Findings Of Fact On April 16, 1986, in conjunction with the preparation of plans for widening Southside Boulevard (State Road 115) in Jacksonville, Florida, the Department recorded a Map of Reservation pursuant to Section 337.241(1), Florida Statutes, which encompassed a portion of the Petitioner's property. It was stipulated by the parties that the Department complied with the necessary notice, filing, and approval requirements of Section 337.241(1), Florida Statutes. The property in question is located in Jacksonville, adjacent to the east side of Southside Boulevard at the intersection of Hogan Road. It is zoned commercial, but there is currently no development on the east side of Southside Boulevard in the immediate vicinity of Hogan Road. The west side of Southside Boulevard is developed commercially for its entire length. This property consists of a tract of land approximately 892 feet long by 15 feet deep which lies adjacent to a strip of land approximately 100 feet deep which is immediately adjacent to Southside Boulevard. The Department determined that there existed a need to widen Southside Boulevard from a two lane highway to a four lane, limited access facility accompanied by two one-way, parallel service roads. In designing the widening of this highway, the Department determined that the minimum right-of-way corridor width for the facility should be 250 feet. This minimum width was established by using official rules and criteria established by the Department, as well as the Rules of the American Association of State Highway Officials and those of the Florida Department of Highway Safety and Motor Vehicles. Presently, the Department has a 200 foot wide right-of-way corridor. Because of the requirement for at least 250 feet of width, the Department needed to take steps to assure that the extra 50 feet would be available by use of a Map of Reservation. The Department determined that land should be reserved on the east side of the right-of-way corridor for the needed 50 feet because the east side of Southside Boulevard in the area in question is undeveloped, while the west side is substantially developed. This was an economic decision based upon an alignment of the right-of-way corridor that would have the least economic impact on the acquisition of the additional right-of-way. The Department did not place all of the Petitioner's property under the Map of Reservation. Only the 50 feet required for the widening project is affected by the regulation. The owner of the subject property is an individual, E. W. Mayhew, and a corporation, Beta Development Company, Inc. The property was purchased in 1982 for development as office/warehouse space. The Petitioner E. W. Mayhew knew that the property was affected by a Limited Access Line across the property, which was established by the Department in the 1960's, well before the Petitioner's purchase of this property. Despite the presence of this Limited Access Line, the Petitioner did not realize until 1984 that the Line informed potential buyers that direct access to Southside Boulevard from the subject property would be eliminated eventually. Although it spent more than $43,000 to develop plans to promote its property, the Petitioner had not applied to the City of Jacksonville for any of the permits that are required in order to build its proposed office/warehouse project by the time the Map of Reservation was filed.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter its Final Order dismissing the Petition in this case. THIS Recommended Order entered on this 24th day of November, 1986, in Tallahassee, Leon County, Florida. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of November, 1986. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 86-1587 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner 1.-4. Accepted. 5.-16. Rejected, as irrelevant because the elements of reasonableness and arbitrariness were not proved. 17. Rejected, as not a proposed finding of fact. Rulings on Proposed Findings of Fact Submitted by the Respondent 1.-9. Accepted. COPIES FURNISHED: Thomas Drawdy, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301 A. J. Spalla General Counsel Department of Transportation Haydon Burns Building Tallahassee, Florida 32301-8064 Theresa M. Rooney, Esquire 1550 Florida Bank Tower Jacksonville, Florida 32202 Paul J. Martin, Esquire Haydon Burns Building, M.S. 58 Tallahassee, Florida 32301-8064
The Issue Whether the Petitioner is entitled to an "in lieu" payment under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4622) as implemented by I. M. 80-1-71 and amended by P. M. 81-1.2.
Findings Of Fact Respondent, Florida department of Transportation, because of the proposed widening of State Road 61, Thomasville Road in Tallahassee, Florida, notified Petitioner in the spring of 1974 that the property on which the business was located was to be taken by the Respondent for road purposes. Petitioner was offered, but did not accept, relocation assistance to move his business to another location or to reimburse him in the amount that a never would charge. Other relocation assistance by the Respondent to find sites which would be appropriate for Petitioner's business was offered and four such sites were presented to Petitioner. Petitioner found the sites undesirable and has located a site at which he intends to move his business. Petitioner contends that the location on Thomasville Road is a good location; that he acquires "walk-in" business from time to time; that the sign on the building is of a type consistent with the limited type of advertising available to members of his profession and is beneficial to him; that the building he rents on Thomasville Road has additional space in which he at one time did rent to other interests, but which rental possibilities were foreclosed upon the general public knowledge that the Respondent would widen Thomasville Road and in the process remove the rental building. Petitioner operates his business from the location and shows that the operation of his consultant service is his sole business. The Petitioner filed for in lieu payments after refusing to accept relocation assistance for the moving of his business Petitioner contends: that nothing in the Act states or implies that a displaced person is required to accept relocation assistance if it is economically unsound; that the Respondent failed to sustain the burden of proof that Petitioner is not entitled to "in lieu" payment under the Act. Respondent contends: that the Petitioner failed to show he is entitled to "in lieu" payments under the Act; that the losses such as production costs, rental income, and advertising possibilities are not within the contemplation of the Act.
The Issue This case was presented on an administrative complaint filed by the Florida Real Estate Commission against Florida Vantage Properties, Inc. and Richard Stewart Grimes, alleging that the Respondents were guilty of violation of Section 475.42(1)(j), Florida Statutes, by having placed or caused to be placed upon the public records of Palm Beach County, a written document which purports to effect the title of, or encumber, real property; and the recording of which was not duly authorizod by the owner of the property and for the purpose of collecting or coercing the money to the Respondents. The Florida Real Estate Commission introduced evidence that the Respondent Grimes, in behalf of the Respondent Florida Vantage Properties, Inc., (hereafter Vantage) filed an affidavit with an attached letter of agreement, which was Introduced and received into evidence as Exhibit 2, in the public records of Palm Beach County. The Florida Real Estate Commission introduced other evidence that Grimes caused those documents to be placed upon public records of Palm Beach County without the authority of the owner of the property which was the subject of the documents and for the purpose of collecting or coercing the payment of money to the Respondents. The Respondents introduced evidence concerning the documents which had been placed on the public records of Palm Beach, County concerning their original execution, purpose, and circumstances surrounding their having been placed upon the public records. Based upon the evidence presented, the issue of fact presented in this case is whether the affidavit and letter of agreement (Exhibit 2) purports to effect the title of or encumber the subject real property?
Findings Of Fact Richard Stewart Grimes and Florida Vantage Properties, Inc. are registered real estate brokers holding registrations issued by the Florida Real Estate Commission. Grimes, together with his two co-owners, sold C.W. Collins Corporation, hereafter Collins Corp., the following real property pursuant to a deposit receipt contract executed on August 20, 1973 and identified and introduced into evidence as Exhibit 4. Lot 6, Block 2, & Lots 5, 9, & 11, Block 5, Carriage Hill, as recorded in Plat Book 30, Pages 67 & 68 of the Public Records of Palm Beach County. The deposit receipt contract (Exhibit 4) was the product of negotiations entered into between Collins Corp. and Grimes and his co-owners. These negotiations had resulted in the execution of a deposit receipt contract identified and received into evidence as Exhibit 6. This deposit receipt contract addressed the proposed purchase of six lots to include the four lots eventually sold pursuant to the deposit receipt contract (Exhibit 4). Also introduced and received into evidence was a letter of agreement covering the property described in the deposit receipt contract (Exhibit 6). This letter of agreement is the same in all respects as the latter of agreement in Exhibit 2 with the exception that it addressed the two additional lots which, were the subject of the deposit receipt contract (Exhibit 6). The evidence introduced, to include the exhibits referended above, show that a portion of the consideration for the sale of the property to Collins Corp. was the letter of agreement (Exhibit 2) which contained an exclusive right of sale for Vantage and a deferred payment agreement under which Collins Corp agreed to Pay Vantage $1,000 on each lot sold by Collins Corp. Both Grimes and Collins agreed that the exclusive right of sale had been terminated prior to the date Exhibit 2 was filed in the public records of Palm Beach County, November 6, 1975. However, Collins Corp. could not unilaterally terminate the deferred payment agreement expressed in the last sentence of the letter of agreement as follows: C. W. COLLINS CORP. may also sell the property themself (sic) and will then pay only a $1,000.00 fee to FLORIDA VANTAGE PROPERTIES, INC. on each lot or house and lot package at time of closing. Grimes, as chief officer of Vantage, consulted legal counsel when Collins Corp. failed to pay $1,000 to Vantage when the corporation sold the first lot. Grimes authorized counsel to take action to obtain payment of the monies due Vantage from Collins Corp. As a result, Grimes executed the affidavit of October 7, 1975 (Exhibit 2) and caused this to be placed on the public records of Palm Beach County by counsel for Vantage and Grimes. Neither the affidavit nor the letter of agreement assert any interest in the subject property and the filing in no way constituted a notice of lis pendens.
Recommendation Based upon the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that the Florida Real Estate Commission take no action on the complaint against Florida Vantage Properties, Inc. or Richard Stewart Crimes. DONE AND ORDERED this 4th day of August, 1975, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 APPENDIX The Respondent timely filed Proposed Findings of Fact (PFF) in this cause, which were considered by the Hearing Officer as follows: Paragraphs 1 and 2 of PFF are incorporated in paragraph 1 of the Recommended Order (RD). Paragraphs 3 and 4 of PFF are incorporated in paragraph 2 of the RD. Paragraph 5 of PFF is incorporated in paragraph 3 of the RD. Paragraphs 6, 7, 8 & 10 of PFF are incorporated in paragraph 4 of the RD. Paragraphs 9, 11, 12,13 and 14 are not material to consideration of the issue presented. Paragraph 15 is consistent with the ultimate conclusion of law reached in the RD. COPIES FURNISHED: John Huskins, Esquire Staff Counsel Florida Real Estate Commission Post Office Box 1900 Orlando, Florida 32802 Arthur C. Koske, Esquire Post Office Box 478 299 West Camino Gardens Blvd. Boca Raton, Florida 33432 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA REAL ESTATE COMMISSION FLORIDA REAL ESTATE COMMISSION CD 14999 Petitioner, PROGRESS DOCKET vs. NO. 3283 FLORIDA VANTAGE PROPERTIES, INC. and RICHARD STEWART GRIMES DOAH NO. 78-696 Respondents. PALM BEACH COUNTY /
The Issue Respondents are charged with misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in violation of Section 475.25(1)(b), Florida Statutes; failure to account or deliver funds in violation of Section 475.25(1)(d), Florida Statutes; and failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement is properly authorized, in violation of Section 475.25(1)(k), Florida Statutes, as more specifically set out in the following Conclusions of Law.
