Okaloosa County BOCC — January 18, 2013 — reading text

the special events by approving written requests for funding received from groups or organizations. The TDC did not require grant recipients to sign a written agreement acknowledging the terms and conditions of the grants, provide documentation of expenses to evidence that the grants were used for allowable purposes, or provide evidence that the special events were effective Attachment: Attorney General P&T Audit (1278 : Response to the Auditor General's Report) in increasing the use of lodging facilities. In the absence of written agreements, the BCC?s legal recourse may be limited should disagreements arise with the grant recipients. In addition, without an accounting of how the grants were used and the amount of the increase in the use of lodging facilities that resulted from the special events, the County had no assurance that the grants were used for allowable purposes or were effective in increasing the use of lodging facilities. In September 2012, the BCC adopted special events grants policies and procedures as part of the TDC?s operations and procedures manual. These policies and procedures included the criteria for awarding grants, the persons responsible for approving the grants, authorized and unauthorized uses of the grants, and a requirement that the grant recipients subsequently document expenses and the increase in the use of lodging facilities. However, the policies and procedures did not address the methodology for calculating the amounts of the grants or require that the grant recipients sign a written agreement acknowledging the terms and conditions of the grants. Recommendation: The BCC should continue to strengthen its special events grant policies and procedures by addressing the methodology for calculating the amounts of the grants and requiring grant recipients to sign a written agreement acknowledging the terms and conditions of the grants. Finding No. 16: Sponsorships In addition to the special events grants discussed in finding No. 15, the County paid for sponsorships to support various organizations or events. The sponsorships were generally approved by the former TDC Executive Director. However, County records did not evidence the sponsorships were approved by the BCC. Our review of selected expenditures disclosed $478,471.95 in sponsorships paid from tourist development taxes or BP grant funds during the period May 2010 through May 2012. Examples of the sponsorships paid included $10,000 to the Horizons Foundation of Okaloosa County, $9,000 to the Fisher House of the Emerald Coast, and $500 to the Fort Walton Beach Rotary Club. The BCC had not developed written policies or procedures addressing sponsorships, and the purpose of sponsorships was not consistently documented in County records. Sponsorship recipients were not required to sign a written agreement acknowledging the terms and conditions of the sponsorship, provide documentation evidencing how the sponsorship moneys were used, or provide evidence that the sponsorships were effective in achieving their intended purpose. In the absence of written agreements, the BCC?s legal recourse may be limited should disagreements arise with sponsorship recipients. In addition, without an accounting of how the sponsorships were used and a means to determine whether the sponsorships were effective in achieving their purpose, the County cannot demonstrate that the sponsorships were used for allowable purposes or were effective in achieving their purpose. In September 2012, the BCC adopted sponsorship policies and procedures as part of the TDC?s operations and procedures manual. These policies and procedures provided that sponsorships of community, civic, cultural, or other 20 Packet Pg. 354  9.1.a ****PRELIMINARY AND TENTATIVE FINDINGS**** organizations may be authorized by the BCC, upon recommendation from the TDC, to promote and attract increased tourism or enhance and develop the use of the convention center. However, the policies and procedures did not address the methodology for calculating the amounts of the sponsorships, address the responsibilities of the sponsorship recipients to document that the sponsorships are used for allowable purposes, or require sponsorship recipients to sign a written agreement acknowledging the terms and conditions of the sponsorships. Recommendation: The BCC should continue to strengthen its sponsorship policies and procedures by addressing the methodology for calculating the amount of sponsorships, requiring sponsorship recipients to Attachment: Attorney General P&T Audit (1278 : Response to the Auditor General's Report) sign a written agreement acknowledging the terms and conditions of the sponsorships, and requiring sponsorship recipients to provide documentation evidencing how the sponsorship moneys were used and that the sponsorships were effective in achieving their intended purpose. Allowable Uses of Restricted Resources Finding No. 17: Tourist Development Taxes – Statutory Compliance As discussed in the Background section of this report, Section 125.0104, Florida Statutes, governs the use of tourist development taxes and indicates the various purposes for which they may be used. This Section further provides that any use of tourist development taxes not expressly authorized is prohibited. During the period May 2010 through May 2012, the County paid $1,912,095.68 from tourist development