The Issue The issue is whether Petitioner owes tax, penalty, and interest under Section 212.05(1)(a)2., Florida Statutes,1/ for an aircraft that it allegedly purchased and used in Florida.
Findings Of Fact Petitioner is a national banking and trust company headquartered in Utah. It does not have any operations or personnel in Florida. Petitioner routinely serves as “owner trustee” for non- U.S. citizens who want to register aircraft with the Federal Aviation Administration (FAA). Petitioner charges a fee (typically $4,000) to set up the trust, as well as an annual fee (typically $2,000) for its services as “owner trustee.” Petitioner holds legal title to the aircraft in its capacity as “owner trustee” because the FAA regulations do not allow non-U.S. citizens to register aircraft. Petitioner does not have any operational control over the aircraft even though it holds legal title. The tax assessment at issue in this case relates to a Cessna Citation 650 jet, tail number N385EM (hereafter “the aircraft”), which Petitioner holds legal title to as “owner trustee” pursuant to a Trust Agreement dated April 28, 2007. The trustor and beneficiary under the Trust Agreement is MAW.ZC, LLC, which is a Delaware limited liability company, controlled by a non-U.S. citizen, Nelson Ceballos. The sole purpose of the trust was to “ensure the eligibility of the Aircraft for United States registration with the [FAA].” The aircraft was purchased from Southern Jet Center (SJC) in Sanford, Florida, on May 3, 2007, for $3.74 million. The “purchaser” identified on the Bill of Sale was “Wells Fargo Bank Northwest, NA as Owner Trustee under Trust Agreement dated 4/28/07.” MAW.ZC, LLC, was not mentioned on the Bill of Sale. Petitioner’s witness, Jon Croasman, testified that MAW.ZC, LLC, negotiated the purchase of the aircraft with SJC, and then assigned the purchase right to Petitioner as “owner trustee” so that the aircraft would not lose its tail number and it would be easier to register the aircraft with the FAA. The record does not contain a written purchase agreement between MAW.ZC, LLC, and SJC or a written assignment of the purchase right from MAW.ZC, LLC, to Petitioner. According to Mr. Croasman, SJC was “kind of an unsophisticated seller” and it did not require these documents. Mr. Croasman was the only witness with personal knowledge of the events surrounding the purchase of the aircraft who testified at the final hearing. His testimony was logical and persuasive and is accepted as credible despite the absence of corroborating documentation. Petitioner did not pay anything to SJC for the purchase of the aircraft. The entire $3.74 million purchase price was paid by MAW.ZC, LLC. Petitioner was the purchaser of the aircraft in name only. The real purchaser was MAW.ZC, LLC. On May 4, 2007, Petitioner filed an application to register the aircraft with the FAA. The applicant listed on the application form was “Wells Fargo Bank Northwest, National Association, not in its individual capacity but solely as Owner Trustee under a Trust Agreement dated as of 4/28/07.” On the same day, the FAA issued a certificate of registration for the aircraft. The certificate was issued to “Wells Fargo Bank Northwest NA Trustee.” Registration of an aircraft with the FAA has no bearing on its ownership. Indeed, the official registration document for the aircraft issued by the FAA states: “This certificate is issued for registration purposes only and is not a certificate of title. The Federal Aviation Administration does not determine rights of ownership as between private parties.” On May 7, 2007, Petitioner filed with the Department an Affidavit for Exemption of Aircraft Sold for Removal from the State of Florida by a Nonresident Purchaser (hereafter “the Removal Affidavit”). The affidavit identified the purchaser of the aircraft as “Wells Fargo bank Northwest, NA, not in its individual capacity but solely as Owner Trustee for MAW.ZC, LLC.” The aircraft remained in Florida undergoing repairs at SJC from the date of purchase until July 2, 2007, when it was flown to Venezuela where it was based. It is undisputed that the aircraft left Florida within 20 days after the initial repairs were completed and, therefore, the sale was exempt from the sales tax. The Department informed Petitioner in a letter dated July 13, 2007, that the aircraft could not be brought back into Florida for a period of six months without its becoming subject to Florida’s use tax. Petitioner forwarded this letter to Mr. Ceballos, since he and MAW.ZC, LLC, were responsible for the operation of the aircraft. Petitioner did not exercise any control over the operation of the aircraft after its purchase. In April 2007, prior to the purchase of the aircraft, Petitioner and MAW.ZC, LLC, entered into an Aircraft Operating Agreement. This agreement was executed in conjunction with the Trust Agreement in anticipation of the purchase of the aircraft. The Aircraft Operating Agreement gave MAW.ZC, LLC, “an exclusive right to possess, use and operate the Aircraft.” The agreement required MAW.ZC, LLC, to pay all costs associated with the operation and maintenance of the aircraft. And, with respect to the operation of the aircraft, the agreement required only that MAW.ZC, LLC, cause the Aircraft to be operated by competent personnel in accordance with the manufacturer’s manuals and FAA and other government regulations. On June 15, 2007, Petitioner authorized Captain Alexander Nunez to pilot the aircraft “wherever necessary and specifically including but not limited to Venezuelan air space.” Petitioner interprets the Trust Agreement and the Aircraft Operating Agreement to preclude it from exercising any control over the operation of the aircraft even though Section 9.01(a) of the Trust Agreement gives Petitioner “absolute and complete discretion” in connection with matters involving the ownership and operation of the aircraft so as to protect the interests of the United States. According to Mr. Croasman, the language in Section 9.01 is required verbatim by the FAA for the sole purpose of ensuring that Petitioner, as “owner trustee,” will be able to operate the aircraft without violating its obligations under the Trust Agreement in the unlikely event that the U.S. government needs to use the aircraft for some reason.2/ And, as Mr. Croasman pointed out, Section 9.01(a) requires Petitioner to “exercise this discretion in all matters involving ownership and operation of the Aircraft by the Owner Trustee with due regard for the interests of the Trustor.” The Trust Agreement and the Aircraft Operating Agreement provided that MAW.ZC, LLC, was responsible for keeping records concerning the use of the aircraft. MAW.ZC, LLC, was also responsible for paying any taxes or expenses related to purchase or use of the aircraft. The aircraft crashed in Venezuela on February 18, 2008, killing Mr. Ceballos, Captain Nunez, and the copilot. The original flight records for the aircraft were destroyed in the crash, and no copies of those records were presented at the final hearing. No witness with personal knowledge regarding the operation of the aircraft was presented at the final hearing. The only evidence presented concerning the operation of the aircraft was flight data obtained from two Internet sources, FlightAware and fboweb.com. The FlightAware data was obtained by Department staff as part of their monitoring of the aircraft’s operation during the six-month period after its initial departure from Florida. The fboweb.com data was provided to the Department by David McDonald, the attorney for MAW.ZC, LLC, and Mr. Ceballos, who was acting as Petitioner’s authorized representative during the investigation and protest phase of this case. There is no evidence that Mr. McDonald had any personal knowledge of the information contained in the fboweb.com data, and he did not present it to the Department as his understanding of the aircraft’s operation. Indeed, the letter by which Mr. McDonald transmitted the fboweb.com data to the Department stated that he was “having trouble trying to decipher the information provided by fboweb.com” and that he was providing it to the Department because it appeared to be inconsistent with the FlightAware data conveyed to him by the Department staff. Mr. McDonald never expressly contested the assertion by the Department staff that the aircraft returned to Florida within the six months after it initial departure. His failure to do so was not, under the circumstances, an admission or acquiescence to the Department’s position that the aircraft did return to Florida within that period. Indeed, he informed the Department staff on several occasions that he had not been able to obtain information concerning the aircraft’s operation because the aircraft’s flight records were destroyed in the crash. No credible evidence was presented as to what the FlightAware or fboweb.com services are, or how they obtain the flight data included in their records. For example, when asked to explain her “understanding of what Flight Aware is,” the Department witness used to introduce the data testified only that “[i]t’s a service that the Department subscribes to to track the flights for the aircraft.” The FlightAware data indicates that the aircraft made eleven flights into Florida between September 2007 and January 2008: Flight Date Destination 1 9/22/07 from Arturo Michelena International Airport (Arturo) in Venezuela to Kendall-Tamiami Executive Airport, and then to Simon Bolívar International Airport in Venezuela by way of Ft. Lauderdale Executive Airport on the same day 2 9/29/07 from Arturo to Hollywood International Airport (FLL), and then to Simon Bolivar International Airport the following day 3 10/1/07 from Arturo to FLL, and then back to Arturo the same day 4 10/4/07 from Arturo to FLL, then to Orlando Sanford International Airport (SFB) the following day, with a return to Arturo by way of FLL and Nassau International Airport on October 14 5 10/15/07 from Arturo to FLL, then to SFB on the same day 6 12/16/07 from Arturo to FLL, then to SFB the same day, with a return to Arturo on December 20 7 12/21/07 from Arturo to FLL, and then back to Arturo on the same day 8 12/23/07 from Arturo to FLL, and then back to Arturo on the same day 9 1/3/08 from Punta Cara International Airport to FLL, then to SFB on the same day, with a return to Arturo by way of FLL on January 6 10 1/10/08 from Arturo to FLL, and then back to Arturo on January 12 11 1/13/08 from Arturo to FLL, and then back to Arturo on the same day The fboweb.com data is, as Mr. McDonald noted, difficult to decipher. However, it appears to include most, if not all, of the flights that were listed in the FlightAware data. The fboweb.com data also lists flights on September 8- 9, 2007, between Arturo, FLL, and SFB. Those flights were not listed in the FlightAware data. No findings can be made as to whether the aircraft was indeed in Florida on the dates reflected in the FlightAware or fboweb.com data because that data is uncorroborated hearsay. Even if the FlightAware and fboweb.com data could be relied upon to establish that the aircraft was in Florida on the dates referenced above, only the September 8-9 flights listed in the fboweb.com data and the first eight flights listed in the FlightAware data would be relevant. The other three flights listed in the FlightAware data -– 1/3/08, 1/10/08, and 1/13/08 - – occurred more than six months after the aircraft’s initial departure from Florida on July 2, 2007. Mr. McDonald was able to locate and provide to the Department repair invoices related to only four of the nine relevant flights listed in the FlightAware and fboweb.com data – - 9/8/07, 10/4/07, 10/15/07, and 12/16/07. On each of those occasions, there is documentation showing that the aircraft underwent repairs at SJC in Sanford. There is no evidence that the aircraft underwent repairs in connection with the other five flights listed in the FlightAware data -– 9/22/07, 9/29/07, 10/1/07, 12/21/07, and 12/23/07. Mr. McDonald provided an invoice for a part that was purchased for the aircraft at FLL on September 29, 2007, but there is no evidence that the part was installed in Florida on that trip. No sales or use tax was paid on the aircraft by Petitioner or any other entity or person to Florida or to any other state or country. Petitioner does not dispute the amount of the tax, penalty, or interest calculated by the Department in the Notice of Reconsideration. The tax is $224,400, which is six percent of the sales price of the aircraft; the penalty is $224,400, which is 100 percent of the tax as required by Section 212.05(1)(a)2., Florida Statutes; and interest is accruing at a rate of $67.44 per day, with $27,273.10 of interest having accrued through the date of the Notice of Reconsideration. These amounts were assessed against Petitioner in its capacity as “owner trustee,” not its individual capacity.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order rescinding the assessment at issue in this case. DONE AND ENTERED this 19th day of August, 2009, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of August, 2009.
