on February 25, 1976, in Room 103 of the Collins Building, Tallahassee, Florida.
For Petitioner: Mr. Daniel S. Dearing
For Respondent: Mr. William Hatch
Upon consideration of the oral and documentary evidence adduced at the hearing, the following pertinent facts are found:
Lake Padgett Estates East is a residential planned unit development in Pasco County, Florida, ultimately to have some 1200 housing units. The developer of this project is Covington Properties, which also constructed within the development the Lake Padgett East Club.
In order to provide a medium for the residents to participate in and ultimately have control over the activities, improvements, appearance and maintenance of this development, Covington Properties initiated the organization of petitioner, a nonprofit corporation, in November of 1972. Among the purposes for which petitioner was formed, as stated in its articles of incorporation, was
"to promote cooperation among lot owners in Lake Padgett Estates East and generally to provide for the mutual assistance, wel- fare and improvement of all such persons."
The petitioner is presently governed by a seven-member board of directors, five of whom are employees of Covington Properties (two of these five reside in the Lake Padgett development) and two of whom are residents of Lake Padgett Estates East and are not employees of Covington. Provisions governing the petitioner provide for a gradual withdrawal from active involvement and voting control by Covington as more lots or homes are sold, or at the end of ten years, whichever first occurs. Voting control is based upon lot ownership, and it is estimated that employees of Covington will lose control over the board of directors within twelve to eighteen months due to the lessening number of unsold lots. There are now 449 members of petitioner's organization.
The Lake Padgett East Club is owned by Covington Properties, but is occupied by and leased to petitioner. This Club is a two-story facility surrounded by lighted tennis courts, a swimming pool, a track and field area and several common areas or parks. Within the Club building are meeting rooms, offices, game rooms, locker rooms, a tennis pro shop, a snack bar and a lounge. The lease between Covington and petitioner is for a period of five years, with options to renew for two additional five year periods, and provides for an annual rental of $60,000.00 per year. In fact, no such rentals have been paid by petitioner nor demanded by Covington Properties. Petitioner's current income is exceeded by its expenses and Covington has made up the deficit. The deficit is carried on the books as a liability of petitioner.
An employee of the petitioner manages the Club premises. The petitioner also employs seven or eight other persons, including maintenance personnel, an activity supervisor and a tennis pro.
As noted above, petitioner currently has 449 members. Membership is mandatory for the residents of Lake Padgett Estates East and they are assessed
$12.50 per month. Some nonvoting members of the Association reside elsewhere, and pay a fee for use of the Club facilities. Additional income is derived from tennis court fees, guest fees and other Club activities. Petitioner is presently in the process of raising funds from dances, personal contributions and other sources for the construction of a playground for small children.
The Club facilities are utilized by petitioner for organized social and athletic activities and association meetings. Petitioner also allows Pasco County high school students to use the Club for track and field events.
Petitioner's organization has several committees, including an entertainment committee and an architectural committee, the latter of which reviews all plans for buildings, structures and other improvements on lots within Lake Padgett Estates East. This committee is also responsible for enforcing covenants, conditions and restrictions. While the committee acts in an advisory capacity to the board of directors, it has been the practice of the board to accept committee recommendations.
On January 20, 1975, petitioner applied to the respondent for a type 11-C beverage license a club license to sell alcoholic beverages to members and nonresident guests only. The application was completed in full and necessary attachments were included therewith. An on site inspection was conducted by an
agent of respondent, which agent recommended approval of the application. Additional information was sought by respondent and supplied by petitioner.
On May 13, 1975, respondent's Director disapproved the application for an 11-C type beverage license for the reason that:
"Applicant corporation does not meet the qualifications of a bona fide club as out- lined in the Florida Statutes and Rules."
Petitioner requested a hearing on the denial of its application and the undersigned hearing officer with the Division of Administrative Hearings was assigned to conduct the hearing.
Respondent's Assistant State Licensing Supervisor, Mr. Barry Schoenfeld, reviewed and processed the subject application. At the hearing in this cause, he stated the following reasons for denial of the application:
the petitioner was organized and controlled by Covington Properties for commercial, rather than community purposes;
A group associated to develop a housing development is not engaged in "community development" within the meaning of the Florida Statutes;
a "community" within the meaning of the statute is more than a housing development; it is the community at large and the term "community" is to be equated with the term "county"; and
to issue an 11-C beverage license to self-serving groups promoting a housing development would effectively destroy and defeat the quota system of one commercial license per 2500 county residents.
