95-001339RP William Markham (Broward County Property Appraiser) vs. Department Of Revenue Status: Closed DOAH Final Order on Wednesday, June 21, 1995.

Summary: Rule does not conflict with constitution or statutes. Improper to look at ""intent"" of constitutional provision.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WILLIAM MARKHAM, as Broward )

County Property Appraiser, )

)

Petitioner, )

)

vs. ) CASE NO. 95-1339RP

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

______________________________)

FINAL ORDER

Pursuant to notice, the above matter was heard before the Division of

Administrative Hearings by its assigned Hearing Officer, Donald R. Alexander, on

April 18, 1995, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Gaylord A. Wood, Jr., Esquire

304 S. W. 12th Street

Fort Lauderdale, Florida 33315-1549

For Respondent: Joseph C. Mellichamp, III, Esquire

Department of Legal Affairs

The Capitol-Tax Section

Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUES

The issues are (a) whether subsection (5) of proposed rule 12D-8.0062,

Florida Administrative Code, is arbitrary and capricious and contravenes the law

implemented, (b) whether subsection (6) of the rule is vague, and (c) whether

subsection (5) of the rule conflicts with Article VII, Section 4(c) of the

Florida Constitution.

PRELIMINARY STATEMENT

This case began on March 17, 1995, when petitioner, William Markham, as

Broward County Property Appraiser, filed a petition challenging the validity of

proposed rule 12D-8.0062, Florida Administrative Code. The rule has been

proposed for adoption by respondent, Department of Revenue. As a statutory

ground for invalidating the rule, petitioner contended the rule was "an invalid

exercise of delegated legislative authority and is arbitrary and capricious."

He alleged further that the "proposed Rule is at variance with the

Constitution." After being reviewed for legal sufficiency, the petition was

assigned to the undersigned Hearing Officer on March 23, 1995.

On April 11, 1995, the agency filed a notice of change, wherein it proposed

certain revisions to the proposed rule. As a result of those changes, at

hearing petitioner was allowed to make an ore tenus motion to amend his petition

to add the claim that subsection (6) of the rule was vague. On April 11, 1995,

respondent filed a motion for summary final order. An affidavit in opposition

to the motion was filed by petitioner. The motion was taken up at final

hearing.

By notice of hearing dated March 23, 1995, the final hearing was scheduled

on April 18, 1995, in Tallahassee, Florida. At final hearing, the parties

agreed that there were no facts in dispute. Thereafter, both parties presented

argument in support of their respective positions. Also, petitioner agreed that

only subsections (5) and (6) of the rule are in issue.

The transcript of hearing was filed on April 28, 1995. Proposed findings

of fact and conclusions of law were filed by respondent and petitioner on May 22

and June 2, 1995, respectively. A ruling on each proposed finding has been made

in the Appendix attached to this Final Order.

FINDINGS OF FACT

Based upon all of the evidence, including the pleadings and attachments

thereto, the following findings of fact are determined:

A. Background

1. This case involves a challenge by petitioner, William Markham, as

Broward County Property Appraiser, to the validity of proposed rule 12D-8.0062,

Florida Administrative Code. The rule is being proposed for adoption by

respondent, Department of Revenue (DOR). That agency has the statutory

responsibility of supervising the assessment and valuation of property and

approving each assessment roll submitted by the county property appraisers.

2. By law, all property is to be valued as of January 1 for the tax year

in question. Unless DOR grants an extension for good cause, the property

appraiser is required to complete the assessment roll by the following July 1

and submit it to DOR for approval on or before that date.

3. The DOR executive director then approves or disapproves the rolls, in

whole or in part. Roll approval is predicated upon substantial compliance with

the requirements of the law relating to the form of the roll and just value, and

upon full compliance with any administrative orders issued by DOR. The proposed

rule codifies standards and establishes procedures relating to the assessed

value of homestead property on the tax roll from year to year.

