05-002489 Amazing New Home Show Productions, Inc. vs. Office Of The Governor, Office Of Film And Entertainment Status: Closed Recommended Order on Monday, October 10, 2005.

Summary: Respondent properly denied Petitioner`s application for the two reasons that were not rules as defined by Section 120.52(15), Florida Statutes.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMAZING NEW HOME SHOW )

PRODUCTIONS, INC., )

)

Petitioner, )

)

vs. ) Cas e No. 05 - 2489

)

OFFICE OF THE GOVERNOR, OFFICE )

OF FILM AND ENTERTAINMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this case on August 17

and 18, 2005, in Tallahassee, Florida, before Suzanne F. Hood,

Administrative Law Judge with the Division of Administrative

Hearings.

APPEARANCES

For Peti tioner: S. Elysha Luken, Esquire

Smith, Currie & Hancock, LLP

1004 DeSoto Park Drive

Tallahassee, Florida 32301

For Respondent: Tom Barnhart, Esquire

Office of the Attorney General

The Capitol, Plaza Level 1

Tallahassee, Florida 32399 - 1050

Ted Bonanno, Esquire

Office of the Governor

The Capitol, Suite 2001

401 South Monroe Street

Tallahassee, Florida 32399 - 0001

STATEMENT OF THE ISSUE

The issue is whether Respondent should have qualified

Petitioner's proposed television production for Florida's

2005/2006 Enterta inment Industry Financial Incentive pursuant to

the requirements of Section 288.1254, Florida Statutes (2005).

PRELIMINARY STATEMENT

On June 13, 2005, Petitioner Amazing New Home Show

Productions, Inc. (Petitioner) filed an application seeking to

qualif y for reimbursement of $2,000,000 in expenditures that

Petitioner proposed to incur for filming 13 episodes of a 30 -

minute television program called the Amazing New Home Show.

That same day, Respondent Office of the Governor, Office of Film

and Entertainm ent (Respondent), issued a letter denying the

application for the following two reasons: (a) the application

was postmarked prior to June 13, 2005; and (b) the application

did not contain documents demonstrating proof of financing. The

denial letter advi sed Petitioner that it could resubmit the

application with the missing information in order to be

considered for future qualification in the incentive program or

request an administrative hearing.

On or about June 16, 2005, Petitioner submitted a Petiti on

of Written Statement of Disputed Material Fact. Petitioner

requested an administrative hearing if the parties were unable

to resolve the disputed facts.

On or about June 17, 2005, Petitioner provided Respondent

with additional documents relative to it s proof of financing.

On June 24, 2005, Respondent issued a letter denying

Petitioner's application for the second time. According to the

letter, Petitioner's application was denied for the following

reasons: (a) Petitioner's proposed budget did not d istinguish

production costs as defined in Section 288.1254(2)(b), Florida

Statutes (2005); (b) Petitioner's proposed budget did not

contain an adequate breakout of the estimated Florida

expenditures as opposed to overall project expenditure; (c)

Petitioner 's application states that all funds must be paid to a

third party instead of the applicant; and (d) Petitioner's

application contains inadequate evidence that Petitioner

submitted it via Federal Express or U.S. Certified Mail. On or

about June 27, 2005, Petitioner submitted a Petition of Written

Statement of Disputed Material Facts in response to the June 24,

2005, letter.

On July 14, 2005, Respondent referred both of Petitioner's

requests for a formal hearing to the Division of Administrative

Hearings . A Notice of Hearing dated July 25, 2005, scheduled

the case for hearing on August 17 and 18, 2005.

During the hearing the parties offered one joint exhibit.

Petitioner presented the testimony of four witnesses and offered

Exhibit Nos. P1 - P3, P5 - P11, P 21, P25, and P27 - P30, which were

accepted as evidence. Respondent presented the testimony of one

witness and offered Exhibits Nos. R1 - R3, which were accepted as

evidence.

On September 2, 2005, the court reporter filed a transcript

of the proceeding. T he parties filed their Proposed Recommended

Orders on September 12, 2005.

FINDINGS OF FACT

1. In 2003, the Legislature created Respondent within the

Office of the Governor, Office of Tourism, Trade and Economic

Development (OTTED). Since that time, Re spondent has

administered an entertainment industry financial incentive

program (the incentive program) subject to specific

appropriation.

2. The purpose of the program in part is to encourage the

use of Florida as a site for filming and providing prod uction

services for motion pictures, made - for - television movies,

commercials, and television programs.

3. For fiscal year 2004/2005, the Legislature appropriated

$2.45 million for the incentive program. The Legislature set

aside $10 million for the in centive program in fiscal year

2005/2006.

4. Petitioner is a Delaware corporation, which is based in

Weddington, North Carolina. The corporation has no assets.

5. Ban Mandell is Petitioner's president and only

identified corporate officer. Mr. Mand ell does not know if the

corporation has issued any shares of stock.

6. Since 1996, Petitioner has been the production company

for the "The New Home Show" (show/series), which has aired

several series on the Public Broadcasting System (PBS) through

its sponsor television station, PBS Station WTVI, in Charlotte,

North Carolina. The concept of the show is to begin with a

vacant lot, to film the construction of a house by licensed

builders and tradesmen, and to complete the project with a fully

furnished home.

7. In addition to Station WTVI, other sponsors have

provided products to Petitioner to use in the construction of

houses for prior shows. For example, Owens Corning underwrote a

series in Tennessee for an 8,000 square - foot Owens Corning

Systems Thinking Home. Additionally PBS underwriters have

provided funds to produce shows in the past.

