01-003508 City Of Sebastian vs. Indian River County Board Of County Commissioner Status: Closed Recommended Order on Friday, November 16, 2001.

Summary: Local governments must annually recalculate their respective shares of the local option gas tax as provided in the County Code and interlocal agreement.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CITY OF SEBASTIAN, )

)

Petitioner, )

)

vs. )

)

INDIAN RIVER BOARD OF COUNTY )

COMMISSIONERS, )

) Case No. 01 - 3508

Respondent, )

)

and )

)

CITY OF VERO BEACH, )

)

Intervenor. )

______________________________)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing on

October 15, 2001. The Administrative Law Judge participated by

telephone in Tallahassee, and the parties and witness

participated by telephone in Vero Beach.

APPEARANCES

For Petitioner: Rich Stringer

City Attorney

City of Sebastian

1225 Main Street

Sebastian, Florida 32958

For Respondent: Willia m G. Collins II

Deputy County Attorney

Indian River County

1840 25th Street

Vero Beach, Florida 32960

For Intervenor: Charles P. Vitunac

Assistant City Attorney

City of Vero Beach

1053 20th Place

Vero Beach, Florida 32960

STAT EMENT OF THE ISSUE

The issue is whether Respondent's use of the 1998

percentages to distribute the local option gas tax revenues for

fiscal year ending 2001 is contrary to applicable law.

PRELIMINARY STATEMENT

By Appeal Pursuant to Fla. Stat. 336.025(5)( b) served

May 18, 2001, Petitioner protested to the Administration

Commission the distribution of the local option gas tax revenues

for fiscal year ending 2001. The appeal challenges the use of

the 1998 distribution percentages, rather than the 2000

distr ibution percentages allegedly required by the Indian River

County Code.

The appeal alleges that, since 1986, local governments of

Indian River County have distributed the local option gas tax

pursuant to a formula that has remained unchanged in interlocal

agreements and the Indian River County Code. The agreements

allegedly provide that the parties shall readdress the

distribution formula every two years, but the agreements

allegedly fail to provide how often the parties are to

recalculate the distributio n percentages.

The appeal alleges that the Indian River County Code

requires review every two years of the "method" of distribution

of the taxes, but supplies a formula for the recalculation of

the distribution formula "each year."

However, the appeal claims that the parties have not

adjusted the distribution percentages each year and failed to

adjust the percentages from 1996 through 1999. The appeal

asserts that, after Petitioner protested these omissions in

March 2000, the parties recalculated the d istribution

percentages in October 1998, but did not implement the new

distribution percentage until fiscal year ending 2000.

The appeal alleges that, in the summer of 2000, Petitioner

insisted that the parties recalculate the distribution

percentages ann ually, but Respondent used the 1998 percentages

for fiscal year ending 2001. This appeal seeks the

recalculation of distribution percentages for the allocation of

the local option gas tax revenues for fiscal year ending 2001.

By letter dated July 25, 200 1, the City of Fellsmere

concurred with the appeal of Petitioner. However, the City of

Fellsmere did not participate as a party in this case.

By letter dated September 4, 2001, the Administration

Commission forwarded the file to the Division of Administr ative

Hearings for further proceedings.

By Motion to Intervene filed September 13, 2001, Intervenor

requested leave to participate as a party in opposition to the

relief sought by Petitioner. By Order entered the following

day, the Administrative Law Jud ge granted Intervenor leave to

intervene.

At the hearing, the parties stipulated to Joint Exhibits 1 -

19, which were all admitted. Respondent called the sole witness

in the case. Petitioner and Intervenor filed proposed

recommended orders by October 24, 2001. The parties did not

order a transcript.

FINDINGS OF FACT

1. By Interlocal Agreement Between Indian River County,

Florida and City of Sebastian, Florida, dated June 25, 1996

(Interlocal Agreement), Petitioner and Respondent agreed upon a

distributio n schedule for the county and five municipalities

within the county of the local option gas tax (Gas Tax). The

schedule was based on a formula weighing equally each local

government's lane miles of road, transportation expenditures

over the past five year s, and population (Formula). The

Interlocal Agreement, which expires in 2026, provides that the

"[F]ormula shall be reviewed every two years starting

September 1, 1998."

2. Indian River County Code (Code) Section 209.04 also

addresses the distribution of the Gas Tax. Section 209.04(a)

describes the Formula and adds: "The method of distribution of

the [Gas Tax] revenues shall be reviewed and a public hearing

held at least every two (2) years by the parties to the

agreement."

