05-001507RU Volusia Home Builders Association, Inc. vs. Volusia County School Board Status: Closed DOAH Final Order on Tuesday, September 13, 2005.

Summary: Respondent improperly amended its promulgated policy by not adhering to the promulgated police contained in Policy 61Z. Respondent`s action is voided and jurisdiction is retained for attorney`s fees and costs.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

VOLUSIA HOME BUILDERS )

ASSOCIATION, INC., )

)

Petitioner, )

)

vs. ) Case No. 05 - 1507RU

)

VOLUSIA COUNTY SCHOOL BOARD, )

)

Respondent. )

)

FINAL O RDER

Administrative Law Judge Don W. Davis of the Division of

Administrative Hearings ("DOAH") held a final hearing in the

above - styled case on July 27, 2005, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Allen Watts, Esquire

Cobb & Cole, P.A.

351 East New York Avenue, Suite 200

Deland, Florida 32724

For Respondent: F. A. (Alex) Ford, Jr., Esquire

Landis Graham French, P.A.

Post Office Box 48

Deland, Florida 32721 - 0048

L awrence N. Curtin, Esquire

Holland & Knight, LLP

Post Office Drawer 810

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

Whether Respondent’s January 26, 2005 school board vote,

adopting the recommendation of Respondent’s Superi ntendent that

a set, single impact fee amount be imposed by the Volusia County

Council (the equivalent of the county commission in non -

chartered counties) on newly constructed housing in Volusia

County, constituted a rule or rule amendment without satisfyi ng

applicable due process requirements of Section 120.54(1)(a),

Florida Statutes, since Respondent’s existing policy determines

the impact fee amount through the impact fee calculation report

(defined in Section 70 - 171 of the Volusia County Ordinance Code

as the Volusia County School Impact Fee Update Final Report

dated December 2004, prepared by Tindale - Oliver & Associates,

Inc., and approved by Respondent) which proposed the adoption of

a varying impact fee amount for different types of housing.

PRELIMINA RY STATEMENT

Petitioner, through its counsel, filed a Petition f or

Determination of Unadopted and Invalid Rule on April 25, 2005.

By motion filed May 10, 2005, Respondent sought dismissal

of the Petition on the basis that Petitioner lacked standing.

On May 25, 2005, Petitioner filed a Response to Respondent’s

Motion to Dismiss. The Motion to Dismiss was denied on May 26,

2005, and the case proceeded to final hearing as scheduled.

At the final hearing on July 27, 2005, Respondent’s Motion

in Limi ne was granted in part and this matter proceeded to final

hearing on the sole issue of whether the action of the

Respondent in approving agenda item 16 during a meeting of its

members on January 26, 2005, constituted rulemaking. If so,

Respondent concedes that the procedural requirements for

rulemaking were not observed.

At the final hearing, Petitioner presented the testimony of

Bob Fitzsimmons, Susan Darden, Robert B. Wallace, William C.

Kelly, Jr., and the expert testimony of Mark D. Soskin, Ph.D.

Re spondent presented the testimony of Richard A. Kizma.

Petitioner's Exhibits 1 - 5 were received into evidence.

Respondent's Exhibits 1 - 8 were received into evidence.

A transcript of the final hearing was filed with DOAH on

August 17, 2005. Each party tim ely submitted a proposed final

order. A review of these post - hearing submittals has been

completed and utilized , where practical , in the composition of

this Final Order.

Absent a contrary indication, citations to Florida Statutes

refer to the 2004 editio n.

FINDINGS OF FACT

1. Petitioner is a not - for - profit corporation, consisting

of about 600 builder and associate members. Petitioner’s

members are affected by market fluctuations in the home

construction industry. Purposes of the corporation with respect

t o governmental affairs are to forward, or promote, the industry

and the values and goals of the industry. Petitioner has

specifically taken an active position with respect to the

adoption of school impact fees within Volusia County.

Petitioner regularly surveys its members and determines their

reaction to existing and proposed ordinances and regulations.

2. Testimony of Bob Fitzsimmons, past president and

governmental affairs committee chair of the Petitioner, and Sue

Darden, executive director of the Peti tioner, establishes that

members of the Petitioner have been affected by the action of

Respondent challenged in this case. A substantial number of

members have absorbed the cost of increased school impact fees,

while other members have raised prices or fo und nearby counties

to be more attractive to their potential customers.

