The Issue Which certificate of need application seeking to establish a new 120-bed community nursing home in Nursing Home District 6, Subdistrict 5 (Polk County), on balance, best satisfies the statutory and rule criteria for approval: Lakeland Oaks NH, LLC’s CON Application No. 10309, or Eighth Florida Living Options, LLC’s CON Application No. 10303.
Findings Of Fact The Parties Lakeland Oaks NH, LLC Lakeland Oaks, LLC, is a Delaware, limited-liability company formed by Greystone Healthcare Management Corporation (Greystone) for the purpose of filing its certificate of need application at issue in this proceeding. Greystone is a Delaware, for-profit, corporation which operates 26 skilled nursing facilities, two assisted living facilities, and six home health branches in Florida. It also operates 10 nursing homes in Ohio. Recently, Greystone constructed and opened a new nursing home known as The Club Health and Rehabilitation Center at the Villages (The Club Villages) in Marion County, Florida. Greystone is headquartered in Tampa, Florida adjacent to Polk County. Eighth Florida Living Options, LLC Eighth Florida Living Options, LLC, is a Florida, limited-liability company formed by Florida Living Options, Inc. (Florida Living Options) for the purpose of filing its certificate of need application at issue in this proceeding. Florida Living Options is a Florida not-for-profit corporation which operates three skilled nursing facilities, three assisted living facilities, and two independent living facilities in Florida. Among them, Florida Living Options operates an assisted living facility known as Hawthorne Lakeland in Polk County, Florida, and recently constructed and opened a new nursing home in Sarasota, Florida, known as Hawthorne Village of Sarasota. Florida Living Options is headquartered just outside of Tampa about six miles from the Greystone headquarters. Agency for Health Care Administration AHCA is the state agency that administers Florida’s CON program. Procedural History The Fixed Need Pool On October 3, 2014, the Agency published a need for 203 additional community nursing home beds in Nursing Home Subdistrict 6-5 encompassing Polk County, for the July 2017 Planning Horizon. In response, eight applicants, including Lakeland Oaks and Eighth Florida, filed CON applications seeking to establish new community nursing home beds in Polk County. On February 23, 2015, the Agency published official notice of its decisions on those applications. The Agency awarded all 203 beds from the fixed-need pool, approving applications filed by Florida Presbyterian Homes, Inc. (14 beds), Lakeland Investors, LLC (69 beds), and Lakeland Oaks (120 beds). The Agency denied the remaining applications; including Eighth Florida’s CON Application No. 10303 seeking 120 beds from the fixed-need pool. Eighth Florida initially challenged all three awards, but voluntarily dismissed its challenge to Florida Presbyterian Homes, Inc. and Lakeland Investors, LLC’s awards prior to the final hearing. As a result, only 120 of the 203 beds in the fixed-need pool are at issue in this proceeding. The Proposals Greystone’s Lakeland Oaks Lakeland Oaks’ CON Application No. 10309 proposes to develop a 120-bed skilled nursing facility (SNF) in Sub-district 6-5, Polk County, consisting of 60 private rooms and 30 semi- private rooms. Lakeland Oaks proposes to offer high quality, short- term rehabilitation services and long-term care services in a country club style atmosphere. Some of the services Lakeland Oaks plans to offer include physical, occupational, and speech therapy; wound care; pain management; and lymphedema therapy. Lakeland Oaks’ proposal is partially modeled after a new SNF established by Greystone called The Club Villages in Marion County, Florida. Greystone developed The Club Villages in 2012 through the transfer of 60 beds from New Horizon NH, LLC, d/b/a The Lodge Health and Rehabilitation Center, an existing 159-bed skilled nursing facility in Ocala, Marion County. The Club Villages provides short-term rehabilitation to patients in a resort-style environment. The Club Villages has been successful since its opening, achieving full utilization within less than six months of operation. It recently added eight additional beds, resulting in a total bed complement of 68 beds, through a statutory exemption for highly utilized nursing home providers. The Club Villages was awarded the LTC & Senior Living LINK Spirit of Innovation Award, which recognizes facilities with innovative and inspirational designs. As of the final hearing, Greystone had not made a formal decision on site selection for the proposed Lakeland Oaks project. However, the evidence at hearing showed that Greystone plans to construct the proposed Lakeland Oaks facility in Polk County at one of four potential sites located near the I-4 interstate and major roadways for easy accessibility in an area with a high concentration of residents age 65 and older. The potential sites are in close proximity to the existing acute care hospitals in Polk County, which, from a health planning perspective, would promote a coordination of care. Given the number of available potential sites, it is not expected that Greystone will have difficulty securing a location for the proposed Lakeland Oaks project. Eighth Florida Living Options Eighth Florida’s CON Application No. 10303 proposes to establish a 120-bed SNF next to Hawthorne Lakeland, Florida Living Options’ existing assisted living facility in Polk County. The proposed facility will consist of two 60-bed pods, consisting of private and semi-private rooms. If approved, Eighth Florida’s proposed SNF will be part of a campus known as Hawthorne Village. In addition to the proposed SNF and Hawthorne Lakeland, Eighth Florida affiliates also plan to construct and operate a second assisted living facility and an independent living facility on the Hawthorne Village campus. An important part of Florida Living Options’ business model is to provide skilled nursing, assisted living, and independent living services on the same campus. By providing different levels of care on the same campus, it is envisioned that residents of Florida Living Options’ facilities can transition among the facilities as their care needs change. Eighth Florida plans to model its proposed skilled nursing facility on Hawthorne Village of Sarasota (Hawthorne- Sarasota), which opened in January 2013. Compared to Greystone’s The Club Villages, Hawthorne-Sarasota had a slow ramp up and only achieved 85 percent utilization after 24 months of operation. The Agency’s Preliminary Decision On February 23, 2015, in Volume 41, Number 36 of the Florida Administrative Record, the Agency for Health Care Administration (AHCA) announced its intent to award 83 of the beds identified to be needed in Polk County to other applicants not involved in this hearing; to approve the application of Lakeland Oaks for CON 10309 for 120 beds; and to deny the application of Eighth Florida for CON 10303 for 120 beds. Statutory and Rule Review Criteria The statutory review criteria for reviewing CON Applications for new nursing homes are found in section 408.035, Florida Statutes, and Florida Administrative Code Rule 59C- 1.036.1/ Each statutory and rule criterion is addressed below. Section 408.035(1)(a): The need for the health care facilities and health services being proposed There is a need for additional community nursing home beds in Nursing Home Subdistrict 6-5, Polk County. Both Lakeland Oaks and Eighth Florida’s CON applications seek to fulfill a portion of the published need for additional beds in Polk County. In addition to the published fixed-need pool, both Lakeland Oaks and Eighth Florida have stipulated to the need and performed their own needs assessment that verified the need for additional community nursing home beds in Nursing Home Subdistrict 6-5, Polk County. At present, Polk County has 24.7 nursing home beds per 1,000 residents. Even with the addition of 203 beds as projected by the fixed-need pool, population growth will cause Polk County’s bed ratio to decline to only 23.6 beds per 1,000 residents by the end of the planning horizon. Accordingly, there is a need for additional community nursing home beds in Polk County. Polk County has a large, fast growing elderly population. According to population data published by AHCA, from 2010 to 2014, the 65 and older population in Polk County grew by nine percent, which exceeded the statewide growth rate of six percent. For the time period 2014 to 2017, the 65+ population in Polk County is expected to grow at an even faster rate of 10 percent, which is substantial. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Polk County currently has twenty-four (24) nursing home facilities with 2,945 licensed beds. Polk County’s existing nursing home beds are highly utilized. For the 12-month period ending June 2014, Polk County’s existing nursing home beds had a total average occupancy rate of 90.29 percent. That occupancy rate is higher than the national rate and Nursing Home District 6’s average occupancy rate as a whole. At such high utilization, Polk County’s existing nursing home beds are not sufficiently available to Polk County residents. Further, Polk County’s existing nursing home beds are not adequate to meet the projected increase in demand for skilled nursing services in Polk County over the planning horizon. Eighth Florida proposes to locate its skilled nursing facility in Zip Code 33813, co-located with Florida Living Option’s existing assisted living facility. The need for additional community nursing beds in Polk County, however, is countywide and not specific to a particular zip code or assisted living facility. In contrast, Lakeland Oaks’ proposed project is located and designed to address the needs of Polk County residents as a whole with access designed to locate near a major hospital, and, as such, will better ensure access to short-term rehabilitation and long-term care services in Sub-district 6-5. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care Both applicants go to great lengths to provide and improve their quality of care. Both applicants propose to use an electronic health record (EHR) system called Point Click Care (PCC). All of Florida Living Options’ facilities currently use PCC. Eighteen (18) of Greystones facilities use PCC, and, by the end of 2016, all Greystone facilities will use PCC. In addition to PCC, both Greystone and Florida Living Options use “Casamba,” a rehab-specific electronic medical record that enables the facilities to maintain electronic plans of care and track patients’ progress in real-time throughout their stay. Greystone and Florida Living Options have implemented Quality Assurance Performance Improvement (QAPI) plans in their facilities. The QAPI program is a rigorous program for the improvement of quality of care and overall performance. It addresses the full range of services offered by a nursing home and is designed to promote safety and high quality with all clinical interventions while emphasizing autonomy and choice in daily life for residents. A QAPI plan is now mandated for use in all nursing homes. Both Greystone and Florida Living Options initiated the QAPI program in their facilities before mandated to do so. Both Greystone and Florida Living Option have developed a range of policies and programs designed to promote quality of care in their respective facilities. Greystone, for example, develops “Centers of Excellence” within its facilities. A Center of Excellence has specialized expertise in treating patients with certain conditions such as stroke, pulmonary, cardiac, or orthopedics. Greystone has developed Centers of Excellence that relate to short-term rehabilitation and therapy, and partners with health systems to develop initiatives to reduce hospital readmissions. In addition to Centers of Excellence, Greystone develops other specialized programs in its facilities tailored towards common diagnoses of patients discharged from area hospitals. All Greystone facilities have an internal Risk Management/Quality Assurance program overseen by a committee that includes the medical director of each SNF. The committee meets on a monthly basis to assess resident care and facility practices as well as to develop, implement, and monitor plans of action. Greystone also routinely conducts on-site mock surveys of its facilities to ensure that they are in compliance with all federal and state laws and regulations. Greystone employs a variety of organization-specific quality improvement policies and programs, including the Believe Balance Assessment Tool, the Operation Make a Difference Policy, the Care Line Policy, and the Culture of Care Program, to promote quality of care within its facilities. The Believe Balance Assessment Tool is a scorecard that enables facilities to monitor their performance with respect to such criteria as patient satisfaction and clinical care. The Operation Make a Difference Policy is intended to help Greystone facilities identify opportunities for improvement and implement positive change to improve the facilities’ quality of care and patient well-being. Greystone’s Care Line is a toll-free number that is staffed 24 hours a day and allows Greystone to quickly address resident and/or family member concerns. Greystone’s Culture of Care program is designed to ensure that Greystone patients receive patient-centered care that meets their individual needs. Greystone also provides voluntary patient satisfaction surveys to its short-term rehabilitation patients upon discharge. For the period December 2014 to July 31, 2015, 92 percent of former residents indicated that they would recommend a Greystone facility to patients in need of short-term rehabilitation care. In sum, Greystone has developed strategies that help its facilities provide quality care. Florida Living Options is also working constantly to improve the quality of care in its facilities. Personnel in its facilities hold regular meetings with their hospital partners to track and reduce readmissions and work with hospitals to develop protocols for dealing with the diagnoses that result in most readmissions. Florida Living Options develops particular protocols for treating conditions that it sees and treats regularly in its nursing homes. Internally, they hold daily quality assurance meetings to discuss recent developments and immediate resident needs, and hold weekly “at-risk” meetings to evaluate particular cases and assure that the residents are being treated in the most appropriate manner. Florida Living Options’ facilities include physician treatment rooms in their nursing homes, which encourage physicians to come to the nursing home more often and to examine patients regularly. In addition, Florida Living Options has Advanced Registered Nurse Practitioners in each of its buildings to provide enhanced nursing services as directed by the doctor. In order to provide for each resident’s specific needs, residents in Florida Living Options’ facilities are fully evaluated and an individual care plan is prepared immediately upon admission, together with a discharge plan that identifies anticipated discharge so that care can best prepare residents for that event. Finally, Florida Living Options continues to follow a discharged resident to confirm that they are doing well and access any continuing needs. Both applicants propose rehabilitative facilities and equipment for its residents. Eighth Florida proposes to equip its facility with state of the art HUR equipment with the capability to transmit patient performance directly to the Casamba electronic records program. The equipment can be used for strength conditioning, transfer improvement, and balance improvement, among other things. Florida Living Options has developed specific protocols for treating rehabilitative conditions. Eighth Florida’s therapy gym will include two types of “zero G” devices: ceiling track and hydro track. These devices allow persons who are not weight bearing (or who are partially weight bearing) to develop strength and balance without having to put all of their weight on their legs. Two additional specific pieces of equipment proposed for Eighth Florida include a VitaStim device that provides electrical stimulation that helps a person relearn how to swallow, and a device called Game Ready. Game Ready is popular with football trainers and orthopedic patients that use ice and pressure to reduce swelling and pain around elbow and knee joint replacement sites. Greystone outfits the gyms in its skilled nursing facilities with a variety of rehab equipment, including high-low tables, mats, hand weights, leg weights, and modern strengthening machines. In addition, many Greystone SNFs have additional high-end, state-of-the-art equipment such as the AlterG and Biodex. The AlterG is an anti-gravity treadmill that enables patients with weight-bearing restrictions to use their muscles, preventing disuse atrophy. A Biodex is used for balance re-training. If approved, Lakeland Oaks proposes to have separate therapy gyms for its short-term rehabilitation and long-term care programs. By having two therapy gyms, Lakeland Oaks would be able to offer therapy services tailored to both patient populations’ needs. In contrast, Eighth Florida proposes to have one centralized therapy gym for its entire facility. Although quality may be measured by many metrics, the five-star rating system published by the Centers for Medicare and Medicaid Services (CMS) has become the most commonly used measure of quality among nursing homes. CMS is the federal agency that oversees the Medicare and Medicaid programs. CMS developed the five-star rating system for nursing homes in 2008. The ratings are scaled on a statewide basis and provide a mechanism to compare nursing homes within a state. Only 10 percent of nursing homes in a state receive a five-star rating. Seventy percent receive a two through four-star rating. The bottom 20 percent receives a one-star rating. A nursing home’s score is derived from a variety of criteria, including the results of its health inspection surveys, staffing data, and quality measure scores. A nursing home’s star rating is available on the CMS Nursing Home Compare website. As of July 2015, Greystone’s average star rating for its Florida facilities was 3.3 stars, which is above average. For the same time frame, Eighth Florida’s average rating was 2.6 stars or slightly below average. Further, several Greystone facilities, including The Club Villages, received five-star ratings. Greystone has also received other quality-related awards. In 2015, seven skilled nursing facilities operated by Greystone in Florida received the American Health Care Association National Quality Award Program Bronze Award. The Bronze Award is awarded to SNFs that have demonstrated their commitment to quality improvement. In addition, Greenbriar Rehabilitation and Nursing Center, a Greystone facility located in Bradenton, Florida, was awarded the Silver Award in recognition of its good performance outcomes. In contrast, only one Florida Living Options’ skilled nursing facility has received the Bronze Award. Florida Living Options explained that it decided not to pursue additional bronze awards believing that these awards reflect more of a paperwork compliance than an actual measure of quality. The greater number of awards received by Greystone, however, has not been ignored. Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation Lakeland Oaks’ total project costs, as reflected in Schedule 1 of its CON application, are $22,877,084. The total project costs are based upon a detailed budget and workpapers underlying the numbers contained in the financial schedules to Lakeland Oaks’ CON application. Because of its size, Greystone is able to purchase equipment at a lower cost than other smaller providers. The project costs include $1.2 million for equipment. The equipment list is based upon consultation with Greystone’s purchasing department and identification of what items are needed, along with the cost of those items. The project costs set forth in Lakeland Oaks’ Schedule 1 are reasonable and appropriate. Schedule 2 of Lakeland Oaks’ CON application sets forth an accurate and reasonable listing of Lakeland Oaks’ capital projects (i.e., only the proposed Lakeland Oaks SNF). Schedule 3 of Lakeland Oaks’ CON application identifies the source of project funds, and reflects the two sources included in Schedule 2: cash-on-hand and non-related company financing. Based on the audit of the parent organization of Lakeland Oaks, Greystone has a large amount of cash-on-hand, totaling $21,972,271. This greatly exceeds the projected $4,575,414 cash-on-hand needed for the project. With respect to non-related company financing, Lakeland Oaks included a letter from The Private Bank, an outside lender that previously has worked with Greystone in the financing of its skilled nursing facility projects. The letter indicates the bank’s interest in funding the Lakeland Oaks project. Greystone previously has obtained approximately six mortgages from this outside lender to acquire properties and develop projects. The lender has never declined to finance a project proposed by Greystone. The lender typically funds between 75 and 80 percent of the cost of a project. Lakeland Oaks will be able to obtain the necessary outside financing to fund the remainder of the cost of the Lakeland Oaks project. Lakeland Oaks’ projected staffing for its facility is set forth on Schedule 6A of its CON application. In projecting its staffing, Greystone considered its other skilled nursing facilities that are comparable in size to Lakeland Oaks and the projected payor mix of Lakeland Oaks. Facilities with higher Medicare populations, such as the proposed Lakeland Oaks facility, generally require higher levels of staffing in light of the acuity of Medicare patients recently discharged from hospitals. In addition, Medicare patients often require physical therapy services. Lakeland Oaks specifically considered the higher resource utilization required by Medicare patients in developing its projected staffing. Additionally, Lakeland Oaks considered the needs of managed care patients and long-term Medicaid patients in connection with its projected staffing. To calculate the projected wages, Lakeland Oaks considered the actual wages paid at comparable Greystone facilities, adjusted those wages using a Medicare wage index that accounted for inflation, and utilized the wage index applicable to Polk County facilities. The projected staffing, and the annual salaries associated with staffing the facility, are reasonable and appropriate. Lakeland Oaks will be able to staff the facility at the projected salaries. While Florida Living Options explained its recruitment program and generous benefits package to attract qualified employees, its proposed funding is unconvincing. Schedule 3 of Eighth Florida’s CON application shows that Eighth Florida proposes to fund its project with $250,000 cash-on-hand and $24,452,400 in related company financing. Schedule 3 does not reflect any non-related company financing. The CON application requires an applicant to attach proof of the financial strength to lend in the form of audited financial statements. The only audited financial statement Eighth Florida included in its application is the financial statement of the applicant entity, which reflects only $250,000 cash-on-hand. Eighth Florida omitted the audited financial statements of any related entity that would reflect the ability to fund the approximately $24 million to be obtained from the related party. As a result, Eighth Florida failed to prove its ability to fund the project, and the project does not appear to be financially feasible in the short term. While there was a letter within its application discussing the possibility of outside financing, Eighth Florida’s CON application is premised upon funding by affiliate reserves. Indeed, Schedule 1, lines 32-41, indicates that information pertaining to outside financing is inapplicable because the project is 100 percent funded by affiliate reserves and no fees or interest charges are anticipated. If Eighth Florida had proposed outside financing, it would have had to complete those lines of the application. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district While both applicants argue that their proposed projects will improve access to health care for residents of Subdistrict 6-5, Lakeland Oaks’ proposed project will better enhance access. Eighth Florida’s zip code analysis and focus on serving residents of Hawthorne Village is myopic when compared to Lakeland Oaks’ proposed project designed to provide access to Polk County as a whole. Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal Schedule 3 of Lakeland Oaks’ CON application sets forth an accurate and reasonable source of funds to develop the project. As previously explained, Greystone is financially capable of funding the project, partially from cash-on-hand and partially from outside financing. The project is financially feasible in the short term. Lakeland Oaks’ projected utilization of its skilled nursing facility is reflected on Schedule 5 of its CON application. The projected utilization is reasonable and achievable. Greystone has been able to achieve a high rate of utilization at The Club Villages in a short period of time. Greystone also has a process to inform hospitals and physicians of its skilled nursing services, including the placement of clinical liaisons in hospitals and physician offices. Greystone also enjoys a good reputation that serves to attract patients, including specifically Medicare patients, to its facilities. Finally, the Lakeland Oaks facility will house long-term care residents, which generally are easier to attract to a facility than patients in need of short-term rehabilitation. With regard to long term financial feasibility issues, Schedule 7 of Lakeland Oaks’ CON application sets forth revenues based on patient days and an assumed payor mix. The payor mix assumptions and projected revenues are accurate and reasonable. The assumed payor mix is based on the experience of other Greystone facilities. Specifically, Lakeland Oaks projects in its second year of operation 7.96 percent self-pay patient days; 29.2 percent Medicaid days; 41.59 percent Medicare Part A days; 15.04 percent “Other Managed Care” days. Medicare Advantage, or Medicare Part C, accounts for 90 percent of the “Other Managed Care” days. Finally, Lakeland Oaks projects 6.19 percent in “Other Payer” patient days, including VA and hospice patients. Based on Greystone’s experience at other, similar facilities, the forecast is reasonable. Schedule 8 of Lakeland Oaks’ CON application sets forth its projected income statement for the facility, including total revenues and expenses. For year two of operations, Lakeland Oaks will have a projected total net income of $1,997,665. This is an accurate and reasonable projection, and the project will be financially feasible in both the short-term and long-term. With regard to the reasonableness of Lakeland Oaks’ fill rate, Greystone facilities have experienced an average occupancy in excess of 91 percent for the years 2010-2013. Greystone has demonstrated the ability to obtain a 94 percent occupancy level in many of its facilities, and it is reasonable to project that it will be able to achieve the 94-percent occupancy projected for the Lakeland Oaks facility within two years. Eighth Florida’s expert, Sharon Gordon-Girvin, agreed that Lakeland Oaks’ projected 94-percent occupancy is achievable. Lakeland Oaks’ projected Medicare census is in line with the Medicare population served by Greystone at its other facilities, including a 150-bed home in Miami-Dade County (39 percent Medicare), a facility in Marion County (42 percent Medicare) and The Club Villages (83 percent Medicare). Eighth Florida’s own expert, Ms. Gordon-Girvin, prepared three CON applications for Greystone that reflected substantial levels of Medicare utilization and did not object to the projected Medicare population. Additionally, CMS data shows that Polk County has a high number of Medicare beneficiaries in comparison to the entire State of Florida, with 119,643 Medicare beneficiaries. Polk County is ranked in the top 10 counties in Florida in terms of the number of Medicare Part A beneficiaries. Finally, a facility in Polk County, Spring Lake, which serves a substantial number of Medicare patients in need of rehabilitation services, experiences a Medicare utilization rate of 64 percent. In sum, Lakeland Oaks’ projected Medicare utilization is reasonable and achievable. Lakeland Oaks projected $150,000 for property taxes as part of its CON application. While Eighth Florida’s financial expert, Steve Jones, opined that Lakeland Oaks’ projected property taxes were understated, his analysis computed the property tax based on certain components of Lakeland Oaks’ projected project costs. Property taxes, however, are based on an assessed value of property, not the costs to construct a facility. Lakeland Oaks’ financial expert, Mr. Swartz, examined the 2015 property taxes at Greystone’s other facilities. The highest property tax rate for any of the Greystone facilities, when inflated forward one year, is $149,381.62. This is consistent with Lakeland Oaks’ projected property taxes of $150,000. Thus, the projected property taxes as set forth in the application are reasonable and accurate. In its CON application, Eighth Florida projected a year one loss of $1,646,400 and a year two profit of $502,945. However, Eighth Florida’s CON application reflects erroneous financial projections and financial deficiencies, some of which were acknowledged by Eighth Florida’s financial expert, Mr. Jones. First, Eighth Florida’s projected Medicaid rate is erroneous. Eighth Florida assumed an incorrect occupancy rate in calculating its Fair Rental Value Rate (FRVS) rate, which is the property component of the Medicaid rate paid by the State of Florida. Specifically, Eighth Florida assumed a 75 percent occupancy in year two of its operation, while the Medicaid allowable rate is 90 percent occupancy in year two. Eighth Florida’s financial expert, Steve Jones, acknowledged the error in the assumed Medicaid rate related to the occupancy factor. In addition, Eighth Florida will not qualify for principal and interest in its FRVS calculation. A provider must have 60 percent mortgage debt in order to receive principal and interest in its FRVS computation. Eighth Florida does not meet the 60 percent test because it relies upon related-party financing, which is not considered a mortgage. Further, Eighth Florida utilized an erroneous interest rate. Because it does not project any outside financing, nor a mortgage, it should have used the Chase Prime Rate, which is about 2.25 percent less than what Eighth Florida assumed in it Medicaid rate calculations. These errors are material in that they result in approximately $135,000 in overstated Medicaid revenue and overstated net income for year two, during which Eighth Florida’s financial schedules project a net profit of approximately $500,000. In response to the opinion that Eighth Florida would not be entitled to principal and interest in its assumed FRVS rate, Mr. Jones maintained that the financing of the project would qualify for treatment as a mortgage, even though the application is premised upon related-party financing. However, AHCA’s rate setting department concluded that borrowing from a related party against reserves, as proposed by Eighth Florida, cannot be considered a mortgage. Mr. Jones conceded that he had never seen AHCA recognize affiliated entity debt as a mortgage. Considering the facts and opinions offered at the final hearing, it is concluded that related party borrowing cannot be treated as a mortgage. Moreover, Schedule 1 of Eighth Florida’s CON application did not include any construction period interest. Lakeland Oaks’ healthcare financial expert, Ronald Swartz reasonably estimated that approximately $700,000-$750,000 in construction period interest was omitted from Eighth Florida’s project costs. As a result, Eighth Florida would require more cash-on-hand to fund the extra costs. This, in turn, affects the income statement, resulting in understated expenses and overstated net income. Mr. Jones acknowledged that construction period interest is normally included. In this application, he did not include that item based upon a cost/benefit analysis and his conclusion that the inclusion of construction period interest would not provide “useful” financial information. Based upon Generally Accepted Accounting Principles and relevant financial standards pertaining to the capitalization of interest, whether construction period interest should be included in financial projections generally turns on concepts of time and materiality. Here, the construction project will take nearly two years, and construction period interest will total approximately $700,000 to $750,000. Thus, construction period interest is material and the interest charge should have been included in Eighth Florida’s financial schedules. Next, Eighth Florida projected a utilization or “fill” rate that is higher than the fill rate Florida Living Options was able to achieve when it opened Hawthorne-Sarasota. A fill rate describes how quickly a facility reaches an anticipated occupancy level. It is appropriate to consider Florida Living Options’ prior history of filling its new facilities. With regard to Florida Living Options’ experience at Hawthorne- Sarasota, that facility reached 85 percent occupancy by the end of its second year of operation. The Sarasota facility had approximately a 35 percent occupancy level at the end of year one, which translates to a first year average occupancy of 16 or 17 percent. At the beginning of year two, it experienced approximately 43 percent occupancy. In contrast, Eighth Florida’s CON application projects an 89 percent occupancy level by month 11. Based on Florida Living Options’ experience in Sarasota, the projection is unreasonable. If Eighth Florida’s proposed facility fills at the same rate as the Sarasota facility, year two of Eighth Florida’s operation would result in a larger financial loss and a greater need for working capital. Given that, Eight Florida’s year two projected net income would actually become a net loss, and additional working capital would be needed. While Eighth Florida’s expert, Mr. Jones, sought to distinguish the Sarasota market from the Polk County market, nonetheless, it is relevant to examine the occupancy level Florida Living Options was able to achieve in connection with the opening of a new facility in the Sarasota market. The financial feasibility of a skilled nursing facility is an important consideration. Considering the issues surrounding Eighth Florida’s fill rate at the end of year one, construction period interest, and the erroneous Medicaid rate, it appears likely that Eighth Florida would experience a year two net loss, bringing into question the long-term financial feasibility of Eighth Florida’s CON application. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost-effectiveness It stands to reason that approval of either application will foster competition due to the fact that additional nursing home beds with new amenities are proposed to be added in Polk County. The extent of that competition, however, is not evident, and the undersigned agrees with the determination of AHCA on page 93 of its State Agency Action Report submitted in this proceeding that “These projects are not likely to have a material impact on competition to promote quality and cost-effectiveness.” Section 408.035(1)(h): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction The Florida Building Code (Building Code) governs the design and construction of skilled nursing facilities. Under the Building Code, a skilled nursing facility may be designed based on either an “institutional” design model or a “household” design model. To obtain AHCA’s approval of a proposed SNF, AHCA requires parties to designate which design model has been selected. An institutional design model involves centralized services. By contrast, the household design model involves decentralized services contained within a “neighborhood” or unit. Section 420.3.2.2 of the Building Code regulates the household design model, and requires that dining activity in social areas be decentralized and included within the resident household. Section 420.3.2.2.1 further provides that “each resident household (unit) shall be limited to a maximum of 20 residents.” Additionally, section 420.3.2.2.2 requires that two individual households be grouped into a distinct neighborhood with a maximum of 40 residents who may share the required residential core areas. Lakeland Oaks’ architectural expert, Bo Russ, and his firm, Architectural Concepts, created the schematic design used in Lakeland Oaks’ CON application. In addition, Mr. Russ and Architectural Concepts provided cost estimates, systems descriptions, and the construction timeline for the project. Architectural Concepts has worked with Greystone in the development of other skilled nursing facilities in Florida, including the design and construction of The Club Villages, The Club at Ocala, and The Club at Kendall. The design of The Club Villages is based on a hospitality model (i.e., the resident-centered culture change model). The social and dining areas of The Club Villages are located within individual neighborhoods. Each neighborhood has a private dining room. Patient rooms surround the dining area. The Club Villages includes a Bistro Restaurant located at the center of the facility for family members and guests. The Club Villages also has space for the provision of rehabilitation services, including two large gyms within the physical therapy suite. The facility has skylights throughout the structure and other features to retain residential elements. In preparing the architectural design for Lakeland Oaks’ proposal, Architectural Concepts incorporated certain aspects of the design of The Club Villages. The Lakeland Oaks design is based on the “institutional model,” but with certain embellishments intended to give the facility a “household,” residential feel. The proposed Lakeland Oaks facility is approximately 84,000 square feet. The facility has 10-foot ceilings, a residential-oriented interior design, residential lighting, residential furniture, a large porte cochere, a lobby area similar to The Club Villages, a Bistro, a central dining area within the community that is divided into four dining rooms with unique interior vernacular, a movie theater, a satellite therapy gym, offices for staffing, a separate Activities of Daily Living suite, a doctors lounge, and three nursing units. With regard to physical therapy services, the proposed Lakeland Oaks facility will include two large gyms at the center of the therapy suite, a private outpatient therapy entrance, a large classroom, and space for other ancillary services. The design will allow for a concierge approach to therapy to treat patients in need of those services. The proposed Lakeland Oaks facility is reasonably and appropriately designed for use as a skilled nursing facility, and promotes high quality of care. In developing the design of the facility, Mr. Russ considered the fact that Lakeland Oaks proposes to offer both short-term and long-term care. Greystone has developed two similar skilled nursing facilities, The Club at Kendall, a 150-bed skilled nursing facility, and The Club at Ocala, a 154-bed facility, both of which are similar in design to Lakeland Oaks. Greystone has received AHCA approval of the design and construction for both of those facilities. Lakeland Oaks’ proposed construction costs are $17,289,054, or $185 per square foot. The estimated construction costs are based on similar projects, including The Club at Ocala at $178 per square foot. The construction costs are reasonable and appropriate. The architectural plan, design, and features presented by Lakeland Oaks satisfy the architectural criteria applicable to skilled nursing facilities in Florida. The facility complies with all applicable construction, design, and life safety code requirements. Lakeland Oaks also presented a reasonable timeline for completion of the project. The timeline is based on Greystone’s prior experience in constructing similar skilled nursing facilities. Mr. Russ reviewed Eighth Florida’s architectural plans and schematics for conformity with applicable criteria. Eighth Florida’s architectural plans and schematics were prepared by Bessolo Design Group (Bessolo Group). Because of design flaws inconsistent with the Building Code, the architectural plans and design proposed by Eighth Florida and Bessolo Group should not be approved by AHCA. Eighth Florida’s proposed design will be reviewed by AHCA based on the provisions governing the institutional design model. The design fails to meet certain distance requirements found in the Building Code provisions governing an institutional design. Specifically, Florida Building Code section 420.3.2.1.2 (now renumbered as Building Code section 450.3.2.1.2) provides that the travel distance from the entrance door of the farthest patient room to the nurse’s station cannot exceed 150 feet. In addition, the distance from a patient room to a clean utility and soiled utility room cannot exceed 150 feet. Based on the schematic plan presented by Eighth Florida and Bessolo Group, the distance from the most remote patient room to the nurse’s station well exceeds 150 feet. In addition, the distance from the most remote patient room to the soiled/utility rooms well exceeds 150 feet. These flaws cannot be remedied without substantial design changes. In addition, the Eighth Florida/Bessolo Group design includes deficiencies related to smoke compartments, nourishment stations, and other items. These more minor flaws can be remedied without substantial changes. However, as to the 150-foot limit, Eighth Florida’s non-compliance makes the design a failed model. The facility cannot be approved in its current design. In order to be approvable, the facility would need to undergo a major redesign, including a change in the size and configuration of the building. This, in turn, would impact all of the financial assumptions contained in Eighth Florida’s CON application. In response to Mr. Russ’ opinions, Eighth Florida’s architectural expert, Kevin Bessolo, contended that the deficiencies related to the 150-feet distances from the patient room to the nurses station and soiled/clean utility areas were not fatal because the plan was based upon the “household model.” Mr. Besselo acknowledged that, if the design is considered to be “institutional,” then the travel distances would exceed the 150-foot distance requirements. Mr. Besselo also acknowledged that a skilled nursing facility can either be an institutional design model or a household design model, but not both. Mr. Bessolo further acknowledged that his position that the plan is approvable is contingent upon the design being considered under the household design model in accordance with the Building Code. Mr. Bessolo disagreed with the criticism offered by Mr. Russ regarding the 150-feet distance requirements because he contended that his design presents a household model. Eighth Florida’s schematic design, however, does not comply with the Building Code’s requirements for a household design model. Eighth Florida’s proposed building is divided into 30-bed neighborhoods that exceed the Building Code’s 20-bed maximum for the household design. In addition, Eighth Florida’s plan presents three households sharing a central services area. Finally, the dining area presented in the Eighth Florida plan is centralized, rather than decentralized as required for the household design model. Because the proposal does not qualify as a household model, AHCA should review it under the institutional plan provisions. In turn, Mr. Bessolo offered criticisms of Lakeland Oaks’ proposed architectural plan. These included issues related to the distance to soiled utility exceeding 150 feet, resident storage areas, central bathing area, no emergency food storage, smoke compartment issues, secondary exit issues, and the planned movie theater. However, unlike Eighth Florida’s major deficiencies related to the 150-foot distant limits from the nurse’s station and from the clean and soiled utility rooms, the criticisms offered by Mr. Bessolo are easily rectifiable by Lakeland Oaks without substantial change. I. Section 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent Greystone has a strong history of serving Medicaid patients in Florida. On a company-wide basis, 53.65 percent of all patient days in Greystone SNFs were provided to Medicaid patients during calendar year 2014. Lakeland Oaks plans to treat Medicaid patients at its proposed facility. In its second year of operation, Lakeland Oaks projects that almost 30 percent of its patient days will be Medicaid days. Additionally, if “dual eligibles” (i.e., patients with Medicare as a primary payer but also eligible for Medicaid) are taken into account, Lakeland Oaks’ provision of services to Medicaid patients will be even higher. Lakeland Oaks’ payor mix assumptions were based on Greystone’s actual experience at comparable SNFs in Florida and are reasonable. Eighth Florida projects in its second year of operation that approximately 40 percent of its patient days will be Medicaid days. As previously explained, that projection is questionable. The evidence at hearing showed that Hawthorne- Sarasota, the facility upon which Eighth Florida’s proposal is based, had only eight percent Medicaid utilization after one and a half years of operation. IV. Factual Summary The facts set forth above demonstrate that Greystone has proposed a well-funded, financially feasible, well-designed skilled nursing facility that will improve Polk County access to short term and long term skilled nursing care for residents of Polk County. Greystone has demonstrated a proven record of providing high quality of care and the ability to assure quality of care for the Lakeland Oaks proposal. In contrast, Eighth Florida’s application was largely focused on improving access to those services within a certain zip code and for residents of the Hawthorne Village community and not residents of Polk County as a whole. Greystone, Lakeland Oaks’ parent company, has a long, well-established history of providing high quality care at over two dozen skilled nursing facilities in Florida. On the other hand, Florida Living Options, Eighth Florida’s parent, only operates three skilled nursing facilities in Florida and does not have as extensive of a track record in providing high quality care. Moreover, Greystone has a well-established history of providing skilled nursing services to a large volume of Medicaid patients. On a company-wide basis, over 50 percent of Greystone’s patient days consist of Medicaid patients. Conversely, Hawthorne-Sarasota, the facility upon which Eighth Florida’s proposed project is based, had only eight percent Medicaid utilization in its first year and a half of operation, calling into question Eighth Florida’s projection of 40 percent Medicaid utilization in its application. Further, Eighth Florida has proposed to build a nursing home with questionable inter-company financing and uncertain financial feasibility. Eighth Florida’s facility design does not meet code requirements and is unlikely to be approved as proposed without substantial changes. Considering both applications and the facts submitted at the final hearing as outlined above, it is found that Lakeland Oaks’ CON application, on balance, best satisfies the applicable statutory and rule criteria.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order approving Lakeland Oaks NH, LLC’s CON Application No. 10309 and denying Eighth Florida Living Options, LLC’s CON Application No. 10303. DONE AND ENTERED this 22nd day of February, 2016, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida32399-3060 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of February, 2016.
