pressed providing two options: “Yes”
or “Contact Customer.”
i. Yes – Closes out the transaction and generates a “Completed” timestamp.
ii. Contact Customer – Sends a text message to the customer who initially texted the
vehicle request and generates a “Completed” timestamp.
Both options close out the vehicle request, and the retrieval time is stopped.
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Additionally, two elapsed time measurements appear in these reports:
e. Accepted Retrieval Time – This measures the time between the Accepted and
Completed timestamps.
f. Customer Retrieval Time – This measures the time between the Requested and
Completed timestamps.
Figure 5 below shows an example of the two separate time measurements, whereby the
Accepted Retrieval Time of 16.57 minutes is compliant with the RPS, while the Customer
Retrieval Time of 36.18 minutes is not.
Figure 5
Figure 5 - The timestamps used to calculate the measurements were given on the report, as shown. The
Accepted Retrieval Time measured the time between the Accepted and Completed timestamps. Meanwhile,
the Customer Retrieval Time measures the time between the Requested and Completed timestamps.
The Accepted Retrieval Time measurement begins when the vehicle request is “accepted”
by the vehicle storage location. The Customer Retrieval Time measurement starts when
the customer requests the vehicle and aligns with the criteria established in Section 28.5.
This information, confirmed by Flash Parking, provides the correct time measurement
(Customer Retrieval Time) to be used by the Parking Department to determine whether
the concessionaire achieved the RPS goal and, if not, the means to calculate any
corresponding penalties.
Upon further testing, OIG staff found that the Accepted Retrieval Time omitted less than
one minute from 530 (15.09%) transactions and from one minute to twelve (12) hours and
fifteen (15) minutes for the remaining 2,983 (84.91%) transactions as shown in Table 6.
Table 6
Time Omitted from RPS Number of Transactions Percentage of Transactions
< 0:01 Minutes 530 15.09%
0:01 - 12:15 2,983 84.91%
Total Transactions 3,513 100.00%
Table 6 – The table displays the number and percentage of transactions with time omitted from the Accepted
Retrieval Time measurement, which was suggested by the concessionaire to be used for the RPS compliance
test. The elapsed time omits when customer vehicles are requested, whether by text, at the kiosk, or over the
phone, and begins the measurement when the valet storage location has accepted the request.
Subsequently, the Customer Retrieval Time measurement was used to determine that the
concessionaire did not meet the concession agreement’s RPS goal for the 2018 events,
which resulted in a $13,400.00 penalty owed to the City as shown in Tables 7 and 8:
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Table 7
Section 28.5 - Return Performance Standard (RPS)
20 Minute RPS Achieved Vehicle Count Vehicle Percentage
Yes 2,475 70.45%
No 1,038 29.55%
Total Number of Vehicles 3,513 100%
Table 7 - The concessionaire returned 2,475 vehicles, or 70.45%, within the applicable twenty-minute RPS
timeframe. The information used for Table 2.2 originated in a Flash Valet generated report using the Customer
Retrieval Time data. This data provides the time measurement between the customer’s request for their
vehicle and the transaction’s close in the Flash Valet software.
Table 8
RPS Measurement and Penalty Calculation
Description Vehicle Count Vehicle Percentage
RPS goal required - 80% of Total
Number of Vehicles (3,513) 2,810 80.00%
Actual concessionaire valet RPS
performance achieved 2,475 70.45%
Difference between RPS goal and
actual performance (Rounded Down
to the Nearest Whole Number)
335 9.55%
Penalty amount per vehicle $ 40.00 Penalty = $40 x 335
Total Penalty Amount $ 13,400.00
Table 8 - The concessionaire returned 2,475 vehicles, or 70.45%, within the applicable RPS timeframe, which
is 9.55% less (80% - 70.45% = 9.55%) than the RPS goal of 80%. The 9.55% is equal to 335 vehicles (3,513
Total Vehicles x 0.0955 = 335.49) when rounded down to the nearest whole number. The City may assess a
$40 penalty to the concessionaire for each vehicle returned beyond the applicable RPS (335 x $40.00 =
$13,400.00) per Section 28.5.
Despite the deficiencies mentioned above related to the 2018 Design Miami and Art Basel
Miami Beach events, the OIG determined that the concessionaire satisfied the RPS goal
on additionally tested events held at the Fillmore and Lincoln Road in December 2018 as
well as for the 2019 Design Miami and Art Basel Miami Beach.