4. On November 3, 1992, the voters approved an amendment to Article VII,

Section 4(c) of the Florida Constitution. The amendment was described as

follows in the ballot summary:

Homestead Valuation Limitation

Providing for limiting increases in homestead

property valuations for ad valorem tax purposes

to a maximum of 3 percent annually and also

providing for reassessment of market values

upon changes in ownership.

As approved by the electorate, section 4(c) reads as follows:

(c) All persons entitled to a homestead

exemption under Section 6 of this Article

shall have their homestead assessed at just

value as of January 1 of the year following

the effective date of this amendment. This

assessment shall change only as provided herein.

1. Assessments subject to this provision shall

be changed annually on January 1st of each year;

but those changes in assessments shall not exceed

the lower of the following:

(A) three percent (3 percent) of the assessment

for the prior year.

(B) the percent change in the Consumer Price

Index for all urban consumers, U. S. City Average,

all items 1967 = 100, or successor reports for the

preceding calendar year as initially reported by

the United States Department of Labor, Bureau of

Labor Statistics.

2. No assessment shall exceed just value.

3. After any change of ownership, as provided

by general law, homestead property shall be asses-

sed at just value as of January 1 of the following

year. Thereafter the homestead shall be assessed

as provided herein.

4. New homestead property shall be assessed at

just value as of January 1st of the year following

the establishment of the homestead. That assessment

shall only change as provided herein.

5. Changes, additions, reductions or improve-

ments to homestead property shall be assessed as

provided for by general law; provided, however,

after the adjustment for any change, addition,

reduction or improvement, the property shall be

assessed as provided herein.

6. In the event of a termination of homestead

status, the property shall be assessed as provided

by general law.

7. The provisions of this amendment are severable.

If any of the provisions of this amendment shall be

held unconstitutional by any court of competent

jurisdiction, the decision of such court shall

not affect or impair any remaining provisions of

this amendment.

5. The new amendment generally requires that all homestead property be

assessed at just value on January 1 following the effective date of the

amendment. Thereafter, the assessed value is to be increased by 3 percent or

the change in the Consumer Price Index (CPI) percentage, whichever is lower, not

to exceed just value. If there is a change in ownership, however, the amendment

requires that the property be assessed at its just value on the following

January 1. Subsequently, and until the next change in ownership, the limitation

will apply. At the same time, when changes, additions, reductions or

improvements to homestead property occur, the value of such changes will be

assessed as provided by general law. After this adjustment is made, the

assessment on the property as a whole is subject to the annual limitations.

6. In 1994, the legislature implemented the new amendment by enacting

Section 193.155, Florida Statutes. The relevant portion of the new statute

reads as follows:

193.155 Homestead Assessments. - Homestead property

shall be assessed at just value as of January 1,

1994. Property receiving the homestead exemption

after January 1, 1994, shall be assessed at just

value as of January 1 of the year in which the

property receives the exemption. Thereafter,

determination of the assessed property is subject

to the following provisions:

(1) Beginning in 1995, or the year following

the year the property receives homestead exemption,

whichever is later, the property shall be reassessed

annually on January 1. Any change resulting from

such reassessment shall not exceed the lower of

the following:

(a) Three percent of the assessed value of the

property for the prior year; or

(b) The percentage change in the Consumer Price

Index for All Urban Consumers, U. S. City Average,

all items 1967 = 100, or successor reports for the

preceding calendar year as initially reported by

the United States Department of Labor, Bureau of

Labor Statistics.

* * *

As can be seen, the statute mirrors the constitu-

tional amendment.

7. In response to this legislation, on March 3, 1995, DOR published in the

Florida Administrative Weekly a notice of its intent to adopt new Rule 12D-

8.0062, Florida Administrative Code. A public hearing on the proposed rule was

held on March 31, 1995. Based on oral and written comments received at that

hearing, on April 10, 1995, DOR gave notice of its intent to change the rule in

certain respects. As modified by these changes, the proposed rule in its

entirety reads as follows:

12D-8.0062 Assessments; Homestead; Limitations.

