City Agrees Club Madonna Does Not Owe Resort Tax
Total Page：16
File Type：pdf, Size：1020Kb
CITY AGREES CLUB MADONNA DOES NOT OWE RESORT TAX The City of Miami Beach has conceded that Club Madonna does not owe resort tax revenue, a reversal from the city manager's threat two months ago to shut down the club over his claims that the club was somehow delinquent. In a two-page legal opinion addressed last Wednesday (March 26) to City Manager Jimmy Morales, Miami Beach City Attorney Jose Smith concluded that the club “is not liable for resort tax” as it currently operates. This acknowledgment is a 180-degree turnaround from Morales's January 27 letter to the club. In it, Morales said he had determined that the club had failed to pay resort tax levied on the sales of club-sold beverages and was therefore in “violation of city code” and could face closure. Smith's memo to Morales is striking in that it glaringly reveals that the city manager apparently issued his letter to the club without first having run it by the city attorney: “As you may recall, our office did not review or have prior knowledge of your letter to Club Madonna,” Smith reminded Morales. Smith also revealed that top city leaders – including Chief Financial Officer Patricia Walker, Code Compliance Division Commander Hernan Cardeno, and Chief Deputy City Attorney Donald Papy – discussed the club's resort tax matter in the wake of Morales's January 10 administrative order closing the club over allegations of an underage teen having been forced to perform in the club by her captors. Club Madonna is currently suing the City for its and Morales's actions in that closing. The discussion of Club Madonna's taxes came up “because the City was defending a lawsuit involving a resort tax dispute with a different club (Chakra 5),” Smith wrote. In his memo, Smith reported that Walker recalled a 1997 conversation with then-City Attorney Murray Dubbin “about the non-applicability of the resort tax to [Madonna].” “She recalled that [Club Madonna president and CEO] Leroy Griffith had stated at the time that no food or drink was being sold,” Smith wrote, “and that everything was included in a 'cover charge'. [Walker] recalled Dubbin saying to her, 'forget about it' (regarding the collection of resort taxes).” Smith's memo goes on to mention that Walker had learned through a Google search that Griffith had applied to the State Division of Alcoholic Beverages & Tobacco for the right to allow club patrons to bring alcohol into the club. What Smith's memo neglects to clarify, however, is that this was an old petition from 2011, not a recent application. Walker, according to Smith, “also believed that Club Madonna may be selling hot foods (such as hors d'oeurves).” Walker is incorrect; the club does not sell and has never sold hot foods. A club attorney, Richard Wolfe, wrote to Morales on February 7 that “our client openly admits to the sale of non-alcoholic beverages and soft drinks to patrons [....] That has been known to the City for more than 20 years, during which time the City has never claimed that the resort tax was due, until the recent dispute with the City and our client has escalated.” Club Madonna spokesman Charles Branham-Bailey issued this statement today: “Club Madonna has suffered unrelenting aspersions and allegations from City Hall ever since the city manager's improper and unwarranted closure of the club on January 10. This – the allegation that we were delinquent on taxes that we have never owed – has been but the latest of these. “It is disturbing that top leaders at City Hall were not on the same page with one another, and were jumping to unfounded conclusions, with some not knowing what others were saying, doing, implementing or authorizing – or whether any of it was even factual or legal. Alarmingly, this is a case of the right hand not aware of what the left was doing. “We are satisfied to have been ultimately proved correct in our rebuttals to Mr. Morales's allegations. Both a club attorney and our accountant addressed letters to the city manager in February affirming that we are not classified as a business that is required to pay resort taxes, and thus have never owed any. “We are pleased that City Hall has recognized and accepted our claims as correct. We expect that this legal opinion means Mr. Morales retracts his threat to go after us and attempt to shut us down again, over an issue that never was one and never should have been elevated to the level of one. “We are displeased, however, that his January 27 allegations of tax delinquency and his threat to shut us down have demeaned and defamed us in media reports about this matter. His making an issue of something we never owed and threatening to shut us down over it – without having carefully researched the facts of the matter – was totally uncalled for and, in retrospect, erroneous, unwise, and beneath the dignity of his public office. “Club Madonna has been, in its twenty-year history on the Beach, a business that has faithfully paid its taxes. In that time, we have employed countless local residents. We have been and continue to be a powerful generator of economic prosperity and stability to neighboring businesses on Washington Avenue. Ask any of those businesses about the benefit of having us as a neighbor and they will attest to this. When we are open, they benefit. When we were closed by the city manager's order for 17 days in January, they suffered tremendously. “We have also benefited untold distributors, suppliers, laborers, taxi drivers, and countless others. “In twenty years, we have generated more tax revenue for this city that we love than have many of those who would wish to put us out of business. "We also proudly possess one of the lowest incident rates of any nightclub or entertainment business in South Beach. It's an indisputable fact: City and police crime stats bear this out year after year. “We hope that Mayor Levine and city commissioners will take note of the reckless and rash words, orders, and threats that have emanated from some departments at City Hall in recent months, and take corrective measures, up to and including replacing top officials. We expect our city leaders to apply the law equally, fairly, and correctly, and not abuse the power of their offices by issuing arbitrary closings and unjustified threats that hinder businesses and residents alike. “We are grateful to have gotten this legal opinion, but it was like pulling teeth to get the City to finally issue it and own up to its error. It took two months for the city attorney to issue it following the city manager's January letter to us. It shouldn't have taken more than two days. No Miami Beach business should have to endure such callous treatment from our public servants at City Hall. Period.” Griffith, whose birthday coincided with Smith's letter, pronounced the City's ruling a “welcome birthday gift.” TO: Jimmy Morales, City Manager FROM: Jose Smith, City Attorney DATE: March 26, 2014 SUBJECT: Club Madonna (Resort Tax) You have requested a legal opinion in regard to a letter dated February 7, 2014, addressed to you (copy attached), from Richard Wolfe, Esq. on behalf of Club Madonna. In his letter, Mr. Wolfe questions the application of the resort tax to the club's operations. His letter was in response to your letter to Club Madonna dated January 27,2014 (copy attached). As you may recall, our office did not review or have prior knowledge of your letter to Club Madonna. The question of resort tax and Club Madonna was first discussed (after Club Madonna was closed by your administrative order), with Patricia (Trish) Walker, Jim Sutter, and Hernan Cardeno because the City was defending a lawsuit involving a resort tax dispute with a different club (Chakra 5). While Trish advised that Club Madonna was not paying resort taxes, she also recalled a conversation in 1997 with former City Attorney Murray Dubbin about the non-applicability of the resort tax law to the Club. She recalled that Leroy Griffith had stated at the time that no food or drink was being sold and that everything was included in a "cover charge." Irish recalled Dubbin saying to her, "forget about it" (regarding the collection of resort taxes). Irish further advised that a recent Google search showed that Griffith had applied to the State alcohol division to allow Club Madonna patrons to bring alcohol into the club and mentioned that he was selling non-alcoholic beverages. His request was denied by the State. Trish also believed that Club Madonna may be selling hot foods (such as hors d'oeuvres). Don Papy asked Trish, Jim, and Heman about what procedures the City follows for determining and computing resort tax. He was told that a code compliance inspector would visit the premises, check the licenses and determine whether they were appropriate and whether a violation of the resort tax or any other violation was occurring. lf5O, a notice of violation would be issued to the business which could request a hearing and appeal to the Special Master. If the Special Master concluded a violation occurred, he would order the business to obtain the proper license and if taxes were owed, Finance and Internal Audit would determine the amount. If there was no violation, the citation would be dismissed. Your administration was therefore advised to follow normal procedures in the case of Club Madonna especially in light of pending litigation, including the lawsuit contesting of the administrative closure of the Club.