The Issue The issues presented are whether Respondent, Smallwood Design Group/Smallwood Landscape, Inc. (Smallwood or the company), owes Petitioner $12,817.17 for agricultural products and, if so, whether the surety is liable for any deficiency.
Findings Of Fact Petitioner is a Florida corporation licensed by the Department as a “dealer in agricultural products,” within the meaning of Subsection 604.15(2), Florida Statutes (2006) (agricultural dealer).1 The license number and business address of Petitioner are 68954 and 3930 14th Street North, Naples, Florida 34103. Smallwood is a Florida corporation licensed by the Department as an agricultural dealer pursuant to license number 68513. The sole shareholder and registered agent for Smallwood is Ms. JoAnn Smallwood. The business address for Smallwood is 2010 Orange Blossom Drive, Naples, Florida 34109. Hartford Fire Insurance Company (Hartford) is the surety for Smallwood pursuant to bond number 21BSBCI1473 issued in the amount of $100,000 (the bond). The term of the bond is December 9, 2005, through December 9, 2006. Petitioner conducts a garden center business that, in relevant part, sells agricultural products, defined in Subsection 604.15(1). Petitioner sells products at wholesale and retail to businesses and consumers in the Naples area. Smallwood purchased agricultural products from Petitioner from 1983 until sometime in 2006. The purchases were made in the ordinary course of Smallwood's architectural landscape construction and horticultural management business (landscape business). The terms of purchase required payment from Smallwood within 30 days. Any monthly balance that remained unpaid after 45 days was subject to interest at a monthly rate of 1.5 percent and an annual rate of 18 percent.2 With one exception, Smallwood paid Petitioner within 60 days of delivery. The exception to Smallwood's payment history with Petitioner is the subject of this proceeding. From May 11 through September 26, 2006, Smallwood did not pay Petitioner $12,817.17 for 66 invoices involving 440 items (pallets or pieces) of sod that Petitioner delivered to Smallwood.3 The sod consisted of varieties identified in the record as: Floratam, Seville, Zoysia, Croton, and Fountain Grass.4 Smallwood does not deny that Petitioner should be paid $12,817.17. However, Smallwood alleges that Petitioner has filed its claim against the wrong party. Smallwood alleges that, on June 13, 2006, another corporation purchased the assets of Smallwood, including the right to conduct the landscape business in the name of Smallwood, and assumed Smallwood's liability to Petitioner for any prior purchases. Subsequent purchases are allegedly the obligation of the successor corporation. Ms. Smallwood filed a Response to Amended Claim with the Department on January 7, 2007 (the Response). The Response identifies the successor corporation as Spartan Partners, Inc., an Illinois corporation, located at 350 Pfingsten Road, Suite 109, Northbrook, Illinois 60062 (Spartan), and alleges that Petitioner’s claim is not valid because: [Smallwood] sold its assets and has not been engaged in business since June 13, 2006. Specifically, pursuant to an Asset Purchase Agreement, [Smallwood] sold its assets (including its name) to Spartan . . . , and thereafter, Spartan continued operating the business for a period of time and then sold some of the assets and ceased operations. (emphasis supplied) Smallwood . . . does not have knowledge of the accounts of Spartan, which continued doing business under the Smallwood name after the sale of assets on June 13, 2006. If items purchased from [Petitioner] have not been paid for, Spartan is the responsible and liable party. (emphasis supplied) The Response filed in January of 2007 was not the first time Petitioner had seen the Smallwood defense. Smallwood sent Petitioner a form letter, dated September 14, 2006, that: contained a salutation addressing “All Vendors of [Smallwood],” referenced the "Termination of Credit Arrangements and Guaranties," and was signed by Ms. Smallwood on behalf of Smallwood (notice letter). The notice letter provided in relevant part: The purpose of this letter is to advise you that the assets of [Smallwood], including the company name, were sold to Spartan . . . as of June 13, 2006. Since [Smallwood] sold all of its assets, that corporate entity is no longer actively engaged in any business. The business known as [Smallwood] is now conducted by [Spartan]. (emphasis supplied) As a result of the sale of assets and the fact that [Smallwood] is no longer actively engaged in business, the relationship or agreement you had with that particular corporate entity is hereby terminated and of no further force and effect. If you are continuing to do business with [Spartan], you should, if you have not done so already, make or confirm your business arrangements with that entity. Furthermore, if I signed any document that could be construed as a personal guaranty of payment for any obligations of [Smallwood], please consider this letter to be a formal revocation, cancellation and termination of any such document. (emphasis supplied) Petitioner's Exhibit 3 (P-3). Part of the Smallwood defense is supported by the evidence. Smallwood did sell its assets to Spartan. The Asset Purchase Agreement between Smallwood and Spartan was admitted into evidence as Petitioner’s Exhibit 2 (P-2). The Agreement shows that Spartan purchased the assets of Smallwood on June 13, 2006, for $1.030 million, of which $883,602.11 was allocated to accounts receivable due the seller. The seller is identified in the Asset Purchase Agreement as Ms. Smallwood and the company. The seller received $895,500.00 in cash at the closing. The remaining part of the Smallwood defense involves two allegations. First, Smallwood alleges that Spartan assumed a liability of $3,834.43 for 23 purchases of sod by Smallwood from May 11 through June 13, 2006. Second, Smallwood alleges that Spartan owes Petitioner $8,982.74 for 43 purchases of sod from June 14 through September 26, 2006. If the evidence were to support both allegations, the result may effectively deprive Petitioner of an administrative remedy. The corporate documents attached to the Asset Purchase Agreement do not show that Spartan complied with the bond and license requirements in Subsection 604.19 prior to conducting the landscape business in the name of Smallwood. Spartan sold the assets needed to satisfy a judgment against Spartan, Spartan is a foreign corporation, and Spartan no longer conducts the landscape business in Florida. It would be unnecessary to determine whether Smallwood or Spartan is liable for the $12,817.17 if: the terms of the bond were to allow an assignment of the bond to Spartan, and the Asset Purchase Agreement were to show that the bond was one of the contracts assigned to Spartan or one of the assets purchased by Spartan. The bond would cover both Smallwood and Spartan in such a case, and a determination of which shell hid the proverbial pea would be moot. A copy of the bond did not find its way into the record. Petitioner did not submit a copy of the bond for admission into evidence, and the Department did not transmit a copy of the bond when the agency referred the matter to DOAH. The copy of the Asset Purchase Agreement admitted into evidence does not include a schedule of the contracts assigned to Spartan or a schedule of the assets sold to Spartan. A finding that Spartan expressly assumed Smallwood's liability to pay Petitioner $3,834.43 for sod delivered from May 11 through June 13, 2006, is not supported by the evidence. In relevant part, the Asset Purchase Agreement provides: At Closing, Purchaser shall assume those liabilities of Company specifically defined and listed on the Schedule 1.6(b) attached hereto (“Assumed Liabilities”), and Purchaser shall not assume, incur, guarantee, or be otherwise obligated with respect to any liability whatsoever of Company other than as so stated. . . . (emphasis not supplied) Purchaser shall cause Stockholder [Ms. Smallwood] to be released as guarantor or obligor under the Assumed Liabilities. . . . P-2 at 2. Schedule 1.6(b) is missing from the copy of the Asset Purchase Agreement that was admitted into evidence. Even if a complete exhibit were to show that Spartan assumed Smallwood's liability to Petitioner, neither of the respondents submitted evidence or cited legal authority to support a finding that such an assumption released Smallwood from its obligation to Petitioner or otherwise extinguished that obligation. Nor is there any evidence that Petitioner acquiesced in an assumption by Spartan or otherwise released Smallwood from the obligation to pay Petitioner for sod delivered prior to June 13, 2006. The remaining allegation in the Smallwood defense is that Spartan, rather than Smallwood, purchased the sod Petitioner delivered between June 13 and September 26, 2006. It allegedly is Spartan that owes Petitioner $8,982.74. The remaining allegation implicitly argues that, after June 13, 2006, Smallwood was no longer a viable corporation with the legal capacity to purchase sod from Petitioner because the asset sale resulted in what courts describe as a “de facto merger” of Smallwood into Spartan or a “mere continuation of business” by Spartan. The law pertaining to these two doctrines is discussed in the Conclusions of Law, but certain factual findings are relevant to both doctrines. The Smallwood defense is a mutation of the doctrines of "de facto merger" and "mere continuation of business," either of which have been utilized by courts to hold a successor corporation liable for the obligations of the corporate predecessor. The Smallwood defense takes the relevant judicial doctrines a step further. The defense implicitly assumes that if a "de facto merger" or "mere continuation of business" occurred as a result of the asset sale, Smallwood "merged" into Spartan, and Smallwood was no longer a viable corporate entity with the legal capacity to purchase sod from Petitioner. Two facts preclude the application of either judicial doctrine to the sale of Smallwood's assets. First, there is no commonality or continuity of ownership interests between Smallwood and Spartan. Spartan did not acquire some or all of the stock of Smallwood, and Ms. Smallwood did not become a shareholder in Spartan. The two corporations do not share common directors or officers. The second fact involves the purchase price paid for the Smallwood assets. The purchase price does not suggest a cozy relationship between Smallwood and Spartan that otherwise may have persuaded a court to disregard the separate corporate existence of Smallwood after the asset-sale. No evidence suggests that the price paid was not the fair market value of the Smallwood assets negotiated at arms length between a willing buyer and a willing seller. Smallwood remained in existence as a viable Florida corporation after the asset-sale on June 13, 2006. No legal impediment prevented Smallwood from purchasing sod from Petitioner, and Smallwood had the legal capacity to do so. The purchases may have breached the terms of the Asset Purchase Agreement, but the legal capacity of Smallwood to purchase sod from Petitioner is not driven by contractual arrangements between Smallwood and private third parties. Smallwood remained in existence as a Florida corporation at least through January 7, 2007, when Ms. Smallwood filed the Response with the Department. The Response does not allege as a factual matter that Smallwood had been liquidated and was no longer in existence as a Florida corporation; or that the $895,500 the seller received for the sale of assets was not in corporate solution and available to pay invoices submitted by Petitioner. The Response merely states that Smallwood was not actively engaged in the conduct of business. Smallwood was actively engaged in the landscape business after June 13, 2006. Smallwood maintained its customary banking account; continued to issue checks imprinted with the company name; paid Petitioner for goods that Petitioner delivered to Smallwood before May 11, 2006; accepted without objection or disclaimer 43 invoices totaling $8,982.74 that were billed to the company for sod delivered to the company at the company's business address; issued the notice letter to its creditors; and purported to terminate credit agreements and guarantees. Prior to receiving the notice letter, Petitioner had no reason to believe that Smallwood was not conducting the landscape business. The face of Smallwood remained unchanged. Ms. Smallwood continued to operate the landscape business pursuant to a long-term employment contract with Spartan. Spartan signed Mr. Keith Whipple, another key employee of Smallwood, to a similar contract. Copies of the employment contracts are attached to the Asset Purchase Agreement.5 Between June 13 and September 14, 2006, Ms. Smallwood continued to sign Smallwood checks imprinted with the company name and issued on the Smallwood business account. Ms. Smallwood signed the checks as the authorized representative of Smallwood. Smallwood accepted 35 invoices issued to the company for $7,007.13 and deliveries of the sod at the company's customary business address. The notice letter was dated September 14, 2006, but Petitioner received the letter on or about September 26, 2006. Between September 14 and 26, 2006, Smallwood accepted eight invoices for sod purchased for $1,975.61. The evidence does not show when Smallwood actually mailed the notice letter, and Petitioner did not stamp the notice letter with the date it was received. The chief operating officer for Petitioner testified at the hearing but does not recall the date Petitioner actually received the notice letter. However, the witness testified that Petitioner stopped all sales to Smallwood immediately upon receipt of the notice letter to allow time for Petitioner to complete a credit check of Spartan. The trier of fact finds the relevant testimony to be credible and persuasive. The failure to timely disclose the identity of Spartan as a successor entity operating in the name of Smallwood misled Petitioner, if not other creditors.6 Between June 13 and September 26, 2006, Petitioner extended credit for purchases of $8,982.74 before Petitioner had the opportunity to ensure the credit worthiness of Spartan and, if desired, to obtain a written guarantee from the individual officers and shareholders.7 Smallwood, rather than Spartan, purchased sod from Petitioner from May 11 through September 26, 2006. Smallwood owes Petitioner $12,817.17. Hartford does not claim that the terms of the bond do not ensure payment of the purchases made by Smallwood. Hartford’s sole objection in its PRO is that the bond proceeds must be paid directly to the Department rather than to Petitioner. Hartford correctly cites Subsection 604.21(8) in support of its objection.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order directing Smallwood to pay $12,817.17 to Petitioner, and, in accordance with Subsection 604.21(8), requiring Hartford to pay over to the Department any amount not paid by Smallwood. DONE AND ENTERED this 15th day of August, 2007, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 2007.
The Issue Live Oak Plantation No. 1, Ltd. (Live Oak) through Stanford Development Group filed application number 4-117-0464AC-ERP with the St. Johns River Water Management District (SJRWMD) in April 1997, seeking a conceptual approval environmental resource permit. After SJRWMD issued its notice of intent to grant the permit, the Petitioners filed their petitions challenging the intended agency action. The central issue in this proceeding is whether the permit should be issued pursuant to Chapter 373, Florida Statutes, and Chapters 40C-4, 40C-41 and 40C-42, Florida Administrative Code, including specific provisions of the Applicant's Handbook adopted by rule and identified in the parties' prehearing stipulation filed July 8, 1998.