3. However, Code Section 209.0 4(b) provides in part:

Each year, during the term of the imposition

of this tax, the division and distribution

of tax proceeds under this article shall be

evaluated and recalculated based upon the

. . . [F]ormula: [Formula omitted].

By August 15 of each year, the county shall

provide the Florida State Department of

Revenue a certified copy of the distribution

proportions established by interlocal

agreement under this section. The revised

distribution of tax proceeds shall become

effective on September 1 of each year.

4. Historically, the local governments of Indian River

County may have used reporting deadlines for Gas Tax data that

did not conform with the deadlines imposed by the Department of

Revenue, but the local governments have since changed their

reporting deadlines and eliminated any inconsistencies.

However, such inconsistencies do not relieve the parties of

their responsibilities under the Interlocal Agreement and Code

in distributing the Gas Tax revenues.

5. Intervenor describes the situation w ell in its proposed

recommended order. Historically, the local governments of

Indian River County did not worry about the distribution formula

due to their equal, and generally low, growth rates, but

disparate growth rates between Petitioner and Interveno r have

eroded this easy custom. Disdaining any attempt to wring from

the Code an interpretation that suits its needs, Intervenor

instead contends only that it relied on the current distribution

formula in preparing its current budget. Intervenor claims t hat

it would not be good budget practice and, thus, would be

contrary to the public interest, to require it to revise its

budget in the middle of the year due to reduced Gas Tax

revenues.

6. As Intervenor implicitly concedes, the Code requires an

annual r ecalculation of the distribution percentage, applying

current data to the Formula and then distributing the Gas Tax

revenues accordingly. Apparently, the effect of this

recalculation for fiscal year ending 2001 would be to increase

Petitioner's share by a bout $40,000, evidently largely at the

expense of Intervenor. Although Intervenor's budget will be

disturbed by the immediate implementation of this recalculation,

the Code does not permit a contrary interpretation, and

Intervenor was aware prior to adopt ing the current budget that

Petitioner was insisting that the parties conform to the law in

dividing the Gas Tax revenues. And it nearly goes without

saying that the Formula is an equitable allocation of these

revenues based on the respective needs of the local governments

of Indian River County.

CONCLUSIONS OF LAW

7. The Division of Administrative Hearings has

jurisdiction over the subject matter. Sections 120.57(1) and

336.025(5)(b), Florida Statutes. (All references to Sections

are to Florida Statutes. )

8. Although Section 336.025 emphasizes the role of

interlocal agreements in distributing the Gas Tax revenues, the

local governments of Indian River County have implicitly agreed

upon the distribution of these revenues, and they have

documented this agree ment in the Code. The Code clearly

establishes the Formula, and it clearly requires annual

recalculation of the Formula. No good reason justifies

Respondent's refusal to recalculate each local government's

share of the Gas Tax revenues for fiscal year en ding 2001.

Respondent should therefore promptly recalculate the

distribution percentages and inform the Department of Revenue of

the new percentages, so the Department of Revenue can make

retroactive reallocations for fiscal year ending 2001 at a rate

tha t is fair to both Petitioner and Intervenor.

RECOMMENDATION

It is

RECOMMENDED that the Administration Commission enter a

final order sustaining Petitioner's appeal of the distribution

of the Gas Tax revenues for fiscal year ending 2001, requiring

Respon dent to recalculate each local government's distribution

percentage in accordance with the Interlocal Agreement and Code,

and providing for an equitable adjustment to Gas Tax revenues

that the Department of Revenue is currently distributing to the

local go vernments of Indian River County.

DONE AND ENTERED this 16th day of November, 2001, in

Tallahassee, Leon County, Florida.

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrat ive Hearings

this 16th day of November, 2001.

COPIES FURNISHED:

Donna Arduin, Secretary

Administration Commission

Executive Office of the Governor

The Capitol -- Suite 1601

Tallahassee, Florida 32399 - 0001

Rich Stringer

City At torney

City of Sebastian

1225 Main Street

Sebastian, Florida 32958

William G. Collins II

Deputy County Attorney

Indian River County

1840 25th Street

Vero Beach, Florida 32960

Charles P. Vitunac

Assistant City Attorney

City of Vero Beach

1053 20th Place

Vero Beach, Florida 32960

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions

to this recommended order must be filed with the agency that

will issue the final order in this case.