STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SEMINOLE COMMUNITY ACTION, ) INC., )

)

Petitioner, )

)

vs. ) CASE NO. 84-1055

)

DEPARTMENT OF COMMUNITY )

AFFAIRS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above case before the Division, of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on November 30, 1984, in Sanford, Florida.

APPEARANCES

For Petitioner: Harry L. Lamb, Esquire

621 Fern Creek Avenue Orlando, Florida 32803

For Respondent: Carla S. Stanford, Esquire

2571 Executive Center Circle, East Tallahassee, Florida 32301

BACKGROUND

By proposed agency action in the form of a letter dated February 14, 1984, respondent, Department of Community Affairs, advised petitioner Seminole Community Action, Inc., that it intended to deny an application for funding of a Community Services Block Grant for fiscal year 1983-84. By separate action respondent advised petitioner that its application for continued funding under a weatherization contract would also be denied. Finally, by proposed action previously issued on July 15, 1983, respondent terminated for cause a Community Services Block Grant for the period December 1, 1982 through September 30, 1983.

On March 7, 1984, petitioner filed a petition requesting a formal hearing to contest each of the above matters. The petition was transmitted by respondent to the Division of Administrative Hearings on March 22, 1984 with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated April 23, 1984, a final hearing was scheduled on June 25, 1984 in Sanford, Florida. At the request of respondent, the hearing was cancel led pending an effort by the parties to settle the matter. By notice entered on September 21, 1984, the final hearing was rescheduled to November 14, 1984, and then finally to November 30 at Sanford, Florida.

At the final hearing petitioner presented the testimony of Reverend Amos C. Jones and Marlene Wright and offered petitioner's exhibits A-U; all were received in evidence. Respondent presented the testimony of Dr. Susan Cook, Earl Billings, Ray Smith, and Teri Buratti, and offered respondent's exhibits 1- 23; all were received in evidence.

The transcript of hearing was filed on December 20, 1984. proposed findings of fact and conclusions of law were filed by petitioner and respondent on January 17 and 29, 1985, respectively, and have been considered by the undersigned in the preparation of this order. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, material or unnecessary.

The issues herein, as raised in the petition, are whether petitioner is entitled to reinstatement and funding of its 1982-83 Community Service Block Grant, whether its application for a similar contract for the years 1983-84 should be granted, and whether it should be awarded a contract and funds for its weatherization program.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner, Seminole Community Action, Inc. (SCA), is a community action agency serving Seminole County, Florida. The organization is a non- profit corporation located at 1101 Pine Avenue, Sanford, Florida and has been in operation since 1966.

   
   

2. According to its by-laws, SCA administers the Community Services Block Grant (CSBG) program in Seminole County. The general purpose of the agency is to plan and mobilize resources to help improve the quality of life for low income families throughout the community. Its primary source of funding has been from the federal and state governments although it does receive a small amount of private funding through contributions.

   
   

3. Effective July, 1982 the responsibility for administering the CSBG program was shifted from the federal government to respondent, Department of Community Affairs (DCA). This meant that applications for CSBG funding would thereafter be filed with respondent rather than the United States Department of Health and Human Services.

   
   

4. After considerable difficulty in preparing its initial application, SCA filed an application with DCA on January 28, 1983 seeking a $95,435 CSBG grant retroactive to the period December 1, 1982 through September 30, 1983. The contract called for monthly payments to SCA of $9,543.50 and required SCA to serve an estimated 4,075 CSBG eligible low-income clients during the 10-month period. Prior to filing the application, DCA representatives spent two days with SCA officials assisting them in completing the application. At that time, SCA was told that its fiscal records and operations were inadequate, that certain changes would be necessary relative to recording liabilities on its books, that its purchasing procedures must be improved, and that its record- keeping in general was in poor condition. Because of these deficiencies, DCA advised SCA by letter dated February 18, 1983, that seven special conditions pertaining to fiscal accountability would attach to the grant of funds. These conditions are set forth in Attachment A to the contract. In addition, DCA

   advised SCA by letter dated February 24, 1983 of federal requirements pertaining to the composition of its board of directors. Information concerning SCA's compliance with the board requirements was requested no later than March 17, 1983. A contract was eventually signed by SCA on March 29, 1983 whereby it agreed to adhere to the seven special conditions.

   
   

5. DCA representatives made two "monitoring visits" to SCA on May 18-20, 1983 and June 1-3, 1983 to determine if the organization's fiscal operation, board composition and program services were in compliance with state regulations and contract terms. Although SCA was given advance notice of the visits, and told to have appropriate records available to substantiate fiscal reports, client records, compliance with the seven special contract conditions, and other matters, the auditors found a "lack of compliance with the law for the structure of the Board," 1/ "lack of fiscal procedures and adequate controls for fiscal accountability," "no documentation that the agency (was) serving low income persons," and a "questionable effort" to provide services to that class of persons. A more detailed list of deficiencies is found in respondent's exhibit

   8 received in evidence.

   
   

6. As a result of the above deficiencies, SCA was advised by letter dated June 15, 1983 that "it (was) imperative that corrective measures be promptly undertaken to correct these problems." A deadline for compliance in eight specific areas was set for July 15, 1983, and if it did not do so, SCA was told the contract would be terminated.

