The Issue The issue is whether either Respondent committed the violations alleged in Counts I through VIII of their respective Administrative Complaints.
Findings Of Fact The Florida Real Estate Appraisal Board is the state agency charged with regulating real estate appraisers who are, or want to become, licensed to render appraisal services in the State of Florida. At all times pertinent, Ms. Green was licensed as a certified residential real estate appraiser. Ms. Green held license number 3236 in accordance with Chapter 475, Part II, Florida Statutes. Ms. Moody was licensed as a registered trainee appraiser. Ms Moody held license number 16667 in accordance with Chapter 475, Part II, Florida Statutes. In October 2008, Ms. Moody received a license as a certified residential appraiser, license number RD 7444. On March 8, 2007, Ms. Moody signed an appraisal of real property located at 11735 Chanticleer Drive, Lot 16, Block B Grand Lagoon, in Pensacola, Florida. She signed as appraiser. Ms. Green signed the report as supervisory appraiser. The listed borrower was James W. Cobb, and the lender was Premier Mortgage Capital. Respondents developed, signed, and communicated this report. Subsequently, the borrower, Mr. Cobb, who was also the buyer, complained to the Division with regard to the appraisal on the property, and the Division investigated the matter. The investigation resulted in an investigative report dated December 21, 2007. According to the appraisal, the property was listed for $1,030,000 in the multiple listing service, and the contract price was $790,000. The appraisal report valued the property using both the sales comparison approach and the cost approach. Both approaches resulted in a value of $1,030,000. These facts were reported in a six-page Uniform Residential Appraisal Report, Fannie Mae Form 1004 March 2005. At the time of the hearing, the property was the subject of a foreclosure action. The USPAP provides guidance to those involved in the business of conducting real estate appraisals. Real estate appraisers typically use both a "sales comparison approach" and a "cost approach" in attempting to arrive at a value. A "sales comparison approach" uses data obtained from sales of similar properties and adjusts for differences. A "cost approach" starts with the cost of an empty building site and adds to that the cost of building an identical structure and adjusts for enhancements and depreciation. Both approaches were used by Respondents and were reported on the Form 1004. The Division's expert witness, Sylvia G. Storm, reviewed the Form 1004 and all of the available supporting data. She did not make an appraisal herself and did not visit the property in question. Ms. Storm was accepted as an expert as provided by Section 90.702, Florida Statutes, because she had "specialized knowledge" regarding real estate appraisals. This was the first time that Ms. Storm testified as an expert witness in a case involving appraisals. The same was true in the case of the expert witness presented by Respondents, Victor Harrison. It is noted that these experts were only minimally qualified, and their testimony is given little weight. Ms. Storm commented on the fact that the property was called "new" in the improvements section yet on the following sales comparison approach it was listed under actual age, "27/E New-2." This suggests the property with improvements is 27 years old, but has an effective age of new to two years. In fact, in the improvements section it was noted that the property has been completely reconstructed. It is clear from the Form 1004, and the hearing record, that the property was essentially destroyed during Hurricane Ivan and was rebuilt above the surviving foundation. It is found that the house was essentially new at the time of the appraisal. Ms. Storm believes some of the deficiencies she noted in the Form 1004, discussed in more detail below, and the supporting documentation contained in the work file, affect the credibility of the report. She believes that some of these deficiencies amounted to a violation of USPAP. Ms. Storm stated that an appraiser should do a complete analysis of the contract and that if it is not done the appraiser is not being reasonably diligent. She also testified that an appraiser, who failed to discuss the large difference between the contract price and appraised value, and who failed to document the analysis, is not being reasonably diligent. Mr. Harrison, on the other hand, testified that after his analysis of the report he found no indication at all of a lack of reasonable diligence. Ms. Storm opined that two or more appraisers, appraising the same property may arrive at two or more numbers and that there is nothing unusual when that occurs. Ms. Moody testified under oath that the supporting information contained in the work file was adequate and that references to other documents, such as public records, were plentiful and complied with the requirements of USPAP. This testimony was adopted by Ms. Green. In order to provide clarity, actual allegations contained in the Administrative Complaints will be discussed in seriatim. As will be addressed more fully in the Conclusions of Law, the Division must prove its factual allegations by clear and convincing evidence. In evaluating the evidence presented, that standard will be used below. The factual allegations will be presented in bold face type, and the discussion of the proof will be in regular type: Respondent made the following errors and omission in the Report:"Failure to discuss or explain why the Subject Property was listed for sale for $1,030,000 and the contract price was $790,000." Ms. Storm opined that the discussion of the contract price did not go into the details as to the history of the property, or list price history, or who the contracting parties were or any fees to be paid by either party. She believes the Form 1004 should have reported when the property was listed and how many days it had been on the market. She believes that USPAP requires the appraiser to analyze the contract completely. She believes the Form 1004 should have commented on the large difference between the sales price and the appraised price. The Form 1004 states, "I did analyze the contract for sale for the subject purchase transaction." Ms. Moody testified under oath that they analyzed the difference between the appraisal price and the selling price. She stated that there was no requirement to discuss it in the Form 1004. Ms. Green adopted this testimony. Ms. Moody also stated that the contract price of a piece of property does not affect the value of the property as reported in the Form 1004. This factual allegation was not proven. "Use of an outdated FEMA map for the Subject Property." Respondents used a FEMA flood map that was outdated. This occurred because the computer program Respondents were using, InterFlood.com, presented an out-of-date map. The map used in the appraisal was dated February 23, 2000, but the most current edition of the map available at the time of the appraisal was dated September 26, 2006. The later map was no different from the map Respondents used. The Form 1004 notes, with regard to the flood status, "It appears to be located in FEMA Flood Zones X and AE. A survey would be needed to confirm flood zones." In sum, there is nothing incorrect or misleading with regard to flooding potential. The Division's expert witness, Ms. Storm, concluded that Respondents did not err with regard to the FEMA flood map. This factual allegation was not proven. "Misstatement of PUD Homeowner's Association Fees for the Subject Property." Respondents asserted the homeowner's association fee to be $100 annually. The by-laws of the Grande Lagoon Community Association, Inc., in effect during all times pertinent, state unequivocally that annual dues of the Association are $100. The Division's investigator stated that he learned through a telephone call with a "Mr. Broome," who was possibly an officer in the homeowner's association, that at the time of the appraisal there was an annual assessment by the homeowner's association of $250 for canal maintenance, and that this amount was to increase to $500 annually in 2008. Information about this assessment was not readily available to Respondents. An assessment is different from a homeowner's fee. The Division's expert witness stated that if there is a homeowner's fee it should be stated on the Form 1004, but that it is not a USPAP requirement. This factual allegation was not proven. "Failure to differentiate view of Subject Property and comparable sale 2, when the Subject Property is located on a canal and the comparable had an open water location." Comparable Sale 2 is located on Star Lake, a small, lagoon- like body of water with access to Pensacola Bay, similar to the location of the appraised property, which is on a canal with access to open water on Big Lagoon. The views on these properties are sufficiently similar that no adjustment is required. This factual allegation was not proven. "Failure to note financial assistance in the sales contract, where seller was to pay all closing costs." The agreement whereby seller would pay $20,000 in closing costs was not made until March 28, 2007, 20 days after the appraisal was completed. This factual allegation was not proven. "Failure to note consulting fee to Investor's Rehab in the sales contract." This allegation is true in that the consulting fee was not mentioned. Ms. Storm opined that it should be analyzed in the appraisal report. She asserted that persons who were not privy to the contract might make decisions in reliance upon the appraisal report and, therefore, the Form 1004 should mention the consulting fee. However, Ms. Moody pointed out that the consulting fee had no effect on the value of the property and stated that it was intentionally omitted. This factual allegation was proven to the extent that the