8. Each show or series is a unique production. The

filming does not take place on a traditional set, studio, or

backlot. Instead, Petitioner films all sce nes on location at

the construction site. If the project demonstrates how to tile

a bathroom, filming takes place during the actual performance of

the work by tradesmen, providing the viewer with an

understanding of the whole process.

9. It takes long er to film a series than traditional

television programs. Filming cannot take place every day

because it is ongoing throughout the construction process. It

took Petitioner 18 months to film its most recent project.

10. Petitioner's first show was in 1996. The show

consisted of 18 episodes about the construction of one home, the

"Wedge Plantation," in North Carolina. Mr. Mandell personally

advanced some of the money to finance the construction of the

house. He and his family now live in the home.

11. In 1997, Petitioner filmed eight episodes in Tennessee

about the construction of a home for Owens Corning. This house

was sold after its completion.

12. In 1999 and 2000, Petitioner videotaped the

construction of two houses in Lake Park, North C arolina.

Petitioner filmed 18 episodes about a Victorian home called

South Port, and eight episodes about a home called the Empty

Nester.

13. In 2004 and 2005, Petitioner filmed eight episodes

about the construction of a golf course house in North Car olina.

The series about the golf course house is complete except for

editing.

14. Excluding the series about the golf course house,

Station WTVI has aired the first three series of completed

projects. PBS makes each completed series available for

dis tribution nationally by other PBS - member stations that want

to include the shows in their programming.

15. Pursuant to a contract between Station WTVI and

Petitioner, Station WTVI must be identified as a co - producer on

all shows that it sponsors. Stat ion WTVI also requires that all

monies from any source that are used to pay for the projects be

paid directly to the station. Station WTVI receives and

disperses all funds and ensures that all contributors receive

the appropriate acknowledgement.

16. Sometime in early June 2005, Respondent notified

interested filmmakers regarding policies and procedures that

OTTED adopted for the 2005/2006 incentive program. A letter

dated June 1, 2005, stated as follows in relevant part:

. . . Before you submit the appropriate

application, . . . there are a few important

things about the process that you must be

aware of.

1. The policies and procedures in the

following document are the only official

policies adopted by the State of Florida

pertaining to the E ntertainment Industry

Financial Incentive Program. There are NO

other persons, agents, organizations,

financial institutions or businesses who in

any way represent the policies of the State

of Florida regarding the details of the

Entertainment Industry Fi nancial Incentive

Program.

2. In an effort to adhere to the new

laws pertaining to this incentive and

application process, we will only accept

completed applications via Federal Express

or U.S. Certified Mail . Any other form of

delivery will not be accepted and your

application will be returned.

3. No applications will be accepted if

they are postmarked before June 13, 2005 .

Applications received before this time and

date will be returned.

* * *

5. These policies and procedures ,

along with the application process, are

contingent upon House Bill 1129 being signed

into law by the Governor.

17. Respondent's 2005 policies and procedures include the

following pertinent provisions:

I. POLICIES AND PROCEDURES

A. Definitions :

* * *

Principal Photography -- The phase in

production in which all of the moving images

are photographed and recorded according to

the instructions of the screenplay in

preparation for later editorial cutting and

assembly.

Production Costs - - The costs of real,

tangible, and intangible property used and

services performed in the production,

including preproduction and postproduction,

of qualified filmed entertainment.

Production costs generally include, but are

not limited to:

1. Wages, salaries, or other

compensation for technical and production

crews, directors, producers, and performers

who are residents of this state.

2. Expenditures for sound stages,

backlots, production editing, digital

effects, sound recordings, sets, and se t

construction.

3. Expenditures for rental equipment,

including, but not limited to, cameras and

grip or electrical equipment.

4. Expenditures for meals, travel,

accommodations, and goods used in producing

filmed entertainment that is located a nd

doing business in this state.

Qualified Expenditures -- Production

costs for goods purchased or leased or

services purchased, leased, or employed from

a resident of this state or a vendor or

supplier who is located and doing business

in this state, but excluding wages,

salaries, or other compensation paid to the

two highest - paid employees.

Qualified Production -- . . . [A]

production is not a qualified production if

it is determined that the first day of

principal photography in this state occu rred

prior to certification by the Office of

Tourism, Trade, and Economic Development

(OTTED).

* * *

C. The Application Procedure :

1. Qualified Production: Any company

engaged in this state in producing filmed

entertainment may submit an app lication to

the OFE for the purpose of determining

qualification for receipt of reimbursement.

The Office of Tourism, Trade and Economic

Development (OTTED) shall make the final

determination for actual reimbursement

through a certification process.

a. Applications received between June

13, 2005, and June 24, 2005 (the "Principal

Photography Application Period"), will be

placed into one of two queues (defined

below), according to principal photography

start date. If more than one project in a

queue has the same principal photography

start date, those projects with the same

principal photography start date will also

be placed in the queue on a first - come,

first - served basis.

b. Applications received between June

27, 2005, and January 31, 2006, will be

placed into one of the two queues on a

first - come, first - served basis.

c. On February 1, 2006, the remaining

funds within both queues will be combined

into a single queue and distributed based on

a project's principal photography start

date.

