STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BELLOT REALTY, )

)

Petitioner, )

)

vs. ) CASE NO. 92-4375

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Ft. Lauderdale, Florida on October 28, 1992, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: James D. Clodfelter, Pers. Rep.

Acquisitions Consultant Enterprises, Inc.

2461 Hillsboro Blvd.

P.O. Box 1199

Deerfield Beach, FL 33443

For the Respondent: Charles G. Gardner, Esquire

Department of Transportation 605 Suwannee Street

Tallahassee, FL 32399-0450 STATEMENT OF THE ISSUES

The issues for consideration in this case are: (1) whether the years 1988 & 1989, or the years 1989 & 1990, should be used by the Department to determine Petitioner's appropriate relocation allowance, and (2) whether the Department properly calculated payment benefits by failing to consider actual expense figures rather than those utilized by Petitioner on its tax return.

PRELIMINARY MATTERS

By letter dated April 20, 1992, Deborah S. Long, the Department's state administrator for relocation assistance, advised Petitioner's representative, Mr. Clodfelter, that its appeal of the Department's determination of relocation assistance computations was denied in that those computations were in accordance with published policies and procedures. On June 14, 1992, within the 60 days allowed for requesting a formal hearing, Petitioner's representative submitted a letter disputing the Department's action and requesting a hearing, and by letter dated July 17, 1992, the matter was forwarded to the Division of Administrative Hearings for the appointment of a Hearing Officer.

By Notice of Hearing dated August 18, 1992, entered after the Department's counsel responded to the Initial Order, the undersigned set the matter for hearing in Fort Lauderdale on October 28, 1992 at which time it was held as scheduled.

At the hearing, Petitioner presented the testimony of Frank Martin Bellot, owner of Bellot Realty in Inverness, Florida and introduced Petitioner's Exhibits 1 through 5. Respondent presented the testimony of Deborah S. Long, the Department's state administrator for relocation assistance. A transcript was provided.

Subsequent to the hearing, both parties submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the matters in issue here, Bellot Realty operated a real estate sales office in Inverness, Florida. The Department of Transportation was the state agency responsible for the operation of the state's relocation assistance payment program relating to business moves caused by road building operations of the Department or subordinate entities.

   
   

2. Frank M. Bellot operated his real estate sales office and mortgage brokerage, under the name Bellot Realty, at property located at 209 W. Main Street in Inverness, Florida since July, 1979. He operated a barber shop in the same place from 1962 to 1979. He moved out in October, 1991 because of road construction and modification activities started by the Department in 1989. The office was located in a strip mall and the other tenants of the mall were moving out all through 1990.

   
   

3. Mr. Bellot remained as long as he did because when the Department first indicated it would be working in the area, its representatives stated they would be taking only the back portion of the building. This would have let Mr. Bellot remain. As time went on, however, the Department took the whole building, including his leasehold, which forced him out. He received a compensation award from the Department but nothing from any other entity.

   
   

4. Though the instant project is not a Federal Aid Project, the provisions of Section 24.306e, U.S.C. applies. That statute defined average annual net earnings as 1/2 of net earnings before federal, state and local income taxes during the two taxable years immediately prior to displacement. During 1988, Mr. Bellot's staff consisted of himself and between 3 and 5 other agents from whom he earned income just as had been the case for several prior years. In 1988 his Federal Corporate Income Tax return reflected gross income of

   $120,843.00 and his profit was reflected as $27,377.25. The Schedule C attached to his personal Form 1040 for that year reflected gross sales of $25,078.00 with deductions of $5,250.00 for a net income of $19,828.00.

   
   

5. Two of his agents foresaw the downturn in business as a result of the road change and left his employ during 1989. A third got sick and her working ability, with its resultant income, was radically reduced. This agent was his biggest producer.

   
   

6. For 1989, Petitioner's tax return reflected the company's gross receipts were down to $50,935.75 and his operating loss was $5,700.03. However, the Schedule C for the 1989 Form 1040 reflected gross revenue of $21,450 with a net profit of $14,503.

7. In 1990, the Schedule C for the Form 1040 reflected gross receipts of

   $5,565.00 which, after deduction of expenses, resulted in a net profit of

   $1,665.00 for the year. The corporate return reflects gross receipts of

   $23,965.96 and a net income figure from operations of $1,282.21. Mr. Bellot contends that neither 1989 or 1990 were typical business years as far as earnings go. Aside from a loss of activity and a general decline in business in Inverness, his parents, who were always in the office due to a terminal illness, caused him lost work time as he was very busy with them. He was also involved in a move and in refurbishing a house.

   
   

8. In 1990, Mr. Bellot decided he could no longer stay in his office location due to the fact that the Department decided to take his whole building. Even if the taking had been of only one-half the building, however, it still would have put him out of business because it would have taken his parking area.

   
   

9. At that time, the Department was rushing Mr. Bellot to vacate the premises. He was in difficult financial straits, however, and it would not have been possible for him to move but for the Department's compensation payments.

   As it was, he claims, the compensation was after the fact, and he had to borrow

   $30,000.00 in his mother's name in order to rehabilitate the building he moved into.

   
   

10. Instead of utilizing income figures from years in which business activity was normal, the Department chose to use the income figures from 1989 and 1990, both of which were, he claims, for one reason or another, extraordinary. In doing so, since the income in those years was much lower than normal, the compensation he received was also much lower, he claims, than it should have been. He received $8,725.50. Had the 1988 and 1989 years income been used, the payment would have been $20,000.00, the maximum. He also claims the Department used the incorrect operating expense figures concerning travel expense. The Schedule C reflects a higher deduction for automobile expense for both years, arrived at by the application of a standard mileage expense approved by the Internal Revenue Service. In actuality, the expense was considerably less and, if the real figures had been used, his income would have been increased substantially for both years.