consulting fee was not mentioned, but this omission did not affect the accuracy or credibility of the appraisal report. "Failure to explain range of effective age dates for the Subject Property and comparable sale 1." As discussed in Finding of Fact 8, the subject property was essentially new at the time it was appraised. As pointed out by Mr. Harrison, the effective age was new. Effective age is an estimate of the physical condition of a building. The actual age of the building may be shorter or longer than the effective age. The determination of effective age is largely a matter of judgment. In the case of Comparable Sale 1, it was built in 1980 and last sold in August 2005. Respondents reported the age in 2007 as 26 years with an effective age of 1-5 years. The Form 1004, therefore, presented a one year error as to actual age, which is insignificant. The allegation is that Respondents failed to explain the range of effective age dates. However, it is found that the Form 1004 adequately informs anyone reading it. Accordingly, this factual allegation is not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 1 for its effective age difference." No evidence supporting this allegation was presented. The unrebutted testimony of Ms. Moody, adopted by Ms. Green, was that there was no market data suggesting that there was a need for adjustment. There was no evidence that an explanation for no adjustment was required. Accordingly, this factual allegation is not proven. "Incorrect site size adjustment for comparable sale 1; the $17,000 should be in the positive direction." The site size adjustment for Comparable Sale 1 is in the amount of $40,000. It appears that the intentions of the Administrative Complaints were to allege an error in gross living area. The result is that the record provides no proof of this allegation. "Adjustment for both the room count and square footage, without explanation of its necessity or market support of its accuracy, for comparable sale 1." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Incorrect actual age for comparable sale 1." In the case of Comparable Sale 1, it was built in 1980 and last sold in August 2005. Respondents reported the age in 2007 as 26 years with an effective age of 1-5. The Form 1004 therefore presented a one-year error. This error is insignificant. "Failure to explain inconsistent site size adjustments made to comparable sale 1, comparable sale 2, and comparable sale 3." The subject property was located on a site (or lot) that was .3 acres. Comparable Sale 1 was located on a site that was .52 acres. Respondents subtracted $40,000 from the sale price of Comparable Sale 1. Comparable Sale 2 was located on a site that was .7 acres. Respondents subtracted $60,000 from the sale price of Comparable Sale 2. Comparable Sale 3 was located on a site that was .44 acres. Respondents added $25,000 to the sale price of Comparable Sale 3. It is the appraiser's duty to value a comparable in such a way that differences between the comparable and the subject property are accounted so that a common denominator may be found. For example, Comparable Sale 1 was approximately .2 of an acre larger than the subject property and thus more valuable solely because it is on a larger site. To equalize the situation, the price of Comparable Sale 1 must be reduced, and it was. Comparable Sale 2 also was reduced, but Comparable Sale 3 that was on a larger lot than the subject property, was credited with a $25,000 addition to its price. Nothing in Respondents' work file provides how the figures for the comparables were found. Moreover, if two of the comparables experienced a downward adjustment because of a larger lot size, then the third comparable, having a larger lot size, should have been adjusted downward also. Therefore, there were inconsistencies requiring explanation, and no explanation was found in the file. "Failure to note that comparable sale 1 has a fireplace." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this factual allegation was not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 1 for its fireplace." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this factual allegation was not proven. "Incorrect actual age for comparable sale 2." Comparable Sale 2 was built in 1990. At the time of the appraisal, it was approximately 17 years old. It last sold November 2006. It was reported to be 16 years of age with an effective age of five years on the Form 1004. This is both incorrect and insignificant. "Adjustment for both room count and square footage, without explanation of its necessity or market support of its accuracy, for comparable sale 2." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Incorrect actual age for comparable sale 2." This allegation repeats that stated in "O" above. "Failure to not [sic] that comparable sale 2 has three fireplaces." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this allegation was not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 2 for its multiple fireplaces." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this allegation was not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 2 for its lake view." Comparable Sale 2 is located on Star Lake, a lagoon-like body of water with access to open water, similar to the location of the appraised property, which is on a canal with access to open water on Big Lagoon. The views on these properties are sufficiently similar that no adjustment is required. This allegation was not proven. "Incorrect actual age of comparable sale 3." Comparable Sale 3 was built in 1989. At the time of the appraisal, it was approximately 18 years old. It last sold in August of 2005. It was reported to be 16 years of age with an effective age of 10 years on the Form 1004. This age was reported incorrectly. "Use of comparable sale 3 which sold 19 months prior to the Report." The Form 1004 noted that finding comparables was difficult due to market disruption caused by Hurricane Ivan. As noted by Ms. Storm, the change in the real estate market during the years 2004, 2005, and 2006, have been profound everywhere. Primarily, market prices have declined during those years. She was of the opinion that the August 18, 2005, sale date of Comparable Sale 3 was too remote. She stated, correctly, that a market condition adjustment should have been made to the price reported for Comparable Sale 3. Ms. Storm found in the work file analyst listings of the comparables that were utilized, and pages from the Marshall and Swift, but did not see any actual paired sale analyses for any of the adjustments that were used in the report. She could not determine from where they obtained these sales and the adjustments for differences. She opined that this made the report less credible. According to Ms. Storm, the insufficient analysis runs afoul of USPAP. The opinion of Ms. Storm, however, fails to take into account the insufficient data in the Pensacola area that resulted from hurricane-induced market disruption and the consequent lack of sales. Because of the lack of viable alternatives, using this property as a comparable was necessary. This factual allegation was not proven. "Adjustment for both room count and square footage, without explanation of its necessity or market support of its accuracy, for comparable sale 3." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Failure to calculate and list the net adjustment and gross adjustment totals for comparable sale 1, comparable sale 2, and comparable sale 3." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Failure to utilize current Marshall & Swift information for the Cost Approach section of the Report." Marshall and Swift is a reference service that is used to develop information in the cost approach analysis. It provides "local multipliers" to provide for cost differentials in various geographic areas, including differentials for garages and two-story houses. It also provides "local multipliers" for the cost per square foot for construction. The pages used by Respondents expired at the end of February 2007, eight days before the Form 1004 issued. Respondents receive quarterly updates. The issue after February 2007 showed no change. To the extent Respondents failed to get the most current information, it had no impact on the appraisal amount. "Failure to complete the PUD information section of the Report, when Subject Property, as noted by Respondent in Report, is located in a PUD." The Division acknowledged during the hearing that there was no support for this allegation, and withdrew it. AA) "Failure to date when Respondent inspected the Subject Property and comparable sales listed in the Report." (This allegation was made in the case of Ms. Green, but not in the case of Ms. Moody.) In the blocks on the Form 1004, below the Supervisory Appraiser's signature, Ms. Green signed statements indicating that she inspected the interior and exterior of the subject property and that she inspected the exterior of the comparable sales properties. She did not date either of these statements. There is no documentation in the work file to support the $40,000 "site size" adjustment made to comparable sale 1 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "site size" of Comparable Sale 1. There is no documentation in the work file to support the $60,000 "site size" adjustment made to comparable sale 2 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "site size" of Comparable Sale 2. There is no documentation in the work file to support the $25,000 "site size" adjustment made to comparable sale 3 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "site size" of Comparable Sale 3. There is no documentation in the work file to support the $50,000 "view" adjustment made to comparable sale 1 in the Sales Comparison section of the Report. Comparable Sale 1 is on Big River. The Form 1004 notes that Big River is similar to Big Lagoon. A $50,000 downward adjustment was made in the "view" category. Ms. Storm stated that she had searched for documentation and did not find it. The work file does not have documentary support for the adjustments. Respondents and Ms. Storm agreed that the lack of sales in the area made such adjustments like this problematic. As Ms. Storm said, "I know there haven't been that many sales of waterfronts so it's really difficult to arrive at that data." Nevertheless, the lack of any information in the work file to support the adjustment means that this factual allegation is proven. There is no documentation in the work file to support the $5,000 "age" adjustment made to comparable sale 2 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "age" of Comparable Sale 2. There is no documentation in the work file to support the $10,000 "age" adjustment made to comparable sale 3 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "age" of Comparable Sale 3. There is no documentation in the work file to support the $3,000 "triple garage" adjustment made to comparable sale 3 in the Sales Comparison section of the Report. A downward adjustment of $3,000 was made to Comparable Sale 3 because of its triple garage. No testimony supporting this allegation was presented. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, includes Marshall and Swift data for garages. Although exactly how the $3,000 adjustment was calculated is not clear, the Marshall and Swift information was in the file and provided a method for making the calculation. There is no documentation in the work file to support the $10,000 "dock/pier" adjustment made to comparable sale 1 in the Sales Comparison section of the Report. A downward adjustment of $10,000 was made to Comparable Sale 1 because of the presence of a "dock/pier." No testimony supporting this allegation was presented. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment. There is no documentation in the work file to support the $15,000 "pool" adjustment made to comparable sale 2 in the Sales Comparison section of the Report. A downward adjustment of $15,000 was made to Comparable Sale 2 because of the presence of a pool on the property. No testimony supporting this allegation was presented. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment. There is no documentation in the work file to support the $39/square foot adjustment for gross living area made tocomparable sale 1, comparable sale 2, and comparable sale 3 in the Sales Comparison section of the Report. No testimony supporting this allegation was presented. The Division has not directed the attention of the Administrative Law Judge to any reference in the record to a "$39/square foot adjustment for gross living area." An independent search of Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, did not reveal documentation for this adjustment or any documentation mentioning it. Accordingly, this allegation is not proven. The work file lacks current Marshall and Swift pages for the time frame that the Reports were completed, as well as any local builder information, to justify the dwelling square footage price in the Cost Approach section of the Report. Marshall and Swift is a reference service that is used to develop information for use in the cost approach. It provides "local multipliers" to provide for cost differentials in various geographic areas, including differentials for garages and two-story houses. It also provides information used to calculate the construction cost per square foot. The pages used by Respondents expired at the end of February 2007, eight days before the report issued. Respondents receive quarterly updates. The issue subsequent to February 2007 showed no change. To the extent Respondents failed to get the most current information, it had no impact on the appraisal amount. The work file lacks any documentation to support the $30,000 As-Is Value of Site Improvements adjustment in the Cost Approach section of the Report. As-is value of site improvements adjustment, in the cost approach section, is a positive value of $30,000. There is no explanation in the record as to what an "as-is value of site improvements adjustment" is or from what source came the $30,000 value. The work file lacks any documentation to support the $60,000 Porches/Appliances adjustment in the Cost Approach section of the Report Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, contains Marshall and Swift information for porches and appliances. Thus, documentation is present.
Recommendation RECOMMENDED that the Florida Real Estate Appraisal Board find Respondents guilty of violating Subsection 475.624(14), Florida Statutes, by failing to document adjustments made to comparable sales and reprimand Respondents. DONE AND ENTERED this 27th day of January, 2009, in Tallahassee, Leon County, Florida. S HARRY L. HOOPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of January, 2009. COPIES FURNISHED: Thomas M. Brady, Esquire 3250 Navy Boulevard, Suite 204 Post Office Box 12584 Pensacola, Florida 32591-2584 Robert Minarcin, Esquire Department of Business & Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801-1757 Ned Luczynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Thomas W. O'Bryant, Jr., Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Suite 802, North Orlando, Florida 32801 Frank K. Gregoire, Chairman Real Estate Appraisal Board Department of Business and Professional Regulation 400 West Robinson Street, Suite 801N Orlando, Florida 32802-1900
Findings Of Fact Respondent Don J. Lo Prince was exclusively connected with International Land Brokers, Inc., as a real estate salesperson, from December 29, 1975, to June 29, 1976. Until approximately two months before respondent's employment, Jeffrey Kramer, a real estate broker, was president and active firm member of International Land Brokers, Inc. At that time, one of the corporation's offices consisted of two rooms. The front room contained Mr. Kramer's desk, a secretary's desk, file cabinets, a duplicating machine, and a reception area. The back room was divided into six cubicles, each with a telephone. The office complex had a regular telephone line and a WATS line. Attached to the walls of most of the cubicles most of the time were portions of a packet of papers that was mailed to certain prospects. Pages two through five of composite exhibit No. 1, together with the last page, were at one time posted on the walls of some of the cubicles. On November 3, 1975, Walter J. Pankz, a real estate broker, began work with International Land Brokers, Inc. Between the hours of six and half past ten five nights a week and at various times on weekends, salespersons in the employ of International Land Brokers, Inc., manned the telephones in the cubicles. They called up property owners, introduced themselves as licensed real estate salespersons, and inquired whether the property owner was interested in selling his property. When a property owner indicated an interest in selling, the salesperson made a note of that fact. The following day, clerical employees mailed a packet of papers to the property owners whose interest in selling the salesperson had noted. Petitioner's composite exhibit No. 1 contains the papers mailed to one prospect. The contents of the materials which were mailed out changed three or four times over the year and a half that International Land Brokers, Inc., was in business. As a general rule, a week or so after the initial call to a property owner who proved interested in selling, a salesperson placed a second telephone call to answer any questions about the materials that had been mailed, and to encourage the property owner to list the property for sale with International Land Brokers, Inc. Property owners who listed their property paid International Land Brokers, Inc., a listing fee which was to be subtracted from the broker's commission, in the event of sale. When International Land Brokers, Inc., began operation, the listing fee was $200.00 or $250.00, but the listing fee was eventually raised to about $300.00. In the event the same salesperson both initially contacted the property owner and subsequently secured the listing, the salesperson was paid approximately 30 percent of the listing fee. If one salesperson initially contacted the property owner and another salesperson secured the listing, the one who made the initial telephone call was paid approximately $20.00 and the other salesperson was paid between $75.00 and $90.00 or thereabouts; when more than one salesperson was involved the sum of the amounts paid to the salespersons represented about 35 percent of the listing fee. In telephoning property owners, the salespersons worked from lists which International Land Brokers, Inc., had bought from unspecified individuals, or compiled from county tax records. The last week of May, respondent telephoned Miss Claire K. Bassett of Lowell, Massachusetts, and urged her not to delay in executing a listing agreement with respect to Florida realty she owned. Another salesman, Marcel Cossette, had earlier spoken to Miss Bassett on several occasions and caused the agreement to be mailed to Miss Bassett. Respondent told her to hurry so that her parcels could be assembled into a tract which respondent represented was expected to be sold in September of 1976. Miss Bassett did execute the agreement and pay a listing fee.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That the complaint be dismissed. DONE and ENTERED this 29th day of September 1977, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 1977. COPIES FURNISHED: Mr. Louis B. Guttmann, III, Esquire Mr. Richard J.R. Parkinson, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Mr. Don J. Lo Prince c/o Morton Wolf 19101 Collins Avenue Miami Beach, Florida 33160
The Issue The issue is whether Respondent committed the violations alleged in the Administrative Complaint, and if so, what discipline should be imposed.
