C: The Honorable Mayor Manuel A. Diaz Pedro G. Hernandez, Chief Administrator/City Manager Members of the Audit Advisory Committee Larry M.

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3 C: The Honorable Mayor Manuel A. Diaz Pedro G. Hernandez, Chief Administrator/City Manager Members of the Audit Advisory Committee Larry M. Spring, Chief Financial Officer Michael J. Boudreaux, Chief of Strategic Planning, Budgeting and Performance Peter W. Korinis, Chief Information Officer, Information Technology Department Jorge L. Fernandez, City Attorney, City Attorney s Office Priscilla A. Thompson, City Clerk, City Clerk s Office Diana M. Gomez, CPA, Director, Finance Department Frank Laso, Director, Parking Network Inc. Arthur Noriega, Executive Director, Miami Parking Authority Scott Simpson, Chief Financial Officer, Miami Parking Authority Michelle Covington, Accounting Manager, Towne Park Nancy Diaz, Manager, Central Parking System Bijan Eghtedari, President, Park One Arturo Evans, Manager, US Parking Mark Alvarez, General Manager, Wyndham Grand Bay Hotel Mariluz Angulo Guzman, CPA, Vice President, Mercy Hospital Inc. Nickos Bastitatos, Miami Star Casino Gary Bleemer, Metro Parking System Inc. Maria Escoto, Keyes Corporate International Al Arias, Ampco Parking System Danny Dominguez, Grand Bay Associates Jennifer Prieto, KW Property Management & Consulting Mike Mangiapane, Lanier Parking Systems Amy Shuster, Imperial Parking Inc. Demetrio Constantiny, Accounts Receivable Supervisor, Finance Department Audit Documentation File

4 AUDIT OF THE CITY OF MIAMI PARKING SURCHARGE FOR THE PERIOD OCTOBER 1, 2004, THROUGH MARCH 31, 2006 TABLE OF CONTENTS INTRODUCTION... 1 SCOPE AND OBJECTIVES... 3 METHODOLOGY... 5 SUMMARY OF AUDIT FINDINGS... 6 SELECTED PARKING FACILITIES AND PARKING NETWORK INC ADDITIONAL PARKING SURCHARGE REVENUES DUE TO THE CITY MIAMI OFF-STREET PARKING AUTHORITY... 7 REVENUES GENERATED FROM THE LEASE OF PARKING FACILITIES WERE NOT REMITTED TO THE CITY... 7 PARKING NETWORK, INC... 8 MONITORING OF COMPLIANCE WITH ORDINANCE NO CAN BE ENHANCED... 8 A PARKING FACILITY WAS NOT LISTED ON THE PARKING NETWORK S DATABASE AND THE RELATED PARKING SURCHARGE WAS NOT COLLECTED AND REMITTED TO THE CITY US PARKING THE RECORDS SUPPORTING PARKING SURCHARGE REVENUES WERE NOT MAINTAINED FINANCE DEPARTMENT PARKING FACILITIES OPERATED WITHOUT REQUIRED OCCUPATIONAL LICENSES AND CERTIFICATES-OF-USE AUDIT FINDINGS AND RECOMMENDATIONS SELECTED PARKING FACILITIES AND PARKING NETWORK INC ADDITIONAL PARKING SURCHARGE REVENUES DUE TO THE CITY MIAMI OFF-STREET PARKING AUTHORITY REVENUES GENERATED FROM THE LEASE OF PARKING FACILITIES WERE NOT REMITTED TO THE CITY PARKING NETWORK, INC MONITORING OF COMPLIANCE WITH ORDINANCE NO CAN BE ENHANCED A PARKING FACILITY WAS NOT LISTED ON THE PARKING NETWORK S DATABASE AND THE RELATED PARKING SURCHARGE WAS NOT COLLECTED AND REMITTED TO THE CITY US PARKING THE RECORDS SUPPORTING PARKING SURCHARGE REVENUES WERE NOT MAINTAINED FINANCE DEPARTMENT... 23

5 PARKING FACILITIES OPERATED WITHOUT REQUIRED OCCUPATIONAL LICENSES AND CERTIFICATES-OF-USE AUDITEE RESPONSES EXHIBIT I: AUDIT OF THE CITY S PARKING SURCHARGE TOTAL SURCHARGE FEES DUE TO THE CITY EXHIBIT II: PICTURES OF MPA PARKING FACILITIES... 38

