Findings Of Fact In years past, the Petitioner, William G. King, was registered by the Respondent, the Department of Labor and Employment Security, Bureau of Agricultural Programs (DLES), as a farm labor contractor. As a farm labor contractor, King can average earning about $8000 a year more than he could earn in an hourly wage job (at legal minimum wage or close to it.) In good years, he can make substantially more; in bad years, he can incur substantial losses. King's crew size averages 40 laborers but can vary from 3 to 200, depending on circumstances. The season for harvesting Florida citrus runs from about November to June. From June to August, King tries to follow the melon harvest from Florida into North Carolina. If conditions are bad for harvesting melons during parts of the summer, he tries to secure contracts to have his crews pick moths out of trees during these months. In August, he drives a crew in his bus to New York to pick apples. All of these activities, until King is outside Florida, require DLES registration as a farm labor contractor. In the early 1980's, King's farm labor contracting business experienced difficulties. While paying his crew per actual box of citrus picked, King was paid per estimated box based on the weight of the citrus he delivered. During lengthier than normal periods of hard freeze, King paid his crew more than he was paid and suffered substantial losses. In this financial condition, King did not pay unemployment compensation tax. By March 1982, King owed about $14,300, with interest and penalties. During the preceding year, King was able to save $10,000, which he applied to the tax bill in March, 1982. He also signed an agreement to pay $4,310.48 in monthly installments of $540. King paid $745 in March and $540 in either April or May, 1982 (or perhaps both). But, as a result of more financial setbacks in 1984 and 1985, the tax indebtedness increased to approximately $20,000 to $24,000, with interest and penalties. When the DLES refused to renew King's registration in 1985, King approached the DLES local office to attempt to make arrangements for payment of the debt. King offered to have the grower with whom he intended to contract pay the DLES $100 a month on the debt. The DLES agent questioned the viability of the arrangement because the DLES usually requires a 20% down payment, but he did not outright decline King's offer. He said the offer had to be in writing. When King went to the party with whom he intended to contract, the party refused to send $100 per month to the DLES but agreed to send the DLES $1200 once a year and reduce King's compensation by $100 per month. Ultimately, in spring, 1986, the DLES refused the repayment arrangement because the DLES insisted on a down payment of approximately $5000, which King did not have. Since 1986, King has not been able to make a 20% down payment on his tax bill and has not made any payments on the debt. His financial ability to make payments is handicapped by his inability to work as a farm labor contractor in Florida. For a full season or two, King was driving a crew in his bus to New York to pick apples. But in 1987, King was advised that it was illegal even to do this without a Florida registration and that the activity exposed him to a $10,000 fine. Instead, he would have to meet his crew in New York. In response, King applied to renew his Florida registration. Not having made any recent payments on his tax bill, King owes the DLES $32,949.02 in unemployment compensation taxes, interest, penalties and filing fees.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the DLES enter a final order: granting the Petitioner's application to renew his farm labor contractor registration, with reservations. issue to the Petitioner a farm labor contractor registration certificate, with the restrictions: that the Petitioner not be permitted to pay, handle or be responsible for payroll; that the Petitioner be required to notity those with whom he contracts--both laborers and growers--of the terms of the restriction on his registration certificate; and that the Petitioner be required to file a quarterly report to the DLES giving the name, address and telephone number of the person responsible for payroll(s), especially unemployment compensation tax, for each laborer in his crew(s) during the preceding quarter. that the Petitioner initially be permitted to make annual $1200 payments on his outstanding unemployment compensation tax bill, with no penalty for making larger payments in accordance with his financial ability. RECOMMENDED this 21st day of March, 1988, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 21st day of March, 1988. COPIES FURNISHED: William G. King 785 Phillips Way (L.H.) Haines City, Florida 33844 Moses E. Williams, Esquire Office of General Counsel Suite 117 Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32399-0658 Hugo Menendez, Secretary Department of Labor and Employment Security 206 Berkeley Building 2590 Executive Center Circle, East Tallahassee, Florida 32399-2152 Kenneth Hart, Esquire General Counsel 131 Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32399-0658
The Issue In this disciplinary proceeding, the issues are: Whether Respondent committed the violations alleged in the Amended Administrative Complaint issued by the Petitioner; and Whether disciplinary penalties should be imposed on Respondent if Petitioner proves one or more of the violations charged in its Amended Administrative Complaint.
Findings Of Fact Respondent, at all times material to this matter, was a state certified general real estate appraiser subject to the regulatory jurisdiction of the Petitioner. He started doing commercial appraisals in the early 1990s in Florida. Whitham was licensed on July 21, 2003. Petitioner issued Whitham license number RZ-2669, which expires on August 31, 2012. On or about January 17, 2006, First Priority Bank asked Whitham to prepare an appraisal for three parcels of land near Bradenton, Florida, for use by the bank in determining a collateral loan amount. At the time Whitham was requested to appraise the parcels, the market was extremely active. There was a very high demand for development sites, particularly for residential development sites. During the appraisal, Whitham developed a regional overview section for the appraisal report. The section summarized the region, history, and economics that had contributed to the evolution of bringing Sarasota and Manatee counties to their current state of desirability. Whitham obtained the information for the section from various published reports and compiled them into a summary of the region. Whitham's historical overview outlined subject matters all the way back to the 1980s. Each of the older references specified a date including the following portions of the report: * * * The Sarasota-Bradenton MSA is noted for its attractive barrier islands . . . all of which have been heavily developed over the last 50 years. Population growth in the MSA-49.3 between 1980 and 1995--has also spread eastward into the woodland area . . . * * * New office construction remained highly constrained through 1996 which had the effect of reducing existing inventories and increasing rents. Over the last 36 months office development particularly in suburban areas but also including the Bradenton and Sarasota CBDs has resumed. * * * In 1997, per capita income was estimated at $21,293, indicating an average annual gain of 3.97 percent, well above the rate of inflation. Whitham included a wrong city, Venice, in his regional overview. When referencing the circus, Whitham reported, "and the winter headquarters of Ringling Bros-Barnum & Bailey Circus (Venice)." Whitham also failed to make clear that Englewood is not an incorporated city and that North Port's entire boundaries lie within Sarasota county. Instead, Whitham reported in the overview section, " . . . the incorporated towns of Englewood and North Port lie in both Sarasota and Charlotte Counties." While preparing the appraisal report, Whitham properly used the highest and best use methodology to value the subject property for his appraisal by applying the four tests: physically possible,1 legally permissible,2 financially feasible,3 and maximally productive.4 In doing the analysis, Whitham used the direct sales comparison approach. He visited the sites and separated out the subject small parcel, 4.8 acres ("subject 1") that had the river frontage and analyzed that applying comparable sales 1 through Whitham used comparable sales 4 through 6 to perform a separate analysis of the 17-acre parcel ("subject 2") that was not connected to the riverfront site. Both subjects 1 and 2 were vacant parcels zoned Planned Development Residential (PDR). Whitham