Findings Of Fact The Parties Michael D. Rich is a former resident of Seminole County who lived on the property contiguous to the Live Oak site. He is the legal representative of his mother who still resides on the property and he is president of C-RED. C-RED is a Florida non-for-profit corporation with members from the City of Oviedo and unincorporated areas of Seminole County who are interested in assuring that development is done without improper impact on the taxpayers and the rural character of the area. Mr. Griffin is a resident of Seminole County living on Horseshoe Lake, which adjoins the Live Oak site. Live Oak is a Florida Limited Partnership which intends to develop the project that is the subject of this proceeding. SJRWMD is a special taxing district created by Chapter 373, Florida Statutes, and charged with responsibility for various permitting programs, including the one at issue here. The Project Live Oak proposes to develop a large multi-phased single family project with two small commercial sites. The project, to be known as "Live Oak Reserve," will be on approximately 1,041 acres on the south side of county road 419 in southeastern Seminole County in the City of Oviedo. The project site is located near the confluence of the Econlockhatchee River (Econ River) and Little Econlockhatchee River. The Live Oak Reserve property includes approximately half of Horseshoe Lake, as well as a small creek, Brister Creek, which flows from Horseshoe Lake across the property to the Econ River. The Econ River, a class III water and designated an Outstanding Florida Water (OFW), crosses the southwestern corner of the Live Oak Reserve property. The Econ River is the receiving water body of Live Oak Reserve. The Live Oak Reserve property is located within the Econlockhatchee River Hydrologic Basin. A portion of the Live Oak Reserve property lies within the Econlockhatchee River Riparian Habitat Protection Zone (RHPZ). The Live Oak property lies within a 1,500 acre drainage basin; approximately 450 acres off-site drain through Live Oak Reserve. Horseshoe Lake has approximately 500 acres that drain through it, then through the wetlands and into the Econ River. Historically, the Live Oak Reserve property has been used for agricultural practices, including siliviculture and cattle production. Some areas of the property have been logged and some areas have been converted to pasture. Cattle have grazed in wetlands, thereby decreasing the amount and diversity of groundcover vegetation on portions of the property. Additionally, on-site drainage ditches have had a major impact on the hydrological characteristics of the wetlands on the property, including the reduction of surface water elevations. The Live Oak Reserve property is currently vacant and undeveloped. The Application Process In April 1997, Live Oak submitted to the SJRWMD an Environmental Resource Permit Application, N4-117-0464AC-ERP, for conceptual approval of a master stormwater and floodplain management system for the development of Live Oak Reserve. A conceptual permit is utilized in complex multi-phased projects which are expected to have a longer build-out period than a single phase project. A conceptual permit does not allow any construction activity, but provides the outline for final engineering calculations and construction drawings. Further permits are required before any sitework or construction is undertaken. In conjunction with its permit application Live Oak submitted detailed technical information, including but not limited to charts, maps, calculations, studies, analyses and reports necessary to show that the conceptual development plan was consistent with the permitting criteria of the SJRWMD found in Chapter 40C-4, Florida Administrative Code, and the Applicant's Handbook. The master plan for the Live Oak project was designed by Donald W. McIntosh Associates, Inc.(McIntosh) using input from: (a) land planners who were required to consider issues related to the comprehensive plans, open space requirements and related issues; (b) landscape architects who were responsible for the proposed park systems and landscape treatments throughout the project; (c) geotechnical engineers responsible for evaluating the soil and groundwater conditions; and (d) environmental consultants, Modica and Associates, who were responsible for wetland delineation and flagging and wildlife surveys. The first version of the Live Oak Reserve site plan prepared for the project by McIntosh included development of all upland areas and filling several portions of the mixed forested wetlands to maximize lot yield. This included development of the upland adjacent to the Econ River and development of an upland parcel on the west side of the river. After much consideration and revision by the developer and its consultants, a site plan was developed which minimizes impacts to wetlands and other surface water functions, particularly as it relates to the Econ river, and maximizes the benefits to wildlife by establishing a series of wildfire corridors across the site. The final plan submitted to the SJRWMD at the time of the application includes the preservation of the entire Econ River floodplain and two adjacent developable upland areas, a large mixed hardwood forested wetland which traverses the site from the northeast to the southwest, and upland and wetland areas in the southern portion of the site that provide a corridor between a large undeveloped parcel to the east and the Econ River to the west. After submission of its application, Live Oak participated in a review process with SJRWMD staff to further eliminate and reduce wetland impacts. Specifically, SJRWMD requested changes to the site plan which included reductions in impacts to various wetlands and additional buffers to other wetlands. Several changes to the site plan were made to accommodate the SJRWMD's concerns relating to reducing impacts to wildlife, particularly the Florida sandhill crane. The reductions in wetland impacts and other design changes resulted in a revised site plan which the SJRWMD staff recommended to the district's governing board for approval. The staff recommendation of approval, with associated conditions, is set forth in Technical Staff Report dated February 10, 1998. On July 14 and 16, 1998, the SJRWMD revised the technical staff report to reflect changes to the project design and mitigation plan, as well as to add conditions inadvertently omitted from the earlier technical staff report. Condition no. 8 was mistakenly added to the July 16 technical staff report and by stipulation of all the parties, this condition was removed from the technical staff report. (See transcript, page 521) Stormwater Analysis McIntosh utilized information from different sources in preparing the stormwater calculations submitted to the SJRWMD. The developer provided information regarding proposed lot sizes and types so as to determine the impervious surface area for developable lots. The geotechnical consultants, Universal Engineering Sciences, (Universal) provided McIntosh with preliminary, interim, and final geotechnical reports, soil boring logs, and groundwater table estimates. The input from Universal primarily involved the establishment of seasonal high and seasonal low groundwater elevations for the pre-development and post-development conditions on the site. The estimated seasonal high and seasonal low groundwater levels refer to the range of levels the groundwater is expected to attain on the site during the wetter (high) and dryer (low) periods of a normal year. These elevations were then utilized in the stormwater calculations prepared by McIntosh. Topography on Live Oak Reserve consists of elevations ranging from 48 feet to 25 feet NGVD. In its pre-development condition, Live Oak Reserve has 6 distinct drainage patterns. Off-site drainage basins also contribute runoff to the property. The conceptual post-development design will modify the project's on-site drainage patterns into 28 drainage basins. At the request of the SJRWMD, Live Oak prepared seasonal high and seasonal low groundwater elevation contour maps. Live Oak performed approximately 200 borings on the Live Oak Reserve property. From the borings, Live Oak determined the soil types present and the existing groundwater elevations. Live Oak also used the borings to assist in establishing the estimated seasonal groundwater elevations. With the exception of several shallow borings in wetland areas, all borings were taken by split spoon sampling. Seventy-nine piezometers were installed next to bore holes to measure groundwater levels. In establishing the seasonal high groundwater levels, Live Oak evaluated the groundwater level at the time of boring; the time of year the groundwater level was measured; the time span of the investigation and its relationship to normal rainfall patterns; soil indicators such as coloration, mottling, and particle size; site specific topography; USGS quadrangle maps depicting site topography; Soil Conservation Service (NSCS) estimates of the expected seasonal high groundwater levels; and vegetative indicators. It is not essential to evaluate rainfall data when determining the seasonal water levels because the historical seasonal water levels are recorded in the soils. The estimated seasonal high groundwater level can be determined during the dry season. The range of the estimated seasonal high groundwater level on the Live Oak Reserve property is from standing water on the ground to five feet below the existing grade. In evaluating Live Oaks estimated seasonal groundwater levels, the District reviewed Live Oak's submittals, and also reviewed the NSCS soil survey to confirm that the estimated seasonal groundwater levels were reasonable. Wetland seasonal surface water levels were estimated using biological indicators such as lichen lines, buttressing, water lines, and sand lines. Lichen lines were apparent on the Live Oak Reserve properly and reflective of normal rainfall conditions. Seasonal high water levels are expected at the end of September. Seasonal low water levels are expected in May. The wetland surface water levels encountered in January 1997, when the seasonal levels were estimated, were neither exceptionally low nor exceptionally high. The water levels were representative of a period of normal rainfall. Water quantity attenuation and stormwater treatment will be accomplished through wet detention ponds and vegetative natural buffers. Due to the location of Live Oak Reserve in the Econlockhatchee River Hydrologic Basin, special basin criteria apply this project. The special basin criteria, also known as the "Econ Rule," is more stringent than the stormwater management criteria set forth in Applicant's Handbook sections 9 and 10. The special basin criteria, as it relates to the surface water management systems, requires Live Oak to control its discharge from two design storms: the mean-annual design storm, and the 25-year, 24-hour design storm. A design storm is a hypothetical storm with a predetermined rainfall amount, a predetermined intensity and 24 hour-duration. Designing the system to control the peak discharge during the mean-annual storm will prevent erosive velocities that would be harmful to Brister Creek and the Econ River. The conceptually proposed system is designed to limit peak rates of discharge to those of pre-development for the mean-annual and the 25-year, 24-hour design storm events. The system, as conceptually proposed, will limit post-development discharge rates to the same as or lower than the pre-development discharge rates. Each stormwater management area will pre-treat its respective post-development basin's pollution volume prior to discharge downstream. Live Oak proposes to use vegetative natural buffers for a portion of the rear lots within the post- development condition to fulfill treatment requirements. Live Oak Reserve is designed for the retention of the first inch of runoff from the total area of the post-development basins or the total runoff from 2.5 inches times the post- development basin's impervious area, whichever is greater. Furthermore, because Live Oak Reserve conceptually discharges to the Econ River, an OFW, the system is designed to provide an additional 50 percent of treatment. For discharges to an OFW the system must treat to a 95 percent removal standard. The outfall structures within each wet detention system are designed to draw down one-half the required treatment volume between 60 to 72 hours following storm event, but no more than one-half of this volume will be discharged within the first 60 hours. Each wet detention pond is designed with a permanent pool with a 31.5-day residence time during the wet season. Residence time is the time that the water within a pond will stay in the pond prior to discharge. The residence time includes the 14-day residence time required of all wet detention systems, an additional 50 percent residence time (7 days) for discharging into an OFW, for a total of 21 days. In addition, each system has been designed to provide an additional 50 percent residence time (10.5 days) because Live Oak has elected not to plant littoral shelves within each pond. As conceptually designed, Live Oak reserve's post- development drainage pattern will have no effect on the drainage patterns of Lake Eva or Horseshoe Lake. As conceptually designed, Live Oak Reserve's post-development drainage pattern will reduce the rate of flow during the storm events, which is a positive effect on the drainage pattern of Brister Creek. The reduction in flow velocity reduces the erosiveness of the storm. Live Oak has demonstrated that the 25-year and 100- year, 24-hour storm events' post-development peak stages for Lake Eva and Horseshoe Lake are not changed as a result of this conceptual project. Based upon Live Oak's calculations, the Live Oak Reserve project will not cause any restriction to the flow of water as it outfalls from Horseshoe Lake to Brister Creek. The conceptual wet detention systems within Live Oak Reserve are proposed to have a maximum depth of 12 feet. However, Live Oak requested consideration at the time of final engineering for each phase of development to maximize selected stormwater management areas for maximum depths of up to 25 feet. That consideration will be made in subsequent application review and is also subject to the City of Oviedo's approval. The conceptual wet detention ponds are designed with an average length to width ratio of two to one, and are configured to minimize the occurrence of short circuiting. As such, they will meet the criteria of the applicable rules. Tailwater conditions for the project were based on published flood elevations. Live Oak analyzed the tailwater condition for the mean-annual, 25-year 24-hour, and the 100-year 24-hour design storms. Live Oak completed a 100-year flow analysis for Live Oak reserve. Pre-development floodplain elevations for Lake Eva, Horseshoe Lake, and the Econ River were referenced from previous studies (Seminole County) and the Federal Emergency Management Agency. Live Oak determined that the 100-year floodplain elevations effecting Live Oak Reserve to be 40.2 feet NGVD from Horseshoe Lake, 45.0 feet NGVD for Lake Eva, and 32.5 feet NGVD for the Econlockhatchee. The U.S. Geological Survey (USGS) has produced a map of flood prone areas which indicates that the elevation delineating the flood prone area for Horseshoe Lake is 40.14, not 40.2, and for Lake Eva is 43.38, not 45.0. Therefore, the area indicated by USGS as the flood prone area is included in the 100-year floodplain analysis of Live Oak. Live Oak, in its conceptual design, has demonstrated that it will provide compensating storage for any encroachments into the 100-year floodplain. Live Oak has conceptually proposed to fill approximately 18.69 acre- feet within the 100-year floodplain. Live Oak will compensate the filling of the floodplain by providing a cut with the 100-year floodplain of approximately 27.09 acre-feet. By meeting the criteria in the "Econ Rule" the project conceptually meets all other relevant standards for stormwater management as the basin rule is more stringent. Live Oak has provided reasonable assurance that the development will not affect surrounding property or raise stagewater elevations of any surrounding property; the development will not displace the 100- year flood plain area; and the development will not restrict or impede the natural flow from Horseshoe Lake. Wetland and Wildlife Impacts Approximately 430 acres of wetlands cover the project site. Two general types of wetlands on found on the Live Oak reserve property: herbaceous wetlands and forested wetlands. Twenty-three herbaceous wetlands are classified as freshwater marshes. These wetlands range in size from 0.2 acre to over 8 acres. Wetlands 10 and 16, the largest on the property, are mixed hardwood forested wetlands. Approximately 525 acres of the Live Oak Reserve property are located within the RHPZ. Of this area, approximately 410.5 acres are wetlands, and the remainder are uplands that are predominantly pine flatwoods and xeric scrub. A few of the wetlands on site are considered RHPZ wetlands, not "isolated," solely because they are connected to floodplain wetlands by ditches. These wetlands and 50 feet of the uplands surrounding them are considered part of the RHPZ. The wetlands within the RHPZ are intact with little disturbance, especially in the Econ River corridor that is a part of wetland 16. Wetland 10 has been logged and the species composition in that wetland has changed. Wetlands 12 and 14 have ditch connections to the Econ River, but these ditch connections do not appear to have adversely impacted the wetlands hydrologically. Wetlands 2,3, and 8 