3. Dr. Mark Soskin, an associate professor of economics

at the University of Central Florida, opined that members of

Petitioner are affected by increases in school impact fees in

three w ays: (1) they pay the impact fees directly; (2) the

value of their product is determined by the types of

expenditures, location and types of services provided to schools

in the neighborhood of their product; (3) impact fees add to the

cost and therefore a ffect the bottom line of home builders. The

industry’s market is volatile, and subject to rapid swings

between profitability and loss based on external cost changes.

4. Respondent is a public body corporate and governing

body of the School District of Volus ia County.

5. On August 24, 1993, Respondent adopted Policy 612,

(Petitioner’s Exhibit 1, originally numbered 609) entitled

“Level of Service for Educational Facilities”. The stated

reason for the alleged rule was “to determine and declare the

policies of t he Volusia County School Board for the financing,

construction and utilization of educational facilities.” These

policies, adopted, reviewed and from time to time revised,

constitute the certifications of the Board, which in turn are

contemplated in ordin ance 92 - 9 of the Volusia County Council

imposing a countywide impact fee.

6. Policy 612 defined a “student station” and prescribed

the necessary space for such a station in both existing and new

schools, and provided for the temporary expansion of the

capac ity of any school through the provision of adequate area

within portable or modular classrooms.

7. Policy 612 further provided that when an elementary

school reaches 100 percent of its capacity and is experiencing

an annual growth rate of at least 10 percent , Respondent shall

give consideration to planning the redrawing of school

attendance areas, or in the case of schools with capacity of 650

or more, planning for implementation of a multi - track modified

school calendar.

8. Policy 612 further required that if for two

consecutive years, more than 20 percent of Respondent’s

elementary school population is enrolled in schools which

utilize a multi - track modified calendar; Respondent shall

certify that fact to the Volusia County Council for

consideration of an appr opriate increase in school impact fees.

9. Policy 612 further determined the initial ratio of

students per each new dwelling, for purposes of certifying, at

the request of the County or any municipality, the expected

demand for new school facilities arising from the issuance of

county or city development orders. The Policy further

authorized Respondent to study and certify any corrections in

that ratio, for purposes of adjusting the school impact fees.

10. Policy 612 further established a “cost per student”

bas ed on the Respondent’s average cost of each new student

station, and initially fixed such costs. The Policy further

provided that for purposes of considering any adjustments to the

cost of facilities per student to be served under the adopted

level of ser vice, Respondent would further certify, biennially

commencing in 1994, the proportion of student stations being

utilized on a modified multi - track calendar or located in

portable classrooms.

11. Policy 612 also provided that the initial school

impact fee was calculated on the premise that Respondent would

allocate .4 mills of its local capital improvement fund, and 10

percent of state public education capital outlay funds, to new

school construction. The policy specified that Respondent would

update and cert ify its actual receipts and allocations at the

times required by C ounty O rdinance 92 - 9.

12. Article VIII(C) of Policy 612 (Petitioner’s Exhibit 1

at page 7) provides formal policy restrictions upon the

expenditure of impact fee receipts, restricting their use solely

to provide for or reimburse capital improvements necessitated by

the growth in student population, and prohibiting use of such

funds for any improvement that does not produce a new increase

in the student capacity of the school district.

13. On Decemb er 13, 1994, Respondent adopted an amendment

to Policy 612 (then still numbered 609) “to update the cost per

student station of new school facilities for purposes of

adjusting the school impact fees in compliance with Volusia

County Ordinance 92 - 9".

14. Exce pt for renumbering, Policy 612 has not been

further amended since December 13, 1994.

15. Volusia County Ordinance 92 - 9 was substantially

amended in 1997. That 1997 version was in turn amended by

County Ordinance 2005 - 01 adopted February 24, 2005. Ordinance

2005 - 01 has been codified in Chapter 70, Article V of the County

Code of Ordinances.

16. Section 70 - 174 of the County Code of Ordinances

provides that “this Article is consistent with, and intended to

assist in the implementation of, the Volusia County

Comp rehensive Plan.”

