The Issue The issue for determination is whether Petitioner should be granted a consumer’s certificate of exemption pursuant to Subsection 212.08(7)(o), Florida Statutes.
Findings Of Fact The Department of Revenue (Respondent) is the state agency charged with enforcement of Chapter 212, Florida Statues, and the issuance of certificates of exemption. Unto Others, Inc. (Petitioner) is an organization incorporated in the State of Florida as a non-profit corporation. Petitioner’s Articles of Incorporation, Article II, states Petitioner’s purpose as follows: The purposes for which the Corporation [Petitioner] is organized are exclusively religious, charitable, scientific, literary, and educational within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986 or the corresponding provision of any future United States Internal Revenue law. Petitioner made application to the Respondent for a certificate of exemption as a charitable institution pursuant to Subsection 212.08(7)(o)2.b, Florida Statutes. Petitioner did not make application for an exemption as a scientific, religious, or educational institution, but it may in the future apply under these criteria. By Notice of Intent to Deny (Notice) dated January 30, 1998, the Respondent notified Petitioner that its application was being denied. The grounds stated in the Notice for the denial were the following: (1) "Your organization does not provide, nor does it raise funds for charitable institutions which provide one or more of the charitable services listed in the statute [Subsection 212.08(7)(o)2.b, Florida Statutes]."; and (2) "Your organization fails to meet the qualification for exemption from sales and use taxation, as set forth in Section 212.08(7), Florida Statutes." Currently, Petitioner’s sole function is the raising of funds to enable Petitioner to rehabilitate people and dwellings. All of Petitioner’s activities are conducted by non-paid volunteers. No evidence was presented to show that Petitioner rehabilitates any person or dwelling, or holds religious services. No evidence was presented to show that Petitioner governs or administers any office within any hierarchy of a larger organization. No evidence was presented to show that Petitioner participates with or controls another organization. No evidence was presented to show that Petitioner expends more than 50 percent of its expenditures toward any charitable service. No evidence was presented to show that Petitioner disburses more than 50 percent of its expenditures directly for a charitable service or to any entity that directly provides or performs any charitable service. No evidence was presented to show that Petitioner directly provides or performs any charitable service for any entity or person; or that Petitioner provides any goods or services as a charitable service. No evidence was presented to show that Petitioner directly provides a reasonable percentage of any charitable service free or at a substantially reduced cost to persons, animals, or organizations that are unable to pay for such services. No evidence was presented to show that any charitable service was provided free or at a substantially reduced cost. No evidence was presented to show that persons, animals, or organizations actually received any charitable service and that those persons, animals, or organizations were unable to pay for such service(s). Petitioner does not currently provide any of the services listed in Subsection 212.08(7)(o).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying a consumer's certificate of exemption to Unto Others, Inc. DONE AND ENTERED this 31st day of August, 1998, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 31st day of August, 1998.
The Issue Whether the Petitioner qualifies as a minority business enterprise?
Findings Of Fact J. F. Dees is the husband of Edith Dees and the father of Gale Dees Paschal and Michael Dees. Edith Dees is the mother of Ms. Paschal and Michael Dees. In 1959, J. F. Dees and Edith Dees began operating a painting business. The business was eventually incorporated as J. F. Dees, Inc. J. F. Dees, Inc., employed union employees. In June of 1974, Ms. Dees formed the Petitioner. The Petitioner was formed so that nonunion labor could be used and to provide for the future of Ms. Paschal and Michael Dees. Ms. Dees owned 100 percent of the stock of the Petitioner from its formation in 1974 until 1976. In 1976, Ms. Dees sold 50 percent of the stock of the Petitioner to Ms. Paschal and 50 percent to Michael Dees. The purchase price for 50 percent of the stock of the Petitioner in 1976 was $25,000.00, half the appraised value of the Petitioner at that time. The money used by Ms. Paschal and Michael Dees to purchase the stock was given to them by Ms. Dees. After selling the stock of the Petitioner, Ms. Dees and J. F. Dees retired. From 1976 until June, 1986, Ms. Paschal and Michael Dees were 50-50 owners and the only directors of the Petitioner. On June 19, 1986, Ms. Paschal and Michael Dees each gave 100 shares of their stock in the Petitioner to Ms. Dees. Ms. Dees was given an interest in the Petitioner and returned to work because J. F. Dees had suffered a serious illness. As a result of this illness, Ms. Dees had suffered financial difficulties which necessitated her return to work. The Petitioner is a Florida corporation. It was formed on June 6, 1974. The Petitioner is engaged in the business of commercial and industrial painting and related services. The Petitioner has no affiliation or relationship with J. F. Dees, Inc., or any other business. As of March 31, 1986, the net worth of the Petitioner was $652,128.29. No financial statements as of March 31, 1987, or any other date after March 31, 1986, have been prepared. In 1986 the Petitioner had gross sales of over $2,000,000.00. The net profit on the Petitioner's gross sales was $164,870.23. The net worth of the Petitioner as of the date of the final hearing of this case was less than $1,000,000.00. The Petitioner is performing a useful business function. Ms. Paschal and Ms. Dees are not employees of a non-minority business with any ownership interest in the Petitioner. The Petitioner has one outstanding class of stock. The outstanding stock of the Petitioner is currently owned as follows: Ms. Paschal 400 Shares -- 40 percent Michael Dees 400 Shares -- 40 percent Ms. Dees 200 Shares -- 20 percent Ms. Paschal, Ms. Dees and Michael Dees are the only directors of the Petitioner at this time. The By-Laws of the Petitioner provide that the management and control of the business of the Petitioner is vested in the Board of Directors. Any combination of two directors can control the business of the Petitioner. The Petitioner's officers are as follows: President: Ms. Paschal Vice-President: Michael Dees Vice-President: Ms. Dees Secretary/Treasurer: Joye M. Glenna The By-Laws of the Petitioner provide the following with regard to the duties of the officers: The duties of the officers shall be such as are usually imposed upon such officials of corporations and as are required by law, and such as may be assigned to them, respectively, by the Board of Directors from time to time. Ms. Paschal, Ms. Dees and Michael Dees are all paid a salary for the work they perform for the Petitioner. The Board of Directors approves Christmas bonuses. In 1985 no bonuses were given to Ms. Paschal, Ms. Dees or Michael Dees. In 1986, Michael Dees was awarded a bonus. The bonus was awarded to Michael Dees because of his work as one of 5 estimators of the Petitioner. His bonus was computed in the same manner that bonuses for the other 4 estimators were calculated. Bonuses were awarded based upon an employee's contribution to the Petitioner's business. Ms. Paschal and Ms. Dees did not receive a bonus in 1986 because they did not work as estimators. Michael Dees has received a loan from the Petitioner. The Petitioner is a subchapter S corporation for Federal income tax purposes. The profits and losses of the Petitioner are allocated to Ms. Paschal, Ms. Dees and Michael Dees in the same proportions as their stock ownership. The five estimators of the Petitioner, including Michael Dees, have the same authority and duties. Michael Dees' primary job function with the Petitioner is in his capacity as an estimator. Michael Dees does not supervise the work of the other 4 estimators. In his capacity as an estimator, Michael Dees prepares bids on jobs, supervises projects he is responsible for, orders materials needed for his projects and signs some correspondence. Correspondence signed by Michael Dees is prepared for his signature by Ms. Paschal. The duties Michael Dees performs as an estimator are also performed by the other 4 estimators. Estimators, including Michael Dees, hire painters and laborers for their projects. Foremen are also hired at the suggestion of the estimators by the Directors. The Petitioner has a weekly staff meeting attended by the estimators, Ms. Paschal and Ms. Dees. Ms. Dees attends as few of the meetings as possible because she does not like getting up as early as the time the meetings are held. The general operation of the Petitioner is discussed at the staff meetings. The estimators report on the status of their projects and recommend who should be hired as a foreman when one is needed. The ultimate decision on who is to be hired by the Petitioner is made by the Directors. The Board of Directors has authorized Ms. Paschal, Ms. Dees, Michael Dees and Joye Glenna, the Secretary/Treasurer, to sign checks on the Petitioner's bank accounts. They are all authorized to sign checks for convenience purposes. All checks are authorized by Ms. Paschal or Ms. Dees. Ms. Glenna prepares the checks and Ms. Paschal or Ms. Glenna sign them. Ms. Paschal reviews all checks except routine ones. Ms. Paschal is a guarantor on outstanding loans of the Petitioner. The Petitioner has not borrowed any funds since Ms. Dees acquired her stock in the Petitioner. If required by a lending institution, Ms. Dees would personally guarantee loans to the Petitioner. Ms. Paschal, Ms. Dees and Michael Dees are all liable on the Petitioner's indemnity bond. Ms. Paschal, Ms. Dees and Michael Dees have the authority to hire and fire employees. If an employee is to be hired or fired, they consult with each other. The last estimator position filled by the Petitioner was filled by the promotion of L. Wayne Long. Mr. Long was promoted in March, 1987. Ms. Dees participated in the decision to promote Mr. Long. Ms. Dees has participated in the decisions to hire foremen since June, 1986. The Petitioner has 18 non-painter permanent positions: 5 estimators, 2 clerical, 8 foremen, 1 warehouse employee and Ms. Paschal and Ms. Dees. During 1985, 1986 and the first quarter of 1987, the Petitioner reported the following number of employees on Form 941, Employer's Quarterly Federal Tax Return: 1985 1986 1987 January 64 58 52 February 54 54 49 March 61 61 40 April 74 73 May 61 69 June 60 91 July 57 104 August 78 86 September 58 65 October 74 80 November 79 72 December 69 70 The Petitioner had 212 projects in 1986. The projects had an average duration of 8 weeks. Therefore, the Petitioner had an average of 32 projects at any given time during 1986. The Petitioner currently has approximately 34 projects. The Petitioner has 60 to 75 persons on its payroll as of the date of the formal hearing of this case. The Petitioner paid a bonus to 18 employees at the end of 1986. Not all permanent employees received a