6 INTRODUCTION Section , Florida Statutes, provides that any municipality that meets any of the following criteria may impose a 15% discretionary per vehicle parking surcharge: A municipality with a population of 200,000 or more that is located in a county with a population of more than 500,000. A municipality whose real property is subject to more than twenty percent exemption from ad valorem taxes The 15% parking surcharge can be assessed on the amount charged for the sale, lease, or rental of space at parking facilities within the municipality that are open for use to the general public, except the airports, seaports, county administrative buildings and others. On July 22, 2004, the City Commission passed Ordinance No (Ordinance) pursuant to the authority granted by Section , Florida Statutes. The Ordinance imposed a surcharge on the sale, lease or rental of space at parking facilities in the City of Miami (City) at the rate of 15% of the revenues derived from any charge, fee or exchange for the parking of a motor vehicle in or on any parking facility in the City for which a charge, fee or exchange is made on an hourly, daily, weekly, monthly, yearly, event validation program, valet or any other basis. Section 8(b) of Ordinance No , stipulates that the operator of each parking facility shall remit to the City Manager the funds collected net of refunds no later than the twentieth (20 th ) day of each calendar month for the preceding calendar month s parking surcharge collections. Section 6 of the Ordinance defines the following terms as: 1

7 Revenue - Any and all revenue, to include the entire amount of compensation in whatever form, exchange or otherwise, to be determined according to generally accepted accounting principles, derived directly or indirectly from or in connection with the Parking operation of the Parking Facility. Operator - Any individual, partnership, association, corporation, or other entity which owns, controls, conducts, leases, operates, or causes to be operated a Parking Facility which offers parking accommodations for a Fee, Charge or Exchange. The intent of the Ordinance is to place the burden for collection of the surcharge on the owner of the facility not the entity that operates the facility if different from the owner. The City outsourced the management of the parking surcharge program to Parking Network, Inc. (PNI). An agreement between the City and PNI authorizes PNI to enforce all the provisions of Ordinance No , including but not limited to monitoring the operations and activities of all parking facilities; ensuring that parking surcharge fees are properly assessed, collected and remitted to the City; performing audits of parking facilities; and ensuring that all parking/valet facilities in the City are identified and included in the parking surcharge database. The City s department of Finance was designated to monitor compliance of the professional service agreement between the City and the Parking Network, Inc. (PNI). The financial accounting records maintained by the City s Finance department disclosed that approximately $17 million of surcharge revenues was remitted to the City for the audit period October 1, 2004 through March 31, There are 291 parking facilities in PNI s database for the period October 1, 2004 through March 31, The 72 parking facilities selected for testing, collected, and remitted to the City approximately $6.2 million or 36% of the $17 million noted above. This report describes the results of the City and the PNI s compliance, pursuant to collection and remittance of surcharge fees to the City. 2

8 SCOPE AND OBJECTIVES This audit was performed pursuant to the authority set forth in Section 48 of the City s Charter titled, Office of Independent Auditor General, and was conducted in accordance with the Fiscal Year 2007 Audit Plan. As part of our oversight responsibilities, the Office of Independent Auditor General performs financial and operational audits to determine the extent of compliance with provisions of contracts, programs, and/or lease agreements between the City and private companies. This audit focused primarily on whether the selected parking facilities complied with the provisions of Ordinance No ; and also whether Parking Network, Inc. (PNI) complied with the terms of the Professional Services Agreement (Agreement) between the City and PNI. The audit also included examinations of various financial transactions between PNI and the City to determine whether they were executed in accordance with the Service Agreement. The audit covered the period October 1, 2004, through March 31, 2006, and selected controls/transactions prior and subsequent to this period. In general our audit objectives were: To evaluate the reliability and integrity of financial and operating information used to identify, classify, and report parking surcharge fees. To determine whether all applicable parking surcharge fees as stipulated in Ordinance No were properly computed and remitted to the City. To determine whether adequate internal controls were maintained. To determine whether the amounts remitted to the City were properly recorded in the City s financial accounting system and deposited into the City s treasury. To determine whether PNI complied with all major provisions of the Agreement. 3

9 To determine whether parking facilities were operating with certificates of use and local business tax receipts. Other audit procedures as deemed necessary. 4

