The Issue The issue for determination is whether Petitioner is entitled to a consumer's certificate of exemption as an organization providing special educational, cultural, recreational, and social benefits to minors pursuant to Subsection 212.08(7)(n), Florida Statutes.
Findings Of Fact Dormouse Productions, Inc. (Petitioner) is a non-profit Florida corporation. Petitioner has one employee who is salaried and is its president. Petitioner currently holds, and at all times material hereto held, an exemption from federal corporate income tax pursuant to Section 501(c)(3) of the U.S. Internal Revenue Code. Petitioner does not hold a certificate of tax exemption issued by the Florida Department of Revenue (Respondent). Petitioner filed its Articles of Incorporation (Articles) with the State of Florida on August 19, 1994. Article III of Petitioner's Articles provides its specific purposes: To promote the educational and cultural development of minors through materials and activities designed to target their communities. To create and produce materials encompassing the language, history, art, architecture, geography, and cultural diversity of communities. To develop civic awareness and pride in hometown communities. To incorporate multi-disciplinary approaches in a variety of learning activities. Petitioner provides copies of a soft-cover book, free of charge, to third grade classes in public, parochial, and private schools in Dade County. Accompanying the books is a teacher's guide for each class, which is also free of charge. Petitioner's sole employee produces the content of the book and teacher's guide. At the time of hearing, one soft-cover book had been printed and one was going to the printer. Petitioner's books (soft-cover book and teacher's guide) are intended to provide information about a child's own local community in Dade County. Presently, to teach children about the concept of "community", teachers use a non-specific textbook and resources which are located by the individual teacher. Petitioner intends to produce books devoted to each local community in Dade County. Teachers and school administrators have been receptive to Petitioner's books. Petitioner's books are provided to the Dade County Public Schools system for distribution to the schools' libraries. The books have been provided to every branch of the Dade County Public School library system and have been distributed to every public elementary school library. Petitioner's sole employee personally takes the books to the elementary schools in the community for which the books are written. Volunteers distribute the books to libraries outside of the public library system and to private and parochial school libraries. Petitioner's sole employee does not go into the classrooms and teach children from or with the books. She holds meetings with teachers to discuss the books and to obtain input as to what the teachers suggest be included in the books. No activities are provided to minors by Petitioner. The teacher's guide describes activities which teachers can provide to minors, if they so choose. Petitioner's chief expenditure of funds involves printing costs and salaries.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying a consumer's certificate of exemption to Dormouse Productions, Inc. DONE AND ENTERED this 8th day of April, 1997, in Tallahassee, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of April, 1997. COPIES FURNISHED: Kevin J. ODonnell, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Joseph H. Huppert, Treasurer Dormouse Productions, Inc. 1601 Biscayne Boulevard #1191 Miami, Florida 33132 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
Findings Of Fact Respondent was employed by the Bradford County School Board as a cosmetology instructor on a continuing teaching contract at the Bradford-Union Area Vocational-Technical Center (Va-Tech Center) in Starke, Florida, for the school year 1983-1984. Respondent's class was designed to prepare students to become licensed cosmetologists. On one occasion prior to Christmas, 1983, Mary Lee Wolf and Rose Smith, students of Respondent, brought an unopened bottle of wine onto the Vo-Tech Center grounds and presented it to Respondent during a class. There is no evidence that Respondent solicited the gift. Subsequently, on another date and after class hours, students Mary Lee Wolf, Tina Moyer, Bonnie Banks and Respondent's teaching aide, Helen Van Wart, opened the bottle and drank wine from cups in Respondent's presence. Respondent was served a cup, but there is no direct, credible testimony that Respondent personally consumed any wine. There is no evidence that any of those who consumed the wine were minors. In February 1984 the Ace Beauty Company, in conjunction with the Florida Cosmetology School Association, put on the Florida Sunshine Trade Show in Tampa, Florida. Attendance by students in Respondent's class at this particular trade show was encouraged by Respondent and pre-authorized by the Vo- Tech Center Director, David B. Smith, Jr. Mr. Smith made no provisions for a teacher's aide to fill in for Respondent on Monday, February 13 and Tuesday, February 14 because Respondent informed him that all but one or two of her students would be attending the trade show from February 11 through February 14, 1984. In fact, seven students did not attend and those who attended returned late February 13. On Friday, February 10, 1984, Mr. Smith approved use of the Vo-Tech Center van for Respondent's field trip, provided only Respondent drive the van. The same day, Respondent gave Mr. Smith a signed Application for Leave, requesting leave from February 11, 1984 through February 14, 1984. Past experience indicated trade shows may exceed the printed agenda. Saturday morning, February 11, 1984, Respondent and the eleven students travelling to the cosmetology show in Tampa, met in the Vo-Tech Center parking lot to board the van. While passing luggage to the Respondent for loading into the van, Bonnie Banks saw liquor bottles protruding from paper bags and remarked to Respondent that it looked like a party was planned. Respondent did not answer her Various students drank mixed alcoholic beverages from paper cups while standing near the van. Those involved took some care to shield their activities from Respondent and there is no direct credible evidence in the record to indicate Respondent was present or observed this alcoholic consumption on the school parking lot. Before climbing aboard the van, several of the students heard Respondent comment to the effect that the students were all adults and she expected them to behave that way. Some interpreted this to mean they were being given tacit permission to drink alcoholic beverages; others interpreted it as a warning either not to drink alcoholic beverages on the trip or not to let Respondent observe them drinking, if they did. Some of the students drank mixed alcoholic drinks from paper or plastic cups in the van while Respondent drove the van to Tampa. Mary Lee Wolf "tasted" some Kahlua liquor from a bottle in a brown paper bag. At one point, another liquor bottle in a brown paper bag rolled forward on the floor near Respondent in the driver's seat and Respondent passed it back to students behind her with an admonition to the effect of "keep it down back there." While it is unclear whether this comment was directed to Ms. Wolf or to someone in control of the rolling bottle, of those students who observed the bottle incident, all understood Respondent's comment to mean "don't let the liquor be seen" as opposed to "stop drinking and don't be so loud." While en route to Tampa, Respondent stopped in Gainesville, Florida, to refuel. At this stop, students Paula Tanner, Bonnie Banks, and Kay Kane left the van, purchased a six pack of beer at an adjoining convenience store and brought it back in a brown bag to the van. Respondent was in an adjoining bakery and did not see the beer loaded. Thereafter, various students drank beer from paper and plastic cups while Respondent drove the van. There is no evidence that any of these students was a minor and there is no direct, credible evidence Respondent consumed any alcoholic beverages in the van. Also at the Gainesville stop, Respondent drove from the gas pumps to another parking location without closing one of the van doors. The open door contacted the bumper of a parked car. There was little or no visual damage to the van but the students had difficulty closing the door again. Respondent had the necessary minor repair work done to the van in the Vo-Tech mechanical shop upon her return but did not report the accident to Director Smith. When Respondent unloaded the van in Tampa, several beer cans littered the van floor and a liquor bottle was dropped and broken in proximity to Respondent. Upon arrival in Tampa, Respondent registered in the Hyatt Regency Hotel, where the trade show was located. For financial reasons, several students had pre-registered in the less expensive Econo-Lodge some distance from the trade show. Respondent permitted Rose Smith to transport these students to and from the Econo-Lodge accommodations to the cosmetology show at the Hyatt Regency throughout the group's stay in Tampa. She jestingly told Rose Smith to say she was Respondent. On Sunday evening, after all educational activities ceased, Rose Smith also drove several of the students to the Confetti Lounge where they consumed alcoholic beverages. Rose Smith and some other students consumed alcoholic beverages in the van on this occasion. Respondent did not accompany the group to the Confetti Lounge. The Florida Sunshine Trade Show ended at 4:00 p.m., Monday, February 13, 1984. Respondent drove the van back to Starke that evening. During the return trip, some students complained of what they considered excessive speed. Respondent's reply to Paula Tanner's complaint was that if she did not like the ride she could get out and walk. The group arrived at the Vo-Tech campus at approximately 10:30 p.m. People were present on the grounds, in the classrooms, and in the administration offices when the cosmetology students arrived and for some time thereafter Respondent waited at the Vo-Tech Center for most of the students to be picked up. At student Lisa Morgan's request, she eventually took the remaining students home, but Ms. Morgan refused Respondent's offer to wait with her and insisted on waiting for her own ride which did not arrive until after 1:30 