bonus, i.e., Ms. Paschal and Ms. Dees. Painting contractor companies generally experience a high turnover of employees. In 1985 the Petitioner employed 337 people during the year. In 1986 the Petitioner employed a total of 374 persons. The Petitioner has 8 foremen who are permanent full-time employees. In order for them to function they must have painters to supervise. If each foreman has only 1 painter, there would be at least 8 additional employees on a permanent full-time basis. More than 8 painters would be needed to work on the 32-34 projects the Petitioner has had at any given time in 1986 and 1987. During 1985 and 1986 the Petitioner employed at least 23 employees who worked for at least 12 months. Ms. Paschal is an American woman. From 1964 until 1974, Ms. Paschal worked full-time with J. F. Dees and J. F. Dees, Inc. Her responsibilities included accounting, payroll and payables. She learned estimating and how to prepare bids and participated in such activities. Since 1974, Ms. Paschal has been employed full-time with the Petitioner. From 1974 until 1976 Ms. Paschal served as a Vice-President of the Petitioner. From 1974 until the present Ms. Paschal has served as a Director of the Petitioner. From 1976 until the present Ms. Paschal has served as the President of the Petitioner. Ms. Paschal graduated from high school. She also has attended Florida Junior College and the University of North Florida. She has taken courses in business and construction, including accounting, management, tax law, blueprint reading, hiring/firing, safety and loss control, Worker's Compensation, insurance and bonding and contract law. Ms. Paschal has also attended seminars relating to product specifications and applications and computers. Ms. Paschal is the secretary/treasurer and founding member of the First Coast Chapter of Painting and Decorating Contractors of America. Ms. Paschal's duties as President of the Petitioner include the following: Overseeing the day to day operations of personnel. She performs this function in part through the estimators and other management personnel who report directly to her; Supervision and control of estimating and final bid estimates; Reviewing specifications on all large and complex projects; The preparation and signing of the vast majority of correspondence on behalf of the Petitioner; Overseeing accounts receivable billings and collections. Estimators, including Michael Dees, also handle the collection of receivables. Difficult collections are often turned over to Ms. Dees to collect; Overseeing and coordinating the use of field personnel; Approval of payroll; Evaluation of personnel and setting of pay; Preparing and overseeing employee management duties, establishing company policies and compliance with personnel laws; Responsibility for financial aspects of the Petitioner; Procurement of insurance; Signing contracts and change orders. Michael Dees and Ms. Dees can also sign contracts and change orders after Ms. Paschal's review and approval; Handling legal matters, including decisions as to whether to institute legal proceedings on behalf of the Petitioner; and Acting as spokesperson on policies of the Petitioner. Ms. Paschal signs the vast majority of contracts entered into by the Petitioner. Michael Dees has signed contracts. Ms. Paschal reviews and approves all bids submitted by the Petitioner. Most bids are initially prepared by the five estimators, including Michael Dees. Ms. Paschal has prepared safety policies for the Petitioner. Ms. Paschal has prepared employee "right to know" compliance manuals for the Petitioner's employees. Ms. Paschal handles the Petitioner's finances, including, among other things, banking relations, loans, payroll, cash flow, review of accounts receivable and budgeting. Ms. Dees assists Ms. Paschal with cash flow and budgeting and other financial aspects of the Petitioner. Ms. Paschal participates in the preparation of large and complex bids. Ms. Paschal and Ms. Dees coordinate and consult on all large purchases. Ms. Paschal keeps her direct contacts with owners, general contractors and project superintendents to a minimum. She has delegated authority to the estimators and allows them to coordinate their projects directly. She is available, however, to handle any problems which the estimators cannot handle. When estimators have a problem they discuss the problem with other estimators, including, but not limited to, Michael Dees. If the estimators cannot resolve the problem they bring the problem to Ms. Paschal for resolution. Ms. Dees is an American woman. Ms. Dees has been involved in the painting business since her early childhood. Her father and her husband were involved in the contract painting business. She has been involved in virtually every function of the contract painting business, including, among other things, estimating, signing contracts, payroll, bookkeeping and inventory control. She is qualified to handle estimating work for the Petitioner. Ms. Dees graduated from high school. Although she has not taken courses in business and construction, her extensive experience in the painting business more than compensates for her lack of formal education. Ms. Dees has served as a Vice-President and comptroller of the Petitioner since 1986. Her duties include collection of difficult overdue accounts, overseeing accounts payable, overseeing purchasing and inventory control and job cost and overhead analysis. A shop man handles the inventory and ordering of supplies but Ms. Dees has the overall responsibility for purchasing and inventory. Ms. Dees reviews estimates prepared by the estimators and can perform estimating work. Ms. Dees designed the purchase order system used by the Petitioner. From 1976 until the present Michael Dees has served as a Vice- President of the Petitioner. Michael Dees graduated from high school and attended Florida Junior College. He has taken building and construction courses and attended seminars, including blueprint reading, estimating and application of new coating products, management, hiring and firing, spray painting and contract law. Michael Dees does not participate in the general, everyday financial affairs of the Petitioner. He is also not actively responsible for accounting, purchasing, payroll, legal matters, insurance or employee and safety regulation compliance. Michael Dees' primary activity with the Petitioner is as an estimator. Although he also serves as 1 of 3 Directors of the Petitioner, Michael Dees does not engage in the overall, daily management of the Petitioner. Michael Dees lacks the experience and knowledge concerning the management of the Petitioner of Ms. Paschal and Ms. Dees. Although he is attempting to learn more about the operation and management of the Petitioner, he relies upon Ms. Paschal and Ms. Dees currently because of their superior experience and knowledge. At present, Michael is more interested in working and being treated in the same manner as the other estimators of the Petitioner. Ms. Paschal has 23 years experience in the painting business, including 11 years with the Petitioner. Ms. Dees has 19 years experience in the painting business, including 3 with the Petitioner. Michael Dees has 18 years experience in the painting business, including 11 years with the Petitioner. Ms. Paschal and Ms. Dees have knowledge of the financial structure of the Petitioner and possess the capability, knowledge and experience necessary to make decisions concerning commercial and industrial painting. In November of 1986, a request for certification as a minority business enterprise was filed by Ms. Paschal on behalf of the Petitioner. The Petitioner has not entered into any agreement which could result in Ms. Paschal and Ms. Dees owning less than 51 percent of the Petitioner's stock.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner's request for certification as a minority business enterprise be denied. DONE and ENTERED this 5th day of August, 1987, in Tallahassee, Florida. LARRY J. SARTIN 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 5th day of August, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0515 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 10. 2 11. 3-6 18. 7 43 and 62. 8 21 and 48. 9 21 and 65. 10 21. 11 19. 12-13 44. 14 45. 15 46-47. 16 49. 17 50. 18-19 5. 20 9. 21 12. 22 26. 23 22. 24 52. 25 27 and 69-70. 26-27 27. 28 52-53. 29 54. 30 52. 31 52 and 65. 32 52. 33 57. 34 69. 35 59. 36 31. 37 15. 38 32. 39 33. 40 55. 41 56. 42 51. 43 23. 44 40. 45-47 These proposed findings of fact are not supported by the weight of the evidence. 48 16. 49-50 63. 51 2 and 4. 52 63. 53 65. 54 66. 55 65. 56 34. 57 28. 58 52. 59 69. 60 70. 61 17. 62 12. Respondent's Proposed Findings of Fact 1 4 and 10. 2 11. 3 18. 4 1. 5 49, 64, 68. 6-8 71. 9 8 and 19. The evidence failed to prove that Ms. Paschal and Michael Dees "jointly managed the business" prior to June, 1986. 10 21 and 48. 11 21 and 67. 12 5, 9, 18, 21 and 65. 13 22. 14 The first two sentences are rejected. The resolution and the ratification of the lawful actions of the officers of a corporation are routine practices of a corporation's Board of Directors. Duties had already been assigned to the officers through the By-Laws of the Petitioner. No further action was required by the Board in order for the officers to carry out their duties. The last sentence is accepted in paragraph 31. 15 This proposed finding of fact is irrelevant. The last sentence is not supported by the weight of the evidence. The authority of the officers was already provided by the By-Laws. 16 73. 17-21 Hereby accepted to the extent they are relevant findings of fact. 22 52 and 65. Michael Dees handles collecting accounts receivables relating to his projects and in his capacity as an estimator. 23 52 and 57. 30. The last sentence is not supported by the weight of the evidence. 34. The last sentence is not supported by the weight of the evidence. 26 29. 27 30. 28 65. 29 Hereby accepted. 30 57. 31 59 and 65. 32 24. 33 31. 34-35 65. 36-39 52. 40 52 and 53. 41 60. 42-44 Not supported by the weight of the evidence. Hereby accepted. Not supported by the weight of the evidence. 47 53. 48-51 28. Hereby accepted. The first 3 sentences are irrelevant or not supported by the weight of the evidence. The last 4 sentences are irrelevant or not supported by the weight of the evidence. The rest of the proposed finding of fact is accepted in 19-20 and 22. 54-55 72. Not supported by the weight of the evidence. 25. The last sentence is irrelevant. 58 24. 59 The first sentence is irrelevant. 32. 60 33. 61 38. The first 2 sentences are not supported by the weight of the evidence. 24 and 39. Hereby accepted. 14 and 37. The next to the last sentence is not supported by the weight of the evidence. COPIES FURNISHED: Ronald W. Thomas John B. MacDonald, Esquire Executive Director Brant, Moore, Sapp, Department of General Services MacDonald & Wells, P.A. Room 133, Larson Building 121 West Forsyth Street Tallahassee, Florida 32399-0950 Suite 900 Post Office Box 4548 Claire D. Dryfuss, Esquire Jacksonville, Florida 32202 Office of General Counsel Department of General Services Room 452, Larson Building Tallahassee, Florida 32399-0955
The Issue The issue in this case is whether Respondent should award a contract to Intervenor to provide physical and occupational therapy services to approximately 1,300 exceptional education students who qualify for such services in 77 public schools in Brevard County, Florida.
