The Issue Did the Florida Real Estate Commission (the Commission) engage in an invalid exercise of delegated legislative authority when promulgating proposed rule 61J2-10.039 (the proposed rule)? See Section 120.52(8), Florida Statutes.
Findings Of Fact A substantial number of the Association's members would be substantially affected by the proposed rule because property management is a fundamental business activity performed by the Association's members. As a percentage, 14.9 percent of the Association's members, in an in-house survey, responded that property management is one of their top three functions. The proposed rule substantially affects a substantial number of the Association's members because it would have a direct and immediate effect on the Association's members' right to earn a living in property management. The subject matter of the proposed rule is within the Association's general scope of interest and activity because of the Association's stated purpose "to serve the Realtor community by providing, promoting and delivering programs, products and services that will enhance members' skills and ability to operate their business profitably and ethically; to advance the real estate industry; and to preserve and extend the right to own, use, and transfer real property." The Association directed its rules challenge to the proposed rule which was noticed by publication in the Florida Administrative Weekly at Volume 24, Number 46, November 13, 1998. As announced in the published notice, the specific statements of authority for promulgating the proposed rule were Sections 475.05 and 475.25(1)(k), Florida Statutes. The notice referred to the law implemented by the proposed rule as Sections 455.224 and 475.25(1)(k), Florida Statutes. As noticed in the Florida Administrative Weekly, the purpose and effect of the proposed rule was as follows: The purpose and effect of the new rule is to require disclosure by a real estate broker to a landlord and tenant if the funds being delivered to the broker are to be held by a business entity or firm that is not a registered real estate broker. The disclosure would not apply to funds being held by an attorney or a title insurance company. In addition, the disclosure applies only to residential real property. The disclosure will then enable the landlord and tenant to make an informed choice about where the funds are being held in the event the funds are to be maintained by an unregulated entity. The notice in the Florida Administrative Weekly summarized the proposed rule as follows: Rule 61J2-10.039 will be a new rule. The rule will require disclosure in the event residential rental funds are to be maintained by an entity not registered as a real estate broker. The disclosure requirement would not apply if the funds are to be held by an attorney or title insurance company. The "summary of statement of estimated regulatory cost" as noticed in the Florida Administrative Weekly referred to costs as "none." That reference was followed by the following instruction: "Any person who wishes to provide information regarding the statement of estimated regulatory costs, or to provide a proposal for a lower cost singular regulatory alternative must do so in writing within 21 days of this notice." As noticed in the Florida Administrative Weekly, the full text of the proposed rule is: 61J2-10.039 Property Management Disclosure. A broker, when entrusted with funds in connection with the rental of residential real property, who is directed by the terms of a written agreement or document or by oral instructions of the parties to deposit the funds in an account maintained by a business entity or firm not registered or licensed with the Commission as a real estate broker shall inform the parties in writing of the following: that the business entity or firm is not registered or licensed with the Commission as a real estate broker and, therefore, is not subject to the escrow account requirements of Chapter 475, Part I, Florida Statutes, and is not within the jurisdiction of the Commission; and that the parties may choose to have the funds held only by a registered or licensed real estate broker. The disclosure requirements of paragraph (1) of this rule also apply to a licensed salesperson or broker-salesperson who is registered with the real estate broker and is involved in any aspect of the rental transaction. (3) The disclosure requirements of paragraph (1) of this rule shall not apply when the funds are to be deposited in an attorney's trust account or with a title insurance company. The text of the proposed rule as noticed in the Florida Administrative Weekly formed the basis for the challenge considered through the final hearing and the opportunity for post-hearing argument through proposed final orders by the parties. The proposed rule was offered for adoption in recognition that some real estate brokers engaged in the related activity of rental property management through the establishment of management companies that are separate from the brokerage activities. In particular, the Commission discovered that following brokerage activity in association with the rental of real property, through a licensed real estate company, by signing contracts between the affected