have ditch connections to the Econ River. These wetlands have been adversely affected (drained) by the ditching. The RHPZ uplands are in good condition and provide very valuable habitat, except for 12 acres that are adjacent to upland cut drainage ditches. These 12 acres have no habitat value. The portion of the Live Oak Reserve property within the RHPZ provides good habitat important to fish and wildlife, and is part of the Econ River floodplain. The upland areas outside the RHPZ on the Live Oak Reserve property primarily consist of pine flatwoods and pasture. The pine flatwoods have been logged and are overgrown. The pasture appears to have been cleared many years ago and planted with bahia grass. Twenty-two isolated wetlands, which total approximately 17.9 acres, are located on the Live Oak reserve property. The isolated wetlands are intact and in good condition, except for temporary impacts due to cattle grazing and logging. The isolated wetlands provide habitat for wading birds, frogs, toads, and other wildlife. Ephemeral wetlands are wetlands that are seasonally inundated, but not necessarily inundated every year. Ephemeral wetlands provide important functions to wildlife, including gopher frogs and other amphibians for breeding, wading birds and sandhill cranes for foraging, and invertebrates. Ephemeral wetlands or "seasonal" wetlands occur on the Live Oak Reserve property. Although Live Oak did not separately address any of the wetlands as ephemeral, the value and functions of ephemeral wetlands were assessed by SJRWMD staff-person, David Eunice. While several small ephemeral wetlands are being impacted by the proposed development, several others are being preserved. Live Oak conducted wildlife surveys of the Live Oak Reserve property in accordance with the Florida Game and Fresh Water Fish Commission's approved Wildlife Methodology Guidelines. Based on the surveys, Live Oak determined that three listed species occurred on-site: the Florida sandhill crane, the gopher tortoise, and the Sherman's fox squirrel. The Florida sandhill crane is a threatened species. Live Oak found no evidence that the property hosts Florida panthers. Although the wildlife surveys did not identify gopher frogs, a species of special concern, the SJRWMD recognized the potential for the gopher frog to use the wetlands, including the ephemeral or seasonal wetlands, on the Live Oak Reserve property. Florida sandhill cranes have been observed foraging in a few areas on the Live Oak reserve property. In the spring of 1997, Live Oak identified two active nests in freshwater marshes (wetlands 21 and 29). There is no evidence that the sandhill cranes are currently nesting in wetland 29; however, Florida sandhill crane nests have been located in wetlands 14 and 21 this year. The typical critical nesting habitat for Florida sandhill cranes is a large, isolated marsh, generally either dominated by maidencane or pickerel weed. The marsh must maintain a surface water level between 12 and 24 inches so that the birds can construct a suitable nesting platform in the marsh. Nesting success, in part, depends upon wetland type used and water depths. The Florida sandhill crane also requires a certain amount of pasture-like upland habitat in which to forage. However, the crane forages in both uplands and wetland. Upland pasture is the sandhill crane's preferred foraging habitat. The sandhill crane's second most preferred foraging habitat is freshwater marsh. When the sandhill cranes have chicks and fledglings, the birds forage in the wetlands. After a period of three to four months, the juvenile and adult sandhill cranes will move to open pasture to forage. The Econ River floodplain wetlands and their associated upland habitats on the Live Oak reserve property are regionally ecologically significant. Overall, the Live Oak Reserve property provides good ecological value. It is part of the river corridor, has a tributary that runs through it and has uplands that have had little disturbance. Live Oak has eliminated certain wetland impacts and reduced others during the design of the Live Oak Reserve project. Live Oak eliminated some road crossings, and redesigned the pond configuration to eliminate or reduce encroachments into wetlands. Live Oak's site plan that was submitted as part of the initial April 14, 1997, application reflects Live Oak's initial attempts to eliminate or reduce impacts. Live Oak, in its application, proposed a project design with 46 acres of wetland impacts. The site plan has changed since Live Oak made the initial application to the SJRWMD. The initial project design called for the removal of the southern one-half of wetland 29 for the construction of a stormwater pond. Live Oak redesigned the project to preserve wetland 29 with a 50-foot upland buffer around it to eliminate direct impacts to the sandhill cranes nesting there. Live Oak further reduced impacts by preserving wetlands 14 and 15, and by placing upland buffers around them to protect sandhill crane habitat. The revised design of the surface water management system reduced wetland impacts by approximately 7 acres. The SJRWMD February 10, 1998, technical staff report includes the design plans reducing impacts by 7 acres. After the SJRWMD issued its February 10, 1998, technical staff report, Live Oak once again redesigned the project to preserve wetland 12. This redesign reduced wetland impacts by an additional 3 acres. In this case, SJRWMD staff worked with Live Oak to reduce or eliminate its impacts. Nonetheless, staff believed Live Oak's proposed mitigation qualified for the exception under Section 12.2.1.2b, that is, the on-site preservation of the Econ River floodplain and associated uplands, in concert with Live Oak's contribution to acquiring a conservation easement over the Yarborough parcel, discussed below, provides regional ecological value and provides greater long term ecological value then the areas impacted. Live Oak proposes practicable design alternatives, but it is not required to reduce or eliminate all impacts. Some design alternatives, such as whether to use a bridge or culverts for the Brister Creek crossing, must be addressed and considered at a later permit application stage and not at this conceptual permit stage. The proposed design includes dredging or filling of approximately 35.9 acres of wetlands and construction in approximately 38 acres of RHPZ uplands. Of these 35 wetlands on the Live Oak Reserve property, Live Oak will completely impact 23 of the wetlands (17.64 acres of wetland impact); partially impact 5 wetlands (18.28 acres of wetland impacts out of 370.15 acres of wetlands); and will avoid impacts to 7 wetlands (40.63 acres). The impacts are mostly limited to the small isolated wetlands, the upland/wetland transitional edges of the floodplain wetlands, and portions of RHPZ already degraded by a ranch roadway and ditch placement. Live Oak focused its impacts on areas, including wetlands, that were historically disturbed. SJRWMD staff considered that the isolated wetlands less than 0.5 acre were used by sandhill cranes and other threatened or endangered species. Therefore, staff required Live Oak to offset impacts to the small isolated wetlands. In addition to physical impacts to wetlands and RHPZ, the habitation of the proposed subdivision, which will result in noise and intrusion into wildlife habitat by humans and their pets, will cause secondary impacts. Those secondary impacts are offset in part by the upland buffers proposed by the applicant (a total of 10 acres of 25 foot buffers and 47.86 acres of 50- foot buffers.) After considering the type of impact proposed; past, present and future activities that may occur in the Econ River Hydrologic Basin; and that Live Oak off-site mitigation of adverse impacts is located within the same hydrologic basin; SJRWMD staff appropriately determined that Live Oak Reserve would not have an adverse cumulative impact. Mitigation Live Oak's mitigation plan consists of both on-site and off-site preservation. The proposed on-site component of the mitigation plan entails the preservation of 19.3 acres of herbaceous marsh, 373.2 acres of forested wetlands, and 124.9 acres of uplands. The mitigation plan preserves approximately 5.65 acres of isolated wetlands on-site, and approximately 386.86 acres of RHPZ wetlands on-site. The cornerstone of Live Oak's on-site mitigation is the preservation of the Econ River forested floodplain swamp, as well as two upland areas, in the southwestern corner of the property. One of the upland areas is a 15-acre upland scrub island on the east side of the river that is surrounded by forested wetlands. The other upland area is 24 acres of uplands located near the Econ River on its west side. Portions of both uplands are within the RHPZ. Both the forested floodplain and the associated upland areas provide habitat of regional ecological significance. The forested floodplain wetlands and the uplands that are part of the RHPZ are protected to a large degree by SJRWMD regulations. These regionally significant wildlife communities, however, can be temporarily, but chronically, impacted, if not permanently degraded, by timbering and other activities that are relatively unregulated. Live Oak proposes to protect and preserve these areas by placing them in a conservation easement. Placing Econ River forested floodplain wetlands and the upland RHPZ areas in a conservation easement will provide a greater level of protection and assurance that they will mature to an "old growth" condition, which will benefit many wildlife species. The Econ River floodplain wetlands, the upland scrub island and the small isolated wetland in the scrub island will accommodate the smaller wildlife species that currently use the Live Oak Reserve property. Live Oak has preserved most of the larger isolated wetlands with high ecological value. The large isolated wetlands preserved on-site will continue to maintain a high level of ecological function even with the surrounding development. Wildlife, such as frogs, toads, snakes, and wading birds will continue to use those wetlands. The on-site portion of the mitigation plan preserves approximately 71.87 acres of upland buffers, of which 2.04 acres are located in 25-foot buffers and 69.83 acres are located in 50- foot RHPZ buffers. The buffer areas will be placed in a conservation easement. The wildlife values of the uplands on this property that are not within the RHPZ are protected to some degree by local government regulations; they are, however, largely unprotected by the existing regulations of SJRWMD. Without the proposed conservation easements, this habitat may be developed or significantly degraded by other activities. As a component of its on-site sandhill crane nesting site management plan, Live Oak preserves a 6.83-acre upland buffer next to wetland 21, which hosts a sandhill crane nest. Additionally, Live Oak provides enhancement of 3.88 acres on the southside of wetland 21 within the 6.83-acre buffer area by converting this area to improved pasture for sandhill crane foraging habitat. The mitigation plan sufficiently offsets the impacts to the smaller isolated wetlands, even if these wetlands have more than a typical resource value. When evaluating impacts and mitigation, Applicant's Handbook Section 12.2.3.7 requires the SJRWMD to evaluate the predicted ability of the wetland or other surface water to maintain their current functions as part of the proposed system once the project is developed. Many of the smaller isolated wetlands, when located in a natural setting such as a pine flatwood, are very critical and provide very high ecological value. However, once a project is developed and the small isolated wetland is surrounded by homes, the resource value of the small isolated wetland is diminished. Many of the smaller wildlife species, such as frogs and snakes, will be extirpated from the developed area of property, whether or not the smaller isolated wetlands remain. SJRWMD considered the value of the off-site mitigation to offset the adverse impacts to the smaller isolated wetlands. In determining the adequacy of the preservation component of the mitigation plan, SJRWMD staff did not rely upon any specific rule, regulation, or comprehensive plan of the City of Oviedo. However, the staff did consider the overall protections afforded by the regulatory and comprehensive plan requirements of the city and determined that preservation of the mitigation areas by conservation easement provided greater assurance that these areas will be protected than the local government rules, regulations, and comprehensive plan. The off-site component of the mitigation plan is the contribution of $160,525 towards participation in the SJRWMD acquisition of a conservation easement over the 3,456 acre Yarborough parcel. The Yarborough parcel is located in the northeastern corner of the Econ River Hydrologic Basin. The Yarborough parcel encompasses property north and south of the Econ River. A portion, mostly sovereign lands, lies within the Puzzle Lake/Upper St. Johns River Hydrologic Basin. The Yarborough parcel is part of a large working ranch. The parcel contains improved and unimproved pasture, significant cabbage palm hammocks, pine flatwood communities, and freshwater marsh. Live Oak's participation equates to the acquisition of a conservation easement over 200 acres of the Yarborough parcel. However, Live Oak is not purchasing any particular 200 acres with the Yarborough parcel. Live Oak's contribution is applied to 200 acres of the Yarborough parcel within the Econ River Hydrologic Basin. SJRWMD estimates that of the 200 acres, 165 acres are wetlands and 35 acres are uplands. This assessment is based on the composition of wetlands and uplands on the Yarborough property within the Econlockhatchee River Hydrologic Basin. SJRWMD has purchased development rights over the Yarborough parcel. Yarborough is authorized to continue its cattle operation on the Yarborough parcel for 20 years in accordance with the conditions of the conservation easement. However, Yarborough is not permitted to increase the amount of improved pasture or further develop the parcel. On the contrary, the conservation easement requires Yarborough to decrease the number of cattle on the parcel over the next 20 years. Purchase of the conservation easement over the working ranch has positive environmental benefits. The conservation easement will protect the wildlife species that use the ranch. This environmental benefit can be used to offset adverse impacts on the Live Oak Reserve property. To participate in this type of mitigation, the acquisition must be imminent so that the SJRWMD is reasonably assured that the purchase will go forward. Participation is precluded for a parcel after its acquisition is concluded. Live Oak's mitigation plan, with its on-site and off- site components, offsets Live Oak Reserves adverse impacts. SJRWMD calculates the mitigation ratio and compares it to the guidelines in the Applicant's Handbook to determine if mitigation is adequate. SJRWMD however, is not required to adhere to any set ratio. The upland preservation ratio (area preserved to area impacted), excluding the 12 acres of uplands along the upland cut ditches and the Yarborough parcel uplands, is 6 to one. The rule guidelines for upland preservation is from 3 to one to 20 to one. The wetland preservation ratio is 15.5 to one. The rule guidelines for wetland preservation is from 10 to one to 60 to one. Public Interest Criteria Live Oak Reserve will not have any effect on the public health, safety or welfare or property of others. Because the mitigation plan adequately offsets all adverse impacts, Live Oak reserve will not adversely affect the conservation of fish and wildlife, including endangered or threatened species or their habitats. Because of the benefits of lowering the discharge rates in the post-development condition and reducing the velocity of stormwater in Brister Creek, Live Oak Reserve will reduce the potential for erosion. Live Oak Reserve will not have any affect on the fishing or recreational values or marine productivity in the vicinity of the site. Live Oak Reserve will be of permanent nature. However, its adverse impacts have been offset by mitigation. The permanence of the project is beneficial in that it provides treatment of untreated off-site runoff from county road 419 by the Live Oak surface water management system and it reduces the discharge rate of stormwater down Brister Creek. Therefore, the permanence of the project is not contrary to the public interest. In accordance with Section 373.414, Florida Statutes, the Florida Department of State Division of Historical Resources determined that the Live Oak Reserve project will have no possible impact to historic properties listed, or eligible for listing, in the National Register of Historical Places, or otherwise of historical or architectural value. Furthermore, the Division of Historical Resources determined that the project is consistent with Florida's Coastal Management Program and its historic preservation laws and concerns. The current condition and relative value of functions being performed by the various vegetative communities on the Live Oak Reserve property is good. However, there is no guarantee that the value and functions would remain good if the property is not managed for species like the sandhill crane or if agricultural and silvicultural practices continue to occur on the property. The mitigation plan, preserving regionally ecologically significant wetland and upland communities on both the Live Oak Reserve and Yarborough parcel by conservation easement, should provide a greater protection of those communities than what currently exists.
