Item K1
BOARD OF COUNTY COMMISSIONERS
AGENDA TTRM SUMMARY
Meeting Date:
'Mnrch 1S-1h. /.000
Division: BOCC
Bulk Item: Yes
No
x
Department: D;Rtrict Five
AGENDA ITEM WORDING:
SOUNDING BOARD ITEM
Request from Ken Carter to address the BOCC concerning the
Management Agreement for the County-owned marina in Marathon.
ITEM BACKGROUND: See attached request.
PREVIOUS RELEVANT BOCC ACTION:
STAFF RECOMMENDATION:
TOTAL COST:
N/A
BUDGETED: Yes
No
COST TO COUNTY:
REVENUE PRODUCING: Yes
No
AMOUNT PER MONTH
YEAR
APPROVED BY: County Attorney
OMB/Purchasing Risk Mgt.
--~ -Kay ~ / tlf0
DIVISION DIRECTOR APPROVAL:
MARY KAY REICH. Comm;RR;onPr
DOCUMENTATION: Included:
x
To Follow:
Not Required:
DISPOSITION:
AGENDA TTRM :/:I:
I.~'
FILE No.01? 02/16 '00 10:46 ID:WAVK-CLEAR CHANNEL
FAX:305?439091
PAGE 1
February 16, 2000
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County Commissioner Mary Kay Reich
District S
Monroe County, Florida
Dear Commissioner Reich:
1 am requesting that you allow me to address the Monroe County Board of
County Commissioners on the Sounding Board at the March 15 and 16
BOCC meeting in Marathon.
My address will concern the Management Agreement that Monroe County
has with the Marathon Economic Development Council for the management
ofthe County-owned marina in Marathon. Attached is some background
information that will be part of my presentation.
I am aware that the BOCC cannot take any action on my presentation at the
Sounding Board. My interest in coming before you is to give the
Commissioners my perspective as a Marathon resident on the Management
Agreement and its high cost to Monroe County taxpayers.
Please let me know if you will be able to till my request.
~
Ken Carter
PO Box 500261
Marathon, FL 33050
(30~)731.3721
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FILE No.01? 02/16 '00 10:46 ID:WAVK-CLEAR CHANNEL
. F~b 1~ 00 0~135p Da~~~ L. Kolhace
FAX:305?439091
PAGE 2
305 285 3615
II. 1
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Enaineering Department
5100 Concae Rd.
Key Wett, Fl 33040
January 13.2000 .
Mr. Kirby ScheinmaM
Marathon J!conomJeo Development Council .
P. O. Box ~22.sB2
Marathon Shore.. FL J30S2
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~RD or COUNTY. COMMISSIONERS
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MIry ICq Rtioh. DiIatoc 5
OOUNTY"-CMONROE
1CFt\WJJ1' \:J '~1:IlMO
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RE: Marina Manqcmlnt Asreement
Dear Mr. Scheir'n: X,ro/,
According to the contract between Monrot County and the MEDC, 'liSe, the MBDC must
submit to the County an aMual audit performed by a CPA no later than three months
after tho end or oaah County fbo&1 year (yoar end. September 30). Th. CPA .hould bo
an independ.nt accountant who has not bttn involved with the marina and who i. not a
member of the MEDC.
In addition, I have attached I memo written by the CountY'1 Office of Managemont and
Budpl Director. John Carter, which.l would lib you to acldre... I'm aura that John
would be willina fO meet if you have any qu~ion. about hi. l'Iqu.at.
Pleue provide th'. lntbrmltion to me at your oarIiolt opportunity. Thank..
cJ;ncerery.
. ~ Ie
,
D.vid S. Koppel. P B.
County Enaineer
-
DSKljl
MthnPkAudit.KSNA
Cc: J~e.L.RDblnJ/
Danny Kolhaae V
Dent Pierce
John Carter
FILE No.018 02/16 '00 10:52 ID:WAVK-CLEAR CHANNEL
FAX:3057439091
PAGE 1
WAVK News 216
The Marathon Economic Development Council, doing business as the
Marathon Community Council, is in violation of its management agreement
with Monroe County to manage the Florida Keys Marina Marathon. The
violation stems from the requirement that the Council submit an audit of its
financial records for the operation of the marina not later than December 31,
1999. The audit must be performed by an independent certified public
accountant.