chose six comparable sales that were vacant and physically possible for residential use like the subject parcels at the time of the appraisal in 2006. When Whitham evaluated subject 1, he found it difficult to find waterfront or water view properties to compare to subject 1. As a result, he made proper adjustments to account for the dissimilarities he encountered under the substitution principle in order for the comparable sales to conform. Whitham determined comparable sale 1 was legally permissible because the zoning was Planned Development Projects ("PDP"), which provided for development either as residential or commercial. He further determined the property was financially feasible as the rate of growth in the market for residential property was at its peak. When Whitman used the substitution principle with comparable sale 1, he focused on two primary considerations: utility and desirability. Since the goal was a potential development and investment, not a completed developer product, Whitham compared the two with adjustments. When looking at the attributes, Whitham determined that traffic was an easy drive to either property and neither was particularly visible from a roadway. Comparable sale 2 was a small site zoned Planned Development Mixed Use, which allows for blending of residential and commercial uses within the same development. Whitham researched the commercial possibilities of comparable sale 2 in 2006, and the direction of the development had not been established. As a result, he concluded that it was financially feasible for residential. Comparable sale 3's direction of development also had not been finalized when Whitham did his appraisal and it was zoned for PDP. After finishing his analysis, Whitham was able to conclude that comparable sales 1 through 3 were financially feasible. Whitham made the determination based on the tenor of the market being good for residential property, which each comparable could become. He then concluded that it was therefore financially feasible for each comparable site to be developed as residential, which would have been both financially feasible and maximally productive. Whitham evaluated subject 2 against comparable sales without waterfronts, water access, and water views. Comparable sales 4, 5, and 6 were either zoned General Agriculture District or Agricultural, which both allowed for general agricultural- related, normal activity and co-existence of other uses generally consistent with agricultural activities including rural residential development. Whitham used comparable sales 4, 5, and 6, since all had proper zoning, which meant residential was allowed like the subject 2 parcel and met the physically possible and legally permissible portion of the tests. Further, each was financially feasible since the strength in the market at the time was residential sites, which would provide for maximal productivity. Whitham summarized how each of the six comparable sales satisfied the four test criteria for the direct sales comparison approach in his appraisal report land sales summary and grid.5 On or about January 28, 2006, after completing his appraisal analysis, Respondent signed and communicated the appraisal report, for the property commonly known as ±4.76, ±17, and ±0.6 Acre Parcels UAs Vacant, Mill Creek Road, Bradenton Florida 34212. Whitman's report concluded in the Highest and Best Use section of the appraisal report that "Our assessment of highest and best use for the subject is: As Vacant: Residential development in accordance with the PDR zoning." In 2009, after a complaint was filed by Ronald Carr, the Department opened an investigation on Whitham regarding the January 2006 appraisal report. Dennis Black ("Black") was hired as an expert State Certified General Real Estate Appraiser to review Whitham's appraisal report. As a result of Black's conclusions on or about October 27, 2009,6 the Department charged Whitham in a four-count Administrative Complaint. The Charges: In Count I, Petitioner charges Respondent with having failed to exercise reasonable diligence in developing an appraisal report in violation of section 475.624(15), Florida Statutes. In Count II, Petitioner charges Respondent with fraud, misrepresentation, concealment, culpable negligence or breach of trust in any business transaction in violation of section 475.624(2). In Count III, Petitioner charges Respondent with failing to retain, for at least five years, original or true copies of any contracts engaging the appraiser's services, appraisal reports, and supporting data assembled and formulated by the appraiser in preparing appraisal reports in violation of section 475.629. In Count IV, Petitioner charges Respondent with making misleading, deceptive, or fraudulent representations in or related to the practice of the licensee's profession in violation of section 455. 227(1)(a).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulations, Division of Real Estate, enter a final order that finds Respondent not guilty as charged in Counts I, II, III, and IV of the Amended Administrative Complaint. DONE AND ENTERED this 14th day of September, 2011, in Tallahassee, Leon County, Florida. S JUNE C. McKINNEY 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 14th day of September, 2011.
The Issue The issue in this cause is whether petitioner is entitled to either an agricultural classification of its land under F.S. 193.461 or a reduced assessment of its land under F.S. 193.011 for purposes of ad valorem taxation. More specifically, the issue is whether the change made by the Palm Beach County Board of Tax Adjustment in the property appraiser's assessment of petitioner's property lacked legal sufficiency or whether the evidence presented was insufficient to overcome the appraiser's presumption of correctness. In accordance with F.S. 193.122(1) and the case of Hollywood Jaycees v. State Department of Revenue, 306 So.2d 109 (Fla. 1975), the evidence and argument adduced at the hearing was limited to the scope of the record established before the Palm Beach County Board of Tax Adjustment (BTA).
Findings Of Fact Upon consideration of the pleadings, evidence introduced at the hearing and the oral argument presented by the parties, the following pertinent facts are found: Petitioner is the owner of approximately 310 acres of real property located in Palm Beach County. As of January 1, 1974, the subject property was used for agricultural purposes and had been so used by petitioner or its predecessor for some nineteen years prior to 1974. Prior to 1974, the subject land had been assessed at $600.00 per acre and had not been reassessed in approximately six years. Prior to and including 1974, petitioner did not file an application for agricultural classification of its land. For the year 1974, the property appraiser assessed the subject property at $4,000.00 per acre under the provisions of F.S. 193.011. Petitioner appealed to the Palm Beach County BTA which found that the appraiser's presumption of correctness had been overcome and that petitioner should be allowed to retain the prior years' assessment on its property ($600.00 per acre). In support of this decision, the BTA found that it had the authority to extend the time for filing an application for agricultural classification and that it had the authority "in light of AGO 71-81 dated April 28, 1971, to grant the continuance of a prior years assessment where the facts and circumstances surrounding the subject property have not changed and are not expected to change. The BTA notified the respondent of the change in assessment pursuant to F.S. 193.122. The respondent's staff recommended that the BTA's action in this case be invalidated on the ground that the evidence presented to the BTA was insufficient to overcome the property appraiser's presumption of correctness. The petitioner requested a hearing to review the staff recommendation, the respondent's Executive Director requested the Division of Administrative Hearings to conduct the hearing and the undersigned was assigned as the Hearing Officer. Due to the fact that there was no court reporter present at the hearing, the parties stipulated that their respective positions would be reduced to writing by the submission of written memoranda. To date, no such memorandum has been received from petitioner.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the action of the Palm Beach County Board of Tax Adjustment in granting an agricultural classification and in reducing the assessment of petitioner's property for the tax year 1974 be invalidated. Respectfully submitted and entered this 3rd day of March, 1976, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 3230 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1976.