Recommendation(s):
Any material amendments reached between all parties to the executed agreement should
be memorialized and presented to the City Commission before being implemented. In its
absence, the executed agreement’s specified terms should be enforced including the
invoicing of the $13,400.00 RPS penalty. It is also recommended that Section 28.5 be
amended, pending the City Commission’s approval, to reflect the Parking Department’s
intended meaning.
The concessionaire should improve its vehicle return performance to always meet the
RPS goal in Section 28.5. If obstacles occur outside the concessionaire’s control, they
should be immediately addressed with the Parking Department to determine if they can
take alternative actions. If the concessionaire does not meet the RPS goal, the Parking
Department should timely impose the applicable penalties.
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Concessionaire’s Response:
See Exhibit D which contains the Concessionaire’s Responses in their entirety.
Parking Department’s Response:
On February 7, 2019 invoice number 18542 was created totaling $13,416.00 in
accordance with Section 28.5 Return Performance Standards of 20 minutes or less per
the FY2018/19 First Class contract. On September 20th, this invoice was voided based on
the information submitted by the Concessionaire from Flash Valet and conversation
between Concessionaire, OIG employee and the Parking Administration. As a result of
this communication, the Accepted Retrieval Time (ART), as opposed to the Customer
Retrieval Time (CRT), was established as the measure for the Return Performance
Standard (RPS). Applying the ART as the RPS measure resulted in no owed penalties.
The Flash System functionality was first tested in an environment that revealed no
difference between the ART and the CRT. While the main parties involved in this decision
are no longer with the City and cannot corroborate the thought process behind the
established standard, it would be reasonable to identity other conditions that negatively
affected the Concessionaire’s return times. Included amongst the considerations are the
high customer satisfaction ratings despite the Concessionaire having to operate from 4
different locations. Additionally, during the events, the Wi-Fi connection at the Miami
Beach Convention Center was not optimal as the distributed antenna system had not been
completed. This could have resulted in a communication delay affecting the lapse between
requested and accepted times.
The Parking Department will henceforth utilize the Customer Retrieval Time as the
measure to determine compliance with the Return Performance Standard.
OIG Audit Observation:
Meetings were held during which a consensus was reached by the Parking Department
and the concessionaire regarding the methodology to be followed in calculating event
turnaround times. These meetings focused on the usage of Flash Valet data to determine
an event’s turnaround times, as the City had only recently been granted read only access
to its data.
The consensus reached represented a material modification to the executed agreement
and needed to be presented to the City Commission for approval before being
implemented. For unknown reasons, it was not. Furthermore, neither party provided any
written documentation to OIG staff confirming the modified terms agreed upon.
Several years have elapsed since these meetings, and testing performed for this audit
discovered that some of the information conveyed by the concessionaire, and relied upon
by Parking Department staff, was incorrect. In addition, individuals present now have
different recollections of the consensus reached between the Parking Department and the
concessionaire, while some others are no longer employed by the City.
Given these facts, the executed agreement’s terms should be followed, which may or may
not differ from the verbal and undocumented consensus reached several years ago. As
such, the OIG believes that the $13,400.00 RPS penalty is due and should be invoiced by
the Parking Department and paid by the concessionaire.
Page 14 of 25
3. Finding: Lack Of Compliance And Enforcement Of Section 3.5 And 29’s Business
Tax Receipt Requirement
Section 5 of the 2018/19 and 2019/20 agreements require that the concessionaire obtain
a business tax receipt (BTR) for each venue serviced. Additionally, Section 29 reinforces
Section 3.5 by stating that the concessionaire must obtain a City of Miami Beach BTR
annually for the concession. City BTRs are issued annually for a one-year period, expiring
each September 30th.
City Code Section 102-357, as authorized by Section 205.042, Florida Statutes, permits
the City to levy a business tax for the privilege of engaging in or managing any business,
profession, or occupation within the City. If a business operating within the City does not
possess a valid/current BTR, it can be assessed penalty fees described in City Code
Sections 102-374 and 102-377. Lastly, City Code Section 102-370 establishes that
businesses operating within the City are ultimately responsible for obtaining their BTRs.