On January 13, 2000, the County Engineer, David Koppel, sent a memo to
Kirby Scheimann, Executive Director of the Marathon Community Council,
stating that the audit had to be submitted. As of yesterday the audit had not
been received by Koppel's office, and Koppel told W A VK yesterday that he
doesn't know when it will be submitted or what is being done to get it
submitted.
Clerk of the Circuit Court Danny Kolhage confirmed to W A VK yesterday
that no audit has been received by his office despite the deadline for its
submission being over six weeks ago.
Written by: Ken Carter, Copyright 2000
FILE No.018 02/16 '00 10:53 ID:WAVK-CLEAR CHANNEL
, F.b 14 00 04.35~ Dann~ L. KOlhaC~
FAX:3057439091
305 295 3615
PAGE 3
p.2
Monroe COUD&y
Office ofManaaement &. Budaet
S 1 00 College Road
Key Weat , FL 33040
vuicu; (30'> 292-4470
fax: (30S) 295-4320
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BOARD OF COUNT)' ~MMI'SIONERS
MAYOR Shirley F".. . DlIIrict3
MQ)'or Pro ..,.. Ooofos. Noupnt, J>l<<riat 2
Wllhtlmllll HItYC1, ORIrIct I
N," WUIlIIftI, DiI1riot 4
Mil)' Kay Retch, Dlltrlcl $
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MEMORANDUM
Date:
January 10,2000
David Koppel
County EDain.sr
JohnCarter ~ ~
Director. OMB
To:
From:
Subject:
Marathon Mllrina
~;
Sl11dra CarUle
James L. Roberts
.-....---..-.-
..........----.......----.-....-..---...... '...-....----.........
Each month. an audit slip to authorize payment to the Marathon Economic Oevelopment
Council. Inc. i. routed throuah my office. I have confined my review to whether there is
rutlicient budget to make the payment each month, However, I hive noted that the attached
dooumtn" do not includ, laY ItQndQrd fUUU\oialltatcmcau. but rather include several
worksheets that finance UH' to support il.Dins IL check.
Although the supportina documentauon is sufficient for issuing a monthly check, it is not
sufficient for proper management and monitoring of the marina operations. It is particularly
fmubJesome to not be Rble to .. how the CIIh floM are handled, what the ;roll profit margins
tor goodl ad ICrvi~CI'lOld an:, U1d whether revenue powth trenda show that the taxpayer
subsidy can lVer be expected to phase out
Since Monroe County taxpayen arc effectively naUent plltnCI'I" in chi. venture, the BOCC
should receive buic. standard (mancial .tatementB. includinll a proper income ltatemtnt, balance
aheet. and statement of changea in financial po.ition (cuh flow). I understand that the Marathon
Marina uael the .crvicca of a Certified Public Accountant. Therefore these fundamental
fananoiaJ atatemon.ts should be relAtivoly cay to produce and I re.pc~tfWl)' m}\JC.t that thcae
atatemenu be provided to the County. .
1
FILE No.018 02/16 '00 10:53 ID:WAVK-CLEAR CHANNEL
FAX:3057439091
PAGE 2
WAYK News 216
The first year of the management of the County marina by the Marathon
Community Council has been a very profitable one for the Council and a
very expensive one for the taxpayers of Monroe County. The cost to Monroe
County taxpayers for the first year of operation of the Florida Keys Marina
Marathon is $86.598. That's the difference between the $155,800 in
management fees the County paid to the Council and the $69,202 the
Council deposited in the County's bank account.
Unaudited financial records released by the Council show that the Council
had a total of$147,364 in expenses. The top three expense items were:
professional fees, $46,635; payroll, $33,169; and utilities, $17,557. Since the
Council took in $155,800 and paid out in expenses $147,604, the Marathon
Community Council actually shows a net profit for the year of$8436, at a
cost to Monroe County taxpayers of $86,598. Although the Marathon
Economic Development Council, Inc. is a non-profit corporation there is
nothing in its Management Agreement with the County that says it cannot
make a profit operating the marina, even if that profit comes at the expense
of Monroe County taxpayers. Fwther, there is no provision in the agreement
that says the protit made at the marina cannot go to fund other Council
activities that have nothing to do with the marina.