parties, monies collected are placed with the management companies for future administration by those companies. The management companies are not licensed by the Commission and are outside the Commission's jurisdiction. As a consequence of the placement of the monies collected with the management company and not the brokerage firm, when the Commission's auditors went to brokers offices to audit trust accounts involved with rental property, the brokers would refuse to allow audits to be performed. The basis of refusal was premised upon the transfer of the money to the management company from the real estate brokerage company, outside the Commission's jurisdiction. In association with this practice, the Commission has received consumer complaints in which it was revealed that the consumers were unaware that they were dealing with two separate firms in the transactions related to the rental properties, the one firm being the brokerage firm and the other the management company. This transpired in a setting in which the consumers were not aware that the funds deposited were being held in the unregulated management company account. The realization of these developments led the Commission to propose the subject rule for adoption, with the expectation that consumers would be able to make an informed choice concerning the placement of the monies collected in relation to the rental properties. As proven by the Commission, audits by its investigators of the records of realtors would not increase the amount of time necessary to perform the audit function if the proposed rule was imposed on the regulated community. Instead, the time necessary to perform the audit function would be diminished. Following the presentation of the Commission's case, the Association failed to refute this proof concerning the costs to the Commission to enforce the terms of the proposed rule or to offer proof concerning costs to members of the Association to comply with the proposed rule.
Findings Of Fact The RFP Respondent issued a request for proposals in October, 1988, entitled "Turnpike Bridge Replacement Design/Build Project, State Road 91 (Florida's Turnpike)" (the "RFP"). The RFP solicited technical and price proposals for state Project Nos. 97890-3325 and 97930-3324. The State Projects involved the design and construction of temporary detours and permanent replacement bridges over canal crossings at several locations on Florida's Turnpike. The RFP required bridges to be constructed as permanent structures at each of the project sites. Respondent advised interested parties at the scope of services meeting on October 18, 1988, that detour bridges would also be required at all of the project sites. Local permitting was a key factor in the scope of services required for the projects contemplated in the RFP. Respondent advised interested parties, including Petitioner and Intervenor, at the scope of services meeting that Respondent had done no coordinating with local agencies and that local permitting was the responsibility of each party responding to the RFP ("offeror"). The local agency with responsibility for issuing permits for a majority of the canal crossings in the RFP was the Lake Worth Drainage District ("Lake Worth"). Both Petitioner and Intervenor inquired of Lake Worth while preparing their respective technical proposals to confirm Respondent's representation that bridges would be required for both detours and permanent structures at all project sites. Lake Worth advised Petitioner that vertical clearances and hydraulics required bridges for both detours and permanent structures at all canal crossings subject to Lake Worth's jurisdiction. However, Lake Worth advised Intervenor, on or about October 26, 1988, that culverts would be acceptable for detours at three of the project sites. Kenneth Bryant was the President of DSA Group, Inc. ("DSA"). DSA is a consulting engineering firm that was retained by Intervenor to assist in the preparation of its technical and price proposals. Mr. Bryant asked Lake Worth why culverts would not be acceptable for permanent structures if culverts were acceptable for detours. Lake Worth responded that consultants for Lake Worth would look into the hydraulics of the entire system. Petitioner and Intervenor submitted their respective technical proposals on or about January 11, 1989. 2/ Intervenor used culverts in its technical proposal at those canal crossings where Lake Worth had approved the use of culverts for detours. Intervenor also included documentation of the approvals by Lake Worth. Petitioner included bridges in its technical proposal for all detours and permanent structures. The date for submitting price proposals was changed by Respondent several times. The original date was scheduled for 30 days after receipt of the technical proposals. After several delays, price proposals were timely submitted by Petitioner and Intervenor on June 21, 1989. The opening of price proposals was set for July 6, 1989, pursuant to a letter dated June 23, 1989, from Bill Deyo, Design/Build Coordinator for Respondent. The letter stated in relevant part: ... If approved by the Final Selection Committee the selected team will be posted on July 10, 1989, with the final awarding scheduled for July 14, 1989. Award and execution of this contract is contingent upon approval of budget by the Governor's office. Respondent selected Petitioner's proposal as number one and Intervenor's proposal as number two. The Final Selection Committee issued a "memo" on July 6, 1989, authorizing award of the contract. 