OIG staff reviewed electronic records stored in the City's licensing and permitting software,
EnerGov, to determine whether the concessionaire complied with the BTR requirements
for the 2018/19 and 2019/20 fiscal years. Additionally, staff conducted inquiries with the
Finance Department's Customer Service Division, which issues BTRs to businesses
operating within the City, and with the City's Parking Department, which monitors and
approves valet operations and administers the concession agreement on behalf of the
City. In doing so, the following deficiencies were noted:
• The concessionaire did not timely obtain its 2018/19 BTR, as it paid the associated
BTR fees on November 27, 2019, which is 422 days after the October 1, 2018 due
date.
• The concessionaire paid its 2019/20 fiscal year BTR fees on October 21, 2019, prior
to remitting the previous year’s BTR fee. However, the Customer Service Division did
not issue either of the BTRs, as the concessionaire had not paid for the previous fiscal
year’s BTR; had not provided a copy of an executed and renewed concession
agreement for fiscal year 2019/20; and had an outstanding parking violation (PV2019-
00523).
• The Customer Service Division issued the concessionaire’s 2019/20 fiscal year BTR
on January 17, 2020. Therefore, OIG staff calculated that the concessionaire had
performed valet services at City venues without a valid BTR for a total of 473 days or
from October 1, 2018, through January 17, 2020.
Also, the Parking Department was not aware that the concessionaire did not pay for its
2018/19 fiscal year BTR and, therefore, did not enforce Sections 3.5 and Section 29 of
the 2018/19 and 2019/20 concession agreements. OIG staff advised Parking Department
personnel on November 27, 2019, that the concessionaire had not paid the BTR fees. As
a result, the Parking Department contacted the concessionaire regarding the lack of
payment. The concessionaire promptly submitted payment on November 27, 2019.
However, on Monday, December 2, 2019, the day before the commencement of the 2019
Design Miami event, the concessionaire’s BTRs for fiscal years 2018/19 and 2019/20
remained in pending status in EnerGov, showing that the BTR process for both the current
and previous fiscal years remained incomplete. Consequently, OIG staff alerted Parking
Department administrative personnel to this deficiency.
Page 15 of 25
The Customer Service Division designated the concessionaire’s 2018/19 fiscal year BTR
as “not issued” in EnerGov as the fiscal year had concluded. Additionally, the Customer
Service Division apparently did not notify the Code Compliance Department to cite the
concessionaire for non-compliance in accordance with the City’s BTR ordinance.
Recommendation(s):
The concessionaire should ensure that it complies with the BTR requirements outlined in
Sections 3.5 and 29 of the 2018/19 and 2019/20 agreements and City Code Section 102-
357. Although the concessionaire paid its BTR fees, payment was remitted to the City
more than a year late. Accordingly, the Parking Department should verify that the
concessionaire has received its annual BTR in the EnerGov system.
The Customer Service Division should timely notify the Code Compliance Department of
any delinquent businesses operating within the City. As a compensating control, the
Parking Department should more closely monitor their respective agreements and notify
the concessionaire and/or the Code Compliance Department when noncompliance exists.
Concessionaire’s Response:
See Exhibit D which contains the Concessionaire’s Responses in their entirety.
Parking Department’s Response:
The Business Tax Receipt (BTR) license issued by the City in 2018 listed an address on
Convention Center Drive, which the Parking employee assigned to verifying the BTR took
as verification of a BTR for the City Contract. When the error was identified the
Concessionaire immediately addressed the matter. Parking staff continues to verify the
existence of valid BTR licenses.
Finance Department’s Response:
The Parking Department should request the concessionaire to provide a copy of their local
Business Tax Receipt (BTR) at the outset before beginning operations. Thereafter,
Parking can verify with the assistance of the Finance Department’s Customer Service
Center that the BTR is updated timely as part of the annual renewal process. The BTR
for First Class Parking Systems, LLC is currently active and in good standing.
The Code Compliance Department together with IT, previously developed a report in the
EnerGov Licensing Module called “Code BTR Report.” This report is a powerful tool,
listing all businesses by their category type, along with their current BTR status. The report
lists real-time information on BTRs. The report was created by the Code Compliance
Department to target non-compliant businesses.
Please note that at separate junctures throughout calendar years of 2018, 2019 and 2020,
City Manager Jimmy Morales imposed a moratorium on the issuance of BTR violations.