The Issue Whether Respondent violated the Florida Fair Housing Act as alleged in the Petition for Relief filed with the Florida Commission on Human Relations on July 9, 2007.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: Petitioner is a single, widowed mother of two minor sons. She belongs to a protected class under the Florida Fair Housing Act because of her sex and familial status. During the times material to these proceedings, Petitioner owned and resided at 1779 Cambridge Village Court, Ocoee, Florida, within the Villages of West Oaks. As a fee interest owner of a lot within the Villages of West Oaks, she is a member of Respondent homeowners' association. Respondent, a not-for-profit corporation, is managed by a Board of Directors drawn from the homeowners' association members elected by members of the homeowners' association as dictated by its Articles of Incorporation and By-Laws. The Board of Directors employed Southwest Property Management to assist the Board of Directors in the management of the homeowners' association, to carry out the instructions of the Board of Directors in the management of the homeowners' association, and to ensure that the homeowners' association's rules were enforced. During the times material to this proceeding, Gary Comstock, an employee of Southwest Property Management, inspected the residences of the Villages of West Oaks to insure compliance with the Covenants, Conditions, and Restrictions of the Villages of West Oaks and Villages of West Oaks Architectural Standards. The above-mentioned Covenants, Conditions, Restrictions and Architectural Standards contain "general restrictions" that address the appearance of the residential lots within the Villages of West Oaks. For example, Article IV, Section 1(f), of the Covenants, Conditions, and Restrictions reads, in pertinent part, "All lots shall be maintained and landscaped to a standard suitable for this type development." The Architectural Standards Manual further defines landscaping standards by dictating the minimum and maximum height and type of lawn grass and provides additional, more specific, landscaping guidelines. However, these landscaping guidelines include the following: "All lots shall be landscaped and in keeping with the general conformity and harmony of the Villages of West Oaks." As a result, the landscaping rules and guidelines are vague. Petitioner was a member of the Board of Directors and Architectural Review Board that created the referenced Villages of West Oaks Architectural Standards Manual in September 2004. Between February 29, 2004, and January 10, 2006, Southwest Property Management sent Petitioner nine letters that addressed purported "disrepair of your home," "covenant violations," "need for lawn replacement," "miscellaneous items on porch," and "miscellaneous items in driveway." During the same general period of time, a significant number of homeowners' association members, female and male (Mr. or Mrs.), apparent single female (Ms.), and apparent married couples (Mr. and Mrs.), received similar letters addressing purported violations similar to those of Petitioner. Petitioner urges that she was discriminated against because of her sex and the fact the she had two teenage boys. Petitioner alleges that this discrimination was manifest in her receipt of the complaints regarding the maintenance of her home and yard. The sheer volume of similar letters to other homeowners and visual evidence received does not support this contention. Admittedly, the "landscape rules and guidelines" require subjective assessment, but there isn't any evidence of discrimination based on sex or familial status. In 2006, the Board of Directors sought volunteers to offer themselves as candidates for board positions. Petitioner offered herself as a candidate at a meeting. Apparently, there was then a discussion among Petitioner, board members and other meeting attendees that Petitioner was not qualified to serve on the board because of her extensive history of violations of the homeowners' association rules. The testimony is conflicting as to whether Petitioner withdrew her name from consideration. The homeowners' association's controlling documents do not contemplate the selection process undertaken at this meeting, nor is there a basis in these documents for disqualification based on a history of violation of homeowners' association rules, except for failure to pay assessments. If this prohibition from candidacy for the Board of Directors reflects discrimination, the discrimination is based on Petitioner's purported failure to comply with homeowners' association rules, not because of her sex or familial status. There is no persuasive evidence that the homeowners' association, either by a member of the Board of Directors or an employee of the property management, threatened to place a lien on Petitioner's property.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing the Petition for Relief filed by Catherine Hall. DONE AND ENTERED this 18th day of October, 2007, in Tallahassee, Leon County, Florida. S JEFF B. CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of October, 2007. COPIES FURNISHED: Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Catherine Hall 584 Neuman Village Court Ocoee, Florida 34761 Ron M. Campbell, Esquire Cole, Scott & Kissane, P.A. 1645 Palm Beach Lakes Boulevard Second Floor West Palm Beach, Florida 33401-2204
Findings Of Fact On March 30, 1978, Lee County applied to the Department for permits pursuant to Chapters 253 and 403, Florida Statutes, to improve the existing Daniels Road in Lee County, Florida, from a two lane unimproved facility to a two lane paved road. The project site is located in southeastern Lee County, Florida, and crosses Six Mile Cypress Swamp. The proposed improvement would require excavation of material from submerged lands of waters of the state to remove a part of the existing dirt roadbed, placing of fill material onto submerged lands of waters of the state to widen the existing roadbed, and construction of two concrete bridges and two variable crest weirs. After receipt of the application, the Department reviewed the application, and, after consultation with Lee County officials, recommended issuance of the requested permit subject to the following conditions: Elimination of a proposed bicycle path; Deletion of a proposed spreader ditch and the dredging necessary for that ditch; Formulation and submission to the Depart- ment by Lee County of an acceptable management plan and schedule for maintaining water levels and indigenous swamp communities within the swamp; Organization of a Melaleuca Control Committee, together with preparation and implementation of a program to eradicate melaleuca within the right- of-way; and Revegetation of willows in the construction area. In their Amended Petition, Petitioners contest the proposed issuance of the requested permit on grounds that the permit condition requiring development of an acceptable water management plan should be accomplished prior to issuance of the permit; that the long range environmental impact of the proposed project has not been assessed; that the application does not contain information sufficient to give reasonable assurances that it will no result in deterioration of water quality; that insufficient information has been provided to demonstrate that the project will not have an adverse long-range impact on the conservation of fish, marine and wildlife, or other natural resources; that the aquifer recharge area adjacent to the proposed project will be substantially reduced; that sheet flow of overland water will be irretrievably altered; that land uses surrounding the Six Mile Cypress Swamp will contribute to deteriorating water quality; that elimination of the proposed bicycle path would deny Petitioners the right to utilize pedestrian, energy conserving and/or non-polluting transportation; and that the health and welfare of the Florida panther will be threatened by construction in the Six Mile Cypress Swamp which serves as habitat for this endangered species. Petitioners allege in their Amended Petition that their substantial interests would be affected ". . . in that Petitioner Joseph H. Burgess, a resident of Daniels Road, may suffer from downstream flooding as a result of issuing this permit." The Amended Petition alleged that Petitioner, Sierra Club - Calusa Group would be substantially affected by the proposed agency action in that they would ". . . be deprived of an area utilized for nature study . . .," in that the project would ". . . seriously impair the group's ability to study bird life and enjoy the natural scenic beauty of a presently relatively undisturbed area. . . ." The Amended Petition also alleged that Petitioners, Mary Ann Wallace and Joseph H. Burgess, would be substantially affected ". . . as nearby residents, who will be denied the right to enjoy a proposed regional park on the south side of Daniels Road in the Six Mile Cypress Swamp as a direct result of issuing this permit." Neither Joseph H. Burgess, Ellen Peterson, nor any representative testifying on behalf of Sierra Club - Calusa Group appeared or testified at the final hearing in this cause. The only named petitioners appearing and testifying at the final hearing were Mary Ann Wallace and Thomas Geary. Neither of these petitioners offered any testimony to establish that they owned property in Lee County, Florida, that they used any of the waters or other natural resources in the area of the Six Mile Cypress Swamp for nature study, recreation or other purpose, or that they would personally be injured or otherwise affected by issuance of the requested permit or the alleged environmental impacts arising therefrom. At the conclusion of Petitioners' case, the Department and Lee County moved to dismiss the Amended petition on grounds that Petitioners had failed to establish that their substantial interests would be affected by the proposed agency action as required by Section 120.57, Florida Statutes, which motions were granted.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that a final order be entered by the State of Florida, Department of Environmental Regulation, dismissing the Amended Petition in this cause. DONE AND ENTERED this 27th day of February 1979 in Tallahassee, Florida. WILLIAM E. WILLIAMS Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of February 1979. COPIES FURNISHED: Isaac Anderson, Esquire 2115 Main Street Suites A and B Fort Myers, Florida 33901 Ray Allen, Esquire Department of Environmental Regulation Twin Towers Office Building 2600 Blair Stone Road Tallahassee, Florida 32301 Thomas M. Brondstetter, Esquire Assistant Lee County Attorney Post Office Box 398 Fort Myers, Florida 33902 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL REGULATION ELLEN PETERSON, et al., Petitioners, vs. CASE NO. 78-1467 STATE OF FLORIDA, DEPARTMENT OF ENVIRONMENTAL REGULATION and LEE COUNTY BOARD OF COUNTY COMMISSIONERS, Respondents. /
Findings Of Fact Based on the oral and documentary evidence presented at the hearing, my observation of the witnesses and the entire record compiled herein, I make the following findings of fact: On November 17, 1988, Petitioner filed an application with Respondent, Department of Environmental Regulation (DER) for a permit to fill submerged areas waterward of the mean high water line abutting certain property Petitioner owns on Big Pine Key. Petitioner also proposed to place a riprap revetment over seagrass in the submerged area, and pilings for a stilted structure in the submerged areas. Petitioner purchased the lot in question on September 8, 1988. There is no habitable structure currently on the property and Petitioner wishes to build a cottage on the lot. The intended purpose of the filling is to enlarge the existing lot so that Petitioner will have adequate area to build a cottage upon, and to stop any erosion that might be occurring. The area to be filled is within the Florida Keys Special Waters, and is classified as Outstanding Florida Water by the Department of Environmental Regulation pursuant to Rule 17.3041(4)(b), Florida Administrative Code. The area is located within the National Key Deer Wildlife Refuge. The area proposed to be filled is further classified as Class III Waters. Although Petitioner contends that he is simply trying to reclaim a portion of his lot which has eroded, the evidence of erosion was very slight and only found in a small area where the property adjoins the vertical seawall of the adjacent property. This particular section is very different from the rest of the shoreline. There is not much vegetation in this area. Aerial photography taken of the property in 1959 and 1972 demonstrates that there has been not been a significant change in the size of the lot in the last thirty years. This conclusion is supported by the physical evidence at the property site. Petitioner has not affirmatively demonstrated that vegetative stabilization would not prevent any erosion that might be occurring. Along the shoreline of the area to be filled are buttonwoods and sea daisy and mangrove seedlings. The submerged area proposed to be filled is very diverse and productive. It includes seagrasses, several types of algae, several macroinvertibrates, and forage fish. The area to be filled is currently very healthy and there are no signs of heavy boat usage in the area. The algae that exists in the area proposed to be filled serves as a food source for fish, and as a helpful filter of floating particles. The dense, constant growth of seagrass in this area provides food for fish, stabilizes sediments, absorbs pollutants from the water, and provides shelter to fish. Any filling of this area would result in the direct elimination of dense, healthy seagrass beds. The proposed filling will result in a drop in the diversity of organisms existing in the filled area. This will cause a violation of the DER's standards for biological integrity. The proposed construction and filling is expected to violate the DER's Class III standards for turbidity. By directly eliminating an area of productive habitat, this project would adversely affect fish and other aquatic wildlife. The loss of the algae and seagrass vegetation will lead to a decrease in fishery production and marine productivity. The filling proposal does not include any measures designed to mitigate for or offset these expected adverse impacts. The residential structure proposed to be built over the fill is expected to cause additional adverse environmental impacts due to nutrient input from the residence.
The Issue The issues in this case are: whether the Petitioner, Lake Region Audubon Society (LRAS), a not-for-profit corporation, has filed a petition challenging the issuance of Environmental Resource Permit (ERP) No. 44025789.001 to Spanish Oaks of Central Florida, L.C.C. (Spanish Oaks); whether LRAS has standing to challenge the ERP; whether the Southwest Florida Water Management District (District, or SWFWMD) should issue the ERP to Spanish Oaks; and whether Spanish Oaks should be awarded attorney's fees and costs.