Recommendation Based on the forgoing, it is RECOMMENDED That a final order be entered granting Live Oak's application for a conceptual approval environmental resource permit with the conditions set forth in the SJRWMD technical staff report dated July 16, 1998, with the exception of condition 8, deleted by stipulation. DONE AND ENTERED this 2nd day of November, 1998, in Tallahassee, Leon County, Florida. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 1998 COPIES FURNISHED: Henry Dean, Executive Director St. Johns River Water Management District Post Office Box 1429 Palatka, Florida 32178-1429 Scott M. Price, Esquire J.A. Jurgens, P.A. 505 Wekiva Springs Road Longwood, Florida 32779 Charles H. Griffin, pro se 250 West 7th Street Chuluota, Florida 32766 Michael L. Gore, Esquire Meredith A. Harper, Esquire Ken W. Wright, Esquire Shutts and Bowen, LLP 20 North Orange Avenue Suite 1000 Orlando, Florida 32801 Anthony J. Cotter, Esquire St. Johns River Water Management District Post Office Box 1429 Palatka, Florida 32178-1429
Findings Of Fact Respondent is a dealer in agricultural products and is licensed by the Department of Agriculture and Consumer Services, under Sections 604.15-604.34, Florida Statutes. On or about April 29, 1987, Steve Brill, who is a project manager and landscape architect employed by Respondent, placed an order with Petitioner, on behalf of Respondent, for various trees. The order was never reduced to writing by Respondent. Respondent ordered six dogwoods, one 18-foot ilex, three 13-foot ilex, 14 laurel oaks, and two ligustrums. Sandra Couey, who took the telephone order for Petitioner, informed Mr. Brill that he could have a higher quality $350 ligustrum or a lower quality $200 ligustrum. He chose the cheaper tree. Mr. Brill requested 18-foot dogwoods, but Ms. Couey informed him that the largest she had was 12 feet. On May 14, 1987, Respondent's driver picked up the trees at Petitioner's nursery. Ms. Couey had removed the ilex from the shipment because these trees, which had been purchased by her from another nursery, were of poor quality. The driver left a check in the amount of $3003, which, by prior agreement of the parties, was not to be deposited for 30 days. Alberto Ribas, president of Respondent, had asked Ms. Couey on the prior day to hold the check until the customer paid Respondent. Immediately upon receiving the shipment, Mr. Brill and Mr. Ribas noticed that the dogwoods were 12 feet and that the quality of the ligustrums were, in Mr. Brill's words, "shaky." Petitioner and Respondent did not communicate again until June 3, 1988, when Ms. Couey telephoned Mr. Ribas to see if she could deposit the check one week early. During the June 3 conversation or shortly thereafter, Mr. Ribas first complained to Ms. Couey about the quality of the trees. He stopped payment on the check and advised Ms. Couey that he intended to procure replacement trees elsewhere, for which Petitioner would be liable, if she did not replace the trees within seven days. Respondent ordered and Petitioner delivered six dogwood trees for a total agreed-upon price of $720, 14 laurel oak trees for a total agreed-upon price of $840, and two ligustrum trees for a total agreed-upon price of $400, which, plus tax, comes to a total of $2058. To date, Respondent has paid nothing of this amount.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered requiring Respondent to pay Petitioner the sum of $2058. DONE and RECOMMENDED this 30th day of September, 1988, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of September, 1988. APPENDIX Treatment Accorded Respondent's Proposed Findings 1-2. Adopted. 3. First sentence adopted. Second sentence rejected as irrelevant. The dogwoods met the requirements of the contract or agreement between Petitioner and Respondent, regardless whether they met the requirements of Respondent's job. 4-5. Adopted in substance. 6-7. Rejected as irrelevant and against the greater weight of the evidence. 8. Adopted in substance. COPIES FURNISHED: Sandy D. Couey, Owner Southern Trees, Inc. Route 1 Box 60-J High Springs, Florida 32643 Stuart H. Sobel, Esquire Sobel & Sobel, P.A. Penthouse 155 South Miami Avenue Miami, Florida 33130 United States Fidelity & Guaranty Company Post Office Box 14143 Tampa, Florida 33623 Clinton H. Coulter, Jr., Esquire Department of Agriculture Consumer Services Mayo Building Ben Pridgeon Bureau of License & Bond Mayo Building Tallahassee, Florida 32399 Robert Chastain General Counsel Department of Agriculture and Consumer Services Mayo Building, Room 513 Tallahassee, Florida 32399-0810 Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-0810
The Issue The issue in this case is whether the application of Christopher and Caroline Roetzer (Appellants) for two variances allowing fences of greater than permitted height on their property should be approved.
Findings Of Fact Appellants, Christopher and Caroline Roetzer, are the owners of property located at 3001 Sunset Point Road in Clearwater, Florida. On or about July 7, 1994, Appellants filed an application with the Appellee, City of Clearwater, for variances of: 3.5 feet to permit a fence height of 6 feet where 2.5 feet maximum height is permitted in a structural setback area from a street right- of-way (Sunset Point Road) where the property is addressed from; and, (2) 2 feet to permit a fence height of 6 feet where 4 feet maximum is permitted in a structural setback from a street right- of-way where the property is not addressed from at 3001 Sunset Point Road. The Appellants purchased the subject property in November of 1993. At the time of purchase, the property was in an incorporated part of Pinellas County and was zoned for commercial use. The Appellants purchased the property for the purpose of constructing a single-family residence. The county issued a permit for construction of the residence on December 8, 1993, and construction began shortly thereafter. The residence was completed in March of 1994. The Appellants' residence is addressed from Sunset Point Road. The back of Appellants' property adjoins Oak Forest Drive. Oak Forest Drive is located in Forest Wood Estates, a residential subdivision that was initially developed more than twenty years ago. Appellants' property was not, prior to their purchase, and is not now, a part of Forest Wood Estates. Appellants' residence is a large two-story, three-car garage structure. The Appellants have also constructed a fenced dog-pen immediately adjacent to their residence. The surrounding residences are generally smaller, single story structures. Unlike Appellants' residence, the other residences adjoining Oak Forest Drive front on, and are addressed from that street, and not Sunset Point Road. The back of the residential property located at 3006 Oak Forest Drive, which is immediately adjacent to the Appellants' property, has a wooden fence in excess of 2.5 feet located along Sunset Point Road. In February of 1994 Appellants applied for annexation by the City of Clearwater. The purpose of the application for annexation was to enable the Appellants to access the City sewage system. On March 17, 1994 the subject property was annexed by the City. The Appellants were not informed that the annexation had been effected at that time. On May 19, 1994, officials of Pinellas County, also unaware that the Appellants' property had been annexed by the City, issued a permit for the construction of a 6 foot fence in the back of the Appellants' property adjoining Oak Forest Drive. On June 7, 1994, the fence was erected. At the time the fence was constructed, Robert King, a resident of Forest Wood Estates, informed the fencing contractor that the fence violated the City code. On June 9, 1994, the City of Clearwater issued the Appellants a notice of violation of permitting requirements. Prior to the construction of the fence, children used the back of Appellants property as a shorter route to return home from school. On July 7, 1994, Appellants filed an application for variances to construct not only the 6 foot fence that had been erected in the back of the property, but also to construct a 6 foot fence in the front of the property along Sunset Point Road. The Appellants applied for the variances for reasons of security, privacy, and protection from liability. Additionally, the Appellants applied for the variances for the purpose of allowing their two golden retrievers access to roam the property safely. The city planning staff recommended approval of the Appellants' application for the two variances. The matter was heard by the Development Code Adjustment Board on July 28,1994, at which time the recommendation of the City planning staff to approve the application for variances was presented by Senior Planner John Richter. Appellants also appeared and expressed their concerns for the security and privacy of their residence and property. Several residents of Forest Woods Estates appeared at the hearing and stated that the fence in the back of Appellants' property was unsightly and would detract from property values. The residents also stated that although a proposed expansion of Sunset Point Road would allow traffic to move closer to the Appellants' residence that the Appellants' front lawn was the largest on the street. The Development Code Adjustment Board unanimously denied the application of the Appellants as to both variances . The Appellants filed a timely appeal of the denial of their application. The appeal was referred to the Division of Administrative Hearings on August 23, 1994. The appeal was heard on January 12, 1995. Since the construction of the 6 foot fence in the back of Appellants' property there have been no incidences of children using the Appellants' property as a route to return home from school. Appellants' dogs have also had access to the back yard without incident. Appellants continue to experience a high level of noise and litter from the traffic on Sunset Point Road in the front of their property. Craig Hill, a resident of Forest Woods, who lives at 1882 Oak Forest Drive which is immediately behind the Appellants' property testified that he recently purchased his home in this subdivision, that the Appellants' fence provided security for keeping his son away from Appellants' dogs, and that the fence did not detract from his purchase of this property. Robert and Caroline King, real estate brokers who have resided in Forest Woods subdivision for 22 years, testified that the fence is unsightly and would detract from the value of other homes in the neighborhood. For these proceedings, Mr. and Mrs. King were neither tendered, nor qualified, as experts in real estate appraisals. Other longtime residents, Irving Carlson and Camplin Straker, also testified that the fence and the double gate for the fence were unsightly. The residents also expressed concerns because the fence is located near the only entrance to Forest Woods and generally detracts from the aesthetic appearance of the entire subdivision. John Richter, a Senior Planner with the City of Clearwater with 17 years of planning experience with the City, testified that there is no presumption to the recommendations of the planning staff to the Board, and that one consideration of the City code is the visual aesthetics of the surrounding property.
The Issue The issue is whether the City of Ocala's Plan Amendment 97-39C adopted by Ordinance No. 2689 on August 5, 1998, is in compliance.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: A. Background For many years, Red Oak has operated a horse farm in the Ocala area. On an undisclosed date in the early 1990s, when Red Oak's property was still located outside the City's boundaries, the City initiated condemnation proceedings against Red Oak (whose tract of land then totaled around 206 acres) for the purpose of obtaining land to site an electrical substation. On May 10, 1994, Red Oak, the City's outside counsel, and the City Manager (but not the City Council) executed a Settlement Agreement (Agreement) to resolve the pending litigation, under which the City's staff agreed to support a City plan amendment changing the land use on the property to Medium Residential Density, support a conceptual development of the property attached to the Agreement (which included the construction, among other things, of an office/convention center, 96 single-family homes, and 715 apartments), and support annexation of the entire tract of property into the City. Because the City subsequently amended its Comprehensive Plan to prohibit apartments on the land use later assigned the property, the conceptual plan was abandoned by Red Oak and is no longer relevant. A City substation now occupies approximately 8 acres of former Red Oak property in the northwest corner of the tract. On November 5, 1996, the City annexed the remaining 197.42 acres of the Red Oak property. At the time of annexation, the property was subject to a combination of two County land use designations: Low Density Residential (one unit per acre) and Agriculture (one unit per ten acres). Pursuant to the Agreement, Red Oak then sought, with City staff's support, the adoption of a plan amendment changing the land use on the Future Land Use Map (FLUM) for the remaining acreage to Medium Density Residential, which authorizes ten dwelling units per acre. However, because of the high intensity of development (such as commercial activities, a hotel, a nursing home, retail outlets, and multi-family apartments) on the land just north of the subject property (of which the apartments were closest to Red Oak's property), the City Council rejected the staff's recommendation. Instead, it decided to reclassify the Red Oak property as Low Density Residential, rather than Medium Density Residential, so that the land use would be more consistent with the City's goal of using a "step-down approach," that is, to gradually step down (in a north to south direction) the intensity of development from commercial to office to apartments to single-family residential. By doing so, the intensity of development on the property would be reduced from ten dwelling units per acre, as proposed by the staff under Medium Residential Density, to no more than five single-family dwelling units per acre under Low Density Residential, which is the City's lowest adopted land use category for residential. On August 5, 1998, the City formally adopted Plan Amendment 97-39C. If the Plan Amendment is ultimately found to be in compliance, Red Oak will more than likely sell the property to a third party/developer, who will then convert the property from a horse farm to more intensive use. An adjacent 40-acre parcel which was later purchased by Red Oak (and is linked to the 197-acre parcel for development purposes) was recently annexed by the City, and is the subject of another plan amendment scheduled for adoption in the summer of 2003. That amendment also proposes to change the land use designation on the adjoining 40-acre tract of property to Low Density Residential. When the Plan Amendment was adopted, the City was one of five local government participants in the Sustainable Communities Demonstration Project authorized by former Section 163.3244, Florida Statutes. Under the terms of that statute, which was repealed in 2001, this Plan Amendment was not reviewed by the DCA. By avoiding this step in the review process, the City shortened the time for adopting the Plan Amendment from nine to four months. On September 4, 1998, SHASTA filed with DOAH its original Petition challenging the Plan Amendment. As later amended three times, the last two times by its former counsel, and generally restated in the parties' Prehearing Stipulation, SHASTA contends that the Plan Amendment is not in compliance because (a) the Plan Amendment is not based on surveys, studies, and data regarding growth and character of land; (b) there is insufficient data and analysis for a determination of the Plan Amendment to show a need for more land to be developed at five units per acre; (c) the developed land will be incompatible with rural land designated at one unit per ten acres in the County; (d) harm will come to the underlying aquifer as a result of large areas of impervious surface rendering the area vulnerable to contamination by stormwater pollution; (e) protection plans proffered by the City do not require special design of retention areas to prevent pollution or stop alteration of natural recharge; (f) the Plan Amendment does not meet the standards set forth in Section 163.3177(6)(d), Florida Statutes, and Rule 9J-5.011(1), Florida Administrative Code, protecting the natural resources; (g) a development agreement between the City and Red Oak approved by the City on April 8, 2003, does not adequately protect the many karst features and cave systems located on, under, and near the subject parcel, and the agreement includes land that is not a subject of this litigation; (h) the Plan Amendment should not have been adopted without DRI review even though the City was a Sustainable Community at the time of adoption; (i) the Plan Amendment is inconsistent with the goals of sustainability as set forth in Section 163.3244, Florida Statutes; (j) The Plan Amendment does not separate urban and rural uses or buffer them; (k) the Plan Amendment by its nature creates urban sprawl in an area unsuitable for urban development; (l) no analysis was presented for the suitability of five units per acre or the need for redevelopment to better use public services and utilities already in place, to better serve city residents and improve blighted areas; (m) the Plan Amendment does not protect adjacent agricultural activities, unique and important farmlands, and soils; (n) the Plan Amendment allows for land use which increases taxpayer cost of providing and maintaining facilities and services including roads, potable water, sanitary sewer, stormwater management, law enforcement, education, and fire and emergency response, and it inhibits infill or redevelopment of existing city neighborhoods; and (o) the Plan Amendment fails to recognize secondary impacts to natural resources, the significant risk to the local population, and the degradation of regionally significant resources like Silver Springs which will ultimately receive water traveling underground to the spring. With a few exceptions discussed below, SHASTA failed to present evidence on any of the issues raised in its Third Amended Petition for Administrative Hearing or the parties' Joint Prehearing Stipulation; thus, the unsupported allegations have been considered to be abandoned and are hereby denied. At hearing, the principal focus of SHASTA's evidence generally related to the impact of development on a cave system located on the property. SHASTA also expressed concerns regarding the development of property in karst topography, and the general loss of agriculture lands in the City. The Parties The City is a local government having the responsibility of preparing a comprehensive plan and amendments thereto in a manner which conforms with Chapter 163, Florida Statutes. Red Oak is an affected person within the meaning of Section 163.3184(1)(a), Florida Statutes, since it owns the property which is the subject of the challenged Plan Amendment, and it submitted oral and written comments to the City during the adoption process. SHASTA is a not-for-profit corporation formed in September 1985. The City and Red Oak have stipulated that SHASTA has approximately 120 members, of whom at least 20 reside and own property within the City; however, property tax