STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

) DEPARTMENT OF BUSINESS )

REGULATION, DIVISION OF )

FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )

)

Petitioner, )

)

vs. ) CASE NO. 85-0294

) MAGIC TREE RESORT CONDOMINIUM ) ASSOCIATION, INC. )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter came to be heard on March 12, 1985 in Jacksonville, Florida before Donald D. Conn, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented as follows:

Petitioners: Robin H. Conner, Esquire

John C. Courtney, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Respondents: Frederick R. Brock, Esquire

Bert C. Simon, Esquire

1325 San Marco Boulevard, Suite 600

Jacksonville, Florida 32247

At the hearing the parties entered into the record a stipulation of certain factual matters, and each party called one witness to testify. Following the hearing the parties jointly submitted an Amended Stipulation, with two attached

exhibits, which is hereby accepted. The hearing transcript was filed on March 22, 1985.

The parties agreed to the consolidation of these cases since the real parties in interest in these cases are the same, and the issues presented in each are identical. The Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes, hereinafter referred to as "Petitioner", had issued Notices to Show Cause against Beach Club at St.

Augustine Association, Phases II and III, dated October 31, 1984 and against Magic Tree Resort II, Phases II and III, dated January 8, 1985. These notices allege that Respondents failed to pay to the Petitioner an annual fee of one dollar for each time-share period within their time-share plan in violation of Section 721.27, F.S. Specifically, it is alleged that Respondents failed to pay the fee which was due January 1, 1984.

FINDINGS OF FACT

1. The following findings of fact are based upon the stipulation of the parties:

   
   

   1. At all times material hereto, Treco, Inc. (hereinafter Treco) was the creating developer as that term is defined in Section 721.05(9)(a), F.S., of a condominium time-share plan, as defined in Section 721.05(28), F.S., known as The Beach Club at St. Augustine Beach and Tennis Resort, a Condominium (hereinafter The Beach Club at St. Augustine), and this plan was located at St. Augustine, Florida.

      
      

   2. In 1983, pursuant to Section 721.07, F.S., Treco filed and obtained Petitioner's approval of a public offering statement for The Beach Club at St. Augustine.

      
      

   3. In 1984, Treco recorded a declaration of condominium in the public records of St. Johns County committing the property described in the declaration contained in the public offering statement for the Beach Club at St. Augustine to condominium ownership.

      
      

   4. The declaration of condominium, referenced in paragraph c) above, provided for and described, in accord with Section 718.403, F.S., three additional proposed condominium phases, identified as The Beach Club at St. Augustine Phase II, The Beach Club at St. Augustine Phase III, and The Beach Club at St. Augustine Phase IV, but did not and has not committed the properties described in the proposed phases to condominium ownership.

      
      

   5. The declaration of condominium, referenced in paragraph c) above, further provided that Phase II would contain 1248 time-share periods and that Phase III would contain 1456 time-share periods.

      
      

   6. In 1983 Treco submitted a subsequent phase filing and filing fees, as provided in Rule 7D-17.03(4) & (5), Florida Administrative Code, for The Beach Club at St. Augustine, Phase II, and The Beach Club at St. Augustine Phase III, and the Petitioner subsequently advised Respondent that the above filings were in compliance with Chapters 718 and 721, F.S.

      
      

   7. The composite exhibit attached to the stipulation as Exhibit A contains true and correct copies of the subsequent phase filings and the Petitioner's response thereto as referenced in paragraph f) above.

   8. Although the Petitioner is without actual knowledge on this issue, it is stipulated for purposes of this proceeding that Treco has not recorded a declaration of condominium committing the properties described in the proposed Phases II and III to condominium ownership, has not offered nor advertised for sale nor filed any advertisements as required by Section 721.11, F.S., nor entered into any contracts for the sale of time-share periods, nor closed on any sales at said phases, and holds no purchase or deposit monies for time-share periods at the proposed phases.