Findings Of Fact Application and ERP On or about January 23, 2004, Spanish Oaks submitted to SWFWMD an application for an ERP to construct a surface water management system (the System) to serve a 30.878-acre, 47-lot single-family residential development in the vicinity of Lakeland, Polk County, Florida. SWFWMD requested additional information on February 20, 2004, to which Spanish Oaks responded on or about February 27, 2004. The application was deemed complete on March 26, 2004. On April 27, 2004, SWFWMD issued the Spanish Oaks ERP. The Spanish Oaks ERP describes the System as follows: The proposed surface water management system includes storm drains with associated piping and three interconnected retention ponds (Pond A, Pond B, and Pond C). The system is designed to accommodate the runoff from the activities associated with the construction of the 47-lot subdivision with paved roads. The project site is located on the south side of State Road 33, just east of Lake Luther Road in Polk County. The project is located within a hydrologically closed drainage basin. The consultant utilized a design storm based on a 100-year, 24-hour rainfall event of 10.0 inches. The ponds are designed to retain the post-development runoff volume for the 100-year, 24-hour rainfall event without surface discharge. Project runoff will be conveyed to the proposed retention ponds. . . . No adverse off-site/on-site water quantity impacts are expected. Compliance with Chapter 40D-4, F.A.C., water quality requirements is assured; the retention ponds will treat the first one- half inch of runoff from the contributing drainage area and recover this volume through natural infiltration within 72 hours. This is consistent with Part B, Environmental Resource Permitting Information Manual Section 5.2(c). No adverse on-site/off-site water quality impacts are expected. There is 0.11 acre of herbaceous wetlands within the project area. Permanent wetland impacts are proposed to the 0.11 acre herbaceous wetland. No mitigation is required for this impact. LRAS' Amended Petition On June 6, 2005, LRAS filed a Petition signed by Paul Anderson, Mae Hartsaw, Carrie Plair, and Chuck Geanangel. SWFWD dismissed the Petition without prejudice. On July 11, 2005, an Amended Petition was filed, clarifying that LRAS was orally informed about the Spanish Oaks ERP by one of its members, since identified as Donna Stark, on May 10, 2005. The Amended Petition was signed by LRAS Steering Committee/Acting President Carrie Plair. The District determined that the Amended Petition was timely filed and substantially complied with the requirements for a petition. The Amended Petition alleged the following as disputed issues of material fact: the Permit allows construction of a retention pond in a sinkhole in the southeast portion of the site; construction of a retention pond in a sinkhole creates a danger to public health and safety; and Spanish Oaks failed to notify SWFWMD that it was beginning construction of the clay cores of certain berms surrounding the retention ponds, as required by a permit condition so that SWFWMD could inspect during the construction.3 The Amended Petition asserted that LRAS member Donna Stark observed firsthand a sinkhole collapse that allegedly occurred in the southeast portion of Spanish Oaks site during construction of Retention Pond A. The Amended Petition alleged that on January 25, 2005, Donna Stark, along with a state employee (since identified as Timothy King), observed a "very large cone-shaped depression with smooth steeply-sloping sides – so steep that Donna Stark was nervous that the front-end loader driving up and down the slopes could end up in the aquifer if he lost traction in the loose unconsolidated sands. In the center of the depression was a lake perhaps 50 feet in diameter." The Amended Petition further alleged that “Donna Stark judged the distance from the top of the ground surface to the water surface to be about 15 feet.” The Amended Petition also asserted that “[o]n November 13, 2004, LRAS member Donna Stark was informed by a man who had worked on the Spanish Oaks site that the retention ponds were 30 feet deep.” As to any specific rules or statutes requiring reversal or modification of the proposed agency action, LRAS’ Amended Petition asserted that the Spanish Oaks development violates Chapter 62, Florida Administrative Code,4 which, LRAS contends, disallows the use of a sinkhole to discharge contaminated water, citing Rule 62-522.300(1) and (3). See Conclusion 90, infra. Standing LRAS did not allege or present any evidence to prove that the substantial interests of a substantial number of its members would be affected by issuance of the ERP to Spanish Oaks. The Amended Petition alleged that, if LRAS failed to oppose the ERP, it would not "fulfill it's [sic] objectives and hence adversely affect the corporation and disappoint it's [sic] membership." But LRAS did not present any evidence at the final hearing to prove that its own substantial interests would be affected by the ERP. LRAS alleged that it has standing under Section 403.412(6), Florida Statutes. See Conclusions 74, infra. LRAS was formed as a Florida not-for-profit corporation in 1962. The evidence was sufficient to prove that LRAS has at least 25 current members residing in Polk County, where Spanish Oaks' ERP is proposed. Not only was there testimony in the depositions introduced into evidence as Spanish Oaks Exhibits 1, 2 and 3 that there were over 500 members of LRAS, most of whom would reside in Polk County, exhibits attached to those depositions included a partial membership list with at least 25 current members residing in Polk County,5 in addition to other members residing in Polk County who testified during the final hearing. Article II of LRAS' Articles of Incorporation states that LRAS was formed "to promote an understanding and interest in wildlife and the environment that supports it and to further the cause of conservation." It also includes language generally empowering the corporation to "have and exercise all of the powers of like corporations not for profit and to do all and everything necessary, suitable or proper for the accomplishment of any of the purposes, the attainment of any of the objects or the furtherance of any of the powers herein set forth, . . . and to do every other act or acts, thing or things incident or pertinent to or growing out of or connected with the aforesaid objects, purposes or powers or any of them." Finally, it includes the admonition that enumeration of specific "powers and objects . . . shall not in anyway be construed as any limitation or derogation of any power or object herein specifically named or any general power which this corporation might otherwise have." Spanish Oaks6 contends that LRAS has no standing in part because the Petition and Amended Petition was "ultra vires"-i.e., that, although there was no evidence that LRAS was dissolved or otherwise not in good standing as a duly- organized not-for-profit corporation, the signers did not have the legal authority to sign or file either the Petition or the Amended Petition on behalf of LRAS under its articles of incorporation and by-laws. At the time of its formation in 1962, LRAS had eleven charter members, six officers, and ten directors. Article VI of the Articles of Incorporation provided, in pertinent part: The affairs of the corporation shall be managed by a board of directors of "not less than five members of the officers provided for in this charter and the Board of Directors shall elect a president, a first vice president, a second vice president, a secretary and a treasurer. The number of directors shall be fixed by the by-laws of the corporation, but in no instance shall the number of directors be less than five. The Board of Directors may establish an Executive Committee from the members of the Board of Directors by resolution and may provide for the setting up of advisory boards or councils. The Board of Directors shall be elected from the voting members of the corporation at an annual meeting to be held in June of each year at a date to be determined by the Board of Directors at least fifteen days prior to such meeting. A quorum for the purpose of transacting business shall consist of those present. The officers and directors herein provided for shall serve until the next general election of the corporation, provided, however, that in the event of any vacancies prior to that time the Board of Directors may fill such vacancies by majority vote. There was no evidence of any amendment to those provisions in the articles of incorporation. Article I of LRAS' By-Laws, as last revised on April 7, 2002, provided for a president to: "(a) preside at meetings of the Society and of the Board of Directors; . . . ; (c) decide all questions of order, and act as judge in elections and declare the results; (d) appoint, subject to the Executive Committee's approval, the chairmen of the Standing Committee, and the chairmen of such special committees as may be authorized by the Board; (e) perform such other duties as the Board or the By-Laws may from time to time assign." It also provided for: a first vice-president, who was to preside and perform the duties of the president in the absence or inability of the president; a second vice-president, who was to preside and perform the duties of the president in the absence or inability of the president and first vice- president; a third vice-president to coordinate all field activities; a fourth vice-president to coordinate all membership activities; a fifth vice-president to be the newsletter editor; a recording secretary to keep an accurate record of all meetings, act as secretary of the board of directors, keep a record of attendance at meetings of the board of directors, and act as custodian of all records and papers; a corresponding secretary, who was to perform the duties of the recording secretary in the absence or inability of the recording secretary; and a treasurer. Article II of the By-Laws provided for the board of directors to "be composed of all officers and committee chairmen, and other members who may be appointed by the President." It also provided that the board of directors had the "power to fill vacancies in the list of officers." It also provided: "A majority of officers shall have the power to carry on the affairs of the Society in the event of emergency, between Board Meetings." Article III of the By-Laws provided for committees to be established by the president as deemed necessary as well as apparently for appointment of individuals with special responsibilities. Article IV provided for elections, including: "A Nominating Committee, consisting of a Chairman and two other members appointed by the President and announced at the January Board Meeting, shall submit a slate of officers at the March meeting for approval by the Board, to be voted on at the Annual Meeting of the Society in April. . . . A majority of the votes cast shall constitute an election. If there are no nominations from the floor, the slate of officers shall stand as presented." It also provided: "Elected officers shall be elected for a term of one year, and shall hold office until their successors have been elected." The president was limited to two consecutive terms, or a third consecutive term upon majority vote of the board of directors. Article V of the By-Laws provided for: open meetings of the board of directors to be held on the second Wednesday of each month September through May, unless changed on ten days notice to each board member; special meetings at the call of the president or written request of five members, with "due notice"; and one annual meeting to be held in April, unless changed by direction of the board. Article VI provided that a majority of the board would constitute a quorum, provided at least two officers were present, and that 15 members, including at least four Board members, would be a quorum for the annual meeting. Article VIII provided that membership in National Audubon, Florida Audubon or LRAS would constitute membership in all three levels for anyone living within the LRAS area. As indicated above, there are inconsistencies between the Articles of Incorporation and the By-Laws. For example, the Articles of Incorporation provide for an annual meeting in June, while the By-Laws provide for the annual meeting to take place in April, unless changed by the board of directors. In addition, the By-Laws provide for more officers than the Articles of Incorporation. Finally, the Articles of Incorporation provide that a quorum at the annual meeting shall consist of those present, while the By-Laws provide for a quorum of a majority of the board, provided at least two are officers, and that 15 members, including at least four board members, would be a quorum for the annual meeting. Under Section 617.0206, Florida Statutes, by-laws must be consistent with the articles of incorporation. Even allowing for the inconsistencies between the Articles of Incorporation and the By-Laws, the evidence suggested that, notwithstanding the formal and detailed (if somewhat inconsistent) provisions in the Articles of Incorporation and By-Laws, LRAS has operated less formally and with less attention to those details at least in recent years, in part because it is a totally-volunteer organization and seems always to be looking for members to share in the tasks of continued operation. Any member who expresses interest in the business of the organization is welcome to volunteer to be on the board of directors. Any volunteer is virtually assured of becoming a board member. There certainly are no contested elections. Spanish Oaks questions whether the process used results in the legitimate election of members of the board of directors and appointment of officers in accordance with the Articles of Incorporation and By-Laws. The evidence presented by Spanish Oaks as to status of LRAS' board of directors and officers was unclear. It consisted of the deposition testimony of Paul Anderson, Carrie Plair, and Chuck Geanangel, along with minutes attached as exhibits to the Anderson deposition. In addition, while not actually introduced in evidence at the final hearing, the minutes of the May 2005 meeting of the board of directors were attached to and formed part of the basis for the Motion for Summary Recommended Order which was filed by Spanish Oaks and joined by SWFWMD. In addition, the PRO filed by Spanish Oaks cited to these attachments to the Motion for Summary Recommended Order.7 The evidence indicates that, notwithstanding provisions in the Articles of Incorporation and By-Laws, for the last two years LRAS has operated using a five-member steering committee (also referred to as an executive board) instead of a president. Designed to relieve the burden on long-serving volunteer president, Pat Herbert, the idea was that the steering committee would rotate responsibility for conducting board meetings, so that each committee member would conduct two meetings a year. Anderson and Plair testified that they were on the LRAS Steering Committee, along with Geanangle, Bill Karnofsky and Mae Hartsaw. Plair testified that all members of the Steering Committee are members of the board of directors, along with all other officers. Anderson also named several other officers from memory--Liz Purnell, Paul Fellers (a vice- president), Gary McCoy (membership chair), and Herman Moulden (newsletter editor). He deferred to a list of board members, which he did not have with him and which was not placed in evidence. Plair named a few other board members--Bob Snow, Gina Lucas, Gil Lucas--along with Fellers. The minutes placed in evidence by Spanish Oaks all state that they are minutes of board of directors meetings and do not refer to an annual general membership meeting. However, Anderson testified that a board of directors meeting is combined with the annual general membership meeting. He believed it was in December but was not sure. Geanangel testified that the annual general membership meeting was in the spring, which was consistent with Plair's recollection, and was noticed as such. Plair testified that there generally were meeting agendas for all board of directors meetings (one of which, according to the testimony, would be the annual general membership meeting). No notices or agendas of meetings were placed in evidence. The minutes placed in evidence started with the September 2003 meeting of the board of directors. According to the minutes, Karnofsky conducted the meeting and also presented a treasurer's report, indicating that he also was the Treasurer at the time. Herbert, Louise Lang, Hartsaw, Plair, Paul and Janet Anderson, Ann Pinner, Gil and Gina Lucas, Paul Fellers, and Rae Bourqueim also attended. Bourquein announced a newsletter deadline. Pinner was looking for volunteers. Under old business, the rotation for conducting the next several meetings was announced: Karnofsky for October 2003, Plair for November and December 2003, Paul Anderson in January and February 2004, and Hartsaw in March and April 2004. Janet Anderson was congratulated on the job she was doing as "Publicity Chairperson." A December 2003 Christmas party was announced. Motions were made or seconded by Gil Lucas, Paul Anderson, Bourqueim, Fellers, and Hartsaw (suggesting that they were members of the board of directors). The minutes were recorded by Gina Lucas, as "Secretary Pro Tem." There was no other indication in those minutes as to who the officers and board members were. The minutes of the October 2003 meeting indicate that the meeting was conducted by Herbert, not Karnofsky, who was unable to attend due to illness. Nine others attended, including the Andersons, Plair, the Lucases, Fellers, Bourquein, Herbert, and Purnell, who was the Recording Secretary. The November 2003 minutes indicate that Plair conducted the board meeting. Hartsaw, Bourquein, Geanangel, Karnofsky, the Lucases, Fellers, Marvel Loftus, the Andersons, Ron Butts, Herbert, and three others also attended, along with Purnell, the Recording Secretary. Motions were made or seconded by Paul Anderson, Hartsaw, Fellers, Herbert, Geanangel, and Janet Anderson. The minutes of the January 2004 meeting of the board of directors indicate that Paul Anderson conducted the meeting, Karnofsky presented a treasurer's report, and Purnell was the Recording Secretary. Hartsaw and Geanangel attended the meeting, along with the Andersons, the Lucases, Herbert, Lang, Loftus, and two others. A motion was made by Herbert and seconded by Loftus. According to the minutes of the February 2004 meeting of the board of directors, it was conducted by Paul Anderson again, again included Karnofsky's treasurer's report, and again was recorded by Purnell. Janet Anderson, Lang, Plair, Hartsaw, the Lucases, Geanangel, and three others also attended. The minutes indicate that Chuck Geanangel would conduct the March 2004 meeting. They also included the reports of several others, including Plair and Hartsaw, without specifying whether they were officers. The minutes indicated that the slate of candidates would be the same as the current officers, but they do not specify who the current officers were, or whether the reference to "officers" was meant to include board members. The minutes of the March and April 2004 meetings, which were conducted by Geanangel and also attended by Hartsaw, the Andersons, Bourquein, Karnofsky, Purnell, Loftus, Pinner, Plair, Fellers, and others. Motions were made or seconded by Herbert, Paul Anderson, Hartsaw, and Loftus. These minutes do not reveal any more information about who the officers were but do reflect that Ron Butts was willing to be on the board of directors and would be contacted about the position. The minutes indicate that a board of directors meeting was held on May 12, 2004, and that it was conducted by Anderson again and was attended by 13 people, including Plair, Hartsaw, Butts, and Geanangel. The minutes do not mention its being a general membership meeting, do not mention any voting, and do not mention any nominations from the floor for membership on the board of directors. They indicate that a new membership chair volunteer was called for and that Karnofsky would be asked to conduct the next meeting in September 2004. Motions were made or seconded by Hartsaw, Butts, Geanangel, and Loftus. The September 2004 minutes indicate that the board meeting was conducted by Geanangel, not Karnofsky, who was absent and did not present his treasurer's report. Plair, the Andersons, Butts, and Ann Pinner attended. Motions were made or seconded by Janet Anderson, Geanangel, Butts, Plair, Paul Anderson, and Pinner. A House Interior Committee was formed, with Plair, Susie Brantley, and Gina Lucas as members. Janet Anderson recorded the minutes in Purnell's absence. According to the minutes, Geanangel also conducted the October 2004 meeting of the board, which was also attended by Bourquein, Karnofsky (who gave the treasurer's report), Pinner, Plair, the Andersons, Paul and Donna Fellers, Butts, the Lucases, and Purnell, the Recording Secretary. Gina Lucas reported for the House Interior Committee. Motions were made or seconded by Butts, Loftus, and Paul Fellers. According to the minutes, Plair conducted the November 2004 meeting of the board, which was also attended by Karnofsky (who gave the treasurer's report), Pinner, the Andersons, Hartsaw, Butts, one other person, and Purnell, the Recording Secretary. It was announced that Bourquein was resigning from her position as Newsletter Editor. There was no replacement yet. The next minutes were for a board meeting in January 2005. Paul Anderson conducted the meeting, which also was attended by Geanangel, Plair, Karnofsky (who gave the treasurer's report), Hartsaw, Gary McCoy, Pinner, Paul Fellers, the Lucases, Butts, one other person, and Purnell, the Recording Secretary. McCoy was introduced as the new Membership Chairman, and it was announced that Herman Moulden had accepted responsibility for the newsletter and website. Geanangel reported on Polk County's desire to use the Saddle Creek property owned by Audubon of Florida for water storage, flow, and quality purposes. Leadership vacancies for Nature Faire and Corresponding Secretary were announced. A motion was made by Pinner and seconded by Hartsaw. According to the minutes, the February 2005 meeting was conducted by Paul Anderson. Plair, Karnofsky, Butts, McCoy, Hartsaw, the Andersons, Moulden, Geanangel, Pinner, Paul Fellers, and Purnell attended. Moulden solicited articles for the newsletter. It was suggested that an invitation to serve on the board be extended to Bob Snow. Motions were made or seconded by Butts, Janet Anderson, Plair, and Pinner. Purnell recorded the minutes. According to the minutes, the March 2005 meeting was conducted by Hartsaw. The Andersons, Paul Fellers, Moulden, McCoy, Butts, Karnofsky, Plair, Geanangel, and