Findings Of Fact Peace River Center for Personal Development (herein Petitioner) is a community service center that offer services to clients who are victims of crimes. Petitioner has been awarded VOCA funds in the past by Respondent. Pursuant to the contract with Respondent, Petitioner was advised that VOCA funds were awarded specifically and that renewal was not automatic but would be considered each funding year. The contract and the VOCA guidelines grant Respondent the discretion to renew or not renew funding requests By letter dated March 23, 1994, Respondent advised Petitioner that its VOCA contract was expiring on June 30, 1994. Petitioner was also advised that its contract may or may not be renewed for an additional year depending on the outcome of a program evaluation and the availability of VOCA funds. In the March 23, 1994 letter to Petitioner, Respondent advised Petitioner that federal VOCA funding to Florida for the 1994/95 fiscal year had been reduced and the reduction would be passed on to applicants. The issuance of renewal funds for the 1994/95 VOCA contracts were based on three criteria, (1) the grant renewal requests, goals and objectives, and budget; (2) an evaluation of the VOCA program's effectiveness in serving victims of crime; and (3) the availability of funds. For fiscal year 1993/94, Petitioner received $55,000 in VOCA funds. Those funds were to assist with the provision of services to adult sexual abuse and domestic violence victims. Petitioner submitted documentation in support of its initial VOCA funding request and indicated that part of its funding would be used to hire a coordinator therapist and a child care advocate. However, during the course of the 1993/94 fiscal year, Petitioner did not fill those positions until the second half of the year based on delays that it experienced in building a new facility. As a result, a portion of the VOCA funds lapsed. Because of those delays, a contract amendment was executed by the parties allowing the lapsed money, which would have been spent for those professional positions, to be used for furniture and supplies. Based on the modification, revised goals were established. Thus, Petitioner set out to serve only 20 children in the child care unit instead of the 60 as noted in the funding request and to provide only 300 hours of child care to children of domestic violence victims instead of the 1000 hours as requested. The modification was an effort to maximize funding in the interest of the community for the 1993/94 fiscal year. Respondent established a procedure for evaluating all applicants for VOCA funding grants in 1994/95. This procedure included forwarding a packet of information which was sent to all applicants. The packet included a cover letter, instructions, a check list and various forms to be completed. As noted, the federal VOCA grant to Respondent was reduced by 5 percent for fiscal year 1994/95. Although Respondent's staff initially recommended to the Attorney General that all VOCA grants be reduced by 5 percent, Respondent reconsidered and decided that it would be more appropriate to evaluate each program to determine which programs were more efficient and were providing the most needed services to the communities. Respondent also reviewed those programs which provided services that were offered by VOCA monies and were achieving the goals and objectives that were originally stated in the funding request. The Respondent implemented this procedure and in doing so, set up a competitive process to rate each of the 48 existing VOCA grantees. To be awarded VOCA funds, the applicants were initially requested to submit renewal applications. Secondly, Respondent solicited comments from community representatives concerning the performance of the grantee over the preceding fiscal year and evaluated those comments. Next, Respondent reviewed and analyzed the funding by the internal monitoring system that was in place at the time. Utilizing this procedure, the grant managers within Respondent's office reviewed their internal reviews, evaluated the monitoring report of the agency that they had prepared including monthly reimbursement requests and any communication or correspondence that had been entered into between the agencies. Respondent's input from the community centered around the performance of the grantees. In measuring their performance, Respondent attempted to get at least three certifiers from persons in the community who worked with, or were familiar with, the grantees. Respondent selected three of the certifiers that had originally certified the grantee program prior to the award of the first VOCA grant and sent forms to those entities. In addition, Respondent attempted to get two additional certifiers, the state attorney's office or local law enforcement, to participate in the certification process. This second group of certifiers was contacted by telephone. In Petitioner's case, only three certifications were submitted. Respondent reviewed those written certifications and rated Petitioner. One certifier observed that Petitioner had insufficient staffing, that waiting periods were too long for victims to get in and that rape crisis volunteers needed to be matched in age with rape victims. That certifier did not intend for her review to impact adversely upon Petitioner's VOCA grant request although she stood by the representations made in the certification. The next certifier related that Petitioner displayed a program weakness in that victims of domestic violence were required to attend the same domestic violence treatment program class as the abuser or pay an additional $200 to attend a different treatment program. She also noted that certain child care victims were not assisted during court appearances, which was an area that Petitioner specifically noted that it would provide services under the VOCA grant. The next certifier related that Petitioner had a number of weaknesses in its program, albeit unspecific, and that she was familiar with the quality of services that Petitioner rendered with VOCA funds since February of 1994. Upon receiving all of the certification information, Respondent compiled a report and ranked each applicant by assigning a numerical value to each applicant. The ranking was based on the totality of the responses received by Respondent. All of the applicants were rated and based on those ratings, their VOCA grant applications were either renewed or not renewed. Of the 48 applicants evaluated, 45 were funded in whole or in part based on their numerical ranking and 3 requests were not funded, including Petitioner's request. Of all the applicants, Petitioner was ranked 48th or last. Specifically, Petitioner was advised of the non-renewal by Respondent in a June 10, 1994 letter that: This decision was based on an internal performance evaluation and upon performance evaluations of your program by agencies and organizations within your community. A major factor in the non-renewal determination was the administration of the VOCA funds, resul- ting in hiring delays, causing a de-obligation of funds and unnecessary waiting lists for crime victims. The effectiveness of services to your community was also a major factor in not offering your agency a renewal contract. Finally, Respondent's chief of advocacy and grants management of the Attorney General's office, Marcie Davis, was formerly employed in a position where she answered a toll-free information line to assist victims of crimes. Ms. Davis recalled an attempt, by her, to get counselling for a child who was a victim of domestic violence in Petitioner's service area (his mother was murdered by her boyfriend) during the 1993/94 fiscal year. Ms. Davis was unable to get services from Petitioner for that child due to its waiting list - a period of eight to thirteen weeks. Respondent's denial of Petitioner's application for VOCA funds was a non-renewal and was not a termination for cause. Respondent utilized sound discretion in awarding the VOCA funding to the various grantees. There was no evidence that the ranking of any grantee, including Petitioner, was either arbitrary or capricious.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Respondent enter a final order denying Petitioner's request to reverse the discretionary decision made to deny Petitioner's request for VOCA funding for the 1994/95 fiscal year. DONE AND ENTERED this 26th day of January, 1995, in Tallahassee, Florida. JAMES E. BRADWELL 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 26th day of January, 1995. APPENDIX TO RECOMMENDED ORDER Rulings on Petitioner's proposed findings of fact: Paragraph 4, rejected, not probative, paragraph 5 rejected, contrary to the greater weight of evidence, paragraphs 11-13, Recommended Order. Paragraph 7, rejected, speculative and not probative. Paragraph 9, rejected, contrary to the greater weight of evidence, Paragraphs 9 and 10, rejected contrary to the greater weight of evidence, paragraphs 12 and 17, Recommended Order. Rulings on Respondent's proposed findings of fact Paragraph 11, rejected, irrelevant and not probative. COPIES FURNISHED: Dennis Eshman, Esquire 1745 Highway 17 South Bartow, Florida 33830 M. Catherine Lannon, Esquire Gregory A. Chaires, Esquire Office of the Attorney General PL-01, The Capitol Tallahassee, Florida 32399-1050 Honorable Robert Butterworth Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32399-1050
The Issue Whether the Petitioner, Spiritual Kingdom of God the Creator of All Universes, should receive a consumer's certificate of exemption.
