Okaloosa County BOCC — January 18, 2013 — Attorney General P&T Audit — reading text

response to damages resulting from the explosion and oil spill, BP provided moneys to the State, certain local governments, and certain nonprofit organizations. 3  ****PRELIMINARY AND TENTATIVE FINDINGS**** Table 1 Revenue 5 1 10 to 10 1 10 to 10 1 11 to Total 9 30 10 9 30 11 5 31 12 Tourist Development Special Revenue Fund Tourist Development Taxes $ 3,839,189.69 $ 6,288,548.04 $ 2,301,634.46 $ 12,429,372.19 Beach Restoration Municipal Services Benefit Unit 70,988.84 881,665.58 850,214.86 1,802,869.28 Florida Department of Transportation Mass Transit Grants 82,113.74 218,520.30 225,860.66 526,494.70 British Petroleum 2,121,939.00 8,073,065.00 10,195,004.00 Investments 11,612.56 43,539.52 205,360.23 260,512.31 Other 14,766.51 5,000.00 76,112.46 95,878.97 Total Tourist Development Special Revenue Fund 6,140,610.34 15,510,338.44 3,659,182.67 25,310,131.45 Convention Center Enterprise Fund Tourist Development Taxes 2,559,459.80 5,237,066.70 1,534,422.98 9,330,949.48 Charges for Services 384,373.68 720,598.20 457,489.93 1,562,461.81 Investments 15,378.72 104,165.90 73,531.93 193,076.55 Other 231.08 311.53 200.49 743.10 Total Convention Center Enterprise Fund 2,959,443.28 6,062,142.33 2,065,645.33 11,087,230.94 Total Revenues for Both Funds $ 9,100,053.62 $ 21,572,480.77 $ 5,724,828.00 $ 36,397,362.39 Source: General Ledger . A major source of revenue used by the County for tourism promotion was tourist development taxes. Of the total revenues shown in the table above, $21,760,321.67, or 59.8 percent, was tourist development taxes. Section 125.0104, Florida Statutes, governs how counties can assess and use tourist development taxes and allows counties to assess up to 6 percent of each dollar collected from rents of living quarters or accommodations in short-term (less than six months) facilities. This Section specifies how counties that assess tourist development taxes can use each percent of the tax and requires that counties assessing tourist development taxes establish county ordinances that specify how each percent of the tax will be used. The BCC assessed tourist development taxes of 5 percent and established ordinances governing the use of the tourist development taxes. Table 2 provides an analysis of tourist development taxes collected by the County during the period May 2010 through May 2012, showing collections by percent and ordinance restriction. 4  ****PRELIMINARY AND TENTATIVE FINDINGS**** Table 2 Percent Distribution County Ordinance 5 1 10 to 10 1 10 to 10 1 11 to Total Use Restrictions 9 30 10 9 30 11 5 31 12 First Percent Beach Restoration and Monitoring $ 1,279,729.89 $ 2,618,533.35 $ 767,211.49 $ 4,665,474.73 Second and Fifth Percents Tourism Promotion 1,433,297.49 2,055,208.23 859,276.86 4,347,782.58 Second and Fifth Percents Tourism Administration 383,918.97 550,502.20 230,163.45 1,164,584.62 Second and Fifth Percents Beach Improvement, Facilities, Landscaping, and Maintenance 691,054.15 990,903.97 414,294.20 2,096,252.32 Second and Fifth Percents Contingency and Statutory Improvements 51,189.19 73,400.29 30,688.46 155,277.94 Total Second and Fifth Percents 2,559,459.80 3,670,014.69 1,534,422.97 7,763,897.46 Third Percent Tourism Promotion 383,918.97 785,560.00 230,163.45 1,399,642.42 Third Percent Beach Improvement, Facilities, Facilities Operations, Landscaping, and Maintenance 895,810.93 1,832,973.35 537,048.04 3,265,832.32 Total Third Percent 1,279,729.90 2,618,533.35 767,211.49 4,665,474.74 Fourth Percent Convention Center Debt Service 1,279,729.90 2,618,533.35 767,211.49 4,665,474.74 Total $ 6,398,649.49 $ 11,525,614.74 $ 3,836,057.44 $ 21,760,321.67 Source: General Ledger Of the tourist development taxes collected, the first, second, and fifth percents were accounted for as revenues in the Tourist Development Special Revenue Fund. The third and fourth percents were accounted for as revenues in the Convention Center Enterprise Fund. The County generally used the tourist development taxes as follows: First Percent. To restore and monitor nine and one-half miles of County beaches, including the beaches within the