a.m. Tuesday morning, February 14, 1984. Respondent retained the Vo-Tech van at her home on Tuesday, February 14, 1984. On February 15, 1984, she reported for work. This is the day the van was repaired. In separate conversations with Barbara Casey, secretary to Director Smith, and with Martha Smith, (Mrs. David Smith) media specialist, Respondent gave the impression she had returned to Starke late Tuesday night. Respondent also submitted a newspaper release to that effect. On or about Friday, February 17, 1984, Respondent submitted to Director Smith a per-diem voucher requesting compensation from 9:30 a.m., February 11, 1984 to 11:00 p.m., February 14, 1984 when she had in fact returned at 10:30 p.m., February 13, 1984. At Mr. Smith's request for a supporting agenda she submitted a typed agenda for the trade show indicating activities through part of Tuesday, February 14, 1984. Four other per diem requests submitted by Respondent during the previous four years for field trips had exceeded the time periods established in their respectively attached agendas. In each instance, Mr. Michael Reddish, finance officer, reduced the time requested and made a reduced per diem reimbursement payment to coincide with the agenda submitted. Each time he did this he informed Director Smith of these actions; neither Smith nor Reddish informed Respondent of these actions, but it may be inferred that she was aware her per diem reimbursement payments were being reduced from the hours she had requested so as to coincide with the agendas she had submitted simultaneously with her per diem reimbursement requests. The per diem reimbursement request submitted on February 17, 1984 with supporting agenda amounted to a request for fifty dollars ($50.00) more than the actual time spent by Respondent on the trade show trip. Respondent's class procedures involved several sources of funds: individual student contributions to a profanity jar, proceeds of a class hot dog sale, fees charged to patrons for student beauty services, charges to students for supplies used by them in class, charges to students for sale of materials such as shampoos and permanents which they took home, and charges to students for special purchase items such as mannequins. Mannequins are false "heads" with rooted hair for hair services' practice. The profanity jar was apparently Respondent's idea to teach decorous language for purposes of future employment. Students who "cussed" were required to deposit various amounts of small change into the jar for each infraction. The amount in this jar at any point in time was never established by any credible evidence, nor has it been established what became of it or that Respondent emptied it. Proceeds from the class hot dog sale were originally intended to be used for groceries for use only for those students attending the trade show field trip. Instead, Respondent responded to non-attenders' complaints and purchased hairspray for the whole class. Although the highest "guesstimate" for hot dog monies was $25, the exact amount of proceeds from the hot dog sale has never been established by any direct credible testimony. At the beginning of the 1983-1984 school year, Director Smith and Respondent agreed that because Vo-Tech and the students each derived some benefit from student use of supplies, the school would charge students half price for supplies they wished to use at home. These types of supplies were initially purchased by the school from internal student money generated from student work on patrons and from sale of the supplies to students. They were internal funds and not county monies in Director Smith's eyes. Director Smith required that funds received from students and patrons be accounted for daily but no one in his office checked up on this. It was left to a teacher or a student to report these amounts on "Report of Monies" logs from each class daily. There is confusion in the testimony of Director Smith, Ms. Edwards, secretary-bookkeeper, and Ms. Norman, school clerk, as to what constituted retail sales and what constituted internal funds, and as to whether wigs and mannequins on hand constitute "supplies" (always retail sales) or are always classified in the category of special pre-paid purchase items. Students could purchase mannequins through the school office but mannequins were normally purchased by the school with county money and Mr. Smith's understanding was that in the 1983-1984 school year there had been only one purchase of mannequins made with county monies and therefore they were not for resale. Ms. Edwards and Ms. Norman thought sale of supplies to students could not generate internal funds and was not permitted, contrary to Mr. Smith's understanding, and both ladies were vague as to whether there had been another set of mannequins for students to purchase. All three administrators agreed resale of items purchased with county funds was improper. Ms. Edwards and Ms. Norman are the persons who determined no amounts of monies in any category had been turned in from Respondent's class in the 1983-1984 school year. On one occasion, student Elizabeth Kelly paid for a mannequin in advance with a check from her grandfather to her, which she endorsed over to Helen Van Wart. She eventually received the mannequin from Helen Van Wart. On another occasion, Bonnie Banks delivered a blank check for $24.00 to Respondent. It was cashed with the name "Betty J. Hutson" filled in and also endorsed on the back. That name is Respondent's name and Bonnie Banks thought that was Respondent's signature but no predicate/foundation/reason exists in the record for that assumption. Bonnie Banks also received her mannequin. In the 1983-1984 school year, money for all supplies regardless of how categorized were collected by Respondent's teacher's aide, Mrs. Van Wart, but the keys to the supply cabinet were freely given out to students. Permanents were left sitting on an open shelf. Mrs. Van Wart did not routinely give out receipts and none of the money students recall paying for supplies was turned in to the Director's office. In the previous years, student monies and retail sales for patrons services and sales to students had been turned in to the office from Respondent's class. In 1983-1984, no theft of monies or supplies was reported to the Director by anyone. Only one student, Elizabeth Kelly, recalls Respondent mentioning some money was stolen but how much or from what source this money was derived was never established by any direct credible testimony. No credible testimony established any supplies were actually missing from the supply cabinet and an outside year end audit revealed no problems in Respondent's class. Petitioner established that over a period of approximately three years, Respondent fell asleep several times while under the hairdryer during class while her students practiced on her. On one other occasion, she was absent from the classroom for a short period of time on a personal errand off- campus. The maximum period of time she was gone was less than an hour and a half and during this period she was entitled to take her lunch. During this absence, a patron was permanented by a student and injured. It is contrary to Vo-Tech policy for students to use chemicals without on-site instructor supervision and Respondent did not advise Director Smith of the patron's injury. She further requested her students to say she was in the school cafeteria when it happened. Cosmetology students attending a normal day of classes on campus would be legitimately credited with seven (7) hours toward their state board requirement. Feeling trade shows were worthwhile learning experiences, Mr. Smith authorized granting students eight (8) hours for the planned activities of a field trip day. At the beginning of the 1983-1984 school year, Respondent told her entire class that no-one-would be required to attend class the day following any multi-day trade show or seminar. On Friday, February 10, 1984, Respondent told her class that they would be returning from the trade show on Monday evening, February 13; that there would be no class on Tuesday, February 14; and that everyone would still get credit for class on Tuesday. Respondent advised her class that students not attending the trade show would receive attendance credit whether or not they attended school on Monday or Tuesday. Seven students were not in school or any school approved instructional program on Monday, February These were the students not attending the trade show that day. Eighteen students were not in school or any school approved instructional program on Tuesday, February 14, 1984. This included the eleven students who had returned from the Tampa trade show with Respondent the night before. Respondent gave all the students credit for seven (7) hours on Monday and seven (7) hours on Tuesday instead of eight (8) hours for Sunday and eight (8) hours on Monday for the students attending the trade show and zero (0) hours credit for the "stay at homes" on Monday and zero (o) hours credit for all students for Tuesday. Director Smith testified he would have no problem if she had given eight (8) hours per day for the trade show activities but the attendance records did not reflect that specifically. Interestingly, after Respondent was suspended, Mr. Smith confirmed Respondent's practice by crediting all students just as Respondent had. Before and during the trade show trip, and at various times thereafter Respondent instructed the students who had been on the field trip, that if asked, they were to say they returned to the Vo-Tech Center grounds on February 14, 1984, instead of a day earlier. Respondent's immediate supervisor, David Smith, instituted an investigation of Respondent' a activities approximately February 17, 1984. Be did not immediately advise her of the serious allegations concerning allegedly missing supplies and leave requests/per diem claims. Respondent was not aided by him in correcting the latter concern. Particularly, she was prevented from correcting the leave requests/per diem claims. On March 17, 1984, Respondent submitted a letter stating she was at home on February 14, suffering from exhaustion and wished to amend her leave and per diem requests. On March 19, 1984, Respondent submitted an amended sick leave request. Director Smith refused to approve these as over thirty days from date of the sick leave and because he considered the initial requests to be fraudulent.