3/ Award and execution of the contract was approved by the Governor's office. 4/ Rejection of All Proposals On July 10, 1989, Respondent sent a telegram to each offeror cancelling the posting of "bid" tabulations for that day. On August 31, 1989, the Final Selection Committee issued a memorandum rescinding its authorization to award the contract for the RFP, and requested its Contracts Administration Office to notify all "...Design/Build teams of the decision to REJECT all price proposals." On September 12, 1989, Respondent notified all offerors by certified mail of Respondent's decision to reject all "bids". No reason for Respondent's rejection of all price proposals was stated in the certified letter. At that time, offerors were not otherwise advised by Respondent of the reason for the rejection. Respondent rejected all price proposals based upon a substantial reduction in the scope of services required for the RFP. Between October, 1988, and August 31, 1989, Lake Worth determined that culverts would be acceptable instead of bridges at five of the six project sites within the jurisdiction of Lake Worth. Lake Worth's change in position substantially reduced the scope of services required in the RFP. The value of that reduction in the scope of services was approximately $3.6 million. 5/ Respondent knew or should have known from the technical proposal submitted by Intervenor on January 11, 1989, that the scope of services required in the original; RFP had been reduced to the extent Lake Worth had approved the use of culverts instead of bridges for the detours at some of the project sites. Respondent did not investigate the potential reduction in the scope of services until after the opening of price proposals on July 6, 1989. The parties stipulated at the formal hearing that Respondent's rejection of all price proposals was not at issue. Therefore, the question of whether Respondent's rejection of all proposals was arbitrary, capricious, or beyond the scope of Respondent's discretion as a state agency is not at issue in this proceeding. 6/ Respondent's Existing Rule The legislature required Respondent to adopt by rule procedures for administering combined design/build contracts. Section 337.11(5)(b), Florida Statutes. Accordingly, Respondent adopted Florida Administrative Code Rule 14- 91.006 on March 13, 1988 ("Rule 14-91.006"). 17. Rule 14-91.006(5) provided: The Deputy Assistant Secretary for Technical Policy and Engineering Services, jointly with the Deputy Assistant Secretary representing the District in which the project is located, may determine it is in the best interest of the state to provide funds to firms selected for preparation of technical and price proposals in response to the Design Criteria Package. Each firm selected shall receive identical fixed fees for this work. Specific Authority 334.044(2) 337.11(5)(b) F.S. Law implemented 337.11(5) F.S. History-New 3-13-88. (emphasis added) Rule 14-91.006(5) was adopted to facilitate competitive responses to a request for proposals by paying fixed fees to firms selected by Respondent to prepare technical and price proposals. Rule 14-91.006(5) was also adopted so that Respondent could compensate offerors, retain their technical proposals, and use the design concepts on similar projects. Rule 14-91.006 was amended on June 13, 1990, in relevant part, by repealing Rule 14-91.006(5). The repeal of Rule 14-91.006(5) occurred approximately 33 days after the date of the formal hearing but before the entry of a final order in this proceeding. 7/ Request for Payment After Respondent notified offerors of the rejection of all price proposals, Petitioner and Intervenor requested Respondent to make a determination of whether it was in the best interest of the state to provide funds to Petitioner and Intervenor for the preparation of their respective technical and price proposals in accordance with Rule 14-91.006(5). Petitioner and Intervenor requested on several occasions that the Deputy Assistant Secretary for Technical Policy and Engineering Services jointly with the Deputy Assistant Secretary for the Turnpike convene a meeting to make the determination authorized in Rule 14-91.006(5) Informal conferences with Respondent's representatives were requested on at least four occasions to discuss the issue of Petitioner's compensation for its technical and price proposals. Respondent's representatives met with Petitioner a few days before the formal hearing on May 10, 1990. Respondent stated that it had no statutory authority to compensate Petitioner for Petitioner's technical and price proposals in the absence of a contract. Respondent neither contracted with Petitioner and Intervenor to pay for their technical and price proposals nor offered to enter into such a contract. Petitioner offered to enter into such a contract and also offered to provide computer tapes containing plans and specifications required in the RFP if Respondent would agree to