The Issue The issue posed for decision herein is whether or not the Petitioner is subject to the Florida corporate income tax for tax years 1972, 1973, 1974 and 1975 plus accrued penalties and interest since July 7, 1977, the date Petitioner was mailed a proposed notice, of deficiency by the Respondent, Department of Revenue.
Findings Of Fact Based on the evidence adduced at the hearing herein; the documentary evidence received; the Respondent's memorandum in support of the assessed deficiency; the Petitioner's memorandum in response thereto; and the entire record compiled herein, the following relevant facts are found.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: That the Respondent enter a Final Order herein denying Petitioner's protest of the proposed deficiency and penalties as set forth hereinabove. RECOMMENDED this 14th day of March, 1983, in Tallahassee, Florida. JAMES E. BRADWELL, 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 14th day of March, 1983.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by Jessica E. Varn, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s Notice Of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File and Relinquishing Jurisdiction as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED. DONE AND ORDERED this AY day of May, 2013, in Tallahassee, Leon County, Florida. Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motorist Services this 4 day of May, 2013. NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. JB/jdc Copies furnished: Dean Bunch, Esquire Nelson, Mullins, Riley and Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john.forehand@southmotors.net David Seymour Leibowitz, Esquire Braman Management Association 2060 Biscayne Boulevard, 2"! Floor Miami, Florida 33137 davidl|@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com Jessica E. Varn Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, vs. SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. a a aU OOOO ee Oe eee Case No. Case No. Case No. 12-3385 12-3386 12-3387 BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3389 SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA BERT SMITH OLDSMOBILE, INC., d/b/a BERT SMITH INTERNATIONAL CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW IMPORT CITY, INC., d/b/a QUALITY BMW REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, _ Petitioner, vs. Case No. 12-3390 BRAMAN MOTORS, INC., d/b/a BRAMAN BMW PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. ORDER CLOSING FILES AND RELINQUISHING JURISDICTION This case came before the undersigned on the Petitioner's Notice of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, filed January 29, 2013, and the undersigned being fully advised, it is, therefore, ORDERED that: 1. The final hearing scheduled for May 13 through 17, 2013, is canceled. 2. The files of the Division of Administrative Hearings are closed. Jurisdiction is relinquished to the Department of Highway Safety and Motor Vehicles. DONE AND ORDERED this llth day of February, 2013, in Tallahassee, Leon County, Florida. aw JESSICA E. VARN 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 11th day of February, 2013. COPIES FURNISHED: Jennifer Clark, Agency Clerk Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, Florida 32399 John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john. forehand@southmotors.net Dean Bunch, Esquire Nelson, Mullins, Riley, and Scarborough LLP Suite 202 3600 Maclay Boulevard, South Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com David Seymour Leibowitz, Esquire Braman Management Association 2nd Floor 2060 Biscayne Boulevard Miami, Florida 33137 davidl@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, v8. Case No. 12-3385 SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3386 POMPANO IMPORTS, INC., d/b/a Vista BMW of Pompano Beach, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. . Case No. 12-3387 POMPANO IMPORTS, INC., d/b/a Vista BMW of Coconut Creek, Respondent. Filed January 29, 2013 8:53 AM Division of Administrative Hearings BMW OF NORTH AMERICA, LLC, Petitioner, vs. SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA; BERT SMITH OLDSMOBILE, INC., d/b/a" BERT SMITH INTERNATIONAL; CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW; IMPORT CITY, INC., d/b/a QUALITY BMW; and REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, Petitioner, vs. BRAMAN MOTORS, INC., d/b/a BRAMAN BMV, and PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. Case No. 12-3389 Case No. 12-3390 NOTICE OF WITHDRAWAL OF PROPOSED DEALER AGREEMENT FROM CONSIDERATION BY RESPONDENTS AND MOTION TO DISMISS AS MOOT Comes now BMW of North America, LLC ("BMW NA") and notifies the Administrative Law Judge that it has withdrawn its notice to Respondents concerning the proposed dealer agreement which is the subject of this proceeding. withdrawal of notice, BMW NA moves to dismiss this matter as moot. motion, BMW NA states: As a result of this In support of its 1. On July 17, 2012, BMW NA notified Respondents of its intent to offer them the superseding/merged BMW Center Agreement for BMW passenger cars and BMW light trucks ("the Merged Agreement"), which was proposed to supersede, modify and replace the existing BMW Dealer Agreement for BMW passenger cars and the existing BMW SAV Center Agreement for BMW light trucks (collectively "the Existing Agreements"). 2. Respondents filed complaints with the Department of Highway Safety and Motor Vehicles ("DHSMV"), contesting the terms of the proposed Merged Agreement. These complaints were transferred by the DHSMV to the Division of Administrative Hearings. 3. On January 29, 2013, BMW NA, by letters attached hereto as Exhibit A, notified Respondents, as follows: BMW of North America, LLC ("BMW NA") hereby withdraws its notice, transmitted to you on July 17, 2012, with respect to the superseding/merged BMW Center Agreement (‘Agreement’) for BMW passenger cars and BMW light trucks. You and your successors may remain on your current forms of: dealer agreements: the BMW Dealer Agreement for BMW passenger cars (‘Old Agreement’) and the BMW SAV Center Agreement for BMW light trucks (‘SAV Center Agreement') or sign the Agreement which was offered to you, at any time in the future. 4. Inasmuch as BMW NA has withdrawn the July 17, 2012 notice that entitled Respondents to file their protests, and confirmed to Respondents that they and their successors', have the option to remain on the Existing Agreements unless, at any time in the future, they elect to sign the Merged Agreement, Respondents’ protests should now be dismissed as moot. ' Motor vehicle dealerships, and equity interests therein, are transferable to buyers as provided in Section 320.643, Florida Statutes. 3 Respectfully submitted, Lh. bL Dean Bunch dean.bunch@nelsonmullins.com C. Everett Boyd, Jr. everett. boyd@nelsonmullins.com Nelson Mullins Riley & Scarborough LLP 3600 Maclay Blvd., S., Suite 202 Tallahassee, FL 32312 Telephone: (850)907-2505 Attorneys for BMW of North America, LLC CERTIFICATE OF SERVICE I HEREBY CERTIFY that the forgoing was served by electronic transmission, this at day of January, 2013, upon the following: | Jennifer Clerk, Agency Clerk clark. jennifer@hsmv.state.fl.us Dept. of Highway Safety Neil Kirkman Bldg., Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, FL 32399 John W. Forehand, Esq. john. forehand@southmotors.net 16165 South Dixie Highway Miami, FL 33157 Richard N. Sox, Esq. rsox@dealerlawyer.com Nicholas A. Bader, Esq. nbader@dealerlawyer.com 2822 Remington Green Circle Tallahassee, FL 32308 David Leibowitz, Esq. davidl@bramanmanagement.com Timothy Grecsek, Esq. timothyg@bramanmanagement.com Braman Management Association 2060 Biscayne Bivd., Second Floor Miami, FL 33137 ~ Attorney
The Issue Whether Respondent committed the violations alleged in the Administrative Action? If so, what penalty should be imposed?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: The Licensed Premises La Catracha Fish Market and Restaurant (hereinafter referred to as the "Restaurant") is an eatery located at 1255 West 46th Street, Hialeah, Florida, that sells beer and wine pursuant to alcoholic beverage license number 23-15943, series 2-COP. The Restaurant offers both counter and table service. The counter where patrons are served (hereinafter referred to as the "Counter") is situated toward the front of the Restaurant, to the right of the entrance. Ownership and Operation of the Restaurant Respondent is now, and has been at all times material to the instant case, the owner of the Restaurant and the holder of the license that authorizes the sale of alcoholic beverages on the premises. Respondent and his wife, Juanita, are now, and have been at all times material to the instant case, actively involved in the operation of the Restaurant. They maintain a regular presence on the premises. Among other things, Juanita mans the cash register behind the Counter. From February of 1994, until the end of July of that year, when the Moyas were on an extended vacation, Respondent had "other people" run the business. When they returned from their vacation, the Moyas discovered that the Restaurant had a "new clientele." The Undercover Operation Elio Oliva and Antonio Llaneras are detectives with the Hialeah Police Department. In August and September of 1994, they participated in an undercover investigation at the Restaurant. The investigation was initiated after the Hialeah Police Department had received complaints that illegal drug and gambling activities were taking place on the premises. The August 31, 1994, Visit The undercover operation began on August 31, 1994. On that date, Oliva and Llaneras, dressed in civilian attire, went to the Restaurant to see if they would be able to make a controlled buy of narcotics. Upon entering the Restaurant, they walked over to the Counter and sat down. From their vantage point at the Counter, Oliva and Llaneras observed a number of patrons walk up to another patron, Antonio Rosales, 1/ hand him money and receive in return a clear plastic bag containing a white powdery substance. After approximately 20 minutes, Oliva approached Rosales and asked him if he had any cocaine to sell. Rosales responded in the negative, but directed Oliva to another patron in the Restaurant, from whom Oliva purchased a clear plastic bag containing, what the patron represented was, a half of a gram of powdered cocaine. The transaction occurred at the Counter in plain view. There was no effort to conceal what was taking place. Oliva subsequently conducted a field test of the substance he had purchased at the Restaurant that day. The field test was positive for the presence of cocaine. 2/ The September 1, 1994, Visit Oliva and Llaneras returned to the Restaurant at around 8:00 p.m. on September 1, 1994. When they arrived, Rosales was at the Counter. There was a telephone on the Counter near where Rosales was seated. Rosales received incoming calls on the telephone that evening. (Employees at the Restaurant answered the telephone and handed it to Rosales, who then engaged in conversation with the caller.) Upon entering the Restaurant, Oliva noticed Rosales at the Counter and walked up to him. He told Rosales that he was interested in purchasing cocaine and then handed Rosales $20.00. Rosales thereupon pulled out from one of his pockets a clear plastic bag containing, what Rosales represented was, a half of a gram of powdered cocaine. He then gave the bag to Oliva. The transaction occurred in plain view. There was no effort to conceal what was taking place. Respondent's wife was on the premises at the time of the transaction. Oliva subsequently conducted a field test of the substance he had purchased from Rosales at the Restaurant that day. The field test was positive for the presence of cocaine. 