Findings Of Fact Petitioner is the state agency charged with the responsibility and duty to prosecute administrative complaints, pursuant to Section 20.165 and Chapters 120, 455, and 475, Florida Statutes. At all times material, Respondent Mary Lawhon was a licensed Florida real estate broker, issued license numbers 607847 and 3028674 in accordance with Chapter 475, Florida Statutes. Respondent Shell Point Realty, Inc., is, and at all times material was, a corporation registered as a Florida real estate broker having been issued license number 1005003 in accordance with Chapter 475, Florida Statutes. At all times material, Respondent Mary Lawhon was licensed and operating as qualifying broker and officer of Respondent Shell Point Realty, Inc. Neither Respondent has previously been prosecuted for license violations, although an Agency investigator's administrative fine of $100.00 for a minor technical violation was imposed several years ago. Between 1996 and 2002, Respondents were paid real estate commissions for the purchase or sale of several Wakulla County properties by Gerd Petrik, or his business, Stone Real Estate Holdings, Inc. For each of these transactions, there was a contract, whereby Respondents' real estate brokerage commission was based on the price of each property as disclosed before sale in the written listing agreement with the seller(s). Mr. Petrik is a foreign national residing in the United States on an investment visa. He lives in Sarasota, Florida. He "owns" several corporations,2/ and, through them, he owns at least 40 properties in the Panhandle of Florida, including a golf course and six rental houses in Wakulla County. One of these rental houses is located at 111 Razorback Road in Crawfordville. Mr. Petrik, or a corporation in which he is majority stockholder, owner-financed, by mortgage, one of the buildings from which Ms. Lawhon conducts Shell Point Realty, Inc.'s business. As an outgrowth of their real estate sales transactions, Mr. Petrik came to respect and value Ms. Lawhon's real estate skills and business acumen. He also appreciated her position and prestige in the community as the former Wakulla County Administrator. Until the incidents giving rise to this case occurred, Mr. Petrik found Ms. Lawhon to be professional and competent in real estate matters and honest and truthful. Mr. Petrik admits that he has lost no money as a result of the incidents giving rise to this license disciplinary proceeding. There has never been a written contract imposing any duty on Respondents to Mr. Petrik with regard to his six rental houses in Wakulla County, or with regard to the 111 Razorback Road property in particular. Having reconciled the witnesses' respective testimonies to the degree possible, and having assessed their respective versions upon credibility factors, it is found that Respondents were never retained or expected by Mr. Petrik to rent, lease, or manage any of his six rental houses in Wakulla County, including the 111 Razorback Road property. Respondents also did not advertise any rental properties, solicit any renters, put up any "for rent" signs, or charge any real estate or management fees to Mr. Petrik or his businesses in connection with the rentals of Mr. Petrik's properties. However, with an eye to promoting further profitable real estate sales dealings with Mr. Petrik, Ms. Lawhon gratuitously facilitated Mr. Petrik's renting his Wakulla County houses. To this end, she regularly communicated by telephone and fax with Mr. Petrik's business manager, Wendy Freed, concerning showing the properties, rent to be charged, and creation or signing of leases. At all times material, Wendy Freed worked in Mr. Petrik's office in Sarasota, as business manager for Stone Management Inc., one of Mr. Petrik's corporations. Stone Management, Inc., owns Stone Real Estate Holdings, Inc. Ms. Freed believed that Stone Real Estate Holdings, Inc., owned 111 Razorback Road, Crawfordville. Apparently no one involved in this case knew that in October 2001, 111 Razorback Road was owned by Newhouse, Inc.3/ The evidence is not clear who or what entity owned the property in March 2002. Regardless of which entity actually owned any of the rental houses, Ms. Freed, Ms. Lawhon, and Mr. Petrik all believed Ms. Freed had Mr. Petrik's complete authority to handle the rentals and to manage everything in connection with the six Wakulla County rental houses, including 111 Razorback Road. Ms. Freed possesses no real estate or other professional licenses. Her entire training for management or leasing of real estate has been "on the job" training with Mr. Petrik. As of October 2001, she possessed only about a year and a half of such training. She keeps track of multiple rentals and other property management factors without any modern property management software. She uses only an Excel spreadsheet. Despite Ms. Freed's testimony to the contrary, it is found that Ms. Lawhon is credible that Ms. Lawhon only collected rent money for Mr. Petrik, or for any of Mr. Petrik's businesses, upon Ms. Freed's specific request, until the incidents giving rise to this case; that all leases for Mr. Petrik's rental properties were usually prepared by Ms. Freed, although on occasion, Ms. Lawhon had prepared a lease for Ms. Freed to use, based on the Tallahassee Board of Realtors' Standard Form; and that usually, after one of Mr. Petrik's houses had been leased, Ms. Freed dealt directly with the lessee, unless she dealt with the lessee through Mr. or Mrs. Alward. At all times material, Kay Alward and Chris Alward, husband and wife, were employed by Mr. Petrik. They were not sure whether they were paid through Stone Management, Stone Real Estate Holdings, Inc., or Stone Management Enterprises. Mrs. Alward had been Mr. Petrik's housekeeper, and Mr. Alward had been his gardener, in Sarasota. Mr. Alward had also personally invested in Wakulla County real estate. For awhile, the Alwards assisted Ms. Freed in managing Mr. Petrik's properties in Wakulla County, by traveling to and from Wakulla County. Ultimately, they moved to Wakulla County to live and manage his properties. During the material period of time, they employed a man named "Greg" to steam clean decks, fix toilets, and be a general handyman for Mr. Petrick's Wakulla County rental properties. Before returning to Sarasota on one occasion, Mr. Alward left with Ms. Lawhon a key for 111 Razorback Road. She understood from him that workmen might need the key to get into the house for repairs and cleaning. Sometime thereafter, on or about October 12, 2001, Lorra Shepard, a local Certified Public Accountant, walked into Respondents' real estate office, because a friend of hers worked there, and asked if they had any rentals. She was shown the 111 Razorback Road property. She asked Ms. Lawhon if she could rent it, and Ms. Lawhon told her the lessor wanted $675.00 per month. Ms. Shepard asked if they could come down on the price. Ms. Lawhon testified that she telephoned Ms. Freed on October 12, 2001, and asked Ms. Freed to lower the rent for Ms. Shepard; that Ms. Freed agreed to lower the rent to $635.00 per month and agreed to draw the lease; that she, Ms. Lawhon, relayed this information to Ms. Shepard; that Ms. Shepard agreed to rent the house at that price; and that Ms. Lawhon then telephoned Ms. Freed again with this information and finally faxed written information about Ms. Shepard to Ms. Freed, so that Ms. Freed could draft the lease and collect subsequent rents. This testimony is credible.4/ Ms. Lawhon and Ms. Shepard concur that Ms. Shepard moved into 111 Razorback Road on October 15, 2001, and that day, Ms. Lawhon accepted a $450.00 cash deposit from Ms. Shepard and provided Ms. Shepard with a signed receipt, setting out the monthly rent of $635.00 per month, and signing the receipt with Ms. Lawhon's own name. Ms. Shepard is clear that at no time did Ms. Lawhon tell her 111 Razorback Road was Ms. Lawhon's house or suggest that Ms. Shepard hide her occupancy. Rather, Ms. Shepard confirms Ms. Lawhon's testimony that Ms. Lawhon told her that the lessor would be sending a lease and that the lessor was Mr. Petrik. Ms. Shepard's testimony also suggests that in October 2001, she thought Ms. Lawhon was saying that Ms. Lawhon would deliver the lease and that when Ms. Shepard signed the lease, she and Ms. Lawhon, together, would work out whether rent would be paid on the 15th or 31st of each month. Even if it were credible that Ms. Freed had told Ms. Lawhon to retain the $450.00 cash deposit, and this portion of Ms. Lawhon's testimony does not ring entirely true, there is no evidence that Ms. Lawhon timely placed the $450.00 cash in an escrow or trust account. It also was not remitted directly to Mr. Petrik or Ms. Freed in October 2001. On the other hand, there is no evidence that it was deposited into any account in Respondents' name(s). It is unclear from Ms. Lawhon's hearing testimony what, exactly, happened to the $450.00 cash deposit, but she admitted to the Agency investigator in June 2002 that she had put it in a file and forgotten about it, and this explanation is accepted. At no time material did Ms. Freed or Ms. Lawhon prepare a lease for 111 Razorback Road. At no time material did either of them send or deliver a lease to Ms. Shepard. Ms. Shepard testified credibly that several times between October 2001 and March 2002, Ms. Lawhon told Ms. Shepard that she, Ms. Lawhon, still had no lease and would call the lessor again. Ms. Lawhon did not address this aspect of Ms. Shepard's testimony in her own testimony. Ms. Lawhon testified that she thought Ms. Freed would deal directly with Ms. Shepard about all aspects of the lease and collecting rent. She also admitted that she had never discussed 111 Razorback Road with Ms. Freed in any of their frequent telephone conversations between October 15, 2001 and March 2002. Upon this evidence and Finding of Fact 24, it is found, contrary to Ms. Lawhon's hearing testimony, that Ms. Lawhon was, in fact, expecting to receive a lease from Ms. Freed and planned to then deliver that lease to Ms. Shepard for execution, but Ms. Lawhon never followed up on Ms. Shepard's request for a lease. Having no lease to guide her, Ms. Shepard did not make out checks for rent in thirty-day increments, beginning in October or November 2001. Instead, she contemporaneously made out a check dated December 21, 2001, for $1,905.00, to "Petrick" for the rent. She contemporaneously made out a check dated December 26, 2001, for $317.50, to "Petrick" for the rent. She contemporaneously made out a check dated February 7, 2002, for $952.00, to "Petrick" for the rent. She expected Ms. Lawhon to pick up these checks, but no one picked them up. Accordingly, Ms. Shepard just left these three checks, totaling $3,174.50, in her office desk drawer and went about her business until March 26, 2002. Mrs. Alward ran some advertisements for Mr. Petrik's rental houses in December 2001. Ms. Lawhon testified that she told Mrs. Alward in December 2001 not to advertise 111 Razorback Road because it was rented. Mrs. Alward was not asked to confirm or deny that conversation occurred, and Mrs. Alward's testimony at hearing does not specifically rule out that she advertised 111 Razorback Road. However, Mr. Alward's deposition and the testimony of Mr. Weltman reveal that in January 2002, the Alwards were managing all rental arrangements by referral to Ms. Freed. In January or February 2002, a maintenance person steam-cleaned the deck at 111 Razorback Road. The maintenance person was never seen by Ms. Shepard, but the maintenance person clearly knew someone was occupying the house because s/he left a note for Ms. Shepard to confine her dogs so the steam cleaning could be done the next day. Ms. Shepard assumed the steam cleaning was done at Ms. Lawhon's direction, but she did not contact Ms. Lawhon about it. Ms. Lawhon did not arrange this service and knew nothing about it. Based on the testimony of Ms. Freed, Mr. and Mrs. Alward, and Mr. Weltman, it is probable "Greg" did this steam cleaning at the Alwards' direction, but Ms. Freed takes no responsibility for it. Upon Findings of Fact 28-29, it is only reasonable to assume that the Alwards had notice that 111 Razorback Road was rented and occupied as of December 2001-January 2002, and their knowledge as of those dates can be imputed to Ms. Freed. On March 26, 2002, Ms. Shepard personally delivered to Ms. Lawhon the three rent checks she had previously written to "Petrick," on December 21, 2001, December 26, 2001, and February 7, 2002, totaling $3,174.50.5/ Ms. Shepard then returned to her office, and on March 29, 2002, she delivered to Ms. Lawhon a last check for $317.50, dated March 26, 2002, and payable to "Stone Real Estate Holdings." The undisputed evidence reveals that on March 29, 2002, Ms. Lawhon signed the first three checks as "Petrik" and deposited them under the stamped endorsement of "Shell Point Realty," into Shell Point Realty, Inc.'s, operating account. She did not deposit them into an escrow account for Mr. Petrik or into Respondents' trust account. The March 29, 2002, deposit complied with Agency rules, in that it was made "immediately" (within three business days or less) of Respondents' receipt of the funds. It did not comply with Agency rules in that it was not deposited in a trust, escrow, or other specifically designated account for Mr. Petrik's benefit. Mr. Petrik and Ms. Freed maintain that Ms. Lawhon was not authorized to endorse the checks with Mr. Petrik's name. The average daily balance of Respondents' operating account at the time Ms. Lawhon deposited Ms. Shepard's first three rent checks was over $54,000.00. There appears to be no financial motivation for Respondents to play fast and loose with the relatively minor amounts of money involved in this case. At hearing, Ms. Lawhon had several explanations for her handling Ms. Shepard's first three checks as she did: that she thought she had received permission for this procedure in a phone conversation with Ms. Freed on March 26, 2002; that Mr. Petrik had allowed herself or Mr. Alward to sign closing and disclosure documents (but not negotiable instruments or checks) for him in the past, as a matter of convenience; and that she was afraid because Ms. Shepard's checks were stale and incorrectly made out (to "Petrick" instead of "Petrik," and not to "Stone Real Estate Holdings"), they also might not be any good. She testified that her thinking was that she should run Ms. Shepard's local checks through her own local bank to be sure they were valid. She maintained that she had intended to run the checks through Respondents' trust account but deposited them into the wrong account by accident. Although Respondents' telephone records show communication