STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUNSOUTH BANK,

vs.

Petitioner,

Case No. 13-2795

DEPARTMENT OF HEALTH,

Respondent.

/

RECOMMENDED ORDER

An administrative hearing was conducted in this case on November 13, 2013, in Tallahassee, Florida, before

James H. Peterson, III, Administrative Law Judge with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: James Goodson, Qualified Representative

SunSouth Bank

Post Office Box 1910 Dothan, Alabama 36302

For Respondent: Caryl Kilinski, Esquire

Chief Legal Counsel Department of Health

4052 Bald Cypress Way, Bin A-02 Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

Whether Petitioner’s application for a variance to permit an onsite treatment and disposal system should be approved.

PRELIMINARY STATEMENT

In October, 2012, SunSouth Bank (Petitioner or the Bank) submitted to the Department of Health (Respondent or the Department) an application for a variance for an onsite sewage treatment and disposal system on a parcel of land it owned in Alford, Florida. By letter dated December 17, 2012, the Department notified Petitioner of its preliminary decision to deny the variance request, and informed Petitioner of its right to request an administrative hearing on the issue within 21 days. Petitioner timely submitted a request for an administrative hearing, and later filed an amended petition for an administrative hearing dated April 3, 2013, contesting the Department’s preliminary decision. The Department referred the case to the Division of Administrative Hearings (DOAH) on

July 23, 2013. The final hearing was originally scheduled for October 3, 2013, but was rescheduled for October 13, 2013.

At the administrative hearing in this matter held on October 13, 2013, the Department presented the testimony of two witnesses and offered 12 exhibits that were received into evidence as Exhibits R-1 through R-12. The Bank presented the testimony of James Goodson, Senior Vice President of SunSouth Bank, who also served as Petitioner’s qualified representative. The Bank offered three exhibits that were received into evidence as Exhibits P-1 through P-3.

The proceedings were recorded and a transcript was ordered. The parties were given 10 days from the filing of the transcript within which to file proposed recommended orders. A one-volume Transcript of the proceedings was filed on December 2, 2013.

Petitioner timely filed its Proposed Recommended Order on December 12, 2013. On December 20, 2013, Respondent filed a Request for Extension of Time which, after a telephonic hearing, was granted on January 6, 2014, accepting the Department’s late- filed Proposed Recommended Order and allowing Petitioner until February 5, 2014, within which to file a response. Petitioner filed its Response to the Department’s Proposed Recommended Order on February 5, 2014. Both parties’ Proposed Recommended Orders and Petitioner’s Response to the Department’s Proposed Recommended Order were considered in preparing this Recommended

Order.

FINDINGS OF FACT

1. The lot of land for which the Bank seeks a variance for an onsite sewage treatment and disposal system is located at

   341 Compass Lake Drive in Jackson County, Florida. The lot is approximately 40 feet wide and 300 feet deep, with approximately

   40 feet of frontage on Compass Lake.

   
   

2. Prior to its severance in 2010, the lot was part of a larger parcel of land with an address of 343 Compass Drive in Jackson County. The larger parcel was owned by Charles Paulk

   
   

   and had substantial improvements consisting of a house, boathouse, and dock.

3. In 2004, Mr. Paulk borrowed money from the Bank and gave the Bank a mortgage lien on the entire larger parcel to secure the loan.

4. At some point, a survey was prepared which subdivided the larger parcel into two lots -- the first containing the substantial improvements, and the other consisting of the approximately 40-foot by 300-foot lot at issue, which is .28 acres in size, with no improvements. There is no indication that the survey was ever recorded in the public records.

5. Later, in 2010, Mr. Paulk decided to sell the lot with the substantial improvements for $330,000. Because the Bank had a lien on the entire larger parcel, Mr. Paulk requested that the Bank release its lien on the lot with the substantial improvements.

6. The Bank agreed to release its lien on the lot with substantial improvements and, after receiving what the Bank felt was a “sufficient pay-down” on the loan, shifted its lien to the smaller, unimproved lot that is at issue in this case.

7. The sale and release of lien transaction “substantially reduced the loan versus the collateral value” that the Bank previously had. According to the Bank’s Senior Vice President,

   
   

   James Goodson, after the sale transaction, there was “not a lot of money left on the loan ”

8. Mr. Goodson testified that, at the time that the Bank agreed to release its lien on the substantially improved lot and shift its lien to the remaining unimproved lot, it was unaware that a variance would be required for an onsite sewage treatment and disposal system (septic tank) on the unimproved lot. The facts as outlined above, however, demonstrate that the Bank was an active participant and beneficiary of the transaction that ultimately resulted in the creation of the two lots, one of which was the approximately 40-foot by 300-foot unimproved lot at issue in this case.