(1) This rule shall govern the determination

of the assessed value of property subject to the

homestead assessment limitation under Article VII,

Section 4(c), Florida Constitution and section

193.155, F. S., except as provided in rules

12D-8.0061, 12-8.0063, and 12D-8.0064, relating

to changes, additions or improvements, changes of

ownership, and corrections.

(2) Just value is the standard for assessment

of homestead property, subject to the provisions

of Article VII, Section 4(c), Florida Constitution.

Therefore, the property appraiser is required to

determine the just value of each individual home-

stead property on January 1 of each year as provided

in section 193.011, F. S.

(3) Unless subsections (5) and (6) of this rule

require a lower assessment, the assessed value shall

be equal to the just value as determined under

subsection (2) of this rule.

(4) The assessed value of each individual home-

stead property shall change annually, but shall

not exceed just value.

(5) Where the current just value of an individual

property exceeds the prior year assessed value, the

property appraiser is required to increase the prior

year's assessed value by the lower of:

(a) Three percent; or

(b) The percentage change in the Consumer Price

Index (CPI) for all urban consumers, U. S. City

Average, all items 1967 = 100, or successor reports

for the preceding calendar year as initially reported

by the United States Department of Labor, Bureau of

Labor Statistics.

(6) If the percentage change in the Consumer

Price Index (CPI) referenced in paragraph (5)(b)

is negative, then the assessed value shall be the

prior year's assessed value decreased by that

percentage.

(7) The assessed value of an individual homestead

property shall not exceed just value.

8. Sections 195.027(1) and 213.06(1), Florida Statutes, are cited as the

specific authority for adopting the new rule. The former statute requires that

DOR adopt "such rules and regulations (to ensure) that property will be

assessed, taxes will be collected, and the administration will be uniform, just,

and otherwise in compliance with the requirements of the general law and the

constitution." Sections 193.011, 193.023, 193.155, 196.031 and 213.05, Florida

Statutes, are given as the law implemented. It is clear, however, that section

193.155 is the principal law being implemented.

9. As clarified at hearing, petitioner does not challenge subsections (1)

through (4) and (7) of the proposed rule. Rather, he alleges that subsection

(5) of the rule is arbitrary and capricious and conflicts with the law

implemented. He also contends that subsection (6) is vague. Finally, he

contends that subsection (5) conflicts with Article VII, Section 4(c) of the

Florida Constitution.

B. Statutory Grounds Concerning Subsection (5)

10. To avoid being found arbitrary and capricious, the proposed rule must

be supported by facts and logic and adopted with thought and reason. Aside from

argument of petitioner's counsel, there is no evidence to support the notion

that the rule lacks a factual and logical underpinning or is not rational.

Indeed, because subsection (5) of the rule simply tracks the provisions found in

the law implemented, that is, Sections 193.155(1)(a) and (b), Florida Statutes,

it cannot be arbitrary and capricious. At the same time, by parroting the

statutory language, subsection (5) comports with the law implemented.

Accordingly, subsection (5) of the rule is deemed to be a valid exercise of

delegated legislative authority.

C. Is Subsection (6) of the Rule Vague?

11. Subsection (6) of the rule reads as follows:

(6) If the percentage change in the Consumer

Price Index (CPI) referenced in paragraph (5)(b)

is negative, then the assessed value shall be the

prior year's assessed value decreased by that

percentage.

12. Through argument of counsel, petitioner contends that the foregoing

provision is "badly worded" and that "a reasonable man can(not) read . . . that

rule, and know what it means."

13. The language in the rule is plain and unambiguous. It indicates that

if the percentage change in the CPI is negative, then the prior year's assessed

value would be decreased. Indeed, the clarity of this language becomes even

more evident when reading subsections (5) and (6) together. Subsection (5)

requires an increase to the prior year's assessed value in a year where the CPI

is greater than zero. Conversely, subsection (6) spells out the requirements

when the CPI is negative. This is exactly the result required by the statute

and Constitution in the event of a negative percentage change in the CPI.