* * *

D. The Decision - Making Process :

1. The decision - making process for

designating filmed entertainment as a

qualified production will follow the

following sequential steps.

a. Completed General Project Overview

and Application i s received in the OFE and

reviewed to ensure all necessary

documentation is attached. If the

application is not complete, or documents

are missing, the OFE will fax a letter to

the production company listing the missing

information and documents and the

a pplication will not be considered for

qualification.

b. Project review by the OFE to

determine if the production is a qualified

production . . . .

c. After the production has been

qualified by the OFE, the OFE will notify

the OTTED of the appli cant's qualification

and the amount of reimbursement.

d. After the OTTED has certified the

amount of funds for the production, the OFE

will notify the applicant of its

determination . . . Expenditures made prior

to certification by the OTTED will not be

considered for reimbursement.

e. A written contract between the

production company and the State of Florida

will be drafted and fully executed.

* * *

E. OFE Evaluation of the General

Project Overview and Application :

1. For a qu alified production , the OFE

will consider the following questions, among

others, when making a determination if the

production is qualified:

a. The Application :

i. Is it completely filled out, signed

and dated?

ii. Are there further quest ions that

must be asked and answered?

iii. Are all of the necessary

documents included?

* * *

c. The Budget :

i. Does the production have the

necessary financing in place to begin

production on the designated start date?

ii. Will t he production spend a

minimum of $850,000 on qualified

expenditures in this state?

* * *

e. A Completion Bond :

i. Will there be a completion bond in

place with an industry recognized completion

bond company before principal photography

begins ? If not, does the production company

have the necessary financing in place to

complete the shooting?

* * *

G. Availability of Funds :

1. Annual funding for the

Entertainment Industry Financial Incentive

Program is subject to legislative

appr opriation. The State of Florida's

performance and obligation to pay under the

contract is contingent upon an annual

appropriation by the legislature. If and

when, the legislature makes funds available,

the OFE will consider each project until all

of the funds are committed, or June 20,

2006, whichever comes first.

2. If an application is received and

is qualified, but no funds are available,

the OFE will notify the company in writing

within five days. If the qualified company

wishes to remain in th e queue in the event

funds become available in that fiscal year,

it must inform the OFE in writing within

five days.

H. Disqualification :

1. A qualified production will cease

to be qualified if the OFE determines:

a. The principal photo graphy start

date:

i. Occurred before funds had been

certified by the OTTED to the production

company; or

ii. Does not start on the day

indicated in the Project Overview on

applications received between June 13, 2005,

and June 24, 2005, for any reason other than

an act of God . . . .

18. Mr. Mandell became interested in producing a series of

the show in Florida a few years ago. He particularly was

interested in telling the story of the vacation home concept as

it has been developing in centr al Florida. Vacation homes are

well - known among European tourists who visit central Florida.

The concept is not well - known to many Americans.

19. There are approximately 50,000 vacation homes

available in the vicinity of Orlando, Florida. Tourists r ent

the homes on a weekly basis. Instead of staying in one or two

hotel rooms, a family can stay in a vacation home with multiple

bedrooms, baths, pool, and other amenities. The vacation homes

generate tax revenue for Florida because they are subject to

hotel tax.

20. In anticipation of potentially coming to Florida,

Mr. Mandell signed up for Respondent's periodic e - mail service.

Through these e - mails, Mr. Mandell learned about the financial

incentive program. He understood from the beginning that t here

was some uncertainty as to whether the program would go forward.

21. On or about June 8, 2005, Petitioner applied for a

Florida sales tax exemption for the entertainment industry. The

sales tax exemption application erroneously stated that PBS

Stat ion WTVI was its parent company. Asserting that its first

day of principal photography would be August 1, 2005, Petitioner

asserted that it intended to build four or five homes in Lake

County, Florida, for a PBS do - it - yourself show.

22. The sales tax e xemption was valid for only 90 days.

However, Mr. Mandell believed that building more than one home

at a time would make the filming go faster, speeding up the

production process by shooting more than once or twice a week.

23. Following Petitioner's su bmission of the application

for the 90 - day sales tax exemption, a member of Respondent's

staff, Niki Welge, advised Mr. Mandell that the incentive

program was going forward. Ms. Welge referred Mr. Mandell to

Respondent's website for details. Ms. Welge al so informed

Mr. Mandell that Respondent would rank applications received

during the "Principal Photography Application Period" (between

June 13, 2005, and June 24, 2005) based on the "Principal

Photography" start date.

24. Based on Mr. Mandell's convers ation with Ms. Welge and

existing contacts for Florida crew members, Mr. Mandell decided

to move Petitioner's "Principal Photography" start date from

August 1, 2005, to July 1, 2005. Mr. Mandell also decided to go

forward with a much larger project than o riginally planned.

25. Mr. Mandell decided to build a neighborhood consisting

of 395 or 396 vacation homes in Lake County, Florida, with

Platinum Properties of Central Florida, Inc. (Platinum

Properties), Clermont, Florida, as the builder/developer. Th e

395 homes were in addition to the four homes in Lake County,

Florida, that Petitioner intended to build with Better Built

Homes, Inc., Melbourne, Florida, as the contractor.

26. Prior to submission of Petitioner's application,

Mr. Mandell reviewed Res pondent's Policies and Procedures and

Section 288.1254, Florida Statutes (2004), the version of the

statute that was available on MyFlorida.com. Mr. Mandell then

filled out the application on June 9 and 10, 2005.