9. In 2012, Mr. Paulk experienced financial problems and was having difficulty paying back the loan to the Bank secured by the unimproved lot. Because it was easier than foreclosure, the Bank agreed to take a deed to the unimproved lot in lieu of foreclosure.1/

10. At the time of the Bank’s release of lien in 2010, as well as at the time of the deed in lieu of foreclosure, the 40- foot by 300-foot lot size of the unimproved lot was too small to meet the statutory requirements for a septic permit.

11. Mr. Goodson testified that, at the time that the Bank accepted the deed in lieu of foreclosure, the Bank was aware that the lot was too small and would need a variance for a

    
    

    septic tank. He did not explain, however, why the Bank had earlier been unaware of the need for a variance when it agreed to release its lien on the substantially improved lot in 2010.

12. After the Bank acquired title to the unimproved lot, a third party offered to purchase it on the condition that the Bank could obtain a permit. The Bank went to Jackson County to request a permit, knowing that its request would be denied because the lot size was insufficient for a septic tank without a variance. Nevertheless, the Bank believed that it would qualify for a variance on hardship grounds because it did not “intentionally” create the hardship.

13. The Bank commenced the permitting process by submitting an application with the Jackson County Health Department on October 4, 2012. The County denied the application on the grounds that the lot was deficient in width and total area.

14. Next, the Bank submitted a request to the Department for a variance. The request was considered by the Department’s Variance Review and Advisory Committee (Committee) on

    December 6, 2012. The Committee has only recommending authority to the State Health Officer.

15. In a four to three vote, the Committee recommended approval of a variance. The members voting against a recommendation for approval were representatives of the State

    
    

    Health Office, the Department of Environmental Protection, and the County Health Department. Eight objections from adjacent property owners were provided to the Committee’s review and consideration.

16. After considering the facts, including the decision of the County Health Department, objections filed by adjacent property owners, actions taken by the Bank, and the recommendations of all the members of the Committee, Gerald Briggs, Bureau Chief for Onsite Sewage Programs for the Department of Health, made the Department’s preliminary decision that the Bank’s variance request should be denied, concluding, among other things, that “[a]ny perceived hardship that [the Bank] might experience as a result of the obligation to meet established standards comes about as a direct result of your own proposed action.”

17. Likewise, considering the facts and evidence as presented in this case, the undersigned finds, as a matter of fact, that the Bank intentionally participated in and benefitted from the transaction that resulted in the hardship posed by the small lot size that it now owns and for which it seeks a variance.

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of this

    
    

    proceeding. See §§ 120.569, 120.57(1), 381.0065(5)(b)4., Fla. Stat.2/

19. As an applicant for a variance, SunSouth Bank is the party asserting the affirmative in this proceeding and has the burden to prove its entitlement to the requested variance by a preponderance of the evidence. See Dep’t of Banking & Finance, Div. of Sec. & Inv. Prot. v. Osborne Stern & Co., 670 So. 2d

    932 (Fla. 1996)(applicant); Fla. Dep’t of Transp. v. J.W.C. Co.,

    
    

    Inc., 396 So. 2d 778 (Fla. 1st DCA 1981)(burden on party seeking the affirmative); § 120.57(1)(j), Fla. Stat. ("Findings of fact shall be based upon a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute ").

20. Florida Administrative Code Rule 64E-6.001(2),

    
    

    provides:

    
    

    (2) Structures used or intended for human occupancy, employment or service to the public and locations where people congregate, such as construction sites, fairs, and field locations for agricultural workers shall provide approved wastewater treatment and disposal systems. Except for the provisions of Rule 64E-6.0101, F.A.C., permanent structures shall not rely upon the use of holding tanks and portable toilets for wastewater treatment and disposal.

    
    

21. Florida Administrative Code Rule 64E-6.003(1) provides in pertinent part:

    System Construction Permit – No portion of an onsite sewage treatment and disposal system shall be installed, repaired, altered, modified, abandoned or replaced until an “Onsite Sewage Treatment and Disposal System Construction Permit” has been issued on Form DH 4016.

