Okaloosa County BOCC — January 20, 2015 — County's Response to Preliminary and Tentative Findings — reading text

support the reasonableness of the rate of reimbursement used. Recommendation: The BCC should ensure that adequate supporting documentation for sponsorship disbursements is obtained to evidence how the sponsorship moneys are used. COUNTY RESPONSE: The County agrees that the BCC’s action in adopting policies and procedures have partially corrected the Recommended Actions noted in previous Findings 15 and 16. The BCC has developed written policies and procedures relating to sponsorships and special event grant funding. However additional modifications to these policies are being prepared to reconcile a possible conflict between “value based” funding eligibility and “cost based” reimbursement provisions. To reconcile this conflict, those marketing activities undertaken by special event funding recipients which fell outside the written special events & sponsorships funding policies and procedures were presented to the TDC and BCC 12 for approval prior to payment. The reconciliation of those provisions are anticipated in the next few months. Allowable Uses of Restricted Resources Finding No. 17: Tourist Development Taxes – Statutory Compliance Previously Reported The BCC paid $2,476,096 from tourist development taxes for lifeguarding, beach patrol, and beach shuttle services that were not expressly authorized by law. We recommended that the BCC seek an opinion from the Attorney General as to the allowability of the $2,476,096 of questioned expenditures and, if appropriate based on the Attorney General’s opinion, restore this amount to the tourist development taxes accounts. Results of Follow-Up Procedures The BCC took no corrective actions on this finding. The BCC did not seek an opinion from the Attorney General, and the BCC continued to fund lifeguarding and beach safety services from tourist development taxes. During the period February 2013 through July 2014, the BCC disbursed or transferred to the General Fund an additional $1,213,702 in tourist development taxes to be used for lifeguarding and beach safety services. Recommendation: The BCC should seek an opinion from the Attorney General as to the allowability of the questioned expenditures and, if appropriate based on the Attorney General’s opinion, restore $3,689,798 to the tourist development taxes accounts. COUNTY RESPONSE: The County acknowledges the finding and recommendation of the Auditor General as it relates to the funding of lifeguard services with Tourist Development Taxes. The funding of lifeguard services through the use of Tourist Development Taxes was initially considered by the BCC in 2003, following numerous highly publicized drowning by visitors to the Gulf Coast area. The BCC became concerned for the safety of users of our beaches and also the impact on tourism as a result of the drownings. In the view of the BCC, the provision of a safe beach is an essential component of promoting the area as a family tourist destination. As a result, they began to explore the possibility of providing lifeguard services and identifying possible funding sources. At that time, the County sought legal opinions from two law firms, both of whom independently concluded that such use of tourist development tax revenues was permissible under Section 125.0104(5) (a) 2., Florida Statutes, provided the County make the necessary legislative finding that the primary purpose of providing lifeguard services is related to promoting tourism within the County. In making its finding, the Auditor General relied solely on the Opinion of the Attorney General No. 90-55 which had opined that Tourist Development Taxes may not be used to fund lifeguard services as those services did not constitute “beach improvement, maintenance, renourishment, restoration, and erosion 13 control” within the contemplation of Section 125.0104 (5) (a) 4, Florida Statutes. Both law firms that reviewed this matter were aware of this opinion and distinguished it in their respective opinions. The primary basis for their conclusion that the Attorney General Opinion was not controlling was that Okaloosa County was not relying Section 125.0104(5) (a)4, Florida Statutes that was the basis of the Opinion, but rather the County was relying on Section 125.0104(5) (a)2. At the time 1990 Attorney General Opinion was issued, that provision authorized the expenditure of tourist development tax revenue “[T]o Promote and advertise tourism in the State of Florida and nationally and internationally.” However, the Legislature, partly in recognition that the provision of services and activities may attract tourists and beneficially promote tourism to an area, amended this subsection in 1996 to add the following: 2. To Promote and advertise tourism in the State of Florida and nationally and internationally; however, if tax revenues are expended for an activity, service, venue, or event, the activity, service, venue, or event shall have as one of its main purposes the attraction of tourists as evidenced by the promotion of the activity, service, venue, or event to tourists. Section 44 of Chapter 96-397, Laws of Florida. The BCC believes that the provision of a safe environment for the attraction of visitors to the area is an essential component of the promotion of tourism to the area. Nor are lifeguard services in the nature of a general governmental function which is owed to the public at large. Therefore, though the County was aware of the Opinion of the Attorney General, it believes that the analysis must be made in the context of the original question asked and the changes in the law that have occurred in the 24 years since the