27. Petitioner's application indicates that Petitioner

intends to film at least 13 episodes in Florida for The New Home

Show (500 Series). The application also indicates that

Petitioner has already begun preproduction at vacation homes in

Polk County, Florida. According to the application, Pe titioner

intends to film for approximately 52 days, between July 1, 2005,

and June 30, 2006, in three Florida counties: Lake, Polk, and

Orange.

28. Paragraph 9 of the application requires the applicant

to describe its Florida qualified expenditures and t o include a

total production budget with a breakout of the estimated Florida

expenditures. Paragraph 9 of Petitioner's application states as

follows in relevant part:

a) Estimated total expenditure on

Florida resident wages (excluding the

salaries for the two highest paid Florida

resident employers): $500,000

b) Estimated expenditures on Florida

lodging: $20,000

i. Name of hotel(s): Private Vacation

Homes

ii. Total number of room nights: 200

[the application skips subse ction c]

d) Estimated expenditures on Florida

set construction: $10,500,000

e) Estimated expenditures on purchase

or rent for real and personal property:

$17,000,000

f) Estimated expenditures on other

services rendered by Florida c ompanies:

$100,000

Please list the other services: Misc.

Construction Services

* * *

h) Total estimated qualified Florida

expenditures: $28,120,000

29. According to the application, Petitioner intended to

spend $500,000 on Florida residen t wages. Mr. Mandell based

this figure on building just 50 homes and spending at least

$10,000 in labor for each home.

30. Petitioner projected that it would spend $20,000 on

Florida lodging. This figure covered 200 nights in hotels and

vacation homes .

31. Petitioner anticipates spending $10,500,000 on set

construction. Mr. Mandell based this figure on the cost of

constructing 50 houses.

32. A set is traditionally a temporary structure.

Petitioner will not have a set. Instead, Petitioner is

pr oposing to build over 300 homes to be sold as permanent, fixed

structures.

33. Petitioner estimates that it will spend $17,000,000

for the purchase or rent of real or personal property.

According to Mr. Mandell, this figure represents the cost of the

a creage at the "Platinum" site, plus the cost of the

infrastructure. However, the purchase of real estate and the

construction of infrastructure are not related to the television

episodes that Petitioner proposes to film. In any event, all of

the lots are already sold and the buyers have contracted for the

construction of homes.

34. The last estimate was $100,000 for other services

rendered by Florida companies. However, Mr. Mandell did not

have anything specific in mind.

35. The general project ove rview and application included

the following admonition:

IMPORTANT NOTE: If the following documents

are not submitted with your application your

application will not be considered complete:

1. Script

2. Budget

3. Production/Shooting Sche dule

4. Proof of Financing

Your application will not be considered

for qualification and will be returned if

the requested documents are not attached.

36. Mr. Mandell attached a proposed budget to Petitioner's

application. The proposed budget was written in narrative form

and states as follows in pertinent part:

The New Home Show will be responsible

for over $20,000,000 in expenditures within

in Florida from July 01, 2005, through June

30, 2006.

Construction of homes and neighborho ods

is always our biggest expense representing

over 80% of the total expenditures.

. . . We will start with four homes built by

Better Built Homes, Inc. The budget for

these four homes will be over $1,000,000.

The homes will be built in an established

ne ighborhood that the producer has located

four vacant lots in.

These homes will be finished during

December 2005.

In September 2005, we will start

working with our 2nd builder/developer,

which is Platinum Properties, Inc. We are

in the process of contracting for several

homes with Platinum. The expenditures for

these homes will be over $15,000,000.

* * *

In the past, our funding comes from

five different areas for these projects.

Those areas are:

1. Producer's advance

2. PBS u nderwriters

3. Builder

4. Developer

5. State Incentives

The PBS Underwriter funds and the State

Incentive are important funds for The New

Home Show because they do not require re -

payment. All of the other categories are

loans that a re repaid from the proceeds from

the sale of the homes that we build.

Our PBS presenting station is WTVI in

Charlotte. All funds for underwriters as

well as state incentives must be paid to PBS

station WTVI. The producer cannot receive

these funds.

WTVI is the co - producer of The New Home

Show on PBS and approves all budgets and

disburses all funds regulated by PBS.

PBS has very strict rules and

regulations regarding the funding of all PBS

shows including The New Home Show and we

adhere to those rules and regulations.

37. In addition to the budget, Mr. Mandell prepared a

production/shooting schedule to be attached to the application,

along with the following: (a) an undated letter from the

Director of PBS PLUS and PBS SELECT describing PBS's

distribution process and the importance of PBS's underwriting

guidelines in very general terms; (b) an undated letter from an

advertising agency; (c) a copy of a script from a prior show;

and (d) seven pages of PBS's promotional material for the sho w's

2005 project about the golf course home.

38. In the very early morning hours of June 10, 2005,

Mr. Mandell realized that the package of material was in excess

of 13 ounces, and that it would not fit in a regular envelope.

He decided to send it to R espondent by U.S. Certified Mail, no

return receipt requested, in a heavy - duty priority mail

envelope.

39. Mr. Mandell uses an Internet postage service, which is

the equivalent of having a postage meter. At 3:31 a.m. on

June 10, 2005, Mr. Mandel purcha sed on - line postage in the

amount of $6.15 for priority mail, flat - rate delivery,

certified, with a ship date of June 13, 2005, on the shipping

label. He did not request or pay an additional fee for a "green

card" return receipt.