      
      

   9. For the calendar year 1984, The Beach Club at St. Augustine Beach and Tennis Resort Condominium Association, Inc. has not paid managing entity fees for The Beach Club at St. Augustine, Phase II, or for The Beach Club at St. Augustine, Phase III.

      
      

   10. At all times material hereto, Treco Inns of Orlando, Inc. (hereinafter Treco Inns) was the creating developer of the condominium time- share plan known as Magic Tree Resort II, a Condominium, and this plan was located in Kissimmee, Florida.

       
       

   11. In 1983, Respondent Treco Inns filed and obtained Petitioner's approval of a public offering statement for Magic Tree Resort II, a Condominium.

       
       

   12. In 1983, Treco recorded a declaration of condominium in the public records of Osceola County committing the property described in the declaration contained in the public offering statement for Magic Tree Resort II, Phase I to condominium ownership.

       
       

   13. The declaration of condominium, referenced in paragraph l) above, provided for and described, in accord with Section 718.403, F.S., two additional proposed condominium phases identified as Magic Tree Resort II, a Condominium, Phase II, and Magic Tree Resort II, a Condominium, Phase III, but did not and has not committed the properties described in the proposed phases to a condominium form of ownership.

       
       

   14. The declaration of condominium, referenced in paragraph l) above, further provided that the Magic Tree Resort II, Phase II, would contain 1040 time-share units and that the Magic Tree Resort II, Phase III, would contain 1508 time-share periods.

       
       

   15. In 1983, Treco Inns submitted a subsequent phase filing and filing fees as provided in Rule 7D-17.03(4) & (5), Florida Administrative Code, for Magic Tree Resort II, Phase II and Magic Tree Resort II, Phase III and the Petitioner subsequently advised Treco Inns that the above filings were in compliance with Chapters 718 and 721, F.S.

       
       

   16. The composite exhibit, attached to this stipulation as Exhibit B, contains true and correct copies of the subsequent phase filings and the Petitioner's response letters referenced in paragraph o) above.

       
       

   17. Although the Petitioner is without actual knowledge, it is agreed for purposes of this proceeding that Treco Inns has not recorded a declaration of condominium submitting the properties described in the proposed Phases II and III above to condominium ownership; has not offered nor advertised for sale, nor filed any advertisements as required by Section 721.11, F.S., nor entered into any contracts for the sale of time-share periods or deposit monies for time- share periods at the proposed phases.

   18. For the calendar year 1984, Magic Tree Resort Condominium Association, Inc. has not paid managing entity fees for either Magic Tree Resort II, Phase II or Magic Tree Resort II, Phase III.

       
       

   19. Chapter 718, F.S., prohibits a developer of a time- share condominium from closing on the sale of time-share periods in a subsequent phase until an amendment to the original declaration extending the condominium form of ownership to the subsequent phase has been recorded in the public records of the county in which the condominium is located, and Chapter 721, F.S., prohibits a developer of a time-share condominium from closing on the sale of time-share periods until construction of the improvements has been completed in accordance with the requirements of Chapter 721, F.S.

       
       

2. The following findings of fact are based upon the testimony and evidence presented:

   
   

   1. On January 1, 1984 Treco had not commenced construction of Phases II and III of The Beach Club at St. Augustine, and Treco Inns had not commenced construction of Phases II and III of Magic Tree Resort II, a condominium. As of the date of the final hearing, construction had begun only on Phase II of Magic Tree Resort II. In accordance with Chapter 721, F.S., Treco and Treco Inns were prohibited from closing sales in the proposed phases on January 1, 1984.

      
      

   2. The estimated completion date for construction of The Beach Club at St. Augustine, Phase II was June, 1984 and February, 1985 for Phase III, and the estimated completion date for construction of Magic Tree Resort II, Phase II was March, 1984 and October, 1984 for Phase III.