taxes to fund a portion of lifeguarding and beach patrol services provided by the City of Destin Fire Department and the Okaloosa County Beach Safety Department. Section 125.0104, Florida Statutes, does not expressly authorize such expenditures as allowable uses of tourist development taxes. In response to our inquiries, County personnel provided three opinions from legal counsel indicating that tourist development taxes may be used to fund lifeguard and beach patrol services, provided that the BCC makes a legislative determination that the primary purpose of these services is related to either promoting tourism within the County or the improvement or enhancement of beach facilities. However, in Attorney General Opinion No. 90-55, dated July 23, 1990, the Attorney General concluded that tourist development taxes may not be used to fund lifeguarding services or general governmental functions owed to the public at large. During the period May 2010 through May 2012, the County also used $564,000 in tourist development taxes to fund a portion of the County?s beach shuttle service. Section 125.0104, Florida Statutes, does not expressly authorize such expenditures as allowable uses of tourist development taxes. As part of its tourist development plan in effect during the period May 2010 through May 2012, the BCC concluded that providing beach shuttle services was a proactive step to reduce seasonal tourism traffic congestion and encourage efficient and environmentally friendly transportation choices, established a permanent and dependable connection between the beaches and adjacent tourist destinations, and was necessary to promote the convention center and provide an alternate mode of access thereto. However, transportation services are a general government function owed to the public at large and, as such, do not appear to be an allowable use of tourist development taxes. Beginning with the 2012-13 fiscal year, the BCC funded the beach shuttle services from other revenue sources. Recommendation: The County should restore the $2,476,095.68 in unallowable expenditures to the tourist development taxes accounts. 21 Packet Pg. 355  9.1.a ****PRELIMINARY AND TENTATIVE FINDINGS**** Finding No. 18: BP Grant Funds – Grant Compliance As discussed in the Background section of this report, the County received funds from BP after the oil spill to help rebuild and promote area tourism, including a $6,506,013 grant through Florida?s Coastal Northwest Communications Council, Inc. Pursuant to the grant agreement, these funds were intended to be used for promotion and awareness building expenditures not already planned or that would not normally be made to promote tourism (i.e., for expenditures to procure goods or services not previously paid with tourist development taxes). Attachment: Attorney General P&T Audit (1278 : Response to the Auditor General's Report) County records supporting many payments made to the two advertising and marketing firms were inadequate to determine whether the payments to the firms were already planned or would normally be made to promote tourism. However, based on available supporting documentation, we noted certain goods and services purchased with the BP grant funds noted above that were for goods or services previously paid for by the County with tourist development taxes. For example, we noted expenditures totaling $61,000 in routine monthly fees paid to one firm from BP grant funds that were for services previously paid with tourist development taxes. Likewise, we noted expenditures totaling $56,994 in special events grants paid to one firm from BP grant funds that were previously paid with tourist development taxes. County personnel indicated that the former TDC Executive Director was allowed to use his judgment in determining the funding source for these expenditures. As the above expenditures, totaling $117,994, were for goods or services previously paid with tourist development taxes, these expenditures represent questioned costs subject to disallowance by the grantor. Recommendation: The County should consult with Florida?s Coastal Northwest Communications Council, Inc., as to the allowability of the $117,994 in questioned costs. Finding No. 19: BP Grant Funds – Grant Compliance and Controls over Debit Card Program Funds received from BP by the County after the oil spill to help rebuild and promote area tourism included a $1,371,939 grant through the State of Florida.4 The BCC approved the use of $1,000,000 from this grant to conduct the Emerald Coast Money Debit Card Program (Program). The Program provided that 5,000 debit cards, each worth $200, would be given to guests that paid for a minimum two-night stay at preapproved lodging facilities located in Destin, Fort Walton Beach, Okaloosa Island, Mary Esther, or Cinco Bayou. County records related to the Program indicated that the majority of the debit cards appear to have been issued to guests at lodging facilities as intended. However, we noted deficiencies in the controls over the Program as discussed below. The Program provided that guests would obtain debit cards by presenting identification and qualifying paid receipts from lodging facilities to the Emerald Coast Visitor?s Center. County records indicated that 3,651 debit cards, totaling $730,200, were issued for this purpose. However, our test of the issuance of 60 of the 3,651 debit cards disclosed that for 6 debit cards (10 percent),