Recommendation Upon assessment of the facts found, and in the conclusions of law reached and in consideration of the argument of counsel, it is recommended 1. That the Bradford County School Board enter a Final Order ratifying Respondent's suspension of employment with the Bradford County School Board without pay and continuing that suspension without pay to and including the end of the 1984-1985 school year, a total of 2 school years. DONE and ORDERED this 1st day of February, 1985, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 1st day of February, 1985.
Findings Of Fact At all times relevant thereto, respondent, Cheryl A. Cooper, was licensed as a real estate broker having been issued license number 0409775 by petitioner, Department of Professional Regulation, Division of Real Estate (Division). Respondent presently resides at 3828 Gatewood Drive, Sarasota, Florida. Also, Cooper has been issued permit number ZH33902 authorizing her to operate Professional School of Business, Inc. (school), a real estate licensing school in Sarasota. Respondent and her husband, Ron, began operating the school in 1985. Each owned 50% of the business. Although both Ron and Cheryl have real estate licenses, only Cheryl had the necessary broker's license to obtain a permit for the school. The school's principal office was in Sarasota while smaller branch offices were located in Fort Myers and Port Charlotte. According to Ron, he promoted the business, gave examinations, answered the telephone, did the bookkeeping, and performed other assorted tasks. This description of duties was not contradicted, and it is found that Ron performed these duties as an agent for his principal. On the other hand, Ron described Cheryl's role as merely giving out handouts and occasionally teaching a few classes. The school also employed part-time instructors for the purpose of teaching most of the courses. When the school was established, a bank account was opened at the Sarasota branch of the NCNB National Bank of Florida. Both Ron and Cheryl were signatories on the account. Around May 27, 1988 Ron moved out of the marital home. The couple is now involved in an acrimonious dissolution proceeding. As of the date of final hearing, the court had not yet adjudicated the property rights of each party, including the assets of the school. On June 21, 1988 Cheryl withdrew $3500 from the school's bank account. She pointed out that Ron had not provided any support for her and the two children since he had moved out a month earlier, and she needed the funds to live on. After learning the following day of the withdrawal of funds by his estranged wife, Ron, without authority from Cheryl, closed the school's bank account and moved the remaining funds to a new account on which he was the sole signatory. He did not disclose this action to his wife, and she did not learn what had happened until later. After June 21, all moneys given to the school by customers were deposited into the school's new bank account over which Cheryl had no control. Around the same time, Ron changed the locks on the school's offices so that Cheryl could not gain access. All school records were located in the Sarasota office. After the new bank account was opened and the locks on the doors changed, Ron continued to promote the school and to accept new customers. He did so since he intended to continue the school's operations after the impending divorce. The administrative complaint charges that during this same time period, Cheryl solicited a number of customers for the school and accepted deposits from these customers. However, the evidence shows clearly that all solicitation was performed by Ron and, with one exception, was done after he changed the door locks and opened the new bank account on June 21. Further, all funds were deposited into the bank account over which he had exclusive control. Therefore, even though Cheryl was the permit holder, she did not have access to the business, its records or the firm's bank account. Thus, she did not know who, if anyone, had been solicited to take courses, the disposition of their deposits, or the course schedule. As to the single instance cited in the complaint where a customer was solicited prior to June 21, this involved a broker in Fort Myers who wished to send an employee to the school's branch office in Fort Myers. The broker dealt directly with the husband or an instructor, and not Cheryl, and sent a check through the mail to the school for the coursework. Whether the check was received and deposited before the old bank account was closed is not of record since the check was not offered in evidence, and the partial bank records received in evidence do not disclose this fact. In any event, after he was advised by letter from Ron that the course had been cancelled, the broker was told by Ron to seek a refund from his wife and to file a complaint against Cheryl with the Division. The broker eventually received a refund from Cheryl on January 9, 1989. On June 27, 1988 respondent contacted the Division and explained her predicament. She advised the Division that her husband had a signature stamp that was being used without her authorization, and that she was unable to get access to her business records. She added that she hoped to gain access after a court hearing then scheduled on July 8, 1988. As it turned out, the hearing was postponed. On July 12, 1988 Cheryl sent a written memorandum to all school instructors advising them not to teach any class that was scheduled to end after August 1, 1988. That date was chosen since it was the date of the final examination of the then pending evening class that had the longest time until completion. It is noted that after Ron saw a copy of this letter, he accepted a deposit from one new customer (Janice Hamann) on July 19 but no others. The school eventually shut down permanently in August or September. As noted in finding of fact 9, Cheryl attempted to get legal access to the Sarasota office by an order of the circuit court. For whatever reason, however, she was unable to get a prompt hearing. When no hearing had been held by early August 1988, upon advice of her attorney, she paid a locksmith to open the Sarasota office one evening and, after gaining access, she removed what she believed to be one-half of the office equipment and furniture. Also, she found some of the school's records and learned that, since the change of bank accounts, Ron had continued to promote the school's business, had accepted deposits from customers and then cancelled classes. In addition, she found letters written to her at the school address demanding refunds of customer deposits previously sent to her husband. Cheryl immediately responded by letter advising those customers of the problems caused by the marital split and that their money would be refunded. The complaint identifies six individuals who paid moneys to the school but were allegedly not given a timely refund. In addition, the complaint cites one individual who was guaranteed a free repeat course if she failed the examination, and who, after failing the examination, was unable to do so since the school had by then closed down. As noted above, with the exception of the broker in Fort Myers who sent a check to the school sometime in mid or late June 1988, all customers were solicited after Ron had opened a new bank account and changed the door locks to the office. Therefore, and in light of the uncertainty surrounding when the broker's deposit was received, it is found the moneys withdrawn by Cheryl on June 21 did not pertain to any customer deposits which are the subject of this complaint. Of the six customers who were solicited by Ron, one, Mary Bellemare, paid her deposit by Visa credit card and obtained a credit on her bank card statement before any money was actually paid by Visa to the school. Therefore, there was no obligation on the part of the school to make a refund to Bellemare since no funds had been exchanged. The remaining five customers received refunds from Cheryl in January 1989. One of these, who was owed $20, never made demand for a refund from Cheryl, but was paid after respondent learned of her situation through the allegations in the administrative complaint. Finally, the customer who desired to receive a free repeat course likewise did not notify respondent of her predicament. Respondent has fully cooperated with the Division during the pendency of this proceeding. Indeed, as explained above, she contacted the Division before the complaint was filed seeking advice on how to properly handle this confusing situation. In addition, at least three memoranda have been sent by Cheryl to the Division. She attributed the delay in refunding the customers' money to a lack of financial resources caused by the still unresolved marital split.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of breach of trust in a business transaction and that she be given a reprimand. All other charges should be dismissed. DONE AND ORDERED this 18th day of April, 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 18th day of April, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-0139 Petitioner: 1-2. Covered in finding of fact l. 3. Covered in finding of fact 2. 4. Covered in findings of fact 5 and 6. 5. Covered in findings of fact 6 and 11. 6. Covered in finding of fact 10. 7. Covered in finding of fact 7. 8-12. Covered in finding of fact 12. 13. Covered in finding of fact 6. 14. COPIES Covered in FURNISHED: finding of fact 12. Stephen W. Johnson, Esquire Post Office Box 1900 Orlando, Florida 32802 Ms. Cheryl A. Cooper 3828 Gatewood Drive Sarasota, Florida 34232 Darlene Keller, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Kenneth E. Easley, Esquire 130 North Monroe Street Tallahassee, Florida 32399-0750
The Issue The issue is whether Respondent improperly withheld points, in scoring Petitioner's application, for proximity to a grocery store, so as to improperly deny Petitioner an opportunity to enter the credit underwriting phase of the process by which Respondent allocated federal income tax credits for low-income housing projects in the 2006 funding cycle. (Pursuant to Florida Administrative Code Rule 67-48.005(4), Respondent would send Petitioner's proposal to credit underwriting for the 2007 funding cycle, if Petitioner proves that Respondent improperly scored Petitioner's application in the 2006 funding cycle, which is now closed by operation of federal law.)