4. Finding: Early Implementation Of New Valet Prices Resulting In $19,960.00 In
Excess Transaction Fees Due To The City
Section 3.1 of the 2018/19 agreement contained updated price schedules allowing the
concessionaire to charge more than $20.00 at the MBCC and the Fillmore. Furthermore,
Section 3.2.2 included a new concession fee called an excess transaction fee (ETF),
which contains a provision that the concessionaire shall pay to the City a 100% of any
portion of a valet fee collected which exceeds $20.00. For example, the City is to receive
$5.00 per transaction (ETF) whenever the concessionaire collects $25.00 from a valet
Page 16 of 25
transaction related to a MBCC or Fillmore event. The concessionaire is to remit the total
amount of ETFs collected to the City no later than thirty days from the end of each prior
month.
Confusion existed over the implementing, collecting, invoicing and remitting of the newly
established ETF as shown by the following:
• The concessionaire incorrectly began charging MBCC and Fillmore valet customers
the $25.00 valet fee in October 2018, instead of the $20.00 valet fee established in
Section 15 of the 2015/18 agreement extended on a month-to-month basis. In fact,
the updated price schedule was not to be implemented until the November 1, 2018
commencement date of the 2018/19 agreement.
• OIG staff reviewed the Flash Valet system and noted that the higher price schedule
was implemented on October 1, 2018, resulting in the early collection of $25.00 per
transaction in valet fees. In response, the Parking Department sent the following email
to the City Attorney’s Office, “First Class has been collecting the valet fee of $25 which
is the amount under the new contract as of October 1st. Therefore, the additional $5
technically belongs to the City. With this said would that make the contract
retroactive?” The City Attorney’s Office responded via e-mail on October 26, 2018, “If
they have applied these terms since October 1, 2018 then it would be; otherwise, the
existing terms would be applied until the agreement is signed.” Finally, Amendment
No. 2 adopted by the City Commission and effective September 25, 2020, modified
the initial term of the agreement to commence on October 1, 2018 and end on
September 30, 2019.
• The Parking Department did not invoice the concessionaire for the ETFs based on the
Flash Valet data since adjustments may occur. Therefore, the concessionaire was not
invoiced for the October 2018 through February 2019 ETFs until the corresponding
monthly reports were submitted to the Parking Department, which occurred late
through a March 25, 2019 email. In addition, the concessionaire could not remit the
monies owed to the City until invoiced by the Parking Department. All these ETF
invoices for the period from October 2018 through February 2019 were paid in full by
the concessionaire.
Recommendation(s):
Although it is understood that the concessionaire received no additional benefit from the
early implementation of the higher price schedule, as any additional monies collected were
subsequently remitted to the City, any new terms should not be implemented until the new
agreement is adopted and becomes effective. Also, the Parking Department should
enforce the terms of the agreement and levy penalties from the due dates specified in
Section 3.2.2.
Concessionaire’s Response:
See Exhibit D which contains the Concessionaire’s Responses in their entirety.
Parking Department’s Response:
The Concessionaire erroneously started collecting the Excess Transaction Fee (ETF) in
October of 2018, as contract negotiations had concluded. However, the effective date of
the Contract was November 1, 2018. Contract effective date was later changed, via an
amendment to October 1, 2018.
Page 17 of 25
The Concessionaire submitted ETF reports late, therefore the Department could not
generate a timely invoice. However, the Parking Department invoiced and charged all late
penalties and interest in accordance with Section 3.3, of the Contract once the
Concessionaire submitted the required reports.
5. Finding: Lack Of Compliance And Enforcement Of The Sales Tax And Late Payment
Interest Requirement
Section 3.4 of the 2018/19 concession agreement, titled “Sales and Use Tax”, establishes
the following: “It is understood that the required Florida State Sales and Use Tax shall be
added to Concessionaire’s payments and forwarded to the City as part of said payments.
It is the City's intent that it is to receive the monthly minimum payment due from
Concessionaire as net of such Florida State Sales and Use Tax.”
OIG staff reviewed the concessionaire’s invoices for October 1, 2018 through February
29, 2020, to determine whether they were accurately calculated by the Parking
Department in compliance with the applicable concession agreements. In doing so, the
following deficiencies were noted:
Unbilled Excess Transaction Fees and Sales Tax
a. The Parking Department did not charge the correct amount of sales tax on ETFs for
October 1, 2018 through February 29, 2020. The Parking Department mistakenly
divided the ETF amounts reported by the concessionaire by one plus the sales tax
(1.07). They deducted the sales tax from the fee amount, thus reducing the ETF paid
to the City and the sales tax paid to the State.