Findings Of Fact Respondent is a certified residential real estate appraiser. His license number is RD-4163. Respondent was licensed as a registered trainee appraiser in December 2001. He passed the certification exam and received his current license in November 2003. Respondent has not previously had any disciplinary action taken against him by the Division or the Florida Real Estate Appraisal Board (Board). On June 14, 2005, Respondent was engaged by a mortgage company to appraise the single-family residence located at 620 Adirondack Avenue in Orlando (“the subject property”). The subject property was owned at the time by Cosme Abreu and his wife. The Abreus also owned a single-family residence located at 623 Adirondack Avenue, which is across the street from the subject property. The subject property was at the time of the appraisal under contract for sale to Jose Ciro, who was a co-worker of Mr. Abreu's. Respondent previously conducted an appraisal of the subject property in March 2005. His firm also conducted several appraisals of the Abreus' property at 623 Adirondack Avenue, including an appraisal on June 14, 2005. Respondent went to the subject property on June 14, 2005, and walked around the inside and outside of the residence taking measurements and observing the condition of the property. He testified that at the time of the appraisal the subject property was in good overall condition; that all of the appliances were in place; that the air conditioner was working; that the carpet and flooring were in place; and that there was no readily observable water damage or rotten wood on the interior or exterior of the residence. Respondent prepared an appraisal report of the subject property on June 14, 2005. Respondent estimated in his report that the market value of the subject property as of the date of the appraisal was $185,000. Respondent used the cost approach and the sales comparison approach to arrive at that valuation. The Division’s expert appraiser, Ben Cole, III, did not take issue with the methodology used by Respondent in his appraisal of the subject property. Indeed, Mr. Cole stated in his report that: “The [comparative] sales were legitimate transactions, pertinent and in close proximity to the subject. The home was measured correctly and the square footage correctly computed with the room count and placement shown properly.” Nevertheless, Mr. Cole testified that the appraisal report prepared by Respondent was misleading because it did not disclose the actual condition of the subject property as of the date of the appraisal. Mr. Cole did not have any personal knowledge as to the condition of the property as of the date of the appraisal; his opinion regarding the misleading nature of Respondent’s appraisal report was based upon the assumption that the condition of the subject property at the time of the appraisal was as reflected in the photographs taken in August 2005. However, as discussed below, the validity of that assumption was not established by clear and convincing evidence. Respondent did not take photographs of the subject property in connection with the June appraisal. The exterior photographs of the subject property included in his appraisal report were the photographs that he took in connection with the March appraisal. Respondent testified that the March photographs accurately depicted the condition of the subject property as he observed it in June, and he stated in his appraisal report that the subject property has been “maintained in good overall condition.” Mr. Abreu testified that subject property was in good condition at the time of the appraisal, which was consistent with and corroborated Respondent’s assessment of the condition of the subject property.3 Mr. Ciro had no direct personal knowledge about the condition of the subject property in June 2005. He did not take possession of the property until mid-August 2005, even though the closing occurred in mid-July 2005. Mr. Ciro had only visited the subject property twice before August 2005. One of those visits occurred prior to the three hurricanes that hit the Orlando area in August and September of 2004. Mr. Ciro could not recall the date of his other visit to the property, but it was before June 2005. Mr. Ciro testified that the subject property was in good condition at the time of his visits, although he acknowledged that he did not closely examine the outside of the house because it was nighttime when he was at the subject property. The condition of the subject property in August 2005 was not good, as reflected in the photographs and videotape that were received into evidence. For example, the carpet in the family room was missing, appliances were missing, the kitchen sink and cabinets had been removed and were on the back patio, there was a stain of some kind on the ceiling in at least one of the rooms, the backyard was overgrown and full of trash, and there was damage to the soffit on the right-front of the house. Mr. Abreu testified that some of the damage depicted in the photographs and videotape -- e.g., removal of the sink from the kitchen, floor damage caused by a plumbing problem -- occurred between the time of the appraisal and the time that Mr. Ciro took possession of the subject property, and that he was in the process of fixing the damage when Mr. Ciro took possession of the property. Mr. Abreu attributed the remainder of the damage to Mr. Ciro. Mr. Ciro and the Abreus are currently in litigation regarding the sale of the subject property and its condition in August 2005. Respondent is not a party to that litigation. Respondent and Mr. Abreu testified that the August 2005 photographs do not reflect the condition of the property as of the time of the appraisal on June 14, 2005. That testimony is called into question by the photograph in the appraisal report that appears to show that the soffit damage observed in August 2005 on the right-front corner of the house was present at the time of the March appraisal,4 but the evidence was not clear and convincing on that issue. In October 2005, the Division received a complaint from Mr. Ciro regarding Respondent’s appraisal of the subject property. Beverly Ridenauer was assigned to investigate the complaint. It took Ms. Ridenauer several months to make contact with Respondent because the address that the Division had on file for him was incorrect. Respondent was not able to produce his work file for the subject property when it was initially requested by Ms. Ridenauer.5 When the original work file could not be located, Respondent “reconstructed” the file and provided it to Ms. Ridenauer. The original work file was subsequently located and provided to the Division during discovery. There is no evidence of any discrepancies between the “reconstructed” file and the original file. The work file was not offered into evidence, but Respondent testified that it included the property appraiser records, Multiple Listing Service print-outs, and other information he reviewed and considered in his appraisal of the subject property. Respondent required his trainees to take interior photographs of the property they appraised for his use in reviewing and signing-off on their work, but he did not take interior photographs of properties that he appraised unless the lender specifically requested such photographs. As a result of this case, however, Respondent now takes interior photographs as a standard practice in order to “protect [him]self.” There is no statute, rule, or USPAP standard that requires interior photographs to be taken as part of an appraisal. The Division’s expert appraiser, Mr. Cole, did not know whether it was even typical for appraisers to take interior photographs; he simply testified that such photographs “would have been helpful” in this case.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Board issue a final order dismissing the Administrative Complaint. DONE AND ENTERED this 22nd day of August, 2007, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of August, 2007.