Findings Of Fact Intervenor is the incumbent contractor for physical and occupational therapy services provided to Respondent. Intervenor has provided such services to Respondent for approximately six years. On February 24, 1999, Respondent issued its request for proposals ("RFP") for occupational and physical therapy services. The RFP consists of eight unnumbered pages. Ten companies responded to the RFP. However, only the proposals of Petitioner and Intervenor are at issue in this proceeding. A four-member evaluation committee ranked each proposal on the basis of six categories. The six categories were: experience; qualification; recruiting ability; location of office; and responsiveness. The evaluation committee also considered the hourly rate and mileage to be charged by each proposer. The evaluation committee met as a body. Each member of the committee then returned to his or her respective office to complete a scoring sheet. The scoring sheet listed each proposer's name in a column down the left side of the sheet and the six categories for evaluation from left to right across the top of the sheet. A column down the right side of each sheet listed the hourly rate to be charged by the proposer identified in the column down the left side of the sheet. The RFP does not prescribe a scoring formula to be used in completing the scoring sheets. In relevant part, the RFP merely states: . . . The Selection Committee shall rank the firms in order of preference and will submit its recommendation to the Superintendent for his consideration. The [Board] will bear responsibility for the selection of the Contractor and will decide which bid [sic] is most appropriate for Brevard schools and their students. The Superintendent will recommend a therapy service provider which will be presented to the . . . Board for approval at a regular or special Board meeting. RFP at unnumbered page 8. All four members of the evaluation committee ranked Intervenor's proposal first and Petitioner's proposal second. However, the hourly rate in Petitioner's proposal was the lowest of all proposers, at $34.75, and $4.25 less than the $39 hourly rate quoted in the proposal submitted by Intervenor. The proposal submitted by Intervenor charged mileage in addition to the hourly rate while the hourly rate quoted by Petitioner included mileage. Before May 11, 1999, when the Board selected Intervenor as the proposer, the evaluation committee met. The committee asked Respondent's buyer assigned to the contract if the committee was required to recommend the proposal with the lowest price. The buyer advised the committee that the contract was for professional services and did not require the committee to recommend the lowest-priced proposal. The committee determined that Ms. Eva Lewis, one of its members and the Director of Program Support for Exceptional Student Education in Brevard County, should telephone Intervenor and ask if Intervenor would match Petitioner's price. Ms. Lewis telephoned Mr. Rick McCrary, the manager for Intervenor, and asked if Intervenor would accept the contract price of $34.75. After consultation with his superiors, Mr. McCrary agreed to the straight-rate price of $34.75. On May 11, 1999, Ms. Lewis presented the recommendation of the evaluation committee to the Board. The Board asked Ms. Lewis if Intervenor's price was the lowest price. Ms. Lewis disclosed that the evaluation committee preferred the proposal submitted by Intervenor, asked Intervenor to lower its price to meet that of Petitioner, and that Intervenor agreed to do so. The Board voted unanimously to select Intervenor as the proposer to be awarded the contract. The parties directed most of their efforts in this proceeding to the issues of whether competitive bidding requirements apply to the proposed agency action and whether the scoring formula used to rank the proposers complied with those requirements. Petitioner asserts that the selection of Intervenor by the Board violates the competitive bidding provisions in Section 120.57(3), Florida Statutes (1997). (All chapter and section references are to Florida Statutes (1997) unless otherwise stated). Intervenor and Respondent contend that Section 120.57(1), rather than Section 120.57(3), controls the Board's selection of Intervenor for the contract. Although the document used by Respondent to obtain proposals from vendors describes itself as an RFP and describes the responses as either proposals or bids, Respondent and Intervenor suggest that the document is not an RFP but merely a "solicitation." Respondent and Intervenor further argue: . . . that the . . . Board . . . did not attempt to comply with the requirements for competitive procurement under Section 120.57(3) or Chapter 287. . . . And . . . that the . . . Board was never required to comply with those statutes. . . . these are contracts for professional, educational and health services, contracts uniquely and specifically exempted from [the] competitive bid procurement process. Transcript ("TR") at 40. It is not necessary to reach the issue of whether Section 120.57(1) or the competitive procurement provisions in Section 120.57(3) and Chapter 287 control Respondent's selection of Intervenor as the proposer to be awarded the contract. In either event, the proposed agency action is contrary to the specifications in the RFP. Assuming arguendo that Section 120.57(3) and Chapter 287 do not apply to the contract at issue in this proceeding, Respondent failed to comply with RFP specifications. As Intervenor and Respondent point out in their joint PRO, Section F.8. of the RFP states: The . . . Board . . . and the selected proposer will negotiate a contract as to terms and conditions for submission to the . . . Board for consideration and approval. In the event an agreement cannot be reached with the selected proposer in a timely manner, then the . . . Board reserves the right to select an alternative proposer. (emphasis supplied) Intervenor and Respondent are also correct that the phrase "negotiate a contract as to terms and conditions" includes terms and conditions such as the contract price. Contrary to the provisions of Section F.8., the Board did not first select a proposer at its meeting on May 11, 1999, and then negotiate a contract price with the selected proposer. Rather, the evaluation committee negotiated a contract price with Intervenor before May 11, 1999, and the Board then selected Intervenor as the successful proposer. The evaluation committee is not the Board and does not have authority to act on behalf of the Board. As the RFP states, the evaluation committee has authority only to: . . . rank the firms in order of preference and . . . submit its recommendation to the Superintendent for his consideration. The [Board] will bear responsibility for the selection of the Contractor and will decide which bid [sic] is most appropriate for Brevard schools and their students. The Superintendent will recommend a therapy service provider which will be presented to the . . . Board for approval at a regular or special Board meeting. RFP at unnumbered page 8. The last sentence in Section F.8. makes clear that the right to select a proposer is the sole province of the Board and not the evaluation committee. Even if one were to ignore the legal distinctions between the evaluation committee and the Board and the authority of each, the RFP specifications fail to provide adequate notice to potential proposers of the true purpose for the RFP. As Respondent and Intervenor state in their joint PRO: . . . the . . . Board used the proposals it received to test the market for physical and occupational therapy services in Brevard County. The . . . Board then used the information it developed from the proposals as negotiating leverage to obtain a price concession from its incumbent contractor. The . . . Board's negotiation tactics permitted it to secure the superior vendor at the price of an inferior vendor. PRO at 33. The RFP fails to disclose that Respondent intended to use potential proposers to obtain negotiating leverage with the incumbent contractor. The failure of the RFP to disclose its purpose violates fundamental principles of due process, adequate notice, and fairness to potential proposers. It creates a gap between what agency staff knew of the Respondent's intent for the RFP and what potential proposers could know from reading the specifications in the RFP. The failure of the RFP to disclose its true purpose suggests that its authors recognized the chilling effect such a disclosure would have had on the response of potential proposers. The lack of responses from potential proposers, in turn, would have frustrated Respondent's intent to "secure the superior vendor at the price of an inferior vendor." Assuming arguendo that Section 120.57(3) controls the contract award at issue in this proceeding, Respondent's proposed agency action violates relevant provisions in Section 120.57(3)(f). In relevant part, Section 120.57(3)(f) provides: In a competitive procurement contest, other than a rejection of all bids, the Administrative Law Judge shall conduct a de novo proceeding to determine whether the agency’s proposed action is contrary to the agency’s governing statutes, the agency’s rules, or policies, or the bid or proposal specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, or arbitrary, or capricious. . . . (emphasis supplied) As previously found, the proposed award of the contract to Intervenor is contrary to the RFP specifications, including specifications for the evaluation and selection process described in paragraphs 7 and 17, supra. The proposed agency action is clearly erroneous within the meaning of Section 120.57(3)(f). It violates fundamental notions of due process, adequate notice, and a level playing field for all proposers. All of the proposers who were induced by the terms of the RFP to expend the time, energy, and expense required to prepare and submit proposals were entitled to rely in good faith on the specifications in the RFP and to require Respondent to adhere to its own specifications. The proposed agency action is also contrary to competition within the meaning of Section 120.57(3)(f). The economic incentive to respond to an RFP would likely diminish over time if the proposed agency action were to persist. Potential proposers would eventually recognize the RFP process as a device intended to reduce the contract price of the incumbent provider rather than as a bona fide business opportunity for potential proposers to gain new market share. Such an economic environment would not likely induce potential proposers to incur the time and expense necessary to prepare and submit proposals. The pool of potential proposers would shrink, and Respondent would lose negotiating leverage with the incumbent vendor. The likely result would be an erosion of negotiating leverage and an accretion in costs.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order finding that the selection of Intervenor for the contract award is contrary to the RFP specifications and contrary to competition. DONE AND ENTERED this 3rd day of September, 1999, in Tallahassee, Leon County, Florida. 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 3rd day of September, 1999. COPIES FURNISHED: Dr. David Sawyer, Superintendent Brevard County School Board 2700 Judge Fran Jamieson Way Viera, Florida 32940-6699 Harold Bistline, Esquire Stromire, Bistline, Miniclier, Miniclier and Griffith 1970 Michigan Avenue, Building E Cocoa, Florida 32922 Jonathan Sjostram, Esquire Steel Hector and Davis, LLP 215 South Monroe Street, Suite 601 Tallahassee, Florida 32301 Edward J. Kinberg, Esquire Edward J. Kinberg, P.A. 2101 South Waverly Place Suite 200E Melbourne, Florida 32901
