STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

REX SHEPHERD and )

DALE HARPER, )

)

Petitioners, )

)

vs. ) Case No. 99-0745BID

)

ST. JOHNS RIVER WATER )

MANAGEMENT DISTRICT, )

)

Respondent. )

)

and )

)

HERBERT CLARK and )

STANLEY DOLLEN, )

)

Intervenors. )

)

)

RECOMMENDED ORDER

Pursuant to notice the Division of Administrative Hearings through its duly-designated Administrative Law Judge, Mary Clark, held a formal hearing in the above-stated case on April 16, 1999. The hearing was conducted by videoconference. The parties, their representatives, witnesses, and court reporter participated from Orlando, Florida; the Administrative Law Judge presided from Tallahassee, Florida.

APPEARANCES

For Petitioners: Clayton D. Simmons, Esquire

Stenstrom, McIntosh, Colbert, Whigham and Simmons, P.A.

Post Office Box 4848 Sanford, Florida 32772-4848

For Respondent: John W. Williams, Esquire

St. Johns River Water Management District Post Office Box 1429

Palatka, Florida 32178-1429 For Intervenors: Herbert Clark, pro se

5416 Trimble Park Road Mt. Dora, Florida 32757

Stanley Dollen, pro se 1230 Kelso Boulevard

Windermere, Florida 34786 STATEMENT OF THE ISSUES

As described in the parties' Prehearing Stipulation Petitioners are challenging the Respondent's (SJRWMD) solicitation process with regard to the "Invitation to submit an Offer to Purchase property known as the Zellwin Airstrip." Petitioners seek to set aside the award of purchase to Intervenors and to have the solicitation process re-advertised. The issue for resolution is whether Petitioners are entitled to that relief.

PRELIMINARY MATTERS

Petitioners' protest with request for hearing was forwarded to the Division of Administrative Hearings on February 16, 1999. Respondent's Motion to Dismiss and a response to the motion were also included in the referral. After a telephone hearing and the opportunity to submit additional authority, the Administrative Law Judge denied the Motion to Dismiss in an order entered on March 15, 1999, which found that Petitioners' protest of the solicitation specifications was untimely but that they should nonetheless be accorded an evidentiary hearing on their claims,

including their reason for not timely contesting the specifications.

The apparent successful bidders were notified of the proceeding and their request to intervene was granted.

After one continuance for good cause the hearing proceeded as described above.

At the hearing the parties stipulated that the Respondent should present its case first. Respondent presented these witnesses: Sharon Carlin, Leonard Freeman, and Robert Christianson. Respondent's Exhibits number 1-10, as identified in the parties' prehearing statement, were received in evidence without objection.

Both Petitioners testified on their own behalf and offered the summary of testimony of Melvin Pittman, Orange County Zoning Director, whose testimony was excluded upon Respondent's objection of relevance. For that same reason Petitioners' Exhibits numbered 1, 11, and 12 were marked for identification only for the record; Petitioners' remaining Exhibits numbered 2-

10 and 13-17, as identified in the prehearing statement, were received into evidence without objection.

Intervenors did not testify but cross-examined the other parties' witnesses. They did not offer additional exhibits.

The Transcript was filed on May 13, 1999; the parties' Proposed Recommended Orders were filed on May 19 and May 24, 1999.

All matters of record, including the parties' stipulated facts, have been considered in the preparation of this recommendation to the St. Johns River Water Management District governing board.

FINDINGS OF FACT

1. In 1996 the Florida Legislature mandated that the St. Johns River Water Management District (SJRWMD) attempt to purchase farms on the north shore of Lake Apopka as part of a long-term restoration and reclamation project.

2. Petitioners, Rex Shepherd and Dale Harper, are pilots and owners of an aerial advertising business, American Outdoor Aerial Advertising. In early 1998 the business was operating out of Crakes field, a small airstrip owned by Kent Crakes as part of Crakes' North Lake Apopka farm. Petitioners' business owned airplanes and banners which it flew for its advertising clients such as Sears and GEICO.

3. Sometime in early 1998 it became obvious that Petitioners would need to move their operation to another field. There were break-ins at the hanger, and the airstrip was beginning to flood as a result of the reclamation project. Kent Crakes referred Rex Shepherd to Leonard Freeman, the individual with SJRWMD who was involved with land acquisition in the area.

4. Around March or early April 1998 Petitioners commenced discussions with Mr. Freeman regarding their use of the farm airstrip at Zellwin Farms, also part of the SJRWMD Lake Apopka

   farms acquisition program. Mr. Freeman was the SJRWMD point of contact for the Zellwin Farms acquisition. By early 1998, the property was already under contract and was scheduled to close some time around June 1998.