40. The Internet posta ge service provided Mr. Mandell with

a Customer Online Label Record, showing that the label was

printed on June 10, 2005, with a June 13, 2005, ship date. The

instructions from the Internet postage service contain the

following request, "Please use this s hipping label on the 'ship

date.'" During the hearing, Mr. Mandell stated that he could

have printed the shipping label with any date between June 10,

2005, and June 17, 2005.

41. Respondent's policies and procedures clearly require

Respondent's staff to determine whether an applicant has the

necessary financing in place to begin production on the

designated start date and to complete shooting. The policies

and procedures do not explain what documents will meet the

"proof of financing" requirement. To answer his questions in

this regard, Mr. Mandell called Ms. Welge.

42. On June 10, 2005, Mr. Mandell advised Ms. Welge that

the show would be financed through construction loans. He

explained that Petitioner could not provide Respondent with a

bank stat ement showing a sum of money in a bank account because

construction loans do not operate in that manner. A borrower

does not retrieve construction loan funds from the lender until

the builder needs them. Financial institutions loaning

construction funds do not escrow the entire sum, but provide

funds on a drawdown basis, based on percentage of completion.

43. After speaking to Ms. Welge, Mr. Mandell sent her an

e - mail on Friday, June 10, 2005, at 4:06 p.m. The e - mail

inquired whether a letter from the real estate company that was

financing the show would satisfy the "proof of financing"

requirement.

44. Petitioner's June 10, 2005, e - mail included a draft of

a letter allegedly from Platinum Properties, identified only as

a Florida real estate develop er. The proposed letter stated as

follows in relevant part:

. . . Subject to timing and construction

issues, we look forward to working with The

New Home Show on this project.

The New Homes Show's project is the

creation of an entire vacation home

neighborhood in central Florida.

If we are able to go forward with The

New Home Show on this project, it will be

funded with a combination of bank and trade

lines, which Platinum Properties utilizes on

a regular basis. We have assured the

producers o f The New Home Show that we have

adequate credit lines to cover any and all

construction on this project.

We expect the cost of this project will

be $_________ of which $_________ is

expected to be spent between 07/01/05 and

06/30/06.

45. Upon rec eiving Mr. Mandell's e - mail, Ms. Welge shared

the proposed letter with others on Respondent's staff. First,

she sent it to Scott Fennell, OTTED's Deputy Director, who was

providing administrative leadership to Respondent's staff during

a vacancy in the po sition of Film Commissioner. Ms. Welge sent

the e - mail to Mr. Fennell on Friday, June 10, 2005, at 4:11 p.m.

Mr. Fennell did not immediately respond to Ms. Welge's inquiry

about the proposed "proof of financing" letter.

46. On June 10, 2005, Ms. Welge a lso discussed

Petitioner's proposed letter regarding "proof of financing" from

Platinum Properties with Susan Simms, Respondent's Los Angeles

Liaison. Ms. Welge then contacted Mr. Mandell, advising him

that the proposed letter was not sufficient because i t contained

contingencies.

47. Later in the evening on June 10, 2005, Mr. Mandell

contacted Danial Lambdin from Better Built Homes, Inc. During a

telephone conversation, Mr. Mandell and Mr. Lambdin, drafted the

unsigned, undated "proof of financing" le tter that Petitioner

ultimately submitted with its application. The letter states as

follows in pertinent part:

This letter confirms that you have

contracted for the construction of four (4)

single family vacation homes in Lake County,

Florida. I am plea sed to be involved with

The New Home Show and am excited about

working with you.

I can confirm that I have an adequate line

of credit to complete these homes for you.

My Bank is Riverside National Bank at 417

First Ave., Indialantic, FL 32903. My

prima ry contact is Monica Silveria. Their

phone number is 321 - 725 - 7200.

Mr. Mandell typed the letter addressed to himself in Weddington,

North Carolina, with the address of Better Built Homes, Inc.,

Melbourne, Florida, as the letterhead.

48. Very late on Friday, June 10, 2005, or very early on

Saturday, June 11, 2005, Mr. Mandell completed the application

form and the preparation of all attachments. He placed all of

the documents in the priority mail envelope and attached the

prepaid certified mail shipp ing label with the predated ship

date. Mr. Mandell then dropped the envelop in an outgoing "mail

tote" at his home.

49. Mr. Mandell does not know when the U.S. Post Office

received the application and its attachments. Someone at his

home takes the mai l tote to the post office in Charlotte, North

Carolina, every day.

50. The U.S. Post Office delivered the application and its

attachments to the state's off - site mail - screening facility on

Monday, June 13, 2005, at 3:43 a.m.

51. On Monday, June 13, 2 005, at 6:18 a.m., Mr. Fennell

answered Ms. Welge's inquiry about the sufficiency of

Petitioner's proposed letter regarding "proof of financing" from

Platinum Properties. Mr. Fennell responded that "[t]his seems a

bit light, but I don't know what typicall y passes for 'proof of

financing' in the film world."

52. On Monday, June 13, 2005, at 9:43 a.m., Ms. Simms

responded by e - mail to Mr. Fennell regarding Petitioner's

proposed letter regarding "proof of financing" from Platinum

Properties. Ms. Simms sta ted that the contingencies in the

proposed letter were potential deal - killers, and that Ms. Welge

was able to let Petitioner know on Friday that this was not

acceptable as proof of financing.