17. The Capital Facilities Element of the Volusia County

Comprehensive Plan provides in Policy 15.3.4.4 that “the County

has adopted, at the request of the School Board of Volusia

County, a level of service standard by reference with the

adop tion of Chapter 70, Article 5 Code of Ordinances, County of

Volusia.”

18. Section 70 - 175(a) of the County Code of Ordinances

provides that “[t]he amount of the impact fee shall be

determined by the impact fee calculation set out in the impact

fee calculation report...” The impact fee calculation report is

further defined in Section 70 - 171 of the Code as “the report

entitled ‘Volusia County School Impact Fee Update Final Report’

dated December 2004, prepared by Tindale - Oliver & Associates,

Inc. and approved by the school board.”

19. Section 70 - 175(b) of the County Code of Ordinances

further provides that:

On February 1, 2006, and February 1 of every

subsequent year thereafter the impact fee

shall be adjusted to reflect any inflation

or deflation in school constr uction costs

after December 1, 2004, ... the school board

shall provide the adjustment rate with the

revised impact fee amount to the county by

December 1 of the year preceding the

effective date for collection of the revised

impact fee.

20. Section 70 - 176 of the County Code of Ordinances

provides that “commencing on June 6, 2005, the amount of the

impact fee shall be $5,442.52 (including three percent

administrative fee) per dwelling. Thereafter, the impact fee

shall be the amount calculated under Section 70 - 175.”

21. Section 70 - 175 of the County Code of Ordinances

further provides for purposes of future calculations, that:

The impact fee calculation shall apply the

following formula: Impact fee (net capital

cost) = Total capital cost - External

revenues - L ocal capital revenues

apportioned per dwelling based on the

student generation rate.”

The definitions of each of the factors in the formula show that

the factors are determined by the policies of Respondent as

initially expressed in Policy 612 and as re vised by the Update,

here challenged as an unadopted rule or rule amendment.

22. William C. Kelly, Respondent’s deputy superintendent

for financial and business services, was unaware of Respondent’s

existing Policy 612 when, in 2004, Respondent determined the

necessity to revisit school impact fees.

23. The responsible principal of Tindale - Oliver &

Associates was Robert Wallace. Wallace’s firm was engaged by

Respondent, through Deputy Superintendent Kelly, to conduct an

update of the Volusia County school impa ct fee data and

methodology. The contract between Respondent and Wallace’s firm

was paid by the school district. Wallace’s role was to

coordinate with the district in the collection of data for

subsequent analysis by his subordinate staff, and to also

su bsequently answer questions from Volusia County staff and

Council members.

24. The Tindale - Oliver Update (Petitioner’s Exhibit 4)

proposed two alternatives for Respondent’s consideration in

adopting an impact fee schedule. At page 15, the Update states

that the first option is to adopt a separate and unique impact

fee for each land use type (single family, multi - family, mobile

home) ranging from $2 , 354 to $6 , 905. The second option is to

charge a single amount ($5 , 284) to all housing types, based on a

weighte d average of student generation ratios from all housing

types. The recommendation by the consultant was that Respondent

adopt and forward to the Volusia County Council the first

option’s varied impact fee. Respondent’s superintendent

recommended at the J anuary 26 meeting of Respondent’s Board that

the Board adopt and give approval for subsequent presentation to

the Volusia County Council at that body’s meeting on

February 24, 2005, an increase in the Volusia County School

District impact fee to $5,284, ba sed on the Tindale - Oliver and

Associates, Inc. study. Respondent, at that meeting, approved

the recommendation; an action tantamount to increasing the

impact fee to an amount in conflict with the preferred choice of

the consultant.

25. Comparison of the T indale - Oliver recommendation and

the Respondent’s action documents that Respondent chose a fee

schedule different from that preferred by its consultant. That

choice, rather than the Tindale - Oliver recommendation, was

ultimately incorporated into Ordinance 2005 - 01 (together with a

County - added 3 percent administrative fee).

CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter under

Sections 120.56 and 120.57(1), Florida Statutes.

27. Petit ioner has challenged Respondent’s action with

regard to the Tindale - Oliver recommendation pursuant to Section

120.56(4)(a), Florida Statutes, which provides in pertinent

part:

Any person substantially affected by an

agency statement may seek an administrat ive

determination that the statement violates

s.120.54(1)(a)....