Findings Of Fact On September 22, 1981, the Respondent, Sonoma International (hereafter Sonoma) , through its vice president, Claudette Bruck, filed an application with the Florida Department of Transportation (hereafter D.O.T.) for a license to construct and operate a private airport to be known as Greener Pastures Private Airport. The proposed airport site is located on Loxahatchee Road (SR 827) in an unincorporated area of southwest Palm Beach County. The parcel on which the proposed airport is to be located consists of approximately 63.42 acres and is owned by Sonoma. The property is approximately 800 feet east to west and 3900 feet north to south. The proposed landing strip would be located on the western-most portion of the property and will run the entire length of the property except for any applicable setback requirements. Petitioner, John J. Burton, (hereafter Burton) owns approximately 15 to 20 acres of undeveloped land in the area of the proposed site. The eastern portion of Burton's property is directly north of the location of the proposed landing strip. The Burton property is approximately 300 feet north of the Hillsborough Canal and approximately 600 to 800 feet north of the proposed airport site. The Petitioner, Florida National Properties, Inc., owns the land contiguous to the southern boundary of the proposed site. This property is also undeveloped. The Loxahatchee National Wildlife Refuge is located approximately 3/4 of a mile north of the proposed site. The area where the proposed site is located remains undeveloped. Sonoma proposes to sell subdivided five (5) acre parcels with the landing strip located on the western portion of each lot. The landing strip is for the use of the owners of these parcels and their guests. The proposed landing strip will be a grass strip and will run the full length of the property. D.O.T. reviewed Sonoma's application, performed site inspections and found the proposed site was adequate to meet the site approval requirements set forth in Rule 14-60.05, Florida Administrative Code. The site inspections were performed by Mr. Boswell and Mr. Brown of D.O.T., who submitted reports of their findings. On October 20, 1982, D.O.T. entered a site approval order which contained the following conditions: All operations are to be conducted in VFR weather conditions. Use of the airstrip is limited to property owners and their invited guests. Left traffic patterns will be established for Runway 18 and Right traffic patterns will be established for Runway 36. Aircraft arriving or departing the airport will avoid overflying the Loxachatchee National Wildlife Refuge below 2000 feet AGL. Users of the airport and invited guests will be informed of possible bird activity in the vicinity of the site. Traffic patterns and operational procedures are subject to review by this Department prior to licensing or re-licensing. The landing strip surface for private airports must be a minimum of 1800 feet in length with a primary surface width of 100 feet and a usable width of 50 feet. The proposed site is more than adequate for a landing strip with these dimensions. A private airport must have and maintain approach zones which are a trapezoidal area increasing in width from 50 feet either side of the runway centerline at a distance of 3000 feet outward from the ends of each runway. Rule 14-60.07(5), Florida Administrative Code. These approach zones must be clear of obstructions above a glide path of 20:1 from the ends of each usable runway. Rule 14-60.07(6). It is not necessary for the applicant to own or control the ground area beneath the approach zones. The approach zones for the proposed airport will extend over property owned by the Petitioner Burton on the north and Petitioner Florida National on the south. Neither of the Petitioners has granted an easement or other right of use of the airspace above their property. There are presently no obstructions which will prevent Sonoma from obtaining the necessary approach zones at the time of licensing. There are Australian Pines located on the northern tip of Sonoma's property and along the right-of-way of Loxahatchee Road where it abuts Sonoma's property on the north. These trees are 80 to 90 feet in height. By constructing the landing strip the full length of Sonoma's property, the threshold for landing may be displaced to the south of these trees. The 90 foot height will require a displacement of 1800 feet in order to obtain the 20:1 glide path clear zone. With a runway length of 3700 feet (3900 feet minus 2 x 100 feet set back) leaves a usable runway length of 1900 feet. This exceeds the minimum 1800 feet requirement. The trees may be topped or removed prior to final inspection. Although there are bird-nesting areas within the Loxahatchee National Wildlife Refuge from which regular flights of birds occur, these flights are fairly predictable as to time and location and will not create an abnormal safety hazard for the proposed site. There are also microwave towers in the general area of the proposed site, but these towers do not constitute a hazard to planes landing or taking off from the proposed airport. Safe air traffic patterns can be developed on the site for takeoff and landing. Herbert L. Brown, an Aviation Specialist with D.O.T., flew low approaches over the proposed site on two different occasions on December 2, 1982, and April 22, 1983. Mr. Brown flew right-hand traffic patterns and approaches to Runway 36 and left-hand patterns and approaches to Runway 18. On each occasion, he could have landed safely on the proposed site but made a go- around. Mr. Brown did not detect any potential hazards on either of these flights and determined that safe air traffic can be developed on the proposed site. On April 29, 1982, the Board of County Commissioners of Palm Beach County approved Sonoma's petition for a Special Exception to the Palm Beach County zoning ordinance. This approval permits Sonoma to construct a private use airport on the proposed site with the following conditions: The developer shall convey to Palm Beach County within ninety (90) days of Special Exception approval 80 feet south of the south right-of-way line of the Hillsboro Canal for the ultimate right-of-way for State Road #827. The developer shall contribute Three Thousand Dollars ($3,000) toward the oust of meeting this project's direct and identifiable traffic impact, to be paid on a pro-rata basis at the time of issuance of the building permit(s). A 100 ft. setback shall be required between the runway edge and any property line. No structure or navigation aids shall be closer than 50 ft. from any property line. Use of this airstrip shall be limited to owners of this property and their guests. The developer has agreed, and shall limit the County's liability for any future condemnation to exclude any improvements constructed as a result of this Special Exception. Airspace approval for the proposed site was obtained from the FAA on February 24, 1982. A private use airport constructed on this site will conform to the minimum standards of safety for a private use airport if constructed in accordance with D.O.T. requirements. The determination of such conformity is made by D.O.T. in a final inspection prior to licensing. The procedure for obtaining a private use license is a two-step procedure. The first determination is site approval and basically addresses the question of whether it is feasible to establish a private use airport on the proposed site which will meet D.O.T. requirements. In this phase, no detailed construction plans or site plans are required. After site approval, the proposed licensee prepares the site and constructs the airport. Upon completion, D.O.T. makes a final inspection to determine if all D.O.T. requirements have been met. If the airport fails to meet any D.O.T. requirement, the license will not be issued.
Recommendation Based upon the foregoing findings of fact and conclusions of law it is RECOMMENDED: That the Department of Transportation issue its site approval order to Sonoma International for the proposed private airport, subject to those specific conditions set forth in the Notice of Intent and proposed Site Approval Order. DONE and ENTERED this 18th day of January, 1984, in Tallahassee, Florida. MARVIN E. CHAVIS Hearing Officer Division of Administrative Hearings Department of Administration 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 18th day of January 1984. COPIES FURNISHED: Gerald K. Burton, Esquire Mark A. Seff, Esquire 2740 Hollywood Boulevard Hollywood, Florida 33020 Paul A. Pappas, Secretary Department of Transportation 605 Suwannee Street Tallahassee, Florida 32301 Thomas G. Wright, Jr., Esquire Gregory S. Sollitto, Esquire 3300 University Drive Coral Springs, Florida 33065 Leslie T. Ahrenholz, Esquire Post Office Box 2656 Fort Myers, Florida 33921 Vernon L. Whittier, Jr., Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32301
Findings Of Fact Prior to December 5, 1979, Robert E. Wood was incorporated under the name of Air Unlimited, Inc., to operate an aircraft fixed base operation at the Opa Locka Airport. He purchased the company in January or February 1979 but failed to inform the Department of State to mail correspondence concerning the company's registration to his address. In the course of operating Air Unlimited, Mr. Wood sold a Cessna 172 to Dr. Johnson. There is a dispute between the parties over whether or not the plane was sold as new or as used. That dispute remains unresolved today. Dr. Johnson through is business dealings with Air Unlimited, Inc., became aware that the name Air Unlimited, Inc., was being used by an aircraft servicing company in Dade County. The company as operated by Mr. Wood and known by Dr. Johnson provides fueling, repair, rental, and other aircraft services. Dr. Johnson also knew that considerable good will is attached to the name Air Unlimited, Inc. The deadline for the submission of Air Unlimited's 1979 annual report was June 30, 1979. Air Unlimited failed to file its report by that date. On December 5, 1979, the Secretary of State dissolved Air Unlimited as a corporation because it failed to file its 1979 annual report. On February 6, 1980, at 11:05 a.m. Dr. Donald E. Johnson requested the Secretary of State to reserve for him the name of Air Unlimited, Inc., for a period of ninety (90) days. At 4:50 p.m. February 5, 1980, Robert Wood sent the overdue Air Unlimited report and back corporate taxes to the Secretary of State. The evidence does not indicate when it was received. As indicated by Dr. Johnson's own testimony the reason he chose to reserve the name Air Unlimited, Inc., was because it had been in use before, the public knew it, and he thought it would help in his new business of leasing aircraft. It is the practice of the Department of State that as soon as a corporation is dissolved, its name is immediately available for reservation by a new company.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the State of Florida, Department of State revoke the reservation of the corporate name, Air Unlimited, Inc., by Dr. Donald E. Johnson. DONE AND ENTERED this 20th day of November 1980 in Tallahassee, Florida. MICHAEL PEARCE DODSON 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 November 1980.
Findings Of Fact Port Largo Airport, Key Largo, Monroe County, Florida has been operated as a public airport under DOT license (p-1) and a zoning variance (R-2) since 1973. A recent rezoning of the R-2U (residential two-family) area of the airport to private airport (P-10) has not been finalized. The most recent lease of the property was executed July, 1977 for a period of five years (P-4) The Port Largo Airport has one asphalt runway oriented nearly north/south that is more than 65 feet wide and 2,100 feet long (P-1 and 3). Between the west side of the runway edge and an airplane parking area there is 30 feet of unpaved area; on the east side at least 20 feet of unpaved area exists between the runway and the ocean. The full length of the paved and unpaved area appears to he on a long, narrow breakwater or strip of land 150 feet wide and 2,400 feet long with the Atlantic Ocean on the east and a wide canal on the west (P-9) The south end of the runway is approached over the water, while the north end has a clump of mangroves 15 feet high a distance of 360 feet from Runway 19's displaced threshold. The height and location of the mangroves from the displaced threshold is such that there is an elevation angle of 2 degrees 17 feet 19 inches and an offset angle of 5 degrees 42 feet 28 inches (P-1).