compensate Petitioner. Repeal of Respondent's Existing Rule Sometime between March 13, 1988, and October, 1988, Respondent considered the payment of funds pursuant to Rule 14-91.006(5) in a design/build project that preceded the RFP. 8/ Respondent requested funds from the comptroller but was advised by the comptroller that no funds could be provided pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent's general counsel confirmed that there was no statutory authority to provide funds pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent took no public action to repeal Rule 14- 91.006(5) until March 16, 1990, approximately two years after the earliest date Respondent could have received the directives from its comptroller and general counsel advising Respondent that Rule 14-91.006(5) exceeded its statutory authority. Instead of formally repealing Rule 14-91.006(5), Respondent followed the comptroller's recommendation to obtain legislative authority to pay funds pursuant to Rule 14- 91.006(5). Respondent unsuccessfully proposed such legislation to the House Transportation Committee during the 1989 legislative session. In November, 1989, Respondent drafted an amendment to Rule 14-91.006 which, in relevant part, repealed Rule 14-91.006(5). Notice of the proposed formal repeal of Rule 14- 91.006(5) was published in the Florida Administrative Weekly on March 16, 1990. The amendment to Rule 14-91.006 was adopted and Rule 14-91.006(5) was formally repealed through appropriate rulemaking procedures on June 13, 1990. During 12 design/build projects, Respondent never paid funds to any firm for technical and price proposals when the firm had not been awarded a contract pursuant to a request for proposals. Respondent never adopted standards for determining the proper timing for payment of funds pursuant to Rule 14-91.006(5). Respondent never adopted standards for determining when it would be in the best interest of the state to provide funds pursuant to Rule 14- 91.006(5). Respondent refused to apply Rule 14-91.006(5) and refused to determine if it would be in the best interest of the state to provide funds to Petitioner and Intervenor for their respective technical and price proposals. The sole reason given by Respondent for its refusal to apply Rule 14-91.006(5) was the lack of statutory authority to provide funds to firms selected for preparation of technical and price proposals in the absence of a contract. Respondent's representatives never considered applying Rule 14- 91.006(5). When Respondent's representatives met with Petitioner shortly before May 10, 1990, they stated that they would like to provide the requested funds and that such funds should be provided, but that no statutory authority existed for providing such funds in the absence of a contract. The signatories to the memorandum from the Final Selection Committee, dated August 31, 1989, never met until after the meeting that took place shortly before May 10, 1990, to discuss payment for the technical and price proposals submitted by Petitioner and Intervenor. When they did meet, it was determined that no statutory authority existed to provide funds pursuant to Rule 14-91.006(5) in the absence of a contract. Respondent never intended to compensate either Petitioner or Respondent for their respective technical and price proposals in the absence of a contract. Respondent never conducted any review of the technical and price proposals prepared and submitted by Petitioner and Intervenor for the purposes described in Rule 14-91.006(5). Two significant factors to be considered in making such a determination, however, would have been the benefit derived by Respondent from the technical and price proposals submitted and the effect that the provision of such funds would have on competition. Best Interest of the State Payment of funds to Petitioner and Intervenor would have been in the best interest of the state within, the meaning of Rule 14-91.006(5). 9/ Respondent derived substantial benefit from the technical and price proposals submitted by Petitioner and Intervenor including a reduction in the cost of State Project Nos. 97890-3325 and 97930-3324 in the approximate amount of $3.6 million. The fair market value of the proposals submitted by Petitioner and Intervenor was between $500,000.00 and $700,000.00 for each of the two proposals. All of the plan sheets and drawings were completed. The plans were prepared in accordance with Respondent's criteria for plan preparation. Every detail was followed and a complete maintenance of traffic plan was included. Where bridges were designed, the bridge calculations were included. Very little work was left to be done. In order to price out a project of the magnitude and scope required in the RFP, the technical proposals had to be very close to final design. Petitioner's technical proposal for both projects contemplated in the RFP was recorded on magnetic media in Petitioner's computer automated drawing machine. The magnetic media files could be easily transferred to Respondent. Petitioner at all times was ready, willing, and able to make such a transfer if Respondent had agreed to provide funds to Petitioner pursuant to Rule 14- 91.006(5). A great deal of valuable information was contained in the technical