3/ The September 2, 1994, Visit Llaneras went back to the Restaurant the following day. When he arrived, Rosales was again at the Counter. From his position near the entrance of the Restaurant, Llaneras, in a normal tone of voice, told Rosales that he wanted to buy a half of a gram of cocaine. Rosales thereupon signaled for Llaneras to sit down next to him. Llaneras complied with Rosales' request. Rosales then pulled out from one of his pockets a clear plastic bag containing a white powdery substance. Upon handing the bag to Llaneras, Rosales bragged, rather loudly, that it was "good stuff." The transaction occurred in plain view. There was no effort to conceal what was taking place. Respondent and his wife were behind the Counter at the time of the transaction. Llaneras subsequently conducted a field test of the substance he had purchased from Rosales at the restaurant that day. The field test was positive for the presence of cocaine. The substance was later analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .3 grams of cocaine. The September 6, 1994, Visit On September 6, 1994, Llaneras returned to the Restaurant, accompanied by Oliva. On separate occasions, they each approached Rosales, who was seated at the Counter. Llaneras' September 6, 1994, Purchase When Llaneras approached Rosales, Rosales asked him if he "needed some more." Llaneras' response was to hand Rosales $20.00. Rosales then took out a folded napkin from one of his pockets and placed the napkin on top of the Counter. He proceeded to unfold the napkin. Inside the napkin were approximately 12 clear plastic bags. Each contained a white powdery substance. Rosales handed one of the bags to Llaneras. He told Llaneras that it was "good stuff." The transaction occurred in plain view. There was no effort to conceal what was taking place. Respondent's wife was behind the Counter, approximately three to four feet from Llaneras and Rosales, at the time of the transaction. Llaneras subsequently conducted a field test of the substance he had purchased from Rosales at the Restaurant that day. The field test was positive for the presence of cocaine. The substance was later analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .3 grams of cocaine. Oliva's September 6, 1994, Purchase When Oliva approached Rosales, he handed Rosales $20.00. Rosales thereupon took out a folded napkin from one of his pockets and unfolded it on top of the Counter. Inside the napkin were approximately ten clear plastic bags, each of which contained a white powdery substance. Rosales handed one of the bags to Oliva. The transaction occurred in plain view. There was no effort to conceal what was taking place. Respondent's wife was behind the Counter, approximately six feet from Llaneras and Rosales, and was facing in their direction at the time of the transaction. The substance Oliva had purchased from Rosales at the Restaurant that day was subsequently analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of cocaine. The September 14, 1994, Visit Oliva and Llaneras next visited the Restaurant on September 14, 1994. When they arrived at the Restaurant, Rosales was seated at the Counter talking on the telephone. Oliva sat down at the Counter next to Rosales and handed him $20.00. As he had done during his previous encounter with Oliva on September 6, 1994, Rosales took out a folded napkin from one of his pockets and unfolded it on top of the Counter. Inside the napkin was a clear plastic bag containing a white powdery substance. Rosales handed the bag to Oliva. The transaction occurred in plain view. There was no effort to conceal what was taking place. Respondent's wife and the barmaids on duty were behind the Counter at the time of the transaction. The substance Oliva had purchased from Rosales at the Restaurant that day was subsequently analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .3 grams of cocaine. The September 15, 1994, Visit Oliva and Llaneras returned to the Restaurant on the following day, September 15, 1994. Gaming Activities During their visit, they heard a loud commotion in the kitchen and went to investigate. Upon entering the kitchen, 4/ they observed several persons, including Respondent and Rosales, gathered around a table participating in a game similar to roulette. The table was round and approximately three feet in diameter. It was filled with indentations painted either black or white. A funnel was held above the center of the table through which a marble was dropped. Participants in the game bet on whether the marble would come to rest on a black or white colored indentation. If the marble landed on a white indentation, the person dropping the marble would win the money that was in the pot. If it landed on a black indentation, the other player(s) would win. The game did not require any skill to play. Its outcome was based entirely on chance. After entering the kitchen, both Oliva and Llaneras played the game. Oliva's September 15, 1994, Purchase While Oliva was in the kitchen, Rosales asked him if he "needed anything." Oliva indicated that he did and handed Rosales $20.00. In return, Rosales gave Oliva a clear plastic bag containing a white powdery substance. Oliva and Rosales each spoke in a normal tone of voice during the exchange. Respondent was among those who were in the kitchen at the time of the transaction. The substance Oliva had purchased from Rosales at the Restaurant that day was subsequently analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .3 grams of cocaine. Llaneras' September 15, 1994, Purchase Llaneras also made a buy from Rosales in the kitchen. Rosales initiated the transaction. He asked Llaneras if he needed any cocaine. Llaneras responded in the affirmative and gave Rosales $20.00, in return for which Llaneras received from Rosales a clear plastic bag containing a white powdery substance. Llaneras and Rosales each spoke in a louder than normal tone of voice during the exchange. Respondent was in the kitchen a few feet away from Llaneras and Rosales when the transaction took place. Llaneras subsequently conducted a field test of the substance he had purchased from Rosales at the Restaurant that day. The field test was positive for the presence of cocaine. The substance was later analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .2 grams of cocaine. The September 16, 1994, Visit The next day, September 16, 1994, Oliva and Llaneras came back to the Restaurant. During their visit on this date, they each made buys from Rosales. Oliva's September 16, 1994, Purchase Rosales was at the Counter talking with Respondent's wife when Oliva approached him. After greetings were exchanged, Rosales asked Oliva if he "needed anything," in response to which Oliva handed Rosales $20.00. Rosales then gave Oliva a clear plastic bag containing a white powdery substance. Oliva and Rosales each spoke in a normal tone of voice during the exchange. The substance Oliva had purchased from Rosales at the Restaurant that day was subsequently analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .2 grams of cocaine. Llaneras' September 16, 1994, Purchase Rosales was in the kitchen when Llaneras approached him and inquired about purchasing a half of a gram of powdered cocaine. After Llaneras tendered the money needed to make the purchase, Rosales gave him a clear plastic bag containing a white powdery substance. Llaneras and Rosales each spoke in a louder than normal tone of voice during the exchange. Respondent was in the kitchen, approximately three to four feet away from Llaneras and Rosales, when the transaction took place. Respondent's wife was also nearby. Llaneras subsequently conducted a field test of the substance he had purchased from Rosales at the Restaurant that day. The field test was positive for the presence of cocaine. The substance was later analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .2 grams of cocaine. The September 22, 1994, Visit Oliva and Llaneras paid separate visits to the Restaurant on September 22, 1994. During their visits, they each made buys from Rosales. Oliva's September 22, 1994, Purchase Rosales was at the Counter talking with Respondent's wife when Oliva walked up to him. Rosales interrupted his conversation with Respondent's wife to ask Oliva if he "needed anything." In response to Rosales' inquiry, Oliva handed Rosales $20.00. Rosales then handed Oliva a clear plastic bag containing a white powdery substance. Oliva and Rosales each spoke in a normal tone of voice during the exchange. Respondent's wife was behind the Counter, approximately four to five feet from Oliva and Rosales, when the transaction took place. The substance Oliva had purchased from Rosales at the restaurant that day was subsequently analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .3 grams of cocaine. Llaneras' September 22, 1994, Purchase Llaneras encountered Rosales as Rosales was leaving the Restaurant. Rosales asked Llaneras if he "needed anything." Llaneras responded in the affirmative. Rosales, in turn, told Llaneras to wait at the Counter. Rosales then left the Restaurant. He returned shortly thereafter with a clear plastic bag containing a white powdery substance, which he handed to Llaneras. The transaction took place in plain view of Respondent's wife, who was approximately three feet away behind the Counter. Respondent was on the premises at the time of the transaction. Llaneras subsequently conducted a field test of the substance he had purchased from Rosales at the Restaurant that day. The field test was positive for the presence of cocaine. The substance was later analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .3 grams of cocaine. Llaneras' September 28, 1994, Visit Llaneras next visited the Restaurant on September 28, 1994. Rosales was seated at the Counter when Llaneras entered the Restaurant. He saw Llaneras enter and walked up to him. Llaneras greeted Rosales by telling Rosales, in a normal tone of voice, that he wanted to purchase cocaine. He then handed Rosales $20.00. In return, Rosales gave Llaneras a clear plastic bag containing a white powdery substance. Respondent's wife was behind the Counter when the transaction took place. Respondent was on the premises. Llaneras subsequently conducted a field test of the substance he had purchased from Rosales at the Restaurant that day. The field test was positive for the presence of cocaine. The substance was later analyzed at the Metro-Dade Police Department's Crime Laboratory. The analysis revealed the presence of .2 grams of cocaine. Oliva's September 29, 1994, Visit Oliva returned to the Restaurant on September 29, 1994. He met Rosales at the Restaurant. As was his usual custom when he conversed with Oliva, Rosales asked if Oliva "needed anything." As was his customary response to such an inquiry, Oliva handed Rosales $20.00. Rosales then stepped outside the Restaurant and retrieved from his car, which was parked in front of the Restaurant, a clear plastic bag containing a white powdery substance. When he returned to the Restaurant, he handed the bag to Oliva. The transaction occurred in plain view at the Counter. There was no effort to conceal what was taking place. Oliva and Rosales each spoke in a normal tone of voice during the exchange. Respondent's wife was behind the Counter at the time of the transaction. Respondent was on the premises. Respondent's Responsibility for Drug Transactions on Licensed Premises Although Respondent may not have been directly involved in any of the above-described sales of cocaine that took place at the Restaurant during the Hialeah Police Department's undercover operation and he may not have even been on the licensed premises at the time of some of these sales, given the persistent and repeated nature of the transactions and the open manner in which they were made, the inference is made that Respondent either fostered, condoned, or negligently overlooked them.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order finding Respondent guilty of the violations alleged in Counts 1 and 3 through 12 of the Administrative Action and penalizing Respondent therefor by revoking his alcoholic beverage license number 23-15943, series 2-COP. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 11th day of August, 1995. STUART M. LERNER 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 11th day of August, 1995.