CONCLUSIONS OF LAW
F.S. s. 565.02(4) authorizes the issuance of special licenses, known informally as "club licenses" to bona fide clubs in continuous active existence and operation for a period of not less than two years in the county where they exist. Certain defined golf clubs are exempt from the two year existence requirement. Such a license authorizes the service and distribution of alcoholic beverages to members and nonresident guests of the club only. F.S.
s. 561.20(7) provides that there shall be no limitation upon the number of licenses issued pursuant to s. 565.02(4), and further defines those organizations entitled to such club licenses. Among golf clubs, lodges or clubs of national fraternal or benevolent associations, showmen and amusement enterprises clubs and clubs promoting, developing and maintaining cultural relations of people of the same nationality are
"nonprofit corporations or clubs devoted to promoting community, municipal, or county development or any phase of community, municipal or county development."
Thus, the central issue in this cause is whether petitioner is a nonprofit corporation or club devoted to promoting community development or any phase of community development so as to be entitled to a club license within the meaning of ss. 561.20(7) and 565.02(4). A determination of this issue involves an interpretation of the words community development" in s. 561.20(7).
Respondent contends that the term "community" encompasses more than a housing development and is to be equated with the county as a whole. The undersigned does not agree with this interpretation. The language used is "community, municipal, or county development." The Legislature is presumed to know the meaning of words and to have expressed its intent by the use of the words found in the statute. The word "or" is a disjunctive article indicating an alternative. Had the legislature intended the word "community" to mean "county", it would have been unnecessary to use the term "community" at all. Also, when the enumeration of organizations devoted to promoting community development is read in pari materia with the other organizations entitled to a special club license, it appears unreasonable to ascribe a county-wide meaning to the term "community." It is concluded that the term community, while certainly comprehending more than a mere neighborhood, may include a housing development of sufficient size and scope and that Lake Padgett Estates East, which will consist of some 1200 housing units with a common recreation area, classifies as a community within the language used in s. 561.20(7).
The next question then becomes whether the petitioner is devoted to any phase of such community development. The evidence presented at the hearing leaves little doubt that the functions of the Lake Padgett Estates East Homeowners Association, Inc. are directed toward the betterment of those who live within the community. These functions include the provision of social, athletic and recreational entertainment for its members and provide a means for maintaining control over the appearance and maintenance of the community. The petitioner also offers its facilities to other groups within the county. It thus cannot be said that petitioner's organization is not devoted to any phase of community development.
Finally, respondent argues that petitioner is not an autonomous group, but is controlled by the developer Covington Properties for its own commercial and economic enhancement. The evidence adduced at the hearing does not support this contention. Lake Padgett Estates East is a planned unit development with a common recreation area managed by petitioner as a nonprofit organization for the benefit of members of the organization. The fact that the developer conceived of and initiated the organization of petitioner does not automatically exclude petitioner from falling within the statutory language of s. 561.20(7). Nor does the fact that currently five of the seven members of the board of directors are employees of the developer. As explained by an expert witness in the field of planned unit developments, a homeowners association is an integral part of a planned unit development. In its early stages, it is desirable for the developer to have some control over the association in order to get it started. The association will ultimately be self-governing and function independently of the developer to provide for its own community needs. The voting control of petitioner is determined by lot sales. Once 80 percent of the lots or housing units within Lake Padgett Estates East are sold or at the end of ten years, whichever occurs first, the developer will lose all voting control. There was uncontradicted evidence at the hearing that plans are now being made for the developer to turn over total control of petitioner to residents of the community, and that this should occur within twelve to eighteen months. There was no evidence that the five directors who are employees of Covington (two of whom are also residents of the development) had exercised their voting control to the detriment of members of the petitioner or the purposes for which petitioner was formed. None of the dues or assessments go to the developer. They are retained by the petitioner. While the developer obviously built the physical structure - the Clubhouse and surroundings - in order to attract purchasers to the development, the structure is operated and maintained by
petitioner and the developer exercises no day-to-day control over the facilities. The possibility that the developer may derive some commercial benefit from the existence of the petitioner and the facilities it manages does not defeat the finding that petitioner is a nonprofit organization devoted to community development or any phase thereof.
As an addendum, it should be noted that if the common recreation area controlled by petitioner were to include a golf course with nine holes on seventy acres of land, there would be no question but that petitioner, as lessee, would be entitled to a special club license pursuant to F.S. ss. 561.20(7) and 565.02(4). It appears to the undersigned to be unreasonable to assume that the legislature intended to award a special license in that case to the exclusion of an organization providing its members with nine lighted tennis courts, a swimming pool, a track field, play grounds and a club house, as well as a means of governing its community appearance and maintenance.