with Ms. Freed's telephone on March 26, 2002, it is noted that Ms. Lawhon's explanation that she had received permission from Ms. Freed that day was never put forth prior to her testimony at the disputed-fact hearing. (See Findings of Fact 44-45 and 51-52.) March 29, 2002, was a Friday. On Monday, April 1, 2002, Ms. Lawhon telephoned her bank and verified that Ms. Shepard's three checks had cleared. That same day, Ms. Lawhon used an overnight delivery service to send Ms. Freed Shell Point Realty, Inc.'s, check for $2,355.00, made out to "Stone Real Estate Holdings." The April 1, 2002, Shell Point Realty, Inc., check specified, on its memo line, that it covered "$635/mo. Jan. 02-April 15 + 450 dep." This amount would have been correct at $635 per month for only three months' rent (January-March 2002) plus a $450.00 deposit. However, it was the wrong amount, considering the 75-day period of October 15, 2001 to January 1, 2002. This check also was $819.50 short of the total amount of Ms. Shepard's first three checks, which Ms. Lawhon had received and negotiated in the names of Petrik/Shell Point Realty, Inc. Ms. Lawhon's testimony did not address when she sent Ms. Shepard's March 26, 2002, check for $317.50, which had been correctly made out to "Stone Real Estate Holdings," to Ms. Freed. Ms. Freed believed she had received this check a week after the April 1, 2002, mailing. However, because this fourth check, received by Ms. Lawhon on March 29, 2002, is also referenced on the memo line of the April 1, 2002, Shell Point Realty, Inc., check, it may be inferred that Ms. Shepard's last check also was sent to Ms. Freed in Ms. Lawhon's April 1, 2002, overnight package. Ms. Lawhon was overwrought on April 1, 2002. She had received a telephone call to come to Louisiana to care for her grandchildren because her daughter-in-law was terminally ill. The last thing she did before leaving Crawfordville, Florida, on that date was to calculate the rents, make out the Shell Point Realty, Inc., check, and send the two checks by overnight delivery to Ms. Freed. Except for returning for less than 24 hours covering part of the following Saturday and Sunday, April 6-7, 2002, to play piano in her church on Sunday, Ms. Lawhon did not return to Florida until Friday, April 12, 2002. April 12, 2002, was Ms. Lawhon's first day in the Shell Point Realty, Inc., office since April 1, 2002. That afternoon, she received a phone call from Mr. Petrik's attorney. She told him her reasons for signing Ms. Shepard's three stale checks as "Petrik" and depositing them. He said he did not think that Ms. Freed had received the whole amount owed by Ms. Shepard. Ms. Lawhon asked him to give her until Monday to recalculate and figure out what had happened. On Monday, April 14, 2002, Ms. Lawhon telephoned Mr. Petrik's attorney and admitted that she had miscalculated the rental amounts collected on March 26-29, 2002, and that she would be sending Mr. Petrik the balance owed. At the attorney's suggestion, she wrote a letter of apology to Mr. Petrik. Ms. Lawhon's April 15, 2002, letter to Mr. Petrik reads, in pertinent part: I hardly know where to begin except to say to you 'I offer my most humble apology concerning the checks from Lorra Shepard.' . . . Since the checks were so old, I signed the back and deposited three of them to make sure they would clear the bank. There was no intention to mislead any one [sic] or to take the money. I had sent the completed lease without her signature and the deposit to your office in December. I assumed you received the lease and would follow through with notification to Ms. Shepard about payment and signature of lease. Your office apparently did not receive my letter and I failed to follow up until I got a call from Wendy a few weeks ago telling me that your office had not received any rent payments. Since the checks were so old and I had signed closing papers, applications for permits, etc. for you in the past, I signed the checks and deposited them in the Shell Point Realty account. On the date that I found out that they had cleared, I ran by the office on my way out of town to write out the check to Stone Real Estate Holdings and figured the wrong amount. Enclosed is check # 3459 for the balance of the rent and Check # 3463 for the deposit . . . . (Emphasis supplied) The emphasized portions of her letter, concerning transmittal to Ms. Freed of the $450.00 deposit, contradict each other, and the information in Ms. Lawhon's letter about her sending a blank lease to Ms. Freed in Sarasota in October 2001, is contrary to Ms. Lawhon's testimony at the disputed-fact hearing and contrary to part of Ms. Freed's deposition testimony. It is further noted that Ms. Lawhon did not mention in this April 15, 2002, letter to Mr. Petrik that she had received permission from Ms. Freed in March 2002 to endorse and deposit the first three checks. It is undisputed that Ms. Lawhon mailed to Ms. Freed a Shell Point Realty, Inc., operating account check for $820.00, dated April 14, 2002, made out to "Stone Real Estate Holdings." This was intended to make up the difference as calculated from Ms. Shepard's first three checks. (See Finding of Fact 38.) It also is undisputed that on April 15, 2002, Ms. Lawhon mailed to Ms. Freed a Shell Point Realty, Inc., operating account check for $450.00, of the same date, made out to "Stone Real Estate Holdings." Apparently, this reflected the amount of the cash deposit Ms. Shepard had given Ms. Lawhon on October 15, 2001. Ms. Lawhon's explanation at the disputed-fact hearing for sending two checks on April 15, 2002, was that she had miscalculated again. With the last check, Respondents satisfied all of what was owed to Mr. Petrik and cleared any discrepancies in their professional accounts within 30 days, as required by Agency Rule. The Agency's June 2002 audit of Respondents' accounts for the material period of time found them to be substantially in compliance with all regulations and general bookkeeping standards for real estate personnel. Ms. Lawhon did not represent to the Agency investigator in June 2002 that she had been given permission by Ms. Freed on March 26, 2002, to sign three of Ms. Shepard's checks with Mr. Petrik's name, but otherwise, her admissions to the investigator are consistent with her explanation at the disputed-fact hearing that Mr. Petrik had allowed people to sign documents (not negotiable instruments or checks) for him in the past as a matter of convenience, and that she was afraid because Ms. Shepard's three checks were stale and incorrectly made out, they also might not be any good. (See Finding of Fact 36.) Telephone bills show there was communication between Respondents and Ms. Freed on March 26, 2002. However, due to what appears to be Ms. Lawhon's recent fabrication that she received oral permission from Ms. Freed on March 26, 2002, to endorse Mr. Petrik's name on Ms. Shepard's first three checks, the portion of her testimony claiming that Ms. Freed gave her permission to endorse those checks in Mr. Petrik's name is not credible. Ms. Lawhon's April 15, 2002, letter (see Finding of Fact 44) constitutes an admission, as well as a statement inconsistent with her testimony at the disputed-fact hearing, in that her letter stated that she did not realize that she had "failed to follow up" concerning the 111 Razorback Road rental until she received a phone call from Ms. Freed. It is significant that Ms. Lawhon's letter states Ms. Freed called Ms. Lawhon first. There is no direct evidence as to why Ms. Shepard chose March 26, 2002, to deliver her three stale checks to Ms. Lawhon or why she made the last check payable to "Stone Real Estate Holdings," the Petrik corporation with which Respondents had an on-going commission sales relationship, but it may be inferred therefrom that it was on March 26, 2002, that Ms. Freed inquired of Ms. Lawhon why she was not receiving rental checks and why she had no lease if the 111 Razorback Road property were occupied. Ms. Freed testified that Respondents failed to remit any of Mr. Petrik's funds due until Ms. Freed first contacted Ms. Lawhon and requested the rent proceeds, and that when contacted by Ms. Freed, Ms. Lawhon initially told Ms. Freed that she had placed Ms. Shepard in 111 Razorback Road in January 2002. The Agency suggests that this representation to Ms. Freed by Ms. Lawhon, together with Ms. Lawhon's remitting only $2,355.00 on April 1, 2002, with the January to March memo on that check, amounts to Respondents' intentional misrepresentation of the amount due Mr. Petrik. Ms. Freed also testified that she later discovered from Ms. Shepard that, in fact, Ms. Shepard had been in possession of 111 Razorback Road since October 2001, and, therefore, Ms. Freed realized that the total amount due Mr. Petrik was higher than the amount represented and remitted by Ms. Lawhon on April 1, 2002. On this basis, the Agency asserts that Respondents remitted the additional funds on April 15, 2002, only after Ms. Freed had confronted Ms. Lawhon concerning her misrepresentation. Unfortunately, Ms. Freed's version of events is not entirely credible for the following reasons: Ms. Freed testified that she knew 111 Razorback was vacant in October 2001, but did not know from October 2001 to March 2002 that it was occupied/rented. She also testified that during this period she made no effort to rent that house. This suggests that either she was not doing her job or she knew on some level in October 2001 that the property was already rented. Ms. Lawhon's notification to Mrs. Alward that it was rented in December 2001 is unrefuted, and Mr. Alward testified that approximately January 2002, he and his wife had notified Ms. Freed that someone was living in the house. Against all this, Ms. Freed testified that she had learned of the occupancy of 111 Razorback Road from the Alwards in March 2002 and from Ms. Lawhon. She further testified that when she first talked to Ms. Lawhon in March, Ms. Lawhon said she had previously sent Ms. Freed her own check and would have to determine if that check had cleared.6/ Finally, Ms. Shepard is very clear that when Ms. Freed contacted her, Ms. Freed did not dispute the $635.00 (as opposed to $675.00) per month rental amount.7/ While Ms. Freed's accepting the lesser amount is not absolute proof, it is, with all the other evidence, an indicator that she had previously approved that amount when Ms. Lawhon telephoned her in October 2001. Given the somewhat naïve and confused property management process in Sarasota, including Ms. Freed's ignorance that Newhouse, Inc. actually held title to the property, Ms. Freed's assessment of an intentional misrepresentation by Respondents is not persuasive. It is undisputed that Ms. Lawhon did not correct the discrepancy of $1,270.00 until April 15, 2002, after Mr. Petrik's lawyer (not Ms. Freed) contacted her, but she did resolve the issue by the next business day after she was alerted that there might be an error. As to the issues of whether or not Ms. Lawhon made a willful oral misrepresentation to Ms. Freed on March 26, 2002, or on the April 1, 2002, Shell Point Realty, Inc., check as to how long Ms. Shepard had occupied 111 Razorback Road or was willfully withholding funds on April 1, 2002, it is more significant that from the very beginning of this series of events on October 15, 2001, Ms. Lawhon told Ms. Shepard to make out her checks to Mr. Petrik and that none of Ms. Shepard's checks were ever in Respondents' possession until March 26, 2002. Therefore, together with Ms. Lawhon's overwrought state of mind on April 1, 2002, it is not clear whether there was a willful misrepresentation, a misunderstanding, a miscommunication, or a miscalculation with regard to the first transmittal of only part of the rental funds on April 1, 2002, and the time line is not so clear that Ms. Freed's and the Agency's sinister construction of Ms. Lawhon's communications and calculations can be the only construction. Without the Agency's sinister construction of events, there is only clear and convincing evidence that Ms. Lawhon undertook, without expectation of a direct real estate commission, to rent 111 Razorback Road for Mr. Petrik, regardless of what entity actually held title thereto. In doing so, she undertook a fiduciary relationship with him and Ms. Shepard. In this capacity, she received a $450.00 cash deposit, which she retained for over five months without clear authority to retain it, and she did not timely deposit it in a trust or other appropriate account for Mr. Petrik's benefit. She did not follow up on getting a lease executed by the parties, which, based on hers and Ms. Freed's prior course of dealing, Ms. Freed could have reasonably expected and which Ms. Shepard clearly did expect. When Ms. Freed inquired about the matter in March 2002, Ms. Lawhon, to her credit, tried to resolve the matter quickly and appropriately. However, in the course of resolving it, she did not get an executed lease as expected; she endorsed checks made out to Mr. Petrik without clear authority to do so; she did not deposit funds from those checks into an appropriate account; and she repeatedly miscalculated amounts due and remitted incorrect amounts to Mr. Petrik, via Ms. Freed. She also did not discover her errors on her own, but had to be alerted by the lawyer on April 12, 2002. While I detect no dishonest intent, nor any intent to permanently convert any funds to her personal use, the fact that Ms. Lawhon ultimately transmitted to Mr. Petrik the full amount due is not particularly to her credit, since her actions--or lack of action--had the effect of depriving Mr. Petrik of the use of a portion of those funds for nearly six months.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order which: Finds Respondents Mary Lawhon and Shell Point Realty, Inc., guilty of Section 475.25(1)(k), Florida Statutes, Counts III and VI, respectively, of the Administrative Complaint; Provides as a penalty for Mary Lawhon the payment of a $1,000.00 fine and five months' suspension of her licenses; Provides as a penalty for Shell Point Realty, Inc., a reprimand; and Dismisses Counts I, II, IV, and V of the Administrative Complaint. DONE AND ENTERED this 21st day of April, 2003, in Tallahassee, Leon County, Florida. ELLA JANE P. DAVIS 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 21st day of April, 2003.
The Issue The issue in these cases is whether a land development regulation adopted as City of Key West Ordinance 98-31, and approved by a Final Order of the Department of Community Affairs, DCA Docket No. DCA98-OR-237, is consistent with the Principles for Guiding Development for the City of Key West Area of Critical State Concern set forth in Rule 28-36.003(1), Florida Administrative Code.