      
      

   3. Respondents have designated The Beach Club at St. Augustine Beach and Tennis Resort Condominium Association, Inc., as managing entity for Phases II and III of The Beach Club at St. Augustine, and Magic Tree Resort Condominium Association, Inc., as managing entity for Phases II and III of Magic Tree Resort, Phase II.

      
      

3. The parties have submitted post hearing proposed findings of fact pursuant to Section 120.57(1)(b)4, F.S. A ruling on each proposed finding has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.

   
   

   CONCLUSIONS OF LAW

   
   

4. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of these proceedings pursuant to Section 120.57(1), F.S.

   
   

5. This case presents the issue of whether an annual managing entity fee under Section 721.27, F.S., is due and payable for each time-share period upon the mere designation of a "managing entity" when no construction, advertisement for sale, contracts for the sale of time-share periods, or recordation of a declaration of condominium committing properties to condominium ownership have occurred. Petitioner contends that the filing of a public offering statement or subsequent phase filing containing the designation of a "managing entity" under Section 721.07, F.S., is the act that triggers the duty to pay the managing entity fee. Respondents urge that since no construction, advertisement, contracts or recordation of the proposed phases of their condominiums had occurred on January 1, 1984, there were no "accommodations" or "facilities" and

   therefore no "time-share periods" as that term is defined in section 721.05(27), upon which the managing entity fee sought by Petitioner is based.

   
   

   Section 721.27, F.S. (1983), provides:

   Annual fee for each time-share period in plan. -- On or before January 1 of each year each managing entity shall collect as a common expense and pay to the division an annual fee of $1 for each time-share period within the time-share plan.

   
   

   Definitions of key terms used in this statute are set forth in Section 721.05,

   F.S. (1983), as follows:

   
   

   (17) "Managing entity" means the person responsible for operating and maintaining the time-share plan.

   1. "Time-share period" means that period of time when a purchaser of a time-share

      plan is entitled to the possession and use of the accommodations or facilities, or both, of a time-share plan.

   2. "Time-share plan" means any arrangement plan, scheme, or similar device, other than an exchange program, whether by membership, agreement,

   tenancy in common, sale, lease, deed, rental agreement, license, or right-to-use agreement or by any other means, whereby a purchaser, in exchange for a consideration, receives ownership rights in or a

   right to use accommodations or facilities, or both, for a period of time less than a full year during any given year, but not necessarily for consecutive years, and which extends for a period of more than

   3 years. (Emphasis supplied.)

   
   

6. The managing entity fee is assessed against each time- share period within a time-share plan. Thus, the existence of a time-share plan containing time-share periods is a precondition to the assessment of said fee. A time- share plan is an arrangement, plan, scheme,or similar device whereby a purchaser receives ownership rights or the right to use "accommodations," "facilities", or both, in exchange for consideration. These additional terms are defined in Section 721.05, F.S. (1983), as follows:

   
   

   (1) "Accommodations" means any apartment, condominium or cooperative unit, cabin, lodge, or hotel or motel room or any other private or commercial structure which is situated on real property and designed for occupancy by one or more individuals.

   (16) "Facilities" means amenities including any structure, service, improvement, or real property, improved or unimproved, other than the time-share unit, which is made available to the purchasers of a time-share plan. (Emphasis supplied).

   From the foregoing it is clear that "accommodations," "facilities," or both, must be in existence, and not simply planned, in order to meet these definitions. An "accommodation" must be "situated on land", and a "facility" is not some mere speculation which will be available in the future, but is a structure, service, improvement or real property itself which is made available to purchasers, currently.