Although Kirby Scheimann, the Council's executive director, reports that the
Council has secured over $300,000 in grants for the marina, neither the
County Engineer David Koppel, nor the County Budget Director John Carter
were able to substantiate to W A VK any specific amounts of grant money
received, where the grant money went or the specific uses the grant money
went to.
I n a January 10 memo, a copy of which was obtained by W A VK from Clerk
of the Courts Danny Kolhage, County Budget Director John Carter informed
County Engineer David Koppel that the financial reports generated by the
Marathon Community Council are not sufficient for proper management and
monitoring of the marina operation. He goes on to write. "It is particularly
troublesome to not be able to see how the cash flows are handled, what the
gross profit margins are, and whether revenue-growth trends show that the
taxpayer subsidy can ever be expected to be phased out."
Written by: Ken Carter, Copyright 2000
FLORIDA KEYS MARINA. MARATHON
Mayor Freeman, Commissioners and citizens of Monroe County:
I thank you for this opportunity to address you on a matter of great importance to every taxpayer in Monroe
County.
The purchase of the marina property now known as the Florida Keys Marina, Marathon by Monroe County
was, in my opinion, one of the best investments that the Board of County Commissioners ever made for the
future of the people of Marathon, and I am only one of many residents grateful to you for having done so.
For the first six months that the Marathon Economic Development COWlcil (hereinafter referred to as the
EDC) managed the marina Wlder an agreement with the County, I visited the marina each month and got a
copy of the financial report prepared by the EDC.
Last month I asked for, and received, a copy of the January, 2000 financial statement, showing the totals
for each month of the first full year of operation. What this statement revealed astounded me.
When I compared the monthly statements I had originally obtained from the EDC for the months February
through July, 1999, to the new statement, I saw that most of the expense amoWlts had been changed. Not
only did monthly amounts not match, but also the six-month totals for specific expenses. Examples: Payroll
and Professional Fees totaled just over $36,000 on the original statements, but on the new statement the
total is more than $39,000; Office Expense on the originals was a little over $2000 and on the new is almost
$3500; and the amoWlt reported for Insurance Expense differs by almost $500. These are only three of the
most glaring discrepancies.
I called the office ofthe Clerk ofthe Circuit Court, Danny Kolhage, to request a copy of the
latest financial statement he had received from the EDC. It was then that I learned that the EDC
had failed to submit an audit of their financial records for the marina.
Essential to an Wlderstanding of my concern in this matter is the fact that the EDC has violated a
basic and critical tenn of their contract with the COWlty by their failure to submit this audit by
December 31. The executive director of the EDC, Kirby Scheimann, had been sent a written
reminder by the COWlty Engineer, David Koppel, on January 13. The memo went on to point out
that the audit should be done by an independent accoWltant who has not been involved with the
marina, and who is not a member of the EDC. The information was requested at the earliest
opportunity. However, no audit was forthcoming in response to this reminder.
At the Town Hall meeting in Marathon on February 23, Richard Fortmann, a member of the
EDC's Board of Directors, assured you that the audit, "should be available by the end ofthis
coming week at the very latest." That date would be March 4.
Today is March 15, and the audit is still not available. Therefore my financial analysis is based
on Wlaudited financial statements prepared by the EDC. What these statements tell me, in
addition to the numerous discrepancies in amounts I mentioned earlier, is quite disturbing.
It cost county taxpayers $86,598 for the EDC to manage the marina the first year. That's the difference
between what the county paid in management fees to the EDC and the amount the EDC deposited into the
county's revenue bank accoWlt. At the same time, the EOC reports an income of $8,436. That is the
amoWlt that was left over after the EDC paid operating expenses out of their management fee. But this isn't
what causes me the most concern.
There are three very puzzling entries that show up in each of the monthly expense summaries
prepared by the EDC. One entry is called "MEDC Reimbursement" and for the year totals $10,000.
~t \
Questions immediately come to mind: What is the MEDC being reimbursed for? Why is it an
expense item? Where did this $10,000 go?