Findings Of Fact The Parties. All of the Petitioners in Case No. 99-0666GM, except Neal Hirsh and Property Management of Key West, Inc. (hereinafter referred to as the "Abbe Petitioners"), are all involved in the rental of real property in Key West, Monroe County, Florida. No evidence was presented concerning the identity of Mr. Hirsh or Property Management of Key West, Inc. The Abbe Petitioners are involved in the rental of Key West real property as owners or as rental managers of residential properties which are rented to tourists for periods of less than 30 days or one calendar month (hereinafter referred to as "Transient Rentals). None of the properties used as Transient Rentals by the Abbe Petitioners constitute the Abbe Petitioners' primary residences. Petitioner in Case No. 99-0667GM, Jerry Coleman, owns residential property located in Key West. Mr. Coleman rents the residential property owned by him to tourists for periods of less than 30 days or one calendar month. Mr. Coleman also resides in Key West. Petitioner in Case No. 99-1081DRI, John F. Rooney, failed to present any evidence in support of his case or his standing. Respondent, the Department of Community Affairs (hereinafter referred to as the "Department"), is an agency of the State of Florida. The Department is charged with responsibility for, among other things, the approval or rejection of the comprehensive growth management plan, plan amendments, and land development regulations adopted by the City of Key West. Intervenor, the City of Key West (hereinafter referred to as the "City"), is a political subdivision of the State of Florida. Consistent with the requirements of Part II, Chapter 163, Florida Statutes, the City has adopted a comprehensive growth management plan, the City of Key West Comprehensive Plan (hereinafter referred to as the "City's Plan"). The City's Plan became effective in 1993. The City's Plan consists of twelve elements: (a) Land Use; (b) Historic Preservation; (c) Traffic Circulation; (d) Housing; (e) Public Facilities; (f) Coastal Management; (g) Port Facilities; (h) Conservation; (i) Open Space and Recreation; (j) Intergovernmental Coordination; (k) Capital Improvements; and (l) General Monitoring and Review. Data Inventory and Analysis in support of the City's Plan was compiled by the City. The City has been designated as an area of critical state concern (hereinafter referred to as the "City ACSC"), pursuant to Sections 380.05 and 380.0552, Florida Statutes, since 1974. Rule 28-36.001, et seq., Florida Administrative Code. As an area of critical state concern, all comprehensive plan amendments and land development regulations adopted by the City must be reviewed by the Department for consistency with the Principles for Guiding Development (hereinafter referred to as the "Principles"), set out in Rule 28-36.003(1), Florida Administrative Code. The Principles were adopted by the Governor and Cabinet, sitting as the Administration Commission, in February 1984. Intervenors, Henry and Martha duPont, reside at 326 Whitehead Street, Key West, Florida. The duPonts reside in an area known as the "Truman Annex." The properties on both sides of the duPonts' residence are used as Transient Rentals. Key West History and Tourism. The City is located primarily on the southern-most bridged island of the Florida Keys, a chain of islands, or keys, which run in a generally southwesterly direction from the southeastern tip of the Florida peninsula. The City, like the Florida Keys, is bounded on the west by the Gulf of Mexico and on the east by the Atlantic Ocean. The City is connected to the Florida peninsula by a series of bridges which connect the keys. The road which runs the length of the Florida Keys is designated U. S. Highway 1. It is approximately 112 miles from the Florida mainland to the City. Prior to the early 1970s, the two most significant components of the City's economy were commercial fishing and the military. Tourism also played a role, but not to the extent that it does today. Toward the middle and end of the 1970s the military presence in the City was significantly reduced and the fishing industry was on the decline. To replace the fading fishing and the lost military components of the City's economy, the City turned to tourism. The City's efforts began in earnest during the 1980s and have continued through the present. The City is now a major tourist destination. The City's most attractive features include its historic character, especially the area of the City designated as "Old Town," its warm climate, its extensive shoreline, and its water resources, including coral reef systems. Approximately two-thirds of the City's economic base is now associated with tourism. While the City shares many of the characteristics of most tourist-resort destinations, it also features certain unique characteristics not found in other destinations. Those features include its geographic remoteness and its limited size. The island where the City is principally located is only approximately eight square miles. Currently, approximately 6.82 million tourists visit the City annually. Approximately 62 percent, or 4.25 million visitors, stay overnight in the City. Approximately 480,000 tourists, or about 11 percent of the overnight guests, stay in Transient Rentals. Tourism in the City represents, directly and indirectly, approximately 66 percent of the economic base of the City. The City's economy in turn represents approximately half of the economy of Monroe County. Approximately 15,000 of the 23,000 jobs in Monroe County and Key West are associated with the tourist industry. Of those jobs, 54 percent of all retail sales jobs are involved in the tourist industry. Approximately 50 percent of the estimated $187 million of Monroe County-wide personal income comes from the tourist industry. The tourist industry should continue to prosper in the City as long as the natural environmental characteristics of the City (the climate, surrounding waters, and tropical features of the Keys) and the unique historical and "community" character of the City remain vibrant. It is the natural environment, the climate, and local community character in combination with the historical and cultural attractions of the City that create a diverse mix of attractions which make the City a unique vacation destination. The City's mixture of attractions must be served by a mixture of tourist accommodation services, including hotels, motels, guest houses, and Transient Rentals. Those accommodations are currently available. There are approximately 3,768 hotel/motel rooms available in the City. There are also approximately 507 residential properties with 906 units which are licensed as Transient Rentals in the City and approximately 647 unlicensed residential properties used for Transient Rentals. The loss of the availability of unlicensed Transient Rentals will not have a lasting adverse impact on tourism in the City. The City's Plan recognizes the importance of tourism. Objective 1-1.3, "Planning for Industrial Development and Economic Base," of the land use element of the City's Plan provides, in pertinent part, the following: . . . . Tourism is the most significant component of the City of Key West economic base. The City of Key West is a major tourist destination. It's principal attributes are its historic character, warm climate, extensive shoreline, water resources, the coral reef system, abundant water related and water-dependent activities, and the ambiance of Old Town. The historic district contains many old structures which do not comply with the City's size and dimension regulations since many structures pre-date these local regulations. Realizing the significant contribution of Old Town, especially the unique character of its structures and their historic and architectural significance, and realizing the substantial impact of tourism to the economic base, the City shall direct considerable attention to its growth management decisions to maintaining the historic character of Old Town and preserving tourism as a major contributor to the City's economic base. Similarly, the City shall carefully consider supply and demand factors impacting tourism and the local economy to ensure the long term economic stability. The two policies adopted to implement Objective 1-1.3, Policies 1-1.3.1, "Mandatory Planning and Management Framework for Industrial Development," and Policy 1- 1.3.2, "Pursue Nuisance Abatement Standards and Criteria," provide for measures to deal with industrial development and not tourism. Reliance upon Objective 1-1.3 of the City's Plan by Petitioners' witnesses is misplaced. While the Objective does reflect the importance of tourism in the City, it does not provide any guidance concerning appropriate land uses which may be allowed throughout the City. There is no direction in the Objective concerning land uses which the City must maintain. Land uses are considered and dealt with in other provisions of the City's land use element. Additionally, the reliance upon Objective 1-1.3 of the City's Plan fails to give adequate weight to other provisions of the Plan. The Historic Significance of the City and "Old Town." The importance of the City's history is recognized throughout the Plan. Objective 1-1.3 of the City's Plan quoted, supra, points to the City's history and the role it plays in tourism. An area of the City has been designated as the Key West Historic District. The area is described in the Data Inventory and Analysis as the "physical manifestation of the 170 year existence of [the City]." Page 1A-11 of the Data Inventory and Analysis. Objective 1-2.3 of the Future Land Use Map Goal of the City's Plan deals with the importance of the Key West Historic District and an area which is largely located within the historic district known as "Old Town": OBJECTIVE 1-2.3: MANAGING OLD TOWN REDEVELOPMENT AND PRESERVATION OF HISTORIC RESOURCES. Areas delineated on the Future Land Use Map for historic preservation shall be planned and managed using a regulatory framework designed to preserve the form, function, image, and ambiance of the historic Old Town. The City's Historic Architectural Review Commission (HARC), in addition to the Planning Board, shall review all development proposals within the historic area designated by the National Register of Historic Places. The land development regulations shall be amended upon plan adoption to incorporate design guideline standards recently adopted by HARC. Development in any area of Old Town within and outside the HARC review area may impact the historic significance of Old Town. Any development plans for these areas shall be subjected to site plan review and shall be designed in a manner compatible with historic structures within the vicinity. While Objective 1-2.3 makes reference to the preservation of the "function" of Old Town, the Objective does not require that any particular "land use" which may exist in Old Town be preserved in perpetuity. The Objective and other provisions of the City's Plan addressing the historic significance of the City evidence a concern for the overall character of the area, not particular land uses. That character is described in, and adopted as part of, the Future Land Use Map of the City's Plan. See Policy 1-3.4.1 and Objective 1-3.4 of the City's Plan. Objective 1-1.5 of the Land Use element emphasizes the importance of maintaining and enhancing the appearance of gateway corridors into the City and the "major activiy centers such as Old Town." The Historic Preservation Element of the City's Plan, Chapter 1A, deals with historic resources, structures, and sites. No particular land use of these resources, structures, and sites, other than "housing," is mentioned. Throughout the history of the City, residents have to varying degrees rented their residences or parts of their residences on a short-term basis to tourists and other guests to the City. Most of the rentals involved the rental of portions of a residence while the owner of the property continued to reside in the rest of the property. Monroe County Commissioner Wilhelmina Harvey, Joe Crusoe, Robert Lastres, Vincent Catala, and Olivia Rowe, all long-term residents of the City, all testified about such rentals. The evidence failed to prove, however, that the types of rentals historically undertaken in the City constitute a part of the significant "history" of the City, at least not in the context of the historical significance of the City addressed in the City's Plan. Nor were the historical rentals testified to during hearing of the scale and scope of the rentals that now exist in the City. Additionally, to the extent that Transient Rentals are considered to be part of the significant "history" of the City, nothing in the land development regulation which is the subject of this proceeding absolutely prohibits such rentals. In fact, Transient Rentals of property for which a transient rental license has been obtained are not impacted by the land development regulation. Transient Rentals will, therefore, continue in the City. Nothing in the City's Plan dealing with the historical significance of the City requires that the City allow Transient Rentals of residential property to continue unregulated in the City. Regulation of the extent and location of Transient Rentals in the City does nothing to harm the historical significance of the City. In suggesting that Transient Rentals constitute part of the "history" of the City, and in particular, a part of the history of Old Town, the Abbe Petitioners have relied upon Policy 1-2.3.9, which provides, in part, the following: Policy 1-2.3.9: Retention of Historic Character and All Permanent Single Family Housing Units. The City desires to retain in perpetuity the existing character, density, and intensity of all historic sites and contributing sites within the historic district; and shall protect all the City's permanent single family housing stock citywide which was legally established prior to the adoption of the plan or a legal single family lot of record. Therefore, the City shall protect and preserve these resources against natural disaster, including fire, hurricane, or other natural or man-made disaster, by allowing any permanent single family units within the City, or other structures located on historic sites or contributing sites, which are so damaged to be rebuilt as they previously existed. . . . The reliance upon Policy 1-2.3.9 is misplaced. First, this Policy deals with all permanent single-family housing stock of the City and not just housing used for Transient Rentals. Secondly, the Policy does not provide for the protection of any particular use of single-family housing stock; it provides for the protection of the structures used as single-family housing. It recognizes the unique, historical construction of homes in the City and provides for their continued protection. The Impact of the City's Limited Land Mass and the City's Effort to Control Transient Rentals. As a relatively small island, the City has a limited land area and little opportunity for expansion without significantly altering the traditional character of the City. Because of the limited land area, maintaining adequate housing, including affordable housing, is a significant concern in the City. Residential property in the City has been used by tourists for accommodations for many years, long before the tourist boom now being experienced in the City. Transient uses of residential property were less organized and were less available than they are today, however. Often times, transient uses of residential property consisted of people renting out rooms in their residences to tourists. While the extent to which residential property has been used historically for tourist accommodations was not accurately quantified by the evidence, the evidence did establish that the use of residential property for Transient Rentals has significantly increased since the 1980s. As tourism has increased since the 1980s, there has been an increasing demand for tourist accommodations of all types. This demand for tourist accommodations, especially the demand for Transient Rentals, has adversely impacted the need and demand for residential housing in the City. In an effort to address the problem the Key West City Commission (hereinafter referred to as the "City Commission"), adopted a Growth Management Ordinance in 1985 mandating a ratio of Transient Rentals to residential units for the City. The intent of the 1985 Growth Management Ordinance was to maintain a suitable balance between tourist accommodations and housing for permanent residents of the City. In 1993 the City Commission adopted a dwelling unit allocation ordinance, or the "rate of growth ordinance," which was designed, at least in part, to achieve a balance between the demand for tourist accommodations and the need for permanent housing, including affordable housing. The 1993 rate of growth ordinance was subsequently incorporated into the City's Plan as Objective 1-3.12. Pursuant to the City's Plan, Transient Rentals are not to exceed 25 percent of single family units permitted annually. Note 2 to Policy 1-3.12.3 of the Plan provides that "[t]he number of transient units reflect a preference for preserving housing opportunities for permanent residents as opposed to transient residents since historical trends indicate an erosion of the permanent housing stock which is largely attributed to conversion of permanent housing units to transient housing." The City's Failure to Control Transient Rentals; The "50% Rule." In 1989, the City required that an occupational license be obtained by property owners using their property for both long-term rentals and Transient Rentals. These occupational licenses were not subject to review by the Department for consistency with the City's Plan and land development regulations. Occupational licenses are essentially a revenue raising requirement. The issuance of an occupational license does not constitute