Findings Of Fact The Respondent is the state agency charged with the administration of Chapter 212, Florida Statutes. On or about February 4, 1999, the Petitioner submitted an application for consumer’s certificate of exemption. Such application sought exemption as a religious organization. On February 17, 1999, the Department issued a letter to the Petitioner acknowledging receipt of the application and requesting additional information about the Petitioner in order to complete the application review. On March 15, 1999, the Department issued a second notice to the Petitioner that mirrored the prior request for additional information. On April 26, 1999, the Department issued a third letter that advised Petitioner that it had failed to demonstrate that it meets the criteria as a religious institution as defined by Section 212.08(7), Florida Statutes. This letter outlined the criteria that would support the approval of the certification sought by the Petitioner. On June 11, 1999, the Department issued a Notice of Intent to Deny the Petitioner’s application for a consumer’s certificate of exemption. Thereafter the Petitioner requested an administrative hearing to contest the agency’s decision.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying the Petitioner’s application for a consumer’s certificate of exemption. DONE AND ENTERED this 8th day of December, 1999, in Tallahassee, Leon County, Florida. 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 8th day of December, 1999. COPIES FURNISHED: Wendell Phillips Spiritual Kingdom of God the Creator Post Office Box 331228 Coconut Grove, Florida 33233-1228 George C. Hamm, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Joseph C. Mellichamp, III, Esquire Office of Attorney General Department of Legal Affairs The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 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 The Petitioner is a Florida not-for-profit corporation which is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. The Petitioner has established a Mark Twain Scholarship Fund the purpose of which is to give recipients funds to pay for post-secondary tuition and books. On or about September 26, 1994, Petitioner filed an application with Respondent for a consumer certificate of exemption and stated as its basis "other." The applicant then identified itself as "state/church separation" organization. Petitioner did not check any of the other categories for exemptions such as "religious," "educational," or "charitable." The application was reviewed by the Department considering all of the categories listed on the application and available under the pertinent statute. Based on the criteria set forth in Section 212.08(7), Florida Statutes, the Department reached a preliminary decision which denied the Petitioner's application for a certificate of exemption. Petitioner was notified of the denial and timely challenged the agency action. All of the members of the Petitioner's group are voluntary, unpaid, participants who pay yearly dues to join the organization. Students pay $10.00, individuals $30.00, and couples $35.00. If someone were to allege poverty, Petitioner would arrange a free membership for such individual. No evidence of members of that category was presented. The only information about its members Petitioner seeks is their educational background. Documentation regarding financial circumstances of each member is not requested nor kept. Petitioner provides benefits to minors by providing speakers for various topics at the university and high school levels, and by allowing students to attend monthly meetings. Monthly meetings for the south Florida group are held in the Fort Lauderdale library. Other chapters in Tampa and Sarasota also hold meetings periodically and such meetings are, presumably, available to students. In Tampa, for example, Petitioner has an information booth on the campus of the University of South Florida. Petitioner attempts to offer a "scientific and more rationale" point of view to young adults. For the south Florida meetings, approximately 5 to 10 persons under 18 years of age might attend. The average attendance of all members is 20 to 40 persons. Petitioner also produces a public access cable television program consisting of twelve half-hour episodes per year. Topics of this program have included "Sin and Sexuality." Petitioner established the scholarship fund indicated above. One recipient was a woman in prison for life in California who wanted to attend the University of California. More recently, Petitioner conducted an essay contest and two men from that event received awards. None of the scholarship recipients was a minor. The total amounts expended on scholarships by the Petitioner did not exceed 10 percent of its total expenditures. The Petitioner's group started with approximately 53 members but has grown to over 200 members. Petitioner provides support to its members who may encounter scorn or harassment from the public and has a telephone line set up so that messages can be taken twenty-four hours of the day. Someone from the organization can then return the call and assist the caller. Public harassment is not uncommon for members of the group. For example, when Mr. Tzanetakos opposed the use of public monies in connection with the Pope's visit to south Florida, he received so many telephone calls that he had to change to an unpublished number. Mr. Tzanetakos maintains that while his organization's views are an unpopular minority in this country, that they are in the majority in Europe and other places. One of the purposes of the Petitioner's group is to advocate, support, and defend "in all lawful ways the complete and absolute separation of church and state." Another purpose is to promote freedom of expression. Thirdly, the group seeks to "protect the constitutional and civil rights of Atheists as members of a free and democratic society." According to its articles of incorporation, Petitioner promotes the following concepts: Because human beings, along with all other species of animal and plants, evolved from a primordial cell, Homo sapien is only a link in the chain of living matter. Because Homo sapiens is the species with the most advanced brain and the most manipulative hands, and because we have developed excessively destructive weapons (nuclear and others), we are solely responsible for the well-being of our own species and to a great extent the rest of the life on planet Earth. Global population control is vital, and the extinction of other living animal and plant species must be avoided. Cooperation and equality--not conflict-- among all peoples must be encouraged and promoted. Because all humans have a common origin, and because the classification of peoples by races and ethnic groups is divisive and detrimental to our species and to life itself, all inhabitants on planet Earth (sic) [should?] be called "Homo Sapiens", and the current national names to denote the geographical origin of peoples and their distinctive cultures. Minors are not specifically mentioned in the Petitioner's articles of incorporation nor given benefits of membership not available to other members or, in the case of the television broadcasts, the public as a whole. Mr. Tzanetakos conceded that one of the television topics, "Euthanasia," may not have been of particular interest to minors. He further acknowledged that it is difficult to get children to watch educational television. The Petitioner does not advertise its programs to the general public, nor does it survey viewers to determine the numbers of minors, if any, that support its television program. Petitioner accepts only "what can be verified by the scientific method and rejects supernatural entities, acceptable only as articles of faith." Accordingly, Petitioner's members do not "worship" god or anything. The Petitioner did not present evidence that it is qualified for accreditation by, or membership in, the Department of Education, the Southern Association of Colleges and Schools, the Florida Council of Independent Schools, or the Florida Association of Christian Colleges and Schools.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Revenue enter a final order denying the application for a consumer's certificate of exemption filed by Petitioner. DONE AND ENTERED this 8th day of March, 1996, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH, 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 8th day of March, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-0654 Rulings on the proposed findings of fact submitted by Petitioner: 1. None timely submitted. Rulings on the proposed findings of fact submitted by the Respondent: 1. Paragraphs 1 through 22 are accepted. COPIES FURNISHED: 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 Mark Trop Shoreview Building 9999 Northeast Second Avenue, Suite 201 Miami, Florida 33138 Ruth Ann Smith Assistant General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668
Findings Of Fact The following findings of fact are based upon stipulations entered into and adopted by the parties on December 15, 1986, January 9, 1987, and January 12, 1987, which were confirmed by all parties at the final hearing: The League is a wholly owned instrumentality of its member cities. The League is charged in its bylaws to work for the general improvement of municipal government and its effective administration in this state. Further, it is charged with representing its membership on statewide issues affecting municipal government. The City is a municipal corporation organized and existing under the laws of the State of Florida. The City has five (5) "local law" municipal retirement funds, including three (3) police plans and two (2) firefighter plans, all of which receive excise tax revenue from the tax fund established in Chapters 175 and 185, Florida Statutes. The Department has responsibility for administering Chapters 175 and 185, Florida Statutes (1986). On November 7, 1986, the Department published notice in the Florida Administrative Weekly of its intent to adopt rules to implement Chapters 175 and 185, Florida Statutes, pertaining to municipal firefighter and police pension funds and to provide for interpretations, standards, applications, enforcement and administration thereof. The published notice stated there would be a public hearing on December 2, 1986, and the public hearing was held on that date. On November 26, 1986, the League filed its petition for administrative determination of the invalidity of certain of the proposed rules. The League represents over 390 cities throughout the State of Florida. As part of their municipal administration, many of these cities maintain firefighter pension funds that receive premium tax pursuant to Chapter 175, Florida Statutes, and police officer pension funds that receive premium tax pursuant to Chapter 185. A number of these cities maintain "local law plans" as defined