The Issue Pursuant to chapter 287, Florida Statutes, and section 255.25, Florida Statutes,1/ the Department of Management Services (DMS) released an Invitation to Negotiate for a contract to provide tenant broker and real estate consulting services to the State of Florida under Invitation to Negotiate No. DMS-12/13-007 (ITN). After evaluating the replies, negotiating with five vendors, and holding public meetings, DMS posted a notice of intent to award a contract to CBRE, Inc. (CBRE) and Vertical Integration, Inc. (Vertical). At issue in this proceeding is whether DMS’s intended decision to award a contract for tenant broker and real estate consulting services to CBRE and Vertical is contrary to DMS’s governing statutes, its rules or policies, or the ITN’s specifications, or was otherwise clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based on the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Background5/ DMS released Invitation to Negotiate No. DMS-12/13-007 on March 18, 2013, and released a revised version of the ITN on May 14, 2013, for the selection of a company to provide tenant broker and real estate consulting services to the State of Florida. Thirteen vendors responded to the ITN. The replies were evaluated by five people: Bryan Bradner, Deputy Director of REDM of DMS; Beth Sparkman, Bureau Chief of Leasing of DMS; Rosalyn (“Roz”) Ingram, Chief of Procurement, Land and Leasing of the Department of Corrections; Clark Rogers, Purchasing and Facilities Manager of the Department of Revenue; and Janice Ellison, Section Lead in the Land Asset Management Section of the Department of Environmental Protection. Five vendors advanced to the negotiation stage: Cushman (score of 87), JLL (score of 87), CBRE (score of 87), Vertical (score of 89), and DTZ (score of 86). DTZ is not a party to this proceeding. The negotiation team consisted of Beth Sparkman, Bryan Bradner, and Roz Ingram. Janice Ellison participated as a subject matter expert. DMS held a first round of negotiations and then held a public meeting on July 16, 2013. DMS held a second round of negotiations and then held a second public meeting on August 1, 2013. A recording of this meeting is not available, but minutes were taken. Also on August 1, 2013, DMS posted Addendum 8, the Request for Best and Final Offers. This Addendum contained the notice that “Failure to file a protest within the time prescribed in section 120.57(3) . . . shall constitute a waiver of proceedings under chapter 120 of the Florida Statutes.” The vendors each submitted a BAFO. DMS held a final public meeting on August 14, 2013, at which the negotiation team discussed the recommendation of award. All three members of the negotiation team recommended Vertical as one of the two vendors to receive the award. For the second company, two of the three negotiation team members recommended CBRE and one negotiation team member recommended JLL. DMS prepared a memorandum, dated August 14, 2013, describing the negotiation team’s recommendation of award. The memorandum comprises the following sections: Introduction; The Services; Procurement Process (subsections for Evaluations and Negotiations); Best value (subsections for Selection Criteria, Technical Analysis, Price Analysis, and Negotiation Team’s Recommendation); and Conclusion. Attached to the memorandum as Attachment A was a memorandum dated April 30, 2013, appointing the evaluation and negotiation committees, and attached as Attachment B was a spreadsheet comparing the vendors’ BAFOs. DMS posted the Notice of Intent to Award to CBRE and Vertical on August 16, 2013. Cushman and JLL timely filed notices of intent to protest the Intent to Award. On August 29, 2013, JLL timely filed a formal protest to the Intent to Award. On August 30, 2013, Cushman timely filed a formal protest to the Intent to Award. An opportunity to resolve the protests was held on September 9, 2013, and an impasse was eventually reached. On October 10, 2013, DMS forwarded the formal protest petitions to DOAH. An Order consolidating JLL’s protest and Cushman’s protest was entered on October 15, 2013. Scope of Real Estate Services in the ITN Prior to the statutory authority of DMS to procure real estate brokerage services, agencies used their own staff to negotiate private property leases. Section 255.25(h), Florida Statutes, arose out of the legislature’s desire for trained real estate professionals to assist the State of Florida with its private leasing needs. The statutorily mandated use of tenant brokers by agencies has saved the state an estimated $46 million dollars. The primary purpose of the ITN was to re-procure the expiring tenant broker contracts to assist state agencies in private sector leasing transactions. Once under contract, the selected vendors compete with each other for the opportunity to act on behalf of individual agencies as their tenant broker, but there is no guarantee particular vendors will get any business. The core of the services sought in the ITN was lease transactions. The ITN also sought to provide a contract vehicle to allow vendors to provide real estate consulting services, including strategies for long and short-term leases, space planning, and space management as part of the negotiation for private leases. As part of providing real estate consulting services, vendors would also perform independent market analyses (IMAs) and broker opinions of value (BOVs) or broker price opinions (BPOs). In almost all instances, this would be provided at no charge as part of the other work performed for a commissionable transaction under the resulting contract. However, the resulting contract was designed to allow agencies to ask for an IMA or BOV to be performed independently from a commissionable transaction. In addition to the primary leasing transactions, the contract would also allow state agencies to use the vendors for other services such as the acquisition and disposition of land and/or buildings. These services would be performed according to a Scope of Work prepared by the individual agency, with compensation at either the hourly rates (set as ceiling rates in the ITN), set fees for the service/project, or at the percentage commission rate negotiated between the vendor and the individual agency. However, these services were ancillary to the main purpose of the contract, which was private leasing. In Florida, most state agencies are not authorized to hold title to land. However, the Department of Environmental Protection (DEP) serves as staff for the Board of Trustees of the Internal Improvement Trust Fund (“Board”), which holds title to land owned by the State of Florida. In that capacity, DEP buys and sells land and other properties on behalf of the Board. DEP recently began using the current DMS tenant broker contract for acquisitions and dispositions. The process was cumbersome under the current contract, so DEP asked to participate in the ITN in order to make the contract more suitable for their purposes. The ITN was revised to include DEP’s proposed changes, and DMS had Ms. Ellison serve first as an evaluator and later as a subject matter expert. At hearing, Ms. Ellison testified that she was able to participate fully, that her input was taken seriously, and that the proposed contract adequately addressed DEP’s concerns. While DEP anticipated that under the proposed contract it would use more BOVs than it had previously, there was no guarantee that DEP would use the proposed contract. DEP is not obligated to use the contract and maintains the ability to procure its own tenant brokers. Additionally, administration and leadership changes may cause a switch of using in-house agency employees instead of tenant brokers to perform real estate acquisition and disposition services. Specifics of the ITN The ITN directed vendors to submit a reply with the following sections: a cover letter; completed attachments; pass/fail requirements; Reply Evaluation Criteria; and a price sheet. The Reply Evaluation Criteria included Part A (Qualifications) and Part B (Business Plan). Qualifications were worth 40 points, the Business Plan was worth 50 points, and the proposed pricing was worth 10 points. For the Business Plan, the ITN requested a detailed narrative description of how the vendors planned to meet DMS’s needs as set forth in section 3.01, Scope of Work. The ITN requested that vendors describe and identify the current and planned resources and employees to be assigned to the project and how the resources would be deployed. Section 3.01, Scope of Work, states that the primary objective of the ITN is to “identify brokers to assist and represent the Department and other state agencies in private sector leasing transactions.” The ITN states that the contractor will provide state agencies and other eligible users with real estate transaction and management services, which include “document creation and management, lease negotiation and renegotiation, facility planning, construction oversight, and lease closeout, agency real estate business strategies, pricing models related to relocation services, project management services, acquisition services, and strategic consulting.” Id. The ITN also specifies: Other real estate consulting services such as property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales or those identified in the reply or negotiation process and made part of the Contract (e.g., financial services, facilities management services, lease v. buy analyses). The ITN lists the following duties the contractor will perform: Act as the state’s tenant broker, to competitively solicit, negotiate and develop private sector lease agreements; Monitor landlord build-out on behalf of state agencies; Provide space management services, using required space utilization standards; Provide tenant representation services for state agencies and other eligible users during the term of a lease; Identify and evaluate as directed strategic opportunities for reducing occupancy costs through consolidation, relocation, reconfiguration, capital investment, selling and/or the building or acquisition of space; Assist with property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding property, property auctions and direct sales; and Provide requested related real estate consulting services. The ITN set the commission percentage for new leases at 4 percent for years 1-10 and 2 percent for each year over 10 years; 2 percent for lease renewals, extensions, or modifications; and 2 percent for warehouse or storage space leases. Id. For “other services,” the ITN states: With respect to all other services (e.g., space management services, general real estate consulting services, property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales), compensation will be as outlined in an agency prepared Scope of Work and will be quoted based on hourly rates (set as ceiling rates in this ITN), set fees for the service/project or by percentage commission rate as offered and negotiated by the broker and the using agency. The ITN also required that vendors specify the number of credit hours to be given annually to DMS. Each vendor gives a certain number of credit hours at the start of each year under the contract. The state earns additional credit hours as the vendors perform transactions. DMS manages the pool of accumulated credit hours and gives them to individual agencies to use on a case-by-case basis as payment for individual projects. These credit hours are commonly allocated to pay for IMAs and BOVs that are not