Miami Beach

Miami Beach failed to collect millions in water and sewer fees from new hotels and condos

To receive drinking water and get rid of sewage, you have to pay your bills.

Despite this simple rule, some Miami Beach hotels and condominiums have for years owed connection fees to Miami-Dade County Water and Sewer Department, the utility known as WASD that provides water services to the Beach. And until a 2005 county audit revealed millions of dollars were owed, it appears no one at county or city hall noticed.

According to county water and sewer records, as of the end of June, 11 Miami Beach buildings owed more than $50,000. All told, they owed $2.7 million in connection fees that were due right after each building’s completion. The list includes establishments like the Loews Hotel, Portofino Tower and Bentley Hotel. Some of the buildings were built so long ago that the state statute of limitations — four years — prevents the county from suing to collect. In some of these cases, ownership has changed hands.

Under a county rule adopted in 2008, the city, which was supposed to collect the money, was made responsible, from then on, for bills not paid by the businesses.

The 2005 audit, which uncovered that about $10 million had gone uncollected, triggered reforms at the water and sewer department and led the department to bring in half of it by 2007. A unit tasked with identifying and collecting outstanding charges was formed.

But millions of that amount remain unpaid, and no one can explain exactly how that happened.

Miami Beach pays the county for clean water and treatment of sewage. The Beach then sells those services to its residents. Under a longtime county ordinance, the city cannot provide the services if the customer has not paid assessed connection charges. The city is responsible for either collecting the connection charges or verifying that the charges were paid.

On the city level, that verification would happen before the building department issues a certificate of occupancy, or permission to allow people to move into a completed building.

At some point more than 10 years ago, that verification was not happening for swanky locales like the Loews Hotel and the Yacht Club at Portofino.

“Therefore, given the city of Miami Beach’s failure to administer its obligation under the [longtime] ordinance, the county met with the city to work jointly on properly referring customers to WASD for the assessment and payment of related connection charges,” said county water and sewer spokeswoman Jennifer Messemer.

Several Miami Beach departments have undergone staffing changes through the years. City Manager Jimmy Morales, who joined the Beach in April 2013, was not aware of the connection-fee issue, and he said questions would have to be directed at staffers and directors from a decade ago.

“This problem predates us,” he said.

In 2007, WASD created the Management and Services Unit to keep close track of outstanding connection fees and ensure that cities who buy and resell county utility services know they have to pay connection fees if property owners don’t. Messemer added that impact fees are now required to be paid earlier in the permitting process.

As for the previous outstanding charges, the old process allowed unpaid fees to slip by.

“If the city issued a CO [certificate of occupancy], and the fees weren’t paid, then that would fall into the cracks,” she said.

David Weston, a former fire inspector for the Beach, stumbled upon a county memo in late 2013 that mentioned the unpaid fees while doing some research.

He recognized some of the buildings he inspected and started asking about the outstanding charges. He was directed to Miami-Dade WASD, which provided an updated list of balances.

“We need to make sure that the people who are in charge of the store can manage our money correctly,” he told the Miami Herald.

In the past, Weston has raised questions of corruption in the building department. His suspicions were proven correct in 2012 when the FBI arrested several city employees in an anti-corruption sting, some of whom are now behind bars.

Regarding the connection fees, the Loews was the only one of the three companies with the highest unpaid balance that responded to inquiries from the Herald.

Alex Tonarelli, managing director of Loews, did not address why the county fees haven’t been paid by the hotel in a statement provided last week. Because of the statute of limitation, the county could not pursue the $976,006 unpaid by the hotel.

“These monies are related to connection fees from the original construction of the hotel,” he said. “We were made aware of this years after the fact and have been consistently meeting our financial obligations, as per our agreement with the city.”

Unpaid connection fees

These figures, provided by the Miami-Dade Water and Sewer Department, show all Miami Beach businesses that owed more than $50,000 for water and sewer connection fees as of June 30, 2014.

Building Balance
The Loews Hotel $976,006
Yacht Club at Portofino $537,389
Portofino Tower $319,422
The Shores Club $255,414
Ocean Blue Condominiums $134,557
Bentley Hotel $120,752
The Hotel SOBE, Tiffany Hotel $71,600
Beach Cinema $65,523
Ocean Steps Condo and Commercial $62,828
Coral Bay Club Condiminium $61,512
Villas at South Beach $52,425
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