by proposed rules 4-14.028 and 4-54.019; a number of the League's member cities maintain "chapter plans" as defined by the same proposed rules. Such plans are required by the proposed rules to meet certain standards which affect the cities' responsibilities in relation to said plans. Thus, the League, which is required to work for the effective administration of municipal government, is substantially affected by the proposed rules. The City is a substantially affected party pursuant to Section 120.54(4)(a),(d), Florida Statutes. All cities operating pension plans which receive funds pursuant to Chapter 175 and Chapter 185 have a duty to adequately fund said plans annually to meet the normal costs of the plan as well as fund any actuarial deficiency over a 40 year period. A number of local law plans presently have procedures and provisions which vary from the procedures and provisions in those sections of Chapters 175 and 185 which are addressed by proposed rules 4-54.024, 4-54.035, 4-54.036, 4- 54.037, 4-54.039, 4-54.040, 4-54.041, 4-54.044 and 4-54.047. The Department has copies of all pension plans which receive funds pursuant to Chapters 175 and 185 in their possession. Case No. 86-4722RP involves a challenge to certain proposed rule amendments to Chapter 4-54, Florida Administrative Code. Case No. 86-4723RP involves a challenge to certain proposed rule amendments to Chapter 4-14, Florida Administrative Code. Many of the proposed rule amendments to Chapters 4-14 and 4-54, Florida Administrative Code, which are being challenged are substantially similar. The statutory authority relied on for corresponding, similar proposed rule amendments in Chapters 4-14 and 4-54 are substantially similar, and the legal issues involved in the challenge to those corresponding proposed rules are identical. As a result of the public hearing held by the Department on December 2, 1986, the Department has agreed and stipulated to modify and/or withdraw certain proposed amendments to Chapter 4-54 which follow, as well as corresponding proposed amendments to Chapter 4-14, and in consideration thereof the Petitioners have agreed to withdraw their objections thereto: 4-54.018 Scope. These rules apply to all municipal firefighters in this State who participate in a pension fund which receives money from the premium tax provided for in ss. 175.101-175.131, Florida Statutes, as well as all municipal firefighter pension boards and municipalities having a municipal fire- fighter pension fund or system which receives state excise tax revenue from the tax fund established in Chapter 175, Florida Statutes, except as otherwise provided herein. The Department shall withdraw subsections (2) and (3) and renumber subsection (4) of proposed rule 4-54.023. The Department shall withdraw subsection (8) and renumber subsections (9), (10) and (11) of proposed rule 4-54.048. The Department shall withdraw subsection (3) of proposed rule 4-54.031. The League agrees to withdraw its challenge to proposed rule 4-54.032, but said withdrawal shall not prejudice its right to later challenge said rule pursuant to Sec. 120.56, Florida Statutes. The City did not object to this proposed rule. The Department shall amend subsection (2)(a) of proposed rule 4-54.024, Florida Administrative Code, to read: 4-54.024(2) A "professionally qualified" consultant means a consultant who meets the following minimum criteria: (a) he must offer his services on a "hard dollar" or flat fee as opposed to or in addition to a commission type basis. The League shall withdraw its objections to proposed rule 4-54.038. The City did not object to this proposed rule. 4-54.020 Minimum Standards Except as otherwise provided herein and Chapter 175, Florida Statutes, Chapter 175, excluding Section 175.351, Florida Statutes, provides minimum standards for (a)(line through original) all chapter funds. and (b) for all local law funds established on or after October 1, 1986. (line through original) Except as otherwise herein and in Chapter 175, Florida Statutes, Section 175.351, Florida Statutes, provides minimum standards for all local law funds. (established prior to October 4, 1986.(line through original) 4-54.029(4) The Department of Insurance shall withhold distribution of Chapter 175 tax revenues as allocated to a Chapter Fund or Local Law Fund which is not in compliance with the applicable requirements of Chapter 175 or Section 175.351. (or these rules.(line through original) 17. The application of Sections 175.071(5), 175.121, 175.162, 175.171, 175.181, 175.191, 175.231, 175.251, 175.261 and 175.333, Florida Statutes, will have an economic impact as defined in Section 120.54, Florida Statutes, (actuarial or administrative costs) on a number of local law municipal pension funds and those municipalities (including the City) that are not presently complying with these sections. The impact of these applications is ascertainable within an identifiable range. The issue of whether these statutory sections, and resulting economic impact, are made applicable to these funds by the provisions of Chapter 175, Florida Statutes, or by the proposed changes to Chapter 4-54, Florida Administrative Code, is not resolved by stipulation or agreement of the parties. During the hearing and also subsequent thereto, the parties further stipulated that: There is a difference in benefits available under the City's pension plans for firefighters enacted by special act and ordinance, and benefits available under a Chapter 175, Florida Statutes, plan. In their respective proposed final orders, Petitioners have listed the proposed rules which remain at issue, following stipulations and voluntary dismissals. (See League proposed finding of fact 23 and City proposed conclusion of law 4.) Proposed rules at issue are: Rule Chapter 4-54 Rule Chapter 4-14 4-54.024(3) 4-14.033(3) 4-54.027 4-14.036 4-54.029(2) 4-14.037(2) 4-54.033(2) 4-14.040(2) 4-54.034 4-14.041 4-54.035 None 4-54.036 4-14.042 4-54.037 4-14.043 4-54.039 4-14.045 4-54.040 4-14.046 4-54.041 4-14.047 4-54.045 4-14.051 4-54.047 None 4-54.048(3)(5)(6)(7)(10) 4-14.053(3)(5)(6)(7)(10) 4-54.049 4-14.054 The following findings of fact are based upon the evidence presented at final hearing: Based on the testimony of Dr. John J. Fenstermaker, who was accepted as an expert in English grammar and sentence structure, the phrase "approved by a majority of the firefighters" found in Section 175.351(13), Florida Statutes, modifies the nouns "board of trustees of the pension fund" and "official pension committee", instead of the verb in the sentence. However, the phrase does not mean that a majority of firefighters must approve the membership of the board of trustees or official pension committee. Rather, it means that a majority must approve action by the board of trustees or committee relative to the placement or use of certain income. A reasonable construction of the statute is that majority approval is required for the board of trustees or committee to act, but not that the make-up or membership of these bodies must be approved each time they propose to place or use certain income from the premium tax referred to in said statute. Proposed rule 4-54.048(7), Florida Administrative Code, is therefore authorized by, consistent with, and implements Section 175.351(13), Florida Statutes. The City's firefighter and law enforcement pension plans have received distributions of state premium tax funds pursuant to Chapters 175 and 185, Florida Statutes, for the last five years. The provisions of the City's local plans are very similar. Actuarial valuations of the City's firefighter and law enforcement pension plans are performed by the City's actuary as required by Chapter 112, Part VII, Florida Statutes. The City's local pension plan for firefighters does not presently apply or conform to the requirements of: Section 175.071(5), Florida Statutes, which requires the board of trustees to retain an independent consultant professionally qualified to evaluate the performance of professional money managers at least once every three years; Section 175.171, Florida Statutes, which deals with optional forms of retirement income; Section 175.181, Florida Statutes, which concerns the designation of beneficiaries; Section 175.191, Florida Statutes, dealing with disability benefits; and Section 175.261, Florida Statutes, regarding reports to Respondent. The Department promulgated an Economic Impact Statement in connection with the proposed rules in Chapter 4-54 which states, in pertinent part, that: Pursuant to Section 120.54(2), Florida Statutes, the State of Florida, Department of Insurance has considered the economic impact associated with the implementation of proposed Rule Chapter 4-54 which relates to municipal firefighters' pension funds. Chapter 175, Florida Statutes, was amended by Chapter 86-41, Laws of Florida, generally effective on October 1, 1986 with some exceptions. The amendments of Chapter 175, Florida Statutes, contained in Chapter 86-41, Laws of Florida, had and will have an economic impact upon the Department, the municipalities receiving state excise tax funds provided for in Chapter 175, Florida Statutes, and the firefighters' pension boards of trustees and pension funds. That economic impact was addressed fully in the legislation and enactment of Chapter 86-41, Laws of Florida. These rules, which augment, interpret, and provide for definitions, application and enforcement of Chapter 175, Florida Statutes, as amended by Chapter 86-41, Laws of Florida, will have no additional impact or nominal additional impact on those entities affected by Chapter 86-41, Laws of Florida. * * * 2. An Estimate of the Cost or Economic Benefit to all Persons Directly Affected by the Proposed Action. Insurance Companies: None. Insurance Agents: None. General Public: None. Municipalities: None, except for minor interest cost if a violation of 175.131, Florida Statutes occurs. Firefighter Pension Boards: None. * * * 5. A statement of the Data and Methods Used in Making Each of the Above Estimates. METHODOLOGY Costs and benefits of the proposed rule are estimated on marginal basis, i.e., additional costs or benefits over and above those associated with normal operations of the affected entity. The relevant costs or benefits to any economic impact are the net additions associated with implementation of the action. DATA The data used in calculating costs and benefits are derived from Departmental experience and statistics. The estimated cost to the agency for implementing the proposed changes was made by responsible agency staff personnel. The Department's Economic Impact Statement for proposed rule Chapter 4-14 is substantially similar to the above. It is clear from the Notice published by the Department, as well as its Economic Impact Statement, that the proposed rules which are here at issue implement Chapters 175 and 185, as amended by Chapters 86-41 and 86-42, Laws of Florida, respectively.