5. Mr. Freeman and the Petitioners met at the Zellwin Farms airstrip in June 1998, and Petitioners determined the property would be suitable for their operation. Eager to accommodate Petitioners because of their predicament and also in anticipation of the SJRWMD's eventual sale of the Zellwin parcel, Mr. Freeman gave permission for Petitioners to store their equipment on the site and gave them a key.

6. Because Zellwin Farms was beyond what SJRWMD considered to be the lake's historic shoreline, the SJRWMD knew that it would need to dispose of its 1400 acres as surplus, in whole or part. Mr. Freeman's desire was to find a way to dispose of the property as the best thing for the SJRWMD. Thus, because of the Petitioners' immediate interest in relocating their business,

   Mr. Freeman began negotiating with them for their purchase of the airstrip and related buildings.

7. In September 1998, Mr. Freeman met again with Petitioners at the airstrip and discussed a specific proposal. Petitioners talked about offering $250,000 under a lease-purchase arrangement, and sent a letter dated September 10, 1998, to Mr. Freeman with that offer. Mr. Freeman later suggested that since the appraised value was $275,000, an offer in that amount would

   be easier to get approved. Mr. Freeman did not have the authority to obligate the SJRWMD to sell the property and Petitioners understood that. Still, Petitioners felt they were negotiating in good faith with staff who could make a strong recommendation to the board.

8. Petitioners believed in early October that they had a hand-shake deal subject to further discussions regarding specific terms. They knew that a competitive solicitation might be an option for the SJRWMD but they also believed that they would be given an opportunity to meet another third party's offer. This belief was based not on some specific agreement for a "right of first refusal," but rather on Mr. Freeman's good-natured assurances that they would work it all out.

9. Mr. Freeman requested that the SJRWMD special counsel develop a draft contract based on Petitioners' offer. The offer would then need to be signed by Petitioners and approved by Mr. Freeman's supervisor before going to the SJRWMD governing board. The counsel never finished the draft and it was never given to Mr. Freeman or the Petitioners.

10. By the end of October 1998, Robert Christianson, Mr. Freeman's supervisor and director of the SJRWMD Department of Operations and Land Resources, learned that Petitioners were flying in and out of the Zellwin airstrip and using it for their business base of operations. This activity was beyond the

    storage permission that Mr. Freeman had granted. (Even that permission was beyond his individual authority.)

11. Mr. Freeman and Mr. Christianson met with Petitioners on October 27, 1998, to work out a license agreement for their use of the airstrip. Such an agreement was necessary to protect the parties' respective interests and to cover the SJRWMD for any liability in the landlord/tenant relationship. The result of that meeting was a written license agreement for Petitioners to use, maintain, and provide protection for the property for a period from October 30, 1998, to April 30, 1999, subject to revocation with advance notice. Petitioners used the

    airstrip property under that agreement and made improvements, mostly cleaning up the facility so it could be used.

12. At the October meeting it became obvious to Petitioners that the informal negotiations for their purchase were terminated and that the SJRWMD was going to solicit competitive offers for the purchase. This concerned the Petitioners and they felt let- down by Mr. Freeman. Still, they concentrated on getting the license agreement worked out.

13. Rex Shepherd's account of the October meeting was that Mr. Christianson was very clear about the fact that the SJRWMD had to go for competitive bid, that they were bound by a board and rules and regulations even though both he and Mr. Freeman would like for Petitioners to have the airport, and that they should be able to work it out. At the end of the meeting, and as

    they were leaving the trailer, Mr. Shepherd commented to Mr. Freeman that he really did not want to lose the airport and wanted to be apprised of what was going on so that if there were a higher bid, he could have the opportunity to match it, or if it were too high, that they would have 30 or 60 days to vacate the property. According to Mr. Shepherd, Mr. Freeman simply responded, "We'll work all that out, don't worry about it."

14. On November 11, 1998, the SJRWMD governing board voted to surplus the Zellwin Farms property with direction to the staff that the sale be widely advertised in the aviation community and not be a sole source deal.