28. Associations such as Petitioner may maintain an action

to challenge a rule or an agency statement as an unadopted rule

in its representative capacity if it can demonstrate that a

substa ntial number of its members are substantially affected by

the alleged rule, that the subject matter is within the scope of

interests of the association, and that the relief requested is

of a type appropriate for an association to request on behalf of

its m embers. Florida Home Builders Ass'n v. Dept. of Labor , 412

So. 2d 351, 353 - 4 (Fla. 1982). Petitioner has met this burden

and possesses standing sufficient to support this challenge to

Respondent’s action.

29. In order to conclude that Respondent’s acti on with

regard to the Tindale - Oliver recommendation at issue in this

matter violates Section 120.54(1)(a), Florida Statutes, it must

be determined whether that action constitutes rule making or

amendment of an existing rule. The burden of proof rests with

Petitioner.

30. Respondent is an educational unit as defined in

Section 120.52(6), Florida Statutes. Accordingly, Respondent is

an agency subject to the requirements of Chapter 120, Florida

Statutes, as required by Section 120.52(1)(b)7. It is observe d

that Section 120.81, Florida Statutes, gives Respondent certain

latitude with regard to the particulars of publication of

proposed rules, but this does not exempt Respondent from

compliance with the basic procedural due process tenets of

Chapter 120, Flo rida Statutes, in the formulation and

codification of polices into administrative rule form.

31. Subsection 120.52(15), Florida Statutes, in relevant

part defines a "rule" as follows:

"Rule" means each agency statement of general

applicability that implem ents, interprets, or

prescribes law or policy or describes the

procedure or practice requirements of an agency

and includes any form which imposes any

requirement or solicits any information not

specifically required by statute or by an

existing rule. The term also includes the

amendment or repeal of a rule.

32. Respondent has the constitutional power and duty to

operate, control and supervise all free public schools within

the school district consisting of Volusia County. Art. IX, §

4(b), F LA . C ONST .

33. Respondent’s existing Policy 612 is a rule

establishing a level of service for school facilities,

consistent with its constitutional authority and duty. It is

within the authority of Respondent to establish the level of

service for its school facil ities. Governmental entities that

are not responsible for providing, financing, operating, or

regulating public facilities needed to serve development may not

establish binding level - of - service standards on governmental

entities that do bear those respons ibilities. § 163.3180(3),

Fla. Stat. It is not a legitimate local government function,

nor within the constitutional home rule powers of such a

government to obstruct or hinder another governmental body in

the performance of its exclusive powers and duti es. City of

Ormond Beach v. County of Volusia , 535 So. 2d 302, 305 (Fla. 5 th

DCA 1988).

34. Respondent’s level of service is incorporated by

reference in the Volusia County Comprehensive Plan, with which

the County’s implementing ordinances must be consi stent.

§ 163.3194(1)(b), Fla. Stat.

35. For purposes of the capital facilities element of a

local government comprehensive plan, a “level of service” is

defined as “an indicator of the extent or degree of service

provided by, or proposed to be provided by, a facility based on

and related to the operational characteristics of the facility.

Level of service shall indicate the capacity per unit of demand

for each public facility.” Fla. Admin. Code R. 9J - 5.003(62).

36. For purposes of establishing a lawful i mpact fee,

“Raising expansion capital by setting ...charges, which do not

exceed a pro rata share of reasonably anticipated costs of

expansion, is permissible where expansion is reasonably

required, if use of the money collected is limited to meeting

the c osts of expansion.” Contractors and Builders Association

v. City of Dunedin , 329 So. 2d 314, 320 (Fla. 1976).

37. Notably, a rule is an agency statement of general

applicability that implements, interprets , or prescribes law or

policy. The preparation or modification of agency budgets is

not rulemaking. But see Dunedin , supra , in which the Supreme

Court held that a formally adopted policy, restricting the

recipient’s use of impact fees solely to the expansion of

capacity, is a necessary legal componen t of an impact fee.