10 METHODOLOGY We conducted the audit in accordance with generally accepted Government Auditing Standards, issued by the Comptroller General of the United States. The audit methodology included the following: Interviewed and inquired of appropriate personnel, reviewed and observed applicable written policies and procedures, in order to gain an understanding of the internal controls, assessed control risk, and planned substantive testing. Performed substantive testing consistent with the audit objectives. Examined, on a test basis, applicable transactions and records. Determined compliance with all the objectives noted on pages 3 and 4. Performed other audit procedures as deemed necessary. Drew conclusions based on the results of the testing, made corresponding recommendations, and obtained the auditee s responses and corrective action plans. 5

11 SUMMARY OF AUDIT FINDINGS SELECTED PARKING FACILITIES AND PARKING NETWORK INC. ADDITIONAL PARKING SURCHARGE REVENUES DUE TO THE CITY. Our review of the pertinent accounting and parking records disclosed that 32 (or 44%) of the 72 parking facilities tested did not remit the correct amount of surcharge revenues due to the City. The total additional parking surcharge due to the City is $234, Upon audit inquiry, $186, of the total additional amount due was remitted to the City as shown in Exhibit I. See detailed discussions of the audit finding on pages 13 and 14. 6

12 MIAMI OFF-STREET PARKING AUTHORITY REVENUES GENERATED FROM THE LEASE OF PARKING FACILITIES WERE NOT REMITTED TO THE CITY. Our audit disclosed that parking surcharge revenues were not remitted to the City for 3 of the 72 parking facilities tested. We were informed by Miami Off-Street Parking Authority (MPA) that the 3 parking facilities were used for staging of construction material/equipment and film production, and therefore, the parking surcharge would not be applicable. However, during an on-sight visit to 1 of the 3 parking facilities on March 27, 2007, we observed only one container occupying approximately 4 of the 44 parking spaces leased to TRG Flagler and vehicles parked in the remaining parking spaces (see pictures on pages 39 and 40). Therefore, based on the written information provided by MPA as it relates to the use of Lot 19, Section 5, we estimate that a total of $9, of parking surcharge including penalty and interest are due and payable to the City. See detailed discussions of the audit finding on pages 15 and 16. 7

13 PARKING NETWORK, INC. MONITORING OF COMPLIANCE WITH ORDINANCE NO CAN BE ENHANCED. The City outsourced the management of the parking surcharge program to Parking Network, Inc. (PNI). A Professional Services Agreement dated May 15, 2000 and subsequently amended/revised on October 1, 2005, between the City and PNI authorizes PNI to enforce all the provisions of Ordinance No During the audit period October 1, 2004 through March 31, 2006, approximately $17 million of parking surcharge revenues were remitted to the City and PNI was paid professional service fees totaling $800, (4.5% of the $17 million). However, our audit of 72 (or 25%) of the 291 parking facilities in PNI s database for the period October 1, 2004 through March 31, 2006, disclosed that additional parking surcharge revenues totaling $234, are due to the City. We noted that 16 (or 22%) of the 72 parking facilities tested as part of this audit were previously audited by PNI, and that $161, (or 69%) of the additional $234, of parking surcharge revenues, identified by our audit, were due from those 16 parking facilities. An audit is an important tool that can be used to determine compliance or lack thereof. However, for the audit process to be effective, it must be properly planned and skillfully executed. See detailed discussions of the audit finding on pages 17 through 19. 8

14 A PARKING FACILITY WAS NOT LISTED ON THE PARKING NETWORK S DATABASE AND THE RELATED PARKING SURCHARGE WAS NOT COLLECTED AND REMITTED TO THE CITY. We visually identified 24 parking facilities/lots located in the City to determine whether said facilities were included in the PNI s database and monitored for compliance with parking surcharge fee assessment, collection and remittance to the City. Our test disclosed that 1 (or 4.17%) of the 24 facilities was not included in the PNI s database and had not remitted any parking surcharge to the City. We determined that said facility, which accommodates approximately 150 vehicles, is leased to a construction company and used as a construction off-site parking for construction workers. In accordance with Section of the City Code, a 15% parking surcharge fee is payable to the City. Upon audit inquiry, PNI stated that it identified said property a couple of months ago and had sent correspondence and left several messages to no avail. However, upon inspection of PNI s database said parking facility, was not listed in the PNI s database as required. Such listing would serve as a basis for documenting all actions taken to ensure compliance. See detailed discussions of the audit finding on pages 20 and 21. 9

