STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OCTAVIO BLANCO, )

)

Petitioner, )

)

vs. )

) WESTFIELD HOMES OF FLORIDA and ) SOUTHWEST FLORIDA WATER )

MANAGEMENT DISTRICT, )

)

Respondents. )

Case No. 05-3274

)

ORDER DETERMINING AMOUNT OF BOND

This case is before the undersigned pursuant to an Order of the Second District Court of Appeal dated June 21, 2006. The Order granted Petitioner’s motion for a stay pending appeal conditioned on Petitioner posting “a good and sufficient bond pursuant to Florida Rule of Appellate Procedure 9.310(c),” and directed “the Administrative Law Judge assigned to these proceedings . . . [to] determine the amount of bond [Petitioner] should post.” The deadline for making the determination was extended by the Court in an Order dated July 12, 2006.

A telephonic evidentiary hearing was held on July 10 and August 2, 2006, at which Respondent Westfield Homes of Florida (Westfield)1 presented the testimony of Barry Karpay and Jerry Tomberlin; Westfield’s Exhibits 1, 2, 6, and 9 through 26, were received into evidence; Petitioner presented the testimony of Dr. Douglas Weiland; and official recognition, which is the administrative equivalent of judicial notice, was taken of the Recommended Order issued in this case. Petitioner did not offer any exhibits, and Respondent Southwest Florida Water Management District (District) did not present any witnesses or offer any exhibits. The hearing was recorded by a court reporter, but the transcript was not filed.

The parties requested and were given an opportunity to file proposed orders. The deadline for the proposed orders was August 7, 2006. Westfield filed a proposed order; the District

and Petitioner did not. Westfield’s proposed order was given due consideration in preparing this Order.

A “good and sufficient bond” is “a bond with a principal and a surety company authorized to do business in the State of Florida, or cash deposited in the [lower tribunal] clerk's office.” Fla. R. App. P. 9.310(c)(1). The factors to be taken into account in determining the amount of the bond include “costs; interest; fees; and damages for delay, use, detention, and depreciation of property . . . .” Fla. R. App. P.

9.310(c)(2). See also Pabian v. Pabian, 469 So. 2d 189, 191 (Fla. 4th DCA 1985) (“[T]he guiding principle in setting a supersedeas bond is to protect the party in whose favor judgment was entered by assuring its payment in the event the judgment is affirmed on appeal.”).

The development plan that is subject to the permit approved by the Final Order on appeal in this case consists of 437

single-family residential units (hereafter “the approved development”). Westfield will have all of the state, federal, and local approvals that it needs to proceed with the approved development by September 1, 2006, assuming the federal permit is not challenged. The approved development has been stayed by the Second District Court of Appeal pending its review of the Final Order.

The property on which the approved development will occur (hereafter “the Westfield property”) is under contract2 for sale to JES Properties, Inc. (JES), which is owned by Dr. Douglas Weiland. The purchase price for the Westfield property is $13 million “as is” (i.e., with the permits for the approved development) or $17 million if JES obtains the necessary approvals to develop the property as a mixed-use development of regional impact (DRI).

The DRI, as it is currently proposed, will include 807 residential units, 800,000 square feet of office space, and 350,000 square feet of retail space. The DRI does not include a borrow pit/lake adjacent to Wetland A3, which, as detailed in the Recommended Order, is Petitioner’s primary objection to the approved development.

The contract gives JES until October 26, 2007, to close on the Westfield property. As a result, even though Westfield will have all of the permits necessary for the approved development by September 2006, it is effectively precluded from commencing the approved development until October 2007.

The contract allows JES to close on the Westfield property earlier than October 2007 if it receives all necessary approvals for the DRI or if it decides to purchase the property “as is.” If JES closes on the property “as is,” Westfield has the contractual right to buy back some of the lots in the approved development from JES.3

JES paid a $400,000 deposit to Westfield under the contract. JES will lose that deposit pursuant to the liquidated damages provision of the contract if it defaults on the contract and fails to close.

JES is currently proceeding through the permitting process for the DRI. The DRI has not yet been found “sufficient” by the reviewing agencies, and once the DRI is found “sufficient,” there are a number of additional steps that must be taken before the DRI is approved.

Dr. Weiland testified that, based upon the feedback that he and his consultants have received from the reviewing agencies, he believes there is a “good chance” that the DRI will be approved. That view was shared by Westfield’s Barry Karpay, who has extensive experience in the real estate development business in Pasco County and is familiar with the status of the DRI negotiations. Mr. Karpay testified that, in his opinion, there is a 75 percent chance that the DRI development order and all other necessary permits for the DRI will be approved by the October 2007 date in the contract.

Dr. Weiland acknowledged that there is a “small” chance that he will default on the contract, but he testified that he has no present intention of doing so. That outcome is particularly unlikely because, in addition to the $400,000 deposit that he will lose, Dr. Weiland will also lose the additional $900,000 that he has spent to date on the DRI permitting process.