Recommendation From the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the renewal license application of Port Largo Aero and Marine, Inc. for the Port Largo Airport be granted and License No. 3778 continued in effect to its termination date of January 31, 1981. DONE and ORDERED this 4th day of December, 1980, in Tallahassee, Leon County, Florida. HAROLD E. SMITHERS Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Charles G. Gardner, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301 Joseph B. Allen, III, Esquire 604 Whitehead Street Key West, Florida 33040 Joe L. Sharit, Jr., Esquire 255 Magnolia Avenue Post Office Box 2295 Winter Haven, Florida 33880
The Issue The issue in this case is whether proposed amendments to Rule 12A-1.070 are an invalid exercise of delegated legislative authority. Petitioners and Intervenors challenge Proposed Rule 12A-1.070(1) and (4)(a) and (b). Respondent published the amendments in the Florida Administrative Law Weekly on March 18, 1994 and June 10, 1994. As described in the Joint Prehearing Stipulation, the proposed rule amendments address, among other things, the taxation of payments to airport authorities from concessionaires like rental car companies and airport restaurants. The law imposes a sales tax on payments for the use or occupancy of real property, whether the agreement consists of a lease or a license to use real property. The main dispute in these cases is whether the proposed rule amendments illegally extend the sales tax to payments for intangibles like a concession, franchise, or privilege to do business.
Findings Of Fact The Proposed Rules By notice published in 20 Florida Administrative Law Weekly 1549 on March 18, 1994, Respondent proposed amendments to existing Rule 12A-1.070. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code. All references to Proposed Rules are to the rule amendments that are the subject of this proceeding.) The notice explains that the purpose of the rule amendments is to clarify the application of specific statutory sales tax exemptions for the lease or license to use real property at airports, malls and nursing homes. The rule amendments clarify that the total payment pursuant to a lease or license of real property is subject to tax, unless specifically exempt, irrespective of how the payment, or a portion thereof, is identified. However, if such leased property includes specifically exempt property, then such exemption may be applied on a pro rata basis. 20 Florida Administrative Law Weekly 1549 (March 18, 1994). In the notice, Respondent cites as specific authority for the proposed amendments Sections 212.17(6), 212.18(2), and 213.06(1). Respondent states that the proposed amendments implement Sections 212.02(10)(h) and (i) and (13), 212.03(6), and 212.031. By notice published June 10, 1994, in 20 Florida Administrative Law Weekly 4096, Respondent proposed amendments to the amendments previously proposed. As amended by both notices, Rule 12A-1.070 provides, with deletions stricken through and additions underlined: * 12A-1.070 Leases and Licenses of Real Property; Storage of Boats and Aircraft (1)(a) Every person who rents or leases any real property or who grants a license to use, occupy, or enter upon any real property is exer- cising a taxable privilege unless such real property is: * * * <<a>>. Property used at an airport exclusively for the purpose of aircraft landing or aircraft taxiing or property used by an airline for the purpose of loading or unloading passengers or property onto or from aircraft or for fueling aircraft. See Subsection (3). <<b. Property which is used by an airline exclusively for loading or unloading passengers onto or from an aircraft is exempt. This property includes: common walkways inside a terminal building used by passengers for boarding or departing from an aircraft, ticket counters, baggage claim areas, ramp and apron areas, and departure lounges (the rooms which are used by passengers as a sitting or gathering area immed- iately before surrendering their tickets to board the aircraft). Departure lounges commonly known as VIP lounges or airport clubs which are affiliated with an airline or a club which requires a membership or charge or for which membership or usage is determined by ticket status are not included as property exempt from tax. The lease or license to use passenger loading bridges (jetways) and baggage conveyor systems comes under this exemption, provided that the jetways and baggage conveyor systems are deemed real property. In order for the jetways and baggage conveyors to be deemed real property, the owner of these items must also be the owner of the land to which they are attached, and must have had the intention that such property become a permanent accession to the realty from the moment of installation. The items shall not be considered real property if the owner, when the owner is not the airport, retains title to the items after the purchase/installation indebtedness has been paid in full. Any operator of an airport, such as an airport authority, which is the lessee of the land on which the airport has its situs is, for the purposes of this sub- subparagraph, deemed the owner of such land. Real property used by an airline for purposes of loading or unloading passengers or property onto or from an aircraft which is exempt from tax includes: office areas used to process tickets, baggage processing areas, operations areas used for the purpose of the operational control of an airline's aircraft, and air cargo areas. If any portion of the above property is used for any other purpose, it is taxed on a pro- rata basis, which shall be determined by the square footage of the portions of the areas in the airport that are used by an airline exclusively for the purpose of loading or unloading passengers or property onto or from aircraft (which areas shall be the numerator) compared to the total square footage of such areas used by the airlines (which areas shall be the denominator). Example: An airline leases a total of 3,000 square feet from an airport authority. The airline uses the space as follows: 1,000 square feet are used to process tickets and check in the passengers' luggage; 1,000 square feet are used for the passengers' departure lounge; and 1,000 square feet are used for the management office and the employees' lounge. The 1,000 square feet used to process tickets and check in the luggage is exempt; the 1,000 square feet used as a passengers' departure lounge is also exempt; and the 1,000 square feet used as the management office and employees' lounge is taxable. Therefore, a total of 2,000 square feet is exempt because that portion of the total space leased by the airline is used exclusively for the purposes of loading or unloading passengers or property onto or from an aircraft. However, the total amount used as office space and the employees' lounge (i.e., 1,000 square feet) is taxable, because that portion of the space leased by the airline is not used exclusively for the purposes of loading or unloading passengers or property onto or from an aircraft. Real property used for fueling aircraft is taxable when the fueling activities are conducted by a lessee or licensee which is not an airline. However, the charge made to an airline for the use of aprons, ramps, or other areas used for fueling aircrafts is exempt. From July 1, 1990, through June 30, 1991, property used at an airport to operate advertising displays in any county as defined in s. 125.011(1), F.S., was exempt from tax.>> * * * (b)1. A person providing retail concessionaire services involving the sale of food or drink or other tangible personal property within the premises of an airport shall be subject to tax on the rental of such real property. 2. However, effective July 1, 1987, a person providing retail concessionaire services involving the sale of food and drink or other tangible personal property within the premises of an airport shall not be subject to the tax on any license to use such property. For purposes of this subparagraph, the term "sale" shall not include the leasing of tangible personal property. <<3. For purposes of this rule, the term "retail concessionaire," which may be either a lessee or licensee, shall mean any person .. . who makes sales of food, drinks, or other tangible personal property directly to the general public within the premises of an airport. With regard to airports, any persons which contract to service or supply tangible personal property for airline operations are considered to be providing aircraft support services and are not concessionaires for purposes of this rule.>> * * * The provisions of this rule relating to the license to use, occupy, or enter upon any real property are effective July 1, 1986, unless other- wise noted. "Real property" means the surface land, improvements thereto, and fixtures, and is synonymous with "realty" and "real estate." "License," with reference to the use of real property, means the granting of a privilege to use or occupy a building or parcel of real property for any purpose. <<1. Example:>> [[(g)]] An agreement whereby the owner of real property grants another person permission to install and <<operate>> [[maintain]] a full service coin-operated vending machine, coin- operated amusement machine, coin-operated laundry machine, or any like items, on the premises is a [[taxable]] license to use real property. The consideration paid by the machine owner to the real property owner <<for the license to use the real property>> is taxable. . . . <<2. Example:>> [[(h)]] An agreement between the owner of real property and an advertising agency for the use of real property to display advertising matter is a [[taxable]] license to use real property. <<The consideration paid by the advertising agency to the real property owner for the license to use the real property is taxable.>> * * * (4)(a)<<1.>> The tenant or person actually occupying, using, or entitled to use any real property from which rental or license fee is subject to taxation under s. 212.031, F.S., and shall pay the tax to his immediate landlord or other person granting the right to such tenant or person to occupy or use such real property. <<2. Where the lessor's or licensor's ability to impose fee(s) is based on its ownership or control of the real property, and the payment made to the lessor or licensor is for the lessee's or licensee's use of the real property, such fees are subject to tax. In such circumstances, the total payment for the use of real property, including airport property, is taxable, irrespective that the payment or a portion of the payment may be identified as consideration for the privilege to do business at that location, privilege fee, guaranteed minimum, concession fee, percentage fee, or by the use of similar terms which seek to distinguish such portion(s) from the payment for the lease of or license to use such real property for any purpose, unless such lease or license is otherwise specifically exempt. Example: A clothing retailer occupying a location inside a mall has an agreement with the owner of the mall under which it pays a minimum rent plus a percentage of its gross sales for the right to operate its store at that location. The agreement characterizes the minimum rent as consideration for the lease of designated real property and the percentage of gross sales as consideration for the privilege to do business in the mall; failure to make any of these payments can cause the agreement to be terminated. The total amount required under the agreement is subject to tax, regardless of how the consideration, or a portion thereof, is characterized. Example: A push cart or kiosk vendor has an agreement with the owner of the mall under which it pays a minimum rent plus a percentage of its gross sales for the right to sell its merchandise at various locations within the common areas of the mall. Failure to make the payments can terminate the right to sell merchandise in the mall. The total amount under the agreement is subject to tax because the statute defines a taxable license as the granting of the privilege to use real property for any purpose, including the privilege to use the real property to do business. Example: A car rental company has an agree- ment with an airport authority to operate its rental car business with a designated office and counter space within the airport terminal building. The agreement provides for a payment designated as rent for the use of real property as well as a payment based on a percentage of gross sales designated as a privilege fee for engaging in business at the airport. Failure to make either payment can terminate the agreement. The total amount required under the agreement is subject to tax. All past declarations, including Temporary Technical Assistance Advisements issued pursuant to Emergency Rule 87AER-91, Technical Assistance Advisements, Letters of Technical Assistance, and similar correspondence, issued by the Department, which advised that fees or portions of fees identified as privilege fees to engage in business were exempt, and which are inconsistent with this rule are rescinded. Therefore, such privilege fees are taxable payments for a lease or license to use real property for business purposes. (b) Except for tolls charged to the travelling public, both commercial and non- commercial, imposed exclusively for the right to travel on turnpikes, expressways, bridges, and other public roadways, the full consideration paid for the license to use airport real property for the purpose of picking-up or dropping-off passengers and baggage from airport sidewalks, landings, and other facilities by any person providing ground transportation services to such airport, shall be taxable as a license to use airport real property, irrespective of whether the operator of such service enters the airport terminal building while engaged in providing such service. Example: The fee paid by a hotel to an airport, for the privilege of coming on the airport property for the purpose of picking-up and dropping- off its guests at the airport terminal, is a license to use airport real property, and is taxable. Example: The fee paid by a taxicab and limousine company to an airport, for the privilege of coming on the airport property for the purpose of picking-up and dropping- off its passengers at the airport terminal, is a license to use airport real property, and is taxable. Example: The fee paid by a remote location rental car company, for the privilege of using the airport premises to pick-up and drop-off its customers at the airport terminal, is a license to use real property, and is taxable.