The Issue As the parties have stipulated, the issue in this case is whether Respondent Florida Housing Finance Corporation (the “Corporation”) properly interpreted Rule 67-48.032(2), Florida Administrative Code, and the corresponding provisions on the same subject found in paragraph 2, at page 2, of the Corporation’s 2000 Qualified Allocation Plan (collectively, the "Instructions"), when it applied the Instructions to determine the substantial interests of Petitioners and Intervenors.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Corporation and Its Duty to Allocate Federal Income Tax Credits The Corporation is a public corporation that administers governmental programs relating to the financing and refinancing of housing and related facilities in Florida. It is governed by a nine-member board composed of eight persons whom the governor appoints plus the Secretary of the Department of Community Affairs, sitting ex-officio. Among other things, the Corporation is the state's designated "housing credit agency" as defined in the Internal Revenue Code. As such, the Corporation has the responsibility and authority to establish procedures necessary for the allocation and distribution of low-income housing federal tax credits, which are created under and governed almost entirely by federal law. These tax credits, which are designed to encourage the development of low-income housing for families, provide a dollar-for-dollar reduction of the holder’s federal income tax liability and can be taken each year, for up to ten years, that the low-income housing project for which the credits were awarded continues to satisfy Internal Revenue Code requirements. Housing tax credits are allotted annually to the states on a per capita basis and then awarded, through state-administered programs, to developers of rental housing for low-income and very low-income families. Once awarded, there is a market for these tax credits; consequently, a developer may sell them at a discount to obtain immediate cash for its project. As a populous state, Florida receives between $18 million and $18.5 million in federal tax credits each year. The Corporation allocates the state's share of tax credits to eligible recipients pursuant to a Qualified Allocation Plan ("QAP") that federal law requires be prepared. The QAP, which must be approved by the governor, is incorporated by reference in Rule 67-48.025, Florida Administrative Code. In accordance with the QAP, the Corporation employs various set-asides and special targeting goals that play a substantial part in determining which applicants will receive tax credits in a particular year. While targeting goals are "aspirational" in nature, set-asides are relatively inflexible. Thus, special targeting goals may be met if credits are available. In contrast, credits that were reserved (or "set- aside") for specific project types will be awarded to applicants whose developments fall within the defined set-aside. The set-asides that have spawned the instant dispute are the Geographic Set-Asides and the Non-Profit Set-Aside. The Geographic Set-Asides require that a pre-determined portion of the available tax credits be awarded to applicants in each of the following county groups: Large County, Medium County, and Small County. In 2000, the allocation percentages for these groups were 64%, 26%, and 10%, respectively. The Non-Profit Set-Aside, which is a function of federal law, requires that at least 12% of the credits be awarded to non-profit applicants. None of the other set-asides is either at issue here or affects the analysis or outcome. The same is true of the special targeting goals. For simplicity's sake, therefore, special targeting goals will be ignored in the discussion that follows, and it will be assumed, unless otherwise stated, that the Geographic and Non-Profit Set-Asides are the only factors (besides merit) that affect the Corporation's award of tax credits. The Petitioners and Intervenors (Collectively, "Petitioners") Lakesmart is a Florida limited partnership which has as one of its general partners a non-profit corporation. In the 2000 application cycle, Lakesmart applied to the Corporation for an award of tax credits from the Medium County allocation. Lakesmart is a "Non-Profit Applicant" for purposes of the Non- Profit Set-Aside. RPK is a Florida limited partnership. In the 2000 application cycle, RPK applied to the Corporation for an award of tax credits from the Large County allocation. For purposes of the Non-Profit Set-Aside, RPK is a "for-profit Applicant." Meadow Glen and Coral Village are Florida limited partnerships. Each has a non-profit corporation as one of its general partners. Both applied to the Corporation in the 2000 application cycle for an award of tax credits from the Medium County allocation. Each is considered a "Non-Profit Applicant" for purposes of the Non-Profit Set-Aside. Evaluation, Ranking, and the Tentative Funding Range To distribute the finite amount of tax credits available each year, the Corporation has designed a competitive process whereby potential recipients file applications that the Corporation grades according to selection criteria set forth in the QAP. Points are assigned based on compliance with these criteria. At the end of the evaluation process, each applicant that met the threshold requirements will have earned a final score that determines its rank in terms of relative merit, with higher-scored projects being "better" than lower-scored projects. Because of the set-asides, however, credits are not awarded simply on the basis of comparative scores. Instead, the Geographic Set-Asides require that the applicants be sorted and ranked, according to their scores, within the Large County, Medium County, and Small County groups to which they belong and from whose credit allocations the successful applicants will be funded. As a result, therefore, if the several applicants with the three highest scores in the entire applicant pool were all in the Large County group and the applicant with the fourth highest score were in the Small County group, for example, then the latter applicant would be ranked first in the Small County group. This means, to continue with the example, that if the first- and second-ranked projects in the Large County group were to exhaust the credits allocated to that group, then the applicant with the third highest score overall would not be funded, while the applicant with the fourth highest score in the applicant pool (but ranked first in a county group) would be funded. 16/ After the Corporation has sorted the applicants by county group and ranked them, within their respective groups, from highest to lowest based on the applicants' final scores, it draws a tentative funding line within each group. Applicants above these lines are within the tentative funding range and thus apparently successful. Conversely, an applicant below the tentative funding line in its county group will not receive tax credits unless, to satisfy a set-aside or fulfill a special targeting goal, it is moved into the funding range. In the 2000 application cycle, a preliminary outcome which had occurred only once before, in 1997, happened again: the aggregate of credits requested by the non-profit applicants within the tentative funding range did not amount to the Non- Profit Set-Aside percentage — 12% in 2000 — of total available credits. Therefore, the Corporation needed to elevate as many apparently unsuccessful non-profit applicants into the funding range — and concomitantly to remove as many apparently successful for-profit applicants from the funding range to make room for the favored non-profit applicant(s) — as necessary to fulfill the 12% quota. An Aside on Categorical Ranking The separation of applicants into three groups according to the Geographic Set-Asides, and the effect that has on determining which applicants will receive credits, was mentioned above. To better understand the parties' dispute regarding the procedure for satisfying the Non-Profit Set-Aside when, as in 2000, it is necessary to award credits to a putatively unsuccessful non-profit applicant at the expense of a putatively successful for-profit applicant, a second, more detailed look at the implications of categorical ranking will be helpful. Because of the Non-Profit Set-Aside, the set of all qualified applicants ("Applicant Pool") is divided into two classes: non-profit and for-profit corporations. As will be seen, the class of non-profit corporations is further separated, for purposes of the Non-Profit Set-Aside, into two subclasses: domestic non-profits and out-of-state, or foreign, non-profits. Finally, to repeat for emphasis, all qualified applicants, regardless of class or subclass (if applicable), fall within one of three groups according to the Geographic Set-Asides: Small County, Medium County, and Large County. The following chart depicts the relevant classification of applicants within the Applicant Pool: Applicant Pool Non-profits For-profits Domestic Foreign Small County Medium County Large County Because, as the chart shows, each applicant fits into several categories, applicants may be ranked in order of their comparative scores in a variety of combinations, depending on how they are sorted, e.g. all applicants, all Large County for- profits, all foreign non-profits, etc. Once the Corporation has drawn the tentative funding lines (which, recall, are county group-specific) and determined preliminarily which applicants will receive funding and which will not, two additional categories exist: applicants within the funding range and applicants below (or outside) the funding range. Owing to the nature of the instant dispute, however, the only non-profits discussed below are those outside the tentative funding range, unless otherwise stated, and the only for-profits considered are those within the tentative funding range, unless otherwise stated. 