a zoning decision or otherwise constitute the approval of a land use. By the time the City adopted the 1993 rate of growth ordinance and the City's Plan, the number of occupational licenses issued for Transient Rentals had already exceeded the allocation of Transient Rentals which are allowable in the City. As a consequence, owners of residential property who desired to use their property for Transient Rental purposes have been unable to obtain an occupational license for such use. The lack of allowable Transient Rentals under the City's Plan did not, however, actually stop individuals from using their property for Transient Rentals. In addition to licensed Transient Rentals, there are approximately 647 unlicensed Transient Rental properties in the City. Properties owned by the Abbe Petitioners and Mr. Coleman are among these unlicensed Transient Rentals. The Abbe Petitioners who own Transient Rentals rather than manage them have occupational licenses issued by the State of Florida and Monroe County, but not a Transient Rental occupational license issued by the City. Mr. Coleman has a "nontransient" license issued by the City and occupational licenses issued by the State and Monroe County, but not a Transient Rental occupational license from the City. The number of unlicensed Transient Rental properties in the City has been contributed to, in part, by an interpretation of a former definition of "tourist and transient living accommodations" found in the City's land development regulations. The definition was adopted in 1986. Accommodations meeting this definition were prohibited in a number of zoning districts in the City. Accommodations which did not come within the definition were not prohibited in those districts. The 1986 definition of "tourist and transient living accommodations" (hereinafter referred to as the "Former Transient Definition"), was as follows: Tourist and transient living accommodations. Commercially operated housing principally available to short-term visitors for less than twenty-eight (28) days. Pursuant to this definition, any property used "principally" for visitors for less than 28 days constituted a tourist or transient living accommodation. There were some who advocated that the term "principally" meant that a residence had to be used as a 28-day short-term visitor accommodation for at least 50 percent of the year. Pursuant to this definition, any residence used at least 50 percent of the year for 28-day or less rentals is considered to constitute a "tourist and transient living accommodation." Conversely, if a residence was used less than 50 percent of the year for 28-day or less rental the property is not considered to constitute a tourist or transient living accommodation. This interpretation of the Former Transient Definition has been referred to as the "50% Rule." Pursuant to the 50% Rule, the owner of residential property in the City could rent the property for periods of less than 28 days without obtaining an occupational license for the property as long as the property was not rented more than half of the year. This rationale was assumed to apply regardless of where the property was located; even in land use districts where Transient Rentals were prohibited. The developer of Truman Annex, an area formerly owned by the Navy located to the immediate south of Old Town, advocated the 50% Rule in his dealings with the City in the early 1990s. The City's licensing department also issued "non- transient" licenses for residences which met the 50% Rule. Code enforcement citations against owners of residences used as Transient Rentals for less than 50 percent of the year without an occupational license were withdrawn. Despite the foregoing, the evidence at hearing in these cases failed to prove that the 50% Rule became an official "policy" of the City Commission. What the evidence proved was that the City took no action to adopt or reject the 50% Rule as an official position. The City simply failed to take any action to reject the 50% Rule and interpret the definition of tourist and transient living accommodations in a more reasonable manner. Given the City's efforts to limit Transient Rentals through the adoption of the 1985 Growth Management Ordinance, the 1993 rate of growth ordinance, and the City's Plan, it is clear, however, that reliance upon the 50% Rule is not reasonable. See findings of fact 39 through 45 of the Department of Community Affairs and City of Key West's Joint Proposed Recommended Order, which are hereby incorporated herein by reference. Finally, even if the 50% Rule did constitute the legislative intent of the City Commission in adopting the Former Transient Definition, it was eliminated by the City Commission in 1997 by the adoption of City Ordinance 97-20. City Ordinance 97-20 was adopted September 16, 1997, and was approved by Final Order of the Department dated November 19, 1997. The new definition of transient living accommodations adopted by City Ordinance 97-20, and still in effect today, is as follows: SECTION 5-21.2: DEFINITION OF TERMS TRANSIENT LIVING ACCOMMODATIONS. Any unit, group of units, dwelling, building, or group of buildings within a single complex of buildings, which is 1) rented for periods of less than 30 days or 1 calendar month, whichever is less; or which is 2) advertised or held out to the public as a place regularly rented to transients. (Emphasis added). The current definition of transient living accommodations has eliminated the reference to properties "principally" used as a Transient Rental. The new definition includes any residence rented for any period of time, even once a year, as long as the rental is for a period of less than 30 days or one calendar month, whichever is less. The Former Transient Definition and, consequently, the 50% Rule, was also superceded by the adoption of the City's Plan. The City recognized the foregoing history in the ordinance which is the subject of this proceeding. In rejecting the notion that the City had adopted the 50% Rule as City policy, the City stated the following in the ordinance: . . . . In 1986, the City enacted former zoning code Section 35.24(44) which provided the following definition of a transient living accommodation "Commercially operated housing principally available to short-term visitors for less than twenty-eight (28) days." (This definition shall hereinafter be referred to as the "Former Transient Definition.") Some property owners and developers interpreted the Former Transient Definition to mean that an owner could rent his or her residential dwelling for less than half the year without the dwelling losing its residential status, and therefore without the need for City-issued transient license . . . . This interpretation went unchallenged by the City. . . . . . . . Therefore, the City of Key West intends by these regulations to establish a uniform definition of transient living accommodations, and to halt the use of residences for transient purposes in order to preserve the residential character of neighborhoods. . . . Based upon the foregoing, any reliance by Petitioners in these cases upon the 50% Rule as City policy is rejected. The City's Adoption of Ordinance No. 98-31. During 1997 and 1998 the City conducted workshops and held public meetings to consider and develop an ordinance regulating Transient Rentals. The workshops were conducted by City staff and were attended by representatives of essentially all those interested in the Transient Rental issue. An effort was made to achieve consensus on the issue. During these workshops, the 50% Rule and the history of Transient Rentals in the City were fully considered. In addition to the workshops conducted by the City, the City hired Frank Pallini with PRG, Real Estate Research and Advisory Services, Clearwater, Florida, to conduct an analysis of the economic impact of an ordinance limiting Transient Rentals. The report prepared by Mr. Pallini (hereinafter referred to as the "Pallini Report"), was submitted to the City on August 28, 1998. The Pallini Report and, consequently, the negative economic impact of the ordinance at issue in this proceeding was fully considered by the City when it adopted the ordinance. On June 2, 1998, the City Commission adopted Ordinance 98-16, which amended the definition of "transient living accommodations" in the City's land development regulations. Unlicensed short-term Transient Rentals were expressly prohibited by Ordinance 98-16 with the exception of four specified City land use districts. Those districts, referred to during the hearing as "gated communities," are all single, contiguous zoning district areas of the City with controlled access and which are governed by homeowners' or condominium associations. Truman Annex was one of the four excluded gated communities. Ordinance 98-16 was found by the Department to be inconsistent with the Principles on July 29, 1998, by Final Order DCA98-OR-135. The Department concluded that Ordinance 98- 16 was inconsistent with the Principles because it allowed the use of residential property as Transient Rentals in areas where, according to the Department, such rentals were prohibited under the City's Plan. The City initially challenged the Department's decision, but subsequently withdrew its challenge. The City subsequently repealed Ordinance 98-16. On November 10, 1998, the City adopted Ordinance 98-31 (hereinafter referred to as the "Ordinance"), which is the subject of this proceeding. The Ordinance contains the same provisions, except the exception for gated communities, that had been contained in Ordinance 98-16. The Ordinance is a "land development regulation" as defined in Section 380.031(8), Florida Statutes. It is, therefore, subject to review for consistency with the Principles by the Department. During the process of adopting the Ordinance the City recognized the confusion that the 50% Rule had caused concerning the intent of the City's Plan with regard to Transient Rentals. The City expressly dealt with the 50% Rule and rejected it as policy of the City. In particular, the Ordinance provides that the City's purpose in enacting the Ordinance was to phase out unlicensed transient uses of residential properties in land use zoning districts in which they are not permitted. This goal is accomplished by further modifying the definition of "transient living accommodations" adopted in 1997 in Section 5-21.2 of the City's land development regulations: Sec. 5-21.2 Definition of terms. Transient Living Accommodations. Or Transient Lodging. Any unit, group of units, dwelling, building, or group of buildings within a single complex of buildings, which is 1) rented for a period or periods of less than 30 days or 1 calendar month, whichever is less; or which is 2) advertised or held out to the public as a place rented to regularly regularly rented to transients. , regardless of the occurrence of an actual rental. Such a short-term rental use of or within a single family dwelling, a two family dwelling or a multi-family dwelling (each also known as a "residential dwelling") shall be deemed a transient living accommodation. (Words struckstruck through were eliminated from the definition and underlined words were added). The Ordinance also adds Section 2-7.21 to the City's land development regulations explaining its action in modifying the definition of transient living accommodations and expressly prohibiting unlicensed Transient Rentals of less than 30 days or one calendar month, whichever is less. The Ordinance does not provide for a complete ban on Transient Rentals. On the contrary, Transient Rentals of properties for which transient occupational licenses have been issued by the City are expressly allowed by the Ordinance. The City estimated that 507 residential properties containing a total of 906 transient units hold such licenses. Under the Ordinance, these units may continue to be used as Transient Rentals. The Department's Review of the Ordinance. On November 24, 1998, the City transmitted a copy of the Ordinance to the Department for approval or rejection pursuant to Section 380.05(6), Florida Statutes. The Department conducted its review of the Ordinance following its customary procedures for review of land development regulations that impact an area of critical state concern. The review included a consideration of Chapter 28-36, Florida Administrative Code, including the Principles, the City's Plan, and the legislative intent of Chapter 380, Florida Statutes. The Ordinance was directed to Kenneth Metcalf, the person in the Department responsible for supervision of the City ACSC. Mr. Metcalf reviewed the ordinance and assigned it to the Department's Field Office with directions as to which issues the Field Office should address during its review. Following staff review, an evaluation was prepared addressing the Ordinance's consistency with the Principles. The evaluation was reviewed by Mr. Metcalf. After receipt and review of the evaluation, it was discussed at a meeting of Department staff. As a result of the meeting, it was recommended that the Secretary of the Department find the Ordinance consistent with the Principles. On January 5, 1999, the Department entered a Final Order, DCA98-OR-237, finding that the Ordinance was consistent with the Principles. The Department caused notice of the Final Order to published in the Florida Administrative Weekly. Petitioners' Challenge to the Ordinance. The Abbe Petitioners, Mr. Coleman and over 200 other owners of property in Truman Annex, and Mr. Rooney all timely filed petitions challenging the Department's Final Order pursuant to Sections 120.569 and 120.57, Florida Statutes, to the Department's Final Order approving the Ordinance. The petitions were filed with the Division of Administrative Hearings by the Department. The petitions were designated Case Nos. 99-0666GM, 99-0667GM and 99-1081DRI, respectively. Following dismissal of the petitions in all three cases, amended petitions were filed. Mr. Coleman's amended petition, filed on or about June 14, 1999, named Mr. Coleman as the only Petitioner remaining in that case. Standing. The parties stipulated to certain facts relating to the standing of the Abbe Petitioners and Mr. Coleman. In addition to stipulating to the facts found, supra, concerning the ownership and use of real property by the Abbe Petitioners and Mr. Coleman in the City, it was agreed that the Abbe Petitioners and Mr. Coleman have transient occupational licenses issued by the State of Florida and Monroe County for their City real property. The Abbe Petitioners and Mr. Coleman suggested in their proposed orders that it had been stipulated during the hearing that they have standing to initiate, and participate in, this proceeding. A close reading of the stipulation of the parties, however, fails to support this contention. What the Department, City, and the duPonts stipulated to were certain underlying facts; they did not stipulate to the ultimate finding. The Department, City, and duPonts did not stipulate to whether the Abbe Petitioners and Mr. Coleman will suffer an immediate injury as a result of the Ordinance. The evidence proved that, the Abbe Petitioners and Mr. Coleman do not have the legal right to use their properties as Transient Rentals. Neither a reasonable interpretation of existing land development regulations nor the 50% Rule legalizes such use. As a consequence, the Ordinance cannot have the effect of preventing the Abbe Petitioners and Mr. Coleman from using their properties for Transient Rental purposes because that is not a purpose for which they are legally authorized to use the properties anyway. The evidence also proved, however, that the City has allowed the Abbe Petitioners and Mr. Coleman to continue to use their properties as Transient Rentals, legally or not, and that, without the City's taking some action, the Abbe Petitioners and Mr. Coleman would continue to do so. As a consequence, the Ordinance will have the practical and real effect of preventing the Abbe Petitioners and Mr. Coleman from continuing to use their properties as Transient Rentals, to their economic detriment. The Abbe Petitioners, other than Neal Hirsh and Property Management of Key West, Inc., and Mr. Coleman have proved that they have standing to institute and participate in this proceeding. The duPonts proved that they have standing to participate in this proceeding. The City proved that its substantial interests were determined by the Department's decision in this matter. The City has standing to participate in this proceeding. Mr. Hirsh, Property Management of Key West, Inc., and Mr. Rooney failed to prove that they have standing to institute or participate in this proceeding. The Principles. Rule 28-36.003, Florida Administrative Code, contains the Principles: Strengthen local government capabilities for managing land use and development; Protection of tidal mangroves and associated shoreline and marine resources and wildlife; Minimize the adverse impacts of development of the quality of water in and around the City of Key West and throughout the Florida Keys; Protection of scenic resources of the City of Key West and promotion of the management of unique, tropical vegetation; Protection of the historical heritage of Key West and the Key West Historical Preservation District; Protection of the value, efficiency, cost-effectiveness and amortized life of existing and proposed major public investments, including: The Florida Keys Aqueduct and water supply facilities, Sewage collection and disposal facilities, Solid waste collection and disposal facilities, Key West Naval Air Station, The maintenance and expansion of transportation facilities, and Other utilities, as appropriate; Minimize the adverse impacts of proposed public investments on the natural and environmental resources of the City of Key West; and Protection of the public health, safety, welfare and economy of the City of Key West, and the maintenance of Key West as a unique Florida