>> Note: In the above text, language added to the statute is within the <<>>; deleted language is within the [[]]. Statutes and Legislative History As amended by 66, Chapter 86-152, Laws of Florida, Section 212.031 states: (1)(a) It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of renting, leasing, [[or]] letting<<, or granting a license for the use>> of any real property unless such property is: * * * Note: In the above text, language added to the statute is within the <<>>; deleted language is within the [[]]. Section 212.02(10)(h) defines "real property" as "the surface land, improvements thereto, and fixtures, and is synonymous with 'realty' and 'real estate.'" The 1986 amendments extend the sales tax to licenses for the use or occupancy of real property. Section 212.02(10)(i) defines "license." "License," as used in this chapter with reference to the use of real property, means the granting of a privilege to use or occupy a building or a parcel of real property for any purpose. Section 212.031 imposes a sale tax for the use and occupancy of real property, but not upon payments for intangibles, such as a franchise, concession, or other privilege to do business. The sales tax imposed by Section 212.031 is limited to the payments, or portions of payments, for the use or occupancy of real property. Each of the ten subsections under Section 212.031 exempts from the sales tax various types of property. Three exemptions relevant to these cases are at Section 212.031(1)(a)6, 7, and 10, which exempt real property that is: 6. A public street or road which is used for transportation purposes. 7. Property used at an airport exclusively for the purpose of aircraft landing or aircraft taxiing or property used by an airline for the purpose of loading or unloading passengers or property onto or from aircraft or for fueling aircraft or, for the period July 1, 1990, through June 30, 1991, property used at an airport to operate advertising displays in any county as defined in s. 125.011(1). Leased, subleased, or rented to a person providing food and drink concessionaire services within the premises of [[an airport,]] a movie theater, a business operated under a permit issued pursuant to chapter 550 or chapter 551, or any publicly owned arena, sport stadium, convention hall, [[or]] exhibition hall<<, auditorium, or recreational facility. A person providing retail concessionaire services involving the sale of food and drink or other tangible personal property within the premises of an airport shall be subject to tax on the rental of real property used for that purpose, but shall not be subject to the tax on any license to use the property. For purposes of this subparagraph, the term "sale" shall not include the leasing of tangible personal property.>> Note: In the above text, language added to the statute is within the <<>>; deleted language is within the [[]]. The indicated changes in subparagraph 10 were enacted by 10, Chapter 87-101, Laws of Florida. The remaining statutes cited by Respondent as law implemented by the Proposed Rules are not relevant to this proceeding. Court Decisions In Quick and Havey v. Department of Revenue, Case No. 72-363, Second Judicial Circuit, decided December 5, 1974, Donald O. Hartwell, Circuit Judge, entered a summary judgement in favor of Respondent. Quick and Havey operated a food concession at the municipal auditorium in West Palm Beach. In return for the concession, they agreed to pay the city base rental and a percentage of gross sales. The agreement entitled Quick and Harvey to the exclusive occupancy of part of the auditorium; they also provided concession services at other locations throughout the auditorium. Quick and Harvey paid the sales tax on the base rental, but argued that the percentage payment constituted "a fee paid for the exercise of a privilege." Judge Hartwell held that the tax applied to the base rent and percentage rent because the latter payments "are so inextricably entwined and enmeshed in the agreement to pay rent that they cannot be separated or distilled . . .." Judge Hartwell reasoned that rent is the "compensation paid for the use and occupation of real property." Recognizing that a tenant might make payments to its landlord that are not rent, Judge Hartwell found that at least under the terms of the instruments before it for construction and analysis that there has not been such a sufficient separation of the source of these funds as to warrant their classification solely as a fee for the exercise of a privilege. The right to use property cannot be separated from the property itself. We, of course, do not pass upon the question of whether the so-called concession rights can be [illegible] separated from the lease of the property itself. Suffice it to say that under the facts as herein presented, the Court is of the opinion that all payments made to the City of West Palm Beach under the agreement before the Court constitute payment of rent and are therefore subject to the tax specified in Section 212.031, Florida Statutes. In Avis Rent-A-Car System, Inc. v. Askew, Case No. 74- 338, Second Judicial Circuit, decided January 20, 1977, Judge Hartwell decided whether certain payments made by Avis were taxable under Section 212.031. Avis had "entered into various contracts for a concession or license to do business at various airports and for the rental of real property," as well as contracts with private individuals for the rental of real property to conduct business at nonairport locations. Judge Hartwell divided the contracts of Avis into three categories. The first type of contract was for the payment of rental for the use real property. The second type of contract was for the payment of a concession fee for the right to do business on the premises and for the payment of a sum explicitly identified as rent for the use of real property. The third type of contract was for the payment of a concession fee for the right to do business on the premises and for the use of real property without a sum explicitly identified as rent. Judge Hartwell concluded that all payments for the rights conveyed by the first type of contract were taxable under Section 212.031. He ruled that the payments for the right to rent real property under the second type of contract were taxable, but the payments for the remaining rights were not. Declining to aggregate payments as he had in Quick and Havey two years earlier, Judge Hartwell ruled that the payments for the rights conveyed by the third type of contract required a "reasonable allocation." The allocation was between the payments for the use of real property, which were taxed, and the remaining payments, which were not. Judge Hartwell ordered that the allocation should be based on rental rates charged for the right of occupancy of the real property charged other tenants for comparable space. In a per curiam decision not yet final, the Fifth District Court of Appeal recently considered the taxation of concession fees in Lloyd Enterprises, Inc. v. Department of Revenue, 20 Fla. Law Weekly D552 (March 3, 1995). The findings of fact and conclusions of law in this final order do not rely upon Lloyd Enterprises, which is discussed merely as supplemental material. In Lloyd Enterprises, the taxpayer entered into a concession agreement with Volusia County for the rental of motorcycles at the beach. A fixed- location concessionaire, the taxpayer had the right to park its vehicles within 100 feet in either direction of its assigned spot during its assigned operating hours. Other concessionaires were allowed to roam the beach, but beach rangers would enforce the taxpayer's exclusive right to sell goods within its 200-foot territory if the free- roaming concessionaires parked or tried to sell goods in this territory. Rejecting Respondent's interpretation of its own rules, the court considered the language of the agreement, as well as a county ordinance incorporated by the agreement. The court held that neither document created a lease or license for the use of real property. Rather, they reflected the County's concern with the image that activities on the beach projected to visitors. The documents evidenced the County's intent to enhance the public's enjoyment of the beach through the provision of goods and services, as well as to raise revenue, mostly to defray cleanup costs at the beach. Thus, under the documents, the payments were nontaxable concession fees. Agency Interpretations Interpretations of Law Prior to Proposed Rule Amendments By letter dated May 14, 1968, Mr. J. Ed Straughn, Executive Director of Respondent, advised Mr. Wilbur Jones that tax is due on the space rented to car rental companies in any airport building. If the agreement makes no allocation between rental and nonrent payments, Respondent would require a "reasonable allocation" between rent and other payments with the tax due only on the amount paid for the right of occupancy. Mr. Straughn suggested that the rent component be estimated by the use of comparable rental rates for space elsewhere in the building. By letter dated August 14, 1985, Mr. Hugh Stephens, a Technical Assistant for Respondent, advised Mr. Victor Bacigalupi that a contract between an advertising company and Dade County, concerning advertising at Miami International Airport, did not involve the rental of real property. Mr. Stephens evidently relied on the nonexclusive right of posting advertising displays and the right of Dade County to require the advertiser to relocate or remove displays. By memorandum dated October 28, 1986, Mr. William D. Townsend, General Counsel, proposed policy for the taxation of licenses. Consistent with the Straughn letter 18 years earlier, the memorandum, which is directed to Mr. Randy Miller, Executive Director, states: A license in real property can be defined as a personal, revocable, and unassignable privilege, conferred either by writing or orally, to do one or more acts on land without possessing any interest in the land. Every license to do an act on land involves the occupation of the land by the licensee so far as it is necessary to do the act. Example: A concessionaire pays for permission (a license) to sell hot dogs in the building of a wrestling arena. The concessionaire has no possessory interest in the building. He normally has no specifically or legally described area which is his. He is allowed simply to vend his hot dogs in the building. Perhaps he delivers and vends in the stands. Without special permission, he cannot assign his license and it is normally revocable by the licensor unless specifically agreed otherwise. . . . For purposes of F.S. 212.031, however, the Department of Revenue (DOR) takes the position that either a lease or license is present in any business arrangement in which one or more owners, lessors, sublessors, or other persons holding a possessory interest in real property, permits a third party to use such real property for authorized acts unless all of the facts and circumstances surrounding the agreement between the parties conclusively indicate that the agreement is neither a lease nor a license. The form in which the transaction is cast is not controlling. Accordingly, some portion of the consideration paid for an agreement that in form is a joint venture, profits interest, management agreement, franchise, manufacturer's discount, bailment or other arrange- ment will be presumed by the DOR to be allocable to a lease or license if the arrangement involves the use of real property to perform authorized acts by the lessee or licensee. If the terms of the agree- ment are silent with respect to the portion of the consideration allocable to the inherent lease or license or if the consideration allocated under the terms of the agreement is less than its fair market value, the DOR will allocate to the lease or license a portion of the consideration that is equal to the fair market value of the lease or license. Contrary to the Straughn letter and Townsend memorandum eight months earlier, Technical Assistance Advisement 87A-011 dated July 2, 1987, which was prepared by Mr. Melton H. McKown, advised the Hillsborough County Aviation Authority that the privilege fees paid by car rental companies to the aviation authority were taxable. The agreement between the parties stated that the fees were "for the concession privileges granted hereunder, and in addition to the charges paid for the Premises .. ., [the car rental company] shall pay a privilege fee " Two months later, Temporary Technical Assistance Advisement TTAA 87(AER)-225 reversed TAA 87A-011. In TTAA 87(AER)-225, which is dated September 10, 1987, Ceneral Counsel William Townsend informed Mr. Samuel J. Dubbin that the payments made to airport