Section 3.4 of the concession agreements requires that sales and use tax be added
to, not subtracted from, the concessionaire’s payments. The results of the months
tested, shown in Exhibit A, indicate that the concessionaire owes a total of $13,171.41
to the City, which includes $12,309.73 in ETFs and $861.68 in sales taxes to be
subsequently remitted to the State.
Overbilled Sales Tax
b. The Parking Department created invoice #20250 for $8,358.52 on May 7, 2019 to
collect state sales tax that was incorrectly omitted from the concession fees billed from
October of 2018 through April of 2019. OIG staff inquired with Parking Department
staff to determine why they omitted state sales tax and how the unpaid amount was
calculated. They responded that the concession fees billed during the period were
invoiced as stated in the 2018/19 concession agreement, but admitted that they
incorrectly omitted sales tax from the fees for said months. Additionally, a spreadsheet
provided by the Parking Department showed incorrectly calculated unpaid state sales
taxes for the months referenced on the invoice. This error resulted in $293.79 being
overbilled by the Parking Department and overpaid by the concessionaire (Exhibit B).
Overbilled Late Payment Interest
c. Seven ETF payments paid to the City by the concessionaire were reviewed (October
2018 through April 2019). Testing determined that six of these payments were
received late, ranging from two to 71 days, for which the Parking Department overbilled
late payment interest, as explained below.
The Parking Department calculated late payment interest by charging 18% of the fee
amount owed instead of calculating the 18% per annum daily rate (18% / 365 days =
Page 18 of 25
0.0493151%), as stated in Section 3.2 of the concession agreements, resulting in a
total overbilled amount of $14,118.00. Actual interest and late fees owed for the six
payments was $1,382.70. After deducting this amount from the total overpayment
made, the result is a net overpayment of $12,735.30 by the concessionaire. The
overbilled late payment interest went undetected until July 2019 when it was brought
to the attention of the Parking Department by the concessionaire.
The concessionaire contacted the Parking Department by email on July 26, 2019 to
correct the late payment interest overbilled for five of the six invoices mentioned above.
The Parking Department credited $11,195.39 to invoice #21531, the concessionaire’s
minimum guarantee concession fee for August of 2019. Consequently, an
overpayment of $1,539.91 ($12,735.30 overpayment - $11,195.39 credited =
$1,539.91) remains uncredited to concessionaire’s customer account in the Munis
system, the City’s current enterprise resource planning system (see Exhibit C).
Moreover, the Parking Department generated two duplicate but identical invoices,
#24318 and #24323, on January 3, 2020 for $264.81. The concessionaire paid both
invoices on February 15, 2020 which contained the same description in Munis stating,
“Late Fee for Excess Trans Fee – August 2019”. Additionally, OIG staff calculated the
late payment interest due for the August 2019 ETF as $339.21. The concessionaire
paid $529.62 ($264.81 x 2 invoices = $529.62) which resulted in $190.41 overpaid to
the City ($529.62 – 339.21 = $190.41).
Table 9 summarizes the amounts disclosed in findings 5a through 5c and the total
amounts due to the City and the State.
Table 9
Description City State Total
a. Unbilled Excess Transaction Fee $ 12,309.73 $ 861.68 $ 13,171.41
b. Overbilled Sales Tax $ - $ (293.79) $ (293.79)
c. Overbilled Late Payment Interest - 6 Invoices $ (1,539.91) $ - $ (1,539.91)
c. Overbilled Late Payment Interest - Duplicates $ (190.41) $ - $ (190.41)
Totals $ 10,579.41 $ 567.89 $ 11,147.30
Recommendation(s):
Parking Department management should establish stronger internal controls over the
creation of invoices and implement an accuracy review process to help mitigate the risk
and to prevent possible recurrences. This process should include an automated invoice
calculation template to ensure the efficiency and effectiveness of the invoice accuracy
review process, which should be reviewed/approved by Parking Department
management.
In sum, the Parking Department should invoice the concessionaire for a total of
$11,147.30 to correct the identified deficiencies. Once received, the City should remit
$567.89 in sales tax to the State.
Concessionaire’s Response:
See Exhibit D which contains the Concessionaire’s Responses in their entirety.
Page 19 of 25
Parking Department’s Response:
5(a) The Department was uncertain on the applicability of sales tax charges as they relate
to Excess Transaction Fees. This led the Parking Department to further research this
matter. The appropriate departments were contacted for further clarification, concluding
sales tax should be charged. The Parking Department has reconciled all transactions
related to Sales tax and has invoiced the Concessionaire accordingly.