part of commissionable transactions. With the exception of one legislatively mandated project, DMS has never exhausted its pool of credit hours. The ITN further specified that IMAs and BOVs must be offered at no cost when performed as part of a commissionable transaction. Historically, most IMAs and BOVs are performed as part of a commissionable transaction. They have only been performed separately from a commissionable transaction a handful of times under the current contract, and many of these were still provided at no cost through the allocation of free credit hours available to the agencies. Therefore, most IMAs and BOVs to be performed under the proposed contract will likely be at no cost. The ITN states that points to be awarded under the price criterion will be awarded based on the number of annual credit hours offered and the commission rate paid per transaction per hour of commission received. The ITN further provides that DMS will evaluate and rank replies in order to establish a competitive range of replies reasonably susceptible to award, and then the team will proceed to negotiations. Regarding negotiations, the ITN states: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent’s demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the section criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. The ITN also states: At the conclusion of negotiations, the Department will issue a written request for best and final offer(s) (BAFOs) to one or more of the Respondents with which the negotiation team has conducted negotiations. At a minimum, based upon the negotiation process, the BAFOs must contain: A revised Statement of Work; All negotiated terms and conditions to be included in Contract; and A final cost offer. The Respondent’s BAFO will be delivered to the negotiation team for review. Thereafter, the negotiation team will meet in a public meeting to determine which offer constitutes the best value to the state based upon the selection criteria. The Department does not anticipate reopening negotiations after receiving BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the State. The ITN and draft contract permit subcontractors to perform under the contract and provide an avenue for a contractor to add subcontractors by submitting a written request to DMS’s contract manager with particular information. Best and Final Offers After the conclusion of negotiations, the negotiation team requested each vendor to submit a BAFO, to be filled out in accordance with the RBAFO format. The RBAFO noted that each vendor would get a set percentage commission for leasing transactions, but asked vendors to submit their prices for IMAs, BOVs, and BPOs performed outside a commissionable transaction and to submit the number of annual credit hours vendors would give DMS at the start of the new contract. In an effort to increase potential savings to the state, DMS lowered the percentage rates of the commissions for lease transactions in the RBAFO below the rates initially set in the ITN. By selecting only two vendors instead of three, the additional potential volume for each vendor on the contract could support the lower commission rates being requested of tenant brokers. The state would ultimately save money due to the impact of the reduced commissions on the overall economic structure of each lease. Beth Sparkman, Bureau Chief of Leasing of DMS, expounded on the rationale for reducing the number of vendors under the new contract to two: The Court: To me, it’s counterintuitive that having fewer vendors would result in more favorable pricing for the state of Florida; and yet you said that was the anticipated result of reducing the number of vendors from three to two – The Witness: Correct. The Court: -- for the new contract. I’m unclear. Tell me the basis for the team’s anticipation that having fewer vendors would result in better pricing. The Witness: When the original ITN was released, it had the same percentages in there that are under the current contract. And I’ll talk, for context, new leases, which right now is at 4 percent. So the discussion was – and 4 percent is typical of the industry. That’s typical for what the industry pays across the board. So the desire was to reduce the commission, to reduce those commission amounts to drive that percentage down. So we went out with the first BAFO that had a range that said for leases that cost between zero – and I can’t remember – zero and a half million, what would your percentage be? Thinking that when we had a tiered arrangement, those percentages would come down. They really didn’t. So when we sat down as a team and discussed: Well, why didn’t they – and you know, because typical is 4 percent. So we came back and said: Well, if we reduce the percentage on new leases to 3.25 but restrict the reward to two vendors, each vendor has the potential to make as much money as they would have made at 4 percent, but the savings would be rolled back into the state. Each of the five vendors invited to negotiate submitted a BAFO, agreeing as part of their submissions to comply with the terms and conditions of the draft of the proposed contract and agreeing to the lowered set percentage commission rates in the RBAFO. The RBAFO listed selection criteria by which the vendors would be chosen, to further refine the broad criteria listed in the ITN. The RBAFO listed the following nine items as selection criteria: performance measures (if necessary), sliding scale/cap, IMA set fee, broker’s opinion of value, balance of line (can be quoted per hour or lump sum), contract concerns, credit hours (both annual and per deal hour), hourly rates, and vendor experience and capability. CBRE’s BAFO submission followed the format indicated in the RBAFO, but CBRE included an additional section giving its proposed commission rates for acquisitions and dispositions of land. These rates were also submitted by other vendors at other parts of the procurement process, but CBRE was the only vendor to include such rates as part of its BAFO submission. DMS considered this addition a minor irregularity that it waived. In its BAFO submission, Cushman offered a three-tiered approach to its pricing for IMAs and BOVs. For the first tier, Cushman offered to perform IMAs and BOVs for free as part of a commissionable transaction. This is redundant, as the ITN required all vendors to perform IMAs and BOVs at no cost when part of a commissionable transaction. For the second tier, Cushman offered to perform IMAs and BOVs at no cost when the user agency has previously hired Cushman on tenant representative work. Ms. Sparkman testified that this provision was unclear, as Cushman did not define the scope of this provision or what amount of work qualified the agency for free services. For the third tier, Cushman offered to perform IMAs and BOVs for $240 when not part of a commissionable transaction for an agency with which it had never done business. Best Value Determination The five BAFOs were sent to the negotiation team for review on August 8, 2013, and on August 14, 2013, the team met in a public meeting to discuss the BAFOs, consider the selection criteria, discuss the team’s award recommendation, and draft a written award recommendation memorandum. During the August 14, 2013, meeting the team determined that CBRE and Vertical represented the best value to the state, by a majority vote for CBRE and by a unanimous vote for Vertical. Ms. Sparkman stated at the meeting that, from her perspective, CBRE and Vertical represented a better value than the other vendors because they were more forward thinking in their long term business strategies for managing Florida’s portfolio. Also at this meeting, Ms. Sparkman noted that CBRE’s prices for IMAs and BOVs were somewhat high but that she would attempt to convince CBRE to lower its prices during the contract execution phase. This was part of an attempt to equalize costs to ensure user agencies selected vendors based on individual needs rather than cost. However, CBRE represented the best value to the state regardless of whether its pricing changed. At hearing, Ms. Sparkman testified that if CBRE had refused to lower its pricing, DMS would still have signed a contract with them based on the pricing submitted in its BAFO. Ms. Sparkman also stated at the public meeting that if she were unable to come to contract with both CBRE and Vertical, she would arrange for another public meeting to select a third vendor with whom to proceed to the contract execution phase. This statement did not refer to DMS selecting a third vendor to replace CBRE should CBRE refuse to lower its price, but rather reflected the possibility that during the contract execution phase, DMS and either one of the vendors could potentially be unable to sign a contract because the vendor was unwilling to execute the written terms and conditions. The “contract negotiations” referenced during the public meeting are the remaining processes to be worked out during the contract execution phase and are distinct and separate from the negotiation phase. At hearing, Ms. Sparkman testified that in the past, vendors have refused to sign a contract because their legal counsel was unwilling to sign off on what the business representatives agreed to. Thus, if either CBRE or Vertical refused to sign the contract altogether, DMS would potentially have selected a third-place vendor in order to have a second vendor on the contract, according to Ms. Sparkman. International experience weighed in favor of CBRE and Vertical, according to team member comments made at the public meeting. Although the phrase “international experience” was not specifically listed in the selection criteria of the ITN or RBAFO, many vendors highlighted their international experience as part of the general category of vendor experience. Vendor experience and capability is specified in both the ITN and RBAFO as part of the selection criteria. Ms. Sparkman testified that international experience is indicative of high quality general vendor experience because international real estate market trends change more rapidly than domestic market trends. None of the negotiation team members recommended Cushman for a contract award, and in fact, Cushman's name was not even discussed at the award meeting. The Award Memorandum Also during the August 14, 2013, public meeting the negotiation team prepared a memorandum setting forth the negotiation team’s best value recommendation of CBRE and Vertical, and many of its reasons for the recommendation. There was no requirement that the memorandum list every single reason that went into the decision. For example, the memorandum did not state that the team found CBRE and Vertical’s focus on long term strategies more impressive than Cushman’s focus on past performance under the current contract. The award memorandum included a “Selection Criteria” section which simply repeated the nine selection criteria that had been previously identified in the RBAFO. The memorandum then went on to include a section labeled “B. Technical Analysis” that stated: Analysis of pricing is provided in section C below. As to the remaining selection criteria items, the Team identified the following key elements for the service to be provided: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. The selection criteria provided above were used by the Team to make its best value recommendation. Ms. Sparkman testified that while the choice of wording may have been imprecise, the items listed in the Technical Analysis