1/ The above makes clear, it is hoped, that a reference to the "highest scored" applicant, without more, may describe many applicants, such as the highest scored domestic non-profit, the highest scored non-profit in the Small County group, the highest scored foreign non-profit in the Large County group, and so on. More information is needed to pinpoint a particular entity. For ease of reference, and to facilitate the discussion and disposition of the present dispute, the following abbreviations will be used in this Recommended Order as shorthand descriptions of applicants’ defining characteristics: Abbreviation Meaning NP Non-profit applicant FP For-profit applicant High- highest scored Low- lowest scored D domestic entity (i.e. organized under Florida law) F foreign entity (i.e. organized under the law of a state other than Florida) S, M, and L Small, Medium and Large County, respectively ! highest or lowest scored within the indicated category; e.g. High- NP(S!) means highest scored non- profit within the Small County group; Low-FP(S!) means lowest scored for-profit in the Small county group x, y variables Combining these abbreviations provides an increasingly precise description, as more information is added. For example: Combination Description High-NP Highest scored non-profit in some, unknown category High-NP[D!] Highest scored domestic non- profit, unknown group; is not necessarily the highest scored non-profit in the class of non- profits High-NP[F!] Highest scored foreign non-profit, unknown group; is not necessarily the highest scored non-profit in the class of non-profits High-NP[D!](S) Highest scored domestic non- profit, located in the Small County group; not the highest scored non-profit within the Small County group High-NP[D](S!) Highest scored non-profit in the Small County group; is a domestic corporation but is neither the highest scored non-profit nor highest scored domestic non-profit High-NP[D](S) Highest scored domestic non-profit in the Small County group; is neither the highest scored non- profit, the highest scored domestic non-profit, nor the highest scored non-profit in the Small County group Low-FP! Lowest scored for-profit in the class of for-profits Low-FP(M!) Lowest scored for-profit in Medium County group; is not necessarily the lowest scored for- profit in the class of for-profits The Controversy: Gored Oxen and Leapt-Over Frogs The solution to the problem that arose in the 2000 application cycle when an insufficient number of non-profit applicants wound up initially within the tentative funding range is found in two places: Rule 67-48.032, Florida Administrative Code, and the 2000 QAP. Although the language of the two is not identical, the parties agree that the rule and the pertinent QAP provisions have the same meaning, despite their differences in wording. The undersigned has concluded, however, that the differences, though subtle, substantially affect the outcome of this case. It is necessary, therefore, to read them carefully. Rule 67-48.032(2), Florida Administrative Code, provides in pertinent part: To ensure that the minimum 10% is set aside, the Corporation has determined that an initial allocation of 12% to qualified Non- Profits will be met. In order to achieve the initial 12% set aside, Applications from Applicants that qualify or whose General Partner qualifies as a Non-Profit entity pursuant to Rule 67.48.002(71), F.A.C., HUD Regulations, Section 42(h)(5)(c), subsection 501(c)(3) or 501(c)(4) of the Code and organized under Chapter 617, Florida Statutes, or organized under similar state law if organized in a jurisdiction other than Florida and meet scoring threshold requirements shall be moved into the funding range, in order of their comparative scores, with Applicants whose Non-Profit entity is organized under Florida law receiving priority over Non-Profit entities of other jurisdictions, until the set-aside is achieved. The last Non-Profit Development that is moved into the funding range in order to achieve the 12% initial set-aside shall be fully funded even though that may result in a higher Non-Profit set-aside. This will be accomplished by removing the lowest scored Application of a for-profit Applicant from the funding range and replacing it with the highest scored Non- Profit Application below the funding range within the applicable Geographic Set-Aside pursuant to the QAP. This procedure will be used again on or after October 1, if necessary, to ensure that the Agency allocates at least 10% of its Allocation Authority to qualified Non-Profit Applicants. Any for-profit Applicant so removed from the funding range will NOT be entitled to any consideration or priority for the receipt of current or future Housing Credits other than placement on the current ranking and scoring list in accordance with its score. Binding Commitments for Housing Credits from a future year will not be issued for Applicants so displaced. Paragraph 2, at page 2, of the Corporation’s 2000 QAP states: [The Corporation] has determined that an initial allocation of 12% to qualified Non- Profits will ensure that the 10% requirement will be met in the event that all Developments included in the initial 12% do not receive an allocation. In order to achieve the initial 12% set-aside a tentative funding line will be drawn. Then, Applications from Non-Profit Applicants that meet scoring threshold requirements shall be moved into the tentative funding range, in order of their scores with Applicants whose Non-Profit entities are organized under Chapter 617, Florida Statutes, having priority, until the 12% set-aside is achieved. This will be accomplished by moving the lowest scored Application of a for-profit Applicant in the funding range down in ranking so it is ranked below the lowest Non-Profit Applicant within the funding range and moving the highest scored Non-Profit Applicant organized under Chapter 617, Florida Statutes below the funding range within the applicable Geographic Set- Aside pursuant to the QAP up in ranking so it is ranked one ranking space above the for-profit Applicant that was moved down in ranking. If no such Applicant exists, the highest Non-Profit Applicant organized under similar statutes from another state which is below the funding range within the applicable Geographic Set-Aside pursuant to the QAP, will be moved into funding range in the same manner as stated in the previous sentence. This procedure will be used again on or after October 1, 2000, if necessary, to ensure that the [Corporation] allocates at least 10% of its Allocation Authority for 2000 to qualified Non-Profit Applicants. Any for-profit Applicant so removed from the funding range will NOT be entitled to any consideration or priority for the receipt of current or future housing credits other than placement on the current ranking and scoring list in accordance with its score. Binding Commitments for housing credits from a future year will not be issued for Applicants so displaced. The last Non- Profit Applicant moved into the funding range, in order to meet the initial 12% set- aside or in order to meet the minimum 10% set-aside after October 1, 2000, will be fully funded contingent upon successful credit underwriting even though that may result in a higher Non-Profit set-aside. After the full Non-Profit set-aside amount has been allocated, remaining Applications from Non-Profit organizations shall compete with all other Applications in the HC Program for remaining Allocation Authority. The Corporation's interpretation of Rule 67-48.032, Florida Administrative Code, and paragraph 2 of the 2000 QAP (collectively, the "Instructions") to determine the procedure for satisfying the Non-Profit Set-Aside in connection with the 2000 application cycle has caused considerable controversy — and led to this proceeding. The controversial interpretation was publicly manifested on September 15, 2000, when the Corporation published a preliminary ranking sheet on its web site which reflected adjustments that its staff had made to fulfill the Non-Profit Set-Aside. Within days, adversely affected applicants were complaining that the Corporation's staff had misinterpreted the Instructions. The Corporation's staff had construed the Instructions to mean that when it is necessary to displace a for-profit within the tentative funding range to satisfy the Non-Profit Set-Aside, the following procedure must be followed: Remove Low-FP!