Destin city limits. Second and Fifth Percents. To promote tourism, operate the Tourist Development Department, maintain beaches, and set aside moneys for contingencies. Third Percent. To promote and operate the Emerald Coast Convention Center (convention center). Fourth Percent. To pay debt service on revenue bonds issued to construct the convention center. . Table 3 provides a summary of funds received from BP during the period May 2010 through May 2012. Table 3 Type 5 1 10 to 10 1 10 to 10 1 11 to Total 9 30 10 9 30 11 5 31 12 Negotiated Settlements Tourist Development Taxes Lost Revenues (1) $ $ 1,567,052.00 $ $ 1,567,052.00 Water and Sewer Department Lost Revenues 110,345.57 110,345.57 Total Negotiated Settlements 1,677,397.57 1,677,397.57 Reimbursements BP Claims Reimbursements 1,116,113.85 146,801.86 1,262,915.71 Performance Based Emergency Medical Services Aid Stations 634,041.00 634,041.00 Grants Tourism Promotion (1) 750,000.00 750,000.00 Tourism Promotion (1) 1,371,939.00 1,371,939.00 Tourism Promotion (1) 6,506,013.00 6,506,013.00 Total Grants 2,121,939.00 6,506,013.00 8,627,952.00 Total $ 3,872,093.85 $ 8,330,212.43 $ $ 12,202,306.28 Note (1): Total Received for Tourism Promotion $ 2,121,939.00 $ 8,073,065.00 $ $ 10,195,004.00 Source: General Ledger 5  ****PRELIMINARY AND TENTATIVE FINDINGS**** The County experienced a decline in tourism after the oil spill that impacted the receipt of tourist development taxes and water and sewer billings. As a result, the County filed claims with BP for lost revenues. BP subsequently negotiated a settlement of these claims and awarded the County $1,677,397.57. In addition, the County incurred expenditures related to beach monitoring and cleanup during the period immediately following the oil spill, and BP reimbursed the County $1,262,915.71 for these expenditures. BP also contracted with the County to provide Emergency Medical Services aid stations at locations specified by BP representatives to assist workers while performing monitoring and cleanup activities. The contract provided that the County would be paid at set rates per hour of service, and it received $634,041 for these services. After the cleanup, the County received three BP grants totaling $8,627,952 to help rebuild and promote area tourism. These grants could be spent on a wide variety of activities including advertising, promotions, special events, and other activities. FINDINGS AND RECOMMENDATIONS Organizational Oversight The BCC is entrusted by the public with the proper and efficient administration of public funds. The Okaloosa County Clerk of the Circuit Court (CCC), as ex-officio clerk of the BCC, auditor, recorder, and custodian of all County funds, is responsible for preauditing expenditures to determine whether the expenditures are lawful and properly supported prior to payment. Additionally, pursuant to Section 125.17, Florida Statutes, the CCC is required to keep the BCC?s minutes and accounts and perform such other duties as the BCC may direct. Further, the TDC is responsible for monitoring expenditures of tourist development taxes. The BCC, TDC, and CCC did not exercise sufficient control over tourist development taxes or funds received from BP to ensure that expenditures of public funds were made in accordance with BCC intentions, grants, or contractual agreements, or were lawful, properly supported, and served a public purpose. Primary issues of concern relate to the failure to budget for and control expenditures at appropriate levels and the failure to obtain adequate support for invoices submitted for payment, especially those invoices related to contracts with two advertising and marketing firms. These and numerous other issues of concern are discussed in this report. Finding No. 1: Budget Preparation and Monitoring As discussed in the Background section of this report, all of the resources accounted for in the Tourist Development Special Revenue Fund and substantially all of the resources accounted for in the Convention Center Enterprise Fund were restricted for various specific purposes (e.g., tourism promotion, tourism administration, beach maintenance). However, the BCC did not adopt