section were simply elaborations of the selection criteria in the ITN and RBAFO, and not new criteria. The first four are subsumed within vendor experience and capability, and the fifth was specifically listed in the RBAFO. Indeed, Cushman’s Senior Managing Director testified at hearing that Cushman had addressed the first four items in their presentation to DMS during the negotiation phase to demonstrate why Cushman should be chosen for the contract. The memorandum failed to note that CBRE had included non-solicited information in its BAFO regarding proposed rates for the acquisition and disposition of land. However, the negotiation team considered CBRE’s inclusion of these proposed rates a minor irregularity that could be waived in accordance with the ITN and addressed in the contract execution phase, since those rates were for ancillary services, and there was no guaranteed work to be done for DEP under that fee structure. The memorandum included a chart, identified as Attachment B, that compared the proposed number of credit hours and some of the pricing for IMAs and BOVs submitted by the vendors in their BAFOs. The chart listed Cushman’s price for IMAs and BOVs as $240 and failed to include all the information regarding the three-tiered approach to IMAs and BOVs Cushman listed in its BAFO. However, Ms. Sparkman testified that the chart was meant to be a side-by-side basic summary that compared similar information, not an exhaustive listing. The Cushman Protest Negotiations After Award of the Contract Cushman alleges that DMS’s selection of CBRE violates the ITN specifications because DMS selected CBRE with the intent of conducting further negotiations regarding price, which provided CBRE with an unfair advantage. Cushman further argues that the procedure of awarding to one vendor and then possibly adding another vendor if contract negotiations fail violates Florida’s statutes and the ITN. Amended Pet. ¶¶ 23, 28 & 31. Section 2.14 of the ITN specifically reserved DMS's right to reopen negotiations after receipt of BAFOs if it believed such was in the best interests of the state. Specifically, section 2.14 A. provides: The highest ranked Respondent(s) will be invited to negotiate a Contract. Respondents are cautioned to propose their best possible offers in their initial Reply as failing to do so may result in not being selected to proceed to negotiations. If necessary, the Department will request revisions to the approach submitted by the top-rated Respondent(s) until it is satisfied that the contract model will serve the state’s needs and is determined to provide the best value to the state. The statements made by Ms. Sparkman at the August 14, 2013, public meeting and in the award memorandum, that DMS would attempt to reduce CBRE's prices for ancillary services during the contract execution process were not contrary to the ITN or unfair to the other vendors. Both Ms. Sparkman and Mr. Bradner, the two negotiation team members who voted to award to CBRE, testified that they recommended CBRE as providing the best value even considering its arguably higher prices for ancillary services. Ms. Sparkman further confirmed that even if CBRE refused to lower its prices during the contract execution phase, DMS would still sign the contract, as CBRE's proposal would still represent the best value to the state. The anticipated efforts to obtain lower prices from CBRE were simply an attempt to obtain an even better best value for the state. Ms. Sparkman also testified that section 2.14 F. allowed continued negotiations, even though it was silent as to timeframe. Paragraph F states: In submitting a Reply a Respondent agrees to be bound to the terms of Section 5 – General Contract Conditions (PUR 1000) and Section 4 – Special Contract Conditions. Respondents should assume those terms will apply to the final contract, but the Department reserves the right to negotiate different terms and related price adjustments if the Department determines that it provides the best value to the state. Ms. Sparkman also cited section 2.14 I. as authority for reopening negotiations following receipt of the BAFO’s. That section provides: The Department does not anticipate reopening negotiations after receiving the BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the state. Ms. Sparkman’s statement that if DMS failed, for any reason, to successfully contract with either of the two vendors selected, it would consider pulling in another vendor, is not inconsistent with the clear language of the ITN. Selection Criteria Cushman alleges that DMS used criteria to determine the awards that were not listed in the ITN or the RBAFO. Amended Pet. ¶ 25. Section 2.14 E of the ITN established broad selection criteria, stating: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent's demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the selection criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. (emphasis added). Following the negotiations, and with the assistance of its subject matter expert, the negotiation team provided in the RBAFO additional clarity as to the selection criteria, and identified the "Basis of Award/Selection Criteria" as follows: Performance Measures (if necessary) Sliding scale/cap IMA set fee Broker's opinion of value Balance of line (can be quoted per hour or lump sum) Contract concerns Credit hours (both annual and per deal hour) Hourly rates Vendor experience and capability The foregoing selection criteria, as well as the selection criteria stated initially in the ITN, make clear that pricing was only one of the criteria upon which the award was to be made. Indeed, Cushman's representative, Larry Richey, acknowledged during his testimony that criteria such as "Performance Measures," "Contract Concerns," and "Vendor Experience and Capability" did not refer to pricing, but rather to the expected quality of the vendor's performance if awarded the contract. As the principal draftsman of the ITN and DMS's lead negotiator, Ms. Sparkman explained that the RBAFO's statement of the selection criteria was intended to provide greater detail to the broad selection criteria identified in the ITN, and was used by the negotiation team in making its best value determination. Ms. Sparkman further testified that the best value determination resulted from the negotiation team's lengthy and extensive evaluation of the vendors' initial written replies to the ITN, review of the vendors' qualifications and comprehensive business plans, participation in approximately two and a half hours of oral presentations by each vendor (including a question and answer session with regard to the proposed implementation and management of the contracts), and a review of the vendors' BAFOs. Applying the selection criteria contained in the ITN and the RBAFO, the negotiation team selected Vertical for several reasons, including its performance indicators, employees with ADA certification, computer programs and employee training not offered by other vendors, its presence in Florida, and the strength of its business plan and presentation. Similarly, the negotiation team selected CBRE for an award based on the strength of its ITN Reply, its broad look at long-term strategies, its key performance indicators, the experience and knowledge of its staff, the comprehensiveness of its proposal and business plan, size of its firm, and creative ideas such as use of a scorecard in transactions. Ms. Sparkman observed that both Vertical and CBRE specifically identified the CBRE staff who would manage the state's business and daily transactions, while it was not clear from Cushman's ITN reply and related submissions who would actually be working on the account. Cushman likewise did not discuss out-of-state leases and how such leases were going to be handled, which was a significant concern because DMS considered out-of-state leases to be particularly complex. Ms. Sparkman also noted that with respect to the vendors' business plans, both Vertical and CBRE focused primarily on strategic realignment and plans for the future, whereas Cushman discussed their current transactions at length, but did not demonstrate forward thinking to the negotiation team. Cushman's reply to the ITN also included various discrepancies noted at the final hearing. While Cushman's ITN reply identifies a Tallahassee office, Cushman does not in fact have a Tallahassee office, but instead listed its subcontractor’s office.6/ Additionally, two of the business references presented in Cushman's ITN Reply appear not in fact to be for Cushman, but instead for its subcontractor, Daniel Wagnon, as Cushman's name was clearly typed in above Mr. Wagnon's name after the references were written. Finally, Cushman failed to provide in its ITN Reply the required subcontractor disclosure information for at least one of its "Project Management Partners," Ajax Construction. Based on all of the above, DMS's decision to award contracts to Vertical and CBRE as providing the best value to the state was not arbitrary, capricious, clearly erroneous, or contrary to competition. Simply stated, and as the negotiation team determined, the submissions by Vertical and CBRE were more comprehensive and reasonably found to offer better value to the state than Cushman's submission. Indeed the negotiation team did not even mention Cushman as a potential contract awardee, but instead identified only Vertical, CBRE and JLL in their deliberations as to best value. Cushman's argument that DMS award memorandum improperly relies on the following as "key elements" related to services does not alter this analysis: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. While Ms. Sparkman acknowledged that the choice of language in the memorandum could have been better, it is clear that the foregoing are indeed "elements" of the selection criteria stated in the ITN and RBAFO, as the first four elements plainly relate to the vendors' ability to effectively provide the services, their technical proposal, performance measures, and vendor experience and capability, while the last element relates to the pricing portion of the criteria. Cushman also argues that the award memorandum failed to inform the final decision-maker that Cushman offered IMAs and BOVs at no charge when Cushman was engaged in a commissionable transaction or was performing other work for an agency under the contract. As a result, Cushman asserts, the Deputy Secretary was provided with inaccurate information relating to price. Cushman's argument that the award process was flawed because the pricing chart attached to the award memorandum did not accurately reflect Cushman's proposed pricing is without merit. As Ms. Sparkman testified, the chart was prepared by the negotiation team to provide for the decision-maker an apples-to- apples broad summary comparison of the vendor's proposed pricing for the proposed ancillary services. The chart was not intended to identify all variations or conditions for potential different pricing as proposed by Cushman.7/ Best Value Determination Cushman contends that the negotiation team’s decision to award a contract to CBRE did not result in the best value to the state. Amended Pet. ¶¶ 26, 28 & 29. Cushman further argues that DMS did not meaningfully consider differences in proposed pricing. The failure to consider price for potential ancillary services, Cushman argues, was contrary to competition as it gave an unfair advantage to CBRE whose prices were higher than Cushman’s prices in all but one