(x!) and replace it with High- NP[D](x). 2/ If there is no domestic non- profit in county group x, then replace Low- FP!(x!) with High-NP[F](x!). 3/ This construction permits High-NP[D!], if there is one, High- NP![F!] if not, to remain outside the funding range, because it might not be in county group x. In practice, the process that the Corporation’s staff had settled upon operated, in the circumstances presented, to the detriment of Petitioners. Here is how it worked. After the tentative funding range was established, the lowest scored for- profit in the class of for-profits was in the Small County group. 4/ There were no non-profits, domestic or foreign, in that group to elevate, however, and so Low-FP!(S!) could not be removed; the fall-back procedure was followed. See endnote 4. As it happened, RPK was Low-FP(L!) and had a lower score than Low-FP(M!). Thus, under the Corporation's staff's interpretation of the Instructions, as revealed by the rankings posted on September 15, 2000, High-NP[D](L!) was moved into the funding range in the place of RPK, even though High-NP[D](L!)'s final score was lower than that of Lakesmart — which was High- NP. (Coral Village and Meadow Glen were the second- and third-ranked domestic non-profits, respectively, in the Medium County Group. Sorted by class, Lakesmart, Coral Village, and Meadow Glen would be ranked first, second, and sixth in the class of non-profit applicants.) 5/ The second lowest-scored for-profit in the class of for-profits was also in the Large County group. Thus, it became Low-FP!(L!) after RPK was removed. It, too, was replaced by the Large County non-profits that became, in turn, High-NP[D](L!) as the next highest-ranked non-profit in that group was moved up into the funding range to satisfy the 12% Non-Profit Set-Aside. In all, the Corporation's staff proposed to elevate — and hence award tax credits to — four non-profit applicants whose final scores were lower than Lakesmart's and Coral Village's. One of those four putative beneficiaries had a lower final score than Meadow Glen's. Lakesmart and others who disagreed with the Corporation’s staff advanced an alternative interpretation of the Instructions. In their view, to ensure that the Non-Profit Set-Aside is met requires the following maneuver: Remove Low-FP(x!) and replace it with High- NP[D!](x). 6/ If there is no domestic non- profit outside the funding range, then replace Low-FP(x!) with High-NP. 7/ This interpretation admits the possibility that Low-FP! might remain in the funding range, because it might not be in county group x. Under this interpretation, favored by all Petitioners, Lakesmart and Coral Village would be elevated into the funding range, rather than being "leap-frogged" by lower-scored non- profits, and RPK would not be displaced. (Of course, Petitioners' interpretation would require that some other for- profit ox be gored — one having a higher score than RPK's.) These competing interpretations of the Instructions were presented to the Corporation's board for consideration at its public meeting on September 22, 2000. After a discussion of the issues, in which members of the public participated, the board voted unanimously to accept the interpretation that the staff had acted upon in preparing the September 15, 2000, rankings. Later in the same meeting the board adopted final rankings, which were prepared in accordance with the approved interpretation, that resulted in the denial of Petitioners' applications for tax credits. The 1997 Awards: Precedent or Peculiarity? Petitioners maintain that their interpretation of the Instructions is supported by a supposed precedent allegedly set in 1997 that, they say, was binding on the Corporation in 2000. In the 1997 cycle, it so happened that after drawing the tentative funding lines, the sum total of credits sought by non-profits within the preliminary funding range failed to reach the then-required threshold of 10%. Thus, for the first time, the Corporation faced the need to replace higher-scored for- profits (that were apparently in line for funding) with lower- scored non-profits that otherwise would not have received credits. The QAP that governed the 1997 awards provided for the Non-Profit Set-Aside but was silent on the procedure for satisfying it: The Agency will allocate not less than 10% of the state’s allocation authority to projects involving qualified, non-profit Applicants, provided they are non-profits organized under Chapter 617, Florida Statutes, and as set forth in Section 42(h)(5) of the Internal Revenue Code, as amended, and Rule Chapter 9I-48, Florida Administrative Code. Respondent's Exhibit 2, page 8. Rule 9I-48.024(3), Florida Administrative Code (1997), did contain directions for carrying out the required substitution. It prescribed the following procedure for elevating non-profits: If 10% of the total Allocation Authority is not utilized by Projects with Non-Profit Applicants, Applications from Non-Profit Applicants that meet scoring threshold requirements shall be moved into the funding range, in order of their comparative scores, until the 10% set-aside is achieved. This will be accomplished by removing the lowest scored Application of a for-profit Applicant from the funding range and replacing it with the highest scored Non-Profit Application below the funding range within the applicable Geographic Set-Aside pursuant to section (2) above. Petitioners' Exhibit 1. These provisions will be referred to hereafter as the "1997 Directions," to distinguish them from the Instructions. Gwen Lightfoot was the Corporation's Deputy Development Officer in 1997. In that capacity, she was directly responsible for implementing the rules relating to the award of low-income housing tax credits. To satisfy the Non-Profit Set- Aside, Ms. Lightfoot followed the 1997 Directions as she understood them. In so doing, she sorted the eligible non- profits by class (i.e. without regard to their respective county groups) and ranked them in score order, from the highest scoring project to the lowest scoring project. 8/ Then, Ms. Lightfoot moved the highest scoring non-profit in the class of non-profits to a position immediately above the for-profit with the lowest score in the same geographic set-aside as the favored non-profit so that the non-profit project would be fully funded. That is, she replaced Low-FP(x!) with High-NP!(x!). This process was repeated, moving the next highest ranked non-profit to a position immediately above the lowest-ranked for-profit in the same geographic set-aside as the elevated non-profit, until the Non-Profit Set-Aside was met. Although the Corporation presently argues that its board was not fully informed in 1997 as to the procedure that Ms. Lightfoot followed in fulfilling the mandate of the Non- Profit Set-Aside, a preponderance of evidence established that Ms. Lightfoot's actions were within the scope of her authority and taken in furtherance of her official duties; that the board was aware of what she had done; and that the board took no action to change the results that followed from Ms. Lightfoot's interpretation and implementation of the 1997 Directions. Ms. Lightfoot's application of the 1997 Directions, in short, was not the unauthorized act of a rogue employee. Rather, as a matter of fact, her action was the Corporation's action, irrespective of what any individual board member might subjectively have understood at the time. In the years following the 1997 awards, Rule 9I- 48.032, Florida Administrative Code, was re-numbered Rule 67- 48.032 and amended three times, the most recent amendment becoming effective on February 24, 2000. As a result, the 1997 Directions evolved into the language of Rule 67-48.032(2) which, though not identical, retains the essential meaning of its predecessor. During the same period, the QAP was also amended three times, the version controlling the 2000 application cycle having been approved by the governor on December 16, 1999, and adopted by reference in the Florida Administrative Code on February 24, 2000. Unlike the revisions to Rule 9I-48.032(3), however, the changes in the QAP that relate to the issue at hand are significant, because the 2000 QAP sets forth a procedure for fulfilling the Non-Profit Set-Aside when the collective amount of credits sought by non-profits in the tentative funding range falls short of the mandated mark, whereas the 1997 QAP did not.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Corporation enter a final order dismissing the petitions of Petitioner Lakesmart, Petitioner RPK, and Intervenors Meadow Glen and Coral Village. DONE AND ENTERED this 7th day of February, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 7th day of February, 2001.