Findings Of Fact Respondent Theodore Dorwin is a registered real estate broker, registration certificate number 0022474, 561 N.E. 79th Street, Miami, Florida. He also is now and was at all times alleged in the Administrative Complain the president and active firm member of Respondent Intermart, Inc., a registered corporate broker located at the same address. As broker with Intermart, Respondent holds registration certificate number . 0157090. Intermart is registered under certificate number 0157081. The registrations of both Dorwin and Intermart were suspended by Petitioner on July 21, 1976, for a period of ninety (90) days. By order, dated December 16, 1976, Petitioner denied Respondents' petition for reactivation and return of registration certificates. (Petitioner's Composite Exhibit 1) Intermart, Inc. was formed in the middle of 1975, but did not commence active operations until February, 1976. Prior to 1975, Dorwin had been a general real estate broker for various land companies in Florida. In 1975, he became associated for a brief period of time with a firm called Property Resales Service, Inc., of Miami, an organization that solicited listings for the resale of property. During the period February, 1975, until 1976, Dorwin was connected successively with International Land Brokers, Inc. (hereinafter "International") and Florida Landowners Service Bureau (hereinafter "Service Bureau"), both of which firms engaged in the solicitation of advance fees from out of state property owners for listing agreements whereby they undertook to advertise and sell the property for a ten percent commission. The listing agreements of these firms provided that the advance fee would be credited against the commission. In February, 1976, Intermart, Inc. was activated and began operations at the same office and with the same salesmen who had been used by Dorwin in his activities for the Service Bureau. It used virtually the identical "Listing and Brokerage Agreement" and promotional material as had the other firms. The change was brought about by the fact that commission checks received from the Service Bureau had "bounced." (Testimony of Dorwin, Petitioner's Exhibits 2,5,6,7,23,26,27,28) Respondents operated the advance fee business in the following manner: Lists of primarily out of state owners of land in large developments in Florida and other states were purchased by Respondents from individuals who sold such lists "on the street." In like manner, lists of prospective purchasers of such land were purchased. Information was placed on cards containing the name, address and phone number of the landowner, together with information as to the development where the land was located. A staff of some fifteen to twenty real estate salesmen were utilized to solicit listings from the prospective sellers over the telephone. Each salesman had a cubicle in a small office with a .telephone. These individuals worked in two shifts, six days a week, during the evening hours. Each salesman averaged about twenty to twenty-five telephone calls a night. When Intermart succeeded Dorwin's operation for the Service Bureau, there was little or no change in any of the above procedures. The average, listing fee was $350 , of which the soliciting salesmen received approximately one-third. The salesmen were provided a "script" or "opening statement" by Dorwin to use as a selling "pitch." The persons called were asked if they were interested in reselling their property. They were told that foreign investors around the world were interested in buying blocks of land in Florida and were quoted a sale price that usually was somewhat in excess of the current market value of the property. If the property owner expressed interest in listing his land for sale, literature was mailed to him which consisted of information about Intermart and the experience and qualifications of its officers, together with a form "Listing and Brokerage Agreement," and reprints of newspaper and other articles concerning the interest of foreign investors in land in the United States, and similar subjects. About two weeks later, the salesman would call the individual again to urge that he send in his advance fee, along with the signed listing agreement. The proposed selling price was fixed by the salesman from a large chart in the office that showed sample original purchase prices and amounts to be quoted as selling prices based on the number of years since purchase of the property. These amounts were used in all cases, regardless of where the property was located. The only deviation from the standard selling price was in cases where water or canal front property, golf course or business property was involved, in which case, $500 to $1,000 was added to the quoted figure. During the initial call, the salesman asked for the legal description of the lots in question and, if a listing was obtained, a copy of the agreement for deed or warranty deed was also requested. However, no efforts were made to check the legal descriptions of the property nor were any visits made to the property by Dorwin or other personnel of the firm. The sales man had nothing to do with actual sales of the property and did not contact prospective purchasers. Neither Dorwin nor one of his former salesmen who testified at the hearing was aware of any actual sales of listed property made by Intermart or the Service Bureau. No credible evidence was submitted that the property was ever checked for zoning restrictions or that prospective purchasers were contacted by anyone. Respondents did occasionally send a form letter to those listing property stating that Intermart "had the opportunity to present your property" to a named individual and that they would "endeavor to interest the prospect further." However nothing ever came of these supposed contacts. During the telephone conversations with sellers, the alesmen made statements to the effect that Intermart was making sales, and that the land would usually be sold within eight to nine months. In one case, a seller was told by one of Respondents' salesmen that Intermart had sold all of the property that had been listed with it. Further representations were that Argentine buyers loaded with money" wanted to invest in American real estate. One salesman represented that Respondents advertised all over the world in all foreign countries and in every state in the Union. A letter enclosed with promotional materials stated that Respondents advertised or had proposed advertising pending in a number of countries via major magazine and newspaper publications, and in Miami, Los Angeles, New York City, Boston and Chicago. Another landowner was told that the company had been in business for a period of ten years. It was also represented that Intermart had a computer printout on the latest market values of land and that this was used in determining their estimate of a selling price. In one instance, the salesman told the seller that they had identified a buyer for his land which would be part of a large block package to be sold to the individual and that a rapid decision had to be made whether or not to list. the property so that he could participate in the deal. He was further told that it would take about three months to close the sale with a Venezuelan investor. Attempts by the property owners to obtain copies of the listing agreement signed by Respondent proved to be futile, in spite of promises from its representatives to provide the same. In one instance, to induce a listing, the