The Issue The issues are whether Respondent, Alex Diaz de la Portilla, committed the violation alleged in the Ethics Commission’s Order Finding Probable Cause, dated January 30, 2019, i.e., filing an inaccurate CE Form 6, “Full and Public Disclosure of Financial Interests” (“Form 6”), for the year 2016, and, if so, what penalty should be imposed for the violation.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Article II, Section 8(a), Florida Constitution, provides that all elected constitutional officers and candidates for such offices must file full and public disclosure of their financial interests. Section 112.3144(1) provides that all persons required by Article II, Section 8 to file a full and public disclosure of their financial interests must file that disclosure with the Commission. The Commission has promulgated Form 6 as the means by which officers and candidates are to make full and public disclosure of their financial interests. Fla. Admin. Code R. 34-8.002. Respondent was a candidate in the 2017 special election to fill the seat for State Senate District 40 and was therefore required to file a Form 6. Respondent served as his own campaign treasurer and completed the Form 6 without the assistance of an attorney or CPA. Respondent attested that he read and understood the accompanying instructions to the Form 6. Respondent also attested that he read and understood the requirements of chapter 106, Florida Statutes, regarding campaign financing. Respondent was an experienced political candidate in 2017, having served in the Florida House of Representatives and the Florida Senate. The 2016 version of Form 6 was in effect at the time of Respondent’s candidacy and was the version that he executed on May 26, 2017, and filed with the Commission on May 30, 2017. Form 6 comprises six parts: Part A, Net Worth; Part B, Assets; Part C, Liabilities; Part D, Income; Part E, Interests in Specified Businesses; and Part F, Training. The instant case concerns Respondent’s reporting under Part B, Assets. The instructions for Part B provided as follows, in relevant part, under the heading “Assets Individually Valued at More Than $1,000”: Describe, and state the value of, each asset you had on the reporting date you selected for your net worth in Part A, if the asset was worth more than $1,000 and if you have not already included that asset in the aggregate value of your household goods and personal effects. Assets include, but are not limited to, things like interests in real property; cash; stocks; bonds; certificates of deposit; interests in businesses; beneficial interests in trusts; money owed you; bank accounts; Deferred Retirement Option Program (DROP) accounts; and the Florida Prepaid College Plan…. Form 6 also included instructions on “How to Value Assets,” which provided as follows, in relevant part: -- Value each asset by its fair market value on the date used in Part A for your net worth. * * * -- Real property may be valued at its market value for tax purposes, unless a more accurate appraisal of its fair market value is available. * * * -- Accounts, notes, and loans receivable: Value at fair market value, which generally is the amount you reasonably expect to collect. The instructions for Part A of the 2016 Form 6 instructed the filer to “[r]eport your net worth as of December 31, 2016, or a more current date, and list that date. This should be the same date used to value your assets and liabilities.” Respondent’s Form 6 listed his net worth as of May 25, 2017, the day before he executed the form. Therefore, his assets and liabilities were also counted as of May 25, 2017. THE CAMPAIGN “LOANS” Candidates for elective office are required to electronically submit reports to the Division of Elections (“Division”) disclosing campaign contributions received and/or campaign expenditures via the Division’s electronic filing system (“EFS”). § 106.0705, Fla. Stat. The Division provides candidates with a handbook to guide them in submitting reports through the EFS. After Respondent filed his appointment of campaign treasurer and designation of campaign depository for the special election for Senate District 40, the Division sent him a letter, dated May 4, 2017, to inform him that his first campaign treasurer’s report would be due on June 12, 2017. On or about June 12, 2017, Respondent electronically submitted a Campaign Treasurer’s Report covering the period from May 8 to June 8, 2017. The Campaign Treasurer’s Report form includes a summary page with total amounts of contributions and expenditures for the reporting period. Under the “Contributions” column, the form lists two categories of contributions: monetary and in-kind. Monetary contributions are divided into two subcategories: “Cash & Checks” and “Loans.” Respondent’s report listed $22,500 in cash and checks and $50,000 in loans. The details of the Campaign Treasurer’s Report show that Respondent made two $25,000 contributions to his campaign, one on May 8, 2017, and one on May 25, 2017, that he identified as loans on the report. Section 106.011(5)(a), Florida Statutes, defines “contribution” as a “gift, subscription, conveyance, deposit, loan, payment, or distribution of money or anything of value, including contributions in kind having an attributable monetary value in any form, made for the purpose of influencing the results of an election or making an electioneering communication.” The term “loan” is not defined by chapter 106 or chapter 112. For such a term of common usage, the definition in Black’s Law Dictionary is sufficient: “A thing lent for the borrower's temporary use, esp., a sum of money lent at interest.” As noted above, the instructions for the Commission’s Form 6 state that a loan should be valued “at fair market value, which generally is the amount you reasonably expect to collect.” Section 106.08(1)(a) provides that no person may, in any election, make contributions in excess of $1,000 to a candidate for legislative office. Section 106.08(1)(b) provides that the $1,000 limitation does not apply to contributions by a candidate to his or her own campaign. Respondent testified as to his understanding of the campaign finance reporting requirements. He understood that he was not limited to $1,000 in making contributions to his own campaign. However, he believed that the Division under no circumstances allows any person, even the candidate himself, to report a contribution in excess of $1,000. Respondent believed that in order to contribute more than $1,000 to his own campaign, he was required to report the excess amount as a loan on his Campaign Treasurer’s Report. Kristi Willis, Bureau Chief of Election Records for the Division, testified that candidates are not required to report contributions to their own campaigns in excess of $1,000 as loans. Respondent offered no statutory support for his belief that he was required to report the two $25,000 contributions as loans. Respondent did not list the two $25,000 contributions as assets on the 2016 Form 6 that he filed on May 26, 2017. The Advocate contends that these contributions should have been reported on Form 6 as assets because they were loans. Respondent testified that, although he characterized them as “loans” to his campaign, he had no expectation of recovering either of the $25,000 contributions. Respondent’s campaign was not established as a corporation or limited liability company with a separate existence from Respondent. He considered the campaign to be his alter ego and believed that he had essentially “lent” the money to himself. He had no intention of creating an obligation on the part of his campaign to repay him. He could not sue himself for repayment of the loan. Respondent’s intention at all times was to spend the money in pursuit of the State Senate District 40 seat. In the same Campaign Treasurer’s Report that included Respondent’s two $25,000 loans, Respondent listed a total of $22,500 in contributions from other sources. Thus, Respondent’s campaign was more than two-thirds self- funded for the period of May 8 to June 8, 2017. Though only the two $25,000 contributions were at issue in this proceeding for the time period covered by Respondent’s Form 6, Respondent in fact contributed 17 times to his State Senate campaign between May 8 and July 20, 2017, for a total of $443,500. Each of the 17 contributions was labeled a loan on Respondent’s campaign finance reports. Respondent made four contributions totaling $262,000 on or after July 18, 2017, for an election to be held on July 25, 2017. All other contributions to Respondent’s campaign amounted to $52,750. In other words, Respondent’s campaign for State Senate District 40 was more than 89 percent self-funded by loans from Respondent to his campaign. Respondent could have had no reasonable expectation of collecting these loans unless he chose to spend no money on the campaign, which would have defeated the purpose of making the loans. The special primary election for State Senate District 40 was held on July 25, 2017. Respondent was eliminated from the race. In a form memorandum dated August 9, 2017, Ms. Willis informed Respondent that as an eliminated candidate, he must dispose of all funds on deposit in his campaign account within 90 days of the special primary election, pursuant to section 106.141. Ms. Willis stated that Respondent’s final expenditure report would have to be filed via the EFS no later than October 23, 2017. Respondent’s final expenditure report indicates that between July 21, 2017 and August 3, 2017, the campaign spent $127,577.90. Most of these expenditures consisted of payments to campaign workers and sums for postage, media, and legal services. The report shows “loan reimbursements” to Respondent of $1,000 on July 28, 2017, and of $3,000 on August 3, 2017. Respondent could not recall the details of these relatively minor reimbursements at two years’ removed from the events, but believed that they must have been repayments for specific expenditures he had made on behalf of the campaign. The report shows that on September 29, 2017, long after the last expenditures to pay for goods and services to the campaign were recorded on August 3, 2017, Respondent gave himself “loan reimbursements” totaling $36,785.69, presumably to reduce the campaign account to zero as required by section 106.141. The Advocate suggests that by characterizing his contributions as loans, Respondent was giving himself priority when it came to the disbursement of surplus campaign funds. Section 106.11(6) provides: (6) A candidate who makes a loan to his or her campaign and reports the loan as required by s. 106.07 may be reimbursed for the loan at any time the campaign account has sufficient funds to repay the loan and satisfy its other obligations. In a campaign that was almost entirely self-funded, it makes little sense that Respondent would characterize his contributions as “loans” for the purpose of obtaining repayment priority prior to the election, particularly