5(b)The Parking Department has established a reconciliation process to ensure this does
not happen in the future.
5(c) The Parking Department has reconciled all transactions and issued appropriate
credits.
6. Finding: The Concessionaire Submitted Late Payments For 21 Of 52 (40.38%)
Invoices Billed During The October 1, 2018 Through April 30, 2020 Audit Period
The 2018/19 and 2019/20 concession agreements require the concessionaire to submit
concession fee payments by the 15th day of each month and establish late payment
interest, 18% per annum, to be charged to the concessionaire for payments submitted
after the due date.
The agreements also set forth the criteria for the collection of a newly established
concession fee called the excess transaction fee (ETF). The concessionaire was required
to submit ETF payments “no later than thirty (30) days from the end of each prior month.”
Additionally, the agreement established the criteria for collection of the percentage of
gross receipts (PG) payment, another newly established concession fee. The agreement
required this payment to be submitted by the concessionaire “no later than thirty (30) days
after the end of each contract year.” In addition to the above, the Parking Department
invoices also established due dates for the submission of payments for any Parking
related reason. Lastly, the 2018/19 agreement added a one-time $100.00 penalty for each
late payment and its 2019/20 renewal modified the one-time late payment penalty of
$100.00 to be charged for every month where the payment remained due.
An analysis of all payments submitted by the concessionaire to the City for the period
October 1, 2018 through April 30, 2020 was completed by OIG staff. The results of the
analysis are summarized in the Table 10 and the subsequent list:
Table 10
Invoice Categories Billed Paid Invoices Unpaid/(Overpaid) Abated/Adjusted
Concession Fees and
True-Up Payments $ 545,131.20 $ 545,131.20 38 $ - $ (11,195.39)
Late Payment
Interest $ 16,979.60 $ 16,979.60 21 $ - $ -
Abated Invoices $ - $ - 7 $ - $ (53,328.52)
Penalties and Misc.
Contract Fees $ 21,786.90 $ 21,486.90 14 $ 300.00 $ -
Grand Total $ 583,897.70 $ 583,597.70 80 $ 300.00 $ (64,523.91)
Table 10 – The information in this table was retrieved from the City’s Munis system.
a. The concessionaire submitted late payments for 21 of 52 (40.38%) invoices billed for
the reviewed concession fees, true-ups and penalties and miscellaneous contract fees
for the period October 1, 2018 through April 30, 2020.
Page 20 of 25
b. The total amount of late payment interest billed to the concessionaire during the audit
period amounted to $16,979.60.
c. The total amount of concession fees and true-up payments billed to the concessionaire
during the audit period was $545,131.20 (excluding the $11,195.39 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 $21,786.90.
e. The Parking Department created and abated, or voided, 7 invoices totaling $53,328.52
during the October 1, 2018 through April 30, 2020 audit period, due to invoice
calculation errors, invoice allocation errors, duplicate invoices, an abated 2018 RPS
penalty, and a concession fee abatement due to the COVID-19 pandemic.
f. The concessionaire paid invoice numbered 26368 for $300 due on April 30, 2020, in
full on October 21, 2020.
The concessionaire’s contract performance over the audit period shows repeated non-
compliance with payment due dates established by the concession agreement.
Recommendation(s):
Although the concessionaire has remitted all associated late fees stemming from its late
payments, it should timely remit all future payments timely, or risk being placed in default
or becoming subject to debarment.
Concessionaire’s Response:
See Exhibit D which contains the Concessionaire’s Responses in their entirety.
Parking Department’s Response:
6(e) Having determined that abatements were justified (see below), the Department
issued updated invoices; appropriate charges were paid by Concessionaire as applicable.
A total of $20,259.52 were voided due to the use of the incorrect GL account. The
concessionaire was reinvoiced and all invoices have been paid. A customer service
satisfaction invoiced for $500.00 was voided due to an error in the Customer Satisfaction
Survey, therefore a new invoice was created and paid by the Concessionaire. The April
concession invoice for $19,153 was voided due to COVID closure in March of 2019. The
$13,416 was abated following the agreement on the Return Performance Standard.
6(f) The Parking Department will continue to work with the Concessionaire in ensuring
timely payments of invoices.