15. Consistent with the board's direction and pursuant to Section 373.089(3), Florida Statutes, the SJRWMD advertised a "Notice of Intention to Sell" the airstrip property in the Orlando Sentinel for three consecutive weeks, November 9, 16, and 23, 1998. The notice identifies the airstrip property as an "Approximately 47-acre agricultural airport facility, 2,200' square feet asphalt runway, 5,250  square feet metal hanger, 2,048  storage square feet building, well and septic tank at a location of northwest Orange County, Florida, Sections 20 and 29, T-20-S, R-27-E, on Jones Avenue, 1  mile west of U.S. Highway 441, Zellwood." The Notice of Intention to Sell states that "[a]ll interested persons are invited to submit an offer to the District for purchase of said lands. Contact the District . . . and request an Airport Sales Package."

16. Both the Airport Sales Package and the Notice of Intention to Sell state that the airport property will be sold for the highest price obtainable. The sales package states that full cash offers to be paid at closing will be given first consideration and that 10 percent of the purchase price must be paid when the offeror was notified that it was successful. The sales package also states that

    any person adversely affected by an offer solicitation shall file a Notice of Protest, in writing, prior to the date on which the offers are to be received, and shall file a formal written protest within ten (10) days after filing the Notice of protest pursuant to Florida Administrative Code

    Rule 40C-1.801.

    
    

    * * *

    
    

    Failure to timely file a notice of protest or failure to timely file a formal written protest shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. (SJRWMD Ex. 3).

    
    

17. Both the Notice of Intention to Sell and the sales package require that sealed "offers for purchase" be submitted to the SJRWMD prior to 2:00 p.m. on December 4, 1998, the advertised time for opening of the offers. Nothing in the Notice or sales package reserves a right of first refusal for any person. Instead, both plainly state "no offer will be accepted after the date and hour specified for submittal of offers." (SJRWMD Exhibits 1 and 3)

18. Although Petitioners did not see the newspaper notice, they had knowledge that the SJRWMD advertised the sale of the

    airstrip property through a competitive solicitation process in the newspaper. They had been clearly informed of need for the competitive process by Mr. Christianson at the October meeting and they were present when a pre-solicitation meeting/inspection took place at the airstrip in November prior to the offers being accepted by the SJRWMD.

19. Intervenors requested a sales package from the SJRWMD on November 30, 1998, and December 2, 1998. Petitioners requested and received a sales package prior to the opening of the offers to purchase. The sales packages were not available to the public until December 2, 1998, the same day Petitioners received their package.

20. Mr. Freeman told Petitioners they needed to submit their bid. Although the sales package stated that facsimile offers would not be accepted by the SJRWMD, Leonard Freeman informed Petitioners that they could fax their Offer to Purchase. The SJRWMD did accept a facsimile offer to purchase from Petitioners on December 4, 1998, at 1:07 p.m.

21. Offers to purchase were opened by the SJRWMD at 2:10 p.m. on December 4, 1998.

22. Petitioners submitted an offer to purchase the airstrip property for $275,000, where Petitioners would pay $1,500.00 per month for 60 months ($90,000 with $72,000 applied toward principal) with a balance of $203,000 cash to be paid at the end of the 60-month term.

23. Intervenors submitted an offer to purchase the airstrip property for $310,000, where Intervenors would put 10 percent down ($31,000 earnest money deposit) at award of Agreement of Purchase and Sale and the balance of $279,000 cash would be paid at closing on or before May 1, 1999.

24. Petitioners' offer to purchase was not the highest offer; it did not provide for cash at closing; and it did not meet the requirement of 10 percent to be paid upon notification.

25. Staff recommended to the SJRWMD board that it award the purchase of the airstrip property to the highest offeror, Intervenors. The governing board approved staff's recommendation at its regularly scheduled meeting on December 9, 1998.

26. On December 9, 1998, Petitioners filed a Notice of Protest. On December 18, 1998, Petitioners filed a copy of their Formal Bid Protest with the SJRWMD.

27. Petitioners never grasped the implications of the competitive solicitation process until after the offers were opened and the award was made to Intervenors. Even if Petitioners had seen the newspaper notice and had received the sales package sooner, they still would not have protested because they understood that their "agreement" was outside of the process. That is, they mistakenly perceived that after the offers were in they could negotiate further to exceed the high offer. Chagrined, and genuinely regretful of the misunderstanding, Mr. Freeman had to tell Petitioners that

    further negotiations were foreclosed after the offers were opened.

28. Mr. Freeman's earlier assurances to Petitioners were the result of an excess of bonhomie rather than any deception.

    He wanted them to have the airport and he wanted to work out the sale of surplus property. Petitioners were aware that he did not have the authority to bind his agency to an agreement.