The Issue As the parties have stipulated, the issue in this case is whether Respondent Florida Housing Finance Corporation (the “Corporation”) properly interpreted Rule 67-48.032(2), Florida Administrative Code, and the corresponding provisions on the same subject found in paragraph 2, at page 2, of the Corporation’s 2000 Qualified Allocation Plan (collectively, the "Instructions"), when it applied the Instructions to determine the substantial interests of Petitioners and Intervenors.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Corporation and Its Duty to Allocate Federal Income Tax Credits The Corporation is a public corporation that administers governmental programs relating to the financing and refinancing of housing and related facilities in Florida. It is governed by a nine-member board composed of eight persons whom the governor appoints plus the Secretary of the Department of Community Affairs, sitting ex-officio. Among other things, the Corporation is the state's designated "housing credit agency" as defined in the Internal Revenue Code. As such, the Corporation has the responsibility and authority to establish procedures necessary for the allocation and distribution of low-income housing federal tax credits, which are created under and governed almost entirely by federal law. These tax credits, which are designed to encourage the development of low-income housing for families, provide a dollar-for-dollar reduction of the holder’s federal income tax liability and can be taken each year, for up to ten years, that the low-income housing project for which the credits were awarded continues to satisfy Internal Revenue Code requirements. Housing tax credits are allotted annually to the states on a per capita basis and then awarded, through state-administered programs, to developers of rental housing for low-income and very low-income families. Once awarded, there is a market for these tax credits; consequently, a developer may sell them at a discount to obtain immediate cash for its project. As a populous state, Florida receives between $18 million and $18.5 million in federal tax credits each year. The Corporation allocates the state's share of tax credits to eligible recipients pursuant to a Qualified Allocation Plan ("QAP") that federal law requires be prepared. The QAP, which must be approved by the governor, is incorporated by reference in Rule 67-48.025, Florida Administrative Code. In accordance with the QAP, the Corporation employs various set-asides and special targeting goals that play a substantial part in determining which applicants will receive tax credits in a particular year. While targeting goals are "aspirational" in nature, set-asides are relatively inflexible. Thus, special targeting goals may be met if credits are available. In contrast, credits that were reserved (or "set- aside") for specific project types will be awarded to applicants whose developments fall within the defined set-aside. The set-asides that have spawned the instant dispute are the Geographic Set-Asides and the Non-Profit Set-Aside. The Geographic Set-Asides require that a pre-determined portion of the available tax credits be awarded to applicants in each of the following county groups: Large County, Medium County, and Small County. In 2000, the allocation percentages for these groups were 64%, 26%, and 10%, respectively. The Non-Profit Set-Aside, which is a function of federal law, requires that at least 12% of the credits be awarded to non-profit applicants. None of the other set-asides is either at issue here or affects the analysis or outcome. The same is true of the special targeting goals. For simplicity's sake, therefore, special targeting goals will be ignored in the discussion that follows, and it will be assumed, unless otherwise stated, that the Geographic and Non-Profit Set-Asides are the only factors (besides merit) that affect the Corporation's award of tax credits. The Petitioners and Intervenors (Collectively, "Petitioners") Lakesmart is a Florida limited partnership which has as one of its general partners a non-profit corporation. In the 2000 application cycle, Lakesmart applied to the Corporation for an award of tax credits from the Medium County allocation. Lakesmart is a "Non-Profit Applicant" for purposes of the Non- Profit Set-Aside. RPK is a Florida limited partnership. In the 2000 application cycle, RPK applied to the Corporation for an award of tax credits from the Large County allocation. For purposes of the Non-Profit Set-Aside, RPK is a "for-profit Applicant." Meadow Glen and Coral Village are Florida limited partnerships. Each has a non-profit corporation as one of its general partners. Both applied to the Corporation in the 2000 application cycle for an award of tax credits from the Medium County allocation. Each is considered a "Non-Profit Applicant" for purposes of the Non-Profit Set-Aside. Evaluation, Ranking, and the Tentative Funding Range To distribute the finite amount of tax credits available each year, the Corporation has designed a competitive process whereby potential recipients file applications that the Corporation grades according to selection criteria set forth in the QAP. Points are assigned based on compliance with these criteria. At the end of the evaluation process, each applicant that met the threshold requirements will have earned a final score that determines its rank in terms of relative merit, with higher-scored projects being "better" than lower-scored projects. Because of the set-asides, however, credits are not awarded simply on the basis of comparative scores. Instead, the Geographic Set-Asides require that the applicants be sorted and ranked, according to their scores, within the Large County, Medium County, and Small County groups to which they belong and from whose credit allocations the successful applicants will be funded. As a result, therefore, if the several applicants with the three highest scores in the entire applicant pool were all in the Large County group and the applicant with the fourth highest score were in the Small County group, for example, then the latter applicant would be ranked first in the Small County group. This means, to continue with the example, that if the first- and second-ranked projects in the Large County group were to exhaust the credits allocated to that group, then the applicant with the third highest score overall would not be funded, while the applicant with the fourth highest score in the applicant pool (but ranked first in a county group) would be funded. 16/ After the Corporation has sorted the applicants by county group and ranked them, within their respective groups, from highest to lowest based on the applicants' final scores, it draws a tentative funding line within each group. Applicants above these lines are within the tentative funding range and thus apparently successful. Conversely, an applicant below the tentative funding line in its county group will not receive tax credits unless, to satisfy a set-aside or fulfill a special targeting goal, it is moved into the funding range. In the 2000 application cycle, a preliminary outcome which had occurred only once before, in 1997, happened again: the aggregate of credits requested by the non-profit applicants within the tentative funding range did not amount to the Non- Profit Set-Aside percentage — 12% in 2000 — of total available credits. Therefore, the Corporation needed to elevate as many apparently unsuccessful non-profit applicants into the funding range — and concomitantly to remove as many apparently successful for-profit applicants from the funding range to make room for the favored non-profit applicant(s) — as necessary to fulfill the 12% quota. An Aside on Categorical Ranking The separation of applicants into three groups according to the Geographic Set-Asides, and the effect that has on determining which applicants will receive credits, was mentioned above. To better understand the parties' dispute regarding the procedure for satisfying the Non-Profit Set-Aside when, as in 2000, it is necessary to award credits to a putatively unsuccessful non-profit applicant at the expense of a putatively successful for-profit applicant, a second, more detailed look at the implications of categorical ranking will be helpful. Because of the Non-Profit Set-Aside, the set of all qualified applicants ("Applicant Pool") is divided into two classes: non-profit and for-profit corporations. As will be seen, the class of non-profit corporations is further separated, for purposes of the Non-Profit Set-Aside, into two subclasses: domestic non-profits and out-of-state, or foreign, non-profits. Finally, to repeat for emphasis, all qualified applicants, regardless of class or subclass (if applicable), fall within one of three groups according to the Geographic Set-Asides: Small County, Medium County, and Large County. The following chart depicts the relevant classification of applicants within the Applicant Pool: Applicant Pool Non-profits For-profits Domestic Foreign Small County Medium County Large County Because, as the chart shows, each applicant fits into several categories, applicants may be ranked in order of their comparative scores in a variety of combinations, depending on how they are sorted, e.g. all applicants, all Large County for- profits, all foreign non-profits, etc. Once the Corporation has drawn the tentative funding lines (which, recall, are county group-specific) and determined preliminarily which applicants will receive funding and which will not, two additional categories exist: applicants within the funding range and applicants below (or outside) the funding range. Owing to the nature of the instant dispute, however, the only non-profits discussed below are those outside the tentative funding range, unless otherwise stated, and the only for-profits considered are those within the tentative funding range, unless otherwise stated. 1/ The above makes clear, it is hoped, that a reference to the "highest scored" applicant, without more, may describe many applicants, such as the highest scored domestic non-profit, the highest scored non-profit in the Small County group, the highest scored foreign non-profit in the Large County group, and so on. More information is needed to pinpoint a particular entity. For ease of reference, and to facilitate the discussion and disposition of the present dispute, the following abbreviations will be used in this Recommended Order as shorthand descriptions of applicants’ defining characteristics: Abbreviation Meaning NP Non-profit applicant FP For-profit applicant High- highest scored Low- lowest scored D domestic entity (i.e. organized under Florida law) F foreign entity (i.e. organized under the law of a state other than Florida) S, M, and L Small, Medium and Large County, respectively ! highest or lowest scored within the indicated category; e.g. High- NP(S!) means highest scored non- profit within the Small County group; Low-FP(S!) means lowest scored for-profit in the Small county group x, y variables Combining these abbreviations provides an increasingly precise description, as more information is added. For example: Combination Description High-NP Highest scored non-profit in some, unknown category High-NP[D!] Highest scored domestic non- profit, unknown group; is not necessarily the highest scored non-profit in the class of non- profits High-NP[F!] Highest scored foreign non-profit, unknown group; is not necessarily the highest scored non-profit in the class of non-profits High-NP[D!](S) Highest scored domestic non- profit, located in the Small County group; not the highest scored non-profit within the Small County group High-NP[D](S!) Highest scored non-profit in the Small County group; is a domestic corporation but is neither the highest scored non-profit nor highest scored domestic non-profit High-NP[D](S) Highest scored domestic non-profit in the Small County group; is neither the highest scored non- profit, the highest scored domestic non-profit, nor the highest scored non-profit in the Small County group Low-FP! Lowest scored for-profit in the class of for-profits Low-FP(M!) Lowest scored for-profit in Medium County group; is not necessarily the lowest scored for- profit in the class of for-profits The Controversy: Gored Oxen and Leapt-Over Frogs The solution to the problem that arose in the 2000 application cycle when an insufficient number of non-profit applicants wound up initially within the tentative funding range is found in two places: Rule 67-48.032, Florida Administrative Code, and the 2000 QAP. Although the language of the two is not identical, the parties agree that the rule and the pertinent QAP provisions have the same meaning, despite their differences in wording. The undersigned has concluded, however, that the differences, though subtle, substantially affect the outcome of this case. It is necessary, therefore, to read them carefully. Rule 67-48.032(2), Florida Administrative Code, provides in pertinent part: To ensure that the minimum 10% is set aside, the Corporation has determined that an initial allocation of 12% to qualified Non- Profits will be met. In order to achieve the initial 12% set aside, Applications from Applicants that qualify or whose General Partner qualifies as a Non-Profit entity pursuant to Rule 67.48.002(71), F.A.C., HUD Regulations, Section 42(h)(5)(c), subsection 501(c)(3) or 501(c)(4) of the Code and organized under Chapter 617, Florida Statutes, or organized under similar state law if organized in a jurisdiction other than Florida and meet scoring threshold requirements shall be moved into the funding range, in order of their comparative scores, with Applicants whose Non-Profit entity is organized under Florida law receiving priority over Non-Profit entities of other jurisdictions, until the set-aside is achieved. The last Non-Profit Development that is moved into the funding range in order to achieve the 12% initial set-aside shall be fully funded even though that may result in a higher Non-Profit set-aside. This will be accomplished by removing the lowest scored Application of a for-profit Applicant