The Issue The ultimate issues in this case are: 1) whether certain agency statements made by the Respondent, DIVISION OF RETIREMENT, regarding the application of the provisions of Chapters 175 and 185, Florida Statutes, to pension plans for municipal fire fighters and police officers are "rules" as defined by Section 120.52(16), Florida Statutes; 2) if so, whether the agency is required to promulgate such "rules" in accordance with Section 120. 535, Florida Statutes; and 3) whether such "rules" constitute an invalid exercise of delegated legislative authority in violation of Section 120.56, Florida Statutes Specifically, the issues in this case relate to the criteria required of municipal pension plans to qualify for state funds. Chapters 175 and 185, Florida Statutes, provide for pension plans for fire fighters and police officers, and authorize two types of pension plans. "Chapter plans" are created by state law, and "local law plans" are created either by special act of the Legislature or by municipal ordinance. The gist of the CITY OF ST. PETERSBURG's Section 120.535 Petition is that the DIVISION is attempting by non-rule policy to impose the same requirements relating to terms, conditions, and benefits on local law plans that the DIVISION requires of chapter plans. Specifically, the alleged non-rule policies of the DIVISION of which the CITY complains are: 1) the definition of "credited service"; 2) the definition of "average final compensation"; 3) the disallowance of a Social Security offset; 4) the interpretation of "disability retirement"; 5) the requirement that all of the CITY's pension plans be in compliance in order to receive state funds; 6) the release of funds to other municipalities not found in compliance; 7) the failure to enforce Rule 60Z-1.004, Florida Administrative Code, which defines "credited service;" and, 8) the application of a declaratory statement issued to the City of Boca Raton to other municipalities. As set forth below, the requirements for local law plans have been the subject of extensive prior litigation. In rejecting a challenge to the constitutionality of these statutes, the Court in City of Orlando v. State Department of Insurance, 528 So.2d 468 (Fla. 1st DCA 1988) stated: Chapters 175 and 185 create a purely voluntary program whereby municipalities may receive state-collected taxes, imposed on property and casualty insurance premiums, with which to fund retirement programs for local police and fire fighters. In exchange for receipt of these funds, the legislature has established certain criteria under which the funds must be operated and managed. Id. at 469. The dispute in this case again focuses on determining what criteria the legislature has established for the operation and management of such local pension plans in order to establish whether a local plan complies with the statute for purposes of receiving state-collected tax funds. Petitioner, CITY OF ST. PETERSBURG, and Intervenors, FLORIDA LEAGUE OF CITIES and CITY OF LARGO, take the position that Respondent, DIVISION OF RETIREMENT, has made non-rule policy statements, and required compliance therewith, which go beyond the criteria established by the legislature for participation in the program. Petitioner contends that such statements violate Section 120.535, Florida Statutes, because the statements constitute unpromulgated rules, and further that such statements violate Section 120.56, Florida Statutes, because the statements constitute invalid exercises of delegated legislative authority. Respondent, DIVISION OF RETIREMENT, takes the position that the statements are not "rules" as defined in Section 120.56(12), Florida Statutes, that even if the statements are "rules" it is not practicable or feasible for the agency to promulgate the statements as rules, and that the statements merely apply the provisions of Chapters 175 and 185, Florida Statutes, as intended by the legislature, and therefore do not violate Section 120.56, Florida Statutes.
Findings Of Fact Parties Petitioner, the CITY OF ST. PETERSBURG (CITY), is a municipality of the State of Florida which participates in the voluntary program to receive state- collected taxes imposed on property and casualty insurance with which to fund retirement programs for its municipal fire fighters and police under Chapters 175 and 185, Florida Statutes, respectively. Intervenor, CITY OF LARGO (LARGO), also is a State of Florida municipality participating in such local plans for fire fighters and police. LARGO has standing to intervene in this proceeding. Intervenor, FLORIDA LEAGUE OF CITIES (LEAGUE), represents municipalities participating in such local plans for fire fighters and police. The LEAGUE has standing to intervene in this proceeding. Respondent, DIVISION OF RETIREMENT (DIVISION), is the agency of the State of Florida charged with the statutory duty to administer the voluntary program by which municipalities receive state-collected taxes imposed on property and casualty insurance with which to fund local plans under Chapters 175 and 185, Florida Statutes. Prior to 1993, the Florida Department of Insurance was the responsible state agency to administer Chapters 175 and 185, Florida Statutes. Intervenors, MICHAEL MOORE and RICHARD FEINBERG are municipal fire fighters with the CITY and have standing to intervene in this proceeding. (Russell M. Rizzo, a municipal police officer and an intervenor in case No. 95- 2637, did not request to intervene in the Section 120.535 action, case No. 95- 5089.) History Chapters 175 and 185, Florida Statutes, relating to pension plans for fire fighters and police, authorize two types of retirement or pension plans. One type is called "chapter plans" and the other is known as "local law plans." Chapter plans are created under state law, and the provisions of Chapters 175 and 185, Florida Statutes, control the plans' terms, conditions and benefits. Local law plans are purely voluntary and are created either by special act of the Legislature, or by municipal ordinance. The special act or municipal ordinance contain the provisions relating to the terms, conditions, and benefits of the local law retirement plan. Both chapter plans and local law plans receive funds from the state-collected premium tax on property and casualty insurance. The CITY has operated local law retirement plans for fire fighters and police since 1951. The CITY's police and fire fighter plans were first chartered by special act of the Legislature. The fire fighter charter plan has been closed to new members since approximately 1970. The CITY in 1970 established a supplemental retirement plan for fire fighters which was enacted by CITY ordinance. The CITY's police and fire fighter pension plans are subject to union negotiation, and cannot be unilaterally amended. City of Tallahassee v. Public Employee Relations Commission, 393 So.2d 1147 (Fla. 1st DCA 1981). In this respect, the CITY may not have the authority to make unilateral changes to its local law plans in order to comply with directives of the DIVISION. The CITY has voluntarily participated on a continuing basis in the program created under Chapters 175 and 185, Florida Statutes, whereby the CITY has received state-collected taxes imposed on property and casualty insurance premiums with which to fund its local plans for fire fighters and police. The CITY has received such funds until calendar year 1994. In 1986 the Legislature significantly amended Chapters 175 and 185, Florida Statutes. See Chapters 86-41 and 86-42, Laws of Florida. Chapter 86-41 pertained to municipal fire fighters; Chapter 86-42 pertained to municipal police officers. As indicated above, the constitutionality of these statutes was upheld in City of Orlando v. State Department of Insurance, supra. In section 1. of each act, the Legislature added substantially the same legislative intent language: Therefore, the Legislature declares that it is a proper and legitimate state purpose to provide a uniform retirement system for the benefit of fire fighters as hereinafter defined, and intends, in implementing the provisions of s. 14, Art. X of the State Constitution as they relate to municipal fire fighters' pension trust fund systems and plans, that such retire- ment systems or plans to be managed, administered, operated, and funded in such manner as to maximize the protection of the fire fighters' pension trust funds. This chapter hereby establishes minimum standards for the operation and funding of municipal fire fighters' pension trust fund systems and plans. After the enactment of Chapters 86-41 and 86-42, Laws of Florida, the Department of Insurance undertook rulemaking to implement the provisions of the acts. The CITY and the LEAGUE challenged the proposed rules under Section 120.54, Florida Statutes. The Department's proposed rules were upheld by a DOAH Hearing Officer. On appeal, the First District Court of Appeal reversed the order of the Hearing Officer, and held that the majority of the department's proposed rules were invalid because statutory provisions governing chapter pension plans, which were not made expressly applicable by the Legislature to local fire fighter and police plans, did not preempt municipal power with respect to pension plans. Florida League of Cities, Inc. v. Department of Insurance, 540 So.2d 850 (Fla. 1st DCA 1989) review denied 545 So.2d 1367 (Fla. 1989), [hereinafter referred to as the "Rules Case"]. In 1988 the CITY and the Department of Insurance engaged in litigation regarding the compliance of the CITY's local law plans with the Department's construction of the statute. This litigation was ultimately settled by the Department's agreement not to withhold the CITY's premium tax funds. During 1990 and 1991, the Department of Insurance also engaged in litigation with numerous other municipalities regarding compliance of local law plans with the provisions of Chapters 175 and 185, Florida Statutes. The Department settled these cases and continued to distribute premium tax funds to these local law plans with the understanding that the disputed issues would be better resolved through rulemaking. The Department of Insurance conducted staff workshops to discuss