Miami Beach

Miami Beach failed to collect $19 million in developer fees for parking

Officials at Miami Beach City Hall have uncovered past mismanagement of a program that allows developers who can’t provide on-site parking to pay the city a fee for every space they can’t provide. The city could have collected nearly $19 million.
Officials at Miami Beach City Hall have uncovered past mismanagement of a program that allows developers who can’t provide on-site parking to pay the city a fee for every space they can’t provide. The city could have collected nearly $19 million. MIAMI HERALD STAFF

In Miami Beach, a town known for its scarcity of parking, city staffers have failed to collect nearly $19 million in fees from developers — fees that were supposed to be used to improve the city’s parking facilities.

City administrators uncovered the problem, which stretches back 25 years, through an eight-month internal review, the results of which were released Tuesday. Administrators will present the findings of the internal investigation to the City Commission Wednesday evening.

Since January, the city’s planning department has reviewed processes and procedures in the “fee in lieu parking” program, which has existed since 1989. The program allows developers who cannot provide sufficient parking for new businesses to pay a one-time fee for each parking space they’re not providing.

That fee, currently set at $35,000 per space, is supposed to go toward improving the city’s parking facilities. An annual fee is also charged if a change to an existing property requires more parking, like if a restaurant adds more tables. That fee is set at $700 per year for as long as that use remains.

According to a memo sent Tuesday afternoon to the City Commission, the review uncovered issues with billing, accounting and inspection of properties in the program, which led to the city leaving $18.9 million on the table over the course of the past 20 years. It started with reviewing a sample of 25 accounts in the program at the beginning of this year. The pool ballooned to about 180 accounts after staffers kept finding problems.

The news comes about a week after the Miami Herald reported that past Miami Beach administrators failed to collect $2.7 million in water and sewer connection fees from several hotels and condos. It does not appear there is any connection between the two instances of mismanagement.

Officials reviewing the parking fee program also found that the city did little or nothing after three previous internal audits revealed some of the management issues in 1997, 2003 and 2010.

“Management responses for corrective action did not have completion dates and there is no evidence that significant and deliberate steps were taken by any of the departments involved to establish the appropriate checks and balances to prevent prevent recurrence or initiate invoicing of of recurring fees to prevent further loss,” reads the memo, prepared by Deputy Planning Director Carmen Sanchez and Assistant City Manager Joe Jimenez.

The one-time fee has increased incrementally over the years. In many cases, records show past planning officials agreed to bill property owners at previous lower rates without explanation. In other cases, property owners were not billed at all.

Bounced checks were not replaced. Inspections were not conducted to check on any changes that would trigger an increase in an annual fee. Revenue was not properly logged into the city’s financial system.

The review is ongoing.

“Staff has conducted extensive research and has had to reconstruct the history for most of the accounts evaluated,” reads the memo. “As new details come to light and additional information is received the estimated receivable amount may change to include other projects identified at a future date.”

The history of poor management came to light to city officials earlier this year, when Sanchez, hired in late 2013, and Jimenez, who joined the city in May 2013, initiated a review of the program. The current administration has already put some checks and balances in place to fix the problems.

According to the memo, the planning department has invoiced 34 recurring accounts for the current fiscal year, and will start invoicing all active accounts for the upcoming fiscal year, starting Oct. 1. The city has updated its permitting software to keep records of what is charged and owed, hired staff to manage special revenue accounts like the parking impact fee program and, from now on, building permits or certificates of use will not be issued until the fee has been paid.

City administrators did not want to comment for this story before presenting their findings to the City Commission. Administrators will ask the City Commission for direction on how to proceed with uncollected money from current businesses and ones that have closed but still have outstanding balances.

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