Findings Of Fact This case involves the 2006 funding cycle of Respondent's Housing Credit program. In this program, Respondent allocates nine percent low-income housing, federal income tax credits to various developers and investors based on their proposals to construct qualified affordable rental housing units in Florida. Because the demand for federal income tax credits allocated to Florida exceeds the supply of such credits, Respondent has adopted an elaborate scoring program, supplemented with tie-breaker points and lottery numbers, to evaluate competitively the various proposals. On February 1, 2006, Petitioner timely filed its application for an allocation of federal income tax credits under the Housing Credit program (Application). The Application seeks an allocation of federal income tax credits in the Large County set-aside for the construction of a 132-unit apartment complex in Miami. Sufficient applications routinely receive maximum scores that Respondent has had to adopt tie-breaking criteria to differentiate between those proposals that may enter credit underwriting and those proposals that may not, due to the lack of available federal income tax credits. These criteria involve the proximity of the proposed project to certain services or facilities, such as public transit, medical clinics, and grocery stores. Sufficient applications routinely receive all of the tie-breaker points that Respondent has had to assign lottery numbers to further differentiate between those proposals that may enter credit underwriting and those proposals that may not. The sole issue in this case is the proximity of the project proposed by Petitioner to a grocery store. Petitioner's proposal received the maximum score, exclusive of the tie- breaker score. Petitioner's proposal received a lottery number that, if its proposal earned the grocery-store tie breaker points, it would enter credit underwriting. Page 14 of the application instructions defines a "grocery store" as: a retail establishment, open to the public, . . . consisting of 4,500 square feet or more of air conditioned space, which as its major retail function sells groceries, including foodstuffs, fresh and packaged meats, produce and dairy products, which are intended for consumption off-premises, and household supplies . . .. Page 15 of the application instructions requires that the grocery store "must be in existence and available for use by the general public as of the [a]pplication [d]eadline." The application deadline for the 2006 funding cycle was February 1, 2006, so the characteristics of the grocery store identified by Petitioner are fixed as of February 1. By letter dated March 2, 2006, Respondent informed Petitioner that it was withholding 1.25 points from its tie- breaker score due to Petitioner's failure to provide the required information as to the proximity of its proposed project to a grocery store. Pursuant to its procedures, Respondent gave Petitioner an opportunity to submit "cure" documentation to demonstrate Petitioner's entitlement to the 1.25 points for proximity to a grocery store. The submittal of "cure" documentation may address issues raised in Respondent's preliminary review of an application but does not extend the date on which the grocery store must be in existence. On April 10, 2006, Petitioner timely filed "cure" documentation identifying the subject grocery store as the Mas Unidos Market at 832 Southeast 8th Street. Accompanying materials indicated that the air-conditioned space was 4547 square feet. By letter dated May 4, 2006, Respondent advised Petitioner that it would receive no points for the proximity of the proposed project to a grocery store because the grocery store identified by Petitioner had less than 4500 square feet of air-conditioned space available to the public. In its final scoring summary, Respondent found that the subject market had less than 4500 square feet of air-conditioned space available to the public. There is no issue as to the proximity of the subject grocery store to the proposed project. The question is whether the subject grocery store meets the definition of a grocery store, as of the application deadline. A sketch that Petitioner submitted to Respondent assists in the analysis. The sketch depicts a 3891 square foot area (Primary Space), which meets all criteria. The Primary Space contains groceries and was air-conditioned and available to the public as of the application deadline. A 656-square-foot area (Additional Space) is separated from the Primary Space by a storage area. If the Additional Space counts toward the area of the grocery store, the subject grocery store would meet Respondent's definition because the Primary Space and Additional Space total 4547 square feet. The owner of the subject grocery store operates a single business from the Primary Space and Additional Space. In doing so, he employs a single set of employees, maintains a single set of financial books, and operates under a single occupational license. On the other hand, the Additional Space is not accessible from the Primary Space, due to the storage area that divides the two areas. The owner of the subject grocery store intends to convert the storage area into a cafeteria, so as to permit interior access between the two spaces, but no such renovation had taken place as of the application deadline. At present, a customer seeking to purchase goods from both spaces must pay for his goods at the one space, leave through the front door, walk a short distance along a sidewalk immediately in front of the two spaces (which occupy a small strip mall), enter the front door of the other space, and pay for his purchases in the other space. Also, the Primary Space contains typical grocery items, but the Additional Space contains items more typically associated with hardware stores. However, these factors, according to an employee of Respondent who testified at the hearing, do not preclude a determination that the Additional Space is part of a grocery store. But the problem with the Additional Space is that it was not available to the public as of the application deadline. The owner of the subject grocery store commenced retail operations in the Additional Space in the fall of 2005, which was prior to the application deadline. However, due to hurricane damage from the 2005 storms, the owner closed the Additional Space for repairs in late 2005 through mid- to late- February 2006, which was after the application deadline. The Additional Space was thus in existence and available to the public as of the application deadline, and Respondent properly excluded the area of the Additional Space in determining whether the store satisfied, as of the application deadline, the criteria of 4500 square feet available to the public. Petitioner contends that the temporary loss of the Additional Space, due to ongoing repairs, should not cause its exclusion from the calculation. The problem with this argument is that it is impossible for Respondent to determine with reasonable certainty whether the owner will complete repairs and reopen the space as a retail grocery operation. The requirement that the space be available to the public on a specific date provides a clear test that is easily administered. The modified requirement for which Petitioner contends creates uncertainty and invites contention as to whether certain space was under repair, the extent of repairs left to complete as of the application deadline, and similar issues that promise prolific litigation, not efficient administration, of the proximity- scoring item. Respondent contends that, if the Additional Space were included, the subject grocery store fails to satisfy the area criterion because the office space behind the Primary Space should not have been included as available to the public. The evidence does not support this contention, although the treatment of the Additional Space in the Recommended Order moots this issue. Directly accessible from the Primary Space, the office space, which totals 107.69 square feet, is separated from the Primary Space by a locked gate. The owner conducts business with customers within the office space, but he must determine, for each customer, whether he wishes to remotely unlock the gate and allow the customer to enter the office space for such purposes as cashing a check. In most cases, the owner makes this determination by viewing the customer through a camera mounted at the gate. If in doubt, the owner leaves the office and meets the customer before escorting the customer to the office, where sums of cash are kept. The security is necessitated by the location of the subject grocery store in a neighborhood afflicted by crime. The presence of the locked gate has not caused Respondent to contend that the adjacent customer bathroom, which is also behind the gate, should not be counted as part of the grocery store, nor should it have this effect as to the office space behind the gate. Petitioner contends that the hallway and bathroom behind the Additional Space should have been included in the area of the subject grocery store. If these areas had been available to the public on the application deadline, this contention would be correct, but the hallway and bathroom were also unavailable to the public on this date. Even if they were included, the total area of the subject grocery store would be only 4085.99 square feet, consisting of 3891 square feet of Primary Space, 107.69 square feet of office space behind the Primary Space, and 87.3 square feet of hallway and bathroom behind the Additional Space. Petitioner has thus failed to prove that it is entitled to any tie-breaker points for proximity to a grocery store.