53. Respondent received the application on Monday,

June 13, 2 005, at 3:29 p.m. Later that day at 6:21 p.m.,

Respondent faxed Petitioner a letter, notifying Mr. Mandell that

Petitioner did not qualify for the incentive program for the

following two reasons: (a) The application was postmarked on

June 11, 2005; and ( b) The application did not contain any

documents containing proof of financing. Respondent sent this

letter without contacting Better Built Homes, Inc., or its

financial institution.

54. Following receipt of Respondent's June 13, 2005,

denial letter, M r. Mandell contacted Raquel Cisneros, another

member of Respondent's staff. Ms. Cisneros and Ms. Welge were

the only staff members involved in reviewing Petitioner's

application on June 13, 2005. Mr. Fennell signed the June 13,

2005, denial letter but di d not review the application.

55. Mr. Mandell explained to Ms. Cisneros that the

application was not postmarked on June 11, 2005. Ms. Cisneros

admitted during the hearing that the denial letter did not have

a postmark of June 11, 2005.

56. Mr. Mandell also inquired of Ms. Cisneros why the

June 13, 2005, denial letter stated that the application

contained no documents to demonstrate "proof of financing," when

the Better Built Homes, Inc., letter had been attached to the

application. Ms. Cisneros advise d Mr. Mandell that the Better

Built Homes, Inc. letter was deficient because it did not

contain an amount of financing.

57. Mr. Mandell was unable to obtain an extension of time

for Petitioner to serve an "election of rights." Therefore,

Mr. Mandell fi led an "election of rights" form with Respondent

on June 16, 2005.

58. Respondent's June 13, 2005, denial letter provided

Petitioner with the opportunity to provide Respondent with

additional documents. On June 17, 2005, Petitioner took

advantage of th at opportunity by submitting a letter dated

June 17, 2005, from Platinum Properties. The letter states as

follows in pertinent part:

We are looking forward to this venture

of together building 395 Vacation homes in

Lake County with the support, coo peration

and abilities that "The New Home Show"

brings to the project.

Attached you will find the Lender

Commitment to get started on the Millbrook

Manor Project from AmBanc Commercial Lending

Services.

Lawrence M. Maloney signed the June 17, 2005, "proof of

financing" letter as president of Platinum Properties. Attached

to Mr. Maloney's letter was the first page of a Conditional

Commitment from AmBanc Commercial Lending Services (AmBanc),

Saint Charles, Missouri.

59. The AmBanc Conditional Comm itment states that

Millbrook Manor/Larry Maloney (Borrower) has executed the

document and requested financing in connection with a project

described therein. The Conditional Commitment also states that

the project has been conditionally approved to receiv e financing

in the maximum principal amount of $15,000,000. The single - page

Conditional Commitment does not contain a description of

Millbrook Manor.

60. Petitioner did not hear further from Respondent until

Petitioner received a second denial letter o n June 24, 2005, the

last day of the initial two - week window for applications.

Respondent based its second denial of Petitioner's application

on the following reasons:

(a) The submitted budget does not

distinguish the production costs as defined

i n Section 288.1254(2)(b) of the Florida

Statutes.

(b) The submitted budget does not

contain an adequate breakout of the

estimated Florida expenditures as opposed to

overall project expenditures as described on

page five of the General Project Overvie w

and Application.

(c) Designated recipients of state

incentives must be party to the application

and subsequent contractual agreements. Your

application states, 'All funds for

underwriters as well as state incentives

must be paid to PBS station WTV I. The

producer cannot receive these funds.'

(d) There is inadequate evidence that

the application was sent via FedEX or U.S.

Certified mail as required on page one (1)

of the Entertainment Industry Financial

Incentive Policies and Procedures. 'A ny

other form of delivery will not be accepted

and your application will be returned.'

61. On June 27, 2005, Petitioner submitted its second

"election of rights" form. Petitioner also provided Respondent

with its second statement of disputed facts.

62. Respondent anticipated that it would receive some

applications on June 13, 2005, by Federal Express or Certified

U.S. Mail by overnight or same - day delivery service.

Respondent's staff included the requirements that no

applications would be accepted if they were postmarked before

June 13, 2005, and only then if they were sent by Federal

Express or U.S. Certified Mail in an effort to ensure a fairer

process for evaluating the applications received during the

critical first two - week principal photograph y application

period. However, the policies and procedures do not require

that the applications be mailed on or after June 13, 2005. In

the instant application process, Respondent approved at least

one other application that Respondent received on June 1 3, 2005.

63. As to the requirement for "proof of financing," at

least one other approved applicant (Britt Allcroft

Productions/Britt Allcroft) contained an unsigned letter from a

third party, which contained a contingent intent to "assist" in

obtaining financing for the production if it was able to obtain

$2 million from the incentive program. For this application,

Respondent's staff engaged in a telephone conference call with

the applicant, obtaining verbal assurances that the letter from

the third par ty constituted a promise to provide financing for

the remainder of the production not covered by the other more

specific non - contingent promises of financing and licensing

agreements.

64. Additionally, the Britt Allcroft application indicated

that a com pletion bond was in place to cover any shortfall in

financing, guaranteeing that the production would be completed.

Petitioner's application did not contain a completion bond.

65. Another approved applicant (Rolling Films Company)

provided Respondent w ith two contingent letters from third

parties, indicating their intent to provide partial financing

for the production only if the remaining funds were obtained by

a date certain. That application also included a letter from

the applicant, indicating the applicant's intent to finance the

production for any amount not covered by the third parties.