authorities from concessionaires are "not for the right to use real property, but are for the right to engage in business at the airport." The letter relies upon Avis Rent-A- Car Systems, Inc. v. Askew. Respondent confirmed TTAA 87(AER)-225 in TTAA 88(AER)- 198, which is dated March 24, 1988, and in a letter dated April 6, 1989, from Mr. Robert M. Parsons, Technical Assistant, to Mr. Thomas P. Abbott. The April 6 letter confirms that payments from on- airport rental car companies are taxed only to the extent that the payments represent rent for space on airport property and not to the extent that the payments represent consideration for the privilege to do business. The April 6 letter adds that the payments from off-airport car rental companies for the right to pick up customers at the airport are not taxable because such payments are merely consideration for the privilege to engage in business. The April 6 letter discusses fees paid by other airport concessionaires. Acknowledging the recent enactment of the statutory exemption for license payments made to airports by food and drink concessionaires, the letter notes that, after July 1, 1987 (the effective date of the statutory changes), such payments, even if calculated as percentages of sales, are not taxable because such payments are construed as payments for a mere privilege or license to engage in business. The April 6 letter evidently marks the first time that, in a single document, Respondent inconsistently treats car rental company concession fees and all other concession fees. The April 6 letter adopts the Straughn/Townsend approach when it states that percentage rent is not taxable because it is payment for the privilege to do business. (The letter actually states "privilege or license" to do business, and this alternative use of "license," not involving the use or occupancy of real property, may have caused part of the confusion.) But the assurance of nontaxability of concession fees in the April 6 letter is limited to the period after July 1, 1987. Consistent with the McKown approach, the letter relies on the relatively recent statutory exemption for license payments from airport retail concessionaires. Consistent with the McKown approach, the letter later adds that percentage rent was taxable after the legislature amended Section 212.031 to tax payments for a license to use real property. The April 6 letter concludes erroneously that it is treating all airport concessionaires like on-airport car rental companies. In a Notice of Decision dated July 28, 1992, Respondent addressed the taxation of payments to airport authorities from car rental companies. Under a concession agreement, the airport charged a car rental company a fixed rent for occupied airport space, such as for parking, check-in, and service. Under the same agreement, the airport also charges the car rental company the greater of a guaranteed minimum or percentage of gross revenues. Taking the Straughn/Townsend approach, the Notice of Decision reversed a tentative assessment and held that the additional payments were not taxable. The July 28, 1992 Notice of Decision also addresses the taxation of percentage payments to airport authorities from other concessionaires. Explicitly endorsing the inconsistency of the April 6 letter, Respondent determined that percentage payments from concessionaires other than rental car companies were taxable either as leases or, since July 1, 1986, as licenses. The only explanation offered for the inconsistent treatment of concessionaires is that TTAA 87(AER)-225 applies only to rental car companies. Two years later, as reflected in a March 3, 1994 internal memorandum from Ms. Nydia Men,ndez to two Miami auditors, Respondent continued to perpetuate its inconsistent policy of taxing all payments for the privilege of engaging in business at airports, except for such payments from rental car companies. Returning to advertising, the July 28, 1992, Notice of Decision also states that the payments from the advertiser addressed in the letter dated August 14, 1985, have been taxable, as payments for a license, since July 1, 1986. This conclusion represents the correct treatment of licenses, as another means of granting a right to use or occupy real property. This treatment contrasts with the apparent misinterpretation in the April 6 letter that taxable licenses include grants of privileges to do business. In an early attempt to revisit the tax treatment of payments for concessions, franchises, and other privileges to do business, especially at airports, Respondent evidently chose the Quick and Havey and McKown approach that such business payments are taxable, at least when they are combined with taxable payments for the use or occupancy of real property. By memorandum dated January 14, 1993, from Assistant General Counsel Jeff Kielbasa to Ms. Lorraine Yoemans, Legislative Affairs Director, Mr. Kielbasa explained the purpose of unidentified proposed rule amendments addressing the same issues addressed by the subject proposed rule amendments. He wrote: The proposed rule amendment attempts to level the field by recognizing that any charge for the right, privilege, or license to do business at an airport is fundamentally a charge for the privilege to use or occupy land. If an airport business refuses to pay the fee, the airport's remedy is to have the business removed as a trespasser. It should be pointed out that we are not concerned with true business licenses or privilege fees attendant to use of trademarks, franchises and the like. These are licenses or privilege fees unrelated to the use of real property. The proposed rule does not differentiate between businesses such as on-airport car rental companies (with counterspaces) and off-airport car rental companies. The fee (however characterized) charged by the airport for the privilege to use or occupy the airport for business purposes is subject to the section 212.031 sales tax. See section 212.02(10)(i) defining license with reference to the use of real property as the "privilege to use or occupy a building or parcel of real property for any purpose." We believe that separation of a payment by characterizing one portion as a lease or license of realty (whether site specific or not) and another for the privilege of conducting business on the premises is artificial. It would be just as easy for the property owner on the corner of College and Monroe to charge a business tenant the average commercial square footage rental in Leon County for the lease and require the tenant to pay the premium attributable to the location at College and Monroe as a separate charge in the form of a license to do business. However carved up and characterized, under the statute each charge would be taxable since both leases and licenses to use real property are taxable. Interpretations of Proposed Rule Amendments On April 14, 1994, Respondent conducted a workshop on the proposed rule amendments prior to the modification published June 10, 1994. Respondent's representatives were understandably reluctant to opine on questions of law without detailed facts. However, explaining the tax consequences of payments from a concessionaire to an airport, Assistant General Counsel Kielbasa stated: I think the notion that there is a separate privilege fee that an airport charges unrelated to the fact that the privilege is being granted to function at the airport, I don't think that's what's happening. I think it's a very simple case, and I think it's very clear. But there may be separate provisions in contracts or lease agreements which have nothing to do with operating at that location, and to that extent, I don't think it would be subject to tax at all under the statute, and that's what we're trying to get at. Respondent's Exhibit 1A, pages 33-34. A major element of the dispute between Respondent and Petitioners and Intervenors (collectively, Petitioners) concerned Respondent's choice to take the Quick and Havey and McKown approach over the Avis and Straughn/Townsend approach in taxing mixed payments for the use of real property and for business intangibles. Following the rule workshop, Respondent made some Avis and Straughn/Townsend changes to the proposed rules, but the changes did not preclude a Quick and Havey and McKown approach, as evidenced by the following statement in the Prehearing Stipulation: "The Department contends that where the amount paid for a privilege fee is so intertwined or meshed with a payment for a license or lease to use real property that it cannot be separated, the full amount is taxable." Airports and Concessions Governmental entities operate and typically own large commercial airports, such as those in Orlando, Miami, and Tampa. By law, these airport authorities are empowered to enter into contracts with third parties to supply persons using airports with goods and services, such as food and beverage, retail sales, and car rentals. In some cases, airport authorities may obtain services by management agreements, which are not subject to sales tax. In most cases, though, airport authorities obtain goods and services for airport visitors by leases and grants of concessions, franchises, or other privileges to do business. The Dictionary of Real Estate Appraisal defines "concession" as "a franchise for the right to conduct a business, granted by a government body or authority." The Dictionary of Real Estate Appraisal defines "franchise" as "a privilege or right that is conferred by grant to an individual or group of individuals; usually an exclusive right to furnish public services or to sell a particular product in a certain community." By what are normally labelled "concession" or "franchise" agreements, airport authorities permit a concessionaire to operate a business with some nexus to the airport or at least its passengers, in return for which the concessionaire pays money to the airport authority. The nexus to the airport may take various forms. Some concessionaires sell food or drink or retail merchandise at exclusively assigned locations within the airport terminal. Hotel concessionaires operate hotels at fixed locations in the terminal. Some concessionaires, like taxi companies and nonairport hotels, pick up and drop off passengers at the airport terminal in areas designated for such purpose, but not reserved exclusively for any one concessionaire. An on-airport car rental concessionaire rents cars at the airport, using fixed counter space, parking areas, car service areas, and car pick-up and drop-off areas. A variation of the car rental concession is the off- airport car rental concessionaire, which has no fixed space at the airport except for customer pick-up and drop-off areas and usually counter space. In Florida, all off-airport rental car companies use their own vans to pick-up and drop-off customers. At some airports outside Florida, such as Sacramento, Dallas, and Minneapolis, the airport authorities operate their own vans to pick up and drop off customers of off-airport rental car companies. In such cases, the off-airport rental car companies do not directly use or occupy any of the real property of the airport. In general, the payments from the concessionaires to the airport authorities consist of two categories. First, there is a fixed payment, which the concession agreement typically characterizes as consideration for the use and occupancy of real property. The airport authority normally bases this rental payment on the fair market value of the space leased, as estimated by a licensed real estate appraiser, or under a cost-based formula. Second, there is a payment representing a percentage of the gross revenue of the concessionaire derived from airport business. The concession agreement typically characterizes this payment as consideration for the privilege to do business with airport passengers. Rents typically exceed $50 per square foot per year. Most, but not all concessionaires, make total payments of considerably more that $50 per square foot per year, often totalling hundreds and sometimes thousands of dollars. In entering into concession agreements, airport authorities pursue a variety of goals. They must produce high revenues because airport authorities do not operate on public subsidies, aside from the monopoly grant of the airport operation itself. But high returns from concessionaires are not the only goal. Airport authorities must serve airport visitors in order to maintain successful relations with the airlines. And airport visitors demand a mix of goods and services at acceptable prices and quality. In selecting concessionaires and pricing concession fees, airport authorities therefore balance maximizing revenues with serving visitors' needs. Airport authorities price concession fees based on the type of goods and services offered by the concessionaire. A bank at one major Florida airport pays six times the concession fees of a travel agency, which occupies space of equal size next to the bank. At the same airport, one theme-park retailer pays concession fees of more than three times what another theme-park retailer pays for the identical space. In the typical concession arrangement, the airport authority receives payments consisting of rent and "something else." The rent is attributable to the use and occupancy of real property. The "something else" is business income, which is attributable to an intangible business asset, such as a franchise, concession, or privilege to do business. Like any other lessor, airport authorities undertake, in their concession agreements, to provide their lessees with offices or retail space for their use and occupancy. Unlike other lessors, however, airport authorities also