7. Finding: Lack of Compliance And Enforcement Of Section 9’s Insurance
Requirements
Section 9 of the 2018/19 and 2019/20 agreements require First Class Parking Systems,
LLC to maintain at least specified levels of Commercial General Liability or Garage Liability
insurance, Garage Keepers Legal Liability insurance, and Worker’s Compensation and
Employer’s Liability insurance.
Additionally, the concession agreements’ insurance requirements mirror Miami Beach City
Code Section 18-337, which requires approval from the City’s Risk Manager indicating
Page 21 of 25
that the valet parking operation has met specific commercial, general liability or garage
liability insurance requirements and garage keepers legal liability insurance to provide
collision and comprehensive coverage for vehicles under the control of the valet parking
operation with minimum limits of $300,000.00 per location, with a maximum Self-Insured
Retention (SIR) or deductible of $1,000.00. Lastly, the concession agreement’s insurance
section requires that the concessionaire provide a certificate of insurance for each policy
and that all policies name the City and Live Nation Worldwide, Inc. as additional insureds.
OIG staff requested insurance certificates from the City’s Parking Department and the
Human Resources Department’s Risk Management Division to determine whether the
concessionaire complied with the current concession agreement’s insurance
requirements. Additionally, the data in Exigis Risk Works (Exigis), the City’s insurance
certificate tracking system, was reviewed to verify insurance certificates submitted to the
City. OIG staff contacted an Exigis representative to determine 1) how compliance is
determined, 2) who defines it, and 3) the criteria used to assess compliance. Upon
analyzing all the information received, the following deficiencies were noted:
• The concessionaire’s insurance certificates for the 2018/19 and 2019/20 concession
agreement years are not compliant with Section 9(b) of the concession agreements
and the requirement of City Code Section 18-337(1)(b) of either maintaining a
maximum Self-Insured Retention (SIR) or a deductible of $1,000. It was determined
that the concessionaire’s insurance certificates contained a $5,000 deductible instead
of the required $1,000, as the City did not accurately provide the requirements to
Exigis.
The City is responsible for setting the criteria or standards in Exigis to be used to determine
compliance with contractual insurance requirements. The City can modify the standards
in Exigis as the City, may, in its discretion, determine. Exigis determines the vendor’s
compliance with the requirements set by the City. Exigis does not set up or review the
contracts, but only monitor insurance requirements set by the City. Ultimately, City
departments rely on the Risk Management Division and Exigis to determine whether a
contracted vendor, such as the concessionaire, is compliant with the City’s insurance
requirements stated in its contractual agreement.
The concessionaire bears the ultimate responsibility for its non-compliance with the
concession agreement’s insurance requirements. Furthermore, the criteria established by
the Risk Management Division in Exigis did not meet all the requirements outlined in
Section 9 of the concession agreement as well as City Code Section 18-337(1)(b). This
deficiency could have exposed valet customers to vehicle losses up to the $5,000.00
deductible.
Recommendation(s):
The concessionaire should always comply with the concession agreement’s insurance
requirements, the pertinent City Code sections, and modify the deductible to the required
$1,000.00 amount. The City should modify the concessionaire’s insurance criteria set in
Exigis to mirror, at a minimum, City Code Section 18-337 and Section 9 of the concession
agreement. The Risk Management Division should adhere to the responsibilities set forth
in its departmental web page, which includes the “review of agreements, contracts, leases
for insurance compliance.” Lastly, it should periodically review vendor insurance
requirements in Exigis to ensure that they are complete and accurate.