Recommendation It is RECOMMENDED that the Florida Housing Finance Corporation enter a final order dismissing the Petition Requesting Informal Hearing and Grant of the Relief Requested. DONE AND ENTERED this 27th day of October, 2006, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 27th day of October, 2006. COPIES FURNISHED: Hugh R. Brown, Deputy General Counsel Wellington Meffert, II, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Sherry Green, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Stephen T. Maher Gary Cohen Shutts & Bowen LLP 201 South Biscayne Boulevard, Suite 1500 Miami, Florida 33131
The Issue Whether the Respondent, Benita A. Roberts (Respondent), committed the violations alleged in the Notice of Specific Charges and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner is the entity charged with the responsibility under Florida law to operate, control, and supervise the administration of all public schools within the Miami-Dade County school district. As such, disciplinary actions against its employees fall within its authority. At all times material to the allegations of this case, the Respondent was employed by the Petitioner and served as the school cafeteria manager at Natural Bridge. The Respondent has been continuously employed within the school district since 1979. She began employment at the age of 20 and was assigned duties as a pot washer. Later the Respondent rose through the ranks to the position of baker. Eventually, after completing training, the Respondent became a food service manager. Throughout her career she served in various capacities without prior disciplinary action being taken against her. In fact, the Respondent received commendations for her hard work, and her kitchen served as a training place for others. Prior to the incidents complained of herein, the Respondent had served the school district with distinction. The Respondent was assigned to Natural Bridge in September of 1992. For many months prior to December 1999, Adrian Ebanks was employed at Natural Bridge as a part-time cafeteria worker. Mr. Ebanks was limited to 30 hours per week or 60 hours per pay period for compensatory purposes. That is, as his manager, the Respondent was supposed to pay Mr. Ebanks for no more than 60 hours per pay period. To arrive at the 60 hours, Mr. Ebanks was scheduled to work no more than 6 hours per day for the 10 days constituting the pay period. According to the Respondent, Mr. Ebanks exceeded the 60 hours numerous weeks but could only be paid for the 60 hours he was approved to work. According to the Respondent, Mr. Ebanks was a dedicated and hard-working cafeteria helper. Between December 23, 1999 and June 16, 2000, Mr. Ebanks was incarcerated and did not report to Natural Bridge to perform his duties. Nevertheless, because the Respondent believed he was owed time for work performed prior to that time, the Respondent continued to complete the payroll record for Mr. Ebanks as if he had worked on the dates indicated. It is undisputed he did not work during the period December 23 through June 16, 2000. The Respondent was not authorized to complete the payroll record for Mr. Ebanks as she did. If, in fact, Mr. Ebanks was owed for additional time worked but not compensated, she should have contacted a supervisor to approve either additional pay for the hours as they accrued or overtime. In truth, Mr. Ebanks was not eligible for overtime pay. The Respondent sought to reward dedicated cafeteria workers who were, in her judgment, underpaid and hardworking. The system did not allow her to give additional pay beyond the time allocated to part-time workers. Regardless, the Respondent attempted to compensate such employees but did not keep a formal log that would demonstrate the actual hours worked that exceeded the 60 hours that could be compensated. In fact, despite her assessment that Mr. Ebanks was owed for the hours he was paid for while incarcerated, there is no documentation to establish that such hours fairly related to unpaid overtime logged prior to his incarceration. Additionally, no cafeteria worker who might have corroborated the Respondent's conclusions testified with regard to the matter. Moreover, the Respondent did not bring the problem of how to fairly compensate her employees to the attention of anyone until after the allegations of the instant case came to light. And, unfortunately, that was not until a year after the incidents complained of in this case. Not until June of 2001 did the principal become aware of the payroll issues. At that time an individual complained to the principal that the Respondent had paid Mr. Ebanks while he was incarcerated. The investigation of that complaint led to the instant action, a criminal investigation of the matter, an audit, and disciplinary action against Mr. Ebanks and the Respondent. As a result of the payroll records submitted by the Respondent, the Petitioner improperly paid Mr. Ebanks $3,255.48. A conference for the record was conducted with the Respondent on November 7, 2001. At that time, the Respondent admitted she had submitted the payroll records for Mr. Ebanks while he was incarcerated. On February 13, 2002, the Petitioner took action to suspend the Respondent and to initiate dismissal proceedings against her for just cause. The "just cause" was alleged to be deficient and/or non-performance of job responsibilities, misconduct in office, lack of good moral character, and violation of School Board rules dealing with employee conduct. On March 5, 2002, the Respondent pled guilty to official misconduct, petit theft, and grand theft. All of the charges arose from the findings set forth above regarding the completion of the payroll records for Mr. Ebanks. As a result of the plea entered by the Respondent, the court imposed 18 months of probation and required the Respondent to remit fees and costs associated with the prosecution of the case. It is unknown as to whether either Mr. Ebanks or the Respondent made restitution for the $3,255.48 paid to Mr. Ebanks during his incarceration. It is certain the Respondent did not acknowledge that her completion of the time records was contrary to school board guidelines.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board of Miami-Dade County, Florida, enter a final order affirming the decision to suspend and dismiss the Respondent from her position as a cafeteria manager with the school district. DONE AND ENTERED this 31st day of October, 2003, in Tallahassee, Leon County, Florida. S J. D. PARRISH 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 October, 2003. COPIES FURNISHED: Merrett R. Stierheim Interim Superintendent Miami-Dade County School Board 1450 Northeast Second Avenue, No. 912 Miami, Florida 32312-1394 Daniel J. Woodring, General Counsel Department of Education 325 West Gaines Street 1244 Turlington Building Tallahassee, Florida 32399-0400 Evan Jay Byer, Esquire Evan Jay Byer, P.A. 1999 Northeast 150th Street Suite 102 North Miami, Florida 33181 Luis M. Garcia, Esquire Miami-Dade County School Board 1450 Northeast Second Avenue, Suite 400 Miami, Florida 33132
The Issue The issues to be resolved in this proceeding concern whether the Petitioner, D. J. Haycook Construction Company (Haycook) was the lowest responsive bidder for an elementary school procurement project known as Elementary School "X," let by the Volusia County School Board and whether the Petitioner should have been awarded the contract.
Findings Of Fact On June 13, 2003, the School Board of Volusia County authorized the issuance of a request for proposal for the construction of a new elementary school known as Elementary School "X." The proposed new school would be located in Orange City, Florida. The school board issued an advertisement for the construction of Elementary School "X" and had it published. The project architect for the Board prepared the solicitation documents constituting a "Phase III specifications" manual and three addenda. The advertisement stated that "the school board expressly reserves the right to reject any and all bids and to waive informalities therein, and to use sufficient time to investigate the bids and the qualifications of the bidders." Section 00430 of the solicitation required that all bidders list the name of the subcontractor for each type of the 12 areas of construction work for Elementary School "X" as follows: 'For each type of work' below, list the name of the subcontractor. List only one name on each line and only one subcontractor for each type of work. Various 'type of work' sub-contracts may have more than one subcontractor (re: roofing; metal roofing and membrane roofing), list each subcontractor accordingly. Use additional sheets, if required. Additionally, Section 00430 provided: The term subcontractor as used herein shall be defined in 2001, Florida Statute 713.01(27) - subcontractor means a person other than a materialman or laborer who enters into a contract with a contractor for the performance of any part of such contractor's contract. The deadline for submission of proposals in response to the solicitation was August 6, 2003. On August 6, 2003, Haycook's bid proposal and that of the second and third lowest bidders were opened and read by the members of the school board's staff. Haycook listed itself as performing or "self-performing" in areas of earthwork, masonry, concrete, and structural steel on the required list of subcontractors form pursuant to section 00430 of the solicitation. Subsequently, the project architect began to investigate the bids for the project. This was done through correspondence and direct contact between Haycook, the project architect, Mr. Daimwood, and the school board staff. This process began on August 8, 2003. As part of the evaluation process the architect verbally requested documentation from Haycook to verify its past and present abilities to self-perform in the four areas of earthwork, concrete, masonry, and structural steel, as well as by letters dated August 12, August 15, and August 25, 2003. Haycook responded to these information requests by letters of August 11, 13, and 28, 2003. The bid documents for the school project included the bidding and contractual conditions, general conditions, technical specifications, and the drawings listed on pages 10D-1 to 10D-2. In order to have a responsive bid a bidder was required to comply with the bid documents when submitting its bid. The relevant bid documents at issue in this dispute are Section 0020, "invitation to bid," Section 00100, "instruction to bidders," Section 00300, "bid form," and Section 00430, "list of subcontractors." The bid documents also required each bidder to deliver a bid bond in the amount of five percent of its bid to accompany the proposal. After acceptance of the lowest responsive bid, and issuance of the contract award, a bidder was required to deliver a payment and performance bond in the amount of 100 percent of the contract price. There is no dispute that Haycook has a bonding capacity of 18 million dollars for a single project and 35 million dollars for aggregate projects and the bonding capacity is not in dispute. The invitation to bid documents require that bidders be required to hold a current Certificate of Pre-Qualification issued by the school board at the time of bid opening. Haycook at all material times hereto held a Certificate of