from the funding range and replacing it with the highest scored Non- Profit Application below the funding range within the applicable Geographic Set-Aside pursuant to the QAP. This procedure will be used again on or after October 1, if necessary, to ensure that the Agency allocates at least 10% of its Allocation Authority to qualified Non-Profit Applicants. Any for-profit Applicant so removed from the funding range will NOT be entitled to any consideration or priority for the receipt of current or future Housing Credits other than placement on the current ranking and scoring list in accordance with its score. Binding Commitments for Housing Credits from a future year will not be issued for Applicants so displaced. Paragraph 2, at page 2, of the Corporation’s 2000 QAP states: [The Corporation] has determined that an initial allocation of 12% to qualified Non- Profits will ensure that the 10% requirement will be met in the event that all Developments included in the initial 12% do not receive an allocation. In order to achieve the initial 12% set-aside a tentative funding line will be drawn. Then, Applications from Non-Profit Applicants that meet scoring threshold requirements shall be moved into the tentative funding range, in order of their scores with Applicants whose Non-Profit entities are organized under Chapter 617, Florida Statutes, having priority, until the 12% set-aside is achieved. This will be accomplished by moving the lowest scored Application of a for-profit Applicant in the funding range down in ranking so it is ranked below the lowest Non-Profit Applicant within the funding range and moving the highest scored Non-Profit Applicant organized under Chapter 617, Florida Statutes below the funding range within the applicable Geographic Set- Aside pursuant to the QAP up in ranking so it is ranked one ranking space above the for-profit Applicant that was moved down in ranking. If no such Applicant exists, the highest Non-Profit Applicant organized under similar statutes from another state which is below the funding range within the applicable Geographic Set-Aside pursuant to the QAP, will be moved into funding range in the same manner as stated in the previous sentence. This procedure will be used again on or after October 1, 2000, if necessary, to ensure that the [Corporation] allocates at least 10% of its Allocation Authority for 2000 to qualified Non-Profit Applicants. Any for-profit Applicant so removed from the funding range will NOT be entitled to any consideration or priority for the receipt of current or future housing credits other than placement on the current ranking and scoring list in accordance with its score. Binding Commitments for housing credits from a future year will not be issued for Applicants so displaced. The last Non- Profit Applicant moved into the funding range, in order to meet the initial 12% set- aside or in order to meet the minimum 10% set-aside after October 1, 2000, will be fully funded contingent upon successful credit underwriting even though that may result in a higher Non-Profit set-aside. After the full Non-Profit set-aside amount has been allocated, remaining Applications from Non-Profit organizations shall compete with all other Applications in the HC Program for remaining Allocation Authority. The Corporation's interpretation of Rule 67-48.032, Florida Administrative Code, and paragraph 2 of the 2000 QAP (collectively, the "Instructions") to determine the procedure for satisfying the Non-Profit Set-Aside in connection with the 2000 application cycle has caused considerable controversy — and led to this proceeding. The controversial interpretation was publicly manifested on September 15, 2000, when the Corporation published a preliminary ranking sheet on its web site which reflected adjustments that its staff had made to fulfill the Non-Profit Set-Aside. Within days, adversely affected applicants were complaining that the Corporation's staff had misinterpreted the Instructions. The Corporation's staff had construed the Instructions to mean that when it is necessary to displace a for-profit within the tentative funding range to satisfy the Non-Profit Set-Aside, the following procedure must be followed: Remove Low-FP!(x!) and replace it with High- NP[D](x). 2/ If there is no domestic non- profit in county group x, then replace Low- FP!(x!) with High-NP[F](x!). 3/ This construction permits High-NP[D!], if there is one, High- NP![F!] if not, to remain outside the funding range, because it might not be in county group x. In practice, the process that the Corporation’s staff had settled upon operated, in the circumstances presented, to the detriment of Petitioners. Here is how it worked. After the tentative funding range was established, the lowest scored for- profit in the class of for-profits was in the Small County group. 4/ There were no non-profits, domestic or foreign, in that group to elevate, however, and so Low-FP!(S!) could not be removed; the fall-back procedure was followed. See endnote 4. As it happened, RPK was Low-FP(L!) and had a lower score than Low-FP(M!). Thus, under the Corporation's staff's interpretation of the Instructions, as revealed by the rankings posted on September 15, 2000, High-NP[D](L!) was moved into the funding range in the place of RPK, even though High-NP[D](L!)'s final score was lower than that of Lakesmart — which was High- NP. (Coral Village and Meadow Glen were the second- and third-ranked domestic non-profits, respectively, in the Medium County Group. Sorted by class, Lakesmart, Coral Village, and Meadow Glen would be ranked first, second, and sixth in the class of non-profit applicants.) 5/ The second lowest-scored for-profit in the class of for-profits was also in the Large County group. Thus, it became Low-FP!(L!) after RPK was removed. It, too, was replaced by the Large County non-profits that became, in turn, High-NP[D](L!) as the next highest-ranked non-profit in that group was moved up into the funding range to satisfy the 12% Non-Profit Set-Aside. In all, the Corporation's staff proposed to elevate — and hence award tax credits to — four non-profit applicants whose final scores were lower than Lakesmart's and Coral Village's. One of those four putative beneficiaries had a lower final score than Meadow Glen's. Lakesmart and others who disagreed with the Corporation’s staff advanced an alternative interpretation of the Instructions. In their view, to ensure that the Non-Profit Set-Aside is met requires the following maneuver: Remove Low-FP(x!) and replace it with High- NP[D!](x). 6/ If there is no domestic non- profit outside the funding range, then replace Low-FP(x!) with High-NP. 7/ This interpretation admits the possibility that Low-FP! might remain in the funding range, because it might not be in county group x. Under this interpretation, favored by all Petitioners, Lakesmart and Coral Village would be elevated into the funding range, rather than being "leap-frogged" by lower-scored non- profits, and RPK would not be displaced. (Of course, Petitioners' interpretation would require that some other for- profit ox be gored — one having a higher score than RPK's.) These competing interpretations of the Instructions were presented to the Corporation's board for consideration at its public meeting on September 22, 2000. After a discussion of the issues, in which members of the public participated, the board voted unanimously to accept the interpretation that the staff had acted upon in preparing the September 15, 2000, rankings. Later in the same meeting the board adopted final rankings, which were prepared in accordance with the approved interpretation, that resulted in the denial of Petitioners' applications for tax credits. The 1997 Awards: Precedent or Peculiarity? Petitioners maintain that their interpretation of the Instructions is supported by a supposed precedent allegedly set in 1997 that, they say, was binding on the Corporation in 2000. In the 1997 cycle, it so happened that after drawing the tentative funding lines, the sum total of credits sought by non-profits within the preliminary funding range failed to reach the then-required threshold of 10%. Thus, for the first time, the Corporation faced the need to replace higher-scored for- profits (that were apparently in line for funding) with lower- scored non-profits that otherwise would not have received credits. The QAP that governed the 1997 awards provided for the Non-Profit Set-Aside but was silent on the procedure for satisfying it: The Agency will allocate not less than 10% of the state’s allocation authority to projects involving qualified, non-profit Applicants, provided they are non-profits organized under Chapter 617, Florida Statutes, and as set forth in Section 42(h)(5) of the Internal Revenue Code, as amended, and Rule Chapter 9I-48, Florida Administrative Code. Respondent's Exhibit 2, page 8. Rule 9I-48.024(3), Florida Administrative Code (1997), did contain directions for carrying out the required substitution. It prescribed the following procedure for elevating non-profits: If 10% of the total Allocation Authority is not utilized by Projects with Non-Profit Applicants, Applications from Non-Profit Applicants that meet scoring threshold requirements shall be moved into the funding range, in order of their comparative scores, until the 10% set-aside is achieved. This will be accomplished by removing the lowest scored Application of a for-profit Applicant from the funding range and replacing it with the highest scored Non-Profit Application below the funding range within the applicable Geographic Set-Aside pursuant to section (2) above. Petitioners' Exhibit 1. These provisions will be referred to hereafter as the "1997 Directions," to distinguish them from the Instructions. Gwen Lightfoot was the Corporation's Deputy Development Officer in 1997. In that capacity, she was directly responsible for implementing the rules relating to the award of low-income housing tax credits. To satisfy the Non-Profit Set- Aside, Ms. Lightfoot followed the 1997 Directions as she understood them. In so doing, she sorted the eligible non- profits by class (i.e. without regard to their respective county groups) and ranked them in score order, from the highest scoring project to the lowest scoring project. 8/ Then, Ms. Lightfoot moved the highest scoring non-profit in the class of non-profits to a position immediately above the for-profit with the lowest score in the same geographic set-aside as the favored non-profit so that the non-profit project would be fully funded. That is, she replaced Low-FP(x!) with High-NP!(x!). This process was repeated, moving the next highest ranked non-profit to a position immediately above the lowest-ranked for-profit in the same geographic set-aside as the elevated non-profit, until the Non-Profit Set-Aside was met. Although the Corporation presently argues that its board was not fully informed in 1997 as to the procedure that Ms. Lightfoot followed in fulfilling the mandate of the Non- Profit Set-Aside, a preponderance of evidence established that Ms. Lightfoot's actions were within the scope of her authority and taken in furtherance of her official duties; that the board was aware of what she had done; and that the board took no action to change the results that followed from Ms. Lightfoot's interpretation and implementation of the 1997 Directions. Ms. Lightfoot's application of the 1997 Directions, in short, was not the unauthorized act of a rogue employee. Rather, as a matter of fact, her action was the Corporation's action, irrespective of what any individual board member might subjectively have understood at the time. In the years following the 1997 awards, Rule 9I- 48.032, Florida Administrative Code, was re-numbered Rule 67- 48.032 and amended three times, the most recent amendment becoming effective on February 24, 2000. As a result, the 1997 Directions evolved into the language of Rule 67-48.032(2) which, though not identical, retains the essential meaning of its predecessor. During the same period, the QAP was also amended three times, the version controlling the 2000 application cycle having been approved by the governor on December 16, 1999, and adopted by reference in the Florida Administrative Code on February 24, 2000. Unlike the revisions to Rule 9I-48.032(3), however, the changes in the QAP that relate to the issue at hand are significant, because the 2000 QAP sets forth a procedure for fulfilling the Non-Profit Set-Aside when the collective amount of credits sought by non-profits in the tentative funding range falls short of the mandated mark, whereas the 1997 QAP did not.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Corporation enter a final order dismissing the petitions of Petitioner Lakesmart, Petitioner RPK, and Intervenors Meadow Glen and Coral Village. DONE AND ENTERED this 7th day of February, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of February, 2001.