when nearly 57 percent of those contributions were made in the week before the election. Again, Respondent could have expected repayment only if he chose to stop spending money on his campaign, which would raise the question, why make the loans in the first place? Whether or not he labeled contributions to his own campaign “loans,” Respondent already had post-election priority by virtue of section 106.141(2), which provides: (2) Any candidate required to dispose of funds pursuant to this section may, before such disposition, be reimbursed by the campaign, in full or in part, for any reported contributions by the candidate to the campaign. It is noted that the total reimbursements Respondent took after he was eliminated from the State Senate election amounted to less than one- tenth of the amount he “lent” to the campaign. In summary, Respondent reported contributions to his own campaign as loans because he misunderstood the reporting requirements of chapter 106. He did not report those contributions on his Form 6 because they were not actual loans in any real sense. If the Commission insists that Respondent’s characterization of his campaign contributions should govern this proceeding, then it is found that the fair market value of those loans, i.e., the amount that Respondent could have reasonably expected to collect, was zero. THE REAL PROPERTY VALUATION On Part B of his Form 6, Respondent listed as an asset “Real Property located at 1519 S.W. 19 Street” and stated that the value of this asset was $603,357. Respondent testified that this property was his residence. It was purchased by his parents in 1964. Respondent grew up in the home and now owns it. It is undisputed that the Miami-Dade Property Appraiser established the 2017 market value for tax purposes of Respondent’s property at $338,929. The Advocate contends that this is the number Respondent should have used as the value of the asset and that Respondent violated Article II, Section 8, Florida Constitution, and section 112.3144 by submitting an inaccurate Form 6. The instructions for Form 6 advise the filer that “[r]eal property may be valued at its market value for tax purposes, unless a more accurate appraisal of its fair market value is available.” This language establishes that reporting the value of a property at its market value for tax purposes is the default option, operating as a safe harbor for the reporting individual in terms of the Commission’s compliance criteria. Respondent understood that he could have reported the Miami-Dade Property Appraiser’s number and been done with it. However, Respondent testified that the political climate in Miami-Dade County was such that he could expect rivals to go over his campaign finance and public disclosure filings with a fine-tooth comb, looking for anything that could be used against him. He testified that the Complainant in the instant case had filed previous complaints against him and was acting as legal counsel for one of Respondent’s opponents in the special election. Respondent testified that the Miami-Dade Property Appraiser had historically undervalued residential properties for taxation purposes to ensure that senior citizens could afford to stay in their homes. Respondent decided to comply with the spirit of the law by obtaining a more realistic valuation of his home, in part to forestall baseless allegations by his political enemies that he had undervalued his home by reporting the Property Appraiser’s number. Anabel Castillo is a real estate salesperson and broker in Miami. She worked as a legislative assistant to Respondent off and on between 1996 and 2010. Respondent phoned Ms. Castillo and asked her to perform a comparative market analysis (“CMA”), to determine the market value of his home. Respondent knew and trusted Ms. Castillo. He also knew that Ms. Castillo was familiar with his neighborhood and his residence. Respondent testified that he knows little about the real estate business and relied on Ms. Castillo’s judgment as to the valuation of his home. Before Ms. Castillo undertook her valuation, Respondent made sure she understood that he wanted a thorough valuation. He asked her to physically visit the comparable properties, not just look at them online. He wanted her to drive around the neighborhood and learn the prices houses were fetching. Ms. Castillo agreed with Respondent’s opinion that the Miami-Dade Property Appraiser undervalued residential properties. Ms. Castillo testified that Respondent did not tell her why he wanted a valuation of the fair market value of his home but that she has performed thousands of CMAs in her career and agreed to undertake this one for Respondent. Ms. Castillo began by looking for active, expired, sold, and pending properties in the Multiple Listing Service, a proprietary tool available to realtors and brokers. Ms. Castillo explained that an “expired” property is one that has been on the market but failed to sell. Ms. Castillo examined county records and went out to visit four or five properties. She went inside at least one of the comparable houses and found it to be in worse condition than Respondent’s house. Ms. Castillo stated that none of the comparable houses was as large as Respondent’s five bedroom, three bath house. Ms. Castillo opined that Respondent’s property was in good condition. The kitchen had been renovated and there were no issues with the roof or the bathrooms. After performing her CMA, Ms. Castillo told Respondent that she could easily sell his property for $635,000. She had no knowledge as to why he stated a value of $603,357 on Form 6. Ms. Castillo suggested that Respondent may have just decided to err on the side of conservatism. At the time, Ms. Castillo did not prepare a written report of her CMA. She merely made an oral report of the result to Respondent. Ms. Castillo testified that after the instant case was begun, she was approached by counsel for Respondent who asked her to create a document memorializing the CMA and price evaluation she performed in May 2017. Ms. Castillo testified that the document she produced at the request of Respondent’s counsel was a fair recreation of her contemporaneous work, but she could not state with certainty whether the houses she selected as comparable properties for the document were the same houses she used as comparables in 2017. Though she was unable to verify that she had perfectly recreated her 2017 CMA, Ms. Castillo nonetheless expressed confidence that her evaluation was accurate and that any other professional would be comfortable using the same comparable properties and would have calculated a value in the same range as she did. Ms. Castillo’s written recreation of her CMA stated that as of May 2017, Respondent’s property would appraise at $603,000. Ms. Castillo did not explain why her recreation arrived at a value of $603,000 when she originally told Respondent that she could sell the property for $635,000. The most likely explanation is that Ms. Castillo was somewhat clumsily attempting to assist Respondent by making her CMA match the number on Respondent’s Form 6. Daena Richardson is the Assistant Director for the Residential Division of the Miami-Dade Property Appraiser. Ms. Richardson testified that the Property Appraiser uses a “mass appraisal” process to determine the value of properties. She described the process as follows: Basically, the difference between mass appraisal and what you would have for someone that's either selling their home or possibly doing a refinance is a fee appraisal, meaning they are going in, they are looking at the subject property, they are finding comparable sales within that immediate area in order to determine a value for whether [sic] loan purposes or refinance purposes or purchasing purposes. Within the property appraiser's office, because we have so many parcels, it is not possible for us to do individual appraisals for every single property, so, therefore, we have to do it in mass based on market area. Basically, we will take, for example, an area like the subject property, we will take all of those properties within the subject area, we will see what sales sold within that subject area, we will see if there is any additional external influences that we need to be aware of, that we need to make adjustments for, and then we will determine values for those properties based on the sales within that area, and then we will apply those values to the entire population. As the name suggests, the mass appraisal process does not consider each property individually. Ms. Richardson testified that in the last year about 60,000 property owners filed petitions contesting the Property Appraiser’s mass appraisal valuation of their properties. Those petitions go before special magistrates with the county’s Value Adjustment Board. Ms. Richardson conceded that the Value Adjustment Board considers market value information provided by real estate brokers on behalf of petitioners. Ms. Richardson discussed the Property Appraiser's summary of Respondent’s property, including the lot size, building size, adjusted square footage of the building, year built, “effective age,”4 and zoning. The summary included a statement of the Property Appraiser’s determination of the land value, building value, “extra features” value, market value, and assessed value of Respondent’s property for the tax years 2014 through 2018. 