undertake, in their concession agreements, to provide nearly all of the concessionaire's customers through operating agreements with airlines. Through concession agreements, airport authorities allow concessionaires to share in the authority's most valuable asset, which is not the real property comprising the airport, but the exclusive, governmental franchise to operate the airport. In these regards, airport authorities are in very similar roles to the county in Lloyd Enterprises with the subjects of the government monopoly being in one case a beach and another an airport. Both governmental "owner/operators" provide customers for their respective concessionaires and predicate their agreements upon the ability of the contracting party to supply the needs of the customers in a manner that does not compromise the public asset--i.e., an airport or a beach. These elements are not typical of a lessor or licensor. To varying, lesser degrees, airport authorities also distinguish themselves from mere lessors through the marketing, management, working capital, and workforce that characterize the airport operation. Respondent's key witness identified four factors useful in determining whether a payment is for the use or occupancy of real property: the relationship of the parties to the real property, the use to be made of the real property, the rights granted the parties under the agreement, and the basis for the payment or charge for the real property. These four factors assist in the determination whether a payment is for the use or occupancy of real property. But the usefulness of the four factors is limited because they do not directly address the other possible component of a mixed payment, which is a payment for a franchise, concession, or other privilege to do business. It is easy to determine that concessionaire payments typically comprise rent or some other payment for the use and occupancy of real property plus a payment for an intangible, such as the privilege to do business with airport users. Obviously, Respondent is not required to accept the parties' labelling or allocations of these payments. But it is difficult to determine how much of a mixed payment is for the use or occupancy of real property, which is taxable (ignoring, as always, the special treatment of certain airport license payments, as well as other exemptions), and how much is for a privilege to do business, which is nontaxable. The issue is whether a "reasonable allocation" is possible between the two components in a mixed payment. As ordered in Avis and suggested by the Straughn letter and Townsend memorandum, the allocation process should begin with finding a fair rental value. It is difficult to estimate the fair market rent for space in a large commercial airport. The universe of comparables is small due to the uniqueness of major airports. But the appraisal of airport real property is not impossible. Nonairport comparables normally exist that, with suitable adjustments, yield reasonable approximations of fair market rentals. A real estate appraisal helps determine how much of a concessionaire's payment should be characterized as rent. However, the allocation problem can be approached at the same time from the opposite end. In appraising business assets, an accountant or business appraiser estimates the value of the concession, franchise, or other privilege to do business with airport visitors. The business-income approach to the allocation problem is aided by analysis of the payments made by completely off- airport car rental concessionaires in Sacramento, Minneapolis, and Dallas. These payments provide a rough approximation of the value of this intangible, even though they probably require major adjustments to reflect, among other things, differing passenger counts and demographics, as well as the costs incurred by the airport authorities in providing transportation to the off- airport sites. Based on the foregoing, the record demonstrates that: a) the payments of a concessionaire to an airport authority ordinarily consist in part of rent or license payments and in part of payments for an intangible, such as a franchise, concession, or other privilege to do business and b) these payments may be allocated, with reasonable precision, between the real property and business components. The Proposed Rules Proposed Rule 12A-1.070(4)(a)2 and (b) Rule 12A-1.070(4)(a)1. is not materially changed by the proposed rule amendments. Consistent with the statute, this paragraph of the rule merely imposes the sales tax in taxable transactions on the person actually occupying, using, or entitled to use the real property and requires that such person pay its immediate landlord or grantor. The next subparagraph is new. Proposed Rule 12A- 1.070(4)(a)2 contains two introductory sentences followed by three examples and a notice. The first sentence of Proposed Rule 12A-1.070(4)(a)2 fairly interprets the statute. The first sentence states that the sales tax is due on payments made to lessors or licensors when the payment is for the use of the real property and is based on the ownership or control of the real property by the lessor or licensor. By limiting the tax to those payments based on the payee's interest in the real property, the proposed rule ensures that the tax is imposed only on the portion of the payment attributable to the use or occupancy of real estate. The first sentence is unobjectionable. The second sentence of Proposed Rule 12A-1.070(4)(a)2 is no more controversial. This sentence provides that the "total payment for the use of real property" is taxable, even though the payment or part of the payment "may be identified" as payment for a privilege to do business. The use of "may be identified" in the "even though" clause refers to the label given such payments by the parties. The second sentence of Proposed Rule 12A-1.070(4)(a)2 merely provides that the taxable consequence of the transaction is not governed by the label given the payments by the parties. In other words, just because the parties use "concession fee," "privilege fee," "percentage fee," or "similar terms" does not necessarily make them payments for the privilege to do business. The second sentence assures that Respondent will not be deterred by mere labels from its lawful responsibility to characterize properly the nature of the payments, and make reasonable allocations when allocations are indicated. The three examples under Proposed Rule 12A-1.070(4)(a)2 are neither illustrative nor useful. To the contrary, they are vague and misleading and appear to reveal a misunderstanding of the proper taxation of mixed payments consisting of rent and payments for a privilege to do business. The first example is Proposed Rule 12A-1.070(4)(a)2.a. A clothing retailer occupies a location in a shopping mall. The retailer pays the mall owner minimum rent plus a percentage of gross sales. The agreement characterizes the minimum rent as consideration for the lease of designated space and the percentage of sales as consideration for the privilege to do business in the mall. The failure to pay either amount is grounds for termination of the agreement. The proposed rule concludes: "The total amount required under the agreement is subject to tax, regardless of how the consideration, or a portion thereof, is characterized." In fact, both payments made by the retailer to the mall owner may constitute taxable payments for the use of real property. Supplying little useful information as to how to determine the true character of payments, the proposed example ignores all of the important factors necessary in making this determination. The proposed example overrides the characterization of the payments by the parties. As discussed above, the parties' labelling of a payment may be tax-motivated, but it may also reveal their true intent. However, the proposed example offers insufficient explanation why it ignores the label of "privilege to do business" at the mall. The only possible grounds for ignoring the label are that the retailer occupies a location inside a mall under which it pays minimum rent and percentage rent and a default in the payment of either amount is grounds for terminating the agreement. The first basis is only that the payments are mixed and, except under the most strained reading of Quick and Havey, cannot, without more, possibly be considered justification for taxing the total payments. The key factor in the first proposed example is thus the presence of a cross-default clause. Such a clause may play a role in distinguishing between payments for the use of real property and other types of payments. In certain cases, the total amount actually being paid for the use of the real property may include all payments that must be paid in order for the agreement to remain in good standing. This would likely be true of base rent and additional rent, consisting of a lessee's prorata share of insurance, taxes, maintenance, and utilities. However, there is nothing in the record to suggest that a cross- default clause is of such importance as to confer upon it the status that it is given in the rule example. Nothing in the record supports the assertion that all cross-defaulted payments are therefore payments for the use or occupancy of real property. For instance, Respondent concedes that a lessee/payor might be obligated under a lease to make taxable payments of rent and nontaxable payments of promotional fees, such as for the use of logos or other intangibles. It is conceivable that a prudent (and powerful) lessor/payee might provide in the agreement, even if called a "lease agreement," that a default in either payment is grounds for terminating the agreement. Even so, the mere existence of such a cross-default clause does not, without more, transform the promotional fee into rent. The proper characterization of the two payments under the first proposed example requires consideration of, among other things, the four factors identified by Respondent's key witness: the relationship of the parties to the real property, the use to be made of the real property, the rights granted the parties under the agreement, and the basis for the payment or charge for the real property. The proper characterization requires consideration, in some fashion, of the elements that distinguish a real property asset from a business asset, such as any contributions by the mall owner in the form of operating agreements, other leases, marketing, management, working capital, and workforce, as well as the method by which the mall owner decides with whom it will enter into agreements and the total payments that it will require. The second example is Proposed Rule 12A-1.070(4)(a)2.b. A push cart vendor pays a mall owner minimum rent plus a percentage of gross sales for the right to sell merchandise at various locations within the common area of the mall. The mall owner may terminate the agreement if the vendor fails to make either payment. The example concludes that both payments are taxable "because the statute defines a taxable license as the granting of a privilege to use real property for any purpose, including the privilege to use real property to do business." The only difference in the first two examples is that the second involves a license and the first involves a lease. Like the example of the mall retailer, the example of the push cart vendor elevates the cross-default provision to outcome-determinative status. Again, the record does not support such reliance upon this factor for the above-discussed reasons. The third example is Proposed Rule 12A-1.070(4)(a)2.c. A car rental company pays an airport authority for designated office and counter space in the terminal. The agreement identifies a payment as rent for the use of real property. The agreement also identifies a payment, representing a percentage of gross sales, as a privilege fee for the right to engage in business at the airport. Failure to make either payment is grounds for terminating the agreement. The example concludes that the "total amount required under the agreement is subject to tax." As with the preceding examples, the example of the airport car rental company relies upon a cross-default clause to characterize all payments as for the use of real property. Again, for the reasons stated above, the record does not support such reliance upon this single factor. The three examples make no "reasonable allocation" between the real property and business components of what are probably mixed payments. Best revealed by the last sentence of the second example, the examples illegitimately transform business payments into real property payments simply because the business payor uses or occupies real property to conduct its business. In reality, the three examples seek to find their way back to the haven of Quick and Havey by equating cross-default clauses with inextricable intertwining and enmeshment. It is only conjecture whether a court would today so readily abandon an attempt to allocate between real property and business income. In any event, the present record demonstrates that "reasonable allocations" are achievable and require consideration of much more than cross- default clauses. Respondent's defense of the examples is inadequate. Respondent argues that the examples are modified by the language of Proposed Rule 12A- 1.070(4)(a)2. As previously stated, the two sentences of Proposed Rule 12A- 1.070(4)(a)2 represent a fair restatement of the statutory taxing criteria. But the role of the two examples is to illustrate the application of Proposed Rule 12A-1.070(4)(a)2, not provide a circular restatement of the rule and, thus, the statute. Given their language, the proposed examples