66. Petitioner's application refers to the funding of

prior shows as including producer's advance and PBS

underwriters. It does not state that Petitioner agre ed in this

case to fund the show over and above the amount to be financed

by Better Built Homes, Inc., in the amount of $1,000,000 for

four homes or the $15,000,000 that Platinum Properties promised

to provide for the construction of 395 homes. Additional ly,

there is no persuasive evidence that Mr. Mandell gave Respondent

verbal assurances that Petitioner or PBS intended to fund any

shortfall in funds to complete the show, which has projected

total production costs in excess of $28,000,000. The letter

fro m PBS Plus & PBS Select agrees to assist in Petitioner's

effort to fund the show but does not say how much funding

Petitioner could anticipate from PBS underwriters.

67. It is obvious that Respondent's staff is confused

about the "proof of financing" re quirement. For example,

Ms. Cisneros testified in deposition that an applicant only

needed to show financing in place for one - half of its total

production costs. During the hearing, Ms. Cisneros testified

that an application had to show "proof of financi ng" all of its

production costs. Ms. Welge testified in deposition that an

applicant had to demonstrate "proof of financing" for its

Florida expenditures. Ms. Simms testified that an applicant had

to establish "proof of financing" for the entire producti on

budget. Mr. Fennell freely admits that he does not know what

constitutes "proof of financing" for an entertainment

production.

CONCLUSIONS OF LAW

68. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter o f this

proceeding pursuant to Sections 120.569 and 129.57(1), Florida

Statutes (2005).

69. Petitioner has the burden of proving by a

preponderance of the evidence that Respondent improperly denied

its application for a financial incentive. See Young v .

Department of Community Affairs , 627 So. 2d 831 (Fla. 1993);

Balino v. Department of Health and Rehabilitative Services , 348

So. 2d 349 (Fla. 1st DCA 1977). Petitioner has not met its

burden.

70. The first question is whether Section 288.1254,

Florida Statutes (2004), or Section 288.1254, Florida Statutes

(2005), applies to Petitioner's application. The former statute

was in effect when Petitioner filed its application on June 13,

2005. It is undisputed that Respondent denied Petitioner's

application on June 13, 2005, and again on June 24, 2005, before

the latter statute's effective date on July 1, 2005. There are

relevant substantive differences in the two statutes.

71. Section 288.1254, Florida Statutes (2004), states as

follows in relevant part:

(2) DEFINITIONS. -- As used in this

section, the term:

* * *

(b) "Production costs" means the total

cost of producing filmed entertainment.

(c) "Qualified expenditures" means

goods purchased or leased or services

purchased, leased, or em ployed from a

resident of this state or a vendor or

supplier who is located and doing business

in this state.

(d) "Qualified production" means

filmed entertainment that makes expenditures

in this state for the total or partial

production of a motion picture, made - for -

television movie with a running time of 90

minutes or more, commercial, music video,

industrial and educational film, television

series pilot, or television episode.

Productions that are deemed by the Office of

Film and Entertainment to contain obscene

content, as defined by the United States

Supreme Court, shall not be considered

qualified productions.

* * *

(3) APPLICATION PROCEDURE; APPROVAL

PROCESS. --

(a) Any company engaged in this state

in producing filmed entertainmen t may submit

an application to the Office of Film and

Entertainment for the purpose of determining

qualification for receipt of reimbursement

provided in this section. The office must

be provided information required to

determine if the production is a qu alified

production and to determine the qualified

expenditures, production costs, and other

information necessary for the office to

determine both eligibility for and level of

reimbursement.

* * *

(d)1. The Office of Film and

Entertainment shall establish a process by

which an application is accepted and

reviewed and reimbursement eligibility and

reimbursement amount are determined. . . .

2. Upon determination that all

criteria are met for qualification for

reimbursement, the office shall notify the

applicant of such approval. The office

shall also notify the Office of Tourism,

Trade, and Economic Development of the

applicant approval and amount of

reimbursement required. The Office of

Tourism, Trade, and Economic Development

shall make f inal determination for actual

reimbursement.

3. The Office of Film and

Entertainment shall deny an application if

it determines that:

a. The application is not complete or

does not meet the requirements of this

section; or

b. The reimbu rsement sought does not

meet the requirements of this section for

such reimbursement.

(e) The Office of Film and

Entertainment shall develop a standardized

application form for use in approving a

qualified production . . . The application

form must include, but is not limited to,

production - related information on

employment, proposed total production

budgets, planned expenditures in this state

which are intended for use exclusively as an

integral part of preproduction, production,

or postproduction activities engaged in

primarily in this state, and a signed

affirmation from the Office of Film and

Entertainment that the information on the

application form has been verified and is

correct. . . .

(f) The office of Film and

Entertainment must comp lete its review of

each application within 5 days after receipt

of the completed application, including all

required information, and it must notify the

applicant of its determination within 10

business days after receipt of the completed

application and r equired information.

(4) REIMBURSEMENT ELIGIBILITY;

SUBMISSION OF REQUIRED DOCUMENTATION;

RECOMMENDATIONS FOR PAYMENT. --

(a) A qualified production that is

certified by the Office of Film and

Entertainment is eligible for the following

financia l incentives from the state:

1. A reimbursement of up to 15 percent

of its qualifying expenses in this state on

that . . . television episode that

demonstrates a minimum of $850,000 in total

qualified expenditures. However . . . the

maximum reimburs ement that may be made with

respect to any single television series

pilot or television episode is $150,000 . .