4 A building’s effective age is determined by reference to renovations done subsequent to its initial construction. Ms. Richardson also discussed the list of comparable properties for each of those years, as determined by the Property Appraiser. Ms. Richardson noted that the Property Appraiser’s Office never valued Respondent’s property at more than $430,054 for any tax year between 2014 and 2018. The Property Appraiser’s market value for Respondent’s property was $201,652 for tax year 2014 and $430,054 for tax year 2018. The value did not increase steadily over the five year period. Rather, the market value jumped from $201,652 for tax year 2014 to $346,759 for tax year 2015, mostly due to the Property Appraiser’s determination that the value of Respondent’s land nearly quadrupled in a single year, from $52,173 in tax year 2014 to $192,324 in tax year 2015. The market value then remained steady for the next two years: $338,246 for tax year 2016 and $338,929 for tax year 2017. The value then jumped by nearly another $100,000 in tax year 2018, again because of an increase of nearly $100,000 in the assessed value of Respondent’s land. Even during the apparently consistent years from 2015 to 2017, there were significant changes within the values that make up the Property Appraiser’s market value, which is the sum of land value plus building value plus the relatively negligible value of “extra features.” From 2015 to 2016, Respondent’s land increased in value from $192,324 to $236,313, but the value of his house decreased from $151,492 to $98,308. The overall market value was virtually the same for tax years 2016 and 2017, but only because another decrease of $22,806 in the value of the building was offset by an increase of $23,592 in the value of the land. Ms. Richardson testified about a map showing the locations of the comparable properties for the tax years 2014-2018 that the Property Appraiser used during its valuation process. Ms. Richardson testified that her office used values from within the market area of Respondent’s property to determine its value. The properties used by the Property Appraiser were generally closer to Respondent’s property than were the comparable properties selected by Ms. Castillo. Ms. Richardson explained that the properties used by the Property Appraiser “were all within close proximity, maybe one or two blocks away from the subject property, all having the same external factors, all having the same influence as far as traffic, whether it’s the elementary school or just people going through the neighborhood. It all shows the same influences that the subject property would have as well.” The properties selected by Ms. Castillo were outside of the boundaries of the “market area” as determined by the Property Appraiser. In Ms. Richardson’s opinion, these properties would not be considered true comparables to Respondent’s property. Ms. Richardson’s opinion is credited to the extent of her expertise: Ms. Castillo’s selections would not be comparable properties for the purposes of the Property Appraiser’s Office in establishing the value of a residential property for taxation. Ms. Castillo’s opinion is likewise credited to the extent of her expertise. The Advocate presented no evidence to suggest that another realtor or broker would have reasonably disagreed with Ms. Castillo’s methodology and conclusions as to the fair market value of Respondent’s property. Anthony Brunson, a CPA who has worked for political campaigns for over 20 years, testified that a property appraiser’s valuation would be the last thing he would use for determining fair market value for Form 6 purposes because property appraisers throughout Florida tend to undervalue residential property. Mr. Brunson credibly testified that the most common method of determining the value of real property for reporting purposes is to obtain: a fair market study done by a realtor wherein you look at like property sales in the geographic area, which could provide, in my view, the best estimate of the current market value of your particular property. Beyond that, a formal appraisal is actually the very best, but that becomes costly, and I believe, you know, not warranted in a circumstance like this. All witnesses agreed that placing a fair market value on a piece of property is an art, not a science. There are different methodologies employed to establish value and different reasons for seeking to establish value. The Property Appraiser looks at actual sales in the market area. It is backward looking and could result in undervaluing properties in a rising market. A broker performing a CMA looks not only at completed sales but at active and pending listings; it is a more current snapshot but also carries the risk of overvaluing the property based on asking prices rather than completed sales. As the Advocate pointed out, there may be a difference between “market price” as established by completed sales and “market value” in the opinion of a real estate broker. There is also the question of whether a CMA, such as that performed by Ms. Castillo, may be considered a “more accurate appraisal” of fair market value than the market value set by the Property Appraiser. Respondent conceded that Ms. Castillo did not, and could not, lawfully perform a formal appraisal of his property. Only a licensed appraiser may perform a formal appraisal, which is usually commissioned by a lender seeking an opinion on the collateral value of a property about to be sold. A full formal appraisal may cost several hundred dollars, as opposed to a CMA that is generally offered free of charge by a real estate agent or broker. For purposes of Form 6 reporting, Mr. Brunson’s opinion was that a CMA is preferable to a property appraiser’s valuation and that he would not advise a client to go to the further expense of obtaining a formal appraisal. Chapter 475, part II, Florida Statutes, sets forth the definitions and standards governing property appraisers in the State of Florida. The Advocate’s Proposed Recommended Order attempts to import the statutes and rules regarding appraisers into Form 6 because of its reference to an “appraisal.” The undersigned is unpersuaded because he is confident that if the Commission intended to provide that the only alternative to a property appraiser’s valuation is to retain a licensed appraiser to perform a full formal appraisal at a cost of hundreds of dollars, and further intended to adopt the definitions and standards of chapter 475, part II, in their entirety and by reference into Form 6, it would have done so clearly and expressly rather than to hang so much meaning, without undergoing rulemaking, on the single word “appraisal.” The evidence presented at the hearing established that Respondent in good faith sought a better estimate of the fair market value of his residence than the “market value for tax purposes,” in light of the common perception that property appraisers undervalue residential properties and Respondent’s knowledge that his political rivals would minutely examine his Form 6 for any possible flaws. Mr. Brunson credibly testified that he routinely advises clients that a CMA is preferable to a property appraiser’s valuation for purposes of Form 6 filing. Respondent had a personal and professional relationship with Ms. Castillo prior to engaging her to perform the CMA for his property in 2017. It appears that when asked to recreate her CMA in 2019, Ms. Castillo shaded her conclusion in a misguided effort to assist Respondent in this hearing, making her CMA conclusion match more closely the number Respondent included on his Form 6. Respondent offered no satisfactory explanation as to why he changed Ms. Castillo’s $635,000 valuation to $603,357 on Form 6. These discrepancies in Respondent’s case were disquieting but ultimately not dispositive. It is understood that a statement of fair market value is an estimate made by a real estate professional. While the Miami- Dade Property Appraiser’s statement of the market value for tax purposes is presumptively acceptable for Form 6 purposes, the evidence presented at the hearing demonstrated that the mass appraisal process does not necessarily yield a satisfactory value for each individual parcel, as evidenced by 60,000 petitions in one year contesting the Property Appraiser’s valuations. Therefore, it was not unreasonable for Respondent to believe that an individuated CMA for his property would be more accurate than the value stated by the Property Appraiser. The Advocate made insinuations regarding Respondent’s possible motives for reporting an inflated value for his property but failed to offer actual evidence that Respondent was interested in anything other than reporting an accurate fair market value. Because of the subjectivity involved in producing a CMA or any other valuation of real property, and absent a definitive showing of bad faith or illicit intent, there should be a fairly wide range of acceptable “fair market value” numbers for financial disclosure purposes. If the Commission truly intends that a candidate’s estimate of the value of his real property must be accurate enough to withstand forensic financial examination by a CPA, Form 6 should be revised through rulemaking to include that cautionary note. Clear and convincing evidence was not presented that Respondent filed an inaccurate Form 6 for the year 2016.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission issue a public report finding that the evidence presented at the public hearing in this case was insufficient to establish clearly and convincingly that Respondent violated Article II, Section 8,Florida Constitution, or section 112.3144, Florida Statutes, by filing an inaccurate CE Form 6, “Full and Public Disclosure of Financial Interests,” for the year 2016. DONE AND ENTERED this 26th day of May, 2020, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Melody A. Hadley, Esquire Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 (eServed) Benedict P. Kuehne, Esquire Kuehne Davis Law, P.A. Suite 3550 100 Southeast 2nd Street Miami, Florida 33131 (eServed) Elizabeth A. Miller, Esquire Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399 (eServed) S LAWRENCE P. STEVENSON 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 26th day of May, 2020. Millie Fulford, Agency Clerk Florida Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317-5709 (eServed) C. Christopher Anderson, III, Executive Director Florida Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317-5709 (eServed)
The Issue Whether the underlined portions of Respondent's proposed Rule 12D-10.0044(4)(b) are invalid exercises of delegated legislative authority: (b) If the property appraiser does not provide the information within the time required by subsection (3) and at least five calendar days before the hearing, the taxpayer shall be entitled to reschedule the hearing. If the property appraiser provides the information within the time set forth in subsection (5) but less than five calendar days before the hearing, the petitioner's submission of the information shall qualify as a written request for rescheduling as provided in subsection (9). In such circumstances, the clerk shall reschedule the hearing upon being so advised by the petitioner. Whether the underlined portion of Respondent's proposed Rule 12D-10.0044(5) is an invalid exercise of delegated legislative authority: (5)(a) The exchange in subsection (2) and (3) shall be delivered by regular or certified U.S. mail, personal delivery, overnight mail, FAX or email. It shall be sufficient if at least three FAX or email attempts are made to such address (sic). If more than one FAX number is provided, three (3) attempts must be made for each number to satisfy this requirement. The taxpayer and property appraiser may agree to a different timing and method of exchange. "Provided" means made available in the manner designated by the property appraiser or by the petitioner in his/her submission of information, as via email, facsimile, U.S. mail, or at the property appraiser's office for pick up. If the petitioner does not designate his/her desired manner for receiving the property appraiser's information, the information shall be provided by the property appraiser by depositing it in the U.S. mail. Whether Respondent's proposed Rule 12D-10.0044(8) is an invalid exercise of delegated legislative authority: (8) The information shall be in writing and may be delivered by regular or certified U.S. mail or personal delivery so that the information shall be received timely.