rulemaking; however, the Department did not thereafter initiate formal rulemaking under Chapter 120, Florida Statutes, with regard to promulgation by rule of compliance requirements for local law plans under Chapters 175 and 185, Florida Statutes. In 1993 the Legislature transferred statutory responsibility for the administration of Chapters 175 and 185, Florida Statutes, from the Department of Insurance to the DIVISION. The legislative transfer effected a transfer of all programs as well as personnel. Since the legislative transfer in 1993, the DIVISION has made a continuous and good faith effort to present these issues to the Legislature for resolution. During the 1996 Session, HB 1951 and SB 2484 have been introduced. These bills specifically address the issues presented in this case. Stipulated Facts The following facts verbatim were set forth by the parties in the Prehearing Stipulation: The DIVISION admits to the authenticity of all documents contained within its files, including, but not limited to, interoffice memoranda, correspondence to and from the DIVISION and/or the Department of Insurance which are contained in the files of the Division, and any correspondence copied to the DIVISION and/or the Department of Insurance which are contained in the files of the DIVISION. The DIVISION takes the position that Sections 175.032 and 185.02, Florida Statutes, (Definitions), apply to local law plans. (The) Position of (the agency in) Declaratory Statement DMS-DR-94-18 was issued to the City of Boca Raton pursuant to Section 120.565, Florida Statutes. It is the position of the DIVISION that a plan containing a mandatory retirement age violates the Older Worker Benefits Protection Act; and that pension plans which violate this federal law are not eligible for distribution of premium tax funds under Sections 175.351 and 185.35, Florida Statutes. It is the position of the DIVISION that fire fighters disabled from duties of a fireman as defined in Section 175.032, Florida Statutes, are eligible for disability benefits. The CITY admits that the Social Security offset contained in its supplemental fire pension plans could possibly reduce a fire fighter's pension below two (2) percent for each year of credited service; however, the CITY specifically has no knowledge that this has or will occur. The CITY admits that Sergeant Rizzo has accrued in excess of thirty- two (32) years of service. The CITY admits that the police pension plan contains a maximum pension plan benefit of 60 percent of the highest pay step of the lowest rank held during the previous three years, which benefit Sgt. Rizzo became eligible for after twenty-five (25) years of active service. The CITY admits after thirty (30) years of service Sgt. Rizzo will retire with a pension benefit equal to less than two (2) percent for each year of active service. The CITY admits that Sgt. Rizzo was permitted to cease all employee contributions to his pension plan after twenty-five (25) years of service. The 1994 premium taxes are withheld from the CITY by the DIVISION. Prior to 1994 the DIVISION, or its predecessor agency, the Department of Insurance, have never withheld Chapter 175 or 185 insurance tax premium moneys from the CITY. The DIVISION has not initiated the rulemaking process with regard to definition of the term "average final compensation" in Section 175.351, Florida Statutes, and there are currently no existing promulgated rules that apply to local law plan definitions for "average final compensation" for the DIVISION. The DIVISION has not initiated the rulemaking process with regard to definition of the term "average final compensation" in Section 185.35, Florida Statutes, and there are currently no existing promulgated rules that apply to local law plan definitions for "average final compensation" for the DIVISION. It is the position of the DIVISION that Rule 60Z-1.004, Florida Administrative Code, defining "credited service" contradicts Chapter 185, Florida Statutes, and is not enforced. It is the position of the DIVISION that all municipal pension plans submitted for review must comply with the non-rule policy at issue in the present case in order to receive Chapter moneys pursuant to Sections 175.351 and 185.35, Florida Statutes. It is the position of the DIVISION that the pension plans of the City of St. Petersburg do not fulfill the requirements of Section 175.351, Florida Statutes, to qualify for release of state premium tax moneys. It is the position of the DIVISION that the pension plans of the City of St. Petersburg do not fulfill the requirements of Section 185.35, Florida Statutes, to qualify for release of state premium tax moneys. It is the position of the DIVISION that the term "credited years of service" as used in Section 175.351(4) and 185.35(1)(d), Florida Statutes, is to be defined in accordance with the term "aggregate number of years of service" and "aggregate number of years of service with the municipality" under Sections 175.032(1)(a) and 185(1)(b), Florida Statutes, respectively. It is the position of the DIVISION that it has the authority under Chapters 175 and 185, Florida Statutes, and Chapter 60Z, Florida Administrative Code, to withhold Chapter 175 and 185 premium tax money to plans not in compliance with Sections 175.351 and 185.35. It is the position of the DIVISION that it has the authority to release payment of Chapter 175 and 185 premium tax moneys to plans not in compliance with Sections 175.351 and 185.35, Florida Statutes, provided the municipality is making good faith efforts to bring the violations into compliance.
The Issue The issue in this case is whether Petitioner is entitled to a consumer certificate of exemption as a religious or charitable institution.
Findings Of Fact Petitioner has submitted seven (7) exceptions to the Hearing Officer's Findings of Fact in the Recommended Order. Exceptions 1, and 3 through 6 filed by Petitioner are rejected. Exception 2 is accepted to the extent it states that Petitioner does not hold worship services. The remainder of this exception is rejected. Exception 7 is rejected, except for the first sentence which indicates that the date of purchase of the vehicle was 1995, not 1993. Petitioner's First Exception-- Finding of Fact No. 1: Petitioner's statements as to how Petitioner was advertised are not relevant and, therefore, are rejected. Petitioner's Second Exception-- Finding of Fact No. 2: Accepted that Petitioner does not have worship services. This determination has been made by the Hearing Officer's Findings of Fact. See Findings of Fact No. 2 and 3. The remainder of this exception is rejected as being irrelevant. Petitioner's Third Exceptions-- Finding of Fact No. 3: The Hearing Officer's Finding of Fact, Paragraph 3 of the Proposed Recommended Order, that Christian-Muslim Church of God (ALLAH) is not part of any established religion is supported by substantial competent evidence. Thus, Petitioner's exception to this finding is rejected. The statement that Petitioner's founder will write a "Consolidated Moral Bible" is not relevant, and is therefore rejected. The Hearing Officer's finding that Petitioner has generalized plans to establish regular religious services, but has not yet done so, is supported by substantial competent evidence. Therefore, Petitioner's exception to this finding is rejected. The statement as to how assemblies of the church will be organized by Petitioner in the future is not relevant, and is therefore rejected. Petitioner's Fourth Exceptions- Finding of Fact No. 4: Petitioner's statements as to where Petitioner's funds are deposited is not relevant, and therefore is rejected. Petitioner's statements as to the type of donations its founder, Mr. Savas, personally makes are not relevant and, therefore, are rejected. The Hearing Officer found that Petitioner does not qualify as a "religious institution" under s212.08(7)(o) 2.a., Florida Statutes. The Hearing Officer's finding is supported by substantial competent evidence. Thus, Petitioner's exception to this finding is rejected. Petitioner's statement as to why Petitioner needs the sales tax exemption is not relevant and, therefore, is rejected. Petitioner's Fifth Exceptions-- Finding of Fact No. 5: The Hearing Officer found that Petitioner is not registered as, or classified as, any type of legal entity. The Hearing Officer also found that the Petitioner is not a church or charitable institution as those terms are defined under s212.08(7), Florida Statutes for purposes of sales tax exemption. The Hearing Officer's findings are supported by the record and by substantial competent evidence. The remainder of Petitioner's exceptions are not material. Therefore, all of Petitioner's exceptions to Paragraph 5 are hereby rejected. Petitioner's Sixth Exception-- Finding of Fact No. 6: The Hearing Officer found that Petitioner is not registered as, or classified as, any type of legal entity and that Petitioner does not qualify as a "charitable institution" pursuant to s 212.08(7)(o)2.b., Florida Statutes. These findings are supported by substantial competent evidence. Therefore, Petitioner's exception to this paragraph is rejected. Petitioner's Seventh Exceptions-- Finding of Fact No. 7: Accepted that Petitioner's founder purchased his car in 1995, and applied for a consumer's certificate of exemption at that time. The statements as to the beliefs of Petitioner's founder are irrelevant or immaterial, and are rejected accordingly.
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 certificate of tax exemption to Petitioner, the Christian-Muslim Church of God (Allah). DONE and ENTERED this 18th day of March, 1996, in Tallahassee, Florida. CAROLYN S. HOLIFIELD 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 March, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-4076 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Respondent's Proposed Findings of Fact. 1. - 11. Accepted and incorporated to the extent not subordinate or unnecessary. COPIES FURNISHED: Ruth Ann Smith, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 John Savas 1416 Hill Drive Largo, Florida 34640 Linda Lettera, Esquire Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