resource. In determining whether the Ordinance is consistent with the Principles, the Principles should be considered as a whole. No specific provision should be construed or applied in isolation from the other provisions. The Ordinance has little or no impact on those Principles that relate to the natural resources of, and public facilities in, the City. Those Principles include Rule 28- 36.003(1)(b), (c), (d), (f), and (g), Florida Administrative Code. Those Principles are considered neutral in the determination to be made in these cases. The determination of whether the Ordinance is consistent with the Principles is limited to a balancing of the Principles listed in Rule 28-36.003(1)(a), (e), and (h), Florida Administrative Code (hereinafter referred to as "Principles A, E, and H," respectively). Principle A: The Ordinance Strengthens the City's Capabilities for Managing Land Use and Development. In order for the Ordinance to be considered as strengthening the City's capabilities for managing land use and development, the Ordinance must be consistent with the City's Plan. The evidence proved that it is. The City's Plan contains various land use districts, all of which have certain allowable and prohibited uses. The districts established in the City's Plan and the relevant prohibition of transient lodgings are as follows: Coastal Low Density Residential Development district: prohibits "transient lodging and guest homes." Single Family Residential Development district: prohibits "transient accommodations" and "transient rental housing." Medium Density Residential Development district: prohibits "transient lodging and guest homes." Mixed Use Residential/Office: prohibits "transient lodging." Limited Commercial Development: Prohibits "transient residential land use activities." Historic High Density Residential Development and Historic Medium Density Residential Development districts: prohibit "transient residential uses, including guest homes, motels, or hotels." Historic Residential Commercial Core 2: prohibits "transient residential uses." Historic Residential/Office district: prohibits "transient lodging or guest houses" unless previously licensed. Conservation, Military, and Public Services districts: prohibit transient uses. The following districts established by the City Plan allow Transient Rentals: Salt Pond Commercial Tourist: allows "motels, [and] limited scale tourist facilities." General Commercial Development: allows "transient lodging including hotels and motels, timesharing or fractional fee residential complexes, and other transient quarters." Mixed Use Planned Redevelopment and Development districts: uses are determined, not by the City's Plan, but the land development regulations and development approvals for these large scale development districts. Historic Residential Commercial Core 1 and 3 districts: allow "transient residential accommodations" and "tourist accommodations." Historic Neighborhood Commercial: allows "transient rental accommodations" in HNC-1 and HNC-3 districts as long as they do not displace permanent resident housing and "transient accommodations" in HNC-2 districts. Historic Commercial Tourist: allows "hotels, motels, and/or transient lodging facilities." The most reasonable interpretation of the restricted and allowable land uses for the land use districts established under the City's Plan is that references to "transient rental accommodations," "transient residential uses," "transient rental housing," and "transient lodging facilities" are intended to include Transient Rentals. One other district is established by the City's Plan which is relevant to this matter: Historic Planned Redevelopment and Development districts (hereinafter referred to as "HPRD" districts). Land uses allowable in an HPRD district are to be established by land development regulations. The only HPRD district in the City is currently the Truman Annex. Truman Annex was being developed at the time the City's Plan was adopted. While the City's Plan provides that the specific requirements for any HPRD district is to be provided by land development regulations, Policy 1-2.3.4 of the City's Plan does provide, among other things, that the regulations are to "[a]void replacement of permanent housing stock with transient lodging." The Ordinance, and its application to Truman Annex, is consistent with this direction of the City's Plan. Truman Annex was developed as a development of regional impact, or "DRI." As a DRI and HPRD district, land uses in Truman Annex are subject to development agreements between the City and the developer of Truman Annex. Those agreements have been amended 12 times. The Truman Annex development agreements allow the development of "housing units," which included both transient and non-transient uses. "Housing units" were further broken down into the following types: "affordable," "hotel transient housing units," "time share transient housing units," and "other residential housing units." "Affordable" and "other residential housing units" are intended to be "residential" development in the context of the Truman Annex development agreements; "hotel transient housing units" and "time share transient housing units" are intended to be Transient Rentals in the context of the Truman Annex development agreements. Given the distinction between "transient" housing units and other uses in the Truman Annex development agreements, no approval of Transient Rentals of "affordable" or "other residential housing units" was contemplated or allowed by the City. The Truman Annex development agreements and the HPRD district land development regulations do not authorize the use of "affordable" or "other residential housing units" in Truman Annex as Transient Rentals. The Ordinance is, therefore, consistent with the Truman Annex development agreements and the HPRD district land development regulations. The Ordinance, if nothing else, clarifies the state of the law with regard to which Transient Rentals are allowed and which are prohibited in the City. The Ordinance eliminates any lingering confusion caused by the failure of the City to reject the 50% Rule in all circumstances and to properly interpret the Former Transient Definition. The suggestion of the Abbe Petitioners that the 50% Rule was adopted as a part of the City's Plan because it existed when the City's Plan was adopted is not supported by the evidence. Again, the 50% Rule was never adopted as the official policy of the City; it simply went unchallenged by the City. In fact, the 50% Rule was allowed to be advanced by some despite the adoption of the City's Plan and its prohibition against Transient Rentals in the land use districts described, supra. Nor does Objective 1-1.3 of the City's Plan support the Petitioners' position in these cases. That Objective does not require that any particular land use be continued in the City. Nor do those provisions of the City's Plan dealing with the historic significance of the City detract from the conclusion that the Ordinance is consistent with the City's Plan. The provisions dealing with the historic significance of the City are concerned with the significance of structures which have been a part of the history of the City's existence. The City's Plan also evidences a desire to preserve historically significant housing, not any particular use of those structures. Based upon a preponderance of the evidence, the Ordinance is consistent with Principal A. Principle E: Protection of the Historic Heritage of the City and the Key West Historical Preservation District. Principle E requires a consideration of significant events in the history of the City, famous visitors and residences of the City throughout its history, the architectural history of the City, and other aspects of the City's character. This conclusion is supported, in part, by Rule 28-36.003(2)(e), Florida Administrative Code: (e) Historic Resource Protection. A management and enforcement plan and ordinance shall be adopted by the City of Key West providing that designs and uses of development reconstruction within the Key West Historical Preservation District shall be compatible with the existing unique architectural styles and shall protect the historical values of the District. The City of Key shall maintain an architectural review board established pursuant to Section 266.207(2), Florida Statutes. . . . . The evidence in these cases proved that the Ordinance will preserve and ensure the preservation of the City's historical significance. It will do so by limiting the destruction of the character and community of the City, as discussed, infra. Principle E does not support a conclusion, as argued by Petitioners, that Transient Rentals have played such a large part in the history of the City that they should not be regulated in the manner the Ordinance provides for. Petitioners' argument also fails because the Ordinance only regulates Transient Rentals, it does not eliminate historical Transient Rental uses. The City's Plan also fails to support Petitioners' argument. The City's Plan does not address, or require, the continuation of "historical" land uses such as Transient Rentals. Based upon a preponderance of the evidence, it is concluded that the Ordinance is consistent with Principal E. Principle H: Public Health, Safety, and Welfare and the Economy of the City. Principal H requires a consideration of the public health, safety, and welfare, and the economic viability of the City. These factors are inextricably tied to the tourist industry of the City. Without the tourist industry, the City's economy would likely falter to the detriment of the public health, safety, and welfare. A large part of what makes the City attractive, to tourist and residents alike, is the unique community atmosphere and the historical character of the City. The health of the tourist industry in the City is, in part, caused by the City's vibrant and viable communities. An essential characteristic of that vibrancy is the fabric of the people that inhabit the City and the interactions of those inhabitants among themselves and with tourists. As long as tourists continue to enjoy the unique character of the City, they will continue to enjoy their experience and will continue to come back to the City. If that unique character is significantly diminished or lost, so too will be the tourist industry. A number of factors threaten the quality of the tourist experience in the City and, therefore, the continued viability of the tourist industry. Those factors include the shortage of available and affordable housing, a shortage of labor to serve the tourist industry, crowding, and conflicts between tourist and residents of the City. All of these factors are related and must be adequately addressed in order to protect the economic viability of the City. Left unchecked, tourism in the City will likely be seriously impacted. Tourism requires a large labor force to provide the services which tourist expect. The labor force must provide lodging, food, retail sales, amusements, and other services. Indirect services, such as fire protection, police, and others must be provided for also by the labor force. The labor force necessary to serve a tourist industry must be provided with adequate housing. The ability to meet this need must be balanced with the need to provide adequate accommodations to the tourists who visit a destination. The need to balance these competing interests is an even greater challenge in the City because of the existing shortage of available residential property in the City and the lack of viable measures which can be taken to address the shortage. The City's shortage of residential property is caused by the fact that the supply of available land in the City is so restricted it simply cannot meet the demand. The problem caused by the lack of available land is exacerbated by restrictions on development, including those imposed by the rate of growth ordinance and the City's Historic Architectural Review Commission. Actions of the City's Historic Architectural Review Commission cause increases in the cost of redeveloping property and limits the types of redevelopment that may be pursed. Alternatives, like housing the labor force some distance from a tourist destination and providing transportation to bring the labor force into the destination, cannot be utilized in the City to meet the demand for housing for its labor force. The unavailability of adequate land is a problem throughout the length of the Florida Keys. Tourist are now demanding a variety of accommodations. The national trend has seen a increase in the demand for accommodations other than the traditional hotel or motel. Many tourists desire accommodations that include multiple rooms, including kitchen facilities. Transient Rentals have become increasingly available in order to meet part of this demand. Hotels and motels have also begun to offer efficiency- like units. Transient Rentals have also increased because of 1986 changes in federal income tax laws. Those changes have resulted in more owners of vacation housing turning their properties into Transient Rentals in order to offset the cost of the properties. The availability of Transient Rentals has significantly increased in scope and magnitude over what was historically experienced in the City. In addition to the impact on the types of accommodations desired by tourist and the tax benefits of converting property to Transient Rental use, tourism itself has increased dramatically during the past 30 years, further increasing the demand for tourist accommodations. According to a report on housing in the City known as the "Shimberg Report," from 1990 to 1995 the number of housing units decreased from 12,221 to 11,733, a decrease of 488 units. Despite this decrease, the number of households in the City during the same period increased from 10,424 to 11,298, an increase of 874. Economically, a commercial-type use, such as Transient Rentals, will usually be more profitable than a residential use of the same property. The City has experienced this economic impact. As a result of the higher economic value of using a residence as a Transient Rental, tourist use of residential property have in many cases displaced the residential use of property. The demand for Transient Rentals and the need to provide for housing for the labor force necessary to serve the City's tourist industry involve competing and inconsistent goals. In order to meet the need for Transient Rentals in the City, it has been necessary to convert housing formerly used to house the City's residents, including those who make up the labor force. The resulting decrease in residential housing and the increase in Transient Rentals also result in crowding, with members of the labor force in the City being required to share available space with tourists. Crowding results in unacceptable densities of use and increased user conflict. The resulting decrease in residential housing caused by the increase in Transient Rental use in the City has not only resulted in permanent residents leaving the City's communities, but in their departure from the City and the Florida Keys altogether. In addition to the negative impacts on housing, a tourist destination can become so popular that the very quality of the location is negatively impacted or even destroyed. John Pennekamp State Park, located in the northern part of the Florida Keys, has been so successful at attracting visitors that it has been negatively impacted. Although tourism has not reached a point where it is destroying the unique character of the City, the very thing that attracts many visitors to the City, it has the potential of reaching that stage without adequate planning by the City. Shopping by residents in the "downtown" area of the City has already been displaced by shopping areas located away from Old Town. Dr. Virginia Cronk testified during the hearing of these cases concerning what can happen to a community's identity if tourism becomes too dominate. The City is already showing some signs of the negative impact tourism can have on a community. As more stress from overcrowding is placed on the City's communities, the very base of the City's tourist industry is impacted. Not only will the labor force be moved out, the community atmosphere of communities that is so attractive in the City may be diminished or even destroyed. As in many other tourist destinations, the activities of tourists and permanent residents the City are often incompatible. This is especially true in the City because much of what attracts tourists to the City is associated with the City's residential neighborhoods. Part of the tourist destination of the City is its neighborhoods. The type of visitors attracted to the City over the last decade has changed significantly. Many tourists now come to "party" on Duval Street, often late into the night and the early morning hours. The partying often continues back to, and at, the accommodations that the tourists utilize. Many tourists make every effort to maximize their "fun time" by staying up late and playing hard. Because tourists are on vacation, they are not as concerned about when they go to sleep and when they enjoy the City. They are not required to keep any particular schedule, so they are more at liberty to stay up into the early morning hours. Because tourists are only in the City for a short time, they are also less concerned with getting along with their neighbors. They want to have a good time and assume that everyone around them is there for the same reason. Permanent residents of the City are much like permanent residents everywhere. The adults are employed during the day and their children attend school. They go to bed and rise earlier than tourists generally do. Because of the differences in the goals of tourists and permanent residents, inevitable conflicts arise when tourists and residents mix. Unless those conflicts are controlled in the City, permanent residents will be forced