Findings Of Fact Mr. Robbins is the property appraiser for Miami-Dade County. The VAB is the duly-constituted value adjustment board for Miami-Dade County. Both Petitioners will be substantially affected if Respondent adopts the challenged portions of the proposed rule at issue in this proceeding. Both Petitioners have standing in this case. DOR has the responsibility to aid and assist property appraisers, tax collectors and value adjustment boards with respect to the assessment and collection of property taxes pursuant to Chapters 192-197, Florida Statutes. In that capacity, DOR promulgates rules implementing relevant legislation ever year. DOR promulgates rules in many areas, generally issues advisement letters, and interacts with local officials involved in the assessment and value adjustment board process. Every year, each county property appraiser is required to determine the value of all property in the county that is subject to ad valorem taxation. The valuation is as of January 1 of each year. See §§ 192.011 and 192.042, Fla. Stat. Each property appraiser is required to provide each taxpayer a notice containing the information required by Section 200.069, Florida Statutes.3 This notice is referred to as the TRIM notice, which is an acronym for Truth in Millage. The TRIM notice is typically mailed to the taxpayer before the end of August of each year. The TRIM notice includes the property appraiser's valuation of the property. For years Florida taxpayers have had the right to challenge a property appraiser's valuation and other issues pertaining to ad valorem taxation. Value adjustment boards, created by Section 194.015, Florida Statutes, serve as a forum to resolve disputes between taxpayers and county property appraisers regarding the appropriate value of real property or tangible personal property for ad valorem taxation purposes.4 Section 194.011(3)(d), Florida Statutes, sets a deadline for a taxpayer to file a petition for a hearing before a value adjustment board. A petition challenging the valuation of property must be filed before the 25th day following the mailing of the TRIM notice. Petitions involving other issues must be filed on or before the 30th day following the mailing of the TRIM notice. Because of these deadlines, a value adjustment board typically knows by the end of September the maximum number of petitions that will have to be resolved for that annual cycle. Pursuant to Section 194.015, Florida Statutes, a value adjustment board consists of three members of the governing body of the county and two members of the school board. Section 194.011, Florida Statutes, provides certain procedures to be followed in the event a taxpayer challenges an assessment. Section 194.011(2), Florida Statutes, provides as follows: (2) Any taxpayer who objects to the assessment placed on any property taxable to him or her may request the property appraiser to informally confer with the taxpayer. Upon receiving the request, the property appraiser, or a member of his or her staff, shall confer with the taxpayer regarding the correctness of the assessment. At this informal conference, the taxpayer shall present those facts considered by the taxpayer to be supportive of the taxpayer's claim for a change in the assessment of the property appraiser. The property appraiser or his or her representative at this conference shall present those facts considered by the property appraiser to be supportive of the correctness of the assessment. However, nothing herein shall be construed to be a prerequisite to administrative or judicial review of property assessments. If the dispute is not resolved, the taxpayer may file a petition with and have a hearing before the county's value adjustment board. The full value adjustment board can hear and decide a petition, or it can appoint a special master to hear the petition. Typically in large counties, including Miami-Dade County, a group of special masters are appointed to hear cases for the county's value adjustment board. In Miami-Dade County, the clerk of the VAB schedules the hearings before each special master. A special master typically hears between 50 and 60 petitions in a day. The series of hearings before a special master for a particular day is referred to as a board. A board is similar to a court docket, where one case is heard after the other. As is apparent from the number of petitions heard in a day by a special master, a hearing before the VAB typically lasts less than 15 minutes. Even with typically brief hearings, the value adjustment board process in Miami-Dade County has in recent years required four to six boards each business day over a period of nine to ten months to hear all petitions filed with the VAB. Mr. Robbins usually has an employee (referred to as an official) to represent his office at a board before a special master. In all, Mr. Robbins has approximately 20 employees who serve as officials plus support staff dedicated to VAB proceedings. It usually takes an official five to six working days to prepare his or her presentations for one board. Typically, an official is assigned a new board every six to seven business days. The value adjustment board process has a large impact on taxpayers and local governments in Miami-Dade County. In 2001, the VAB removed from the certified tax roll of Miami-Dade County over $1,600,000,000 in assessment dollars, which translated to approximately $39,500,000 fewer tax dollars. In 2002, the VAB removed from the certified tax roll of Miami-Dade County over $1,900,000,000 in assessment dollars, which translated to approximately $44,600,000 fewer tax dollars. The VAB heard approximately 24,500 petitions for tax year 2002 and it is estimated that 28,500 petitions will be heard for tax year 2003. Prior to 2002, the taxpayer had to disclose his or her evidence to the property appraiser prior to the hearing, but there was no requirement that the property appraiser had to provide his or her evidence to the taxpayer prior to the hearing. Frequently, the taxpayer would see the property appraiser's evidence for the first time at the hearing itself. In 2002, the Florida Legislature enacted Chapter 2002- 18, Laws of Florida, which amends portions of the law referred to as the “Taxpayers Bill of Rights,” including portions of Chapter 194, Florida Statutes. Referring to hearings before a value adjustment board, Section 2 of Chapter 2002-18 created subsection (4) and (5) of Section 194.011, Florida Statutes, to read as follows: (4)(a) At least 10 days before the hearing, the petitioner [the taxpayer] shall provide to the property appraiser a list of evidence to be presented at the hearing, together with copies of all documentation to be considered by the value adjustment board and a summary of evidence to be presented by witnesses.[5] (b) No later than 5 days after the petitioner provides the information required under paragraph (a), the property appraiser shall provide to the petitioner a list of evidence to be presented at the hearing, together with copies of all documentation to be considered by the value adjustment board and a summary of evidence to be presented by witnesses. The evidence list must contain the property record card if provided by the clerk. The department shall by rule prescribe uniform procedures for hearings before the values adjustment board which include requiring: Procedures for the exchange of information and evidence by the property appraiser and the petitioner consistent with s. 194.032[6]; and That the value adjustment board hold an organizational meeting for the purpose of making these procedures available to petitioners. In response to the mandate found in Section 194.011(5), Florida Statutes, Respondent proposes, pertinent to this proceeding, to adopt Rule 12D-10.0044, which provides, in pertinent part, as follows. Subsequent to the mailing or sending of the hearing notice, and at least 10 days before the scheduled hearing, the petitioner shall provide the property appraiser with a list and summary of evidence to be presented at the hearing. The list and summary must be accompanied by copies of documentation to be presented at the hearing. No later than 5 days after the property appraiser receives the petitioner's documentation, the property appraiser shall provide the petitioner with a list and summary of evidence to be presented at the hearing. The list and summary must be accompanied by copies of documentation to be presented at the hearing. The evidence list must contain the property record card if provided by the clerk. In computing the 5 day period prescribed in this subsection, intermediate Saturdays, Sundays, and legal holidays shall be excluded in the computation. See Rule 1090(a), Florida Rules of Civil Procedure, entitled Time.