one other person also attended. McCoy presented a membership report, and Moulden reported on the newsletter. Geanangel reported on negotiations with Polk County on the Saddle Creek property. Motions were made or seconded by Paul Anderson, Fellers, and Karnofsky. Hartsaw would chair the April meeting. Paul Anderson recorded the minutes in Purnell's absence. According to the minutes, the April 2005 meeting was conducted by Hartsaw. Pinner, McCoy, Karnofsky, the Andersons, Moulden, the Lucases, Butts, Plair, Paul Fellers, Purnell (the Recording Secretary), and one other person also attended. Karnofsky gave his treasurer's report, Moulden asked for newsletter articles, and a nominating committee was appointed, consisting of Paul Anderson, Karnofsky, and Plair. A motion was made by Karnofsky and seconded by Loftus. The real need for a corresponding secretary was discussed. According to the minutes,8 the May 11, 2005 meeting was conducted by Karnofsky. Plair, Butts, the Andersons, Pinner, McCoy, Moulden, Geanangel, Purnell (the Recording Secretary), Donna Stark, and one other person also attended. Motions were made by Paul Anderson and seconded by Pinner. The minutes reflect a nominating committee report which included: a five-member Steering Committee of Karnofsky, Hartsaw, Geanangel, Plair, and Paul Anderson; Hartsaw as Vice- President for Programs; Geanangel as Vice-President for Conservation; Paul Fellers as Vice-President for Field Trips; McCoy as Vice-President for Membership; Moulden as Vice- President for News Letter; Karnofsky as Treasurer; and Purnell as Recording Secretary. Also nominated as members of the board of directors were: Janet Anderson, Louise Lang, Marvel Loftus, the Lucases, Butts, McCoy, Moulden, Snow, Pinner, and six others. No voting or nominations from the floor are reflected in the minutes. While the evidence was not clear, it appears from the testimony and minutes that all those attending the board of directors meeting on May 11, 2005, except for Donna Stark and one other person, were officers or otherwise members of the board of directors under the Articles of Incorporation and the By-Laws. The minutes of the February 2004 board meeting state that the "LRAS Candidate slate will be the same as the current officers." It appears that they included at least Karnofsky, Bourqueim, and Purnell and that Karnofsky, Plair, Paul Anderson, Hartsaw, and Geanangel were on the steering committee. Assuming the use of the word "officers" in the minutes meant to include the current board members who were not officers, it appears that they also would have included Herbert, Lang, Janet Anderson, Pinner, the Lucases, Fellers, Loftus, and Butts. There are no minutes mentioning a noticed general membership meeting or election of the board of directors in the spring of 2004. If there was one, the minutes do not indicate that there were nominations from the floor. If there was a noticed general membership meeting for purposes of electing the board of directors, with a quorum, and there were no nominations from the floor, either the slate of current officers (and, probably, directors) "stood," or the officers and board of directors would continue to serve until the next general election, under Article VI of the Articles of Incorporation. In either case, vacancies prior to that time could be filled by the board of directors by majority vote, and it would appear that, at the beginning of the board meeting on May 11, 2005: the officers included at least Karnofsky, Purnell, McCoy, and Moulden; the steering committee still consisted the same five; and other board members included at least Lang, Janet Anderson, Pinner, the Lucases, Fellers, Loftus, and Butts. Only 12 individuals appearing to be board members attended the meeting on May 11, 2005. While this would not be a quorum under the By-Laws, it would be a quorum under the Articles of Incorporation, which would control over inconsistent By-Laws.9 Assuming the May 2005 meeting was the noticed general membership meeting, since the minutes do not reflect any nominations from the floor, the slate stood as presented under Article IV of the By-Laws. If not, (or if the By-Laws established the necessary quorum), under Article VI of the Articles of Incorporation, the current officers and board of directors would serve until the next general election. In either case, it appears that authorized officers and directors were in place and in attendance at the board meeting on May 11, 2005, and that there was a quorum for transacting business under the Articles of Incorporation. In any event, Spanish Oaks did not prove the contrary. According to the May 2005 minutes, as well as the testimony at the final hearing, Donna Stark made a presentation asserting that Spanish Oaks was using at least three sinkholes to collect runoff water, instead of digging retention ponds, contrary to legal requirements and polluting the underlying aquifer. She asked LRAS to consider filing an administrative challenge to the ERP. After the presentation, the board decided that the Steering Committee would continue to investigate and make a decision as to what role LRAS should have in the future. Although the minutes do not reflect a vote on a resolution, the assigned task of the Steering Committee was like the role of the "Executive Committee" referred to in Article VI of the Articles of Incorporation. The Steering Committee reviewed the information presented by Starks, decided to file a challenge, and invited Starks to help draft the Petition, which was signed by four members of the Steering Committee between May 31 and June 2, 2005, as well as the Amended Petition signed by "LRAS Steering Committee/Acting President Carrie Plair" on July 6, 2005. Starks actually drafted almost all of the Petition and Amended Petition. The subject of the challenge in the Petition and Amended Petition is virtually identical to a challenge to Spanish Oaks' ERP that was filed by Starks on behalf of her not-for-profit corporation, Central Florida EcoTours, in early May 2005 but was time-barred and dismissed because Starks and Ecotours got mailed notice of the issuance of the ERP to Spanish Oaks. Spanish Oaks implied that Starks told LRAS about the fate of the EcoTours challenge and asked LRAS to file its Petition and Amended Petition at her behest to block the Spanish Oaks development for her ulterior motives. But those allegations were denied by LRAS and were not proven. Alleged Sinkholes The principal concern raised by LRAS, both in its Amended Petition and at hearing, is that one or more of the retention ponds constructed on Spanish Oaks is located over a sinkhole. LRAS is of the view that this alone should mandate that the ERP application be denied. Retention ponds are often located in depressional areas since these land features are generally the lowest spots on a property and allow the engineers designing a surface water management system to utilize the land’s natural drainage configuration. A relic sinkhole, as contrasted to an active sinkhole, has either been sealed or has self-sealed, so that there is no connection between the sinkhole and the underlying aquifer. An active sinkhole provides a direct connection-- referred to by both LRAS’ and Spanish Oaks' experts as a “good communication”--between the surface and the aquifer. Retention ponds are intended to allow infiltration of water through the soils underlying the pond bottom. This infiltration through soil layers provides water quality treatment, and it is necessary to ensure that the bottom surface of a retention pond is sufficiently separated by soils from the top of the aquifer. If an active sinkhole develops in a retention pond, SWFWMD requires that some corrective action be taken. Generally, this involves refilling the cavity formed by the sinkhole. However, because retention ponds are designed to allow infiltration through the pond bottoms, care must be taken to ensure that any fill does not impede this infiltration function. The bottoms of the retention ponds at Spanish Oaks are approximately seven feet below natural grade. The Floridan Aquifer in the Spanish Oaks vicinity is approximately 75 feet below grade. The separation between the pond bottoms and the limestone that is part of the aquifer is sufficient to provide adequate water quality treatment. Soil borings done around the perimeter of each of the ponds indicate the presence of clays and clayey sands between the pond bottoms and the aquifer. These soil layers act as an aquitard that impedes the migration of water into the bedrock (and upper soils into lower cavities, voids, or ravel zones, which are areas of loose, unconsolidated soils capable of further downward subsidence). In each instance, the depth at which the aquitard occurs is below the bottom depth of the retention ponds. There was no competent evidence admitted at hearing to suggest that there are active sinkholes in or under any of the three retention ponds on Spanish Oaks. To the contrary, the SWFWMD personnel who have been on the site testified that they saw nothing on the site that indicated the presence of an active sinkhole. Contractors and engineers who were on the site prior to and during construction of Spanish Oaks stated that they were not aware of any active sinkholes. Nonetheless, because LRAS made the allegation that there were sinkholes on the site, Spanish Oaks retained a geotechnical engineer with expertise in sinkholes, Sonny Gulati, to conduct a sinkhole investigation of the three retention ponds. Mr. Gulati used testing protocols that are generally utilized to determine whether sinkhole activity has caused damage to a building or other structure. Mr. Gulati observed no damage to the retention ponds and his investigation revealed no sinkhole activity onsite. (LRAS’ expert also was unaware of any damage to the retention ponds.) Mr. Gulati used both ground penetrating radar (GPR) and standard penetration testing (SPT) during his investigation. GPR makes use of repetitive, short-duration, electromagnetic waves, which are deflected back to a receiver by interfaces between materials. GPR detects subsurface features such as sinkholes and voids through the reflected radar signal. GPR must be conducted with the transmitter in contact with the ground surface. It cannot be used over a water surface. Mr. Gulati took GPR readings around each of the three retention ponds, in two circles, one contained within the other. GPR data collected on the Spanish Oaks site revealed no subsurface anomalies. SPT is described in Mr. Gulati’s report as: a widely accepted method of in-situ testing of foundation soils (ASTM D-1586). A two- foot long, two-inch outside diameter, split barrel (“spoon”) sampler, attached to the end of drilling rods, is driven 18.0 inches into the ground by successive blows of a 140-pound hammer freely dropping 30.0 inches. The number of blows needed for each six (6) inches of penetration is recorded. The sum of the blows required for penetration of the second and third six-inch increments of penetration constitutes the test result or N-value. LRAS Exhibit 5, p. 23. An N-value of less than 2 indicates the presence of a ravel zone, a subsurface area with voids or loose soils into which soils from upper strata can travel and which acts as a conduit between strata. An N-value of less than 4, in combination with a loss of drilling fluid,10 may also indicate a ravel zone. Solutioned calcareous ravel zones are those ravel zones that occur in the limestone that forms the top of the Floridan Aquifer. Based on his investigation, Mr. Gulati concluded as follows: Our investigation did not reveal the existence of specific conditions such as cavities or voids, solutioned calcareous ravel zones, or the presence corroded bedrock conditions located above the dense bedrock stratum indicative of sinkhole activity at the subject site. Based on the interpretations of our recent subsoil investigation, site reconnaissance, available background and geologic data, it is our opinion that the subject site has not been impacted by a sinkhole related activity. In our professional opinion, the scope of work included in this analysis is of sufficient scope to eliminate sinkhole activity at the subject site within a reasonable professional probability. LRAS-5 at 18 (emphasis in original). SWFWMD's expert agreed that there is no direct connection to the Floridan Aquifer. Marc Hurst, a geologist who testified for LRAS, opined that Mr. Gulati’s sinkhole investigation was insufficient to demonstrate whether or not the Spanish Oaks retention ponds were constructed over sinkholes.11 However, Mr. Hurst offered no opinion as to whether the retention ponds are located over active sinkholes. Nor did Mr. Hurst specifically disagree with Mr. Gulati’s conclusion that the Spanish Oaks retention ponds have not been impacted by active sinkholes.12 To the contrary, Mr. Hurst admitted that the retention ponds were holding water on the day that he observed them--indicating that to him that the ponds were not acting as a strong conduit to the aquifer. Mr. Gulati also noted the significance of the presence of water in the ponds, stating that, if there were active sinkholes in the ponds, they would not hold water.13 The only suggestion of any sinkhole-related damage to the retention ponds came from Donna Stark, who testified that George Wilt--a heavy equipment operator at the site incorrectly identified by Ms. Stark as “an employee of Spanish Oaks”--told her that there had been a sinkhole collapse during the excavation of Pond A. This hearsay testimony was directly contradicted by Mr. Wilt himself, who testified that he made no such statement. Despite the allegation in LRAS’ petition regarding observations of collapse of sinkhole by Donna Stark, Ms. Stark herself admitted at hearing that she did not witness any actual collapse. Rather, she testified that, on January 25, 2005, she saw what she believed to be the aftermath of a sinkhole collapse. Stark may have been confused by the amount of excavated material being stored on the ground surface around the pond. 43,906 cubic yards of dirt was excavated from Pond A alone and was stacked to a height of 8-10 feet higher than the natural ground elevation. Others who observed the site on January 25, 2005, saw no evidence of a sinkhole collapse. Tim King, a Florida Fish and Wildlife Conservation Commission employee who was with Ms. Stark on January 25, 2005, merely reported seeing pond excavation in process. Laura Howe, a SWFWMD employee who inspected the site on that date, observed that “[i]t appears depth of ponds are [p]robably close to permitted depth.” Moreover, Ms. Stark admits that, on February 10, 2005, she observed the ponds to be “[s]even and a half feet, or six and a half, whatever it should be.” Ms. Stark’s suggestion that the collapse was filled in between January 25 and February 10, 2005, is belied by testimony that repairing a sinkhole collapse of the size suggested by Ms. Stark would have required much more material than was available. (No dirt was imported onto the site.) The evidence admitted at hearing requires a finding that there was no sinkhole collapse onsite. Spanish Oaks provided reasonable assurance that the System was designed and constructed to include sufficient separation between the pond bottoms and the Floridan Aquifer to prevent groundwater contamination. Construction of Berms LRAS contended in its Amended Petition that Spanish Oaks failed to give notice prior to constructing clay cores in some of the berms onsite, as required as a condition of the ERP, and that this failure constituted failure to provide reasonable assurances.14 The interconnection of the three ponds that are part of the System will allow them to function as one pond, while a perimeter berm around the entire Spanish Oaks project will ensure that surface water runoff is retained onsite and directed toward the ponds. Ponds A and C are located, respectively, at the southeast and northeast corners of Spanish Oaks.15 The design plans submitted with the ERP application indicated that the berms alongside the eastern side of Ponds A and C are to include clay cores, a design feature that was included as a specific condition in the ERP. The purpose of the clay cores was to prevent offsite impacts caused by lateral movement of water. The specific conditions of the ERP also required that Spanish Oaks notify SWFWMD's "Surface Water Regulation Manager, Bartow Permitting Department [William Hartmann], at least 48 hours prior to commencement of construction of the clay core, so that District staff may observe this construction activity." LRAS proved that Mr. Hartmann did not personally receive a phone call prior to the construction of the clay cores, as required by the ERP, and that SWFWMD staff did not observe the construction. Mr. Hartmann explained that this constituted a permit condition compliance issue which would prevent the ERP from being transferred to the operation phase until SWFWMD was assured that the clay core was, in fact, constructed as required. To confirm proper construction of the clay core, Spanish Oaks undertook soil borings. SWFWMD staff engineer Sherry Windsor was onsite to observe the soil borings. Spanish Oaks also submitted a report from its engineering consultant certifying that the clay cores had been properly constructed in accordance with the ERP. SWFWMD typically relies on a project engineer’s signed and sealed certifications of compliance matters. SWFWMD staff observations and the certification provided by the Spanish Oaks engineer satisfactorily resolved the issue of proper clay core construction. Failure to notify Mr. Hartmann prior to construction, as required by the ERP, does not undermine Spanish Oaks' provision of the necessary reasonable assurance for issuance of the ERP.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that SWFWMD issue a final order approving the issuance of ERP 44025789.001 to Spanish Oaks. Jurisdiction is retained to consider Spanish Oaks’ Motion for Attorney's Fees under Sections 57.105, 120.569(2)(e), and 120.595(1)(a-e), if renewed within 30 days after issuance of the final order. DONE AND ENTERED this 10th day of November, 2005, in Tallahassee, Leon County, Florida. S J. LAWRENCE JOHNSTON 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 10th day of November, 2005.
Findings Of Fact The dredge/fill project sought to be permitted involves a proposed residential lot located on Lake Padgett in Pasco County. The tract is also adjacent to a canal dug by the Applicant and his father. The Applicant, Michael Millen, acquired this property from his father, Otis Millen, who continues to own other property in this area. Petitioner is an adjoining landowner, and also acquired his property from Otis Millen. DER prematurely issued the proposed permit 1/ on August 9, 1984. If reissued, this permit would allow the Applicant to develop a residential lot by filling a portion of a cypress swamp and creating compensating wetland elsewhere on his property. Additionally, the Applicant agrees to dedicate a three acre "conservation easement" and to install a culvert to improve drainage. The advantages of this project include the creation of a homesite where none is available now, acquisition by the State of three acres of dedicated wetland (conservation easement) and improved drainage through the culvert installation. There would be no net loss in cypress swamp area. The disadvantages include temporary turbidity in surrounding waters and some tree removal in the construction area. The Applicant would replace any trees removed through replanting. The Applicant also seeks permits to build a "summer kitchen" over jurisdictional wetlands and to fill the lakefront area with white sand. These "add-on" permit requests are not properly a part of this proceeding, however, and were not contemplated in the application at issue here. DER's expert witness gave only limited testimony on their feasibility during the rebuttal phase of this hearing. Petitioner has raised numerous objections to all the proposed projects, but principally to the one at issue here. He was not notified of DER's intent to grant the dredge and fill permit, and became aware of the project only after he observed construction activity. It was determined that DER had failed to notify him through an oversight of that agency or the Applicant. Petitioner points out that lot development is not being done in accordance with the (proposed) permit. He noted that trees have been cut down, fill was dumped in the canal and work on canal banks was taking place, all in contravention of permit conditions. Petitioner believes DER has acted improperly in tolerating the Applicant's unpermitted construction activity. To support this charge, he called as a witness a neighbor who had placed white sand on his lakefront property, but was required to remove it by DER enforcement personnel. The Applicant, on the other hand, has placed white sand on his beachfront property without a permit, and DER is assisting him in obtaining an after the-fact permit. Petitioner proved, through a series of aerial photographs, and the testimony of both expert and lay witnesses, that the canal which separates his lot from the Millen properties was constructed between 1976 and 1977. DER had jurisdiction at that time, 2/ but no permit was ever sought or obtained. The canal was dug as a "joint venture" of the Applicant and his father. It connects Lake Padgett with a drainage pond several hundred feet behind the lake. This canal has changed area drainage causing one nearby resident to experience periodic property flooding as a result. Prior to the canal's construction, a small drainage ditch with an earthen or cement dam did exist in the general area. However, the canal construction removed the dam and greatly enlarged the size and capacity of the previous ditch. Expert interpretation of aerial photographs revealed that a substantial number of mature cypress trees were removed in conjunction with the Millens' canal project. Some cypress trees were also cut for the recent (unpermitted) construction of the "summer kitchen" by the Applicant. He also constructed a dock which was later determined to be exempt by DER. Again, the Applicant had not obtained DER approval for the dock and had, in fact, been advised to stop construction until a determination of permitting requirements, if any, was made. Petitioner attempted to show a conflict of interest within DER. However, the fact that one DER field representative knew Otis Millen did not demonstrate such a conflict. Rather, DER's enforcement policies have been lax or inconsistent primarily due to a shortage of field personnel.
Recommendation From the foregoing, it is RECOMMENDED: That the Department of Environmental Regulation reissue Permit No. 510852383 to Michael A. Millen. DONE and ENTERED this 24th day of September, 1985 in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1985.