15 US PARKING THE RECORDS SUPPORTING PARKING SURCHARGE REVENUES WERE NOT MAINTAINED. Our audit disclosed that 1 (or 1.40%) of the 72 parking facilities did not provide us with any of the required records. The only records provided by US Parking were hand-written summary reports showing the starting and ending ticket numbers and total amount of cash collected by US Parking in connection with the valet parking service provided to Big Fish Restaurant and only for certain days in January through March In addition, the total gross receipts on these hand-written reports did not agree to the total gross receipts reported to the City for two of the three months provided. See detailed discussions of the audit finding on pages 22 and

16 FINANCE DEPARTMENT PARKING FACILITIES OPERATED WITHOUT REQUIRED OCCUPATIONAL LICENSES AND CERTIFICATES-OF-USE. Our audit disclosed that 291 Parking Facilities were listed on PNI s Property listing spreadsheet. Upon review of the spreadsheet, we noted that the columns designated for the identification numbers relative to the business tax receipt (formerly known as occupational license) for 170 parking facilities were not completed. Also, the columns designated for the identification numbers relative to certificate-of-use for 159 parking facilities were not completed. Upon further investigation we noted that said columns were not completed because parking facilities had not provided that information on the monthly Surcharge Remittance Reports or the Annual Registration forms that were submitted to PNI. We judgmentally selected 30 of the 170 parking facilities to verify compliance with the requirement for occupational license and a certificate-of-use certificate. Our audit test disclosed that 3 (or 10%) of the 30 parking facilities tested did not have valid occupational licenses and certificates-of-use issued by the City as required. See detailed discussions of the audit finding on pages 24 and

17 AUDIT FINDINGS AND RECOMMENDATIONS SELECTED PARKING FACILITIES AND PARKING NETWORK INC. ADDITIONAL PARKING SURCHARGE REVENUES DUE TO THE CITY. Section 4 of Ordinance No requires all operators of parking facilities to remit to the City 15% of the revenues derived from any charge, fee or exchange for the parking of a motor vehicle in or on any parking facility in the City. Section 8(b) of said Ordinance stipulates that the total funds collected net of refunds shall be remitted to the City no later than the twentieth (20 th ) day of each calendar month for the preceding calendar month s parking surcharge collections. We judgmentally selected 72 (or 25%) of the 291 parking facilities from a database maintained by Parking Network, Inc. The 291 parking facilities generated total gross receipts of approximately $17 million for parking services provided within the City during the audit period. The total parking surcharge remitted to the City by the 72 parking facilities during the audit period was approximately $6.2 million. Our review of the pertinent accounting and parking records disclosed that 32 (or 44%) of the 72 parking facilities tested did not remit the correct amount of surcharge revenues due to the City. The total additional parking surcharge due to the City is $234, Upon audit inquiry, $186, of the total additional amount due was remitted to the City as shown in Exhibit I. Recommendation We recommend that all the parking surcharge fees due and payable to the City be remitted to the City. We also recommend that Parking Network, Inc. develop a multiyear audit/monitoring plan to ensure that each parking facility is audited at least once within the four year contractual term. The Finance Department should bill and collect the $47, outstanding amount due to the City. 12

18 Auditee Response and Action Plan The parking facilities concurred with the audit findings and a total of $186, of the additional amount due has been remitted to the City. In a written response (see pages 26 through 29) the Director of PNI stated that PNI will implement an audit schedule/plan that will periodically rotate the audit of all parking facilities. 13

19 MIAMI OFF-STREET PARKING AUTHORITY REVENUES GENERATED FROM THE LEASE OF PARKING FACILITIES WERE NOT REMITTED TO THE CITY. Article IX, Section of the City Code defines parking charges, fees or exchange as the consideration paid to the operator for goods and services ancillary to parking if payment for such goods and services is mandatory and not optional to the user s entry into a parking transaction. Examples of goods and services that may be considered ancillary to parking include, but are not limited to food, beverages, air fresheners, windshield cleaning, car wash, tire pressure checks, jump starts and emergency phone services. The intent of this definition is to impose the surcharge on all consideration paid by the user as a condition of entry into a parking transaction, irrespective of whether particular components of such consideration are characterized as compensation received or cost imposed for goods and services separate and apart from parking in an attempt to evade the surcharge. Our audit disclosed that parking surcharge was not remitted to the City for 3 of the 72 parking facilities tested. We were informed by Miami Off-Street Parking Authority (MPA) that the 3 parking facilities were used for staging of construction material/equipment and film production, and therefore, parking surcharge would not be applicable. We noted, however that 1 of the 3 parking facilities is currently being leased to TRG Flagler pursuant to a written agreement dated May 4, 2005, which allowed TRG Flagler to have exclusive use of 44 parking spaces in Lot 19, Section 5 on a month to month basis beginning July 1, 2005 at a rate of $26,000 monthly for staging of construction material and equipment. However, during an on-sight visit to the parking facility on March 27, 2007, we observed only one container occupying approximately 4 of the 44 parking spaces leased to TRG Flagler and vehicles parked in the remaining parking spaces, as evidenced by the pictures shown on pages 39 and 40. Upon audit inquiry, we were informed that the parking facility was leased and used for staging of construction material and equipment beginning July 1, 2005 but that the lessee (TRG Flagler) began using the leased facility for construction parking on February 1,