stand alone and cannot be saved by the implicit incorporation of the first two sentences of Proposed Rule 12A- 1.070(4)(a)2. Standing alone, the illustrations are erroneous in their reliance on cross-default clauses, misleading in their omission of material factors required for any reasonable allocation, and misguided in their implicit bias against making allocations between payments for real property and business components. Respondent claims that the examples create presumptions that a taxpayer may rebut. This claim is dubious on two counts. First, Respondent's key witnesses disagreed on whether the presumptions created by the examples were indeed rebuttable. One witness testified clearly that, if a nonexempt transaction fit one of the examples, then the transaction was taxable. Nothing in the examples suggests that these presumptions are rebuttable. But the examples do not work even if they establish only rebuttable presumptions. The cross-default provision cannot bear the burden even of creating a rebuttable presumption. A cross-default provision is simply not that important to the proper characterization of the payments, especially in light of far more important factors. Proposed Rule 12A-1.070(4)(a)d warns taxpayers that all past declarations, including technical assistance advisements, that "advised that fees . . . identified as privilege fees to engage in business were exempt, and . . . are inconsistent with this rule" are rescinded. Proposed Rule 12A- 1.070(4)(a)d concludes: "Therefore, such privilege fees are taxable payments for a lease of license to use real property for business purposes." Respondent's key witness could not identify with certainty the past declarations rescinded by Proposed Rule 12A-1.070(4)(a)d or the past declarations left unaffected. This leave the proposed rule unnecessarily vague, at least as to airport authorities. There are a limited number of airport authorities and concessionaires that could be relying on past declarations and, if there are any besides those uncovered in this proceeding, they should be easily found. Proposed Rule 12A-1.070(4)(b) identifies as a taxable license to use real property the "full consideration paid for the license to use airport real property for the purpose of picking- up or dropping-off passengers and baggage from airport sidewalks, landings, and other facilities" by any provider of ground transportation services, regardless whether the provider "enters the airport terminal building while . . . providing such service." The full payment for the real property component is taxable, and Proposed Rule 12A-1.070(4)(b) accurately interprets the statutes. However, Respondent again encounters problems in the three examples that follow Proposed Rule 12A-1.070(4)(b). In Proposed Rule 12A-1.070(4)(b)1, a hotel pays a fee to an airport authority for the privilege of coming onto airport property to pick up and drop off hotel guests at the terminal. The example states that the payment is taxable because it is for a license to use airport real property. The second and third examples are identical except they involve a taxicab and limousine company and an off-site car rental company. Proposed Rule 12A-1.070(4)(b) states the obvious-- i.e., that whatever the payor pays for the right to use or occupy real property is subject to sales tax. Proposed Rule 12A- 1.070(4)(b) does not require the characterization of all payments between such parties as taxable payments for the use or occupancy of real property. The problem with the proposed examples is that they depart from the real-property language of Proposed Rule 12A- 1.070(4)(b) and use the business language of a privilege to do business. The first example baldly provides that a fee paid by a hotel to an airport for the "privilege" to enter airport property and pick up and drop off hotel guests is a license to use airport property and is taxable. There is no mention of allocation or of the factors that would go into a reasonable allocation. The fee is taxable. The language and paucity of reasoning are practically identical for the second and third examples. Respondent argues that Proposed Rule 12A-1.070(4)(b) must be read in connection with the language of Proposed Rule 12A-1.070(4)(a)2, which restates the statutory language. This argument fails for two reasons. Like the examples under Proposed Rule 12A-1.070(4)(a)2, Proposed Rule 12A-1.070(4)(b) does not incorporate by reference the language of Proposed Rule 12A-1.070(4)(a)2. Respondent's argument of implicit incorporation is even weaker here because Proposed Rule 12A-1.070(4)(b) is not even a subparagraph of Proposed Rule 12A- 1.070(4)(a)2. The first set of proposed examples at least mentions a cross-default clause, which could have some bearing on the proper characterization of the payments, even though the omission of far more important factors invalidates the first set of examples. The second set of proposed examples fails even to mention a single factor. If the hotel, taxi cab company, or rental car company pays for the privilege of entering airport property to do business, the entire payment is taxable. Proposed Rule 12A-1.070(1)(a)6.b and c Proposed Rule 12A-1.070(1)(a)6.b provides that property "used by an airline exclusively for loading or unloading passengers onto or from an aircraft is exempt." The proposed rule identifies examples of such property as common terminal walkways used by passengers for boarding or exiting planes, ticket counters, baggage claim areas, ramp and apron areas, and departure lounges (but distinguished from VIP lounges or clubs that require a membership not determined by ticket status). Proposed Rule 12A-1.070(1)(a)6.c adds that "[r]eal property used by an airline for purposes of loading or unloading passengers or property . . . which is exempt from tax includes ... office areas used to process tickets, baggage processing areas, operations areas used for the purpose of the operational control of an airline's aircraft, and air cargo areas." Petitioners object to the use of "exclusively" in subparagraph b. The statute provides an exemption for property used exclusively for aircraft landing or taxiing or property used by an airline for loading or unloading persons or property or for fueling. Clearly, due to the repetition of "property used" in the second clause, the modifier "exclusively" applies only to the first clause, which is consistent with the doctrine of the nearest antecedent argued in Petitioner's proposed final order. It is unclear how Proposed Rule 12A-1.070(1)(a)6.b and c work together because they seem to define the same exempt property under different subparagraphs. Both subparagraphs apply to real property, and both seem to describe the same examples of real property, using different words. The subparagraphs under subparagraph b present reasonable rules for determining what is real property based on ownership of the underlying land, with a special rule when the airport authority leases, but does not own, the land on which the airport is situated. The subparagraphs under subparagraph c identify a prorating process, which applies when the property is used for both exempt and nonexempt purposes. It is unclear how property could be used for exempt and nonexempt purposes under the requirement of "exclusive" use in subparagraph b, although such mixed uses is contemplated by subparagraph c. The requirement contained in the first sentence of Proposed Rule 12A- 1.070(1)(a)6.b that the property be used exclusively for loading or unloading passengers conflicts with the language of Proposed Rule 12A-1.070(1)(a)6.c, as well as the language of Rule 12A-1.070(1)(a)6.a; neither of the latter two provisions predicates the exemption upon exclusivity of use. More importantly, the first sentence of Proposed Rule 12A- 1.070(1)(a)6.b conflicts with the relevant statutes. However, the remainder of Proposed Rule 12A- 1.070(1)(a)6.b, including subparagraphs (I) and (II), is a reasonable interpretation of the relevant statutes, as is Proposed Rule 12A-1.070(1)(a)6.c, including subparagraphs (I) and (II). Petitioners argue that Respondent intends to tax nonairline concessionaires for their use of property used for loading or unloading persons or property. This argument is unclear, perhaps because the unobjectionable proposed rules do not require such an application. Proposed Rule 12A-1.070(1)(b)3 Proposed Rule 12A-1.070(1)(b)3 defines "retail concessionaire" as either a lessee or licensee that makes sales directly to the public within an airport. The words "retail concessionaire" are not used elsewhere in the rule or proposed rules at issue except in Rule 12A-1.070(1)(b)1 and 2, which addresses "a person providing retail concessionaire services" involving the sale of food or drink or other tangible personal property in an airport. Subparagraph 1 imposes tax on rent paid by such persons, and subparagraph 2 exempts from tax any license payments made by such persons. Petitioners' arguments against the definitional proposed rule are misplaced. The definition covers lessees and licensees, but does not impose any tax. In conjunction with subparagraphs 1 and 2, the proposed definition of "retail concessionaire" says, in effect, that all lessees and licensees selling food and drink or other personal property are subject to tax on payments for the rental of associated real property, but are not subject to tax on payments for the licensing of associated real property. The subparagraphs that carry tax consequences honor the legislative directives as to taxability.
Findings Of Fact The facts in this case are not in dispute. In October 1978 Herbert Grossman, a CPA, one of whose clients was Red Aircraft, Inc., and Spencer Gordon formed the corporation Southern Air Charter, Inc., for the purpose of taking title to an aircraft to be operated by Red. The bill of sale for $140,000 in September 1978 was from Red to Southern Air Charter, Inc., who financed the plane with a loan from Barnett Bank. Red, at all times here relevant, was registered with the Department of Revenue (DOR or Petitioner) as a dealer engaged in the business of selling tangible personal property. Southern Air Charter submitted application to DOR for a certificate of registration (Exhibit 1) bearing the typed date October 1978 scratched out, and inserted in handwriting 6-1-79. This application (Exhibit 1) was stamped received in DOR office February 1, 1979. Grossman's testimony, which was undisputed, was that Southern was formed as an accommodation to Red for the purpose of taking legal title to the aircraft to improve Red's balance sheet. Red continued to provide insurance coverage on the aircraft, charter the aircraft and perform all of their activities respecting the aircraft that would be done by an owner. Southern, having legal title to the aircraft, took depreciation and investment tax credit while Red used the aircraft. At the time of the sale of the aircraft to Southern, the latter was not a registered dealer, and Red did not collect sales tax on this transaction. On July 7, 1979, the tax, penalty and interest assessed on this transaction was $6,331.68 (Exhibit 2). The accuracy of this figure was not contested, nor was the assessment for rentals of aircraft in the amount of $1,704.34 (Exhibit 2). Red contended that no tax was due on the leasing of the aircraft but no evidence to support this exemption was presented.
Findings Of Fact The Garemore airport is located in Marion County and is known as the Greystone Airport. The Garemores were issued a private airport license for the period September 24, 1980, through September 30, 1981, and have made timely application for annual renewal of this license. Neighboring property owners and residents who objected to grant of the initial license also object to renewal. Generally, their objections concern excessive noise and unsafe aircraft operations. Several Petitioners raise and breed thoroughbred horses on property adjacent to the airport. They fear for their personal safety and the well-being of these horses and other livestock. These Petitioners also contend that aircraft noise and low flying upset their animals and interfere with mating. However, Respondent introduced opposing evidence, and Petitioners' contention was not established as factual. Through unrebutted testimony, Petitioners established that crop dusters routinely originate operations from Greystone Airport, and that crop dusting chemicals are stored on the site. About six months ago, a crop duster taking off from Greystone Airport dumped his chemical load on a Petitioner's property and subsequently crashed on this property. Petitioners also argue that the airport glide slope does not meet accepted criteria and that runway surfacing is inadequate. Respondent DOT has recently inspected the facility and through the testimony of its airport inspector, demonstrated that the glide slope has been measured and meets the 20 to 1 requirement set forth in Section 14-60.07, Florida Administrative Code. The runway is not surfaced and Petitioners contend it is not hard enough for aircraft operations during the rainy season. As evidence of this, they cite an incident where a visiting airplane ground looped on landing and appeared to lose a wheel. This incident did not establish a runway deficiency, however, nor did Petitioners offer evidence that the runway surface fails to meet any statutory or rule standard. Petitioners related numerous examples of low flying, night flying and acrobatic maneuvering at and near the Greystone Airport. They contend that these activities along with the concentration of World War II and antique aircraft, and the crop dusting operations, have made this a commercial facility.