[7] (4)(a) If the taxpayer does not provide the information to the property appraiser at least ten days prior to the hearing pursuant to subsection (2), the property appraiser need not provide the information to the taxpayer pursuant to subsection (3). (b) If the property appraiser does not provide the information within the time required by subsection (3) and at least five calendar days before the hearing, the taxpayer shall be entitled to reschedule the hearing. If the property appraiser provides the information within the time set forth in subsection (5) but less than five calendar days before the hearing, the petitioner's submission of the information shall qualify as a written request for rescheduling as provided in subsection (9). In such circumstances, the clerk shall reschedule the hearing upon being so advised by the petitioner. (5)(a) The exchange in subsection (2) and (3) shall be delivered by regular or certified U.S. mail, personal delivery, overnight mail, FAX or email. It shall be sufficient if at least three FAX or email attempts are made to such address (sic). If more than one FAX number is provided, three attempts must be made for each number to satisfy this requirement. The taxpayer and property appraiser may agree to a different timing and method of exchange. "Provided" means made available in the manner designated by the property appraiser or by the petitioner in his/her submission of information, as via email, facsimile, U.S. mail, or at the property appraiser's office for pick up. If the petitioner does not designate his/her desired manner for receiving the property appraiser's information, the information shall be provided by the property appraiser by depositing it in the U.S. mail. The information shall be sent to the address listed on the petition form; however, it may be submitted to an email or FAX address if given. In computing any period of time prescribed or allowed by these rules, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included unless it is a Saturday, Sunday, or legal holiday, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday. If the tenth day before a hearing is a Saturday, Sunday, or legal holiday, the information under subsection (2) shall be provided no later than the previous business day. * * * Hearing procedure: . . . A property appraiser shall not appear at the hearing and use undisclosed evidence that was not supplied to the petitioner as required. The normal remedy for such noncompliance shall be a rescheduling of the hearing to allow the petitioner an opportunity to review the information of the property appraiser. The information shall be in writing and may be delivered by regular or certified U.S. mail or personal delivery so that the information shall be received timely. The petitioner may reschedule the hearing one time by submitting a written request to the clerk of the board no less than 5 calendar days before the scheduled appearance. This rule provides procedures for information and evidence exchange between the petitioner and property appraiser, consistent with s. 194.032 F.S., subject to the provisions of 194.034(1)(d), F.S., and subsection 12D-10.003(4), F.A.C., relating to a request by a property appraiser for information from the petitioner in connection with a filed petition, which information need not be provided earlier than ten days prior to a scheduled hearing pursuant to subsections (2) and (5). The value adjustment board shall hold an organizational meeting and must make the uniform procedures available to petitioners. Such procedures shall be available a reasonable time following the organizational meeting and shall be available a reasonable time before the commencement of hearings in conformance with this rule. The Board [sic] shall be deemed to have complied if it causes petitioners to be notified in writing, along with or as part of the notice of hearing, of the evidence and availability of its procedures and include notice as to the exchange of information contained in this rule. The Board [sic] is authorized to use other additional or alternative means of notification directed to the general public or specific taxpayers, as it may determine. The taxpayer is entitled to notice of the hearing of his or her hearing by a value adjustment board (or a special master on behalf of the value adjustment board) of no less than 20 calendar days. See § 194.032 (2), Fla. Stat.8 The taxpayer must provide the property appraiser with the taxpayer's evidence no less than ten calendar days before the scheduled hearing to trigger the requirement that the property appraiser provide his evidence to the taxpayer prior to the hearing. If the taxpayer does not provide its evidence to the property appraiser at least ten days prior to the hearing, the exchange of evidence requirement is not triggered and the taxpayer is not entitled to the property appraiser's evidence prior to the hearing. If the exchange of evidence requirement is timely triggered by the taxpayer, Section 194.011(4)(b), Florida Statutes, requires the property appraiser to provide his or her evidence to the taxpayer within five days after receiving the taxpayer’s information. Pursuant to Section 3 of the proposed rule (which is not being challenged in this proceeding) this five-day period consists of business days. Pursuant to Section 194.032(2), Florida Statutes, the taxpayer has the right to one continuance of the hearing if the request for the continuance is made at least five calendar days before the scheduled hearing (the so-called "freebie"). In addition to the freebie, the VAB typically grants a taxpayer’s motion for continuance based on one or more of the following grounds: A recent death within the immediate family of the taxpayer or his representative; A medical emergency; Proper notification was not afforded the taxpayer pursuant to the provisions of Rule 12D-10.0004(2). A clerical error was made by the county's staff that precluded the appearance of the taxpayer before the board as scheduled. The taxpayer or the taxpayer's agent is scheduled to appear before another governmental entity on the same date and within the same time frame as the scheduled appearance before the board. The taxpayer's scheduled appearance falls on a religious holiday. The taxpayer has not been afforded reasonable notice of the requirement to have the professional appraiser who prepared the taxpayer's appraisal report physically present at the hearing to testify. The taxpayer is unable to submit an appraisal report of other documentary evidence to the property appraiser prior to the scheduled hearing if reasonable cause exists for failure to do so. The property appraiser failed to comply with the evidence exchange requirements of Section 194.011(4), and the taxpayer requests a consequence of that failure. The proposed rule creates an additional ground for the taxpayer to request that a hearing be rescheduled. Pursuant to the portion of Section (4)(b), Florida Statutes, of the proposed rule being challenged in this proceeding, the taxpayer has a right to a continuance of the scheduled hearing (a) if the taxpayer has triggered the requirement for the exchange of evidence set forth in both Section 194.011 and the proposed rule and (b) the taxpayer does not receive the property appraiser’s evidence at least five calendar days before the hearing. It is realistic to anticipate that many taxpayers will trigger the exchange of evidence provision on the tenth day before the scheduled hearing. In most of those cases, the taxpayer will not receive the property appraiser's evidence five calendar days before the scheduled hearing even if the property appraiser provides his or her evidence to the taxpayer on the fifth business day following receipt of the taxpayer's evidence. In virtually all of those cases, the taxpayer will not receive the property appraiser's evidence five calendar days before the hearing if the property appraiser mails that evidence to the taxpayer or if the property appraiser needs time to gather rebuttal evidence.9 The number of hearings that will have to be rescheduled before the VAB has not been quantified, but the number is substantial and additional costs will be incurred. While it is clear that the rescheduling of a substantial number of hearings before the VAB will increase the workload for Mr. Robbins's office and for the VAB staff, the evidence did not establish that the proposed rule places an impossible burden on either Mr. Robbins or the VAB. With appropriate planning both Petitioners should be able to manage the rescheduling of a large number of value adjustment board hearings. DOR drafted the proposed rule with the intent that the interests of the taxpayer and the property appraisers be balanced to the fullest extent possible within the authority granted by Section 194.011(4) and (5), Florida Statutes. The addition of the non-statutory ground for a continuance is intended to provide the taxpayer a reasonable period of time to review the property appraiser's evidence prior to a hearing. In determining what would constitute a reasonable