category. Although pricing for the potential ancillary services was relevant, the ITN's initial scoring criteria made clear that DMS was primarily focused on evaluating the experience and capability of the vendors to provide the proposed services. For this reason, the ITN's initial scoring criteria awarded 90 percent of the points based upon the qualifications and business plan of the vendors, and only 10 percent of the points based on the pricing for potential ancillary services. The negotiation team members testified that this same focus on qualifications and the vendors' business plan continued during the negotiation phase and award decision, although without reliance on the mathematical scoring process utilized during the initial evaluation phase. Nothing in the ITN specifications altered this focus, and the negotiations were directed to gaining a greater understanding of the vendors' proposed services, the qualifications and bios of individuals who would actually do the work, vendors' approach to the work and parameters the vendors would use to evaluate their performance. Pricing remained of relatively minor significance primarily because the RBAFO established a uniform lease commission rate for all vendors, effectively removing pricing as a means to differentiate between the vendors. As a result, vendors were required to quote pricing only for certain potential ancillary services, including IMAs and BOVs, and the number of free credit hours to be provided to the state. Pricing for these potential ancillary services was not considered particularly important, since historically these services were seldom used, and the ITN required all vendors to provide IMAs and BOVs free of charge when related to a commissionable transaction (thereby greatly reducing the impact of any "free" IMA or BOV services). For these reasons, the negotiation team considered the potential ancillary services and pricing for these services not to be significant in the award decision and only incidental to the core purpose and mission of the intended contract, to wit, leasing and leasing commissions. As a result, the negotiation team referred to these potential ancillary services as "balance of line" items which were nominal and added little value to the contract. Notwithstanding Cushman's argument that it should have been awarded the contract because it offered the lowest pricing for these ancillary services, its prices were not in fact the lowest offered by the vendors. Indeed JLL offered to provide all IMA and BOV services (with no preconditions) at no cost. Cushman's pricing for the ancillary services also was not materially different than CBRE's pricing. CBRE's consulting services rates are comparable, if not lower, than Cushman's rates, and the difference between Cushman's and CBRE's proposed charges for IMAs and BOVs is only a few hundred dollars. When considered in terms of the anticipated number of times the ancillary services will be requested (rarely, based on the prior contract), the total "extra" amount to be spent for CBRE's services would be at most a few thousand dollars. The negotiation team reasonably considered this to be insignificant in comparison to the multimillion dollar leasing work which was the core purpose of the intended contract.8/ Because pricing for the potential ancillary services was of lesser significance to DMS's award decision, Cushman's position that DMS should have awarded Cushman a contract based upon its pricing for ancillary services is not consistent with the ITN and does not render DMS's intended awards to Vertical and CBRE arbitrary, capricious, clearly erroneous or contrary to competition. To the contrary, DMS articulated a rational, reasonable and logical explanation for the award. CBRE’s Proposal Non-Responsive to ITN and RBAFO? Cushman alleges that CBRE’s BAFO was not responsive to the ITN and the RBAFO because CBRE included a set rate for acquisitions and dispositions in its proposal. Amended Pet. 30. Since CBRE's BAFO materially deviated from the ITN's specifications, CBRE’s proposal should have been deemed non- responsive and therefore rejected, Cushman argues. The ITN originally requested pricing related only to credit hours as the ITN set the rates for leases. The ITN stated that “other services” would be determined on a case-by- case basis as negotiated by the agencies. However, as part of the ITN process, DMS discussed with the vendors the potential for them to assist the state in the sale and acquisition of property, and what commission rates might be charged for this work. For this reason, CBRE included proposed commission rates for acquisition and disposition services in its BAFO. DMS considered the inclusion of potential rates for acquisitions and dispositions to be a minor irregularity which did not render CBRE's BAFO non-responsive. This determination is consistent with the terms of the ITN, which at section 2.14(g) states "[t]he Department reserves the right to waive minor irregularities in replies." The form PUR 1001 incorporated by reference into the ITN likewise reserves to DMS the right to waive minor irregularities and states: 16. Minor Irregularities/Right to Reject. The Buyer reserves the right to accept or reject any and all bids, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if the Buyer determines that doing so will serve the state's best interests. The Buyer may reject any response not submitted in the manner specified by the solicitation documents. Consistent with the above-cited provisions, the negotiation team noted at its August 14, 2013, meeting that CBRE's inclusion of the proposed rates was not material, and that during the contract execution process, DMS would either exclude the proposed rates from the contract, or possibly include such as a cap for these services. Both of these alternatives were available to DMS given CBRE's commitment to follow the terms of the draft contract, which specifically stated that fees for acquisitions and dispositions would be negotiated on a case-by-case basis. Finally, CBRE's inclusion of proposed commission rates for acquisitions and dispositions did not give CBRE an advantage over the other vendors, or impair the competition, because Cushman and JLL also submitted, as part of their ITN responses, proposed commission rates for the acquisition and disposition of property. Do the ITN Specifications Violate Section 255.25? Cushman's final argument is that the ITN specifications, and the proposed contract, violate section 255.25(3)(h)5., Florida Statutes, which states that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract and may not be supplemented or modified by the state agency using the contract." Cushman's argument has two components. First, Cushman argues that the specifications included at Tab 5, page 13 of the ITN violate the statute by providing: "With respect to all other [ancillary] services, . . . , compensation shall be as outlined in an agency prepared Scope of Work and will be quoted based on an hourly rate (set as ceiling rates in this ITN), set fees for the service/project or by a percentage commission rate as offered and negotiated by the using agency.” Cushman also argues that the language in the award memorandum stating that the BOV rates are "caps" and "may be negotiated down by agencies prior to individual transactions," violates the statute. This latter reference to "caps" correlates to the "ceiling rates" stated in the above quoted ITN specification. Section 120.57(3)(b), Florida Statutes, requires vendors to file a protest to an ITN’s terms, conditions, or specifications within 72 hours of the release of the ITN or amendment; failure to protest constitutes a waiver of such arguments. DMS included this language with the release of the ITN and each amendment, so Cushman was on notice of its protest rights. Cushman's challenge to the ITN specifications as violating section 255.25 is untimely and has been waived. Having been fully informed of this specification since May 14, 2013, when the revised ITN was published, Cushman could not wait until the ITN process was completed some four months later, and then argue that the ITN specifications do not comply with section 255.25 and must be changed. Such argument plainly constitutes a specifications challenge, and such a challenge is now time-barred. Even were Cushman’s challenge not time-barred, it would still fail. Section 255.25 requires only that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract," and not that all terms identifying the compensation be specified. The challenged ITN specification, actually added via Addendum 2 at the request of DEP and its subject matter expert, does specify the approved methods by which the state could compensate the vendor, which DMS determined would best be determined on a case-by-case basis. By stating the approved methods which can be used by the state agencies, the ITN specifications and term contract did specify the terms "relating to" the compensation of the vendor, i.e., an hourly rate (set as ceiling rates in the ITN), set fees for the service/project, or a percentage commission rate. DMS established these terms because the exact compensation would best be determined by the state agency on a case-by-case basis in a Statement of Work utilizing one of the specified compensation methods.9/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered denying the petition of Cushman & Wakefield of Florida, Inc., and affirming the Notice of Intent to Award to CBRE, Inc., and Vertical Integration, Inc. DONE AND ENTERED this 24th day of January, 2014, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 24th day of January, 2014.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by Lynne A. Quimby-Pennock, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Respondent’s Withdrawal of Notice and Motion to Dismiss as Moot, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED and no license will be issued to Subaru of America, Inc. and Boyland Auto Center, LLC d/b/a Subaru of South Orlando for the sale of Subaru vehicles (SUBA) at 9576 South Orange Blossom Trail, Orlando (Orange County), Florida 32837. Filed March 28, 2012 7:52 AM Division of Administrative Hearings DONE AND ORDERED this a | day of March, 2012, in Tallahassee, Leon County, Florida. v Lrloen Julie Baker, Chief Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed in the official records of the Division of Motorist Services this_4_ day of March, 2012. ok Nalini Vinayak, Dealer Hicense Administrator NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. JB/jde Copies furnished: J. Andrew Bertron, ESquire Nelson, Mullins, Riley and Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 Kenneth G. Turkel, Esquire Bajo, Cuva, Cohen and Turkel, P.A. 100 North Tampa Street, Suite 1900 Tampa, Florida 33602 Hayden P. Ridore, Esquire Invictus Law Group, P.L. Post Office Box 2209 Orlando, Florida 32802 Dylan M. Snyder, ESquire Dylan Snyder, P.A. 201 North Franklin Street, Suite 2880 Tampa, Florida 33602 Lynne A. Quimby-Pennock Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator
The Issue The issue in this case concerns whether the Petitioner should issue a cease and desist order and/or impose sanctions against the Respondent on the basis of allegations that the Respondent, by failing to have its books, accounts, and documents available for examination and by refusing to permit an inspection of its books and records in an investigation and examination, has violated Sections 520.995(1)(a), (f), and (g), Florida Statutes.