    
    

11. Mr. Bellot's appeal was reviewed by Ms. Long, the Department's administrator for relocation assistance who followed the provisions of departmental manual 575-040-003-c which, at paragraph (IV) on page 33 of 35, requires the displacee to furnish proof of income by tax returns or other acceptable evidence. At subparagraph (e) on page 31 of 35 of the manual, the requirement exists for the displaced business to "contribute materially" to the income of the displace person for the "two taxable years prior to the displacement." If those two years are not representative, the Department may approve an alternate two year period if "the proposed construction has already caused an outflow of residents, resulting in a decline of net income. "

    
    

12. To grant an alternative period, then, the Department must insure that the loss of income is due to the Department's construction and not to other considerations. Here, the Department's District Administrator took the position it was not it's actions which caused the Petitioner's loss of income. Ms. Long took the same position.

    
    

13. The Department's District 5 initially notified the people of Inverness of the proposed project somewhere around 1988. The project was to straighten Main Street out through downtown Inverness for approximately 2 miles. There is

no evidence as to when the first affected party moved and Ms. Long does not know whether or not the project had an adverse effect on business in downtown Inverness. Petitioner's evidence does not show that it did.

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

   
   

2. Petitioner seeks to have the Department apply its manual's alternative method for dislocation compensation calculation to include the income for calendar years 1988 and 1989 rather than 1989 and 1990, and to include the actual mileage expense in arriving at net income rather than the IRS approved standard deduction utilized in preparing Mr. Bellot's and the corporation's federal income tax returns for 1988, 1989 and 1990. To succeed in this effort, it must establish the correctness of its position by a preponderance of the evidence.

   
   

3. The Department has utilized a procedure for calculating reimbursements here which is very similar to that of the federal government used on federal aided projects. The Department requires that income figures for the two years prior to the displacement be utilized in calculating displacement assistance payments. There is a provision for an alternative method of calculation if it can be shown that the proposed construction had already caused an outflow of residents resulting in a decline in net income during the two years otherwise to be used.

   
   

4. Here, Mr. Bellot furnished his pertinent income tax returns for the years 1988, 1989 and 1990. The returns for 1989 and 1990 were considered pertinent by the Department. Both reflect income much less than that earned by Petitioner during the 1988 tax year he would prefer be used. However, there was no evidence to establish any basis for the application of the alternative year. To be sure, there was a downturn in Petitioner's realty business in Inverness, but this was not shown to be caused by the Department's actions. Rather, the evidence would seem to indicate the downturn was caused as much by the illness and absence of Petitioner's star sales person, a leading producer, and the fact that Mr. Bellot was forced to spend a lot of time tending to his parents, due to their illnesses, rather than to his business.

   
   

5. As to the difference in expense figures, it would appear that by utilizing the higher IRS standard figure for deduction from gross income, Petitioner reduced the amount of income on which he had to pay tax, in itself a benefit. It seems patently inappropriate to utilize a different figure for reimbursement when to do so would potentially support a higher relocation payment.

   
   

6. Considering the evidence as a whole, Petitioner has failed to establish, by the required preponderance of the evidence, that the use of the income for the alternate years of 1988 and 1989 would be appropriate in calculating dislocation reimbursement, or that the mileage deduction should be adjusted.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that Petitioner's appeal of the Department's decision to refuse to use alternate tax years or actual mileage deduction in its calculation of a relocation assistance payment be denied.

RECOMMENDED this 29th day of December, 1992, in Tallahassee, Florida.

ARNOLD H. POLLOCK

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 29th day of December, 1992.

APPENDIX TO RECOMMENDED ORDER

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

FOR THE PETITIONER:

1. Accepted.

2. & 3. Accepted and incorporated herein.

   1. Accepted and incorporated herein.

   2. Accepted and, in part, incorporated herein.

   3. Rejected as not proven by competent, non-hearsay, evidence.

   4. Accepted.

   5. Not proven. Merely a statement of Petitioner's position.

   6. Accepted that Petitioner's business income dropped. It cannot be said that the road project's were the primary cause of the decline in Petitioner's business. There is no independent evidence of this.

   7. Accepted and incorporated herein.

   8. First sentence accepted. Balance not based on independent evidence of record.

   9. Not a proper Finding of Fact but a comment on the evidence.

   10. First sentence accepted. Second sentence rejected.

   11. Accepted and incorporated herein.

   12. Not a Finding of Fact but a restatement of and attempted justification of Petitioner's position.

   13. Accepted and incorporated herein.

   14. Rejected as argument and not Finding of Fact.

   15. Not a Finding of Fact but a recapitulation of the evidence.

       
       

       FOR THE RESPONDENT:

       
       

       1. Accepted.

       2. & 3. Accepted.

1. - 6. Accepted and incorporated herein.

   1. Accepted and incorporated herein.

   2. Accepted.

   3. & 10. Accepted.

11. & 12. Accepted.

13. Accepted.

COPIES FURNISHED:

Charles G. Gardner, Esquire Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0458

James R. Clodfelter

Acquisitions Consultant Enterprises, Inc.

P.O. Box 1199

Deerfield Beach, Florida 33443

Ben G. Watts Secretary

Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0458

Thornton Jpp. Williams General Counsel

Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0458

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency which will issue the Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency which will issue the Final Order in this case.

Docket for Case No: 92-004375

Orders for Case No: 92-004375