20 However, there was no change-of-use document filed as required by Section 2-207(a) of the City Code indicating a change of use (from parking facility to a construction material/equipment storage facility and back to parking). Section 2-207(b) of the City Code provides that change-of-use shall not be granted until a zoning certificate of use has been issued by the Planning and Zoning departments. Said zoning certificate is only granted after the premises has been inspected and found to comply with all code requirements of the Planning, Building, Zoning, and the Fire Rescue departments. A properly filed and approved change-of-use zoning certificate would evidence when the change of use occurred, provide the effective date for assessing and calculating the parking surcharge fee due and payable to the City, and assist PNI in its monitoring efforts. Based on the written information provided by MPA as it relates to the effective date for calculating parking surcharge due to the City in connection with Lot 19, Section 5, we estimate that a total of $9, of parking surcharge including penalty and interest are due and payable to the City. Recommendation We recommend that MPA seek guidance from the City s Building department as it relates to change-of-use zoning certificate requirements. Auditee Response and Action Plan The Executive Director of MPA noted that the change of use was not intended to be permanent nor long term, and therefore, a new zoning certificate may not be applicable. However, he intends to discuss this observation with the City s Building department for clarification and guidance. He also stated that MPA will notify the City or the Parking Network, Inc. when change of use occurs. This notification will provide the effective date for assessing and calculating the parking surcharge fee due and payable to the City. See written response on page

21 PARKING NETWORK, INC. MONITORING OF COMPLIANCE WITH ORDINANCE NO CAN BE ENHANCED. The City outsourced the management of the parking surcharge program to Parking Network, Inc. (PNI). A Professional Services Agreement dated May 15, 2000 and subsequently amended/revised on October 1, 2005, between the City and PNI authorizes PNI to enforce all the provisions of Ordinance No The contractual responsibilities of PNI include but are not limited to monitoring the operations and activities of all parking facilities; ensuring that parking surcharge fees are properly assessed, collected and remitted to the City; performing audits of parking facilities; and ensuring that all parking/valet facilities in the City are identified and included in the parking surcharge database. During the audit period October 1, 2004 through March 31, 2006, approximately $17 million of parking surcharge revenues were remitted to the City and PNI was paid professional service fees totaling $800, (4.5% of the $17 million). However, our audit of 72 (or 25%) of the 291 parking facilities in PNI s database for the period October 1, 2004 through March 31, 2006, disclosed that additional parking surcharge revenues totaling $234, are due to the City. PNI s contractual responsibilities require performing audits and ensuring that parking surcharge fees are properly assessed, collected and remitted to the City. We noted that 16 (or 22%) of the 72 parking facilities tested as part of this audit were previously audited by PNI. However, our audit identified that $161, (or 69%) of the additional $234, of parking surcharge revenues were due from those 16 parking facilities. An audit is an important tool that can be used to determine compliance or lack thereof. However, for the audit process to be effective, it must be properly planned and skillfully executed. During the five year period January 1, 2001 through December 31, 2006, PNI s records indicated that approximately 154 (or 53%) of the 291 parking facilities in its database were audited by PNI. A more frequent audit of the accounting records of all parking 16