   
   

7. On July 15, 1983, SCA was notified by letter that its contract was being terminated effective June 30, 1983. Such action was appropriate because SCA failed (a) to comply with board of director structure requirements, (b) to resolve a carry-over debt from a prior year, (c) to justify a $9,544 budget amendment, (d) to resolve $3,700 in disallowed costs, and (e) to "demonstrate a continuing fiscal accountability to the satisfaction of the Department."

   
   

8. Petitioner has also participated in the State Weatherization Assistance Program whereby it receives state funds for conservation purposes. These are federal grant monies funded under the Low-Income Home Energy Assistance Act of 1981, and are granted for the purpose of providing information, services and technical assistance concerning weatherization and energy conservation to the low income community. It received $21,432 in grant funds during the fiscal year 1982-83, and was subjected to an audit by a state monitoring team in July, 1983 to insure compliance with program goals. The team found SCA had paid salaries from the grant funds in violation of federal regulations and had constructed a "cooler room" to store surplus food with grant monies in violation of federal law. Then, too, CA's administrative expenses totaled 34.9 percent of total funds which was far in excess of the norm of 5 percent for other agencies. Finally, it spent on the average over $1,300 to weatherize each home when the maximum allowed was only $1,000 per home. Because of these deficiencies, SCA's application for renewal of the program during 1983-84 was properly denied.

   
   

9. Petitioner has also made application for CSBG funds for fiscal year 1983-84. Since the time its 1982-83 contract was terminated, SCA has failed to satisfy the concerns which were raised in the letter of July 15, 1983 which terminated the contract. Specifically, its Board of Directors still does not comply with federal or state requirements, and its fiscal irregularities have not been resolved. Until it does so, it is ineligible for grant funds and DCA is justified in refusing to approve SCA's applications.

10. SCA contends all matters raised in the July 15, 1983 termination letter have been satisfactorily resolved. In making this contention it relies primarily upon a letter dated February 15, 1984 from the United States Department of Health and Rehabilitative Services to SCA, and the adoption of amended by- laws which comply with federal guidelines pertaining to community action agency board of directors. However, neither the letter nor the amended by-laws satisfy the long-standing deficiencies cited by DCA.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

    
    

12. Chapter 82-228, Laws of Florida, directed DCA effective July 1, 1982, to assume responsibility for administering funds appropriated pursuant to the Federal Community Services Block Grant Act.

    
    

13. To carry out its responsibilities, DCA has adopted Chapter 9B-22, Florida Administrative Code. As is pertinent here, Rule 98-22.09, provides in relevant part as follows:

    
    

    1. Funds shall be deemed to be misused when a grantee . . . does not use CSBG--funds in accordance with the approval program and operating budget set forth in a contract to be negotiated between the grantee and the Department . . .

    2. The Department shall have the right to terminate the contract for noncompliance with Federal and State laws, rules and regulations governing the funds . . .

       
       

       Further, Rule 9B-22.03(4) provides that "(t)he Department will perform such activities as may be necessary to monitor grantee compliance with State and Federal laws, rules, and regulations, to evaluate the fiscal and programmatic effectiveness of the grantee's activities and to confirm the status of budgets and progress of activities."

       
       

14. At issue herein are three proposed actions by the DCA: (a) a termination of SCA's 1982-83 CSBG contract, (b) a denial of SCA's application for CSBG funds for fiscal year 1983-84, and (c) a denial of SCA's request to renew its contract under the Weatherization Assistance Program. All three actions stem from numerous deficiencies noted by DCA auditors during monitoring visits conducted in 1983.

    
    

15. The evidence reveals that SCA has failed to adhere to requirements relative to its board of directors. This conclusion is based upon its failure to adhere to composition requirements, election of members from the low income sector, and filling of vacancies in a timely and proper basis. The evidence also reflects that SCA did not adhere to contract terms relating to fiscal control and fiscal and programmatic accountability. Finally, SCA violated federal regulations set forth in 10 CFR Part 440, and breached its weatherization contract by using grant funds and labor to construct a cooler room.

16. Rule 9B-22.09(10) specifically authorizes DCA "to terminate a contract for noncompliance with Federal and State laws, rules and regulations." Accordingly, it is concluded that the termination of the 1982-83 CSBG contract was justified and reinstatement is not warranted.

    
    

17. Absent a showing that an applicant "(meets) the applicable Federal and State laws," DCA must "reject" an application. Rule 9B-22.08(4), Florida Administrative Code. Until SCA can give assurances that the criteria set forth in Rule 9B-22.10, Florida Administrative Code, will be met, its CSBG and weatherization applications should be DENIED.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the relief requested in Seminole Community Action, Inc.'s

petition be DENIED.

DONE and ORDERED this 1st day of March, 1985, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 1st day of March, 1985.

ENDNOTE

1/ This included a failure to adhere to composition requirements, improper filling of vacancies, and no democratic elections of members from the low income sector.

COPIES FURNISHED:

Harry L. Lamb, Esquire 621 Fern Creek Ave.

Orlando, Florida 32803

Carla S. Stanford, Esquire

2571 Executive Center Circle, East Tallahassee, Florida 32301

Docket for Case No: 84-001055

Orders for Case No: 84-001055