issuance of that opinion. In response to the Report No. 2013-085, the County reviewed its prior legal analysis and concluded that the expenditure of Tourist Development Taxes for lifeguard services was authorized under the provisions of section 125.0104, Florida Statutes, as implemented by the County’s Tourist Development Plan. Finding No. 18: BP Grant Funds – Grant Compliance Previously Reported The BCC paid $117,994 for various goods and services from BP grant funds that, in the past, were paid from tourist development taxes, contrary to grant provisions. We recommended that the BCC consult with the grantor, Florida’s Coastal Northwest Communications Council, Inc. (FCNCC), as to the allowability of the $117,994 in questioned costs. Results of Follow-Up Procedures The BCC’s actions partially corrected this finding. In November 2013, the BCC’s legal counsel submitted a letter to the FCNCC proposing a transfer of $117,994 in tourist development taxes to an account to be used for purposes allowable under the terms and conditions of the BP grant. Having received no response, in September 2014, the BCC’s legal counsel submitted a letter to BP Gulf Coast Restoration Organization informing BP that no response was received from the FCNCC and requesting 14 that BP respond to the matter. On October 1, 2014, the Senior Counsel for BP responded that BP could not provide direction to the BCC at this time and recommended that the BCC contact the FCNCC to “close the loop on this matter” as this was where the BCC had initiated its inquiry. On December 11, 2014, the Chairman of the FCNCC responded to the County indicating that since BP did not object to the County’s proposal, FCNCC deemed the proposal approved. However, as of December 18, 2014, the County had not transferred the funds. Recommendation: The BCC should transfer the $117,994 in tourist development taxes to an account to be used for purposes allowable under the terms and conditions of the BP grant. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and suggests that the BCC has now fully and completely addressed and implemented the recommended corrective actions. The County has now received direction from the Chairman of the FCNCC as to the corrective action proposed by the County and the BCC, at its meeting on January 6, 2015, has approved the transfer of $117,994 in tourist development taxes to an account to be used for purposes allowable under the terms and conditions of the BP grant. Finding No. 19: BP Grant Funds – Grant Compliance and Controls over Debit Card Program Previously Reported As part of the Emerald Coast Money Debit Card Program, the BCC used $207,730 of BP grant funds for purposes that BCC records did not evidence were allowed by grant provisions. We recommended that the BCC consult with the FCNCC as to the allowability of the $207,730 in questioned costs. Results of Follow-Up Procedures The BCC's actions partially corrected this finding. In November 2013, the BCC’s legal counsel submitted a letter to the FCNCC that proposed a transfer of $7,730 of tourist development taxes to an account to be used for purposes allowable under the terms and conditions of the BP grant. In the letter to the FCNCC, the BCC’s legal counsel stated that, although Vision Airlines had not provided the BCC with an accounting of $200,000 in debit cards provided to Vision Airlines as part of the Emerald Coast Money Debit Card Program, Vision Airlines verbally confirmed that the debit cards were properly used. The BCC’s legal counsel requested direction from the FCNCC as to whether additional documentation would be required. Having received no response, in September 2014, the BCC’s legal counsel submitted a letter to BP Gulf Coast Restoration Organization informing BP that no response was received from the FCNCC and requesting that BP respond to the matter. On October 1, 2014, the Senior Counsel for BP responded that BP could not provide direction to the BCC regarding the $207,730 in questioned costs at this time and recommended that the BCC contact the FCNCC to “close the loop on this matter” as this was where the BCC had initiated its inquiry. On December 11, 2014, the Chairman of the FCNCC responded to the County indicating that since BP did not object to the County’s proposal, FCNCC deemed the proposal approved. However, as of December 18, 2014, the County had not transferred the funds. Recommendation: The BCC should transfer the $7,730 in tourist development taxes to an account to be used for purposes allowable under the terms and conditions of the BP grant. 15 COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and suggests that the BCC has now fully and completely addressed and implemented the recommended corrective actions. The County has now received direction from the Chairman of the FCNCC as to the corrective action proposed by the County and the BCC, at its meeting on January 6, 2015, has approved the transfer of $7,730 in tourist development taxes to an account to be used for purposes allowable under the terms and conditions of the BP grant. Finding No. 20: BP Claims and Reimbursements Previously Reported The BCC overcharged BP $27,063 in connection with medical support services provided, and BCC records did not adequately support the allowability of $385,185 in reimbursements received from BP. We recommended that, for future reimbursement agreements, the BCC ensure that reimbursement requests are made pursuant to terms of the agreements, including submission of required supporting documentation. Results of Follow-Up Procedures No occasion to correct. Our review disclosed no similar reimbursement agreements during the period February 2013 through July 2014. COUNTY RESPONSE: The County