The second entry concerns the amOlmt of the start-up loan obtained by the EDC. As with most other
figures reported on their statements, there are two amounts. On the original statement there is a
footnote that says the amount is $15,000. On the second statement the amount seems to be $20,000,
broken down into two entries of $10,000 each, which is shown as a negative expense item in
January, 1999 and February, 1999. How much did they borrow?
Incredibly, on their financial statements the EDC treats their loan principal payments as an expense
item! Every first-year accounting student knows that loan principal payments are a capital item,
never an expense. These payments are reported under the entry "MEDC TIB LOC principal" and
for the year total $20,000 on the revised statements. However, on the original statements for June
and July the loan payment is $2000 each month, but on the new statement the amount has been
changed to $1000 for these two months. Why were the changes made? What happened to this extra
$2000?
The third puzzling entry is under the expense item labeled "Professional Fees". For the year the
total is more than $46,000 and is in addition to payroll expense of more than $33,000. Not only are
there wide differences in what was reported for this category on the original statements compared
to the new statement, but the amount of this category differs by hundreds of dollars each month. To
whom were professional fees paid each month? What were the professional services that were
provided in exchange for these fees?
There is yet another area of concern in this matter. The records that the EDC has provided to the
County and to the public do not reveal what the EDC is doing with their income from the marina.
For this year the annual audit will have to provide the answer, but in the future this dilemma can be
prevented. Please consider what your own County Director of Management and Budget, John
Carter, pointed out to the County Engineer, County Finance Director, and County Administrator in
a memo dated January 10, 2000:
"I have noted that the attached documents do not include any standard financial statements. Although the
supporting documentation is sufficient for issuing a monthly check, it is not sufficient for proper
management and monitoring ofthe marina operations. It is particularly troublesome to not be able to see
how the cash flows are handled, what the gross profit margins for goods and services sold are, and whether
revenue growth trends show that the taxpayer subsidy can ever be expected to phase out ... The BOCC
should receive basic, standard financial statements, including a proper income statement, balance sheet,
and statement of changes in financial position. "
Proper financial statements would reveal that the income reported by the EDC is grossly understated by a
total of $30,000. If the entries of $ 10,000 as MEDC Reimbursement and $20,000 in MEDC TIB LOC
principal payments are removed as operating expenses from the income statements as prepared by the
EDC, then the EDC is shown to have an income of $38,436 and not just $8436 as they reported. Other than
the $20,000 that is shown as loan payments, where is that money? Has the EDC removed that money from
the marina accounts and used it elsewhere for other than marina projects?
I bring up this question because on December 4, 1998, Commissioner Neugent, who is a former active
member of the EDC, told me in a discussion I had with him about the Management Agreement, "I think
the Economic Development Council plan is to plow revenues made from the public/private relationship
with the County into good projects in the community."
It is surprising that the Management Agreement does not preclude the EDC from taking their income made
at the marina and using that money elsewhere.
Is this what the BOCC had in mind when they approved this Agreement?
Is this what the taxpayers wanted when their tax dollars were specifically earmarked to go into their
marina?
Does the EDC have some $18,000 sitting in a bank account somewhere? Or was it removed from the
marina bank accounts altogether to pay for what the EDC considers "good" projects in the community?
Do you want to continue to wait until the EDC finally makes their audit available to you to learn where the
money is?
On behalf of the taxpayers of Monroe County I ask that the provisions of paragraph 5b of the Management
Agreement with the EDC be invoked as soon as possible. That paragraph calls for the EDC to hand over
all its financial records pertaining to this agreement to auditors employed by the Cmmty or the Clerk. You,
the Board of County Commissioners, and the taxpayers of Monroe County need to know what has
happened to the taxpayer money that went into the marina.
The marina now has a new administrator, hired by the EDC. I respectfully ask that you require that his
tenure begin with accurate financial reporting using adequate financial statements, as recommended by
your Budget Director. It is the only way that you and the taxpayers of Monroe County will know what is
going on at our County marina.
Written by Ken Carter
PO Box 500261
Marathon, FL 33050-0261
(305) 731-3721
Delivered to Monroe County Board of County Commissioners March 15, 2000