proposals prepared and submitted by Petitioner and Intervenor. Eighty to 90 percent of the engineering decisions were made and depicted either on the preliminary drawings or within the calculations included in the technical proposals. Information gathering and coordination with local permitting agencies, including Lake Worth, was a major component of designing and building the projects described in the RFP. Those kinds of activities required a good deal of time from higher level personnel in each organization. Respondent derived benefit from the technical proposals prepared by Petitioner and Intervenor irrespective of whether bridges or culverts are ultimately used at the canal crossings in the RFP. The only change that would be required would be to erase the bridges and insert details for a culvert crossing. Respondent derived benefit from the technical proposals prepared by Petitioner and Intervenor with respect to the projects contemplated in the RFP and similar projects in the future. Respondent can "relet" the project in the future and intends to do so. 10/ Respondent has retained the technical and price proposals submitted by Petitioner and Intervenor pending the outcome of this proceeding. Respondent's unwritten policy is to either return technical and price proposals to their offerors or destroy such proposals upon the concurrence of the, appropriate offeror. After this proceeding is concluded, Respondent intends to either return or dispose of the technical and price proposals submitted by Petitioner and Intervenor in a manner consistent with its unwritten policy. Reliance On Respondent's Existing Rule Petitioner and Intervenor were aware of Rule 14-91.006(5) in preparing and submitting their respective technical and price proposals. Neither Petitioner nor Intervenor, however, presented evidence of the extent to which they may have relied on Rule 14-91.006(5). Petitioner and Intervenor did not demonstrate that they were induced by Rule 14-91.006(5) to respond to the RFP or that Rule 14-91.006(5) was even a material or significant consideration to them. Payment of funds pursuant to Rule 14-91.006 (5) was neither addressed in the RFP nor discussed by the parties prior to Respondent's rejection of all price proposals. The record leaves open to speculation whether Petitioner and Intervenor would not have responded to the RFP in the absence of Rule 14- 91.006(5).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner's written formal protest should be DENIED; Respondent should return the respective technical and price proposals to Petitioner and Intervenor; Respondent should not provide funds to either Petitioner or Intervenor pursuant to former Rule 14-91.006(5). DONE AND ORDERED in Tallahassee, Leon County, Florida, this 10th day of January, 1991. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk, of the Division of Administrative Hearings this 10th day of January, 1991.
Conclusions This case came before me for the purpose of issuing a final agency order. The Administrative Law Judge, Stephen F. Dean, assigned by the Division of Administrative Hearings (DOAH) to the above-styled case, entered his Recommended Order dated June 4, 2004. In the Recommended Order, the Administrative Law Judge explained that the Division of Retirement could not process the Petitioner’s Petition for Benefits absent a judicial order issued by a court of competent jurisdiction determining heirs and a judicial order of guardianship of minor heirs. At the time the Recommended Order was issued, the Petitioner had not submitted either order to the Division of Retirement. The Administrative Law Judge recommended that the Division of Retirement allow the Petitioner to submit the required judicial orders within 45 days of the date of the order. In addition, the Administrative Law Judge recommended the Division’s dismissal of the Petition for Benefits, upon Petitioner's failure to provide the judicial orders within the 45 day time period. Prior to the Administrative Law Judge’s Recommended Order, the Petitioner submitted an Order Determining Beneficiaries to the Division of Retirement. Rather than submit the judicial orders identified by the Administrative Law Judge in response to the Recommended Order, the Petitioner filed a Notice of Exception stating that documents submitted prior to the Recommended Order fulfilled the requirements of the Recommended Order. Those documents were part of the application for benefits that the Administrative Law Judge determined are inadequate to support the Petition for Benefits. Because the exception is not responsive to the Recommended Order, it is rejected. The Division hereby adopts and incorporates by reference the Recommended Order issued by the Administrative Law Judge on June 4, 2004. A copy of that Recommended Order is attached hereto and made a part hereof as “Exhibit A.” Based upon the foregoing, it is ORDERED and DIRECTED that the application filed by Lavondra Steadman o/b/o John Steadman is rejected and the request for retirement benefits is hereby Denied. DONE and ORDERED this A k day of l , 2004, at Tallahassee, Leon County, Florida. Soult. Serra SARABETH SNUGGS ~~ State Retirement Director Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560 (850) 488-5541