records offered into evidence by SHASTA show that as many as 35 members own property within the City. They have also stipulated that at least one member (Miriam Cook) appeared before the City during the adoption process and made comments and recommendations on behalf of SHASTA regarding the Plan Amendment. There is no evidence that SHASTA "resides," or owns a business or property, within the City. According to its representative, SHASTA members have an interest in the preservation, protection, and conservation of natural resources in the high-water-recharge and karst- sensitive lands adjacent to and within the City. At least one of its members (Darlene Weesner) has "intermittently" attended City Council meetings over the years (although it is unclear whether such attendance was on her own behalf or on behalf of SHASTA), and it can be reasonably inferred from the evidence that, through its members, the organization has actively attempted to provide information to the City and County regarding various planning decisions by those two bodies. Although its representative referred at hearing to a document describing various projects undertaken by SHASTA over the years, presumably related to natural resources and land use, the document was never offered, or received, in evidence. The Property As noted above, an operational horse farm now exists on the property, which consists mainly of improved pasture lands with many trees. It lies just southeast of the intersection of State Highway 200 (the City's busiest commercial corridor) and Interstate Highway 75 (I-75), a heavily-traveled, north-south, major roadway which cuts through the western part of the City. Just north of the property is the Paddock Park Development of Regional Impact (DRI), which consists of various commercial uses (a Publix shopping center, restaurants, and hotels), office space, medical offices, professional offices, and surgical centers, and (closest to Red Oak's property) two large apartment complexes with a total of 768 apartments. The western side of the property adjoins I-75, and an industrial park has been partially developed directly west of the property across I-75. Just beyond the industrial park lies the Heathbrook DRI, which consists of 900 acres, the majority of which have been designated as Low Density Residential with the remaining part designated for a retail mall. To the south of the property is the Westbury Subdivision which has been developed as a gated community with single-family residences on large lots. To the east of the property lies an approved Planned Unit Development (PUD) known as the Shady Road PUD, which contains a combination of several hundred single-family and multi-family homes. Just east-northeast of the property is a recently constructed Catholic high school which was the subject of Case No. 98-5019GM, a proceeding in which SHASTA also participated. Other nearby development (to the northeast) includes a Super Wal-Mart and a 16-screen movie theater complex. Finally, the City and County have currently approved and are planning to construct a four-lane road that would abut the southern boundary of the property and cross over I-75 so as to relieve traffic congestion on State Road 200 and nearby 17th Street. Collectively, these facts indicate that the Red Oak property is located near the fastest growing and most intensively developed area of the City and County. Like much of the other land in the County, Red Oak's property is located within a karst sensitive area. In these areas, the limestone which contains the Floridan aquifer exists at, or is very close to, the land surface, and the absence of cover material (sands, clays, and other material) over the limestone allows the rapid movement of surface water into the aquifer with little treatment. Thus, in much of the County (and the City), the Floridan aquifer (which is the main source of potable water) has a greater potential for contamination from surface pollutant sources than in other areas of the State. Because of these conditions, the St. Johns River Water Management District (District) has promulgated special rules governing the discharge of stormwater runoff which apply only to karst sensitive areas, such as those found in Alachua and Marion Counties. The property is also the site of a cave system known as the Briar Cave, considered to be a "medium difficulty cave" for recreational purposes, which lies underneath approximately 4.1 acres of the property. The cave is considered "unique" in the sense that only a handful of cave systems in the State have formations similar to Briar Cave. Red Oak and the City have recently entered into a Development Agreement under Sections 163.3220 through 163.3243, Florida Statutes, that places a number of restrictions on the development of the property, protects Briar Cave, and imposes groundwater protection provisions. For example, the Development Agreement requires that the developer implement an integrated pest management plan addressing the application of fertilizers and pesticides on the property; that additional restrictions (more stringent than District standards) be used in constructing the stormwater retention areas on the property; and that a water quality monitoring plan be implemented to monitor groundwater on the site. It also requires the property to be developed as a PUD under the City's land development regulations. This will enable the City to exercise more control over any future development of the property, including the right to approve where buildings will be placed on the property. The Plan Amendment Because the City was a participant in the Sustainable Communities Demonstration Project, there has been no formal state or regional review of the Plan Amendment. Thus, while the DCA offered what can be described as informal comments on a limited aspect of the Plan Amendment, it made no statutory determination as to whether the Plan Amendment is or is not in compliance. The Plan Amendment simply amends the City's FLUM to change the land use on Red Oak's property from a combination of two County land use classifications to Low Density Residential. In making this decision, the City relied upon the staff's consideration of the type of soil on the site; the terrain of the site; the protection of Briar Cave, sinkholes, or wetlands on the site; and other factors concerning the suitability of the property for development. The City also considered the fact that the property was located within its Urban Service Area, which meant that the City had the exclusive right (as opposed to the County) to provide water and sewer services after the property was annexed into the City. Finally, the City considered the compatibility of the property with the surrounding uses, including its proximity to adjacent DRIs, malls, a large movie theater, shopping centers, and other heavy commercial and retail development. From this, it made a determination that the Low Density Residential land use is the most appropriate land use designation to buffer the intensive urban uses of property immediately to the north of the property from the residential and agriculture properties to the south. The data relied upon by the City at the adoption hearing is found in City Exhibits 19-21 received in evidence. Even though SHASTA failed to adduce any evidence to support its claim that the Plan Amendment was not based upon sufficient data and analysis, the City and Red Oak have established by a preponderance of the evidence that the Plan Amendment is based on adequate data and analysis, and that the City reacted to this data in an appropriate manner. Besides the foregoing data, the City considered the comments of various governmental agencies, including the DCA, the District, and the County. The County did not object to the Plan Amendment, while the District's comments focused on protection of the cave and stormwater issues in karst sensitive areas. The City staff has responded to the District's concerns by incorporating a number of development restrictions (see Findings of Fact 15, 20, and 24) to protect these resources. The DCA was primarily concerned that the conceptual plan of development attached to the 1994 Settlement Agreement may constitute a DRI. However, that plan was later abandoned by Red Oak, and therefore the DRI issue raised by the DCA is no longer relevant. The cave A valuable cave system known as Briar Cave is located on the property, and whose underground system takes up slightly more than four acres. Under the Development Agreement between Red Oak and the City, Red Oak must give a conservation easement to the City for the cave site. The City has mapped the system to ensure that no development will occur around the cave, and that no vehicular traffic will be allowed on top of the site. Testimony by Red Oak's witness Garman, who has personally inspected at least 90 percent of Briar Cave, established that the cave map used by the City is reasonably accurate to less than a five percent error, and that a 40-foot buffer zone around the 4.1-acre site will adequately protect the system. By adding this buffer zone to the conservation area, that area will total around 5.7 acres. In addition, public access to the cave will be restricted, and only those persons who are specially trained and equipped to enter caves will be given access to the cave system. Finally, before any development on the property begins, the City will require that the developer design a drainage system (using standards more stringent than even District criteria) that will protect the aquifer from runoff associated with the project. Given these considerations, the preponderance of the evidence supports a finding that the cave system and aquifer will be protected from contamination, and that the Plan Amendment will not cause harm to Briar Cave. Through its professional geologist, who relied on observations made by one of his staff some ten years ago or so, SHASTA also contended that the cave system (at least in the early 1990s) had an intermittent perched water table that occurs (during non-drought periods) in the sands, and assists in the formation of cave deposits such as speleothems, stalectites, and stalagmites. Although the significance of such a table (assuming one exists) was not fully explained in the record, presumably an improperly designed drainage system associated with any future development on the property could cause harm to the perched water table and lead to the dissolution of the cave formations. In order to accurately determine if the cave has a perched water table, it would be necessary to install piezometers (monitoring wells), which measure water levels in the soil columns and the Floridan aquifer to ascertain whether there is a head difference between the two. Observations alone are insufficient to make that determination. In this case, piezometers were not used, and it is impossible to conclude with any degree of certainty that such a table exists. Although the cave does contain speleothems, stalectites, and stalagmites, as reported by witnesses Garmen and Boyes, the more credible evidence supports a finding that they were the result of infiltrating rainwater over long periods of time, and not a perched water table. Even assuming arguendo that such a table exists, the protective measures taken by the City will ensure that stormwater does not penetrate the cave. Stormwater runoff As noted above, the District has promulgated additional requirements found in Rule 40C-41.063(7), Florida Administrative Code, which regulate the design and construction of stormwater management systems within karst sensitive areas. These criteria are designed to protect against stormwater runoff contamination of the underlying aquifer and are more stringent than other District criteria that apply in non-karst sensitive areas. In addition, the Development Agreement imposes further limitations (generally described in Finding of Fact 15) related to groundwater contamination which are even more restrictive than the District rules. It is undisputed that a surface water management system can be designed to protect the groundwater and cave system from contamination. SHASTA also contends that based on its interpretation of infrared aerial photographs taken in the 1970s, a lineament (a linear subsurface feature) begins just southwest of the Red Oak property and runs across the property in a southwest to northeast direction and then northeast for several miles. It further asserts that if the Red Oak property is developed, the groundwater will be contaminated, and such contamination will then spread (presumably through the lineament) to the City's wellfield, which lies to the northeast of Red Oak's property. The exact distance between Red Oak's property and the City's wellfield is unknown, although the wellfield appears to be at least several miles to the northeast. The area between the two sites already contains rather intensive urban development. SHASTA's concern here is based on the incorrect assumption that any development on Red Oak's property will automatically contaminate the groundwater. As noted above, however, it is undisputed that a surface water management system can be designed to protect the groundwater from any contamination caused by development of the property. In addition, the City has enacted a wellfield protection ordinance, which imposes special restrictions on any activity within 1,500 feet of the wellfield that might pose a threat to the City's water supply. Even assuming that a lineament exists, a fact which is subject to some debate by the experts in this case, the ordinance and other groundwater protections associated with development of the Red Oak property are sufficient to ensure that the City's water supply will not be at risk. The preponderance of the evidence supports a finding that stormwater systems and development can be located within a karst sensitive area, including the subject property, that will adequately contain and control stormwater runoff and prevent groundwater contamination. Thus, the Plan Amendment poses no risk to groundwater or aquifer recharge areas, as alleged by SHASTA. Other Allegations In the absence of any credible evidence regarding the remaining allegations raised by SHASTA, those contentions are rejected.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the City of Ocala enter a final order sustaining its determination that Plan Amendment 97-39C adopted by Ordinance No. 2689 on August 5, 1998, is in compliance. DONE AND ENTERED this 16th day of June, 2003, in Tallahassee, Leon County, Florida. ___________________________________ DONALD R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2003.
The Issue Is Petitioner entitled to compensation for the sale of agricultural products, and, if so, how much?
Findings Of Fact On or about August 28, 2001, Petitioner sold F.O.B. (Free on Board) at Petitioner's farm to P.S.L. Landscape Services Inc. (hereafter, PSL), 16 Crepe Myrtle trees 14 feet tall and 5 Live Oak trees 2.5 -3.0 inches in Diameter Breast High for a total costs, including tax, of $4,208.20. These trees were dug and wrapped in accordance with the standards of the American Association of Nurseryman in the afternoon of August 30, 2001. The tree roots balls were 40 inches in diameter, and the root balls were placed in wire baskets lined with burlap. The trees were placed upon a flatbed truck with the tops of the trees resting on a rack, and the entirety of the trees, except the roots, covered with a plastic screening material used for this purpose to keep the leaves from becoming wind burned in transit. The trees were transported overnight to PSL where they were received Broward County the following morning at 8:00 a.m. The trees were received and signed for by a representative of PSL, Randy Smith. The documents accompanying the shipment were introduced as part of Petitioner's Composite Exhibit 1. The first of these documents signed by Smith states: Attention: We do not replace trees. If trees are not in satisfactory condition when received, do not accept them. So please take care of your trees. Refer to watering guide in our catalog. The second document signed by Smith provides in bold type at the bottom of the page: DO NOT REFUSE TO UNLOAD THE TRUCK. If there is a serious problem and you question the merchandise, call our office immediately. Our number is 352 493 2496. PSL provided the freight company two checks, one to the freight handler for the freight and the other for 4,208.20 to Petitioner. This check was delivered to the Petitioner by the freight company and deposited by the Petitioner in due course. The Petitioner was notified several days later that a stop payment order had been received on the check for $4,208.20 by PSL. This was the first time the Petitioner was aware of a problem with the merchandise. PSL had not contacted the Petitioner about any problem with the shipment. When Mr. George Kijewski of PSL was contacted regarding the stop payment order, he responded that the trees had wilted. He wrote a letter dated December 21, 2001, to the Department of Agriculture in which he stated: Our firm ordered material from A.D. Andrews Nursery for one of our projects. Two Live Oaks were not number one as ordered. The Crepe Myrtle came in bone dry, not wet as the nursery states. The nursery dug up the plant material ordered and left items in the field until they were loaded onto truck for delivery. They never went to holding area prior to loading to get watered or hardened off. When we got them they were wilting . . . [.] Mr. Deming was present when the trees were prepared. Mr. Kijewski was not present when the trees were prepared. Mr. Deming described the manner in which the trees were dug, prepared for shipment, and shipped. The Crepe Myrtles were dug using a tree spade; the root balls were placed in burlap- lined wire baskets; and the trees placed on the trailer bed where they were secured and covered with a plastic screen to protect them from wind in transit. The Oaks were handled in a similar manner. The trees were not watered; however, the area had received approximately 1.5 inches of water in the seven days prior to shipment. The roots were wet enough to cause the burlap to be damp. The shipping documents do not reflect any wilting or problems although the documents, as quoted above, advised that product should not be received if not in good shape. No notes were made upon receipt reflecting the alleged poor condition of the trees. The trees were sold F.O.B. at Chiefland, and were the property of PSL when loaded.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department enter a final order adopting these findings and conclusions of law, directing PSL to pay to Petitioner $4,208.20 within 14 days of receipt of its final order; and, if PSL fails to abide by the Department's order, directing the surety to make good on its bond in the amount of $4,208.20. DONE AND ENTERED this 30th day of April, 2002, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2002. COPIES FURNISHED: Andy D. Andrews A. D. Andrews Nursery Post Office Box 1126 Chiefland, Florida 32644 Brenda D. Hyatt, Bureau Chief Department of Agriculture 541 East Tennessee Street Tallahassee, Florida 32308 George Kijewski P.S.L. Landscaping Services, Inc. Post Office Box 9421 Port St. Lucie, Florida 34985 Deborah A. Meek Cumberland Casualty & Surety Company 4311 West Waters Avenue Suite 401 Tampa, Florida 33614
The Issue Whether Grandview Landscaping Services, Inc., is liable to Petitioner for the purchase of landscaping trees; and, if so, in what amount.