Accordingly, the contention that the rule is impermissibly vague is deemed to be

without merit.

D. Does Subsection (5) Conflict with the Constitution?

14. Finally, petitioner contends that subsection (5) conflicts with

Article VII, Section 4(c) of the Florida Constitution. More specifically, he

argues that the rule conflicts with the "intent" of the framers of the ballot

initiative, and that a third limitation relating to market value or movement,

and not contained in the amendment itself, or even in the ballot summary, should

be incorporated into the language of the rule in order to make it compatible

with the constitution. He agrees, however, that subsection (5), as now written,

does not conflict with the actual language found in the amendment.

15. To be constitutionally infirm in the context of petitioner's

challenge, subsection (5) would have to contain provisions which depart from the

language in the amendment. Because the subsection essentially tracks the

language in Section 193.155, Florida Statutes, which in turn tracks the language

of the amendment, it is found that the rule does not conflict with the

constitution.

CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has jurisdiction over the

subject matter and the parties hereto pursuant to Sections 120.54(4) and

120.57(1), Florida Statutes.

17. As the party challenging the proposed rule, petitioner has the burden

of proving by a preponderance of the evidence that the challenged rule is an

invalid exercise of delegated legislative authority. Agrico Chemical Company v.

Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978).

This burden has been characterized as being "a stringent one indeed." Agrico,

365 So.2d at 763.

18. Subsection 120.52(8), Florida Statutes, defines an invalid exercise of

delegated legislative authority as follows:

Invalid exercise of delegated legislative

authority means action which goes beyond the

powers, functions, and duties delegated by the

legislature.

The same statute goes on to provide that a proposed rule is invalid if:

(a) The agency has materially failed to

follow the applicable rulemaking procedures

set forth in s. 120.54;

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is

required by s. 120.54(7);

(c) The rule enlarges, modifies, or contravenes

the specific provisions of law implemented,

citation to which is required by s. 120.54(7);

(d) The rule is vague, fails to establish

adequate standards for agency decisions, or

vests unbridles discretion in the agency, or

(e) The rule is arbitrary or capricious.

19. In his initial petition, as amended and clarified at hearing,

petitioner contends that subsection (5) of the rule is arbitrary and capricious

and conflicts with the law implemented. He also contends that subsection (6) is

vague. Finally, he alleges that subsection (5) conflicts with Article VII,

Section 4(c) of the Florida Constitution. In his one-page proposed order,

however, petitioner argues only that the rule is "contrary to the language of

the Constitution" and thus "it represents an invalid exercise of delegated

legislative authority." Notwithstanding this confusion and lack of clarity, the

undersigned will address both the statutory and constitutional grounds initially

raised.

20. Taking the statutory grounds first, there is no evidence of record to

sustain any of petitioner's contentions. Indeed, the challenged portions of the

rule are consistent with the agency's mandate to adopt such rules pertaining to

property assessment as are necessary to ensure "compliance with the requirements

of the general law and the constitution," Subsection 195.027(1), F. S., they

have a factual and logical underpinning, they are plain and unambiguous, and

they do not conflict with the law implemented. Therefore, petitioner's claims

to the contrary are rejected.

21. Petitioner further contends that subsection (5) of the rule is

"contrary to the language of the Constitution." As clarified through argument

of counsel, petitioner suggests that in addition to the two limitations

specifically included in section 4(c) of the constitution, namely, the 3 percent

and CPI restrictions, the framers of the ballot initiative intended that a third

limitation, not found in the amendment itself, or the ballot summary, should

also apply. This limitation, grounded on "market movement," would mean that in

a year in which market value did not increase, the assessed value of a homestead

property would not increase. Because the rule does not include this limitation,

petitioner reasons that the rule is in conflict with the amendment.