Conclusions Background These consolidated cases involve applications by Secret Oaks Owners' Association (Secret Oaks) for a regulatory wetland resource management (dredge and fill) permit (OGC Case No. 95- 1341; DOAH Case no. 98-5290) and a proprietary consent of use for sovereign submerged lands (OGC Case No. 98-2669; DOAH Case No. 98-5190) for the construction of a dock on the St. Johns River, a Class III waterbody, in the Secret Oaks subdivision located on Fruit Cove Road and Secret Oaks Place in St. Johns County, near Jacksonville, Florida. The total square footage of the proposed dock over waters of the state is 3,234 square feet. The proposed dock would have an access pier 5 feet by 520 feet, a terminal platform 10 feet by 16 feet, a covered boat slip 16 feet by 28 feet waterward from the terminal platform, and a catwalk 3 feet by 26 feet at the boat slip. There is an existing dock on Lot 10 in Secret Oaks subdivision owned by Martin and Linda Parlato (the Parlatos). Secret Oaks has an easement along a 20 foot wide strip along one side of the Parlatos' lot to the waterfront. At one time there was an "ancillary dock" connecting the easement, over the water, to the existing dock on the Parlatos' lot. The ancillary dock was removed by the Parlatos and Secret Oaks has no easement to cross Parlatos' lot between the 20 foot easement and the location of the existing dock. The proposed dock would be constructed at the end of the 20 foot wide easement. Secret Oaks' applications for the permit and consent of use are being opposed by the Parlatos who own and reside at Lot 10. The decision to grant a consent of use is also being opposed by Patricia Ward (Ward) who lives at 912 Fruit Cove Road, Florida, immediately adjacent to and south of the Parlatos' property. A hearing on the consolidated cases was held on May 10 and 11, and July 21, 1999, before an administrative law judge (ALJ) with the Division of Administrative Hearings (DOAH). On January 27, 2000, the ALJ submitted his Recommended Order (RO) to the Department of Environmental Protection (Department). The ALJ concluded that the application for the dock satisfied all of the requirements for the regulatory permit, but concluded that the application for the dock did not comply with the proprietary requirement of rule 18-21.004(3) that the dock not interfere with the riparian rights of the adjacent upland owners. The ALJ believed that the concurrent review provisions of section 373.427 and rules 18-21.00401 and 62-343.075 applied to both the applications for the regulatory permit and the proprietary consent of use. Because the concurrent review statutes and rules provide that a regulatory wetland resource management permit may not be issued unless the applicant also meets all the requirements for any required proprietary approval, the ALJ recommended that both the regulatory permit and the proprietary consent of use be denied. A copy of the Recommended Order is attached as Exhibit A. On February 8, 2000, Secret Oaks filed a motion requesting entry of an order extending the time to file exceptions to the Recommended Order to and including February 24, 2000. In support of its motion, Secret Oaks' counsel of record stated that he had not received a copy of the Recommended Order, and that DOAH agreed to mail him a copy on February 9, 2000. On February 9, 2000, Secret Oaks filed a supplemental motion consenting to a corresponding extension of time (i.e., an extension of 15 days) for the Department to enter this final order. On February 10, 2000, the Department's counsel for the hearing below filed a response of no objection to the requested extension of time, and further requested that all parties be granted an extension of time to file exceptions to the Recommended Order to and including February 24, 2000. On February 10, 2000, I entered an order granting the request for extension of time for all parties to file exceptions to the Recommended Order to and including February 24, 2000, and granting a corresponding 15 day extension of time for the entry of this final order. Exceptions to the Recommended Order were filed by Secret Oaks, the Parlatos, and the Department. Patricia Ward did not file exceptions. The Department filed a response to the exceptions of Secret Oaks. No other responses to exceptions were filed. The matter is now before me as the Secretary of the Department for final agency action. Under chapter 373 of the Florida Statutes and chapter 62- 312 of the Florida Administrative Code, I have jurisdiction to enter this final order on the wetland resource management permit. Under rule 18-21.0051 of the Florida Administrative Code, I have delegated jurisdiction to enter this final order on the proprietary consent of use to use sovereign submerged lands. As a preliminary matter, I note that when an ALJ's findings of fact are supported in the record by competent substantial evidence I am bound by those findings and may neither reject them nor reweigh the evidence. See Dunham v. Highlands County School Board, 652 So.2d 894 (Fla. 2d DCA 1995); pietz v. Florida Unemployment Appeals Commission, 634 So.2d 272 (Fla. 4th DCA 1994); Florida Department of Corrections v. Bradley, 510 So.2d 1122 (Fla. 1st DCA 1987); Heifetz v. Department of Business Regulation, 475 So.2d 1277, 1281 (Fla. 1st DCA 1985); Sec. 120.57(1)(1), Fla. Stat. (1999). Nor may I rejudge the credibility of testimony. See Brown v. Criminal Justice Standards and Training Commission, 667 So 2d 977 (Fla. 4th DCA 1996). However, in an area of law over which the Department has substantive jurisdiction, as long as I state with particularity the reasons for rejecting an ALJ's conclusion of law and find that my substituted conclusion is as reasonable, or more reasonable, I am not bound by the ALJ's conclusions of law. Sec. 120.57(1)(1), Fla. Stat. (1999). See also, Harloff v. Citv of Sarasota, 575 So.2d 1324, 1328 (Fla. 2d DCA 1991), review denied, 583 So.2d 1035 (Fla. 1991). For the reasons discussed in detail below, I concur in and accept the ALJ's recommendation that the consent of use be denied. However, I disagree with and reject the ALJ's recommendation that the wetland resource management permit also be denied. The ALJ's recommendation that the wetland resource management permit be denied was based on the erroneous finding of fact and conclusions of law that the concurrent review provisions of section 373.427 of the Florida Statutes and rules 18-21.00401 and 62343.075 of the Florida Administrative Code applied to these applications (FOF No. 2; COL Nos. 62, 71, 77, and 87). In the proceeding below, the ALJ took official recognition of rules 18-21.00401 and 62-343.075 (RO at 5). The official history notes published in the Florida Administrative Code show that these concurrent review rules did not take effect until October 12, 1995. The applications for the regulatory permit and the proprietary consent of use were received on November 28, 1994, (FOF No. 12, RO at 9), and the Department's intent to issue the wetland resource management permit was noticed on June 7, 1995 (FOF No. 22, RO at 13). Thus, the concurrent review rules took effect after the Department's decision on the intent to issue. With respect to whether the concurrent review rules apply to this case, the issue presented is whether a rule that takes effect after an application is complete--and after the agency's decision to grant or deny the application is made within the 90- day timeframe allowed for final agency action on the application under section 120.60 -- may be applied to the application in a subsequent administrative hearing on the application. Because the application of the concurrent review rules would add criteria for the issuance of the wetland resource management permit, application of the concurrent review rules would be a substantive increase in the requirements for obtaining a wetland resource management permit. The case law on this issue presents an uncertain guide. In Lavernia v. Department of Professional Regulation, 616 So.2d 53 (Fla. 1st DCA 1993), after an application for a medical license was filed--but before the Board of Medicine noticed its intent to deny the license--the applicable licensing statute was amended. The court held that the amended statute applied to the pending application. Lavernia, is not directly on point because in the applications at issue here the concurrent rule took effect after the Department had noticed its final agency action within the 90- day permitting timeframe allowed by section 120.60. Closer to the situation at hand is the case in Central Florida Regional Hospital v. Department of Health and Rehabilitative Services, 582 So.2d 1193 (Fla. 5th DCA 1991). In Central Florida Regional Hospital, after the agency had made a final decision on the application within the timeframe allowed by section 120.60--but before an administrative hearing on the application--an applicable rule was invalidated. Despite the fact that the rule had been invalidated, the court held that the rule should still be applied to the application. In other words, the law as it existed at the time of the decision within the 90-day permitting timeframe of section 120.60 applied. In contrast to Central Florida Regional Hospital, in Agency for Health Care Administration v. Mount Sinai Medical Center of Greater Miami, 690 So.2d 689 (Fla. 1st DCA 1997), the court held that an agency rule invalidated after an application was complete, but before a final decision on the application was made, cannot be applied to the application in a subsequent administrative hearing. In other words, the new law must be applied in the subsequent administrative hearing.1 In both Lavernia and Mount Sinai Medical Center the court recognized an exception when the application of the new law would be unfair. In the case now before me, the application was filed, complete, and the final decision of the agency to grant the regulatory wetland resource management permit was made before the concurrent review rules took effect. This case does not involve the application of a rule that was subsequently invalidated. The issue of whether an invalid rule should be given effect raises its own unique policy issues. Therefore, the holdings in Mount Sinai Medical Center and Central Florida Regional Hospital are not directly applicable. I am guided by the fact in both Lavernia and Mount Sinai Medical Center the court recognized an exception when the application of the new law would be unfair. I note that even though this administrative proceeding is a de novo determination of the final agency action,2 it would be fundamentally unfair to the applicant to change the substantive rules of the game to "raise the bar" after an application is complete, and even more so after a final agency decision on the application is made within the 90-day timeframe allowed by section 120.60. Therefore, I conclude that the concurrent review rules do not apply to this case. In view of all of the above, I find and conclude that the ALJ's conclusion that the concurrent review provisions apply to these applications is contrary to the ALJ's own findings, is not supported in the record by competent substantial evidence, and is erroneous as a matter of law. Based on my review of the applicable case law, on the findings that the application was filed on November 28, 1994, and on the fact that the Department's intent to issue was noticed on June 7, 1995, and based on the official history notes of rules 18-21.00401 and 62-343.075 showing an effective date of October 12, 1995, I find that my substituted conclusion that the concurrent review rules do not apply is as reasonable, or more reasonable, as the rejected conclusion of law. Therefore, I reject the ALJ's finding and conclusions of law that the concurrent review provisions of section 373.427 of the Florida Statutes and rules 18-21.00401 and 62-343.075 of the Florida Administrative Code apply to these applications. Accordingly, I must reject the recommendation that the wetland resource management permit be denied. Although the law as interpreted by this order requires that the regulatory permit be issued even though the proprietary consent of use is denied, I do note that the issuance of the permit will be of little avail to Secret Oaks because it cannot build the dock without the consent of use, which is denied by this order. Rulings on the Exceptions of the Parlatos Parlatos' Exceptions Regarding the Wetland Resource Management Permit The Parlatos filed two exceptions concerning the wetland resource management permit. Parlatos' first exception disputes the ALJ's Finding of Fact No. 5 that before the Parlatos purchased Lot 10, the developer of Secret Oaks had recorded a Declaration, Grant of Easements, Assessments [sic] for the Secret Oaks subdivision. The Parlatos assert that the Declaration was recorded on April 10, 1991 [sic], and that the Parlatos purchased the lot on an earlier date. The Parlatos do not cite to the record in support of their contention that they purchased the lot before the Declaration was recorded. Parlatos' Exhibit No. 6 was admitted into evidence and is a partial summary judgment in Secret Oaks Owners Association v. Parlato, Case No. CA 92-692, Seventh Judicial Circuit (December 29, 1992) (attached as an exhibit to the Recommended Order). Paragraph 3 of the partial summary judgment states that the Declaration was recorded on April 10, 1990.3 Paragraphs 7 and 8 of the partial summary judgment state that the Parlatos were fully aware of the other lot owners' right [under the declaration] to use the [existing] dock before they purchased Lot 10. Also attached as an exhibit to the Recommended Order is a declaratory judgment in the same case, Secret Oaks Owners Association v. Parlato, Case No. CA 92-692, Seventh Judicial Circuit (March 31, 1994). That order states the developer of Secret Oaks signed and delivered a warranty deed for Lot 10 to the Parlatos on March 13, 1991. The order further states that the deed to the Parlatos was recorded on April 13, 1991. Accordingly, the record contains competent substantial evidence in support of Finding of Fact No. 5. Therefore, this exception is denied. Parlatos second exception disputes the conclusion of law in paragraph 56 of the Recommended Order that Secret Oaks has provided reasonable assurance that the project is not contrary to the public interest "as required by section 373.414" of the Florida Statutes. The Parlatos contend that Secret Oaks has not provided reasonable assurance that the dock will not be used for mooring an excessive number of boats, and therefore that reasonable assurance has not been provided that there will not be unacceptable impacts to grassbeds, manatees, and other environmental resources in the area. The Parlatos contend that the railing along the dock will not prevent such excessive use and consequent harm to the resources. The Parlatos do not take exception to the ALJ's Findings of Fact Nos. 17-20 and 25-31 wherein the ALJ found that there would be no adverse impact to manatees; no adverse impact to seagrass beds, that handrails would discourage boaters from mooring in those places where handrails were placed; that the pier would be elevated to five feet above mean high water to discourage excessive mooring of boats; that there would be no long-term adverse impacts to water quality; that short-term turbidity impacts would be mitigated; that there would be minimal impacts on biological diversity; that there would be no adverse effect on public health, safety, or welfare; that the project will not have an adverse effect on the property of others; and that there would be no adverse impact on navigation. Although, as noted above, I am not bound by the ALJ's conclusions of law, in view of the above findings, to which the Parlatos take no exception, I find the ALJ's conclusion of law that Secret Oaks has provided reasonable assurance that the project is not contrary to the public interest is reasonable. Accordingly, I will not disturb that conclusion of law. The exception is denied. Parlatos' Exceptions Regarding the Consent of Use The Parlatos filed four exceptions concerning the consent of use. Parlatos' first exception disputes the ALJ's conclusion of law in paragraph 66 that, for the purpose of deciding whether Secret Oaks should be granted a consent of use to build a dock from its easement, Secret Oaks should be assumed to have no proprietary right to use the existing dock on Parlatos' Lot No. 10. The Parlatos contend that because Secret Oaks asserted that it has a right to use the existing dock on Lot 10 in a petition for an administrative hearing in another case,4 it should be assumed that Secret Oaks has such a right for the purpose of determining whether the present application for another dock is "no more than the minimum length and size necessary to provide reasonable access to navigable water" as required to qualify for a consent of use under rule 18-21.005(1)(a) 1. Even if there was merit in Parlatos' assertion -- which I need not decide -- it is contrary to Finding of Fact No. 15 to which the Parlatos take no exception and must therefore be bound. See, e.g, Couch v. Commission on Ethics, 617 So.2d 1119, 1124 (Fla. 5th DCA 1993); Florida Dept. of Corrections v. Bradley, 510 So.2d 1122, 1124 (Fla. 1st DCA 1987). I do note that the partial summary judgment and the declaratory judgment in Secret Oaks Owners Association v. Parli to (Case No. CA 92-692, Seventh Judicial Circuit) noted above, held that Secret Oaks has an easement right along a 20 foot wide strip perpendicular to the shore line where it once connected to a now removed "ancillary" dock structure that provided access to the Parlato dock. The court also held that Secret Oaks has an easement right to be on the Parlato dock, but that Secret Oaks has no easement right to cross Lot 10 from the 20 foot easement strip to the location of the existing dock. Because of the gap that now exists between the 20 foot easement strip and the location of the existing Parlato dock, and because the declaratory judgment held that members of Secret Oaks have no right to cross Lot 10 to get to the Parlato dock, I cannot agree that the existence of the Parlato dock should be considered in determining whether Secret Oaks proposed dock is "no more than the minimum length and size necessary to provide reasonable access to navigable water." Accordingly, the exception is denied. Parlatos' second exception disputes the ALJ's conclusion of law in paragraph 80 that the dock proposed by Secret Oaks is eligible for a consent of use. The Parlatos contend that When state submerged lands would be preempted by a proposed dock, it cannot be authorized by consent of use [sic]. Under the existing policy of DEP, a dock that preempts an area of state waters can only be authorized under a submerged lands lease. This contention has no merit. Rules 18-21.005(1)(a)1. and 2 of the Florida Administrative Code expressly authorize consents of use for docks under certain conditions, and all docks preempt some sovereign submerged lands. Rule 18-21.003(38) defines "preempted area" as follows: "Preempted area" means the area of sovereignty lands from which the traditional public uses have been or would be excluded to any extent by an activity. The area may include, but is not limited to, the sovereignty lands occupied by the docks and other structures, the area between the docks and out to any mooring pilings, and the area between the docks and the shoreline. If the activity is required to be moved waterward to avoid dredging or disturbance of nearshore habitat, a reasonable portion of the nearshore area that is not impacted by dredging or structures shall not be included in the preempted area. Fla. Admin. Code R. 18-21.003(38) (1999) (emphasis added). Clearly, all docks have a preempted area associated with them, and a consent of use is expressly authorized for some docks under rules 18-21.005(1)(a)1 and 2.5 Accordingly, the exception is denied. Parlatos' third exception disputes the ALJ's conclusion of law in paragraph 81 that the project is not contrary to the public interest under chapter 18-21 of the Florida Administrative Code. The Parlatos contend that Secret Oaks has insufficient financial resources to be financially responsible for the dock, and that should make granting the consent of use contrary to the public interest. Except for special event leases under rule 18- 21.0082, which is not applicable to this case, there is no provision in chapter 18-21 for consideration of financial responsibility in determining whether a consent of use or other proprietary authorization should be granted. Accordingly, this exception is denied. Parlatos' fourth exception disputes the ALJ's conclusion of law in paragraph 84 that the project will not result in significant adverse impacts to sovereign submerged lands. The Parlatos contend that this conclusion is erroneous because of the likelihood of improper mooring along the dock. This exemption is rejected for the same reasons as stated for the second exemption in Part II. A above. Rulings on Exceptions of Secret Oaks Secret Oaks filed six exceptions. Secret Oaks' first exception disputes the conclusion in paragraph 65 that "[o]nly the Parlatos have DEP permission to use that [the existing] dock." Secret Oaks correctly notes that a Department permit under chapter 62312 to construct a dock does not regulate who may use the dock -- it is merely an authorization to construct the dock. To the extent the ALJ's paragraph 65 states otherwise, the exception is granted. The granting of this exception does not alter the outcome of this proceeding. Secret Oaks' second exception disputes the statement in paragraph 66 that "it is not assumed that the Association has any proprietary rights in the dock already in place at Lot 10." Secret Oaks argues that the Department lacks jurisdiction to determine ownership interests in either riparian areas or docks. It is clear from paragraph 56 of the Recommended Order that the ALJ was not implying that the Department had jurisdiction to adjudicate ownership rights in property. As discussed in the response to the exceptions of the Parlatos, Part II.B above, the ALJ's comment relates to whether the proposed dock is "no more than the minimum length and size necessary to provide reasonable access to navigable water" for the purposes of rule 18- 21.005(1)(a)1. Accordingly, the exception is denied. Secret Oaks' third exception disputes the finding in paragraph 75 that the proposed dock would create a preempted area between the proposed dock and the existing dock on Lot 10. Although this statement is in the section of the Recommended Order designated conclusions of law, I agree that it is a finding of fact and should be treated as such. See J. J. Taylor Co. v. Department of Business and Professional Regulation, 724 So.2d 192 (Fla. 1st DCA 1999) (a statement that is a finding of fact must be treated as such regardless of whether it is characterized as a conclusion of law by the ALJ); accord Battaglia Properties v. Land and Water Adj. Commission, 629 So.2d 161, 168 (Fla. 5th DCA 1994). Secret Oaks claims that there is no preempted area between the docks because the proposed dock is limited to one slip, and because members of Secret Oaks have the right to use the existing dock on Lot 10. Secret Oaks misconstrues the meaning and purpose of the preempted area rule provision. The purpose of the preempted area provision is to take into consideration that the general public, for which the sovereign submerged lands are held in public trust, will either lose or suffer a reduction in ability to access the preempted area of sovereign submerged lands. Therefore, it is not determinative whether the docks have one slip or whether Secret Oaks has access rights to both docks. The issue is to what degree is the general public's use of the sovereign submerged lands impaired by the docks. Thus, as noted above, rule 18-21.003(38) defines preempted area as "Preempted area" means the area of sovereignty lands from which the traditional public uses have been or would be excluded to any extent by an activity. The area may include, but is not limited to, the sovereignty lands occupied by the docks and other structures, the area between the docks and out to any mooring pilings, and the area between the docks and the shoreline. If the activity is required to be moved waterward to avoid dredging or disturbance of nearshore habitat, a reasonable portion of the nearshore area that is not impacted by dredging or structures shall not be included in the preempted area. Fla. Admin. Code R. 18-21.003(38) (1999) (emphasis added). If the docks are close enough so that traditional use by the general public would be excluded to any extent, there will be a preempted area between the docks regardless of whether Secret Oaks has access rights to both docks. Accordingly, the exception is denied. Secret Oaks' fourth and fifth exceptions dispute all of paragraph 86 in the Recommended Order. Secret Oaks contends that the Department has no jurisdiction to determine property rights, and that because a court has determined that Secret Oaks has an easement across Lot 10 to the water, the Department cannot take into consideration the provision of rule 18-21.004(3)(c) that the proposed dock may "not restrict or otherwise infringe upon the riparian rights of adjacent upland riparian owners." I disagree. In Secret Oaks Owners' Association v. Department of Environmental Protection, 704 So.2d 702 (Fla. 5th DCA 1998), the court held that Secret Oaks, by virtue of its easement, had sufficient title interest under rule 18-21.004(3)(b) "for the purpose of seeking permission to construct a dock." Id., 704 So.2d at 703, 706. The court did not hold that when seeking permission to construct a dock Secret Oaks did not have to comply with the provisions of 18-21 concerning proprietary approval for the construction of a dock on sovereign submerged lands. As noted above, rule 18- 21.004(3)(c) requires the Department to consider whether a proposed structure will "restrict or otherwise infringe upon the riparian rights of adjacent upland riparian owners." I agree with the statement in paragraph 56 of the Recommended Order that this administrative proceeding cannot adjudicate real property disputes between Secret Oaks and the Parlatos. See Buckley v. Dept. of Health and Rehabilitative Services, 516 So.2d 1008, 1009 (Fla. 1st DCA 1988); Miller v. Dept. of Environmental Regulation, 504 So.2d 1325 (Fla. 1st DCA 1987); Hageman v. Carter, 17 F.A.L.R. 3684, 3690 (Fla. DEP 1995); Powell v. Alabama Electric Cooperative,15 F.A.L.R. 325, 326 (Fla. DER 1992). However, absent a controlling court adjudication regarding riparian rights lines and whether a proposed structure would interfere with those riparian rights, the Department is required under rule 18-21.004(3) to consider whether a proposed structure will restrict or otherwise infringe upon the riparian rights of adjacent upland riparian owners. Accordingly, I reject these exceptions. Secret Oaks sixth exception disputes the recommendation that the wetland resource management permit be denied. I accept this exception for the reasons stated in Parts I and II.A above, and reject the recommendation that the wetland resource management permit be denied. Rulings or' Exceptions of the Department The Department's first exception objects to Findings of Fact No. 2 and Conclusions of Law Nos. 62, 71, 77, 87, and 79 insofar as they relate to the ALJ's finding and conclusion that the concurrent review provisions of section 373.427 and rules 18- 21.00401 and 62-343.075 are applicable to these applications. For the reasons stated in Part I above, this exception is accepted, and the above findings and conclusions of law are modified accordingly. The Department's second exception takes issue with the statement in Conclusion of Law No. 79 that the Department is authorized under rule 18-21.0051 to consider Secret Oaks' request for a consent of use to use sovereign submerged lands. Department's counsel below notes that rule 18-21.0051 has an effective date of October 12, 1995. Section 253.002(2) of the Florida Statutes expressly notes that -- at the time of the enactment of this provision in 1994 -- the Board of Trustees of the Internal Improvement Trust Fund had certain uncodified delegations to the Department to take actions on requests for authorizations to use sovereign submerged lands. Section 253.002(2) directed that these delegations be codified by December 31, 1995. Rule 18-21.0051 codified these delegations and demonstrates that, prior to the adoption of rule 18-21.0051, the Department had delegated authority to act on this application for a consent of use. Furthermore, the delegation under rule 18-21.0051 is only procedural. Applying the rule to these applications does not affect the substantive rights of the applicant and is not unfair. Therefore, in this de novo administrative proceeding, the application of rule 18-21.0051 at the time of entry of this final order is both appropriate and authorized. See generally Lavernia v. Department of Professional Regulation, 616 So.2d 53 (Fla. 1st DCA 1993). The exception is therefore accepted in part and rejected in part. Conclusion The consent of use must be denied because the proposed dock would restrict or otherwise infringe on the riparian rights of adjacent upland riparian owners in contravention of rule 18- 21.004(3)(c). Because the application for the dock meets all the permitting criteria for a wetland resource management permit, and because the concurrent review provisions of section 373.427 and rules 18-21.00401 and 62-343.075 do not apply, the wetland resource permit must be issued. ACCORDINGLY IT IS ORDERED THAT: Except as otherwise stated in this final order, the Recommended Order is adopted and incorporated herein by reference. The application for a proprietary consent of use for sovereign submerged lands in OGC Case No. 98-2669; DOAH Case No. 98-5190, is DENIED. The regulatory wetland resource management (dredge and fill) permit as described in the intent to issue noticed on June 7, 1995, DEP File No. 552613202, in OGC Case No. 95-1341; DOAH Case No. 98-5290 is APPROVED, and the Department staff is directed to issue the permit forthwith. DONE AND ORDERED this 24th day of March 2000. DAVID B. STRUHS Secretary 3900 Commonwealth Boulevard Tallahassee, FL 32399-3000 Notice of Rights Any party to this proceeding has the right to seek judicial review of the Final Order pursuant to Section 120.68, Florida Statutes, by the filing of a Notice of Appeal pursuant to Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the Department in the Office of General Counsel, 3900 Commonwealth Boulevard, M.S. 35, Tallahassee, Florida 32399-3000; and by filing a copy of the Notice of Appeal accompanied by the applicable filing fees with the appropriate District Court of Appeal. The Notice of Appeal must be filed within 30 days from the date this Final Order is filed with the clerk of the Department.
Findings Of Fact Based upon the evidence and testimony adduced at hearing, and the record as a whole, the following Findings of Fact are made: The Proposed District will be located in an unincorporated area of central Palm Beach County within the boundaries set forth in the Amended Petition. It will encompass approximately 9,450 acres of land, including the 2,300 acre impoundment area that the State of Florida has an option to purchase. Irving Cowan, individually and as Trustee, Adrian R. Chapman, as Trustee of the A.R. Chapman Palm Beach Groves Trust, Marvin S. Savin and Elaine S. Savin, as general partners of Savin Groves, a Florida general partnership, and Petitioner, a Florida limited partnership, presently own 100 percent of the land to be included within the Proposed District. The property within the District is designated in the Palm Beach County Comprehensive Plan Land Use Element as either Agricultural Production or Rural Residential The land within the Proposed District is located entirely within the boundaries of an inactive unit of development of the ITWCD. Consequently, the owners of the land neither pay taxes to, nor receive benefits from, the ITWCD. Most of the land is currently used for growing citrus fruit. Those areas which do not have citrus groves are used to support grove operations. It is the present intent of the landowners to continue to use the land for such agricultural purposes. The purposes and functions of the ITWCD and the Proposed District will be significantly different. The ITWCD is primarily concerned with providing drainage to an urbanizing, residential area with a "one By contrast, the Proposed District will operate a "two-way" drainage and irrigation system designed for the benefit of active agricultural production. The ITWCD and the Proposed District will be able to operate independently within their respective areas of responsibility. The creation of the Proposed District will have no adverse impact upon the ITWCD. On July 27, 1992, the Board of Supervisors of the ITWCD unanimously adopted a Resolution in support of the establishment of the Proposed District. The existing infrastructure within the Proposed District consists of roadways, drainage and irrigation facilities, pumping stations, and culverts connecting with the L District. There are no existing water mains or existing sewer facilities. Among the potential improvements to the existing infrastructure which could be undertaken by the Proposed District are the construction of central pumping stations to replace the many individual pumps operated by the several property owners within the Proposed District, and the replacement of the outfall structures into the L-8 canal. In addition, the Proposed District could engage in roadway construction and surfacing of the main fruit hauling routes within the District. 4/ The Proposed District provides the best possible mechanism for financing and implementing these improvements. Of the various alternatives in providing infrastructure services for the community, a community development district is superior to any other alternative, including a municipal service taxing unit, the County or a homeowners' association. This is because neither the County nor a municipal service taxing unit would be as responsive to the Proposed District's landowners as would be the Proposed District and because a homeowners' association would be hindered by reason of its inability to issue bonds or effectively collect property assessments. Centralized ownership, management and control of the Proposed District's infrastructure is more efficient and less costly than the current arrangement. Consequently, the establishment of the Proposed District will increase the likelihood that the land within its boundaries will continue to be used for agricultural purposes. The District will be empowered to issue bonds, levy ad valorem taxes and special assessments, and impose user fees and charges. To defray the costs of operation and maintenance of the infrastructure, the District will utilize a variety of taxes, assessments and user charges tailored to the service involved so as to minimize costs while insuring that only those who receive the benefits from a facility pay the costs involved. Ultimate Findings All statements contained in the Amended Petition, including those contained in the economic impact statement, are true and correct. The creation of the District is not inconsistent with any applicable element or portion of the State Comprehensive Plan or of the Palm Beach County Comprehensive Plan. The land within the Proposed District is of sufficient size, is sufficiently compact, and is sufficiently contiguous to be developable as a functional interrelated community. The Proposed District is the best alternative for delivering community development services and facilities to the area that will be served by the District. The community development services and facilities of the Proposed District will not be incompatible with the capacity and uses of existing local and regional community development services and facilities. The area that will be served by the Proposed District is amenable to separate special-district government.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that FLWAC enter a final order granting Petitioner's Amended Petition to establish the Cypress Grove Community Development District by rulemaking pursuant to Chapter 190, Florida Statutes. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of June, 1993. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 1993.
The Issue The issue in this case is whether the Southwest Florida Water Management District (District) should approve applications to renew consumptive use permits filed on behalf of the West Coast Regional Water Supply Authority (Authority), Pinellas County (County), and Freeman F. Polk (Polk), and if so, what conditions should be included in the permits. The District proposes to issue renewed permits to these applicants with specified conditions, but Polk seeks certain additional condition; to the permits sought by the Authority and the County, and similarly, the Authority and County seek the imposition of additional conditions on Polk's permit. The parties seek these additional conditions to insure that the permitted uses will not interfere with any legal use of water existing at the time of the applications, and will also not cause the water table to be lowered so that lake stages or vegetation are adversely and significantly affected on lands other than those owned, leased or controlled by the applicants.
Findings Of Fact The following findings are based upon relevant stipulations of the parties: The Authority is a special taxing district of the State of Florida encompassing Pasco, Pinellas and Hillsborough Counties, which was created by interlocal agreement on October 25, 1974. It is responsible for the design, construction, operation and maintenance of facilities in locations, and at times, necessary to insure that an adequate supply of water will be available to all persons residing within its boundaries. The District is an agency of the State of Florida which is charged with regulating consumptive uses of water in a sixteen county area, including Pinellas, Pasco and Hillsborough Counties. It has implemented a permitting program that requires all persons seeking to withdraw water in excess of an annual average daily rate of 100,000 gallons, and a maximum daily rate of 1,000,000 gallons, to obtain a consumptive use permit. The Cypress Creek Wellfield is located on a 4,895 acre site in central Pasco County, lying east of U.S. 41 between State Roads 52 and 54. The District owns 3,623 acres of this Wellfield, and the remaining 1,272 acres are owned by the City of St. Petersburg. Construction on the Cypress Creek Wellfield commenced in 1974, and it currently consists of thirteen production wells, numerous monitor wells, several thousand feet of transmission lines, two 5 gallon storage tanks, a pump station and several buildings. The City of St. Petersburg, Pinellas and Pasco Counties, and the District have transferred their rights and privileges in this Wellfield, as well as the Wellfield facilities, to the Authority by contracts entered into in November, 1973, and August 1974. Water produced at the Cypress Creek Wellfield is sold at cost by the Authority to users which include the City of St. Petersburg and Pinellas County. The water produced at this Wellfield comprises 29% of the County's total water system demand (20 million gallons a day), and 25% of the City of St. Petersburg's total system demand (10 million gallons a day). These water systems serve approximately 470,000 and 330,000 persons, respectively. In March 1978, the District issued a six-year consumptive use permit to the Authority, the City of St. Petersburg, and the County authorizing an annual average and maximum daily withdrawal of 30 million gallons a day from the Cypress Creek Wellfield. The Authority also began a detailed ecological monitoring program in, and around, this Wellfield in 1978. A three-year permit was then issued to the Authority in December, 1982, authorizing withdrawals of 30 million gallons a day, annual average, and 40 million gallons a day, maximum daily, from the Wellfield. The District determined by Order No. 82-28, dated December 1, 1982, that an average annual daily rate of withdrawal of 30 million gallons, and a maximum daily rate of withdrawal of 40 million gallons from the Cypress Creek Wellfield was a reasonable-beneficial use, was consistent with the public interest, and would not interfere with any legal use of water existing at the time of that application. An application for renewal of the Cypress Creek Wellfield consumptive use permit at the quantities permitted in 1982 was filed with the District on November 7, 1985, by the Authority, the County and the City of St. Petersburg. The continued withdrawal of water from the Cypress Creek Wellfield at an annual average daily rate of 30 million gallons, and a maximum daily rate of 40 million gallons is needed in order to meet the water supply demands of the residents of Pinellas and Pasco Counties, is in the interest of residents of Pinellas County, and will not cause the rate of flow of a stream or other watercourse to be lowered below the minimum rate of flow established by the District. The regulatory level of the potentiometric surface established by the District for the Cypress Creek Wellfield has never been exceeded by prior withdrawals of water at permitted rates. Continued withdrawal of water from the Cypress Creek Wellfield at an annual average daily rate of 30 million gallons, and a maximum daily rate of 40 million gallons will not cause the potentiometric surface level to be lowered below sea level, or any regulatory level established by the District, will not cause the surface level of water to be lowered below any minimum established by the District, and will not significantly induce salt water encroachment. The Cross Bar Ranch Wellfield is located on a 8,060 acre site in north central Pasco County, lying approximately one mile south of the Pasco-Hernando County line, and immediately east of U.S. 41. The Cross Bar Ranch Wellfield property has been owned by Pinellas County since 1976. Wellfield construction was completed in 1981. By agreement entered into on April 11, 1979, the Authority is obligated to sell the County water produced from the Cross Bar Ranch Wellfield, but any excess not currently being used by the County may be sold to other members of the Authority. A significant amount of water produced at Cross Bar Ranch is pumped to the Cypress Creek Wellfield where it is combined with that Wellfield's water, and then distributed to Pinellas and Hillsborough Counties, as well as the City of St. Petersburg, for further distribution. The water produced at these two Wellfields in combination accounts for about 60% of the County's total water system demand. Following pump tests performed from 1977 to 1979, as well as an ecological monitoring program, the District issued a modified consumptive use permit to the Authority by Order 80-9, dated February 6, 1980, for Cross Bar Ranch Wellfield. The District determined that withdrawals at an average daily rate of 30 million gallons, and a maximum daily rate of 45 million gallons from Cross Bar Ranch Wellfield was a reasonable beneficial use, was consistent with the public interest, and would not interfere with any legal use of water existing at the time of that application. On November 7, 1985, the Authority and County jointly applied to the District for renewal of the consumptive use permit for Cross Bar Ranch Wellfield at the current permitted quantities of an annual average daily rate of 30 million gallons, and a maximum daily rate of 45 million gallons. These withdrawal rates are needed in order to meet present and future water supply demands of the residents of Pinellas, Pasco and Hillsborough Counties, provide water for environmental mitigation, and make up water when one or more production facilities cannot pump at their permitted levels. The withdrawal of water from Cross Bar Ranch Wellfield at permitted rates will not cause the level of the potentiometric surface to be lowered below sea level, or any regulatory levels established by the District, and will not significantly induce salt water encroachment. Jumping Gully is the only stream or watercourse in the vicinity under