Findings Of Fact On September 21, 1987, petitioner, Terrell Oil Company (TOC), filed an application for renewal of its certification as a disadvantaged business enterprise (DBE) with respondent, Department of Transportation (DOT). TOC had been previously certified as a DBE for a two-year period commencing in January 1986. After reviewing the application, DOT advised TOC by letter dated January 20, 1988, that its application had been denied on the grounds the firm "(did) not appear to be performing a commercially useful function nor (was) it an independent business entity as required by D. O. T. Rule 14-78.05, Florida Administrative Code." 2/ The letter of denial precipitated this proceeding. Later correspondence from DOT on February 8, 1988, advised TOC that its existing certification would remain in effect until this proceeding was concluded. According to its original application dated September 21, 1987, TOC was established on February 5, 1986, and engaged in the business of "oil-gas- petroleum products." Its offices were then located at 1908 West Cass Street, Tampa, Florida. The application identified Grady F. Terrell, Jr., a black man, as being the sole stockholder in the firm, its president and chairman of the board. Other directors included Richard W. Gilliam, a white man, and Walter Scott, a black man. The application represented that Terrell served as president and treasurer of TOC while Gilliam held the positions of vice president and secretary. The application reflected also that Terrell and Gilliam shared the power in the areas of policy making, financial decisions, job estimating, bidding and supervising field operations and that Terrell alone had the power to dismiss employees and sign checks. Finally, the application represented that the corporation owned no equipment, it had earned $14,000 in calendar year 1986, Terrell had invested $6,000 of his own money in the firm, and it had two full-time and two cart-time employees. After receiving the original application, two DOT employees made an on- site investigation of the business and conducted an interview with Terrell on October 20, 1987. They found no sign on the building at 1908 West Cass Street indicating that TOC occupied the premises, but they were directed by the landlord to a small 8' x 10' rear corner office. During the interview, Terrell was asked for copies of TOC business contracts but had none. Also, he did not have any cancelled checks, insurance coverage or bonding at that time. Terrell stated he had no employees so no insurance was needed. He represented further that he was "self-employed" by TOC and devoted 100% of his time to that endeavor. When the parties reviewed the application item by item and found several discrepancies or incorrect responses, Terrell agreed to amend his application in the presence of the DOT representatives. As amended, the application reflected that Terrell, Gilliam and J. Anthony Belcher, a white man, were the current directors, the firm had one full-time (Terrell) and no part- time employees, Terrell, Gilliam and Belcher served as president, vice-president and treasurer, respectively, while William V. Gruman, a white man and attorney, served as secretary, and there were no written, oral or tacit agreements concerning the operation of the firm between any persons associated with the firm. Terrell denied that Belcher worked for Belcher Oil Company (BOC), a large oil concern, and described him as a retired individual serving as an independent consultant for TOC. As to Gilliam, Terrell described him as an independent contractor who worked on a 100% commission basis and solicited business for the firm. During the same interview, Terrell represented that the $6,000 investment in capital was actually a loan from a local bank and denied that TOC owned or leased any equipment. Terrell could offer no proof that the firm had earned $14,000 in 1986 and indicated the firm had no projects underway. He described his business as being a broker of gasoline, diesel fuel and motor oil and that other persons supplied and delivered the fuel. According to Terrell, business transactions were conducted in the following manner. He first determined the market price of fuel from BOC, his principal supplier, and based upon that price, submitted a bid on a job. If TOC was successful, Terrell made a telephone call to BOC requesting that the fuel be delivered to the buyer. Through BOC, Terrell was able to purchase fuel two percent below the "rack" rate. TOC then added a percentage of profit to its sales price. In actuality, TOC never had physical possession of the fuel and, accordingly, needed no equipment to engage in this activity. At the same inspection, the DOT personnel confirmed through reading the firm's bylaws that each of three directors had one full vote, regardless of the number of shares held. Thus, the two white directors could outvote Terrell on any TOC decision. Also, a quorum of the directors could convene a meeting and theoretically conduct business without Terrell's knowledge. On November 23, 1987, or a little over a month after the DOT visit was made, TOC adopted a corporate resolution authorizing any one of the three directors to execute binding contracts on behalf of TOC. Thus, either of the two white directors had the authority to enter into contracts without Terrell's approval. A copy of the resolution has been received in evidence as respondent's exhibit 12. Shortly after the above resolution was approved, Gilliam and Belcher were given the opportunity to each purchase 19% of TOC's stock while Gruman was allowed to purchase the remaining 2%. This meant the three white officers now owned 40% of the stock while Terrell owned the remaining 60%. On December 1, 1987, TOC and BOC entered into an agreement whereby TOC agreed to buy fuel and petroleum products from BOC for resale to customers, and in return, BOC extended TOC a $200,000 line of credit. The agreement has been received in evidence as respondent's exhibit 1. Under the agreement, TOC's invoices to customers had to be approved by BOC, and the customers were required to remit moneys due for fuel to a special bank account controlled by BOC. That firm then sent its invoices to the bank and was paid out of the proceeds. The remainder in the account was for the use of TOC. This agreement was negotiated on behalf of TOC by Belcher, whose family once owned BOC, and until 1987 served as a consultant to that oil company. Because of numerous concerns raised during the October 10 visit, DOT continued its investigation of TOC. Besides learning about the above resolution, stock sale and agreement, DOT obtained various corporate records of T0C, including tax returns, cancelled checks, records of fuel sales and applications for minority certification with other governmental entities. Through its investigation, DOT uncovered the fact that Terrell did not devote 100% of his time to TOC as he had earlier claimed but had been employed as a car salesman by Crown Pontiac in St. Petersburg, Florida, on a full-time basis since July 1987. Indeed, Terrell worked there more than fifty hours per week. Contrary to Terrell's representation, authority to sign TOC checks had been delegated to Gilliam who had done so on numerous occasions prior to and after the application was submitted. As to Terrell's contention that TOC owned no equipment, the firm's corporate income tax return indicated it purchased a small tank truck in 1986 and carried the same on its books. The claim that Terrell alone controlled the business was refuted by the firm's corporate records which reflected that the two white board members could effectively control all management decisions and run the business on a day-to-day basis. DOT learned also that, although TOC had five customer accounts in 1988, of which four came from the private sector, the fifth account was with Hillsborough County, a governmental entity, and comprised more than 99% of its total business. In addition to the DOT application, TOC has sought minority business status from the City of St. Petersburg, the City of Orlando, Hillsborough County, Broward County and the federal government. A review of these applications revealed a maze of conflicting information submitted to the respective agencies. For example, Terrell represented to Hillsborough County that one Noble Sissel (a black man) was TOC's vice-president, secretary, treasurer and board member when in fact Sissel never held any of those positions. Terrell represented to Hillsborough and Broward Counties that TOC had two full-time employees while the amended DOT application reflected that TOC had only one. Further, Terrell gave conflicting answers to the various agencies as to the equipment owned by TOC and the purported gross receipts of the firm. In order to perform a commercially useful function, a DBE must manage and perform at least 51% of its work. In other words, the firm cannot subcontract out more than 49% of its business. Also, there is a requirement that a DBE's principal customers be entities other than governmental agencies in order to perform a commercially useful function. Through testimony and admissions of its officers, TOC acknowledged that it was merely acting as a broker. In industry parlance, this means that TOC did all its work by telephone, obtained a seller and buyer and then obtained a common carrier to deliver the product. As such, TOC never took physical possession of the product on its own equipment since it owned none, and it was not responsible for the movement of the product from the terminal to the customer. Further, since TOC purchased virtually all of its fuel from BOC, and under an agreement customer checks went directly to that firm, TOC was, in essence, conducting a broker operation for BOC. Therefore, TOC was not performing a commercially useful function. At hearing, Gilliam was TOC's only witness, and he attempted to establish TOC's entitlement to certification. Besides pointing out that Terrell was a black man and the majority shareholder in the firm, Gilliam attempted to show that Terrell actually controlled and ran the business. Also, he attempted to demonstrate the commercially useful function of the firm by the fact that 80% (4 out of 5) of TOC's five accounts are nongovernmental customers. Although not reflected on the amended or original applications, Gilliam acknowledged that TOC owns one 1200 gallon truck capable of making fuel deliveries. Gilliam contended further that Terrell had made an initial contribution to the corporation of $120,000 of his own funds. However, no proof of this claim was submitted. Given the overwhelming contradictory evidence of record, and the numerous inconsistencies in the testimony of TOC representatives, Gilliam's testimony is not accepted as being credible.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered denying the application of Terrell Oil Company for certification as a Disadvantaged Business Enterprise. ENTERED this 9th day of November, 1988, in Tallahassee, Florida. DONALD R. ALEXANDER 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 9th day of November 1988.