Pre- Qualification and was licensed to perform all work called for by the bid documents including, among others, self-performance of earthwork, concrete work, masonry, and structural steel. The three bids received were in the amounts as follows: (1) D. J. Haycook Construction Company: a base bid of $7,599,000.00; Alternate One, $189,000.00; Alternate Two, $48,800.00; Alternate Three, $21,000.00; (2) Mark Construction Company of Longwood, Florida: base bid of $7,657,000.00, Alternate One, $221,000.00; Alternate Two, $50,000.00; Alternate Three, $20,000.00; (3) Clancy and Theys Construction Company of Orlando, Florida: base bid of $7,840,000.00; Alternate One, $230,000.00; Alternate Two, $50,000.00; Alternate Three, $21,000.00. Section 00430 required each bidder to furnish a list of subcontractors defined as quoted above in the bid form. Section 00430 of the bid form also permitted a bidder to list itself as a subcontractor. The form provides: "A contractor may not list himself as performing a type of work unless he is self- performing and is a Florida licensed contractor for that type of work". Haycook was properly licensed at the time of bidding, and at all relevant times, to self-perform in the four areas of earthwork, structural steel, masonry, and concrete at issue in this case. After the bids were opened and examined, Mr. Daimwood, the architect evaluating bids for the school board, requested that Haycook furnish a list of past projects where it had self- performed earthwork, structural steel, masonry, and concrete work. Haycook provided a list of examples of prior projects for which it had self-performed work in those areas on August 11, 2003. The list included five projects for earthwork, four projects for structural steel, seven projects for masonry, and seven projects for concrete. Thereafter, on August 12, 2003, the architect requested additional information regarding self- performance of work in the four areas at issue. Haycook provided the architect with the requested additional information on August 13, 2003, including a list of each project, the total cost of each project, the completion dates, as well as contact persons with their telephone numbers and including copies of qualifications of the subcontractors listed on Haycook's subcontractor list. On August 25, 2003, the architect requested Haycook payroll records and workers compensation information for two of the listed projects of those Haycook had provided, that for Goldsboro Elementary School and Eustis Elementary School. On August 28, 2003, Haycook sent a letter to the architect explaining that on the Goldsboro job the earthwork was self-performed by a combination of supervising and directing the work with salaried employees, with leasing of labor from an employment service, and hiring of labor by the cubic yard with a cap on the activity. Haycook also explained that structural steel work on the projects was self-performed by a combination of supervising and directing the work with salaried employees, leasing of labor from an employment service, hiring of labor paid by the foot to erect specific components of the job, as well as using salaried employees for the performance of specific activities, and including purchasing of fabricated materials and then hiring crew labor and equipment on an hourly basis to erect them. In the August 28, 2003, letter Haycook also explained, with respect to the self-performed masonry work on both the Eustis and Goldsboro jobs, that those areas of work were self- performed by purchasing fabricated material, supervising and directing the work with salaried employees, hiring labor by the unit price (for instance by the block) to lay the block, and hiring labor from an employee leasing service for specific activities as to those jobs. Haycook also explained in the August 28, 2003, letter that a combination of the methods and means of performing delineated above and in that letter would be used for the activities listed on the subcontractor list on the relevant bid form for Elementary School "X". Haycook explained that it had priced and used its own costs for the activities listed on the bid form to arrive at the bid price for Elementary School "X". Enclosed with the August 28, 2003, letter from Haycook were copies of its purchase orders and cost journals for the Goldsboro School, concerning earthwork, masonry, and structural steel activities and its vendor purchase orders and cost journals for the Eustis Elementary School's masonry work done by Haycook. The enclosures with the August 28, 2003, letter showed that Haycook had purchased the materials, performed the work with its own employees, and performed work using additional outside labor in the areas of structural metals, prefabricated structures, earthwork, cast-in-place concrete, structural steel erection, and masonry work. Haycook also provided its proposals used on the Goldsboro project which consisted of concrete labor and structural steel labor. The architect interpreted the term "self-performance" to mean labor with the contractor's own employees only. Based upon that restrictive interpretation, he concluded that he had not found adequate information demonstrating Haycook's having "self-performed" these types of work previously. Additionally, the architect opined that Haycook's intended self-performance on Elementary School "X" project at issue, in the four work areas in dispute, "is in our opinion, a subcontractor format." Uncontroverted evidence adduced at hearing established that Haycook has extensive public school construction experience. The Petitioner's President, Dennis Haycook, has built more than 35 public schools and Haycook's project manager, Reed Hadley, who is assigned to the Elementary School "X" project, has built over 25 school projects. Dennis Haycook was also a principal of Mark Arnold Construction Company in the past, which was one of the largest public school contractors in Florida. In the past 10 years, with his own company, the Petitioner, Haycook, has built numerous school projects including the Goldsboro school which was a $7,000,000.00 project. The Goldsboro, Eustis, and other Haycook-built schools referenced during the hearing and in the evidence were all projects that were built within the authorized budget, were timely, and were of quality construction. The Board ultimately rejected Haycook's bid on Elementary School "X" because of the architect's interpretation concerning "self-performance," i.e. that all work must be performed by employees on Haycook's payroll. The bid documents did not define "self-performance," nor do the bid documents require that labor used must be on the contractor's payroll in order for his performance to constitute "self-performance." Haycook's witnesses were consistent in their testimony as to the definition of "self-performance": "self-performance," as customarily used in the construction industry, includes the contractor's purchasing of materials, performing part of the work with its own labor force, providing other labor not on the contractor's payroll, and directly supervising the work with the contractor's supervisory personnel. The term "subcontractor" is defined in the custom and usage of the construction industry, however, to mean someone or an entity that provides all labor, material, and equipment necessary to do the complete operation, as well as all supervision. It is more of a "total turn key operation." A subcontractor provides everything necessary to finish the work, including supervision, and then merely answers to the general contractor in terms of responsibility for the quality of the job and its timeliness. The school board's witnesses, expert and otherwise, gave interpretations of the concept of self-performance which were somewhat conflicting. Mr. Daimwood, the architect, opined that self-performance requires the contractors to use employees on its own payroll and make direct payment of workers' compensation for such employees. His opinion was that anything else would be a subcontractor relationship and not self- performance. He later testified, however, that paying labor not actually on Haycook's payroll could still constitute self- performance. Patricia Drago, of the school board staff, testified that if a contractor uses 10 employees on his payroll and uses 10 non-employees, this would be self-performance. If such a contractor has 10 employees and uses 11 non-employees, she was not sure whether this would constitute self-performance. Allen Green testified that self-performance of an area of work requires the majority of that work to be performed by the contractor's own employees, while other work could be performed by contract labor. He later changed his definition to require a contractor to have all employees on the payroll in order to self-perform. In other testimony, however, Mr. Green opined that if a contractor supplemented his labor with a couple of additional masons and paid them by the piece, then he would no longer be self-performing. At still another point in his testimony he added that it would be dependent upon the stage of the project as to whether the contractor's use of contract labor is self-performing or subcontracting. He felt that if the contractor adds some additional masons near the end of a job, as opposed to the beginning, then he could still be self- performing. Gary Parker is the Director of Facilities for the Lake County School Board. He testified that from his perspective, self-performance required the use of employees on the contractor's payroll. This definition, however, was not consistent with Lake County's course of conduct with the job that Haycook performed. Mr. Parker acknowledged that there had been no complaints by the architect or anyone else associated with the Eustis school project where Haycook listed itself as self-performing for masonry work, even though Haycook had retained a different entity to perform masonry labor (although not supply materials or supervision). Scott Stegall, the Director of Capital Outlay for the Seminole County School Board, testified that self-performance would require a contractor to perform all work without the use of outside contractors, including labor. Yet Mr. Stegall acknowledged that Haycook listed itself as self-performing masonry work on the Goldsboro school project and used a firm or entity known as Webber and Tucker to perform some masonry work, and that the Seminole County School Board had no dispute with this approach. Mr. Stegall's evaluation form for Haycook had stated that Haycook did not improperly substitute any subcontractors from the submitted list in that project. He later changed his definition of self-performance to acknowledge that a contractor could bring in laborers individually to perform without a "formal contract"; these informal labor contracts would not take it out of the self-performance category according to Mr. Stegall. The evidence concerning the Lake County District's and Seminole County District's experience as to the Eustis school project and the Goldsboro school project with Haycook's performance, including Haycook's approach to self-performance, was satisfactory in terms of pricing and the quality and timeliness of the work performed. The perceived fear by the Respondent that Haycook's performance might be substandard or that it might "bid shop" amongst potential subcontractors, after the bid