Page 23 of 25
Exhibit A
Period
Concession Agreement
Excess Transaction Fee
(ETF)
Concession Agreement
Sales Tax
Concession Agreement
ETF Amount Owed with
Sales Tax
Parking Department's
ETF Calculation
Parking Department's
Sales Tax Calculation
ETF Reported by the
Concessionaire
October-18 19,960.00$ 1,397.20$ 21,357.20$ 18,654.21$ 1,305.79$ 19,960.00$
Total 19,960.00$ 1,397.20$ 21,357.20$ 18,654.21$ 1,305.79$ 19,960.00$
November-18 4,080.00$ 285.60$ 4,365.60$ 3,813.08$ 266.92$ 4,080.00$
December-18 19,930.00$ 1,395.10$ 21,325.10$ 18,626.17$ 1,303.83$ 19,930.00$
January-19 10,625.00$ 743.75$ 11,368.75$ 9,929.91$ 695.09$ 10,625.00$
February-19 4,035.00$ 282.45$ 4,317.45$ 3,771.03$ 263.97$ 4,035.00$
March-19 13,935.00$ 975.45$ 14,910.45$ 13,023.36$ 911.64$ 13,935.00$
April-19 6,570.00$ 459.90$ 7,029.90$ 6,140.19$ 429.81$ 6,570.00$
May-19 5,725.00$ 400.75$ 6,125.75$ 5,350.47$ 374.53$ 5,725.00$
June-19 9,000.00$ 630.00$ 9,630.00$ 8,411.21$ 588.79$ 9,000.00$
July-19 10,650.00$ 745.50$ 11,395.50$ 9,953.27$ 696.73$ 10,650.00$
August-19 6,555.00$ 458.85$ 7,013.85$ 6,126.17$ 428.83$ 6,555.00$
September-19 3,805.00$ 266.35$ 4,071.35$ 3,556.07$ 248.93$ 3,805.00$
October-19 13,045.00$ 913.15$ 13,958.15$ 12,191.59$ 853.41$ 13,045.00$
Total 107,955.00$ 7,556.85$ 115,511.85$ 100,892.52$ 7,062.48$ 107,955.00$
November-19 13,572.00$ 950.04$ 14,522.04$ 12,684.11$ 887.89$ 13,572.00$
December-19 25,032.00$ 1,752.24$ 26,784.24$ 23,394.39$ 1,637.61$ 25,032.00$
January-20 9,575.50$ 670.29$ 10,245.79$ 8,949.07$ 626.43$ 9,575.50$
February-20 12,068.50$ 844.80$ 12,913.30$ 11,278.97$ 789.53$ 12,068.50$
Total 60,248.00$ 4,217.36$ 64,465.36$ 56,306.54$ 3,941.46$ 60,248.00$
Totals 188,163.00$ 13,171.41$ 201,334.41$ 175,853.27$ 12,309.73$ 188,163.00$
Excess Transaction Fee
(ETF)
Concession Agreement
Sales Tax
ETF Amount Owed with
Tax
Agreement 188,163.00$ 13,171.41$ 201,334.41$
Parking Dept.175,853.27$ 12,309.73$ 188,163.00$
Difference 12,309.73$ 861.68$ 13,171.41$ Owed by the Concessionaire
Excess Transaction Fee (ETF) Billing
Page 24 of 25
Exhibit B
Overbilled Sales Tax
Period Unpaid Sales Tax Billed and Collected on Invoice #20250 Difference/Overpayment
October-18 546.73$ 840.52$ 293.79$
November-18 1,253.00$ 1,253.00$ -$
December-18 1,253.00$ 1,253.00$ -$
January-19 1,253.00$ 1,253.00$ -$
February-19 1,253.00$ 1,253.00$ -$
March-19 1,253.00$ 1,253.00$ -$
April-19 1,253.00$ 1,253.00$ -$
Total 8,064.73$ 8,358.52$ 293.79$
2015/18 Agreement
Second Contract Year
Concession Fee
Sales Tax
(11221.88 x 0.07)
Concession Fee With Tax
(11221.88 + 785.53)
7% of Concession Fee
with Tax
11,221.88$ 785.53$ 12,007.41$ 840.52$
Actual Sales Tax Owed 546.73$
Total Sales Tax Overpayment 293.79$
Page 25 of 25
Exhibit C
Invoice Month Amount Charged Days Late Daily Interest Interest Due Late Fee Total Interest & Late Fee Previously Paid Credit Due
20247 October-18 19,960.00 12 0.000493151 118.12$ 100.00$ 218.12$ 3,692.80$ 3,474.68$
20080 November-18 4,080.00 23 0.000493151 46.28$ 100.00$ 146.28$ 834.40$ 688.12$
20079 December-18 19,930.00 23 0.000493151 226.06$ 100.00$ 326.06$ 3,687.40$ 3,361.34$
20865 January-19 10,625.00 71 0.000493151 372.02$ 100.00$ 472.02$ 2,012.50$ 1,540.48$
21033 March-19 13,935.00 2 0.000493151 13.74$ 100.00$ 113.74$ 1,282.60$ 1,168.86$
21034 April-19 6,570.00 2 0.000493151 6.48$ 100.00$ 106.48$ 2,608.30$ 2,501.82$
782.70$ 600.00$ 1,382.70$ 14,118.00$ 12,735.30$
(11,195.39)
1,539.91$
Overbilled Interest and Penalties
Previously Credited
Overpayment Remaining
Exhibit D