Consequently, Article VIII(C) of Policy 612, or an equivalent

under the Tindale - Oliver “Update” approved by the Respondent, is

considered a required rule in the presence of the Volusia County

Council’s ordinance essentially specifying that the County

impact fee determination shall be determined in accordance with

the amount or methodology certified to the County by Respondent.

38. Petitioner has not presented any general or special

law applicable to the facts of this case, which would n ot

require complete obedience by the Volusia County Council with

its own ordinance. Accordingly, Policy 612 is a statement of

general applicability, which prescribed and implemented

Respondent’s level of service for school facilities, upon which

any resul ting school impact fee ordinance or rule is dependent.

Policy 612 specified each of the several policy decisions (area

per student, number of students per dwelling, tools for

maximizing facilities through modified calendars and portable

classrooms, thresh olds for realignment of attendance zones,

historic appropriation of other revenues) that affect the level

of service per student and the resulting pro rata cost of school

facilities. By virtue of the County’s incorporation of

Respondent’s level - of - service policy into the County ’s

Comprehensive Plan and Ordinance 2005 - 01, Respondent has the

power to determine, and from time to time revise, the impact of

its level - of - service policies upon builders of new dwellings.

39. The power of Respondent to establish and revise the

level of service for school facilities, and the components of

that level of service, is recognized by the Comprehensive Plan

and by Chapter 70, Article V of the Code of Ordinances of

Volusia County. School impact fees may be collected and

e xpended only upon a uniform District - wide basis. St. Johns

County v. Northeast Fla. Builders Association, Inc . , 583 So. 2d

635, 638 (Fla. 1992). Accordingly , it is unnecessary and

inappropriate in this forum to consider whether the county

government or i ndividual municipalities within the county could

refuse to adopt the level of service for school facilities

established by Respondent’s policies.

4 0 . In approval of the Tindale - Oliver Update of the

District’s impact fees, and the choice of an option not

recommended by Tindale - Oliver, as reflected in its motion

adopted January 26, 2005, Respondent necessarily amended Policy

612.

4 1 . Section 70 - 175 of the County Code of Ordinances

provides that the Respondent may further adjust school impact

fees unilate rally without further County legislation, by

changing the component policies upon which the Tindale - Oliver

report is calculated and certifying that fact to the County.

Policy 612 also provided for such certifications; but Section

120.54(1)(i), Florida Stat utes, prohibits the incorporation of

future data or policy choices into existing policy without a

rule amendment.

ORDER

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is ORDERED that Respondent’s January 26, 2005 motion

approving the Tindale - Oliver report and selecting an option

contained in that report constitutes a rule under the provisions

of Section 120.52, Florida Statutes, which has not been adopted

in compliance with Section 120.54.

It is further ordered that, pursuant to S ecti on 120.595(4),

Florida Statutes, Petitioner is awarded reasonable costs and

reasonable attorney fees and jurisdiction is retained solely

with regard to the determination of the amount of such cost and

fees in a subsequent proceeding upon filing of appropri ate

documentation by the Petitioner.

DONE AND ORDERED this 13 th day of September , 2005 , in

Tallahassee, Leon County, Florida.

S

DON W. DAVIS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Buildin g

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 13 th day of September , 2005 .

COPIES FURNISHED :

Richard A. Kizma, Esquire

Volusia County School Board

Post Office Box 2118

Deland, Florida 32721 - 2118

C. Allen Watts, Esquire

Cobb & Cole

351 East New York Avenue, Suite 200

Deland, Florida 32724

Lawrence Curtin, Esquire

Holland & Knight, LLP

315 Sou th Calhoun Street, Suite 600

Post Office Box 810

Tallahassee, Florida 32302 - 0810

Alex Ford, Esquire

Landers, Graham, French, P.A.

Post Office Box 48

Deland, Florida 32721

Dr. Margaret A. Smith

Superintendent of Schools

Volusia County Schools

Post Off ice Box 2118

Deland, Florida 32721

Scott Boyd, Executive Director

and General Counsel

Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399 - 1300

Liz Cloud, Program Administrator

Administrative Code

Department of St ate

R. A. Gray Building, Suite 101

Tallahassee, Florida 32399

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 the original notice of appeal with the Clerk of the

Division of Administrative Hearings and a copy, accompanied by

filing fees prescribed by law, with the Distr ict 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.