Recommendation From the foregoing, it is RECOMMENDED: That the private airport license issued to James and Geraldine Garemore be renewed subject to a restriction against crop dusting operations. DONE AND ENTERED this 30th day of November, 1981, in Tallahassee, Florida. R. T. CARPENTER, 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 30th day of November, 1981. COPIES FURNISHED: Mrs. Clark Hardwick 900 Northeast 100th Street Ocala, Florida 32677 Charles and Terry Kerr 8149 West Anthony Road, Northeast Ocala, Florida 32670 Mr. John P. Edson 8610 West Anthony Road, Northeast Ocala, Florida 32671 Sherry and Vince Shofner Post Office Box 467 Anthony, Florida 32617 Frank and Carol Constantini 8545 West Anthony Road, Northeast Ocala, Florida 32670 Mr. James B. Banta, Sr. 9349 West Anthony Road, Northeast Ocala, Florida 32670 Ms. Deborah Allen 8263 West Anthony Road, Northeast Ocala, Florida 32671 Mr. Worthy E. Farr, Jr. 8215 West Anthony Road, Northeast Ocala, Florida 32671 Mr. Michael J. Stavola Post Office Box 187 Anthony, Florida 32617 Frances Spain Post Office Box 128 Anthony, Florida 32617 Ms. Beatrice Shepherd Post Office Box 215 Anthony, Florida 32617 J. W. Houston 900 Northeast 100th Street Ocala, Florida 32670 John F. Welch, Esquire Post Office Box 833 Ocala, Florida 32678 Philip S. Bennett, Esquire Department of Transportation Haydon Burns Building, Suite 562 Tallahassee, Florida 32301
The Issue The issue is whether Respondent properly issued Site Approval Order No. 3-99-01 for Ochlockonee Bay Seaplane Base pursuant to Chapter 330, Florida Statutes, and Chapter 14-60, Florida Administrative Code.
Findings Of Fact On July 8, 1997, Walt Dickson, the applicant, filed an Airport Site Approval and License Application with Respondent for a seaplane base located two (2) miles south of Panacea, Florida, in Ochlockonee Bay, Wakulla County, Florida, at Latitude N29 degrees, 59'35" N, Longitude W 84 degrees, 23'73" W. The application gives the following legal description of the proposed facility: Lot lying between Williams Brothers Lumber Co. lot and Troy Fain lot on river in SW 1/4 of Section 1. A map of the proposed seaplane base was attached to the application. The map shows a sea lane 1/ toward the middle of Ochlockonee Bay. The sea lane has an east/west heading. It is three (3) miles long with a primary width of one (1) mile and a usable width of one-half (1/2) mile. The application does not indicate the exact position of the sea lane. The application's map indicates that a bridge for U.S. Highway 98 is located east of the proposed sea lane and shoreline facilities. The bridge crosses the bay, connecting the bay's northern and southern shores. The bridge has an approximate height of 42 feet above sea level. East of the bridge, the mouth of the Ochlockonee Bay opens into the Apalachee Bay and the Gulf of Mexico. The application's map indicates that the shoreline facilities of the proposed seaplane base are located on the northern shore of the Ochlockonee Bay, west of the bridge and east of Bayside Marina. A plot of the proposed shoreline facility shows a dock or pier, of undetermined length and width extending into the bay. Ms. Ann Tiller, Respondent's aviation licensing specialist for district three, performed the initial review of the subject application. She considered Chapter 330, Florida Statutes, Chapter 14-60, Florida Administrative Code, and FAA Advisory Circular No. 150/5395 in conducting her review of the application. First, Ms. Tiller reviewed the application to ensure that it was complete. She determined that the application contained, among other things, the following information: FAA air space determination, zoning approval from the appropriate governmental agency, copy of the deed, lease or easement, legal description that indicates section, township, range and geographical coordinates, general location maps showing nearby roads, towns and landmarks, U.S. Geological Survey quadrangle maps . . . [o]r equivalent with facility plotted. Ms. Tiller testified that the application "in itself probably would not show that [the site] is adequate." She stated that "[w]hen [the applicant] sends me the application, he is telling me that he thinks it is adequate." The application did not address the following factors outlined in FAA Advisory Circular No. 150/5395: performance characteristics of the proposed seaplane, water currents or wave action, shifting channels, ship or boating activity on the water, prevailing winds, wind data during daylight hours, adequacy of the water depth for a seaplane, or information about the taxi channel dimensions for the take-out and launch ramp. On May 8, 1998, Ms. Tiller conducted a site inspection to determine the adequacy of the site. She did not go out into the bay on a boat. During the inspection, Ms. Tiller advised the applicant's representative that the required approach ratio for the takeoff and landing area was 20 to 1 and that the applicant would need to install a windsock before receiving a license. She made a general observation of the proposed site, finding no obvious reason to deny site approval. After making the inspection, Ms. Tiller completed an Airport Site Inspection report. The report states that the site "is feasible for the proposed use and can meet the requirements set forth in Airport Licensing and Zoning Rule Chapter 14-60." Ms. Tiller did not consider the factors listed in the FAA Advisory Circular in making this determination. According to Ms. Tiller, the standards in the FAA Advisory Circular apply after the applicant receives site approval. She considers them as guidelines during the licensing phase of the application review, showing "what possibly could be done." By letter dated May 22, 1998, the FAA informed the applicant as follows: . . . it has been determined that the subject seaplane base will not adversely affect the safe and efficient use of airspace by aircraft provided the following requirements are complied with: All operations are conducted in VFR weather conditions. The landing area is limited to private use. You execute and maintain an operational letter of agreement with the Wakulla County Airport that would insure operation at this proposed seaplane base will not disrupt or conflict with operations at the existing public use airport. We recommend you reference FAR [Federal Aviation Regulations] 91.69, Right of Way Rules; Water Operations and comply with FAA Advisory Circular, AC 150/5395-1, Seaplane Bases. On April 19, 1999, the Wakulla County Board of County Commissioners executed an Operational Letter of Agreement between the Ochlockonee Bay Seaplane Base and the Wakulla County Airport. Prior to the hearing, Bobby Grice, Respondent's Public Transportation Manager, made a site inspection. He did not go out into the bay on a boat. Mr. Grice determined that the proposed takeoff and landing area met the required approach ratio of 20 to 1. He also concluded that the proposed sea lane, which is west of the bridge with a heading of 927, did not require a pilot to takeoff and land in close proximity to the bridge. Mr. Grice reached this conclusion without knowing the precise location of the takeoff and landing area. Mr. Grice's observation of the site did not reveal anything that "[p]rohibited [him] from saying that . . . somewhere in the bay that's 3 miles long and a mile wide, that somewhere in there we cannot find an area that is at least 1800 feet long, that's at least deep enough for a plane, and without obstruction." Mr. Grice testified as follows when questioned regarding the possible placement of crab traps in the area that serves as the proposed takeoff and landing area: I would not know if someone had gone in there and put [a crab trap] out, no more than I would know if one was out there with a motorboat running over it. But with the low tide, not the lowest, that's when we would go out and look with the applicant. And at that time if we saw some areas [where crab traps could not be seen] at low tide, then we would certainly assume that . . . at higher tide that [the crab traps] would not be in the way. The greater weight of the evidence indicates that crab traps, twelve (12) to eighteen (18) inches in height, are exposed in the proposed seaplane runway during tides which are low but not the lowest. When the tide is higher, the crab traps are submerged, leaving no indication as to how deep they are in the water. In addition to crab traps, other debris such as picnic tables and pieces of destroyed docks are submerged or floating at unknown locations in the bay. Mr. Grice saw channel markers in the bay. He did not know whether there were any markers in the area of the proposed sea lane. He assumed that the proposed sea lane area was large enough for the applicant to find at least some place where channel markers would not interfere with the required minimum length and approaches. The greater weight of the evidence indicates that channel markers are located directly in the proposed flight path of the seaplane. However, there is no persuasive evidence that these channel markers create a hazard in the approach and departure path of the proposed sea lane. The evidence also shows that the largest concentration of channel markers is located near the seaplane base's taxi and launch areas along the north shore of the bay. The seaplane will have to taxi across the channel and over the mudflats, areas of the bay with soft bottoms, to reach the proposed sea lane. Mr. Grice did not consider the depth of the water in the proposed launch area, taxi area, and sea lane. Therefore, he did not know whether the water depth was adequate for a seaplane. He did not know what type of seaplane(s) would use the seaplane base. According to Mr. Grice, Respondent can place restrictions on the site before licensing to prohibit the use of the seaplane base when the water is at a depth that Respondent determines is unsafe. The depth of the water at mean lower low water levels ranges between one (1) and four (4) feet in the proposed sea lane area. The four (4) foot soundings are located at the eastern tip of the proposed sea lane area, closet to the bridge. The depth of the water at mean lower low water levels ranges between one-half (1/2) foot and three (3) feet along the bay's northern shore in the vicinity of the seaplane base's launch area. Respondent asserts that its primary concern is safety. Therefore, Respondent makes a judgement call about boats and people swimming in the landing area. There is no evidence that Respondent considered the effect of boat traffic before approving the site at issue here. The channel of the bay is within 100 feet of the place where the proposed seaplane will be taken in and out of the water. The greater weight of the evidence indicates that many grouper boats and sport fishing boats use the channel on weekday mornings. On the weekends, boat and jet ski traffic in the channel increases substantially. The weekend boat traffic in the channel is fairly constant. The prevailing wind on the bay is out of the southeast or southwest during most of the day. The prevailing wind runs perpendicular to the proposed sea lane area. A crosswind takeoff and landing is dangerous, especially over a certain speed. The proposed seaplane base is located 80 feet from a dock referred to as the Williams dock. A channel marker is only a few feet from the end of the dock. The greater weight of the evidence indicates that taking a seaplane in and out of the water at the proposed seaplane base launch area is dangerous due to the following conditions: (a) swift channel current of six to ten knots that runs horizontal to the bay's northern shore and perpendicular to the dock; (b) heavy boat traffic in the channel; (c) the concentration of channel markers near the launch area; (d) prevailing winds which run almost perpendicular to the proposed launch area; and (e) the close proximity of the Williams dock. Respondent considers site approval as permission to build the proposed airport. According to Mr. Grice, "[i]t gives the applicant[s] some kind of assurance that they don't go out and spend a lot of money and then DOT comes back and goes through this hearing process after they have spent a lot." Respondent uses the FAA Advisory Circular as a guideline primarily during the licensing phase of application review. Respondent acknowledges that the language in each provision of the circular determines whether a provision is advisory or mandatory. Respondent admits that provisions of the circular containing the words "should" or "shall" relate to mandatory safety issues. Approximately two weeks before the hearing, the FAA requested clarification concerning the coordinates of the seaplane base because its proposed latitude and longitude as provided by the applicant may be incorrect. If the FAA does not issue an approval after receiving clarification, Respondent will deny the application due to the lack of an FAA air space determination.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is