Findings Of Fact Sometime during the month of February of 1991, Ms. Jennifer Chirolis, a Financial Investigator from the Department of Banking and Finance, visited the offices of the Barat Company. She spoke with Mr. Roque Barat and determined that the Barat Company was conducting retail installment sales without being licensed to do so under Chapter 520, Florida Statutes. Mr. Chirolis advised Mr. Roque Barat that he needed a license and asked him to cease operations until he obtained the necessary license. The Barat Company thereafter obtained the necessary license and was still licensed as of the time of the formal hearing. Thereafter, the Department received a complaint about the Barat Company from a customer. The customer's complaint was to the effect that the Barat Company had made misrepresentations concerning the fee paid by the customer. The Department initiated an "investigation" of the customer's complaint and also decided to conduct an "examination" of the Barat Company. On April 22, 1992, a Department Examiner, Mr. Lee Winters, went to the office of the Barat Company to conduct the "examination" and "investigation". The Barat Company is operated out of a small office with two employees and a few filing cabinets. When Mr. Winters arrived, employees of the Barat Company were conducting business with two customers. Mr. Winters identified himself to the employees and informed them that he had been assigned to conduct an "examination" and "investigation" of the Barat Company. A Barat Company employee, Mr. Fred Vivar, said that he could not produce the company's records without express authorization from Mr. Roque Barat, that Mr. Roque Barat was out of the country, that he could not get in touch with Mr. Roque Barat at that moment, but that when he did get in touch with him, he would advise Mr. Roque Barat of Mr. Winter's desire to examine the company's books and records. Following a number of telephone calls over a period of several days, on May 1, 1992, Mr. Vivar advised Mr. Winters that he had received authorization from Mr. Roque Barat for the Department to inspect the books and records of the Barat Company. An appointment was made for the Department to inspect the books and records on May 6, 1992, beginning at 10:00 a.m. On May 5, 1992, a letter from an attorney representing the Barat Company was hand delivered to Mr. Winters. The letter included the following paragraph: It is my understanding that you have requested the opportunity to view the records of the above-referenced company, said inspection to take place on May 6, 1992. Please be advised that if this "inspection" is purportedly being done by your agency's authority, pursuant to F.S. 520.996, that no records will be produced absent compliance by your department with F.S. 520.994 including, but not limited to, the Barat Company exercising its right to challenge said subpoena. The Department concluded from the letter of May 5, 1992, that the Barat Company not only refused to produce records without a subpoena, but that, even if served with a subpoena, the Barat Company would resist compliance with the subpoena unless and until ordered to comply by a court. For that reason the Department did not pursue the issuance of a subpoena. Mr. Winters has been involved in over one hundred "examinations" under Chapter 520, Florida Statutes. In the course of those "examinations" there have been only two licensees that did not produce their records. Those two licensees were the Barat Company and another company known as Phase One Credit. Mr. Roque Barat is an officer and director of both Phase One Credit and the Barat Company. The license of Phase One Credit was revoked for its failure to produce its books and records. The refusal to produce the books and records of the Barat Company was occasioned by an effort on the part of Mr. Roque Barat to avoid payment of "examination" fees authorized by Section 520.996, Florida Statutes. In the summer of 1992, the Barat Company filed for bankruptcy, closed down its business operations, and is currently winding up the business.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Banking and Finance issue a Final Order in this case to the following effect: Dismissing the charge that the Barat Company has violated Section 520.995(1)(a), Florida Statutes; Concluding that the Barat Company has violated Sections 520.995(1)(f) and (g), Florida Statutes, as charged in the Administrative Complaint; Imposing a penalty consisting of: (a) an administra-tive fine in the amount of one thousand dollars, and (b) revocation of the Barat Company's license; and Ordering the Barat Company to cease and desist from any further violations of Chapter 520, Florida Statutes. DONE AND ENTERED this 23rd day of February, 1993, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of February, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-5620 The following are my specific rulings on the proposed findings of fact submitted by the parties. Proposed findings submitted by Petitioner: Paragraph 1: Rejected as constituting a conclusion of law, rather than a proposed finding of fact. Paragraphs 2, 3 and 4: Accepted in substance. Paragraph 5: Accepted in substance, with the exception of the last five words. The last five words are rejected as irrelevant to the issues in this case and as, in any event, not supported by clear and convincing evidence. Paragraph 6: Accepted in substance. Paragraph 7: First sentence accepted in substance. Second sentence rejected as irrelevant to the issues in this case. Paragraph 8: First sentence accepted. Second sentence rejected as inaccurate description of letter. (The relevant text of the letter is included in the findings of fact.) Last sentence rejected as subordinate and unnecessary evidentiary details. Paragraph 9: Rejected as irrelevant to the issues in this case. Paragraph 10: First two sentences rejected as irrelevant to the issues in this case. Last two sentences accepted in substance. Paragraph 11: Accepted in substance. Paragraph 12: First sentence accepted in substance. Second sentence rejected as irrelevant to the issues in this case. Paragraph 13: Accepted. Proposed findings submitted by Respondent: As noted in the Preliminary Statement portion of this Recommended Order, the Respondent's proposed recommended order was filed late. The Respondent's proposed recommended order also fails to comply with the requirements of Rule 60Q-2.031, Florida Administrative Code, in that it fails to contain citations to the portions of the record that support its proposed findings of fact. A party's statutory right to a specific ruling on each proposed finding submitted by the party is limited to those circumstances when the proposed findings are submitted within the established deadlines and in conformity with applicable rules. See Section 120.59(2), Florida Statutes, and Forrester v. Career Service Commission, 361 So.2d 220 (Fla. 1st DCA 1978), in which the court held, inter alia, that a party is not entitled to more than a reasonable period of time within which to submit its proposals. Because the Respondent submitted its proposals late and because those proposals fail to comply with the requirements of Rule 60Q-2.031, Florida Administrative Code, the Respondent is not statutorily entitled to a specific ruling on each of its proposed findings and no such specific findings have been made. (As noted in the Preliminary Statement, the Respondent's proposed recommended order has been read and considered.) COPIES FURNISHED: Ron Brenner, Esquire Office of the Comptroller 401 Northwest 2nd Avenue Suite 708-N Miami, Florida 33128 Louis J. Terminello, Esquire 950 South Miami Avenue Miami, Florida 33130 Michael H. Tarkoff, Esquire 2601 South Bayshore Drive Suite 1400 Coconut Grove, Florida 33133 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Copies furnished continued: William G. Reeves, General Counsel Office of the Comptroller The Capitol, Room 1302 Tallahassee, Florida 32399-0350
The Issue Whether Beacon Motors, Inc., is entitled to be established as an additional Chevrolet dealer in Miami, Dade County, Florida.
Findings Of Fact Petitioner, General Motors Corporation, Chevrolet Division, is a manufacturer of automobiles and trucks and is a "licensee" pursuant to Section 320.642, Florida Statutes. Petitioner, Beacon Motors, Inc., is a proposed Chevrolet dealer to be established at 12th Street and 89th Court Northwest, in Miami, Dade County, Florida. Respondents, Anthony Abraham Chevrolet, Co. (Abraham), Tropical Chevrolet, Inc. (Tropical), and Potamkin Chevrolet, Inc. (Potamkin), are existing Chevrolet dealers located in Dade County, Florida. Each has standing to protest the proposed new dealership. All other existing dealers in the community or territory who opposed the proposed dealership have withdrawn their contests. The area described in this record as the Sweetwater Community or Territory (Sweetwater Comm/Terr) is the appropriate geographical area to evaluate this case pursuant to Section 320.642, Florida Statutes. The Sweetwater Comm/Terr includes all of Dade County and part of the southern tip of Broward County, Florida. Typically, the area wherein a dealer maintains a competitive advantage over all other same line dealers is designated an "area of geographic sales and service advantage" (AGSSA). This advantage is presumed because the dealer is closer to consumers within the AGSSA than is any other same line dealer. In this case, Chevrolet is represented in eight of the nine AGSSAs which encompass the Sweetwater Comm/Terr. The proposed additional point would be located in AGSSA 15, currently un-represented by Chevrolet. AGSSAs 7 (Potamkin), 9 (Tropical), 11 (Abraham), 12 (Sun Chevrolet, Inc.), 15 (Proposed Point), and 16 (Grand Prize Chevrolet) comprise an area described as the Miami Multiple Dealer Area ("MDA"). The Miami MDA is the contractual Area of Primary Responsibility ("APR") for these dealers. The Miami MDA and AGSSA 15 are identifiable plots within the Sweetwater Comm/Terr. Chevrolet's share of industry registrations or its "market penetration" in Florida lagged behind Chevrolet's national market penetration for the period 1993 to 1995. In 1995, Chevrolet's national penetration was 16.43%, while its Florida penetration was only 12.18%. In 1995, Florida ranked 44th out of 50 states in Chevrolet market share. Vehicle preferences of Florida consumers for particular sizes and types ("product segments") accounted for only 1.39 percentage points of the 4.25 percentage-point shortfall between the Florida and national penetration rates in 1995. After adjusting for product segment preference, Florida's Chevrolet registration effectiveness compared to the expected average ranked 43rd out of 50. The shortfall between its Florida and national averages is due to deficiencies in Chevrolet's statewide dealer network. The principal deficiency with the dealer network, which would explain the shortfall between Chevrolet's penetration in Florida and its expected penetration, is dealer count, i.e., the number of Chevrolet dealers available to serve the public. Other possible deficiencies include dealer locations and operational performance. Chevrolet's share of competitive franchises in Florida is below national average. This factor correlates to Chevrolet's ability to achieve a reasonably expected market share. In roughly half of all states, Chevrolet's share of franchises equals or exceeds national average. Florida, on the other hand, ranks 46th of 50 states in Chevrolet franchises as a percentage of industry franchises. In this case, the national average (the sum of all adequate, inadequate, and non-represented markets) adjusted for local product segment preferences in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15, provides a reasonable standard for measuring the performance of the Chevrolet dealer network in the three areas. Mr. Anderson's assessment in this regard has been deemed persuasive. Using national average adjusted for local product segment preferences produces an expected penetration (hereinafter "expected penetration" or "expected average") in 1995 of 14.07% for the Sweetwater Comm/Terr, 13.96% for the Miami MDA, and 14.31% for AGSSA 15. Actual Chevrolet penetration, however, was only 8.97% in the Sweetwater Comm/Terr, 7.86% in the Miami MDA, and 7.64% in AGSSA 15. The shortfall between expected and actual penetration described above demonstrates the level of the dealer network inadequacy in these areas. From 1993 to 1995, Chevrolet's registration effectiveness fell below expected average in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15. The disparity in performance