22 facilities would enhance compliance with the parking surcharge Ordinance. For example, there is no document to evidence the use of an audit plan that periodically rotates the audit of all parking facilities. A more frequent review of supporting accounting records would enhance the accuracy of the parking revenues generated and reported to the City. Upon audit inquiry, the Director of PNI stated that the records of a parking facility are only subjected to an audit if there is a decrease in the revenues being remitted to the City, if it is a new parking facility, if there is a change of parking facility operator, or triggered by field observations/audits/field surveys. Also, the Director stated that field surveys, field observations, field audits, and review of payment history are other types of oversight processes used by PNI to complement review of revenues and accounting records/documents. Recommendation We recommend that PNI implement a comprehensive multi-year audit plan that would ensure that the revenues/accounting records of all parking facilities are periodically subjected to an audit. The audit process should include tracing of revenues generated to bank deposits and reviewing of cash receipt journals and other relevant accounting records. Furthermore, said comprehensive audit plan should include field surveys and observations of all facilities. 17

23 Auditee Response and Action Plan In a written response (see pages 26 through 29) the Director of PNI stated that PNI will implement an audit schedule/plan that will periodically rotate the audit of all parking facilities. 18

24 A PARKING FACILITY WAS NOT LISTED ON THE PARKING NETWORK S DATABASE AND THE RELATED PARKING SURCHARGE WAS NOT COLLECTED AND REMITTED TO THE CITY. Attachment A, subsection titled Enforcement of the Agreement between the City and Parking Network, Inc. (PNI) provides that PNI shall monitor the operations and activities of all parking facilities and ensure that parking surcharge fees are properly assessed, collected and remitted to the City. The provider (PNI) is also required to perform audits of customers/property lease files, identify, and include all parking/valet facilities into the parking surcharge database. We visually identified 24 parking facilities/lots located in the City to determine whether said facilities were included in the PNI s database and monitored for compliance with parking surcharge fee assessment, collection and remittance to the City. Our test disclosed that 1 (or 4.17%) of the 24 facilities was not included in the PNI s database and had not remitted any parking surcharge to the City. We determined that said facility, which accommodates approximately 150 vehicles, is leased to a construction company and used as a construction off-site parking for construction workers. In accordance with Section of the City Code, a 15% parking surcharge fee is payable to the City. Upon audit inquiry, PNI stated that it identified said property a couple of months ago and had sent correspondence and left several messages to no avail. However, upon inspection of PNI s database said parking facility was not listed in the PNI s database as required. Such listing would serve as a basis for documenting all actions taken to ensure compliance. Recommendation We recommend that all new parking facilities identified by field audits be listed in the database, including all related enforcement actions. 19

25 Auditee Response and Action Plan The auditee (PNI) stated that it identified said property a couple of months ago and had sent correspondence and left several messages to no avail. However, going forward, it plans to include in its database all parking facilities identified including those not remitting the required parking surcharge fees. See written response on pages 30 through

26 US PARKING THE RECORDS SUPPORTING PARKING SURCHARGE REVENUES WERE NOT MAINTAINED. Article IX, Section (c) of the City Code stipulates that every operator of a parking facility shall keep complete and accurate records of all motor vehicles parked on an hourly, daily, monthly, yearly, event, validation program, valet or any other basis in the parking facility together with the amount of surcharge collected from all transactions and shall keep all pertinent records and documents as are necessary to determine the amount of surcharge due. Article IV, Section 401 of the City s Parking Surcharge Regulations provides that records to be kept shall consist of, but not limited to: (1) A monthly and/or daily revenue summary report showing the starting and ending ticket number, the amount of tickets sold at each representative price and the amount of surcharge collected; (2) Trial Balance for each Facility; (3) Bank deposit slips and bank statements for each location 4) Other records such as General Ledger/Profit and Loss Statements (P&L) and ticket stubs. However, 1 (or 1.40%) of the 72 parking facilities did not provide us with any of the required records. The only records provided by US Parking were hand-written summary reports showing the starting and ending ticket number and total amount of cash collected by US Parking in connection with the valet parking service provided to Big Fish Restaurant and only for certain days in January through March In addition, the total gross receipts on these hand-written reports did not agree to the total gross receipts reported to the City for two of the three months provided. Upon audit inquiry, US Parking indicated that it will contact the owner of the restaurant to discuss how to implement procedures to ensure compliance with the City s parking surcharge regulations. Article IX, Section (a) (6) of the City Code stipulates that the operator of a parking facility who fails to comply with any and all parking rules or regulations or to keep complete or accurate records as required shall be subject to certain penalties, 21