Findings Of Fact The Petitioner is a Florida not-for-profit corporation which is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. The Petitioner has established a Mark Twain Scholarship Fund the purpose of which is to give recipients funds to pay for post-secondary tuition and books. On or about September 26, 1994, Petitioner filed an application with Respondent for a consumer certificate of exemption and stated as its basis "other." The applicant then identified itself as "state/church separation" organization. Petitioner did not check any of the other categories for exemptions such as "religious," "educational," or "charitable." The application was reviewed by the Department considering all of the categories listed on the application and available under the pertinent statute. Based on the criteria set forth in Section 212.08(7), Florida Statutes, the Department reached a preliminary decision which denied the Petitioner's application for a certificate of exemption. Petitioner was notified of the denial and timely challenged the agency action. All of the members of the Petitioner's group are voluntary, unpaid, participants who pay yearly dues to join the organization. Students pay $10.00, individuals $30.00, and couples $35.00. If someone were to allege poverty, Petitioner would arrange a free membership for such individual. No evidence of members of that category was presented. The only information about its members Petitioner seeks is their educational background. Documentation regarding financial circumstances of each member is not requested nor kept. Petitioner provides benefits to minors by providing speakers for various topics at the university and high school levels, and by allowing students to attend monthly meetings. Monthly meetings for the south Florida group are held in the Fort Lauderdale library. Other chapters in Tampa and Sarasota also hold meetings periodically and such meetings are, presumably, available to students. In Tampa, for example, Petitioner has an information booth on the campus of the University of South Florida. Petitioner attempts to offer a "scientific and more rationale" point of view to young adults. For the south Florida meetings, approximately 5 to 10 persons under 18 years of age might attend. The average attendance of all members is 20 to 40 persons. Petitioner also produces a public access cable television program consisting of twelve half-hour episodes per year. Topics of this program have included "Sin and Sexuality." Petitioner established the scholarship fund indicated above. One recipient was a woman in prison for life in California who wanted to attend the University of California. More recently, Petitioner conducted an essay contest and two men from that event received awards. None of the scholarship recipients was a minor. The total amounts expended on scholarships by the Petitioner did not exceed 10 percent of its total expenditures. The Petitioner's group started with approximately 53 members but has grown to over 200 members. Petitioner provides support to its members who may encounter scorn or harassment from the public and has a telephone line set up so that messages can be taken twenty-four hours of the day. Someone from the organization can then return the call and assist the caller. Public harassment is not uncommon for members of the group. For example, when Mr. Tzanetakos opposed the use of public monies in connection with the Pope's visit to south Florida, he received so many telephone calls that he had to change to an unpublished number. Mr. Tzanetakos maintains that while his organization's views are an unpopular minority in this country, that they are in the majority in Europe and other places. One of the purposes of the Petitioner's group is to advocate, support, and defend "in all lawful ways the complete and absolute separation of church and state." Another purpose is to promote freedom of expression. Thirdly, the group seeks to "protect the constitutional and civil rights of Atheists as members of a free and democratic society." According to its articles of incorporation, Petitioner promotes the following concepts: Because human beings, along with all other species of animal and plants, evolved from a primordial cell, Homo sapien is only a link in the chain of living matter. Because Homo sapiens is the species with the most advanced brain and the most manipulative hands, and because we have developed excessively destructive weapons (nuclear and others), we are solely responsible for the well-being of our own species and to a great extent the rest of the life on planet Earth. Global population control is vital, and the extinction of other living animal and plant species must be avoided. Cooperation and equality--not conflict-- among all peoples must be encouraged and promoted. Because all humans have a common origin, and because the classification of peoples by races and ethnic groups is divisive and detrimental to our species and to life itself, all inhabitants on planet Earth (sic) [should?] be called "Homo Sapiens", and the current national names to denote the geographical origin of peoples and their distinctive cultures. Minors are not specifically mentioned in the Petitioner's articles of incorporation nor given benefits of membership not available to other members or, in the case of the television broadcasts, the public as a whole. Mr. Tzanetakos conceded that one of the television topics, "Euthanasia," may not have been of particular interest to minors. He further acknowledged that it is difficult to get children to watch educational television. The Petitioner does not advertise its programs to the general public, nor does it survey viewers to determine the numbers of minors, if any, that support its television program. Petitioner accepts only "what can be verified by the scientific method and rejects supernatural entities, acceptable only as articles of faith." Accordingly, Petitioner's members do not "worship" god or anything. The Petitioner did not present evidence that it is qualified for accreditation by, or membership in, the Department of Education, the Southern Association of Colleges and Schools, the Florida Council of Independent Schools, or the Florida Association of Christian Colleges and Schools.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Revenue enter a final order denying the application for a consumer's certificate of exemption filed by Petitioner. DONE AND ENTERED this 8th day of March, 1996, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-0654 Rulings on the proposed findings of fact submitted by Petitioner: 1. None timely submitted. Rulings on the proposed findings of fact submitted by the Respondent: 1. Paragraphs 1 through 22 are accepted. COPIES FURNISHED: Linda Lettera General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Mark Trop Shoreview Building 9999 Northeast Second Avenue, Suite 201 Miami, Florida 33138 Ruth Ann Smith Assistant General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668
The Issue The issue is whether Petitioner is entitled to formal training and education sponsored by the Division of Workers' Compensation, pursuant to Section 440.491(6), Florida Statutes.
Findings Of Fact From 1985 through 1995, Petitioner was employed by Truly Nolen, a pest-control company. In April 1995, Petitioner was a termite supervisor engaged in fumigation work. In this job, Petitioner set up crews and sent different crews to do jobs. He scheduled work and performed actual work on the job, such as dragging sand bags around a building and putting tarps on the roofs of buildings. While so employed on April 26, 1995, Petitioner fell while spreading tarp on a roof. Petitioner injured his back, suffering what the neurosurgeon described as “fundamentally a frozen back,” and was unable even to bend forward and touch his knee caps. Diagnosed with a herniated disc in the lumbar region, Petitioner had surgery on September 12, 1995. Although the surgery repaired the herniated disc, Petitioner’s recovery was prolonged. The surgeon determined that Petitioner reached maximum medical improvement on January 19, 1996. At this time, the surgeon stated that Petitioner was capable of working in light- to medium-duty work with no lifting of more than 50 pounds and no repetitive lifting of 25 pounds or more. The surgeon assigned Respondent a 12 percent impairment of the person as a whole, but later agreed that it was a 16 percent permanent partial impairment. The surgeon believes that Petitioner may have intermittent problems with his back for the rest of his life, but it is not medically probable that he will require surgery or any other form of aggressive intervention. The day after being released by the surgeon, Petitioner met with the branch manager of the Truly Nolen office, out of which Petitioner had worked at the time of his accident. For about one month, Petitioner had been performing part-time, light office duties at this office as part of a work-hardening program. The branch manager offered Petitioner a residential pest-control route, rather than Petitioner’s old job as a termite supervisor. Although not entirely clear in the record, the office appears to have employed only one termite supervisor. By the time that Petitioner was able to return to work, the branch manager had hired another person for the job of termite supervisor. It is, in any event, unclear whether Petitioner would have been able to do his old job anymore, as it required the supervisor to drag heavy tarps over the tops of buildings, as Petitioner was doing when he fell and was injured. Petitioner and the branch manager discussed two routes, but the manager was inclined to give Petitioner the route that Petitioner found less preferable. Petitioner visited one house on the route and determined that the value of the route, as posted in the office, was less than one-half of what Petitioner had been making at the time of the injury. Petitioner then informed his supervisor that he would not take the job due to inadequate money. Petitioner admits that money, rather than the physical demands of the job, was the sole reason for declining the job offer. The most productive pest-control routes in this Truly Nolen office earn $35,000 annually. Petitioner could probably earn $20,000 to $25,000 from the route that the branch manager offered him. Two weeks prior to the hearing, Petitioner started work as a car salesperson at a local Chevrolet dealer. He was earning about $250 weekly and 4 percent of the profit on each car sold. He had sold only one car for a commission of $50. Previously, he had worked on an occasional basis for his uncle driving a mowing tractor and earning $5.25 hourly; however, he had not worked over one week consecutively on this job. At the time of his injury, Petitioner’s average weekly wage was about $800. He was born on January 15, 1966. Petitioner completed his formal education when he finished high school. Petitioner is a certified pest-control technician. Except for some general construction and service work experience, Petitioner’s entire work history consists of his employment with Truly Nolen. The record does not disclose if Petitioner applied to Truly Nolen or its competitors for work as a termite supervisor or pest-control technician. Petitioner has not proved that he is physically unable to work in either position. To the contrary, it is likely that he could do the job as a pest-control technician, given his refusal to take the offer of such a job solely on monetary grounds and the relatively light physical demands of this work. In light of Petitioner’s age, education, work history, transferable skills, previous occupation, and injury, the job offered by the branch manager in January 1996 gave Petitioner a chance to regain as soon as practicable and as nearly as possible his pre-accident average weekly wage. Thus, the branch manager’s offer to take a pest-control route represented suitable gainful employment.