Findings Of Fact Petitioner, Southeastern Trees, LLC (Petitioner or Southeastern Trees), is a Florida Limited Liability Corporation located in Gainesville, Florida, engaged in the business of commercial tree farming. Keith Lerner is the President of Southeastern, and David Lerner is the Vice President. Respondent, Grandview Landscaping Services, Inc. (Respondent or Grandview), is a Florida corporation headquartered in Ocala, Florida, engaged in commercial landscaping. Grandview is licensed by the Department as a dealer in nursery products, flowers, and sod. In August 2015, John Sapp, Grandview’s owner, visited Petitioner’s tree farm and selected 27 live oak trees to purchase. On December 11, 2014, Mr. Sapp returned to Southeastern Trees and took possession of the 27 live oak trees. Mr. Sapp used his own equipment to haul the trees. Petitioner sent an invoice to Respondent on December 11, 2014, in the amount of $5,724.00 for the 27 live oak trees. The invoice term was “net 30,” allowing 30 days for Respondent to pay in full. After 30 days had elapsed without payment, David Lerner contacted Mr. Sapp to request payment. Mr. Lerner also requested the location of the trees in order to place a lien thereon. According to Mr. Lerner, Mr. Sapp refused to divulge the location of the trees. After 60 days had elapsed without payment, Keith Lerner contacted Mr. Sapp via telephone. According to Keith Lerner, he spoke with Mr. Sapp on March 1, 2015, who informed him the trees were beautiful and Mr. Sapp would “get him a check.” Keith Lerner attempted to reach Mr. Sapp via telephone again on March 10, 2015, and left messages with Grandview’s office and on Mr. Sapp’s personal mobile phone. Mr. Lerner did not receive a return call. On March 25, 2015, Petitioner sent Respondent, via certified mail, a letter requesting payment of $5,724.00 for the 27 live oak trees and “any interest available to us beyond the 30 days of credit that were extended to you.” The letter was delivered to both Grandview’s business address and Mr. Sapp’s home address. The certified mail receipts were returned to Southeastern Trees, signed and dated March 26, 2015. Petitioner filed a complaint with the Department on March 31, 2015, against Southeastern Trees. Petitioner paid a filing fee of $50.00 As of the date of the hearing, Southeastern Trees had not responded to Petitioner’s request for payment.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving the claim of Southeastern Trees, LLC, against Grandview Landscaping Services, Inc., in the amount of $5,774.00. DONE AND ENTERED this 8th day of October, 2015, in Tallahassee, Leon County, Florida. S Suzanne Van Wyk 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 8th day of October, 2015.
The Issue Whether Rule 7D-31.001(5), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority? Whether a petition to determine the invalidity of a rule is properly addressed either to alleged, "unwritten, unadopted rule[s]," or to an agency's free form actions in a particular case?
Findings Of Fact Petitioner operates a mobile home park, "Water Oak Country Club Estates," near Lady Lake, Florida. The parties have stipulated, as follows: That the Bureau's [petitioner's Bureau of Mobile Homes] current position regarding prospectus amendments is that the Bureau will not approve amendments which call for changes from the matters disclosed in a previously approved and delivered prospectus [except for those changes falling within Rule 7D-312.001(5) (b)-(i)] unless the park owner can demonstrate that the consent of every mobile home owner who received the prospectus to be amended has been obtained as to the amendment and that such is the current Bureau policy even if the prospectus to be amended was approved by the Bureau with "reservation-of-rights" clauses as to the matters to be changed in the amendment; and that such is currently the consistent Bureau practice as applied in all reviews of prospectus amendments; and that such current practice is a departure from Bureau practice in the past with regard to review of prospectus amendments where the prospectus to be amended contained "reservation of rights" language. * * * That James Leftheris was the Bureau employee assigned to review the prospectus amendments for Water Oak which were submitted to the Bureau for approval on or about April 6, 1988; and a. that he reviewed the prospectus amendments themselves and the letter of April 6, 1988 (Water Oak's Exhibit "4") in the course of his review, and compared the amendments to the previously approved prospectuses to which each amendment related; and * * * that he recommended approval of the amendment to his supervisor, Mrs. Joann Dixon; and that the amendments were accepted by the Bureau on June 23, 1988; and * * * That the letter of April 25, 1989 from Joann Dixon to Richard Lee (Water Oak's Exhibit "17") states the Bureau's reasons for its rescission of the June 23, 1988 acceptance of the Water Oak prospectus amendments in question. The parties also stipulated that it is expensive for mobile home tenants to move out of mobile home parks, that it is not easy for them to move, and that some mobile home parks will not accept used mobile homes. On April 6, 1988, petitioner submitted to respondent proposed amendments to three prospectuses, Nos. 3500521P, 3500521P2, and 3500521P86, pertaining to its mobile home park. The proposed amendments "were accepted for filing purposes on June 23, 1988." Petitioner's Exhibit No. 11; Petitioner's Exhibit No. 10. On April 25, 1989, respondent wrote petitioner's lawyer, stating: Since our records do not include the requisite consent of the home owners, the Bureau is rescinding its acceptance of the subject amendments. Petitioner's Exhibit No. 11. This rescission applied to all three amendments, Nos. 3500521P, 3500521P2, and 3500521P86. Rule 7D-31.001(5), Florida Administrative Code, reads, as follows: (5) The prospectus distributed to a home owner or prospective home owner shall be binding for the length of the tenancy, including any assumptions of that tenancy, and may not be changed except in the following circumstances: Amendments consented to by both the home owner and the park owner. Amendments to reflect new rules or rules that have been changed in accordance with procedures described in Chapter 723, F.S., and the prospectus. Amendments to reflect a change in the name of the owner of the park. Amendments to reflect changes in zoning. Amendments to reflect a change in the person authorized to receive notices and demands on the park owner's behalf. Amendments to reflect changes in the entity furnishing utility or other services. Amendments required by the Division. Amendments required as a result of revisions of Chapter 723, F.S. Amendments to add, delete or modify user fees for prospective homeowners.
The Issue Which certificate of need application seeking to establish a new 120-bed community nursing home in Nursing Home District 6, Subdistrict 5 (Polk County), on balance, best satisfies the statutory and rule criteria for approval: Lakeland Oaks NH, LLC’s CON Application No. 10309, or Eighth Florida Living Options, LLC’s CON Application No. 10303.
Findings Of Fact The Parties Lakeland Oaks NH, LLC Lakeland Oaks, LLC, is a Delaware, limited-liability company formed by Greystone Healthcare Management Corporation (Greystone) for the purpose of filing its certificate of need application at issue in this proceeding. Greystone is a Delaware, for-profit, corporation which operates 26 skilled nursing facilities, two assisted living facilities, and six home health branches in Florida. It also operates 10 nursing homes in Ohio. Recently, Greystone constructed and opened a new nursing home known as The Club Health and Rehabilitation Center at the Villages (The Club Villages) in Marion County, Florida. Greystone is headquartered in Tampa, Florida adjacent to Polk County. Eighth Florida Living Options, LLC Eighth Florida Living Options, LLC, is a Florida, limited-liability company formed by Florida Living Options, Inc. (Florida Living Options) for the purpose of filing its certificate of need application at issue in this proceeding. Florida Living Options is a Florida not-for-profit corporation which operates three skilled nursing facilities, three assisted living facilities, and two independent living facilities in Florida. Among them, Florida Living Options operates an assisted living facility known as Hawthorne Lakeland in Polk County, Florida, and recently constructed and opened a new nursing home in Sarasota, Florida, known as Hawthorne Village of Sarasota. Florida Living Options is headquartered just outside of Tampa about six miles from the Greystone headquarters. Agency for Health Care Administration AHCA is the state agency that administers Florida’s CON program. Procedural History The Fixed Need Pool On October 3, 2014, the Agency published a need for 203 additional community nursing home beds in Nursing Home Subdistrict 6-5 encompassing Polk County, for the July 2017 Planning Horizon. In response, eight applicants, including Lakeland Oaks and Eighth Florida, filed CON applications seeking to establish new community nursing home beds in Polk County. On February 23, 2015, the Agency published official notice of its decisions on those applications. The Agency awarded all 203 beds from the fixed-need pool, approving applications filed by Florida Presbyterian Homes, Inc. (14 beds), Lakeland Investors, LLC (69 beds), and Lakeland Oaks (120 beds). The Agency denied the remaining applications; including Eighth Florida’s CON Application No. 10303 seeking 120 beds from the fixed-need pool. Eighth Florida initially challenged all three awards, but voluntarily dismissed its challenge to Florida Presbyterian Homes, Inc. and Lakeland Investors, LLC’s awards prior to the final hearing. As a result, only 120 of the 203 beds in the fixed-need pool are at issue in this proceeding. The Proposals Greystone’s Lakeland Oaks Lakeland Oaks’ CON Application No. 10309 proposes to develop a 120-bed skilled nursing facility (SNF) in Sub-district 6-5, Polk County, consisting of 60 private rooms and 30 semi- private rooms. Lakeland Oaks proposes to offer high quality, short- term rehabilitation services and long-term care services in a country club style atmosphere. Some of the services Lakeland Oaks plans to offer include physical, occupational, and speech therapy; wound care; pain management; and lymphedema therapy. Lakeland Oaks’ proposal is partially modeled after a new SNF established by Greystone called The Club Villages in Marion County, Florida. Greystone developed The Club Villages in 2012 through the transfer of 60 beds from New Horizon NH, LLC, d/b/a The Lodge Health and Rehabilitation Center, an existing 159-bed skilled nursing facility in Ocala, Marion County. The Club Villages provides short-term rehabilitation to patients in a resort-style environment. The Club Villages has been successful since its opening, achieving full utilization within less than six months of operation. It recently added eight additional beds, resulting in a total bed complement of 68 beds, through a statutory exemption for highly utilized nursing home providers. The Club Villages was awarded the LTC & Senior Living LINK Spirit of Innovation Award, which recognizes facilities with innovative and inspirational designs. As of the final hearing, Greystone had not made a formal decision on site selection for the proposed Lakeland Oaks project. However, the evidence at hearing showed that Greystone plans to construct the proposed Lakeland Oaks facility in Polk County at one of four potential sites located near the I-4 interstate and major roadways for easy accessibility in an area with a high concentration of residents age 65 and older. The potential sites are in close proximity to the existing acute care hospitals in Polk County, which, from a health planning perspective, would promote a coordination of care. Given the number of available potential sites, it is not expected that Greystone will have difficulty securing a location for the proposed Lakeland Oaks project. Eighth Florida Living Options Eighth Florida’s CON Application No. 10303 proposes to establish a 120-bed SNF next to Hawthorne Lakeland, Florida Living Options’ existing assisted living facility in Polk County. The proposed facility will consist of two 60-bed pods, consisting of private and semi-private rooms. If approved, Eighth Florida’s proposed SNF will be part of a campus known as Hawthorne Village. In addition to the proposed SNF and Hawthorne Lakeland, Eighth Florida affiliates also plan to construct and operate a second assisted living facility and an independent living facility on the Hawthorne Village campus. An important part of Florida Living Options’ business model is to provide skilled nursing, assisted living, and independent living services on the same campus. By providing different levels of care on the same campus, it is envisioned that residents of Florida Living Options’ facilities can transition among the facilities as their care needs change. Eighth Florida plans to model its proposed skilled nursing facility on Hawthorne Village of Sarasota (Hawthorne- Sarasota), which opened in January 2013. Compared to Greystone’s The Club Villages, Hawthorne-Sarasota had a slow ramp up and only achieved 85 percent utilization after 24 months of operation. The Agency’s Preliminary Decision On February 23, 2015, in Volume 41, Number 36 of the Florida Administrative Record, the Agency for Health Care Administration (AHCA) announced its intent to award 83 of the beds identified to be needed in Polk County to other applicants not involved in this hearing; to approve the application of Lakeland Oaks for CON 10309 for 120 beds; and to deny the application of Eighth Florida for CON 10303 for 120 beds. Statutory and Rule Review Criteria The statutory review criteria for reviewing CON Applications for new nursing homes are found in section 408.035, Florida Statutes, and Florida Administrative Code Rule 59C- 1.036.1/ Each statutory and rule criterion is addressed below. Section 408.035(1)(a): The need for the health care facilities and health services being proposed There is a need for additional community nursing home beds in Nursing Home Subdistrict 6-5, Polk County. Both Lakeland Oaks and Eighth Florida’s CON applications seek to fulfill a portion of the published need for additional beds in Polk County. In addition to the published fixed-need pool, both Lakeland Oaks and Eighth Florida have stipulated to the need and performed their own needs assessment that verified the need for additional community nursing home beds in Nursing Home Subdistrict 6-5, Polk County. At present, Polk County has 24.7 nursing home beds per 1,000 residents. Even with the addition of 203 beds as projected by the fixed-need pool, population growth will cause Polk County’s bed ratio to decline to only 23.6 beds per 1,000 residents by the end of the planning horizon. Accordingly, there is a need for additional community nursing home beds in Polk County. Polk County has a large, fast growing elderly population. According to population data published by AHCA, from 2010 to 2014, the 65 and older population in Polk County grew by nine percent, which exceeded the statewide growth rate of six percent. For the time period 2014 to 2017, the 65+ population in Polk County is expected to grow at an even faster rate of 10 percent, which is substantial. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Polk County currently has twenty-four (24) nursing home facilities with 2,945 licensed beds. Polk County’s existing nursing home beds are highly utilized. For the 12-month period ending June 2014, Polk County’s existing nursing home beds had a total average occupancy rate of 90.29 percent. That occupancy rate is higher than the national rate and Nursing Home District 6’s average occupancy rate as a whole. At such high utilization, Polk County’s existing nursing home beds are not sufficiently available to Polk County residents. Further, Polk County’s existing nursing home beds are not adequate to meet the projected increase in demand for skilled nursing services in Polk County over the planning horizon. Eighth Florida proposes to locate its skilled nursing facility in Zip Code 33813, co-located with Florida Living Option’s existing assisted living facility. The need for additional community nursing beds in Polk County, however, is countywide and not specific to a particular zip code or assisted living facility. In contrast, Lakeland Oaks’ proposed project is located and designed to address the needs of Polk County residents as a whole with access designed to locate near a major hospital, and, as such, will better ensure access to short-term rehabilitation and long-term care services in Sub-district 6-5. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care Both applicants go to great lengths to provide and improve their quality of care. Both applicants propose to use an electronic health record (EHR) system called Point Click Care (PCC). All of Florida Living Options’ facilities currently use PCC. Eighteen (18) of Greystones facilities use PCC, and, by the end of 2016, all Greystone facilities will use PCC. In addition to PCC, both Greystone and Florida Living Options use “Casamba,” a rehab-specific electronic medical record that enables the facilities to maintain electronic plans of care and track patients’ progress in real-time throughout their stay. Greystone and Florida Living Options have implemented Quality Assurance Performance Improvement (QAPI) plans in their facilities. The QAPI program is a rigorous program for the improvement of quality of care and overall performance. It addresses the full range of services offered by a nursing home and is designed to promote safety and high quality with all clinical interventions while emphasizing autonomy and choice in daily life for residents. A QAPI plan is now mandated for use in all nursing homes. Both Greystone and Florida Living Options initiated the QAPI program in their facilities before mandated to do so. Both Greystone and Florida Living Option have developed a range of policies and programs designed to promote quality of care in their respective facilities. Greystone, for example, develops “Centers of Excellence” within its facilities. A Center of Excellence has specialized expertise in treating patients with certain conditions such as stroke, pulmonary, cardiac, or orthopedics. Greystone has developed Centers of Excellence that relate to short-term rehabilitation and therapy, and partners with health systems to develop initiatives to reduce hospital readmissions. In addition to Centers of Excellence, Greystone develops other specialized programs in its facilities tailored towards common diagnoses of patients discharged from area hospitals. All Greystone facilities have an internal Risk Management/Quality Assurance program overseen by a committee that includes the medical director of each SNF. The committee meets on a monthly basis to assess resident care and facility practices as well as to develop, implement, and monitor plans of action. Greystone also routinely conducts on-site mock surveys of its facilities to ensure that they are in compliance with all federal and state laws and regulations. Greystone employs a variety of organization-specific quality improvement policies and programs, including the Believe Balance Assessment Tool, the Operation Make a Difference Policy, the Care Line Policy, and the Culture of Care Program, to promote quality of care within its facilities. The Believe Balance Assessment Tool is a scorecard that enables facilities to monitor their performance with respect to such criteria as patient satisfaction and clinical care. The Operation Make a Difference Policy is intended to help Greystone facilities identify opportunities for improvement and implement positive change to improve the facilities’ quality of care and patient well-being. Greystone’s Care Line is a toll-free number that is staffed 24 hours a day and allows Greystone to quickly address resident and/or family member concerns. Greystone’s Culture of Care program is designed to ensure that Greystone patients receive patient-centered care that meets their individual needs. Greystone also provides voluntary patient satisfaction surveys to its short-term rehabilitation patients upon discharge. For the period December 2014 to July 31, 2015, 92 percent of former residents indicated that they would recommend a Greystone facility to patients in need of short-term rehabilitation care. In sum, Greystone has developed strategies that help its facilities provide quality care. Florida Living Options is also working constantly to improve the quality of care in its facilities. Personnel in its facilities hold regular meetings with their hospital partners to track and reduce readmissions and work with hospitals to develop protocols for dealing with the diagnoses that result in most readmissions. Florida Living Options develops particular protocols for treating conditions that it sees and treats regularly in its nursing homes. Internally, they hold daily quality assurance meetings to discuss recent developments and immediate resident needs, and hold weekly “at-risk” meetings to evaluate particular cases and assure that the residents are being treated in the most appropriate manner. Florida Living Options’ facilities include physician treatment rooms in their nursing homes, which encourage physicians to come to the nursing home more often and to examine patients regularly. In addition, Florida Living Options has Advanced Registered Nurse Practitioners in each of its buildings to provide enhanced nursing services as directed by the doctor. In order to provide for each resident’s specific needs, residents in Florida Living Options’ facilities are fully evaluated and an individual care plan is prepared immediately upon admission, together with a discharge plan that identifies anticipated discharge so that care can best prepare residents for that event. Finally, Florida Living Options continues to follow a discharged resident to confirm that they are doing well and access any continuing needs. Both applicants propose rehabilitative facilities and equipment for its residents. Eighth Florida proposes to equip its facility with state of the art HUR equipment with the capability to transmit patient performance directly to the Casamba electronic records program. The equipment can be used for strength conditioning, transfer improvement, and balance improvement, among other things. Florida Living Options has developed specific protocols for treating rehabilitative conditions. Eighth Florida’s therapy gym will include two types of “zero G” devices: ceiling track and hydro track. These devices allow persons who are not weight bearing (or who are partially weight bearing) to develop strength and balance without having to put all of their weight on their legs. Two additional specific pieces of equipment proposed for Eighth Florida include a VitaStim device that provides electrical stimulation that helps a person relearn how to swallow, and a device called Game Ready. Game Ready is popular with football trainers and orthopedic patients that use ice and pressure to reduce swelling and pain around elbow and knee joint replacement sites. Greystone outfits the gyms in its skilled nursing facilities with a variety of rehab equipment, including high-low tables, mats, hand weights, leg weights, and modern strengthening machines. In addition, many Greystone SNFs have additional high-end, state-of-the-art equipment such as the AlterG and Biodex. The AlterG is an anti-gravity treadmill that enables patients with weight-bearing restrictions to use their muscles, preventing disuse atrophy. A Biodex is used for balance re-training. If approved, Lakeland Oaks proposes to have separate therapy gyms for its short-term rehabilitation and long-term care programs. By having two therapy gyms, Lakeland Oaks would be able to offer therapy services tailored to both patient populations’ needs. In contrast, Eighth Florida proposes to have one centralized therapy gym for its entire facility. Although quality may be measured by many metrics, the five-star rating system published by the Centers for Medicare and Medicaid Services (CMS) has become the most commonly used measure of quality among nursing homes. CMS is the federal agency that oversees the Medicare and Medicaid programs. CMS developed the five-star rating system for nursing homes in 2008. The ratings are scaled on a statewide basis and provide a mechanism to compare nursing homes within a state. Only 10 percent of nursing homes in a state receive a five-star rating. Seventy percent receive a two through four-star rating. The bottom 20 percent receives a one-star rating. A nursing home’s score is derived from a variety of criteria, including the results of its health inspection surveys, staffing data, and quality measure scores. A nursing home’s star rating is available on the CMS Nursing Home Compare website. As of July 2015, Greystone’s average star rating for its Florida facilities was 3.3 stars, which is above average. For the same time frame, Eighth Florida’s average rating was 2.6 stars or slightly below average. Further, several Greystone facilities, including The Club Villages, received five-star ratings. Greystone has also received other quality-related awards. In 2015, seven skilled nursing facilities operated by Greystone in Florida received the American Health Care Association National Quality Award Program Bronze Award. The Bronze Award is awarded to SNFs that have demonstrated their commitment to quality improvement. In addition, Greenbriar Rehabilitation and Nursing Center, a Greystone facility located in Bradenton, Florida, was awarded the Silver Award in recognition of its good performance outcomes. In contrast, only one Florida Living Options’ skilled nursing facility has received the Bronze Award. Florida Living Options explained that it decided not to pursue additional bronze awards believing that these awards reflect more of a paperwork compliance than an actual measure of quality. The greater number of awards received by Greystone, however, has not been ignored. Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation Lakeland Oaks’ total project costs, as reflected in Schedule 1 of its CON application, are $22,877,084. The total project costs are based upon a detailed budget and workpapers underlying the numbers contained in the financial schedules to Lakeland Oaks’ CON application. Because of its size, Greystone is able to purchase equipment at a lower cost than other smaller providers. The project costs include $1.2 million for equipment. The equipment list is based upon consultation with Greystone’s purchasing department and identification of what items are needed, along with the cost of those items. The project costs set forth in Lakeland Oaks’ Schedule 1 are reasonable and appropriate. Schedule 2 of Lakeland Oaks’ CON application sets forth an accurate and reasonable listing of Lakeland Oaks’ capital projects (i.e., only the proposed Lakeland Oaks SNF). Schedule 3 of Lakeland Oaks’ CON application identifies the source of project funds, and reflects the two sources included in Schedule 2: cash-on-hand and non-related company financing. Based on the audit of the parent organization of Lakeland Oaks, Greystone has a large amount of cash-on-hand, totaling $21,972,271. This greatly exceeds the projected $4,575,414 cash-on-hand needed for the project. With respect to non-related company financing, Lakeland Oaks included a letter from The Private Bank, an outside lender that previously has worked with Greystone in the financing of its skilled nursing facility projects. The letter indicates the bank’s interest in funding the Lakeland Oaks project. Greystone previously has obtained approximately six mortgages from this outside lender to acquire properties and develop projects. The lender has never declined to finance a project proposed by Greystone. The lender typically funds between 75 and 80 percent of the cost of a project. Lakeland Oaks will be able to obtain the necessary outside financing to fund the remainder of the cost of the Lakeland Oaks project. Lakeland Oaks’ projected staffing for its facility is set forth on Schedule 6A of its CON application. In projecting its staffing, Greystone considered its other skilled nursing facilities that are comparable in size to Lakeland Oaks and the projected payor mix of Lakeland Oaks. Facilities with higher Medicare populations, such as the proposed Lakeland Oaks facility, generally require higher levels of staffing in light of the acuity of Medicare patients recently discharged from hospitals. In addition, Medicare patients often require physical therapy services. Lakeland Oaks specifically considered the higher resource utilization required by Medicare patients in developing its projected staffing. Additionally, Lakeland Oaks considered the needs of managed care patients and long-term Medicaid patients in connection with its projected staffing. To calculate the projected wages, Lakeland Oaks considered the actual wages paid at comparable Greystone facilities, adjusted those wages using a Medicare wage index that accounted for inflation, and utilized the wage index applicable to Polk County facilities. The projected staffing, and the annual salaries associated with staffing the facility, are reasonable and appropriate. Lakeland Oaks will be able to staff the facility at the projected salaries. While Florida Living Options explained its recruitment program and generous benefits package to attract qualified employees, its proposed funding is unconvincing. Schedule 3 of Eighth Florida’s CON application shows that Eighth Florida proposes to fund its project with $250,000 cash-on-hand and $24,452,400 in related company financing. Schedule 3 does not reflect any non-related company financing. The CON application requires an applicant to attach proof of the financial strength to lend in the form of audited financial statements. The only audited financial statement Eighth Florida included in its application is the financial statement of the applicant entity, which reflects only $250,000 cash-on-hand. Eighth Florida omitted the audited financial statements of any related entity that would reflect the ability to fund the approximately $24 million to be obtained from the related party. As a result, Eighth Florida failed to prove its ability to fund the project, and the project does not appear to be financially feasible in the short term. While there was a letter within its application discussing the possibility of outside financing, Eighth Florida’s CON application is premised upon funding by affiliate reserves. Indeed, Schedule 1, lines 32-41, indicates that information pertaining to outside financing is inapplicable because the project is 100 percent funded by affiliate reserves and no fees or interest charges are anticipated. If Eighth Florida had proposed outside financing, it would have had to complete those lines of the application. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district While both applicants argue that their proposed projects will improve access to health care for residents of Subdistrict 6-5, Lakeland Oaks’ proposed project will better enhance access. Eighth Florida’s zip code analysis and focus on serving residents of Hawthorne Village is myopic when compared to Lakeland Oaks’ proposed project designed to provide access to Polk County as a whole. Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal Schedule 3 of Lakeland Oaks’ CON application sets forth an accurate and reasonable source of funds to develop the project. As previously explained, Greystone is financially capable of funding the project, partially from cash-on-hand and partially from outside financing. The project is financially feasible in the short term. Lakeland Oaks’ projected utilization of its skilled nursing facility is reflected on Schedule 5 of its CON application. The projected utilization is reasonable and achievable. Greystone has been able to achieve a high rate of utilization at The Club Villages in a short period of time. Greystone also has a process to inform hospitals and physicians of its skilled nursing services, including the placement of clinical liaisons in hospitals and physician offices. Greystone also enjoys a good reputation that serves to attract patients, including specifically Medicare patients, to its facilities. Finally, the Lakeland Oaks facility will house long-term care residents, which generally are easier to attract to a facility than patients in need of short-term rehabilitation. With regard to long term financial feasibility issues, Schedule 7 of Lakeland Oaks’ CON application sets forth revenues based on patient days and an assumed payor mix. The payor mix assumptions and projected revenues are accurate and reasonable. The assumed payor mix is based on the experience of other Greystone facilities. Specifically, Lakeland Oaks projects in its second year of operation 7.96 percent self-pay patient days; 29.2 percent Medicaid days; 41.59 percent Medicare Part A days; 15.04 percent “Other Managed Care” days. Medicare Advantage, or Medicare Part C, accounts for 90 percent of the “Other Managed Care” days. Finally, Lakeland Oaks projects 6.19 percent in “Other Payer” patient days, including VA and hospice patients. Based on Greystone’s experience at other, similar facilities, the forecast is reasonable. Schedule 8 of Lakeland Oaks’ CON application sets forth its projected income statement for the facility, including total revenues and expenses. For year two of operations, Lakeland Oaks will have a projected total net income of $1,997,665. This is an accurate and reasonable projection, and the project will be financially feasible in both the short-term and long-term. With regard to the reasonableness of Lakeland Oaks’ fill rate, Greystone facilities have experienced an average occupancy in excess of 91 percent for the years 2010-2013. Greystone has demonstrated the ability to obtain a 94 percent occupancy level in many of its facilities, and it is reasonable to project that it will be able to achieve the 94-percent occupancy projected for the Lakeland Oaks facility within two years. Eighth Florida’s expert, Sharon Gordon-Girvin, agreed that Lakeland Oaks’ projected 94-percent occupancy is achievable. Lakeland Oaks’ projected Medicare census is in line with the Medicare population served by Greystone at its other facilities, including a 150-bed home in Miami-Dade County (39 percent Medicare), a facility in Marion County (42 percent Medicare) and The Club Villages (83 percent Medicare). Eighth Florida’s own expert, Ms. Gordon-Girvin, prepared three CON applications for Greystone that reflected substantial levels of Medicare utilization and did not object to the projected Medicare population. Additionally, CMS data shows that Polk County has a high number of Medicare beneficiaries in comparison to the entire State of Florida, with 119,643 Medicare beneficiaries. Polk County is ranked in the top 10 counties in Florida in terms of the number of Medicare Part A beneficiaries. Finally, a facility in Polk County, Spring Lake, which serves a substantial number of Medicare patients in need of rehabilitation services, experiences a Medicare utilization rate of 64 percent. In sum, Lakeland Oaks’ projected Medicare utilization is reasonable and achievable. Lakeland Oaks projected $150,000 for property taxes as part of its CON application. While Eighth Florida’s financial expert, Steve Jones, opined that Lakeland Oaks’ projected property taxes were understated, his analysis computed the property tax based on certain components of Lakeland Oaks’ projected project costs. Property taxes, however, are based on an assessed value of property, not the costs to construct a facility. Lakeland Oaks’ financial expert, Mr. Swartz, examined the 2015 property taxes at Greystone’s other facilities. The highest property tax rate for any of the Greystone facilities, when inflated forward one year, is $149,381.62. This is consistent with Lakeland Oaks’ projected property taxes of $150,000. Thus, the projected property taxes as set forth in the application are reasonable and accurate. In its CON application, Eighth Florida projected a year one loss of $1,646,400 and a year two profit of $502,945. However, Eighth Florida’s CON application reflects erroneous financial projections and financial deficiencies, some of which were acknowledged by Eighth Florida’s financial expert, Mr. Jones. First, Eighth Florida’s projected Medicaid rate is erroneous. Eighth Florida assumed an incorrect