Jerry Tomberlin, an expert in financial analysis of real estate transactions and Westfield’s controller, prepared an analysis that purports to establish the amount of “delay damages” that Westfield will suffer as a result of the stay being in effect. The analysis calculated the difference in the net present value of the profit expected by Westfield from the approved development based upon construction starting in March 2008 rather than September 2006. The analysis showed that the net present value of Westfield’s profit would be approximately

$4.1 million lower if construction did not start until March 2008.

Mr. Tomberlin’s analysis assumed that Westfield could begin construction on the approved development in September 2006. He did not take into account the October 2007 date in the JES contract, but rather assumed that JES would default on the contract prior to September 2006. He also assumed that the stay would remain in effect until March 2008. The assumptions underlying Mr. Tomberlin’s analysis were not shown to be reasonable or likely.

First, it is unlikely that the appeal, which was filed in June 2006, will still be pending in March 2008. Indeed, it is not unreasonable to expect that the appeal will be resolved by the October 2007 date in the JES contract, or sooner if the Court expedites the appeal.

Second, it is unlikely that JES will default on the contract prior to September 2006 or close on the property “as is” before October 2007. Dr. Weiland testified that he is committed to seeing the DRI process through and there appears to be a reasonable likelihood -- 75 percent according to Mr. Karpay

-- that the DRI will be approved by the October 2007 date in the contract and, as noted above, Dr. Weiland will lose his significant investment in the property -- $1.3 million so far -- if JES defaults on the contract.

The stay has no bearing on the interest, finance charges, or other “carrying costs” that Westfield is incurring on the property while it is “tied up” by the JES contract. Indeed, Mr. Tomberlin acknowledged that Westfield would be incurring those costs even if the stay was not in effect because it is unable to develop the Westfield property while the JES contract is in effect.

The only conceivable damage that Westfield might incur if JES were to close on the property “as is” while the stay is in effect is that Westfield would not be able to develop the lots that it has a contractual right to purchase from JES. No evidence was presented regarding the amount of such damages and, as noted above, it is unlikely that JES will close on the property “as is” prior to October 2007.

In sum, the evidence fails to establish that Westfield will suffer any delay damages (or other damages) by virtue of the stay imposed by the appellate court because even if the stay was

not in effect, Westfield could not begin the approved development while the property is under contract with JES, which it will likely be until October 2007. In the unlikely event that JES defaults on the contract or closes on the property “as is” while the stay is in effect, the bond issue can be revisited on an appropriate motion.

Finally, it is reasonable to expect that Westfield and the District will incur taxable costs in the appeal. See generally Fla. R. App. P. 9.400(a). No evidence was presented regarding the amount of such costs, but because Westfield and the District are appellees and are not responsible for preparing the record on appeal, it is unlikely that their taxable costs will exceed

$500. A bond or cash in that amount should be sufficient to ensure Petitioner’s payment of any taxable costs incurred by Westfield and the District in the event that the Final Order is affirmed on appeal. See Fla. R. App. P. 9.310(c)(2).

Based upon the foregoing, it is

DETERMINED that Petitioner should post a bond or cash in the amount of $500 (five hundred dollars) as a condition of the stay issued by the appellate court.

DONE AND ORDERED this 9th day of August, 2006, in Tallahassee, Leon County, Florida.

S

T. KENT WETHERELL, II Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 9th day of August, 2006.

ENDNOTES

1/ Effective April 1, 2006, Westfield changed its name to Standard Pacific of Tampa GP, Inc. Westfield’s motion to change the case style to reflect the name change was denied through an Order dated July 31, 2006, based upon the undersigned’s determination that he lacked jurisdiction to grant such relief in light of the limited scope of the remand by the appellate court. As a result, and for sake of consistancy, this Order continues to refer to Westfield as the developer of the approved development.

2/ The original contract was executed on November 17, 2004, see Exhibit 12, and there have since been a number of amendments and addenda to the contract. See Exhibits 13-20. The most recent, and most pertinent addendum is Addendum Seven, which was received into evidence as Exhibit 20.

3/ The terms of the parties’ agreement on this issue are contained in a separate contract, which was received into evidence as Exhibits 21 through 26.

COPIES FURNISHED:

James Birkhold, Clerk

Second District Court of Appeal Lawton M. Chiles, Jr. Courthouse 1005 East Memorial Boulevard Lakeland, Florida 33801

Marcy I. LaHart, Esquire Marcy I. LaHart, P.A.

711 Talladega Street

West Palm Beach, Florida 33405-1443

David Smolker, Esquire Bricklemyer, Smolker & Bolves, P.A.

500 East Kennedy Boulevard, Suite 200 Tampa, Florida 33602-4936

Jack R. Pepper, Esquire Southwest Florida Water Management District

2379 Broad Street

Brooksville, Florida 34604-6899

Nicki Spirtos, Esquire Southwest Florida Water

Management District 2379 Broad Street

Brooksville, Florida 34604-6899

Docket for Case No: 05-003274

Orders for Case No: 05-003274