out, threatening to end one of the very features that has made the City so attractive to tourists: the unique community atmosphere and historical character of the City. Dr. Cronk explained the different social forces which impact the behavior of tourists and residents. Tourists are simply not subject to the same informal social controls that residents are. As a result, the behavior of tourists often comes into conflict with the behavior normally associated with a true community neighborhood. Because the behavior of tourists is not subject to the same informal social controls as residents, residents must turn increasingly to more formal social controls such as the police and private security forces. These controls often do not work and are more expensive than the informal social controls normally associated with neighborhoods. Witnesses during the hearing of these cases gave examples of clashes between permanent residents and tourists. Those incidents are fully reported in the transcript of the hearing of this matter and are summarized in the proposed orders filed by the Department and City, and the duPonts. The need to resort to more formal social controls, such as the police and private security was also explained by these witnesses. The credible testimony of Ms. Rowe, Margaret Domanski, and Martha duPont accurately describe the types of conflicts the Ordinance is intended to reduce. The impact which the conversion of residential properties to Transient Rentals has on affordable housing in the City is difficult to measure. The Department has suggested that it is significant. Petitioners argue that there is no impact and that, even if there were some impact, affordable housing is not one of the Principles and, therefore, should play no part in the review of the Ordinance. The principles which apply to Monroe County require that Monroe County "make available adequate affordable housing for all sectors of the population of the Florida Keys." Section 380.0552(7)(j), Florida Statutes. This principle is consistent with the legislative intent set out in Section 380.0552(2)(d), Florida Statutes, that a local government provide affordable housing in close proximity to places of employment in the Florida Keys. The Principles applicable to the City ACSC do not contain a principle specifically requiring that affordable housing be maintained. The lack of a specific requirement concerning affordable housing does not, however, support a conclusion that affordable housing should be ignored when applying the Principles to land development regulations adopted by the City. On the contrary, Principle H is broad enough to require a consideration of affordable housing. After all, any consideration of the "public health . . . welfare, and economy" of the City, necessarily must include a consideration of affordable housing. Without adequate housing for all sectors of the City's population, the public health and welfare of the City cannot be maintained. Nor can the economy of the City survive without adequate housing for all segments of the work force. "Affordable housing" does not mean housing for the poor. "Affordable housing" is defined in terms of the percentage of a household's income spent on housing which is considered "affordable" by very-low income, low-income, and moderate-income persons. What is considered affordable is based upon the median household income of a community's very-low income, low-income, and moderate-income population. The approximate median household income of City residents is $49,000.00. In order for the City to be considered to have adequate "affordable housing," persons making between 80 and 120 percent of the median household income, or $39,000 to $59,000, should be able to afford a house. The average value of a single-family house in the City, however, is $300,000, well above the price affordable to persons with a household income of between $39,000 and $59,000. Because of the disparity between the average price of homes and the low median household income of City residents, an enormous burden is placed on residents to fund any type of housing. As much as 30 percent of residents' income must be spent on housing. The number of residents spending at least 30 percent of their income on housing increased significantly between 1990 and 1995. That number is likely to continue to increase. As the cost of residential property increases, the economic burden on residents for housing continues to increase. The cost of residential property is increasing, and will continue to increase, because of the conversion of residential property to Transient Rentals. If the City takes no action with regard to balancing tourist accommodations, particularly Transient Rentals, and housing for its residents, the ability of residents to afford any housing will continue to be negatively impacted. Even though it is doubtful that the Ordinance will increase the ability of residents to actually own their own home, there is no doubt that their ability to afford any housing will continue to be negatively impacted if Transient Rentals continue to displace the use of property for residential purposes. In adopting the Ordinance, the City recognized the negative impact that tourism is having on the City: . . . the transient use of residential dwellings has had deleterious consequences in the residential neighborhoods of Key West; and . . . the increase in the conversion of residential dwellings to transient use is, in part, responsible for the affordable housing shortage in Key West, a shortage confirmed in a study of the City by the Shimberg Center of the University of Florida . . . The finding concerning affordable housing is consistent with the City's Plan. Objective 3-1.1 and Note 2, Policy 1-3.12.3 of the City's Plan. In adopting the Ordinance, the City took a reasonable step to address the problems associated with tourism. The Ordinance, while causing an initial negative impact to the economy, will promote the protection of residential neighborhoods from unnecessary intrusion, promote affordable housing, and ultimately ensure the continued viability of the tourist economy of the City. By limiting the intrusion of Transient Rentals into most residential neighborhoods in the City, the Ordinance will limit the intrusion of negative tourist activities into those neighborhoods. Those negative impacts testified about by Ms. Rowe, Ms. Domanski, and Ms. duPont will be, in most cases, prevented or at least reduced. The reduction of tourist intrusions into neighborhoods will also ensure that the unique community character of the City remains viable. The Ordinance will go a long way in keeping the charm of the City's neighborhoods intact for tourists and residents both. The Ordinance goes a long way in planning for tourism in the City. Reducing economically competitive uses of property in the City, such as the use of property for Transient Rentals, will ensure that the scarce supply of residential property is not further reduced. Stabilizing the supply of residential property, while not eliminating cost increases, will at least eliminate the increase in housing costs associated with the conversion of residential property to Transient Rental use. Eliminating the unlicensed use of Transient Rentals, which the Ordinance will do, will have the effect of actually returning some residential property to the supply of property available to residents. By prohibiting the use of residential properties as Transient Rentals, the total properties in the City available for housing, including for long-term rentals, for permanent residents, will increase. As supply increases, the demand for all housing, including to a very limited extent affordable housing, will be better met. By reducing the drain on residential properties in the City, the strain on the work force necessary to serve the tourist economy of the City will also be reduced. The City recognized and accepted the fact that the Ordinance will have an initial negative impact on the economy of the City. The Pallini Report was commissioned by, and considered by the City Commission. There will be an immediate reduction in revenues from unlicensed Transient Rentals that comply with the Ordinance and the income associated with providing services to those Transient Rentals. Some tourists who would otherwise select the City as their vacation destination will go elsewhere. Unlicensed Transient Rentals (taxed and untaxed), however, make up no more than ten percent of the total accommodations available in the City. It is estimated that the Ordinance will result in a loss in gross sales of $31 million, a loss in personal income of $9 million, and a loss in City revenues annually of $260,000. It is also estimated that there will be a loss of approximately 500 jobs associated with unlicensed Transient Rentals. These estimates are the "worst case" scenario figures. Actual losses will likely be somewhat less. The losses associated with the Ordinance will, however, not be long-term. Gradually, the tourist industry will adjust to the decrease in tourist accommodations and the negative impact on the economy. Some tourists will adjust the time of year they come to the City, resulting in greater tourist business during traditionally slower times. Persons who experience unemployment as a result of the Ordinance will also very likely find other employment relatively quickly because of the tight labor market in the City. The negative economic impacts to the City caused by the Ordinance should not last longer than three to five years. After that time, the economy will adjust. The overall impact of the Ordinance will be to help balance the need to provide tourist accommodations and the need to protect the charm of the City and the ability of the City to provide a work force. Protection of residential neighborhoods in the City comes within the City's responsibility to provide for the public health, safety, and welfare of its citizens, and is a necessary consideration in providing for the economic well- being of the City. Based upon a preponderance of the evidence, the Ordinance is consistent with Principal H. Truman Annex. It has been argued by Mr. Coleman that the application of the Ordinance to the Truman Annex supports a conclusion that the Ordinance is not consistent with the Principles. The evidence failed to support this contention. Truman Annex is located within walking distance of most tourist destinations in the City. The character and atmosphere of Truman Annex makes it an attractive tourist destination in itself. The "Little Whitehouse," a house utilized by President Harry Truman, is located within Truman Annex as is a tourist destination itself. While the Truman Annex is located in an area conducive to use as tourist accommodations, nothing in the City's Plan or land development regulations, the development orders associated with Truman Annex, the historic use of Truman Annex, the public health, safety and welfare, or the continued economic viability of the City depends upon such use. Truman Annex consists of residential housing and tourist accommodations, as well as some commercial facilities. Those activities are, however, largely buffered from each other. Most of the commercial activities are located in the western portion of Truman Annex. The residential housing is located primarily in the eastern portion of Truman Annex. Truman Annex without Transient Rentals constitutes appropriate planning by the developer of Truman Annex and the City. The Ordinance, even when applied to Truman Annex, constitutes an appropriate effort of the City to manage land uses and development. The Ordinance, even when applied to Truman Annex, will protect the historic heritage of Truman Annex and, more importantly, the City. Finally, the evidence proved that the application of the Ordinance to Truman Annex will not adversely impact the public health, safety, welfare, or the long-term economy of the City. Consideration of the Principles as a Whole. The evidence in these cases supports a conclusion that the Ordinance has no or little impact on most of the Principles, except Principles A, E, and H. The evidence proved that the Ordinance is neutral with regard to the other Principles. When Principles A, E, and H are considered individually and together, the evidence proved that the Ordinance is consistent with Principles A, E, and H. The Ordinance constitutes an effort of the City to manage land uses and development in the City, consistent with Principal A. The Ordinance will also help to protect the historic heritage of the City by preserving the character of the City's neighborhoods and, as a result, will preserve the tourist industry, consistent with Principal E. Just as clearly, the Ordinance will enhance the safety, health, and welfare of the residents of the City. Finally, the Ordinance is consistent with Principal H because it will benefit the public health, safety, and welfare of the City by protecting neighborhoods from the intrusion of tourists, reducing the impact of the conversion of residential housing for Transient Rentals, and ensuring the continued character of the City. While there will be an initial negative impact on the economy of the City as a result of the Ordinance, ultimately the Ordinance will have a positive impact on the economy of the City due to the positive impact on the City's tourist industry which will result from the regulation of Transient Rentals. Abbey Petitioners' Rule Challenge, Constitutional Issues, and Other Issues. In the Amended Petition for Administrative Hearing (hereinafter referred to as the "Amended Petition") filed by the Abbe Petitioners, the Abbe Petitioners attempted to challenge pursuant to Section 120.56(4), Florida Statutes, portions of the Final Order of the Department as an unpromulgated rule. The Amended Petition was not, however, filed consistent with the requirements of Section 120.56(4), Florida Statutes. This challenge was required to be filed in a separate petition filed solely with the Division of Administrative Hearings (hereinafter referred to as the "Division") and not through an amendment to a petition originally filed with the Department which was subsequently filed by the Department with the Division with a request that the Division hear the matter. Additionally, even if the issue were properly before the Division, the evidence in this case failed to prove that the statements in the Final Order have any application other than to the Ordinance. Therefore, those statements are not "agency statements of general applicability." The statements are not, therefore, "rules" as defined in Section 120.52(15), Florida Statutes. The Abbe Petitioners also raised issues in the Amended Petition other than the consistency of the Ordinance with the Principles. Other than the question of the consistency of the Ordinance with the Principles, the evidence failed to support the Abbe Petitioners' argument that the issues raised in the Amended Petition are relevant to this matter.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Community Affairs enter a final order approving City of Key West Ordinance 98-31 as consistent with the Principles for Guiding Development of Rule 28-36.003(1), Florida Administrative Code. DONE AND ENTERED this 31st day of August, 2000, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 31st day of August, 2000. COPIES FURNISHED: Jeffrey M. Bell, Esquire Ritter, Chusid, Bivona & Cohen, LLP 7000 West Palmetto Park Road, Suite 400 Boca Raton, Florida 33433 Jerry Coleman, Esquire Post Office Box 1393 Key West, Florida 33041 John F. Rooney 208-10 Southard Street Key West, Florida 33040 Andrew S. Grayson, Esquire Assistant General Counsel Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100 Robert Tischenkel, City Attorney City of Key West Post Office Box 1409 Key West, Florida 33041 David J. Audlin, Jr., Esquire Eaton Street Professional Center 524 Eaton Street, Suite 110 Key West, Florida 33040 Lee R. Rohe, Esquire Post Office Box 500252 Marathon, Florida 33050 Barbara Leighty, Clerk Growth Management and Strategic Planning The Capitol, Suite 2105 Tallahassee, Florida 32399 Carol A. Licko, General Counsel Office of the Governor The Capitol, Suite 209 Tallahassee, Florida 32399-0001 Steven M. Seibert, Secretary Department of Community Affairs 2555 Shumard Oak Boulevard, Suite 100 Tallahassee, Florida 32399-2100 Cari L. Roth, General Counsel Department of Community Affairs 2555 Shumard Oak Boulevard, Suite 325 Tallahassee, Florida 32399-2100