occupancy rate in calculating its Fair Rental Value Rate (FRVS) rate, which is the property component of the Medicaid rate paid by the State of Florida. Specifically, Eighth Florida assumed a 75 percent occupancy in year two of its operation, while the Medicaid allowable rate is 90 percent occupancy in year two. Eighth Florida’s financial expert, Steve Jones, acknowledged the error in the assumed Medicaid rate related to the occupancy factor. In addition, Eighth Florida will not qualify for principal and interest in its FRVS calculation. A provider must have 60 percent mortgage debt in order to receive principal and interest in its FRVS computation. Eighth Florida does not meet the 60 percent test because it relies upon related-party financing, which is not considered a mortgage. Further, Eighth Florida utilized an erroneous interest rate. Because it does not project any outside financing, nor a mortgage, it should have used the Chase Prime Rate, which is about 2.25 percent less than what Eighth Florida assumed in it Medicaid rate calculations. These errors are material in that they result in approximately $135,000 in overstated Medicaid revenue and overstated net income for year two, during which Eighth Florida’s financial schedules project a net profit of approximately $500,000. In response to the opinion that Eighth Florida would not be entitled to principal and interest in its assumed FRVS rate, Mr. Jones maintained that the financing of the project would qualify for treatment as a mortgage, even though the application is premised upon related-party financing. However, AHCA’s rate setting department concluded that borrowing from a related party against reserves, as proposed by Eighth Florida, cannot be considered a mortgage. Mr. Jones conceded that he had never seen AHCA recognize affiliated entity debt as a mortgage. Considering the facts and opinions offered at the final hearing, it is concluded that related party borrowing cannot be treated as a mortgage. Moreover, Schedule 1 of Eighth Florida’s CON application did not include any construction period interest. Lakeland Oaks’ healthcare financial expert, Ronald Swartz reasonably estimated that approximately $700,000-$750,000 in construction period interest was omitted from Eighth Florida’s project costs. As a result, Eighth Florida would require more cash-on-hand to fund the extra costs. This, in turn, affects the income statement, resulting in understated expenses and overstated net income. Mr. Jones acknowledged that construction period interest is normally included. In this application, he did not include that item based upon a cost/benefit analysis and his conclusion that the inclusion of construction period interest would not provide “useful” financial information. Based upon Generally Accepted Accounting Principles and relevant financial standards pertaining to the capitalization of interest, whether construction period interest should be included in financial projections generally turns on concepts of time and materiality. Here, the construction project will take nearly two years, and construction period interest will total approximately $700,000 to $750,000. Thus, construction period interest is material and the interest charge should have been included in Eighth Florida’s financial schedules. Next, Eighth Florida projected a utilization or “fill” rate that is higher than the fill rate Florida Living Options was able to achieve when it opened Hawthorne-Sarasota. A fill rate describes how quickly a facility reaches an anticipated occupancy level. It is appropriate to consider Florida Living Options’ prior history of filling its new facilities. With regard to Florida Living Options’ experience at Hawthorne- Sarasota, that facility reached 85 percent occupancy by the end of its second year of operation. The Sarasota facility had approximately a 35 percent occupancy level at the end of year one, which translates to a first year average occupancy of 16 or 17 percent. At the beginning of year two, it experienced approximately 43 percent occupancy. In contrast, Eighth Florida’s CON application projects an 89 percent occupancy level by month 11. Based on Florida Living Options’ experience in Sarasota, the projection is unreasonable. If Eighth Florida’s proposed facility fills at the same rate as the Sarasota facility, year two of Eighth Florida’s operation would result in a larger financial loss and a greater need for working capital. Given that, Eight Florida’s year two projected net income would actually become a net loss, and additional working capital would be needed. While Eighth Florida’s expert, Mr. Jones, sought to distinguish the Sarasota market from the Polk County market, nonetheless, it is relevant to examine the occupancy level Florida Living Options was able to achieve in connection with the opening of a new facility in the Sarasota market. The financial feasibility of a skilled nursing facility is an important consideration. Considering the issues surrounding Eighth Florida’s fill rate at the end of year one, construction period interest, and the erroneous Medicaid rate, it appears likely that Eighth Florida would experience a year two net loss, bringing into question the long-term financial feasibility of Eighth Florida’s CON application. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost-effectiveness It stands to reason that approval of either application will foster competition due to the fact that additional nursing home beds with new amenities are proposed to be added in Polk County. The extent of that competition, however, is not evident, and the undersigned agrees with the determination of AHCA on page 93 of its State Agency Action Report submitted in this proceeding that “These projects are not likely to have a material impact on competition to promote quality and cost-effectiveness.” Section 408.035(1)(h): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction The Florida Building Code (Building Code) governs the design and construction of skilled nursing facilities. Under the Building Code, a skilled nursing facility may be designed based on either an “institutional” design model or a “household” design model. To obtain AHCA’s approval of a proposed SNF, AHCA requires parties to designate which design model has been selected. An institutional design model involves centralized services. By contrast, the household design model involves decentralized services contained within a “neighborhood” or unit. Section 420.3.2.2 of the Building Code regulates the household design model, and requires that dining activity in social areas be decentralized and included within the resident household. Section 420.3.2.2.1 further provides that “each resident household (unit) shall be limited to a maximum of 20 residents.” Additionally, section 420.3.2.2.2 requires that two individual households be grouped into a distinct neighborhood with a maximum of 40 residents who may share the required residential core areas. Lakeland Oaks’ architectural expert, Bo Russ, and his firm, Architectural Concepts, created the schematic design used in Lakeland Oaks’ CON application. In addition, Mr. Russ and Architectural Concepts provided cost estimates, systems descriptions, and the construction timeline for the project. Architectural Concepts has worked with Greystone in the development of other skilled nursing facilities in Florida, including the design and construction of The Club Villages, The Club at Ocala, and The Club at Kendall. The design of The Club Villages is based on a hospitality model (i.e., the resident-centered culture change model). The social and dining areas of The Club Villages are located within individual neighborhoods. Each neighborhood has a private dining room. Patient rooms surround the dining area. The Club Villages includes a Bistro Restaurant located at the center of the facility for family members and guests. The Club Villages also has space for the provision of rehabilitation services, including two large gyms within the physical therapy suite. The facility has skylights throughout the structure and other features to retain residential elements. In preparing the architectural design for Lakeland Oaks’ proposal, Architectural Concepts incorporated certain aspects of the design of The Club Villages. The Lakeland Oaks design is based on the “institutional model,” but with certain embellishments intended to give the facility a “household,” residential feel. The proposed Lakeland Oaks facility is approximately 84,000 square feet. The facility has 10-foot ceilings, a residential-oriented interior design, residential lighting, residential furniture, a large porte cochere, a lobby area similar to The Club Villages, a Bistro, a central dining area within the community that is divided into four dining rooms with unique interior vernacular, a movie theater, a satellite therapy gym, offices for staffing, a separate Activities of Daily Living suite, a doctors lounge, and three nursing units. With regard to physical therapy services, the proposed Lakeland Oaks facility will include two large gyms at the center of the therapy suite, a private outpatient therapy entrance, a large classroom, and space for other ancillary services. The design will allow for a concierge approach to therapy to treat patients in need of those services. The proposed Lakeland Oaks facility is reasonably and appropriately designed for use as a skilled nursing facility, and promotes high quality of care. In developing the design of the facility, Mr. Russ considered the fact that Lakeland Oaks proposes to offer both short-term and long-term care. Greystone has developed two similar skilled nursing facilities, The Club at Kendall, a 150-bed skilled nursing facility, and The Club at Ocala, a 154-bed facility, both of which are similar in design to Lakeland Oaks. Greystone has received AHCA approval of the design and construction for both of those facilities. Lakeland Oaks’ proposed construction costs are $17,289,054, or $185 per square foot. The estimated construction costs are based on similar projects, including The Club at Ocala at $178 per square foot. The construction costs are reasonable and appropriate. The architectural plan, design, and features presented by Lakeland Oaks satisfy the architectural criteria applicable to skilled nursing facilities in Florida. The facility complies with all applicable construction, design, and life safety code requirements. Lakeland Oaks also presented a reasonable timeline for completion of the project. The timeline is based on Greystone’s prior experience in constructing similar skilled nursing facilities. Mr. Russ reviewed Eighth Florida’s architectural plans and schematics for conformity with applicable criteria. Eighth Florida’s architectural plans and schematics were prepared by Bessolo Design Group (Bessolo Group). Because of design flaws inconsistent with the Building Code, the architectural plans and design proposed by Eighth Florida and Bessolo Group should not be approved by AHCA. Eighth Florida’s proposed design will be reviewed by AHCA based on the provisions governing the institutional design model. The design fails to meet certain distance requirements found in the Building Code provisions governing an institutional design. Specifically, Florida Building Code section 420.3.2.1.2 (now renumbered as Building Code section 450.3.2.1.2) provides that the travel distance from the entrance door of the farthest patient room to the nurse’s station cannot exceed 150 feet. In addition, the distance from a patient room to a clean utility and soiled utility room cannot exceed 150 feet. Based on the schematic plan presented by Eighth Florida and Bessolo Group, the distance from the most remote patient room to the nurse’s station well exceeds 150 feet. In addition, the distance from the most remote patient room to the soiled/utility rooms well exceeds 150 feet. These flaws cannot be remedied without substantial design changes. In addition, the Eighth Florida/Bessolo Group design includes deficiencies related to smoke compartments, nourishment stations, and other items. These more minor flaws can be remedied without substantial changes. However, as to the 150-foot limit, Eighth Florida’s non-compliance makes the design a failed model. The facility cannot be approved in its current design. In order to be approvable, the facility would need to undergo a major redesign, including a change in the size and configuration of the building. This, in turn, would impact all of the financial assumptions contained in Eighth Florida’s CON application. In response to Mr. Russ’ opinions, Eighth Florida’s architectural expert, Kevin Bessolo, contended that the deficiencies related to the 150-feet distances from the patient room to the nurses station and soiled/clean utility areas were not fatal because the plan was based upon the “household model.” Mr. Besselo acknowledged that, if the design is considered to be “institutional,” then the travel distances would exceed the 150-foot distance requirements. Mr. Besselo also acknowledged that a skilled nursing facility can either be an institutional design model or a household design model, but not both. Mr. Bessolo further acknowledged that his position that the plan is approvable is contingent upon the design being considered under the household design model in accordance with the Building Code. Mr. Bessolo disagreed with the criticism offered by Mr. Russ regarding the 150-feet distance requirements because he contended that his design presents a household model. Eighth Florida’s schematic design, however, does not comply with the Building Code’s requirements for a household design model. Eighth Florida’s proposed building is divided into 30-bed neighborhoods that exceed the Building Code’s 20-bed maximum for the household design. In addition, Eighth Florida’s plan presents three households sharing a central services area. Finally, the dining area presented in the Eighth Florida plan is centralized, rather than decentralized as required for the household design model. Because the proposal does not qualify as a household model, AHCA should review it under the institutional plan provisions. In turn, Mr. Bessolo offered criticisms of Lakeland Oaks’ proposed architectural plan. These included issues related to the distance to soiled utility exceeding 150 feet, resident storage areas, central bathing area, no emergency food storage, smoke compartment issues, secondary exit issues, and the planned movie theater. However, unlike Eighth Florida’s major deficiencies related to the 150-foot distant limits from the nurse’s station and from the clean and soiled utility rooms, the criticisms offered by Mr. Bessolo are easily rectifiable by Lakeland Oaks without substantial change. I. Section 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent Greystone has a strong history of serving Medicaid patients in Florida. On a company-wide basis, 53.65 percent of all patient days in Greystone SNFs were provided to Medicaid patients during calendar year 2014. Lakeland Oaks plans to treat Medicaid patients at its proposed facility. In its second year of operation, Lakeland Oaks projects that almost 30 percent of its patient days will be Medicaid days. Additionally, if “dual eligibles” (i.e., patients with Medicare as a primary payer but also eligible for Medicaid) are taken into account, Lakeland Oaks’ provision of services to Medicaid patients will be even higher. Lakeland Oaks’ payor mix assumptions were based on Greystone’s actual experience at comparable SNFs in Florida and are reasonable. Eighth Florida projects in its second year of operation that approximately 40 percent of its patient days will be Medicaid days. As previously explained, that projection is questionable. The evidence at hearing showed that Hawthorne- Sarasota, the facility upon which Eighth Florida’s proposal is based, had only eight percent Medicaid utilization after one and a half years of operation. IV. Factual Summary The facts set forth above demonstrate that Greystone has proposed a well-funded, financially feasible, well-designed skilled nursing facility that will improve Polk County access to short term and long term skilled nursing care for residents of Polk County. Greystone has demonstrated a proven record of providing high quality of care and the ability to assure quality of care for the Lakeland Oaks proposal. In contrast, Eighth Florida’s application was largely focused on improving access to those services within a certain zip code and for residents of the Hawthorne Village community and not residents of Polk County as a whole. Greystone, Lakeland Oaks’ parent company, has a long, well-established history of providing high quality care at over two dozen skilled nursing facilities in Florida. On the other hand, Florida Living Options, Eighth Florida’s parent, only operates three skilled nursing facilities in Florida and does not have as extensive of a track record in providing high quality care. Moreover, Greystone has a well-established history of providing skilled nursing services to a large volume of Medicaid patients. On a company-wide basis, over 50 percent of Greystone’s patient days consist of Medicaid patients. Conversely, Hawthorne-Sarasota, the facility upon which Eighth Florida’s proposed project is based, had only eight percent Medicaid utilization in its first year and a half of operation, calling into question Eighth Florida’s projection of 40 percent Medicaid utilization in its application. Further, Eighth Florida has proposed to build a nursing home with questionable inter-company financing and uncertain financial feasibility. Eighth Florida’s facility design does not meet code requirements and is unlikely to be approved as proposed without substantial changes. Considering both applications and the facts submitted at the final hearing as outlined above, it is found that Lakeland Oaks’ CON application, on balance, best satisfies the applicable statutory and rule criteria.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order approving Lakeland Oaks NH, LLC’s CON Application No. 10309 and denying Eighth Florida Living Options, LLC’s CON Application No. 10303. DONE AND ENTERED this 22nd day of February, 2016, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida32399-3060 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of February, 2016.