22. Petitioner's request that the undersigned apply this theory of intent

to an unambiguous constitutional provision must be rejected for three reasons.

First, the law is settled that when constitutional language is precise, as it is

here, its exact letter must be enforced and extrinsic guides are not allowed to

defeat the plain language. See, e. g., State ex rel. West v. Gray, 74 So.2d

114, 116 (Fla. 1954). Second, such intent is unreliable. As stated by the

supreme court in Williams v. Smith, 360 So.2d 417, 420 (Fla. 1978):

In analyzing a Constitutional amendment adopted

by initiative rather than by legis-lative or

Constitutional revision commission vote, the

intent of the framers should be accorded less

significance than the intent of the voters as

evidenced by materials they had available as a

predicate for their collective decision. An

absence of debate and recorded discussion marks

the development of an initiative proposal. To

accord the same weight to evidences of the intent

of an amendment's framer as is given to debates

and dialogue surrounding a proposal adopted from

diverse sources would allow one person's private

documents to shape Constitutional policy as

persuasively as the public's perception of the

proposal. This we cannot permit.

Third, the ballot summary is not consonant with the intent that petitioner

advocates in this proceeding. Indeed, there is no mention whatsoever of "market

movement" or "market value" in the summary. Further, there was no evidence

submitted or proffered by petitioner of any legislative history concerning this

third limitation. In fact, petitioner agreed that none existed.

23. For all of these reasons, the undersigned declines to ignore the plain

and unambiguous provisions of the amendment as written and to apply the "intent"

of the framers of the ballot initiative. Because the rule as written clearly

comports with the language in section 4(c), it is not unconstitutionally infirm.

24. In view of the above, respondent's motion for summary final order is

granted and, as a matter of law, the rule is determined to be valid.

Based on the foregoing findings of fact and conclusions of law, it is

ORDERED that subsections (5) and (6) of proposed rule 12D-8.0062 are

determined to be a valid exercise of delegated legislative authority, and

subsection (5) is determined to be consistent with Article VII, Section 4(c) of

the Florida Constitution.

DONE AND ORDERED this 21st day of June, 1995, in Tallahassee, Florida.

___________________________________

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 21st day of June, 1995.

APPENDIX TO FINAL ORDER, CASE NO. 95-1339RP

Petitioner:

1. Partially accepted in findings of fact 1 and 7.

2. Rejected as being contrary to the evidence.

3. Rejected. See findings of fact 14 and 15.

Respondent:

1-6. Rejected as being unnecessary.

7-8. Partially accepted in finding of fact 1.

9. Partially accepted in finding of fact 2.

10. Partially accepted in finding of fact 3.

11. Partially accepted in finding of fact 4.

NOTE: Where a proposed finding has been partially accepted, the remainder has

been rejected as being unnecessary for a resolution of the issues, irrelevant,

cumulative, subordinate, not supported by the evidence, or a conclusion of law.

COPIES FURNISHED:

V. Carroll Webb, Director

Joint Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

Liz Cloud, Chief

Bureau of Laws and Administrative Code

The Capitol, Room 1802

Tallahassee, Florida 32399-0250

Gaylord A. Wood, Jr., Esquire

304 S. W. 12th Street

Fort Lauderdale, Florida 33315-1549

Joseph C. Mellichamp, III, Esquire

Department of Legal Affairs

The Capitol-Tax Section

Tallahassee, Florida 32399-1050

Linda Lettera, Esquire

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to judicial

review pursuant to Section 120.68, Florida Statutes. Review proceedings are

governed by the Florida Rules of Appellate Procedure. Such proceedings are

commenced by filing one copy of a notice of appeal with the agency clerk of the

Division of Administrative Hearings and a second copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First District, or

with the district court of appeal in the appellate district where the party

resides. The notice of appeal must be filed within 30 days of rendition of the

order to be reviewed.