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following Findings of Fact: The Respondent, St. Lucie County Expressway Authority, was created by the Florida legislature in 1983, and is governed by Chapter 348, Florida Statutes. The Authority is composed of two members from the Board of County Commissioners of St. Lucie County, two members from the City Commission of Ft. Pierce, two members from the City Council of Port St. Lucie and three members appointed by the governor. Based on the anticipated future growth of St. Lucie County, there is a need for additional East-West traffic arteries in the southern portion of the county to ease expected traffic conditions. The St. Lucie County Expressway Authority employed consultants and conducted public hearings to determine the best location for such a roadway. Prior to selecting the location for the proposed East-West Expressway, the St. Lucie County Expressway Authority examined feasibility studies, traffic count reports and engineering and road design proposals on alternative alignments and found the proposed corridor to be the best choice from both an economic and environmental standpoint. The proposed expressway route connects Interstate 95 to U.S. Highway 1. Phase 1 of the project would begin in the southern portion of St. Lucie County at U.S. Highway 1 and continue east, following existing transmission lines owned by Florida Power and Light Company and extend to a point which is now called East Torino Parkway. The total length of Phase One of the project is approximately 2.6 miles. Phase Two would extend the project to Interstate 95. The St. Lucie County Expressway Authority expects to obtain funding for construction of the East-West Expressway from various sources including the State of Florida's Toll Facilities Revolving Trust Fund, the Florida Department of Transportation and state-backed revenue bonds. The use of state-backed revenue bonds would require St. Lucie County to pledge a certain portion of its gas tax revenue as security to cover the bonds in the event that the expressway did not generate enough money from tolls to pay back the bonds. A public hearing is scheduled for January, 1988 at which the St. Lucie County Commission will review updated feasibility studies and traffic count estimates to determine whether to pledge the necessary funds to support the bonds. Assuming that approval is obtained for state-backed revenue bonds, the letting of a contract to construct the East-West Expressway could be accomplished by July 1, 1989. The time period for construction of a project such as the East-West Expressway is approximately two (2) years from the date that the contract for construction is executed. Thus, under the most optimistic outlook and projections, the proposed East-West Expressway could be completed by July of 1991. However, difficulties in obtaining funding and/or necessary environmental permits could delay completion of the expressway for ten (10) years, or until 1997. In conjunction with the preparation of plans for construction of the East-West Expressway, the St. Lucie County Expressway Authority filed "right-of- way reservation maps" on October 13, 1986, in accordance with Section 337.241, Florida Statutes. The reservation maps were filed and approved by the St. Lucie County Expressway Authority in compliance with all applicable statutes and regulations. The purpose of filing the right-of-way reservation maps by the St. Lucie County Expressway Authority is to preclude development of properties within the proposed corridor of the East-West Expressway while final construction and engineering plans are being prepared, thereby preventing an increase in cost of acquisition of those properties pending eventual eminent domain proceedings. The right-of-way reservation maps will prohibit the granting of development permits, as defined in Section 380.031(4), Florida Statutes, by any governmental entity for a period of five (5) years from the date of recording of the reservation maps. This period may be extended for an additional five years at the option of the Expressway Authority pursuant to Section 337.241(2), Florida Statutes. The reservation maps do not prohibit sale, continued use of the property by its owners nor is any use prohibited which does not require a development permit as defined in Section 380.031(4), Florida Statutes. The engineering construction plans for the East-West Expressway encompass less area than the reservation maps. However, the larger reserved area will be utilized to facilitate construction of the project and for water retention on site. Thus, less private property will ultimately be taken than that which is included in the right-of-way reservation area. The property owned by Petitioners, T. L. Sloan, James Taylor and Bill Stewart (hereinafter referred to as the "Sloan property") consists of a front and rear parcel. The front parcel consists of 6.54 acres of which 2.28 are within the right-of-way reservation area. The rear parcel is physically separated from the front parcel by a drainage canal and consists of approximately 4.25 acres. The rear parcel is not within the reservation map area, but access to this parcel can only be gained by U.S. Highway 1 through the front property. The property owned by Petitioners Mark C. Walters and David J. Gonzalez (hereinafter referred to as the "Walters' property") measures approximately 55,450 square feet of which approximately 46,000 square feet are within the right-of-way reservation area. The Sloan and Walters' properties are located at the easternmost end of the proposed East-West Expressway and front the east side of U.S. Highway 1 in Ft. Pierce, Florida. Both properties were purchased in 1984 as investment property and are presently vacant, unimproved acreage. The front parcel of the Sloan property is zoned commercial general and the rear parcel is zoned multifamily residential at five units per acre. The Walters' property is zoned commercial general and is adjacent to the Florida Power and Light transmission lines. The St. Lucie County Expressway Authority intends to use the property within the reserved area for the construction of the entrance and exit ramps of the proposed expressway. The engineering design of the East-West Expressway was done with as little intrusion upon Petitioner's properties as practical and only that property absolutely necessary for construction will ultimately be taken. Pursuant to the right-of-way reservation maps, all of the highway frontage on U.S. Highway 1 for both properties has been reserved for the expressway construction. Because of existing regulations, the St. Lucie County zoning office will not issue any development permits for property which has no access to a public highway. Therefore, the local zoning office will not issue any development permits for any portion of the Petitioners' properties, whether included in the reservation area or not. Thus, all of the property owned by Petitioners has been affected by the right-of-way reservation maps. The Sloan property was listed for sale prior to the recording of the right-of-way reservation maps. The Walters' property was purchased with the intent to build a gun shop which is now operated by the present owners at another location. After the recording of the reservation maps, the Walters' property was actively listed for sale. After the recording of the reservation maps, purchase inquiries regarding the Sloan property began to rapidly decrease. Inquiries regarding the Walters' property have also been extremely slow. No written offers to purchase the subject properties have been submitted to any of the Petitioners. David Fuller, a real property appraiser called as a witness by Petitioners, prepared an appraisal estimating the effects of recording the right-of-way reservation maps on the Sloan and Walters' property. The testimony of Mr. Fuller is accepted as more credible and pertinent to the issues involved in this cause than the testimony presented by Mr. Davis, the Respondent's expert appraiser. Mr. Davis admitted that the purpose of his appraisal was to estimate the fair market value of the property in fee simple, the part "taken" and damages to the remainder for the purpose of eminent domain. Mr. Davis' analysis is more appropriate for an action sounding in eminent domain. Mr. Fuller used the Sales Comparison or Market Approach combined with a discounted cash flow method of appraisal in determining the difference in the value of the properties before the recording of the right-of-way reservation maps, and the market value of the properties immediately after recording of the reservation maps. The value of real property is directly related to the use to which it can be put. Thus, a particular parcel may have several different value levels under alternative uses. In determining what, if any, substantial impact the record of the right-of-way reservation maps had on the market value of the Sloan and Walters' property, Fuller evaluated the difference in the value of the properties utilizing their highest and best use before the filing of the right- of-way reservation maps and the highest and best use after the recording of the maps. The highest and best use for the Sloan property without the encumbrance of the right-of-way maps would be to improve the front commercial zoned parcel with a commercial use consistent with neighborhood use trends (i.e., strip shopping centers, rental storage buildings and/or automobile dealerships) and improve the rear multifamily zoned parcel with a support use for the front commercial property. The highest and best use of the Sloan property after filing of the right-of-way reservation maps would be to hold the property as vacant until the right-of-way reservation map filing expires. Although the Sloan property could be sold with the right-of-way reservation, a majority of the potential market would be eliminated and the remaining market would require a discount to purchase the property knowing that the restrictions exist. The potential market in the neighborhood consists of generally three types of investors; (1) the owner occupant; (2) the real estate investor seeking income from an improved property; and (3), the short term land speculator. The owner occupant seeking to immediately build would not consider the property in question because the potential to immediately construct a new improvement is not available. Likewise, the investor seeking to build an income producing improvement, either immediately or in the next three years, would not be interested in the property. The short term land speculator would not be interested because there is no certainty that the property would be able to be developed to its highest potential market value within the next two to three years. The highest and best use for the Walters' property without the encumbrance of the right-of-way reservation maps would be to improve the parcel in approximately one to two years with a commercial use consistent with the neighborhood trends (i.e., owner occupied small business and/or mini-storage property). Improved uses such as an automobile dealership or shopping center could not be physically constructed on a site the size and shape of the Walters' property. The highest and best use of the Walters' property after filing of the right-of-way reservation maps would be to hold the parcel vacant until the reservation filing expires. As with the Sloan property, although the parcel could be sold, a majority of the potential market would be eliminated and the remaining market would require a discount to purchase the property knowing that the restrictions exist. Mr. Fuller stated that in his opinion, using the discounted cash flow model of appraisal, the Sloan properties suffered a total loss in value of approximately $441,450.00 on the date the reservation maps were filed. As to the Walters' property, the loss was calculated at $78,480.00. Mr. Fuller's financial calculations as to loss are misleading and not very useful because they were specifically calculated for a period of time of ten years. In other words, Mr. Fuller's total loss of value calculations are based on the assumption that the reservation map restrictions would exist for the full initial five (5) year period and that they would be extended for an additional five (5) year period. The ability to develop vacant and unimproved commercial property and to put the land to its highest and best use is a substantial beneficial ownership interest arising out of the ownership of commercial property. Both of the properties owned by Petitioners are fully capable of development and no other impediments to development exist except for the reservation maps. Substantial payments on the mortgages for the properties are being made by Petitioners each year totalling over $58,000.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that the St. Lucie County Expressway Authority enter a Final Order in favor of Petitioners after which the Authority shall have 180 days from the date of said order to acquire the Petitioners property or initiate appropriate acquisition proceedings pursuant to the requirements of Section 337.241, Florida Statutes. DONE and ORDERED this 2nd day of December, 1987, in Tallahassee, Leon County, Florida. W. MATTHEW STEVENSON 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 2nd day of December, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-2279, 87-2517 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in Finding of Fact 1. Adopted in Findings of Fact 7 and 8. Adopted in Finding of Fact 7. Adopted in Findings of Fact 11, 12 and 13. Adopted in Findings of Fact 11, 12, 13 and 14. Adopted in Finding of Fact 15. Adopted in Finding of Fact 16. Adopted in Findings of Fact 9, 17 and 18. Adopted in substance in Findings of Fact 23, 25 and 27. Partially adopted in Findings of Fact 6 and 26. Matters not contained therein are rejected as misleading and/or argument. Adopted in substance inn Finding of Fact 27. Addressed in Conclusions of Law section. Addressed in Conclusions of Law section. Rulings on Proposed Findings of Fact Submitted by the Respondent Adopted in Finding of Fact 1. Adopted in Finding of Fact 2. Adopted in Finding of Fact 8. Adopted in Finding of Fact 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 13. Adopted in Finding of Fact 10. Adopted in Finding of Fact 3. Adopted in Finding of Fact 9. Rejected as subordinate and/or unnecessary. Adopted in Finding of Fact 11. Adopted in Finding of Fact 12. Adopted in Finding of Fact 13. Adopted in Findings of Fact 13 and 14. Adopted in Findings of Fact 13 and 14. Rejected as subordinate and/or unnecessary. Adopted in Finding of Fact 18. Adopted in Finding of Fact 9. Adopted in Finding of Fact 9. Adopted in Finding of Fact 15. Adopted in substance in Finding of Fact 10. Partially adopted in Finding of Fact 26. Matters not contained therein are rejected as misleading and/or not supported by the weight of the evidence. Rejected as contrary to the weight of the evidence. Adopted in substance in Finding of Fact 6. Rejected as misleading. The Petitioners' expert projected that "completion" and not "construction" could possibly take 10 years. Adopted in substance in Finding of Fact 9. COPIES FURNISHED: John T. Brennan, Esquire Post Office Box 3779 Ft. Pierce, Florida 33448-3779 Frank J. Lynch, Jr., Esquire Post Office Box 4027 Ft. Pierce, Florida 33448-4027 David Stuart Chairman St. Lucie County Expressway Authority Post Office Box 4027 Ft. Pierce, Florida 33448-4027
The Issue Whether the Department of Transportation's intended action to reject all quotes and re-advertise Lease No. 550:0318 was illegal, arbitrary, fraudulent, or dishonest.
Findings Of Fact In October of 1999, the Department advertised for office space for use as the Toll Data Center - Audit Section, Office of Toll Operations (Toll Office) located in Broward County. The lease was clearly advertised as a negotiated lease. It was not advertised as a competitive bid lease. Under the negotiated lease process before letting any lease, the Department must submit to the Department of Management Services (DMS) a Request for Space Need (RSN) and Letter of Agency Staffing (LAS). From DMS the Department receives the authority to directly negotiate a lease for space under 5,000 square feet with prospective lessors. 1/ Consistent with procedure, the Department received approval of the RSN on October 18, 1999. Pursuant to statute, DMS has strongly suggested that prior to selection of the apparent successful lessor, the Department should obtain a minimum of three documented quotes for a lease that has not been competitively bid. The Department has consistently followed that suggestion in negotiated leases. Under special circumstances, where it is clear it is improbable that three quotes cannot be obtained, the Department may waive its requirement that three documented quotes be received. However, the agency must certify to DMS that attempts to receive the required number of documented quotes were unsuccessful and/or special circumstances exist to negotiate the lease with less than three quotes. In this case, no special circumstances exist. In an effort to obtain more than the minimum three documented quotes, the Department opted to advertise for lease space on the Internet. The Internet is utilized by the DMS, among other state agencies, to disseminate information provided in the RSN to the private sector. Additionally, the Internet site may also be used by the private sector to provide notice of space they have available for review by the agency seeking space. A total of three submittal packages were distributed for Lease No. 550:0318. Despite the Department's advertisement over the Internet, only two requests for quote submittal packages were received. Of the three quote submittal packages distributed, the Department received only one documented quote in response to the advertisement for the Toll Office. Atlantic Investment submitted a Quote Submittal Form to the Department in late October for office space in North Fort Lauderdale. Atlantic Investment became aware of the Department's advertisement for lease space from Sheldon M. Schermer, employed by Atlantic Investment as its real estate agent. Mr. Schermer learned of the Department's need for lease space from an advertisement placed on the Internet. On November 8, 1999, the Department informed Atlantic Investment via Sheldon M. Schermer, Real Estate Agent for Atlantic Investment, of the Department's intent to reject all quotes and re-advertise for Lease No. 550:0318. This decision was not arbitrary, capricious, fraudulent, or dishonest and well within the Department's discretion and procedures for negotiated leases. The basis for the decision was the Department's modification of the lease specifications pursuant to a recommendation by DMS to modify the lease space terms to hopefully generate more interest and more quotes. In a competitive negotiation, DMS was aware of agencies who modified leases and advertised as many as five times before three documented quotes were received. Moreover, the evidence showed that the Broward County commercial real estate market could easily generate three quotes for the space required by the Toll Office.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered dismissing the Petitioner's protest. DONE AND ENTERED this 14th day of April, 2000, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER 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 14th day of April, 2000.