opening, if Haycook did not list all subcontractors on the bid response, and self-performed in the manner Haycook described in its evidence, has not been shown to have occurred with regard to any of Haycook's past projects. There has been no demonstration by preponderant evidence that the use of only subcontractors listed or named in the bid response has resulted, in itself, in a lower price or better performance for the public by a contractor situated as Haycook. The architect testified that one method of defining "self-performance" is to determine whether the entity performing work was a subcontractor as defined by the bid documents. If the work is not being performed by a subcontractor, then it is being performed by the general contractor or self-performance. As the term is used in the construction industry, a subcontractor generally furnishes materials, installs the work, and supervises its own work. The bid documents define subcontractor as follows: "subcontractor means a person other than a materialman or laborer who enters into a contract with a contractor for the performance of any part of such contractor's contract." Preponderant, credible, and substantial evidence was presented by Haycook to show that Haycook's use of the term "subcontractor" was an entity that furnishes the materials, provides the labor, and the supervision, and undertakes the entire responsibility for that type or phase of the work. When a general contractor hires contract labor only, this excludes what is occurring from the definition of subcontractor, since the definition of subcontractor prevailing in this proceeding based upon the bid documents, takes out of that subcontractor definition "a materialman or laborer." The preponderant credible evidence shows that when Haycook purchases materials and provides the labor, whether or not the labor is on Haycook's payroll, which Haycook then directly supervises, this, by definition, is not a subcontractor situation under the definition of that concept in the bid documents themselves. The bid documents provide no definition for self- performance, but simply contain the following requirements: "a contractor may not list himself as performing a type of work unless he is self-performing and is a Florida licensed contractor for that type of work." Therefore, if a contractor meets these two requirements, he is responsive to this specification concerning when subcontractors should be listed or need not be listed in the bid response. Haycook meets both of the two requirements for self- performing. Haycook's definition of self-performing work is consistent with and does not conflict with the definition of "subcontractor," which excludes materialmen and laborers. Haycook's expert witness, Mr. Harold Goodemote, is a general contractor with 20 years experience, including 8 years as a project engineer and chief estimator for Foley and Associates Construction Company for many public school projects in the Orlando, Melbourne, and Daytona Beach area. Mr. Goodemote is also Vice-President of "Coleman-Goodemote" which has been in existence for approximately 10 years and has built projects worth multi-millions of dollars for Daytona Speedway related entities. It was established through Mr. Goodemote's testimony that it is customary in the construction industry to self- perform work by the contractor's purchasing of materials and using the contractor's own employees, along with "third party labor," to complete work under the direct supervision and control of the general contractor. The testimony of Mr. Reed Hadley and Mr. Haycook likewise establishes that it is common practice in the construction industry to self-perform work in the manner in which Haycook has performed it in the past. For example, both the Lake County and Seminole County School Boards allowed Haycook to list itself as self-performing where Haycook purchased masonry materials and used contract labor to install the masonry materials and components. "Bid shopping" is a practice whereby a contractor submits a bid for a project and, after winning the bid, goes to its subcontractors or even to new subcontractors, not considered in the bid process, and attempts to get lower prices from them, versus the prices the contractor had when it submitted its bid. This allows more profit to be built into the job for the contractor or, if the contractor artificially bid low in order to get the job, tends to allow the contractor to restore profit to the job for itself. The school board's rationale for requiring pre-bid opening listing of subcontractors is to prevent bid shopping after the bid is awarded in order to protect the competitive integrity of the bidding process. The listing of subcontractors is a practice of the Volusia County School Board and some other school boards in Florida. Ms. Drago, in her testimony, acknowledged that a substantial number of school boards in Florida do not require a list of subcontractors to be provided with bid proposals, and she acknowledged that this does not mean that those school boards' bid processes lack credibility and competitive integrity. She was unaware of any examples in the Volusia County School Board's experience where a contractor listed itself as self-performing and then shopped subcontractors after the bid opening to obtain a better price. The preponderant evidence of record does not establish that this has been the case with Haycook or other contractors on past Volusia County School Board jobs. This is in accord with Mr. Haycook's testimony, who described the detrimental effects such a practice could have on future relationships between a contractors and subcontractors in terms of having them available for later jobs, if a contactor became known for "beating down" subcontractors' prices. If a contractor had a reputation for engaging in that practice, in the future subcontractors' bids to that general contractor would likely be higher, if he could get their bids, and this might result in that contractor having difficulty rendering bid proposals that were low enough to have a chance of being successful. The bid documents give the school board the right to determine if each subcontractor listed by the bidders is qualified to perform the work and if not, to reject that subcontractor and require a replacement subcontractor. It is noteworthy that neither the architect nor the school board rejected Haycook as being unqualified to perform the work in any of the areas in which Haycook, in effect, listed itself as the subcontractor. The bid documents do not provide that the school board may reject "sub-subcontractors" engaged by a subcontractor, nor does the school board examine the history and capabilities of sub-subcontractors that a subcontractor intends to use. Once a subcontractor is acceptable to the Board, there is no further review to determine what means, methods, and procedures the subcontractor uses to perform the work. The subcontractor can contract out all of the work to sub-subcontractors who are actually performing the work, and the Board might not even be aware of it. Therefore, its method or rationale of listing subcontractors and then investigating the subcontractors is no guarantee of ensuring quality of work. In fact, the more areas of work that the general contractor does itself, the more direct control over performance the school board would have. The school board apparently uses a different approach in the instance where a general contractor lists itself as a subcontractor for one or more types of work, i.e. is self- performing. The Board's practice in that situation requires the general contractor to list each contractor who may perform parts of the work. Therefore, the general contractor must list each contractor who will perform the work in each area while this standard is not applied to listed subcontractors. The bid documents do not disclose to bidders the school board's unwritten definition and interpretation of "self- performance." They do not reveal that under the Board's interpretation a contractor must self-perform only with employees on its payroll; that a pre-qualified contractor licensed to perform work in a given area must prove that it has self-performed such work in the past with its own employees only; that general contractors will be treated differently from subcontractors on the subcontractors list, as to the listing of contract labor, and that even though the term "subcontractor" in the bid documents excludes "materialmen" and "laborers," the school board still considers contract labor as a subcontractor or subcontracting, that must be listed for self-performance work. Haycook has substantial experience in bidding and performing work on public school projects, as does Mr. Haycook himself, with both Haycook and a prior company with which he was associated. Haycook had prepared a bid three or four months earlier on a prototype school project similar to Elementary School "X" and had extensive cost information obtained from its work on that project and from subcontractors, including those "bidding" Elementary School "X." Haycook maintains a large database of subcontractors and suppliers experienced in performing work and portions of the work necessary for the Elementary School "X" project, including cost information. It has a database of over 3,000 names useful in obtaining and providing labor for use on parts and subparts of any self- performed work. Prior to the bid, Haycook received the plans and specifications enabling it to determine the quantities of materials needed and the costs per unit for installing the materials and performing the necessary work. Haycook had received subcontractor bids in each of the four areas that it later determined it would self-perform (earthwork, structural steel, concrete, and masonry). Because Haycook's "takeoffs," historical pricing information and recent bid information from another Volusia County prototype school indicated that it could self-perform the work at less cost than using the bids of subcontractors in those four work areas, Haycook elected to self-perform the work and listed itself as the subcontractor in those four work areas. This was not a case where Haycook simply ran out of time to get subcontractors' bids in those four work areas and therefore simply listed itself as performing in the four work areas at issue due to time expediency. It was also not because Haycook intended listing itself as performing in the four subject work areas so that it would create an opportunity to get lower bids from unknown subcontractors after bid opening, in order to enhance its profitability and support a low bid, in terms of putting enough money in the job for itself. As general contractor for the entire project, Haycook intended to provide general supervision of the entire project including subcontractors. With respect to self-performed work, Haycook intended to supply materials and components and to directly supervise and control the means, methods, and procedures of the self-performed work with contract labor. Haycook's definition of "self-performance" for earthwork involved Haycook's renting equipment, retaining contract laborers to clear the site, place the fill (paid by the hour or by the yard), compact the fill, and grade the site. Haycook directly supervises self-performed work and schedules and manages it with Haycook's project manager and on-site