sales man told the landowner to cross out the amount shown on the listing contract that previously had stated a sale price and to pencil in an increased sales price. He also told him to make pencil corrections on the proposed agreement to indicate that the purchaser rather than the seller would pay the ten percent commission of the sales price. (Testimony of Judkins, Ladabauche, Nicholas, Burke, Petitioner's Composite Exhibit 2, Petitioner's Exhibits 5,6,7 [depositions]) Respondents' promotional literature and information that was sent to prospective sellers of property contained various promises and representations that were not kept, as follows: Respondents stated that it would "analyze" the property to arrive at a correct selling price by reviewing the status of development and zoning in the immediate area of the property. In fact, the selling price was based solely on an arbitrary figure selected from a chart on the wall that did not take into consideration the precise location of the property or zoning considerations. Respondents stated that "Your property legals are checked thoroughly." In fact, any legal description of the property was obtained solely from copies of agreements for deed or warranty deeds supplied by the owner , and were not further checked in any manner. Respondents stated "In order for us to successfully merchandise and receive the highest offer for your property (ies) considerable expense is involved because a great deal of time is put forth on your behalf and many of the property(ies) are being offered for sale sight unseen." In fact, only a small amount of money and little or no time was expended to sell the property. After the property owner had submitted his advance fee and listing agreement to Respondents, no further efforts were made on his be half nor was he ever contacted thereafter by the firm. (Testimony of Lewis, Judkins, Ladabauche, Nicholas, Petitioners' Composite Exhibit 2, Petitioners' Exhibits 57, 23) In the "Listing and Brokerage Agreement," Respondents a greed to use its "efforts to secure a purchaser for the property" and to include the property in its directory of "available properties, to be distributed to other real estate brokers." It also contained A the following pertinent undertakings: "4. In consideration of this listing, you agree: To cause said property to be included in your listing directory and in two successive issues of said directory within a period of one year. Contemporaneously with the appearance of said listing in the directory, you agree to direct the efforts of your organization to bringing about a sale of my property; To advertise said property as you deem advisable in magazines or other mediums of merit: I understand that this agreement does not guarantee the sale of my property, but that it does guarantee that you will make an earnest effort pursuant to the aforementioned provisions." (Petitioner's Composite Exhibit 23) Respondent Dorwin testified that he planned to issue a catalog of listed properties in June, 1976 to be distributed to various investors and brokers in the United States and foreign Mailings this depend 7 countries. of catalog were to on responses to .advertisements placed in newspapers around the world and in the United States in April. No action toward any of these goals was taken until March, 1976 when Intermart entered into an agreement with Currency Control Advertising, Miami, Florida, to act as an advertising agency for brochures, printing, copy, layout, typesetting, art, newspaper and magazine advertising, public relations, radio and television. Under this contract, small, one insertion newspaper ads were placed in approximately seven newspapers of various foreign countries and Canada, and in newspapers in Chicago, Los Angeles and New York, costing approximately $500. These ads read as follows: "U.S. Investments Catalogue . . . $9.95 U.S. Complimentary to Investors and to the Trade." Property listings for the catalog were not provided to the advertising agency until the last half of July, 1976. It was not published until August 20th but has not been mailed due to Respondents' current suspension by Petitioner. A few responses were received as a result of the newspaper advertisements but Dorwin testified that nothing was done to follow-up such inquiries because he was waiting for the catalog to be published. Five thousand copies of the catalog were printed at a cost of some $4,500. At the present time, Intermart owes the advertising firm about $2,500 for its work. Dorwin testified that he planned to distribute the catalog to several thousand investors and brokers listed in the International Real Estate Federation, of which he was a member, but that he was unable to do so because of his suspension by Petitioner in July. During the period January-June, 1976, Intermart's records reflected a gross income from the advance fee business of approximately $190,000. About forty-eight per cent of this amount was paid to salesmen for commissions on listing fees, twenty-eight per cent for officers salaries, and about one and one-half per cent was paid for advertising. (Testimony of Dorwin, Weinstein, Stowe, Leader, Petitioner's Exhibits 4, 825) During the last half of June, 1975, Intermart, upon advice of Counsel, in anticipation of a new state law regulating advance fee contracts, stamped on their listing agreements a statement that the parties agreed the advance fee did not constitute trust funds and that the monies therefrom could be expended for expenses. Listing fees received after July 1, 1976, were placed in an Intermart, Inc. trust account of the Capital Bank of North Bay Village, Florida, Account 10452, and as of December 31, 1976, this account showed a balance of $5,083.35 that is being retained by Respondents pending the outcome of present proceedings. (Testimony of Dorwin, Petitioner's Dorwin testified that, although he was aware the other advance fee firms with which he had been associated did not follow through on listings to attempt to make sales, he planned to do so by his newspaper advertisements and issuance of the catalog. However, he admitted that no information was ever sent to any prospective purchaser, that no advertisements were ever placed that described individual parcels of property, and that the only contact ever made with prospective purchasers was by telephone calls. He further admitted that no one from the firm ever checked public records involving the property listed for sale to assure the accuracy of information provided by the owners, and only token visits were ever made to view the listed properties by any member of the firm. He maintained that salesmen were not given a "script" to use but merely an "opening statement" and that they were free to deal with property owners as individuals. He was unaware of where the chart showing sample property values had been obtained and stated that such a chart was not used during Intermart's operations but had been used only during the previous operation at the same address. He denied ever telling salesmen to inform expected sellers that the firm was selling blocks of land but acknowledged that in monitoring telephone conversations of the salesmen, they did exaggerate at times. (Testimony of Dorwin) In view of the totality of the evidence, it is found that the operations of Intermart, Inc. were designed and carried out with the sole intention of extracting monies from landowners with no intent to carry out the stated promises of "earnest efforts" to sell the property.