the influence of this Wellfield, and the District has not established a minimum rate of flow for Jumping Gully. Hydrologic data collected from monitor wells located at the Cross Bar Ranch Wellfield show the potentiometric surface has been above mean sea level during the operation of this facility. The District has renewed consumptive use permits for a period of ten years for the City of St. Petersburg, and the City of Lakeland Power Plant. The Authority owns, leases or otherwise controls the area within both the Cypress Creek and Cross Bar Ranch Wellfields. Polk owns, leases or otherwise controls the property identified in his amended permit application of July 26, 1988. Both the Authority's and Polk's permit applications were filed on the proper forms, and otherwise comply with the District's procedural requirements for consumptive use permits. Each party has standing to participate in this case. The proposed uses of water which are the subject of these proceedings are reasonable beneficial uses, and in the public interest. The only permit criteria that remain at issue in this case are set forth in Rules 40D-2.301(1)(c) and (2)(e), Florida Administrative Code. The following findings of fact are based upon the evidence presented at the hearing: Polk was first issued a consumptive use permit for Ft. King Ranch in August, 1981, after both the Cypress Creek Wellfield and Cross Bar Ranch Wellfield had each been permitted to withdraw 30 million gallons per day. Polk's permit authorized him to withdraw ground water at an average annual rate of 420,000 gallons per day, and a maximum rate of approximately 1.94 gallons per day for irrigation of pasture grass and citrus, and cattle drinking water. A temporary consumptive use permit issued to Polk in August, 1981, was signed by him and states on its face that these additional groundwater withdrawals were necessary because of drought conditions. A modified permit was issued to Polk by the District in July, 1982, authorizing him to increase his withdrawals to an average annual rate of approximately 1.94 gpd, and a maximum rate of 5.9 gpd. Polk's wells are not metered. Prior to August, 1981, Polk did not have man made surface or groundwater withdrawal on his property. As it relates to this proceeding, the property owned, leased or otherwise controlled by Polk is known as the Ft. King Ranch, which is generally located between the Cross Bar Ranch and Cypress Creek Wellfields, and consists of approximately 6,000 acres. The Ft. King Ranch is comprised of five tracts which were separately acquired by Polk commencing in January, 1969, and ending in 1984. By 1978, Polk had acquired two of these five tracts. He leased a third tract beginning in 1971, before acquiring an ownership interest in 1981. These three tracts were designated parcels A, B, and C, and are located in the eastern and northern portion of the Ranch. These three parcels were the only tracts owned, leased or otherwise controlled by Polk at the time the first Cypress Creek and Cross Bar Ranch Wellfield permits were issued in 1978. The western tracts were acquired in 1982 and 1984, and were also referred to as the AL-BAR Ranch at hearing. Polk uses the Ft. King Ranch for a cow-calf operation, and also sod farming and seeding. From 1969 to approximately 1978, there was sufficient surface water on the Ft. King Ranch for these farming activities to be carried out without irrigation or wells. Water holes used by cattle were always wet, and lakes on the property were used for swimming and fishing. His pasture, hay, seed and sod grasses received moisture solely from rainfall. However, Polk did not establish the amounts of water used in his operations prior to the issuance of Wellfield permits. In 1976, parcels A, B, and C were used for these purposes, although Polk has frequently changed the specific size and location of acreages devoted to these land uses. In order to correct flooding that occurred on portions of the Ft. King Ranch during times of heavy rainfall, Polk sought the advice of the Soil Conservation Service in the mid-1970's. He was advised to construct a series of dikes and swales to control the flow of surface water on his property. During 1980 and 1981, Polk constructed a network of swales and ditches to divert and control the flow of surface water from portions of the Ranch needing less water to those requiring wetter conditions, such as his sod and seed operation. The swales interconnect lakes and ponds on his Ranch. He also constructed a levee on the property, and installed a lift pump. These activities have converted most of the eastern portion of his ranch to improved pasture and sod grasses, and virtually eliminated native vegetation. Polk had no professional help in the construction of his ditch-swale systems, or the levee. Beginning in approximately 1980, drier conditions were experienced at the Ranch. One of the ten driest years on record in this area occurred in 1980, and continued drought conditions in 1981 caused the District's Governing Board to declare a water shortage, and impose water conservation measures throughout the District. Some lakes and cypress swamps dried completely and failed to recharge to pre-1980 levels after rainfall. Due to reduced water availability since 1980, including drought conditions in 1985, Polk's calf weights have decreased, while the number of non-breeding cows has increased. Feed bills have increased due to reduced hay and grass production at the Ranch. Polk's bahia seed and sod crops have also declined since 1980 due to reduced surface water levels. Adequate and stable moisture is essential for seed production, and while such conditions did exist on the Ft. King Ranch prior to 1980, they have been absent since 1980. Due to the drier conditions which he noted in 1980 and 1981, Polk filed a formal complaint with the District in 1981. A site visit and pump test were conducted, and the District concluded that the Wellfields were causing less than a one foot drawdown in the Ft. King Ranch water table, and that dry conditions at his ranch were due primarily to drought. In 1985, Polk complained to the District again, and requested that it augment two lakes within the Ranch. After review of surrounding lake conditions, the District declined his request since Polk's lakes had not experienced water level declines atypical of lakes well beyond the influence of the Authority's Wellfields. Studies of water level elevations in the area indicate that the effect of Cypress Creek Wellfield pumpage is quite small when compared to natural changes in water levels due to variable rainfall and evapotransporation. Rainfall in this region is variable, and there has been a significant negative trend over time in surficial and potentiometric water levels that predates Wellfield pumpage. According to J. B. Butler, who was accepted as an expert in hydrology, the swales, dikes and levees constructed by Polk have not caused the water table or surface water level reductions experienced since late 1981. Rather, these are an attempt to divert and retain water on the property, and even in their absence, there would be no significant flow of surface water across Ft. King Ranch from an east to west direction. In addition, Butler testified that a fence line berm constructed along the northern border of the Ranch is an insignificant obstacle to the flow of surface water from the north to south across the Ranch when compared to topographic features, and has had no impact on the water tables of the Ranch. However, evidence introduced at hearing established that as early as 1981, the staff of the District concluded that the swales and elevated fence lines could be aggravating low water conditions by increasing evaporation and leakance, and by excluding surface water which would have entered the Ft. King Ranch from the north. The Authority offered competent substantial evidence to rebut the Butler testimony. Thomas Schanze, who was accepted as an expert in agricultural engineering, testified that Polk's elevated berm along his northern fence line has significantly restricted the flow of surface water onto Ft. King Ranch, and has contributed to the eastern portion of the Ft. King Ranch becoming a closed watershed. Between 1984 and 1986, approximately 700 million gallons of surface water have been excluded by Polk's water control and diversion activities. This exclusion has resulted in a diminished water table within the Ft. King Ranch of about one half foot compared with the water table on the northern side of the berm. Surface water cannot flow onto Polk's property until water levels immediately north reach flood stage. Aerial photographs of the Ft. King Ranch and surrounding properties show that the Polk property is significantly drier than surrounding properties, which include predominant wetlands. If the dry conditions experienced by Polk had been due to pumpage, the same dry conditions should be observed on surrounding properties and lands nearer the Wellfields. However, aerial photos show that lands closer to the Wellfields than Ft. King Ranch are less dry than the Ranch itself. This supports the position of the District and the Authority that Polk's own activities have had a significantly greater impact than pumpage on surface and groundwater levels. The reduction in productivity of Polk's farming activities is reasonably related to his northern berm which serves as a dike, preventing water from flowing onto Ft. King Ranch, as well as drought conditions existing in 1980, 1981 and 1985. The cumulative effect of water excluded from this property and dry weather conditions is significant, and accounts for decreased production. It was not established through competent substantial evidence that Polk's decreased production has resulted from any hydrologic impact of Wellfield pumpage. The District's expert in hydrology and ground water modeling, Robert G. Perry, concluded that significant water table declines on Ft. King Ranch due to pumping from Cypress Creek and Cross Bar Ranch Wellfields could not be confirmed. Through groundwater flow modeling and statistical analysis, he concluded that a one foot water table drawdown contour resulting from withdrawals at the rate of 30 mgd for 30 days without any recharge would not reach the Ft. King Ranch. Even in a worse case scenario of 120 days without recharge and pumpage at Cypress Creek of 30 mgd for 30 days, then 40 mgd for 30 days, and finally 30 mgd for 60 days, Perry concluded that the one foot water table drawdown contour would not reach Polk's Ranch. There is some evidence that under a worse case condition, pumpage at the Cross Bar Ranch Wellfield could result in the one foot water table drawdown contour intersecting a small portion of the western tract of the Ft. King Ranch, but this tract was not owned or leased by Polk in 1978, when the first Wellfield permits were issued. Conflicting evidence based upon steady state modeling by Craig Hutchinson of the United States Geological Survey was introduced on behalf of Polk to establish that the cumulative impact of the Wellfields could induce a significant drawdown in the water table in the area between the Wellfields, including the Ft. King Ranch. However, this evidence is rejected as less credible than the analysis conducted by Park and Phillip Davis, who was also accepted as an expert in hydrology and groundwater flow modeling. The steady state approach used by Hutchinson is inappropriate for analyzing the effects of wellfield withdrawals on the water table, because the water table is a dynamic system which is never at steady state. The transient groundwater simulation model used by the District is better suited for an analysis of impacts to the water table, although it does tend to overpredict such impacts, since it accounts for changes in rainfall. The Hutchinson analysis is also unreliable since it is based upon artificially derived antecedent water levels, rather than observed levels. Finally, he did not have required predevelopment water table data, and thus, could not verify water table predictions derived from his steady state model. A transient groundwater flow computer model used by Terry Bengtsson to estimate greater potentiometric surface and water table declines due to withdrawals from the Wellfields than predicted by Park or Davis was discredited, and shown to be unreasonable, by the results of a 28 day pump test in September and October, 1988. According to Rick Stebnisky, who was called on behalf of Polk and accepted as an expert in groundwater hydrology, the combined effect of pumping at the Cross Bar Ranch and Cypress Creek Wellfields has resulted in a significant reduction in water table and potentiometric surface levels at Ft. King Ranch, with such reductions being greater in the southern areas than northern portions of Polk's property. He testified that drawdowns have been noted since pumping began at Cypress Creek in April, 1976, with greater drawdowns occurring closest to the Wellfields, and for this reason drawdowns appear to be related to pumping rather than drought conditions. However, Stebnisky's conclusions were drawn from an overly simplistic hydrographic analysis which ignored factors other than pumpage, such as reduced rainfall, regional trends, surface drainage and non-wellfield pumpage, according to Robert G. Perry, an expert in hydrology and groundwater modeling. Stebnisky was not accepted as an expert in groundwater flow modeling. It was also established that some of the basic assumptions used by Stebnisky in predicting drawdowns were inaccurate, and not based upon accepted hydrologic principles. Therefore, when weighed and considered against other expert testimony, including that of Perry and Dr. J. I. Garcia-Bengochea, Ph.D., an expert in hydrology and environmental engineering, the testimony of Stebnisky is found to lack credibility. While Dr. Garcia-Bengochea agreed with the testimony of Stebnisky that the potentiometric surface and water table levels on the Ft. King Ranch had been somewhat reduced due PAGE 18 MISSING individual well meters, regardless of whether on-site wetlands are being augmented, and is sufficiently accurate for use in evaluating the impact of withdrawals on the water table and Floridan Aquifer. As a condition for renewal of the Authority's permits, the District has required that flow measuring devices or methods be installed for each augmentation discharge point, although generally augmentation of lakes and wetlands within wellfields is not metered. The allowable drawdown levels of potentiometric surface for the Cypress Creek Wellfield established by the District have never been reached. The lowest levels occurred during severe drought conditions in 1981 and 1985. However, even during these times, the lowest potentiometric surface level was 8.53 feet above regulatory levels. Notwithstanding the testimony of Philip Waller, an expert in hydrology, pumping from Polk's irrigation Wellfields have not had a significant impact on the Cypress Creek Wellfield because Waller's model assumptions are extreme, according to Robert G. Perry, whose field of expertise includes groundwater modeling. These unrealistic assumptions included that Polk would operate his irrigation wells at maximum capacity for 120 days, and that there would be no recharge, even though irrigation, like rainfall, would be expected to result in some recharge. Even under these extreme assumptions, Waller's modeling only produced a one foot drawdown at Cypress Creek Wellfield, which would still be well within regulatory levels established by the District, based upon data for the drought years of 1981 and 1985. Since 1979, Cypress Creek Wellfield has averaged approximately 30 million gallons per day, with the maximum withdrawal occurring in May, 1983, when it averaged 34.2 mgd. From 1981 to 1985, the average withdrawals from Cross Bar Ranch Wellfield remained stable at 13 mgd, but since 1986, the pumpage has increased to over 15 mgd due, in part, to the use of water from Cross Bar to compensate for contaminated wells shut down at the Eldridge-Wilde Wellfield. For purposes of Rule 40D-2.301(1)(c), Florida Administrative Code, the District does not consider the use of water that occurs naturally, without pumping or diversion, for use on crops or other agricultural purposes to be, an existing legal use of water, because it does not require a permit. The District does not apply Rule 40D-2.301(2)(e) to protect agricultural crops, but rather to protect naturally occurring vegetation. When an application to renew a consumptive use permit is reviewed by the District, and that renewal does not seek an increase in the quantity of water withdrawals, "legal users" are those present prior to the original permit. On May 17, 1988, a Final Order was entered in DOAH Case No. 88-0693R declaring the District's Rules 40D-2.301(3)(b), (c), and (d), Florida Administrative Code, which otherwise would apply in this proceeding, to be an invalid exercise of delegated legislative authority. The Authority's applications were declared complete by the District on June 18, 1987, and the District staff recommended issuance of these permits on August 14, 1987. Modifications to the draft permit were made by the District on December 28, 1988, and these modified draft permits are acceptable to the Authority. The latest draft permits contain stated conditions which include the requirement that the Authority directly measure the amount of water it uses to augment the water level of on-site wetlands. On February 22, 1989, the Authority and the District filed a Joint Notice of Settlement in Case Number 87- 4644 by which they settled their dispute as to the duration of consumptive use permit renewals for the Wellfields, and provided for a ten year permit for Cypress Creek, and a six year permit for Cross Bar Ranch Wellfield. Polk submitted his original permit application on April 13, 1987, and then amended his request on July 26, 1988. The District has proposed to issue a draft permit to Polk, with stated conditions.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Southwest Florida Water Management District enter a Final Order approving the consumptive use permit applications of the West Coasts Regional Water Supply Authority and Pinellas County for the Cross Bar Ranch and Cypress Creek Wellfields, with conditions proposed by the District, and also approving the consumptive use permit application of Freeman F. Polk, with conditions proposed by the District. DONE AND ENTERED this 10th day of July, 1989, in Tallahassee, Florida. 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 10th day of July, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-4644, 87-4645, 87-4647, & 88-1169 Rulings on the District's Proposed Findings of Fact: Adopted in Findings 6, 21. Rejected as unnecessary. Adopted in Finding 6. Adopted in Finding 38. Adopted in Finding 21. Adopted in Finding 11. Adopted in Finding 38. 8-11. Adopted in Finding 20. 12. Adopted in Finding 21. 13-14. Adopted in Finding 22. Adopted in Finding 27. Adopted in Finding 25. 17-19. Adopted in Findings 25, 26. 20-22. Adopted in Findings 26, 28. 23-48. Adopted in Findings 31 through 35. 49-60. Adopted in Findings 28 through 30. 61-64 Adopted in Finding 36. 65-68. Adopted in Finding 37. Rulings on the Authority's Proposed Findings of Fact: Adopted in Finding 1. Adopted in Findings 4, 10. Adopted in Finding 2. 4-6. Adopted in Finding 39. Adopted in Finding 18. Adopted in Findings 21, 22. Adopted in Finding 40. 10-11. Adopted in Finding 3. 12-14. Adopted in Finding 36. Adopted in Findings 6, 38. Adopted in Finding 5. 17-19. Adopted in Findings 6, 21. 20. Adopted in Findings 7, 16. 21-23. Adopted in Finding 41. 24-25. Adopted in Finding 9. 26-27. Adopted in Finding 36. Adopted in Findings 11, 38. Adopted in Finding 10. Adopted in Finding 11. 3132 Adopted in Findings 11, 21. 33. Adopted in Findings 12, 16. 34-36. Adopted in Finding 41. Adopted in Finding 21. Adopted in Finding 24. Adopted in Finding 29. Adopted in Finding 24. 41-42. Adopted in Finding 22. 43-45. Adopted in Finding 25. Adopted in Finding 26. Adopted in Finding 25. Adopted in Finding 26. Adopted in Findings 26, 28. 50-53. Adopted in Finding 20. Adopted in Findings 20, 21. Adopted in Finding 20. Adopted in Finding 37. Rejected as not based on competent substantial evidence. Adopted in Finding 41. Rejected as unnecessary. 60-62. Adopted in Finding 35. 63. Adopted in Finding 36. 64-70. Adopted in Findings 34, 35. 71-76. Adopted in Findings 33 through 35. 77-78. Rejected as unnecessary and irrelevant. 79-80. Adopted in Finding 34. 81-87. Adopted in Finding 32. 88-91. Adopted in Findings 26 through 35. 92-96. Adopted in Findings 29, 30, but otherwise Rejected as unnecessary and cumulative. Adopted in Finding 28. Adopted in Finding 29. 99-100. Adopted in Finding 30. 101-102. Adopted in Finding 37. Rejected as unnecessary and cumulative. Adopted in Finding 37. Rejected in Finding 37. Adopted and Rejected in part in Finding 37 Ruling on Pinellas County's Proposed Finding of Fact: (The County also adopted the Authority's Proposed Findings.) 1. Rejected since the statement proposed by the County is not a finding of fact, but simply a statement on the evidence. Evidence which was not admitted at hearing has not been considered. Rulings on Polk's Proposed Findings of Fact: Adopted in Finding 3. Adopted in Findings 9, 10. Adopted in Finding 21. Rejected in Findings 6, 11, 21. Adopted in Finding 22. Adopted and Rejected in part in Findings 25 through 27. 7-8. Rejected in Findings 25 through 27. Adopted in Finding 25. Adopted in Finding 24. 11-13. Rejected in Findings 24, 29, 30. Adopted in Finding 37. Rejected as argument on the evidence and not a proposed finding of fact. COPIES FURNISHED: Edward P. de la Parte, Jr., Esquire Douglas M. Wyckoff, Esquire 705 East Kennedy Boulevard Tampa, Florida 33602 Thomas E. Cone, Jr., Esquire 202 Madison Street Tampa, Florida 33602 John T. Allen, Jr., Esquire Chris Jayson, Esquire 4508 Central Avenue St. Petersburg, Florida 33711 Bram D. E. Canter, Esquire 306 North Monroe Street Tallahassee, Florida 32302 Peter G. Hubbell, Executive Director Southwest Florida Water Management District 2379 Broad Street Brooksville, Florida 34699-6899