period of time for a taxpayer to have to review the property appraiser’s evidence, DOR considered several factors. DOR considered the statutes and the legislative intent. DOR considered the type of evidence the property appraiser would typically have to provide the taxpayer and the availability of such evidence. DOR considered that Section 194.034(1)(d), Florida Statutes,10 has been historically interpreted as requiring the taxpayer to provide his evidence to the property appraiser "a reasonable time" before the value adjustment board hearing, and that “a reasonable time" has been historically interpreted to be five business days before the hearing. DOR considered that the taxpayer must exercise the freebie continuance no less than five calendar days before the hearing. DOR considered input from representatives of taxpayers and property appraisers during the rulemaking process. In drafting the provision that delivery by mail would be the default method of delivery, DOR considered that the rule will be of statewide applicability, that delivery by mail is the most common default method of delivery, and that not all taxpayers or property appraisers have the capabilities to receive or send information by facsimile, e-mail, or hand delivery. DOR entered into a long rule-promulgation process, which gave all interested parties, including Mr. Robbins and the VAB, an opportunity to provide input into the rules that would govern the process of exchange of information prior to VAB hearings. Mr. Robbins and the VAB actively participated in the rule-making process and made their views known throughout the process. The promulgation of the proposed rule was delayed to give interested parties an opportunity to seek to have the legislation amended, but no amendments were passed during the 2003 Legislative Session. The Notices of Proposed Rulemaking for the proposed rule contained the summary of statement of estimated regulatory costs, which requested that any person who wishes to provide information regarding the regulatory costs or who wished to provide a proposal for a lower cost regulatory alternative must do so within 21 days of the notice. No comments or proposals were received on the regulatory cost statement at any point during the rule promulgation process. Neither Mr. Robbins nor the VAB submitted a statement of alternative regulatory costs during the rule promulgation process or at the final hearing. Neither Petitioner established at the final hearing that a less costly alternative to the proposed rule would substantially accomplish the statutory objectives.
The Issue The issues are whether Respondent properly conducted a sales and use tax audit of Petitioner's books and records; and, if so, whether Petitioner is liable for tax and interest on its purchases of materials used for improvements to real property.
Findings Of Fact During the audit period, Petitioner was a Florida corporation with its principal place of business located at 7820 Professional Place, Suite 2, Tampa, Florida. Petitioner's Florida sales tax number was 39-00-154675-58, and Petitioner's federal employer identification number was 59-3089046. After the audit period, the Florida Department of State administratively dissolved Petitioner for failure to file statutorily required annual reports and filing fees. Petitioner engaged in the business of providing engineering services and fabricating control panels. Petitioner fabricated control panels in a shop Petitioner maintained on its business premises. Petitioner sold some of the control panels in over-the- counter sales. Petitioner properly collected and remitted sales tax on the control panels that Petitioner sold over-the-counter. Petitioner used other control panels in the performance of real property contracts by installing the panels as improvements to real property (contested panels). Petitioner was the ultimate consumer of the materials that Petitioner purchased and used to fabricate the contested panels. At the time that Petitioner installed the contested panels into real property, the contested panels became improvements to the real property. Petitioner failed to pay sales tax at the time Petitioner purchased materials used to fabricate the contested panels. Petitioner provided vendors with Petitioner's resale certificate, in lieu of paying sales tax, when Petitioner purchased the materials used to fabricate the contested panels. None of the purchase transactions for materials used to fabricate the contested panels were tax exempt. The audit is procedurally correct. The amount of the assessment is accurate. On October 23, 2000, Respondent issued a Notification of Intent to Audit Books and Records (form DR-840), for audit number A0027213470, for the period of October 1, 1995, through September 30, 2000. During an opening interview, the parties discussed the audit procedures and sampling method to be employed and the records to be examined. Based upon the opening interview, Respondent prepared an Audit Agreement and presented it to an officer and owner of the taxpayer. Respondent began the audit of Petitioner's books and records on January 22, 2001. On March 9, 2001, Respondent issued a Notice of Intent to Make Audit Changes (original Notice of Intent). At Petitioner's request, Respondent conducted an audit conference with Petitioner. At the audit conference, Petitioner provided documentation that the assessed transactions involved improvements to real property. At Petitioner's request, Respondent conducted a second audit conference with Petitioner's former legal counsel. Petitioner authorized its former legal counsel to act on its behalf during the audit. At the second audit conference, the parties discussed audit procedures and sampling methods, Florida use tax, fabricated items, and fabrication costs. Respondent revised the audit findings based upon additional information from Petitioner that the assessed transactions involved fabricated items of tangible personal property that became improvements to real property. Respondent assessed use tax on the materials used to fabricate control panels in those instances where Petitioner failed to document that Petitioner paid sales tax at the time of the purchase. Respondent also assessed use tax on fabrication costs including the direct labor and the overhead costs associated with the fabrication process, for the period of October 1, 1995, through June 30, 1999. Respondent eliminated use tax assessed on cleaning services in the original Notice of Intent because the amount of tax was de minimis. On August 29, 2001, Respondent issued a Revised Notice of Intent to Make Audit Changes (Revised Notice of Intent). On September 18, 2001, Petitioner executed a Consent to Extend the Time to Issue an Assessment to File a Claim for Refund until January 25, 2002. On October 18, 2001, Petitioner executed a second Consent to Extend the Time to Issue an Assessment to File a Claim for Refund until April 25, 2002. On February 6, 2002, Respondent issued a Notice of Proposed Assessment for additional sales and use tax, in the amount of $21,822.27; interest through February 6, 2002, in the amount of $10,774.64; penalty in the amount of $10,831.12; and additional interest that accrues at $6.97 per diem. Petitioner exhausted the informal remedies available from Respondent. On April 29, 2002, Petitioner filed a formal written protest that, in substantial part, objected to the audit procedures and sampling method employed in the audit. Respondent issued a Notice of Decision sustaining the assessment of tax, penalty, and interest. Respondent correctly determined that the audit procedures and sampling method employed in the audit were appropriate and consistent with Respondent's statutes and regulations. Respondent concluded that the assessment was correct based upon the best available information and that Petitioner failed to provide any documentation to refute the audit findings. Petitioner filed a Petition for Reconsideration that did not provide any additional facts, arguments, or records to support its position. On May 16, 2003, Respondent issued a Notice of Reconsideration sustaining the assessment of tax and interest in full, but compromising all penalties based upon reasonable cause.
Recommendation Based upon the findings of fact and the conclusions of law, it is RECOMMENDED that Respondent enter a Final Order denying Petitioner's request for relief and sustaining Respondent's assessment of taxes and interest in full. DONE AND ENTERED this 10th day of December, 2003, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 10th day of December, 2003. COPIES FURNISHED: Carrol Y. Cherry, Esquire Office of the Attorney General Revenue Litigation Section The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Michael E. Ferguson Control Design Engineering, Inc. 809 East Bloomingdale Avenue, PMB 433 Brandon, Florida 33511 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