superintendent. The testimony of Reed Hadley and Dennis Haycook on behalf of Haycook established that Haycook had self-performed earthwork on other projects in the same manner as described above, satisfactorily for the owners. Specific project names and other project information showing earthwork self-performance by Haycook was provided to the architect as referenced above. Mr. Haycook established that Haycook had "self-performed" earthwork on 50 to 60 percent of its projects in the past. Haycook's definition of self-performance of structural steel included engaging a licensed fabricator, as required by the bid specifications in this instance, hiring experienced labor erection crews, purchasing the materials and component parts, and directly supervising and managing the work, including scheduling of the labor crews. Haycook had performed structural steel on 10 to 15 percent of its past projects. Four examples of projects, self-performed in structural steel, were provided to the architect along with related detailed information. Haycook's self-performance of concrete work included its purchasing of materials, hiring contract labor for footings, paid by the lineal foot, and concrete slabs paid by the square foot, and directly supervising, coordinating, and scheduling the concrete work activities with Haycook's own project managers and superintendent. Haycook has self-performed concrete work on approximately 80 percent of its past projects. The architect was provided a project listing of self-performed concrete work and detailed information showing Haycook's experience in this area. Concrete work is the area of work most commonly self- performed by general contractors in the construction market area in and around Volusia County. Haycook's self-performance of masonry includes Haycook's purchasing of concrete blocks, and reinforcing steel placed within the block, hiring labor on a unit price basis to install it (as, for instance, paid by the block laid), directly supervising the work, and coordinating and scheduling the masonry work activities with Haycook's project manager and superintendent. Haycook has self-performed masonry on approximately 70 percent of its past projects. The architect was provided examples of projects listing self-performed masonry work by Haycook, as well as detailed information depicting Haycook's experience in this work area. Mr. Goodemote, as referenced above, is a local general contractor with school board project experience and is Haycook's expert witness. He established that it is common practice in the construction industry in the Volusia County area for contractors to self-perform work in the manner that Haycook had self-performed it in the past and proposes to do on Elementary School "X." He established with reference to the Board's definition of "subcontractor," which excludes "materialmen" and "laborers," that a contractor's purchase of materials and the hiring of contract labor to install the materials does not come within the definition of "subcontractor" or "subcontracting." He established that a subcontractor is the one who provides all labor, material, equipment, and supervision necessary to complete a work operation. "It's a total turnkey operation. They provide everything to finish the work." Mr. Goodemote's opinion establishes that "self-performance" of the subject work includes a general contractor hiring contract labor to perform a part of the work, because many times there are multiple vendors associated with a portion of the work, and the contractor is still directing and supervising the work and assuming all the risks associated with the work. Mr. Goodemote himself has self- performed as a general contractor and observed other contractors self-perform earthwork, masonry, concrete work, and structural steel work. He demonstrated that if a general contractor uses contract labor to perform a portion of the work, it still remains a "self-performance" by the general contractor, and that the laborers do not have to be on the contractor's payroll in order for the work to constitute self-performance, according to the general practice and usage in the construction industry. When requested by the architect to provide examples of past projects that it had self-performed in the four subject work areas, Haycook listed five projects as to earthwork; four projects in structural steel; seven projects as to masonry; and seven projects as to concrete. In consideration of his restrictive view of what self-performance means (i.e. that self- performance can only mean performance of work by salaried employees on the general contractor's own payroll), the architect (evaluator) requested payroll records and workers' compensation information on two projects only, the Goldsboro Elementary School and Eustis Elementary School. The bid documents do not provide unbridled discretion in the architect/evaluator, or in the school board, to define self-performance in a manner not provided for or inconsistent with the bid documents or to define "subcontractor," to include contract labor and thus require the labor to be listed as a subcontractor on the bid response. There was no notice to any of the bidders that such a restrictive definition would be employed, nor that a contractor listing itself as self- performing, and therefore standing in same position as other subcontractors as to the areas of work it would self-perform, would be treated differently from other subcontractors by, in effect, having to list such persons or entities as those providing contract labor as "sub-subcontractors." There was no evidence that the architect was provided sole discretion to verify self-performance experience as to the two projects only and ignore verification information of self-performance as to the other listed projects provided by Haycook. Although the architect and the Board contended that Haycook's listing of itself as self-performing in the four work areas at issue might allow Haycook to "buy out" subcontractors or to "bid shop," there was no evidence offered to substantiate that this was Haycook's intent or that Haycook or any other identified contractor in Volusia County or the surrounding area had ever attempted to "buy out" subcontractors on Volusia County school projects. Contrarily, Mr. Haycook testified that he does not engage in a practice of "buying out" subcontractors after he has obtained contracts with a winning bid. He explained, as referenced above, that subcontractors and the business relationships that he has with them are crucial to the success of his business. If Haycook made a practice of engaging in such inappropriate operational and pricing conduct when bidding for projects, or entering into related contracts, then subcontractors would either elect not give bids to Haycook at all when Haycook was, in the future, attempting to formulate bid responses, or would not give Haycook their lowest or best price because of their knowledge of such a practice, if Haycook engaged in it. This would obviously have an adverse effect on Haycook's ability in the future to be successful in competitive bid procurements or projects. Haycook has self-performed in the manner intended as to Elementary School "X" for years, as have his competitors. Although the Board apparently feared that Haycook's listing itself as self-performing in the areas of work in question gave it a competitive advantage over other bidders, the evidence does not bear out that fear. The competing bidders had the same opportunity to look at their past cost knowledge and experience, their knowledge of materialmen and suppliers in the area, their knowledge of the labor market and available labor and other data by which they might arrive at an independent evaluation of what a particular area of the work should cost, as well as the methods and means necessary to perform it. They had the same opportunity to evaluate any such knowledge base they have and elect to self-perform one or more areas of the work, as did Haycook. Since they had the same opportunity to do so, the evidence does not show there is any competitive advantage gained by Haycook in this situation which was not available to other bidders as well. As addressed above, the architect's recommendation to reject the Haycook bid was based upon his interpretation that "self-performance" required all work to be accomplished by employees on Haycook's payroll. Using that restrictive definition, the architect concluded that Haycook did not demonstrate, as to the Goldsboro and Eustis projects only, that Haycook had self-performed work with its own employees in the past and therefore that Haycook would self-perform with its own employees on the project at issue. The architect concluded that Haycook's subsequent engagement of contract labor in lieu of using his own payroll employees "could potentially give D. J. Haycook Construction Company an unfair advantage over the other bidders." Neither the architect's testimony nor the Board's other evidence explained, however, how that would give the Petitioner an unfair advantage over other bidders who, as found above, were free to engage in the same proposed self-performance as Haycook. The evidence did not establish how it would harm the public's strong interest in getting the best possible price for a quality construction effort that was completed on time, within the authorized budget, and in accordance with all the contractual terms. The architect's and Board's conclusion in this regard is based upon incorrect and unreasonable interpretations of what is meant by "subcontractor" and the concept of "self-performance." The rationale for finding that Haycook's putative self-performance would give Haycook an unfair advantage, vis a vis, other bidders or would promote bid shopping or buy-out of subcontractors has been shown by the evidence to be based upon speculation and conjecture. Haycook's bid response has been shown to be responsive to the specifications as they were stated, published and furnished to the bidders, including Haycook, in the bid documents at issue. The definition of self-performance employed by the architect and the Board is not supported by the language of the bid documents and has been shown by the preponderant, most credible evidence of record to be an unreasonable definition and manner of evaluating the bids and particularly Haycook's bid. Haycook has been shown to be responsive to the specifications and the relevant portions of the bidding documents and to have the lowest bid by a significant amount, some $241,000.00 dollars as to the base bids of Haycook versus that of Clancy and Theys.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the School Board of Volusia County awarding the contract for Elementary School "X" to the Petitioner, D. J. Haycook Construction Company, Inc. DONE AND ENTERED this 8th day of March, 2004, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 Clerk of the Division of Administrative Hearings this 8th day of March, 2004. COPIES FURNISHED: S. LaRue Williams, Esquire Kinsey, Vincent, Pyle, L.C. 150 South Palmetto Avenue, Box A Daytona Beach, Florida 32114 Theodore R. Doran, Esquire Michael G. Dyer, Esquire Doran, Wolfe, Rost & Ansay 444 Seabreeze Boulevard, Suite 800 Post Office Drawer 15110 Daytona Beach, Florida 32115 William E. Hall Superintendent Volusia County School Board Post Office Box 2118 Deland, Florida 32721-2118