noted above is not due to a disproportionately high percentage of Hispanics. While the Sweetwater Comm/Terr has a significant Hispanic population, it cannot be concluded that a domestic manufacturer will not perform well in this market. Ford, a domestic competitor of Chevrolet, exceeded or very nearly met its expected penetration from 1993 to 1995 in AGSSA 15 and the Sweetwater Comm/Terr, notwithstanding their large Hispanic populations. Nationally, Chevrolet performs much better against Ford than it does in the Sweetwater Comm/Terr, AGSSA 15, or the Miami MDA. If Chevrolet performed as well as Ford in the Sweetwater Comm/Terr, Chevrolet would have registered 5,364 more vehicles in 1995. Chevrolet currently has 8 dealers in the Sweetwater Comm/Terr; Ford has 10. The applicant for the proposed point, Mr. de la Cruz, who is a Cuban-born Hispanic, acquired Sunshine Ford in Miami in 1993. Since 1993, Sunshine Ford has risen from bankruptcy to become a top Ford dealer in Miami, selling mostly to Hispanics. Mr. de la Cruz also owns Miami Honda. Sunshine Ford and another Ford dealer in Miami, Machado Ford, which is also Hispanic owned, outsell Miami Honda every month in essentially the same market area. Ford also outsells Honda in Hialeah which has large Hispanic population. Mr. de la Cruz, who has actual experience with this market, determined that Hispanic buying preferences are driven more by model of car than by whether the car is an import or a domestic. Potamkin sells most of its Chevrolets to Hispanics. Of the eight Ford dealers in Miami, including the top two in sales, five are Hispanic owned. Of the top three Honda dealers in Miami, two are Hispanic owned, and the third, which is partially Hispanic owned, is managed by an Hispanic. None of the existing Chevrolet dealers in the Sweetwater Comm/Terr is Hispanic. There is no evidence in the record that Hispanics as an ethnic group have an inherent bias in favor of imports against domestics, including Chevrolet. Dade County has been a growing market through 1995, and the demographics forecast that it will continue to grow through the year 2000. It is projected that the population in AGSSA 15 will grow at a rate of over 6% with households growth over 12% from 1995 to 2000. Household growth in the Sweetwater Comm/Terr is to the west along the north/south corridor of the community. Chevrolet's current dealer network in Dade County is located mostly to the east along the ocean side of the market. Abraham and Potamkin are located in areas of high household and population density. Typically, such areas support sales and service opportunity. The population and household density south of the proposed location is also high. Since 1980, the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15 have experienced dramatic growth in total population, driver-age population, and households. Increases in households and population may indicate an increase in car-buying potential. During the same time frame, however, Chevrolet's dealer count in the Sweetwater Comm/Terr has decreased from ten to eight. A comparison of Chevrolet's dealer count and population in Dade County as a percentage of national averages of those factors suggests that Chevrolet's dealer count for this area has lagged behind its population growth. Considering only population, Chevrolet would need two more dealers in Dade County. AGSSA 15 and the Sweetwater Comm/Terr have a good distribution of income levels with very few pockets of extremely low or extremely high income. Because a majority of the population in the Sweetwater Comm/Terr and AGSSA 15 have incomes in the range of the median income of the average Chevrolet buyer, lack of income does not contribute to Chevrolet's poor performance in these areas. Employment trends in Dade County from 1980 through 1995 also reflect growing opportunity to make new car sales. This growing opportunity, coupled with Chevrolet's continued decline in performance, suggest that it is the dealer network causing a problem, and not the local economy or economic variables associated with income. Retail registrations have grown in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15 from 1991 to 1995. Registrations per dealer is a measure of the level of opportunity available in a market. Without the proposed dealer, the existing Chevrolet dealer network in the Sweetwater Comm/Terr and the Miami MDA has the second largest opportunity in the entire State of Florida. Even with the addition of the proposed dealer, the Miami MDA still remains the second largest opportunity in the State of Florida, while the Sweetwater Comm/Terr will have the fourth highest opportunity in the State of Florida. Other factors which may be beyond the control of the dealers, such as product availability, do not explain the poor performance demonstrated in this record. Additionally, share of voice, a measure of advertising, cannot explain the performance problems demonstrated in this record. Although import dealers utilize aggressive advertising, it cannot be concluded that such efforts produce increased sales. The quality of the advertising, the market that is targeted, the message conveyed, and the timing of the advertisement all play a role in determining the effectiveness of advertising. Other factors which affect advertising effectiveness include the appearance of the dealership, word of mouth from other people as to their experience with the dealership, and the community presence of the dealer. The purpose of advertising is to create awareness and consideration. If a manufacturer already has awareness and consideration, then more advertising may not increase its market share. Share of voice does not necessarily correlate to market share. For example, Chevrolet's factory expenditures for advertising in South Florida increased from 1993 to 1995. And, although the South Florida Chevrolet Dealer Association raised its contribution to the dollars being spent on advertising directed to the Hispanic market, Chevrolet's market share declined. Finally, other factors that might explain Chevrolet's poor performance (such as brand preference, product quality, product design, changes in the economy, age, and income variations of consumers purchasing vehicles) in the same segments and education levels have been accounted for in the segment adjustment process. The growth in households, population and registrations in the study areas, coupled with a decline in Chevrolet's dealer count, the strong correlation between share of franchises and market share, and the inability of existing dealers to adequately penetrate the market in AGSSA 15, explain why Chevrolet is performing poorly in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15. The existing dealer network has failed to adequately serve consumers in those areas. Given the need to add another dealer to the Sweetwater Comm/Terr dealer network and the fact that there is no dealer in AGSSA 15, the best solution to Chevrolet's representation problem is to add another dealer to AGSSA 15. The proposed Beacon site is a good location for a dealership because of its high visibility from the Dolphin Expressway, which is the main east/west expressway; its substantial frontage on 12th Street; and its location in an area that is becoming an auto cluster or row. Based upon Mr. Anderson's assessment of the gross registration losses together with the insell from outside dealers, which is accepted, there should be enough lost opportunity available in this market to ensure that the proposed dealer will not take sales from existing dealers. Further, it is concluded that under these conditions a concept known as stimulated competitive response should benefit the surrounding Chevrolet dealers. By enhancing their competitive efforts, either by advertising more, improving their service departments, carrying more inventory, cutting their prices, or by having better salesmen, they will gain sales by responding positively to enhanced competition. Abraham and Potamkin are profitable Chevrolet dealerships whose financial well-being will not be threatened by the proposed new point. The addition of the proposed dealer in the Sweetwater Comm/Terr will increase customer convenience for both sales and service. Consumers should also benefit from the increased level of competition among dealers who should offer consumers more selection and better prices and service for their vehicles needs. Raising competition and increasing brand awareness for Chevrolet in the marketplace should benefit the existing dealers. Adding the proposed dealer would give Chevrolet an opportunity to correct one of its dealer deficiencies by increasing its number and improving its location. Further, Chevrolet would have an Hispanic dealer/operator, which it currently does not have. Having an Hispanic dealer with strong business ties to the region would be a favorable cultural development for the community. Adding the proposed dealer would serve the public interest by increasing employment, taxes, and money being spent in the area. Increased convenience serves the public interest. Adding a minority dealer would serve the public interest as expressed in the state franchise law. The proposed dealership will fit in well with the mix of commercial and industrial uses in the proposed area, and it will generate involvement by the dealer in the community and charitable affairs in the area. The proposed location is not so close to Abraham that distance alone must preclude the addition of the new point. The addition of Beacon should benefit consumers and public interest by providing more competitive and convenient sales and service to a growing population. The addition of an Hispanic dealer to the Chevrolet family will direct sales to a market which is largely Hispanic and will continue community involvement by this dealer. The existing dealers' abilities to perform their obligations under their dealer agreements should not be impaired by the addition of a new dealer at AGSSA 15. Based upon the demographic factors of the community or territory, it is expected the market penetration which is currently below reasonably expected levels, would be improved by an additional dealer at AGSSA 15. Chevrolet does not deny its existing dealers opportunities for reasonable growth, market expansion or relocation. Given the market opportunity in this community or territory, all dealers should benefit from the establishment of an additional point. Chevrolet did not attempt to coerce existing dealers into consenting to an additional dealership. With the addition of the Chevrolet point at AGSSA 15, the distance, travel time, and accessibility for this line-make will be improved. Other dealers are closer together than the proposed site is to its nearest Chevrolet competitor (Abraham) without adversely affecting one another. It is expected Chevrolet dealers will react similarly. Although Abraham and Potamkin have failed in specific obligations of their dealer agreements, they are in substantial compliance with such agreements. The existing dealership network has failed to perform at a reasonably expected level. The economic and marketing conditions for this community or territory warrant an additional Chevrolet dealer at AGSSA 15. While Chevrolet has begun efforts to improve performances in the Sweetwater Comm/Terr, the additional dealer at AGSSA 15 will best address the inadequacy of the dealer count in this market.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the additional dealership in AGSSA proposed by Beacon Motors, Inc., be granted. DONE AND ENTERED this 5th day of September, 1997, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1997. COPIES FURNISHED: Charles J. Brantley, Director Division of Motor Vehicles Neil Kirkman Building, Room B439 Tallahassee, Florida 32399-0500 Enoch Jon Whitney, General Counsel Division of Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Michael J. Alderman, Esquire Division of Motor Vehicles Neil Kirkman Building, Room A432 Tallahassee, Florida 32399-0500 James Williams, Esquire Michael A. Gruskin, Esquire General Motors Corporation Post Office Box 33122 Detroit, Michigan 48202 Fred J. Lotterhos, III, Esquire Scott D. Makar, Esquire Holland & Knight, LLP 50 North Laura Street, Suite 3900 Jacksonville, Florida 32202 Manual Kadre, Esquire de la Cruz Companies 3201 Northwest 72 Avenue Miami, Florida 33122 James D. Adams, Esquire A. Edward Quinton, III, Esquire Adams & Quinton, P.A. Camino Real Centre 7300 West Camino Real Boca Raton, Florida 33433 Gerald B. Wald, Esquire Murai, Wald, Biondo & Moreno 9th Floor Ingraham Building 25 Southeast 2nd Avenue Miami, Florida 33131