Recommendation That the certificates of registration of Theodore Dorwin and Intermart, Inc. be revoked pursuant to subsection 475.25(3), F.S. DONE and ENTERED this 11th day of February, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Richard J. R. Parkinson, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Louis B. Guttmann, Esquire 2699 Lee Road Winter Park, Florida 32789 Harold Mendelow, Esquire Manners and Amoon, P.A. 4349 N.W. 36th Street, Suite 106 Miami, Florida 33166
Findings Of Fact The Petitioner, Tommy C. Chastain, III, is a Property Appraiser II (appraiser) employed by the Respondent, State of Florida, Department of Revenue (Department). The Petitioner has been employed in that capacity in excess of 12 years. The Respondent is an agency of the State of Florida charged with enforcing and carrying out the taxing authority of the State of Florida, embodied in Chapter 212, Florida Statutes, and other extant law. Its regulatory authority, in raising state revenues through taxes, includes regulatory oversight and the certification process concerning county ad valorem tax rolls and related tax administration. On or about March 27, 1996, the Petitioner submitted a written request to the Department's Executive Director, Mr. Fuchs, requesting authorization to seek political office as a Property Aappraiser, a county officer, of Bradford County, Florida, while remaining an employee of the Department. This request was made pursuant to Rule 60K-13, Florida Administrative Code, a rule of the Department of Management Services (DMS) concerning the circumstances under which employees of the State of Florida may obtain permission to seek political office. This rule embodies an examination and determination of whether such candidacies pose conflicts with the duties and responsibilities of such a candidate's state employment. The Executive Director denied the request on April 16, 1996 on the basis that the Department was unable to certify, under prevailing DMS rules and Florida Statutes, that the Petitioner's candidacy would involve "no interest which conflicts or activity which interferes" with the Petitioner's state employment with the Department. The Petitioner sought a formal proceeding before the Division of Administrative Hearings to contest that initial determination. The Petitioner has been employed with the Department since 1983. Approximately two years after he was so employed, the Petitioner's wife was elected to the School Board of Bradford County, Florida. Due to his wife's position on the Bradford County School Board, the Petitioner requested and the Respondent, through the Petitioner's supervisor, agreed that the Petitioner should not and would not be assigned to do the Department's appraisal work in and with regard to Bradford County and its tax rolls. This was due to a perceived conflict of interest, or the possibility thereof, on the part of both the Petitioner and the Respondent. It was a voluntary arrangement. Since that time, the Petitioner has not been assigned to do any appraisal work related to Bradford County. The duties of a property appraiser for the Department, such as the Petitioner, involve assisting county property appraisers and employees in the county appraiser's office in appraisal techniques, to arrive at estimated values concerning commercial, residential and personal property. The Department appraiser administers policies and procedures pertaining to appraisal of real and personal property, set forth in the Florida Statutes and policies, rules and regulations of the Department, and it consults with all levels of government officials, as well as property owners and private appraisers, concerning problems involving appraisal of real and personal property. The Department property appraiser also investigates and reports on conduct and performance of county officials involved in the ad valorem taxing process. The property appraiser also investigates taxpayer complaints and applies the appraisal process, as defined by the American Institute of Real Estate Appraisers, to arrive at estimated values for these types of property. The appraisal studies performed by employees, such as the Petitioner, for a given tax year, are kept confidential from the county property appraiser, until a year-end review is conducted between the county and Department, pursuant to Section 195.096(2)(e), Florida Statutes. The Petitioner is assigned to the Lake City Regional Office in the property tax administration program. He does not perform appraisal work in and for Bradford County nor has he worked with that county's property appraiser or his staff. It is possible, however, that based upon legitimate business decisions by the Department, including considerations of saving expense funds, that he could be assigned to perform appraisal work in any county in the Lake County region, including Bradford County, although that has not been the case heretofore. The Petitioner's duties and responsibilities entail safeguarding certain confidential tax information, pursuant to Department directive 0101.10 and Section 6103 and 7213, of the Internal Revenue Code (IRC), as well as pursuant to various internal security procedures for safeguarding confidential information, including procedures and policies for safeguarding information sources, mandated by the Department's rules and policies. The Department appraisers are relied upon for their independent professional judgment in performing their duties and responsibilities involved in appraising property and in the tax administration process for the counties under their audit authority. Conflicts may arise between the Department appraiser and the county Property Appraiser. Judgmental adjustments to comparable sales transactions in a county that indicate market value for properties being appraised may differ between that of the county Property Appraiser and the Department appraiser, thereby affecting the measurement of the overall tax rolls the county Property Appraiser is required to submit to the Department for approval, pursuant to statute. The Petitioner's current duties and responsibilities provide him with access to information within the Lake City regional office files which include information related to Bradford County's assessment levels for a particular year, even though he himself is not assigned to work in the Bradford County taxing appraisal and tax roll approval process. Such information is available to the Petitioner prior to it becoming known to the Bradford County Property Appraiser, the official the Petitioner seeks to oppose in the upcoming election. County Property Appraisers make the determination of how to increase assessment or just value on each parcel of real estate and the amount of assessment valuation increase on homestead property, by authority of Sections 193.011 and 193.155, Florida Statutes. The Department is charged with oversight of each county Property Appraiser's office to insure that all properties are assessed at just value, with equity and uniformity. The Department's goal in property tax administration is to achieve compliance with statutory standards through the aid and cooperation of the local Property Appraiser and his staff. Cooperation by the county appraisers is essential. If Department employees gather information, contemporaneously with running for office against the Property Appraiser, it would tend to arouse suspicion in the county Property Appraisers and their staffs concerning the Department's motivations. It would call into question the independence of the Department in local tax administration matters in all the counties under its jurisdiction, as well as in a particular county involved. The independent judgment of Department appraisers, in performing their assessment studies for counties, is essential for the Department to determine whether the county Property Appraiser's increases and assessments are in compliance with the Department policies, administrative rules, and statutory requirements. The failure of the county Property Appraiser's tax roll to comply with the Department standards can result in disapproval of the county tax roll, which, in turn, may lead to punitive, interim roll procedures and ultimately culminate in litigation if the discrepancies are not amicably resolved. The Department appraiser performing such assessment studies for the year in controversy would likely be required to testify and ultimately defend his or her work product in litigation in a manner adverse to the interests of the county Property Appraiser. Moreover, appraisal studies performed by a Department appraiser for one county can affect the appraisal assessments in another county. The Department develops a "systematic base rate" for use in the appraisal system, from data gathered from a particular region, including appraisal data for the entire region. Data gathered for the Lake City region, where the Petitioner practices, would include data for Bradford, Baker, Union and Alachua Counties, as well as for southern Clay County, in determining what rate would be appropriate for any of those counties for individual base rates. Thus, the appraisal work performed by the Petitioner, even though he does not do appraisal work in Bradford County, can affect the appraisal assessments in Bradford County. The Department appraisers are called upon to resolve disputes over tax roll assessments in counties other than that in which they are regularly assigned. The Petitioner, for instance, has been called upon to provide aid and assistance in the Jacksonville Regional Office in this capacity, during the time he has been assigned to the Lake City Regional Office. Confidential appraisal information generated by the county Property Appraisers and their staff is available to all the Department appraisers within a particular region, as is confidential appraisal information generated by a Department appraiser assigned to a particular county in that region. The Petitioner has, and has had, access to all confidential appraisal information pertaining to Bradford County, in his Lake City Region, even though he himself is not assigned to do appraisal work in Bradford County. He has had access to that information prior to the information being made available to the Bradford County Property Appraiser. The Department's goal, through its aid and assistance to the county Property Appraisers, is for the Property Appraisers in the counties to meet their statutory and constitutional obligations and have their tax rolls approved by the Department. If the county tax rolls are not in compliance with the Department assessments, and issues are not reconciled within 90 percent of the Department's assessment values, then the Department will issue review notices or administrative orders directing compliance. Such disputes can culminate in litigation. In order to avoid disruption to the tax administration process and to the impartial and independent appraisal judgment