Recommendation It is RECOMMENDED that the Division of Workers’ Compensation enter a final order denying Petitioner’s requests for training and education sponsored by the Division and attorneys' fees. DONE AND ENTERED this 19th day of February, 1998, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 19th day of February, 1998. COPIES FURNISHED: Peter C. Burkert Burkert & Hart Post Office Box 2485 Fort Myers, Florida 33902 Attorney Michael G. Moore, Sr. Department of Labor and Employment Security 2012 Capital Circle, Southeast 307 Hartman Building Tallahassee, Florida 32399-2189 Russell Schropp Henderson Franklin Post Office Box 280 Fort Myers, Florida 33902 Edward A. Dion General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast 307 Hartman Building Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast 303 Hartman Building Tallahassee, Florida 32399-2189
Findings Of Fact The Petitioner is a "small business party" sole proprietorship domiciled in Tampa, Florida, with less than 25 employees, and a net worth of less than $2 million. The Respondent previously initiated action against Petitioner as a result of a Medicaid audit of Petitioner's pharmacy and identified an overpayment which it then sought to recover from Petitioner. A timely request for hearing was filed by Petitioner, and the matter was transmitted by the Respondent to the Division of Administrative Hearings where it was assigned Case Number 88-1668. The final hearing was held in Tampa, Florida, on June 22, 1988, before Donald D. Conn, Hearing Officer, and thereafter a Recommended Order was filed on August 17, 1988, which recommended that Respondent enter a Final Order dismissing its action against Petitioner, refunding any funds which it had withheld, plus interest, and removing all other sanctions. The Respondent approved and adopted this recommendation in its Final Order entered on September 15, 1988, by the terms of which Petitioner prevailed in the prior action initiated by the Respondent. The Respondent was not a nominal party to the prior proceedings, and there is nothing in the record to show that the Respondent was substantially justified in bringing the prior action, or that any special circumstances exist which would make an award of fees and costs unjust. On November 2, 1988, a Petition for Costs and Attorney's Fees was filed with the Division of Administrative Hearings by the Petitioner. The Petition is accompanied by an affidavit and supporting documents which are uncontroverted, and which establish that Petitioner incurred legal fees in the amount of $14,587.50 and costs of $1,437.77, as a result of the prior proceedings in Case Number 88-1668. In the Petition for Costs and Fees, the Petitioner specifically indicated that an evidentiary hearing was not requested. No responsive pleading of any kind has been filed on behalf of the Respondent to this Petition for Costs and Fees.
The Issue The issue in the case is whether the Petitioner qualifies as a “charitable institution” as defined at Section 212.08(7) (o)2.b., Florida Statutes, and is therefore entitled to a consumer certificate of taxation exemption.
Findings Of Fact The Junior League of Tampa, Inc., (League) is a non- profit corporation exempt from federal income tax under Section 501(c)3 of the Internal Revenue Code. The Articles of Incorporation for the League provide that the League is intended to foster member’s interests in local social, economic, educational, cultural, and civic conditions, and to make efficient use of members as volunteers. According to testimony offered at hearing, the purposes of the Junior League of Tampa are to offer social assistance to persons in the community, provide volunteers to various local organizations, and to offer volunteer training to League members. The League provides member education regarding issues of local concern by offering bus tours through area communities, attendance at government meetings (school board, county commission, etc.) and training sessions focusing on the operation and activities of the League. Members of the League pay dues which are used to support the administrative costs of the organization. Members of the League are expected to provide volunteer services to community organizations through the League. No services are provided directly to individuals. In addition to dues the League raises funds through local fund raising activities, including production of a cookbook and a thrift sale. Fund raising revenue is used to support community projects. According to the financial statements for the fiscal year ending May 31, 1995, the League’s total operational expenses (excluding depreciation) were about $400,000. Expenses were allocated between “program services” and “support services.” Total support services costs were approximately $269,000, including $94,576 for fund raising costs. Other costs allocated to support services included $103,827 in “administrative costs,” $11,089 in “association dues,” $20,493 in “membership expense” and almost $39,000 for the League’s membership publication, “The Sandspur.” None of the support services expenditures were directly related to the community or volunteer efforts of the League. Total program services costs were $131,655, including $21,642 for “program research and evaluation,” $25,876 for “association dues,” and $84,137 for “community projects.” “Program research and evaluation” costs include the expenses of the community advisory board which assists the League in determining local needs and evaluating projects. Additional program research costs include expenses related to development and evaluation of League projects, expenses related to sending Tampa League members to meetings of the national League, other membership expenses, expenses of a public relations campaign, expenses related to preparation of a member brochure describing volunteer opportunities, and “ad hoc training.” None of the expenses allocated to “program research and evaluation” are directly provided to recipient organizations through monetary donation or by provision of volunteers. Expenses identified as “program services/association dues” include $25,876 paid to the American Association of Junior Leagues. The national organization offers information related to the anticipated success of specific league projects. None of the expenses allocated to “association dues” are directly provided to recipient organizations through monetary donation or provision of volunteers. The “community projects” total expenditure of $84,137 represents actual funds donated by the League to recipient organizations. In addition to actual donations, members of the League provide hours of free volunteer service to local IRC 501(c)(3) organizations. During fiscal year 1985, League members provided 11,823 hours of volunteer service to local organizations and to the League’s own community projects. The League asserts that many League members providing volunteer services are professionals and that such services should be valued at approximately $10.00 per hour. The evidence fails to establish that the volunteer services provided require professional education or certification or that the volunteer services should be valued at any more than the minimum wage, $5.00 during the time period relevant to this proceeding. The League lists 22 local activities and organizations for which volunteer services were provided. The parties have stipulated that 12 of the 22 (Bereavement Camp, Kids Rights Fund, Child Life Program, Immunization, Ronald McDonald House, Parenting Power, Emergency Shelter, Georgia Flood Relief, Judeo Christian Health, Bay Area Legal Services, WestCoast Golden Services, and McDonald Training) are accepted as “charitable activities.” The Department asserts that the ten remaining activities and organizations do not meet the relevant definition of acceptable charitable services and can not be included in the League’s total charitable effort for purposes of tax exemption. The ten activities include Puppet Troupe, Children’s Museum, McKay Bay Learning Lab, Funbook, Tampa Tickets, Tampa Area Playground, Tampa Museum of Art, Tampa Bay Youth Orchestra, Musicale and Federated Club and H. B. Plant Museum. The “Puppet Troupe” consists of the preparation and performance of a puppet show for residents of nursing homes and for hospitalized children. The evidence fails to establish that the League's participation in Puppet Troupe is an acceptable charitable service for purposes of the tax determination. The Tampa Children’s Museum is an admission-charging, public museum, open to all, designed to provide learning opportunities for children and parents. The evidence fails to establish that the League's participation in Tampa Children's Museum is an acceptable charitable service for purposes of the tax determination. The McKay Bay Learning Lab offers educational programs to children of elementary school ages. The programs are targeted to special needs children, but are open to all. The evidence fails to establish that the League's participation in the McKay Bay Learning Lab is an acceptable charitable service for purposes of the tax determination. “Funbook” is a coloring book focused on Tampa history and distributed to hospitalized children. The evidence fails to establish that the League's participation in Funbook is an acceptable charitable service for purposes of the tax determination. “Tampa Tickets” is a grant of funds to the Tampa Performing Arts Center and is intended to subsidize the cost of admission to cultural events at the Center. The evidence fails to establish that the League's participation in Tampa Tickets is an acceptable charitable service for purposes of the tax determination. The Tampa Area Playground is a public playground which was constructed with funds and volunteer labor contributed by many local organizations including the League. The evidence fails to establish that the League's participation in the Tampa Area Playground is an acceptable charitable service for purposes of the tax determination. The Tampa Museum of Art is a public admission-charging museum for which the League funded a curriculum guide for use in local schools. The evidence fails to establish that the League's participation in the Tampa Museum of Art is an acceptable charitable service for purposes of the tax determination. The Tampa Bay Youth Orchestra received funds from the League directed towards purchasing musical instruments for children who could not afford them. The evidence fails to establish that the League's participation in the Tampa Bay Youth Orchestra is an acceptable charitable service for purposes of the tax determination. The Musicale and Federated Clubs is a performing arts organization. The League provided a grant of funds to cover the costs of termite treatment for the Club facility. The evidence fails to establish that the League's participation in the Musicale and Federated Clubs is an acceptable charitable service for purposes of the tax determination. The H. B. Plant Museum is a public admission-charging museum. The League contributed funds to purchase two computers used in the museum’s membership solicitation program. The evidence fails to establish that the League's participation in the H. B. Plant Museum is an acceptable charitable service for purposes of the tax determination. The evidence establishes that the McKay Bay Learning Lab, the Children’s Museum, the Tampa Museum of Art, and the H. B. Plant Museum are educational institutions, rather than charitable institutions. Expenditures of funds or volunteer time contributed to educational organizations which do not otherwise meet the requirements for qualification as charitable institutions are properly disallowed from the calculation of the League’s charitable effort. The evidence is insufficient to establish that expenditures related to the Puppet Troupe and Funbook projects, the Tampa Tickets program, the Tampa Area Playground, the Tampa bay Youth Orchestra, or the Musicale and Federated Clubs meet applicable requirements for qualification as a charitable expenditures by the League. Such expenditures are properly disallowed from the calculation of the League’s charitable effort. Based on examination of the total acceptable charitable effort of the League, both donations of volunteer time and actual funds, the evidence fails to establish that the sole or primary purpose of the League is to provide such services.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Revenue enter a Final Order denying the Petitioner’s application for renewal of a Consumer Certificate of Exemption. RECOMMENDED this 8th day of January, 1997, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 1997. COPIES FURNISHED: Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Jeremy P. Ross, Esquire Bush, Ross, Gardner, Warren and Rudy, P.A. 220 South Franklin Street Tampa, Florida 33602 Ruth Ann Smith, Esquire Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668