27 included but not limited to, having his or her occupational license revoked, an administrative fine in an amount of $500 and compliance with stricter reporting requirements to the City. Recommendation We recommend that US Parking comply with the provisions of Article IV, Section 401 of the City s Parking Surcharge Regulations. Auditee Response and Action Plan The auditee concurred with the audit finding and recommendation. See written response on pages 33 and

28 FINANCE DEPARTMENT PARKING FACILITIES OPERATED WITHOUT REQUIRED OCCUPATIONAL LICENSES AND CERTIFICATES-OF-USE. Article III, Section 301, titled Occupational License and Certificate-of-Use of the City s Parking Surcharge Regulations states that, Every owner and operator who begins or intends to begin to operate a nonresidential parking facility shall apply for an occupational license and a certificate-of-use before commencing operation of the parking facility. Attachment A of the Professional Services Agreement between the City and Parking Network, Inc. (PNI) dated May 15, 2000 and subsequently amended/revised on October 1, 2005, requires PNI to maintain a database that includes all revenue surcharge generators. We noted that during the audit period, PNI maintained a Parking Facilities (Property) listing spreadsheet, which documents information such as the addresses of each parking facility, geographical locations, payment status, and occupational license/certificate-of-use numbers. A total of 291 Parking Facilities were listed on the Property listing spreadsheet. Upon review of the spreadsheet, we noted that the columns designated for the identification numbers relative to the local business tax receipt (formerly known as occupational license) for 170 parking facilities were not completed. Also, we noted that the columns designated for the identification numbers relative to certificate-of-use for 159 parking facilities were not completed. Upon further investigation, we determined that said columns were not completed because parking facilities had not provide that information on the monthly Surcharge Remittance Reports or the Annual Registration forms that were submitted to PNI. We judgmentally selected 30 of the 170 parking facilities to verify compliance with Sections 31-26(a) and Section (b) of the City Code, which requires all businesses to obtain an occupational license and a certificate-of-use prior to starting a business in the City. Our audit test disclosed that 3 (or 10%) of the 30 parking facilities tested did not have valid occupational licenses and certificates-of-use issued by the City as required. It should be noted that 1 of the 3 parking facilities has been operating since January A similar audit finding was noted in Audit Number dated January 22,

29 Upon audit inquiry, the Director of PNI indicated that PNI routinely reports to the City s Finance department verbally and in writing all parking facilities operating without the proper occupational license and/or certificate of use for proper follow-up actions. However, the proper assessment and collection of these fees, which are due to the City, would enhance the City s recurring revenue stream. Also, when these facilities are allowed to operate without valid occupational licenses and/or certificates-of-uses, the City cannot be assured that all the necessary infrastructure and public safety issues were properly considered and resolved prior to the use of the facility by the general public. Recommendation We recommend that inspections be conducted for those parking facilities operating without valid occupational licenses and/or certificate-of-uses for compliance with applicable provisions of City Code/Ordinance and those facilities not in compliance be assessed the applicable fees and penalties. Auditee Response and Action Plan The auditee stated that when Finance department field personnel encounter a business operating without a certificate of use and/or local business tax receipt, Notice of Violation is issued and the Code Enforcement department is notified for follow-up action. See the entire written response on Pages 36 and

30 AUDITEE RESPONSES 25

31 2. 26

32 27

33 28

34 3. 29

35 30

36 31

37 32

38 33

39 34

40 35

41 36

42 4. EXHIBIT I: AUDIT OF THE CITY S PARKING SURCHARGE TOTAL SURCHARGE FEES DUE TO THE CITY Parking Facilities Total amount due to the City Total Paid upon audit inquiry Double Tree $ 2, $ 2, Towne Park/Mandarin Oriental Hotel Central Parking System/Dominion Tower Park One/Mayfair House hotel US Parking /1200 1, Park One/Grand Bay Hotel 7, , Grand Bay Hotel 17, , Mercy Hospital 54, , Miami Star Casino 1, , US Parking /1444 Biscayne Boulevard 42, , Metro Parking System/100 South Biscayne Boulevard 3, , SW 3rd 3, Ampco Parking System/4770 Biscayne Imperial /1395 Brickell Avenue 6, , Imperial /1101 Brickell Avenue Lanier Parking Systems/Wachovia Financial 1, SW 37th Grand Bay Miami Parking Authority 76, , Sub Total Due To The City 224, , Miami Parking Authority 9, Grand Total Due To The City 234, Agreed to pay amount owed 37

43 EXHIBIT II: PICTURES OF MPA PARKING FACILITIES 38

44 39