exercised by the Department's appraisal staff, as well as by the county appraisal staffs, it is essential that the atmosphere of trust, confidence and reliance on the exercise of independent judgment by the Department's appraisers, and by the county appraisers, be maintained. In the Department's experience, the candidacy of a Department appraiser for the local county Property Appraiser's office can easily arouse suspicion and distrust on the part of the county Property Appraisers towards the Department's tax administration staff and its appraisers. It can foster the belief in the county Property Appraisers, even if mistaken, that the Department is fostering the candidacies and elections of its own staff members with their own ideas and judgments concerning appraisal processes and techniques against the interests of the incumbent appraisers and their counties. This is a state of affairs the Department must assiduously seek to avoid, which is why it has historically followed a policy of not approving its property appraisers' candidacies for county Property Appraiser offices while they are still Department employees. The property tax administration program is primarily responsible for measuring the relevant levels of assessment of property in the state between the various counties and certifying that level for each county annually for the Department of Education, for use in disbursement of general revenue funds to the counties based upon the relevant levels of assessment in reference to a statewide average level of assessment. Thus, as an incident of that function, the tax rolls of each county must be approved each year by the Department. In the appraisals conducted by both the county appraisers and the Department, of the sampled properties that are provided in any county, the methodologies that are used to appraise the property depend on the independent, impartial judgment of the appraiser doing the appraisals and applying that methodology. A candidate for the Property Appraiser office has the ability to affect that judgment and call into question the product of those appraisals and methodologies (Department employee candidate). If tax rolls are litigated in any county in which those appraisals were done, or in counties bordering on those counties, the appraisals could be called into question in the course of litigation of those tax rolls if disapproved by the Department, as analogous appraisals. The appraisers who performed those appraisals for the same county or for neighboring counties, which were called into question in disputes with the Property Appraiser of a particular county, could be called as witnesses to defend their work product, even though their work was done in and for different counties in the Department's region from the litigating county. The Department appraiser has the ability to call into question the methodologies used in any county in the state. Even if that Department appraiser was not assigned to the county in question, under the Department's practice in the Petitioner's regional office, the appraisers for the various counties have a review function over the appraisal work done for any particular county, a sort of "peer review process". Because of this process and their access to the confidential records pertaining to any county in their region, a Department appraiser who is a candidate for the county Property Appraiser's office against an incumbent, in a county in his region, could thus have access to information which might be advantageous to his political campaign. Access and use of this information, even if only a possibility and not actually practiced by such an appraiser candidate, would jeopardize the Department's relationship of cooperation and trust with each of the county Property Appraisers. The county Property Appraiser, in turn, has the ability to call into question both the appraisals made by the Department's field appraisers in other counties and the methodologies applied in those appraisals, the policies of the Department that underlie those methodologies, the decision-making process for which those methodologies and policies were decided and the administration of property taxes in general by the Department. They can do this through the vehicle of disputing formally or informally the application of Department appraisal techniques, methodologies and policies in his or her own county. The Department thus has a concern and a very real interest in maintaining the perception, in the administration of its taxing authority, that the independent and impartial adherence to the revenue statutes and policies involved is maintained. The Department has a real concern that if it authorizes one of its appraisers to run for the county Property Appraiser's office, the Department's policies would be perceived as motivated by an effort to install replacements to the incumbent county Property Appraisers who are more favorable to the Department's view of tax appraisal and assessment methodologies and policies. If the credibility of the Department's decision to disapprove a county's tax roll is called into question because a Department appraiser is challenging that incumbent property appraiser, the Department would be prejudiced during the litigation over disapproval of that county's tax roll. This is due to the fact that a candidate for Property Appraiser, rather than a disinterested Department employee, will have performed some of the appraisal work, even if done in a different county, upon which the Department is relying to defend its litigation position and its appraisal methodologies and policies by the means of comparing independent and purportedly analogous appraisal methodologies and practices by the Department in the various neighboring counties. In Lake County, Florida, for example, the current county Property Appraiser is now being challenged by a former Department appraiser. That former Department appraiser's work product in a neighboring county has been called into question and made the subject of the political campaign in the media. The methodologies used by the former Department appraiser, the appraiser's competency in applying those methodologies, the appraiser's training and level of education, and the Department's policies and the decision-making process under which those policies were selected, have been called into question in the political campaign. In a like vein, the appraisal methodology used by the Department for Dixie County has been introduced into litigation presently occurring in Levy County. The issue is the neighboring county's methodology for applying and calculating the "base rate", which is a unit of measurement per square foot for dollar valuation of structures. The county Property Appraisers have knowledge of how the Department appraisers and other counties apply Department policy and the Department appraisers assigned to each county know how their counterparts assigned to neighboring counties apply appraisal principles in Department appraisal policy. They know this because they have direct access to the confidential appraisal- related records as to each county in their region and, moreover because, as found above, they engage in a "peer review" of each other's audit and appraisal work periodically. Because of this knowledge of or access to confidential information pertaining to any particular county by any Department appraiser assigned to any county in that same region, that appraiser could have an undue advantage in a political campaign. The county Property Appraisers, of course, realize this. If the Department countenanced such employed Department appraisers opposing county Property Appraisers for election, immediate distrust and suspicion of the Department's motives would arise on the part of the county Property Appraisers. Thus, such a candidacy by a still-employed Department appraiser would represent a conflict of interest with his continued employment with the Department, which requires the maintenance of both the appearance and the fact of independent, impartial exercise of appraisal judgment and the maintenance of confidentiality of the tax administration-related records pertaining to any county. The appraisal studies, along with all documentation attendant thereto, are confidential until they are completed for the year-end assessment. The findings therein are then discussed with the county Property Appraisers. Only after that time do they become public record. Section 196.095(2)(e), Florida Statutes. In summary, the candidacy for the office of county property appraiser by a still-employed Department appraiser presents a real conflict of interest between the Petitioner's employment with the Department in that circumstance and the Department's statutory mission, which includes, as a necessary part, the maintenance of a cooperative relationship between the Department tax administration personnel and the county Property Appraisers. There exists the possibility that the platform or public statements of the Petitioner as a candidate would conflict with the Department's administration and interpretation of the tax laws under Chapters 192-197, Florida Statutes, which could impair the essential reputation of the Department for impartiality and independent judgment in appraisal work and administration of the tax laws among all of the counties under its jurisdiction. This would create a direct conflict with the Petitioner's continued state employment under those circumstances.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is RECOMMENDED that a Final Order be entered by the Department of Revenue denying certification that the Petitioner's candidacy for the office of Property Appraiser for Bradford County involves no interest which conflicts with or activity which interferes with his state employment and thus denying authorization for him to become a candidate for that office while remaining employed by the Department of Revenue, for purposes of Section 110.233(4)(a), Florida Statutes. DONE AND ENTERED this 1st day of August, 1996, in Tallahassee, Florida. P. MICHAEL RUFF, 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 1st day of August, 1996. APPENDIX TO RECOMMENDED ORDER Petitioner's Proposed Findings of Fact 1-11. Accepted, but not in themselves materially dispositive of the issues presented for resolution by the Hearing Officer. Respondent's Proposed Findings of Fact 1-26. Accepted, except to the extent modified by the Hearing Officer. 27. Rejected, as immaterial due to its speculative nature. 28-43. Accepted, except as modified by the findings of fact of the Hearing Officer. COPIES FURNISHED: G. Keith Quinney, Jr., Esquire Bryant, Miller & Olive, P.A. 201 South Monroe Street, Suite 500 Tallahassee, FL 32301 Peter S. Fleitman, Esquire Brian F. McGrail, Esquire Post Office Box 6668 Tallahassee, FL 32314-6668 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, FL 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, FL 32399-0100