    
    

22. In order to obtain a permit for the construction of an onsite sewage treatment and disposal system, lots subdivided after January 1, 1972, must meet the minimum lot size requirements found in section 381.0065(4)(a), Florida Statutes, or obtain a variance from the Department under section 381.0065(4)(h)1.

23. The minimum lot size requirements found in section 381.0065(4)(a) provide:

    Subdivisions and lots in which each lot has a minimum area of at least one-half acre and either a minimum dimension of 100 feet or a mean of at least 100 feet of the side bordering the street and the distance formed by a line parallel to the side bordering the street drawn between the two most distant points of the remainder of the lot may be developed with a water system regulated under 381.0061 and onsite sewage treatment and disposal systems, provided the projected daily average flow does not exceed an average of 1,500 gallons per acre per day, and provided satisfactory drinking water can be obtained and all distance and setback, soil condition, water table elevation, and other related requirements of this section and rules adopted under this section can be met.

    
    

24. It is undisputed that the lot at issue is of insufficient size or dimension to allow the construction of a septic tank without a variance.

25. Section 381.0065(4)(h)1. provides:

    
    

    The department may grant variances in hardship cases which may be less restrictive than the provisions specified in this section. If a variance is granted and the onsite sewage treatment and disposal system construction permit has been issued, the variance may be transferred with the system construction permit, if the transferee files, within 60 days after the transfer of ownership, an amended construction permit application providing all corrected information and proof of ownership of the property and if the same variance would have been required for the new owner of the property as was originally granted to the original applicant for the variance. There is no fee associated with the processing of this supplemental information. A variance may not be granted under this section until the department is satisfied that:

    1. The hardship was not caused intentionally by the action of the applicant;

    2. No reasonable alternative, taking into consideration factors such as cost, exists for the treatment of the sewage; and

    3. The discharge from the onsite sewage treatment and disposal system will not adversely affect the health of the applicant or the public or significantly degrade the groundwater or surface waters.

       
       

26. The facts, as outlined above, show that the Bank intentionally participated in a transaction resulting in the small lot size from which the Bank now seeks a variance. Unfortunately for the Bank, it did not undertake the same due

    
    

    diligence as the prospective purchaser of the lot at issue when intentionally allowing its interest to be reduced to a substandard-sized lot.

27. Applicable law does not allow a variance under these circumstances. See § 381.0065(4)(h)1.a., quoted supra; cf.

    Elwin v. City of Miami, 113 So. 2d 849, 852 (Fla. 3d DCA 1959), cert. denied, 116 So. 2d 773 (Fla. 1959)(“A self-imposed or

    self-acquired hardship (such as by purchasing property under existing zoning and then applying for a variance) is not the kind of hardship for which variance should be granted.”).

28. Petitioner’s request for a variance should be denied.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Health enter a Final Order denying SunSouth Bank’s application for a variance.

DONE AND ENTERED this 21st day of March, 2014, in Tallahassee, Leon County, Florida.

S

JAMES H. PETERSON, III

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 2014.

ENDNOTES

1/ The initial warranty deed that Mr. Paulk gave to the Bank in lieu of foreclosure dated May 24, 2012, inadvertently described the entire parcel before it had been divided into the two lots. A corrective deed dated October 2, 2012, was later recorded which corrected the description.

2/ Unless otherwise indicated, all references to the Florida Statutes or Florida Administrative Code are to the current, 2013 editions. See Lavernia v. Dep’t of Prof’l Reg., Bd. of Med., 616 So. 2d 53 (Fla. 1st DCA 1993)(law for determining applications is the law in effect at the time of final determination, as opposed to the time of application).

COPIES FURNISHED:

James Goodson SunSouth Bank

Post Office Box 1910 Dothan, Alabama 36302

Caryl Kilinski, Esquire Chief Legal Counsel Department of Health

4052 Bald Cypress Way, Bin A-02 Tallahassee, Florida 32399

Althea Gaines, Agency Clerk Department of Health

4052 Bald Cypress Way, Bin A-02 Tallahassee, Florida 32399

Jennifer A. Tschetter, General Counsel Department of Health

4052 Bald Cypress Way, Bin A-02 Tallahassee, Florida 32399

John H. Armstrong, M.D., F.A.C.S. State Surgeon General

Department of Health

4052 Bald Cypress Way, Bin A-00 Tallahassee, Florida 32399

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 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: 13-002795

Orders for Case No: 13-002795