    Mr. Freeman never specifically told Petitioners they had a right of first refusal; they wanted that advantage and surmised agreement from Mr. Freeman's and Mr. Christianson's vague counsel to not worry and that it would all be worked out.

29. The SJRWMD devised a competitive process for disposition of the Zellwin airstrip that was consistent with its statute and with the direction of its governing board. Intervenors responded with an offer that met all the published requirements. Petitioners did not, and any culpability of SJRWMD's staff for Petitioners' misunderstanding is not so egregious as to require that the process begin again.

    Petitioners occupied the property, used it, and made improvements to enhance their use. This, however, was in reliance on their license to use the property and not on some certainty that they would ultimately be able to own the property. As Petitioners testified at hearing, they were disappointed that the SJRWMD decided to solicit competitive proposals; they knew that it was

    possible someone would offer more than they could match. (Harper, Transcript pages 117-120).

    CONCLUSIONS OF LAW

    
    

30. The Division of Administrative of Hearings has jurisdiction in this proceeding pursuant to Sections 120.569, and 120.57(1) and (3), Florida Statutes.

31. Section 373.089, Florida Statutes, provides, in pertinent part:

    373.089 Sale or exchange of lands, or interests or rights in lands.

    
    

    The governing board of the district may sell lands, or interests or rights in lands, to which the district has acquired title or to which it may hereafter acquire title in the following manner:

    
    

    1. Any lands, or interests or rights in lands, determined by the governing board to be surplus may be sold by the district, at any time, for the highest price obtainable; however, in no case shall the selling price be less than the appraised value of the lands, or interests or rights in lands, as determined by a certified appraisal obtained within 120 days before the sale.

       
       

    2. All sales of land, or interests or rights in land, shall be for cash or upon terms and security to be approved by the governing board, but a deed therefor shall not be executed and delivered until full payment is made.

       
       

    3. Before selling any surplus land, or interests or rights in land, it shall be the duty of the district to cause a notice of intention to sell to be published in a newspaper published in the county in which the land, or interests or rights in the land, is situated once each week for 3 successive weeks (three insertions being sufficient),

    the first publication of which shall be not less than 30 days nor more than 45 days prior to any sale, which notice shall set forth a description of lands, or interests or rights in lands, to be offered for sale. . . .

    
    

32. The process adopted by the SJRWMD for disposition of the Zellwin airstrip was consistent with Section 373.089, Florida Statutes, and with the regulatory and statutory procedures for contract solicitation; Rule 40C-1.801, Florida Administrative Code, and Chapter 120, Florida Statutes, are cited in the sales package.

33. To comply with the deadline established in Rule 40C- 1.801(2)(a), Florida Administrative Code, Petitioners should have filed a notice of protest of the terms of the solicitation as soon as they received the packet instead of waiting until the day the governing board made its award: December 9, 1998. The findings of fact establish a reasonable excuse for that failure. See Phillips v. University of Florida, 680 So. 2d 508 (Fla. 1st DCA 1996). The findings however, do not support Petitioners' claim that "fairness" requires the process begin anew.

34. Petitioners knew that SJRWMD staff could not bind the governing board to any deal; they knew, as of the end of October, that the Zellwin airstrip sale would be advertised; they knew that a newspaper notice had been published and that other parties were interested in purchasing the property; and finally, before actually submitting their bid, they had the sales package that stated no offers would be accepted after the deadline for

submittal. These facts, and not wishful thinking fueled by vague assurances of staff, should have guided Petitioners' attempts to secure their purchase of the airstrip property. In contrast to the cases cited by Petitioners, their reliance on those vague assurances was not reasonable.

RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED: that the SJRWMD enter its final order denying Petitioners' request to reject all bids and re-advertise the sale.

DONE AND ENTERED this 24th day of June, 1999, in Tallahassee, Leon County, Florida.

MARY CLARK

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 24th day of June, 1999.

COPIES FURNISHED:

Henry Dean, Executive Director St. Johns River Water

Management District Post office Box 1429

Palatka, Florida 32178-1429

John W. Williams, Esquire St. Johns River Water

Management District Post Office Box 1429

Palatka, Florida 32178-1429

Clayton D. Simmons, Esquire Stenstrom, McIntosh, Colbert, Whigham

And Simmons, P.A. Post Office Box 4848

Sanford, Florida 32772-4848

Stanley Dollen

1230 Kelso Boulevard

Windermere, Florida 34786

Herbert Clark

5416 Trimble Park Road Mt. Dora, Florida 32757

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 10 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 99-000745BID

Orders for Case No: 99-000745BID