   
   

7. The existence of "accommodations" or "facilities" is essential if there is to be a "time-share plan" containing "time- share periods". The plain meaning of the words used by the Legislature in enacting the above definitions prevails since Petitioner has not adopted any rules explicating its policy on the assessment of the fee under Section 721.27, and since Petitioner has not shown any particular need for agency expertise in the interpretation of these statutory definitions. In the recent case of All Seasons Resorts, Inc. v. Department of Business Regulation, 455 So.2d 544 (Fla. 1st DCA l984), the court reviewed the statutory definitions here in question and stated:

   
   

   . . . in order for Chapter 721 to apply to a given program, it must include a "time-share plan" containing "time-share periods" as well as "accommodations" or "facilities." Section 721.03(1) . . . the Division has overlooked the intent of the Legislature, as indicated by the specific types of accommodations

   enumerated in Section 721.05(1), that the more general definition therein of "structure(s) situated on real property and designed for occupancy by individuals" refer to structures of the type suited to residency, not merely

   to use and control. This holding is consistent with the well-worn maxim that "(legislative) intent is determined primarily from the language of the statute (and) the plain

   meaning of the statutory language is the first consideration." . . . Having determined that accommodations do not exist . . ., it follows necessarily that no time-share units are involved. . . .

   Id. at 547, 548.

   
   

   The All Seasons Resorts case involved memberships in a network of campgrounds whereby members could use their membership to stay at designated campgrounds at anytime of the year as long as they did not use their membership for more than fourteen days at a time. Thus, the facts are very different from this case which involves time-shares for fixed periods in a residential condominium as compared to floating time-shares in a campground. Nevertheless the principle of statutory construction involving the definitions here in question which was applied in the All Seasons Resorts case is equally applicable in this case.

   Since there were no accommodations or facilities, as those terms are commonly understood, in existence for the proposed phases on January 1, 1984, there were no time-share periods within a time-share plan, and thus the managing entity fee cannot be collected.

   
   

8. Further examination of the statutes in question support Respondents' position. Section 721.27 requires the managing entity to collect the annual fee which is here in question "as a common expense." Section 721.05(5), F.S., defines "common expenses" as:

   . . . those expenses properly incurred for the maintenance, operation, and repair of the accommodations or facilities, or both, constituting the time-share plan.

   
   

   Since the fee which Petitioner seeks to collect is an expense incurred for maintenance, operation and repair of accommodations or facilities, and since no "accommodations" or "facilities" existed on January 1, 1984, it follows that no common expenses could be incurred for maintenance, operation or repair. The managing entity fee, being a "common expense," therefore could not be incurred.

   
   

9. Respondents also raise what they consider to be an inconsistency in Petitioner's interpretation of similar statutes, Sections 718.501(2)(a) and 721.27, and urge that Petitioner change its interpretation of Section 721.27 to conform with its interpretation of Section 718.501(2)(a). It is unnecessary to reach this point and determine if there is an inconsistency, however, since Respondents have prevailed in their interpretation of the relevant portions of Chapter 721.

   
   

10. The Petitioner has argued in support of its position that fees generated by Section 721.27, F.S., are essential to carry out its responsibilities for investigation and enforcement under Chapter 721, and that other fees collected under Chapter 721 are insufficient or inapplicable to support its regulatory activities with respect to sales and management practices. This argument is not persuasive. The intent of the Legislature in enacting Chapter 721 must be gleaned from the plain meaning of the words used therein, and in this case the words used in defining the various terms cited above establishes that intent. Petitioner's concern about funding levels and the adequacy of funding sources may be legitimate and deserving of legislative attention, but are not determinative of the question of whether Respondents can be assessed the fee prescribed in Section 721.27 in this case.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law, it is hereby recommended that the Notices to Show Cause issued herein be DISMISSED.

DONE and ENTERED this 19th day of April, 1985 at Tallahassee, Florida.

DONALD D. CONN

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this th day of , 1987.

COPIES FURNISHED:

Robin H. Conner, Esquire John C. Courtney, Esquire

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Frederick R. Brock, Esquire Bert C. Simon, Esquire

1325 San Marco Boulevard, Suite 600

Jacksonville, Florida 32247

Richard B. Burroughs, Jr., Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 85-000004

Orders for Case No: 85-000004