. . All noted reimbursements are subject to

appropriation. Payments under this section

in a fiscal year shall be made on a first -

come, first - se rved basis until the

appropriation for that fiscal year is

exhausted. Subject to subsequent

appropriations, the eligibility of qualified

productions shall carry over from year to

year. The Office of Film and Entertainment

shall develop a procedure to ens ure that

qualified productions continue on a

reasonable schedule until completion. If a

qualified production is not continued

according to a reasonable schedule, the

office shall withdraw its eligibility and

reallocate the funds to other qualified

product ions.

2. Qualified expenditures for which

reimbursement shall be made include salaries

and employment benefits paid for services

rendered in this state; rents for real and

personal property used in the production;

payments for preproduction, produc tion,

postproduction . . . and cost of set

construction. Reimbursement may not be

authorized for salaries of the two highest -

paid actors. Salaries of other actors are

reimbursable.

* * *

(e) The Office of Film and

Entertainment shall notify the Office of

Tourism, Trade, and Economic Development

whether an applicant meets that criteria for

reimbursement and shall recommend the

reimbursement amount. The Office of

Tourism, Trade, and Economic Development

shall make the final determination for

actu al reimbursement.

(5) POLICIES AND PROCEDURES. -- The

Office of Tourism, Trade, and Economic

Development shall adopt policies and

procedures to implement this section,

including, but not limited to, requirements

for the application and approval proce ss,

records required for submission for

substantiation for reimbursement, and

determination of and qualification for

reimbursement.

72. Section 288.1254, Florida Statutes (2005), states as

follows in pertinent part:

(2) DEFINITIONS. -- As used i n this

section, the term:

* * *

(b) "Production costs" means the costs

of real, tangible, and intangible property

used and services performed in the

production, including preproduction and

postproduction, of qualified filmed

entertainment. Product ion costs generally

include, but are not limited to:

1. Wages, salaries, or other

compensation for technical and production

crews, directors, producers, and performers

who are residents of this state.

2. Expenditures for sound stages,

backlots, production editing, digital

effects, sound recordings, sets, and set

construction.

3. Expenditures for rental equipment,

including, but not limited to, cameras and

grip or electrical equipment.

4. Expenditures for meals, travel,

accommodations , and goods used in producing

filmed entertainment that is located and

doing business in this state.

(c) "Qualified expenditures" means

production costs for goods purchased or

leased or services purchased, leased, or

employed from a resident of this state or a

vendor or supplier who is located and doing

business in this state, but excluding wages,

salaries, or other compensation paid to the

two highest - paid employees.

(d) "Qualified production" means

filmed entertainment that makes expenditur e

in this state for the total or partial

production of filmed entertainment . . . [A]

production is not a qualified production if

it is determined that the first day of

principal photography in this state occurred

on or before the date of submitting its

ap plication to the Office of Film and

Entertainment or prior to certification by

the Office of Tourism, Trade, and Economic

Development.

* * *

(3) APPLICATION PROCEDURE; APPROVAL

PROCESS. --

(a) Any company engaged in this state

in producing fil med entertainment may submit

an application to the Office of Film and

Entertainment for the purpose of determining

qualification for receipt of reimbursement

provided in this section. The office must

be provided information required to

determine if the pr oduction is a qualified

production and to determine the qualified

expenditures, production costs, and other

information necessary for the office to

determine both eligibility for and level of

reimbursement.

* * *

(d)1. The Office of Film and

Ente rtainment shall establish a process by

which an application is accepted and

reviewed and reimbursement eligibility and

reimbursement amount are determined. The

Office of Film and Entertainment may request

assistance from a duly appointed local film

commis sion in determining qualifications for

reimbursement and compliance.

2. The Office of Film and

Entertainment shall develop a standardized

application form for use in approving a

qualified production . . . . The application

form must include, but need not be limited

to, production - related information on

employment, proposed total production

budgets, planned expenditures in this state

which are intended for use exclusively as an

integral part of preproduction, production,

or postproduction activities en gaged

primarily in this state, and a signed

affirmation from the Office of Film and

Entertainment that the information on the

application form has been verified and is

correct. The application shall be

distributed to applicants by the Office of

Film and E ntertainment or local film

commissions.

3. The Office of Film and

Entertainment must complete its review of

each application within 5 days after receipt

of the completed application, including all

required information, and it must notify the

applic ant of its determination within 10

business days after receipt of the completed

application and required information.

4. Upon determination that all criteria

are met for qualification for reimbursement,

the Office of Film and Entertainment shall

notif y the applicant of such approval. The

office shall also notify the Office of

Tourism, Trade, and Economic Development of

the applicant approval and amount of

reimbursement required. The Office of

Tourism, Trade, and Economic Development

shall make the fi nal determination for

actual reimbursement.

5. The office of Film and

Entertainment shall deny an application if

it determines that:

a. The application is not complete or

does not meet the requirements of this

section; or

b. The reimbur sement sought does not

meet the requirements of this section for

reimbursement.

(4) REIMBURSEMENT ELIGIBILITY;

SUBMISSION OF REQUIRED DOCUMENTATION;

RECOMMENDATIONS FOR PAYMENT. --

(a) A production that is qualified by

the Office of Film and Ent ertainment and is

certified by the Office of Tourism, Trade,

and Economic Development is eligible for a

reimbursement of up to 15 percent of its

qualifying expenditures in this state on a

filmed entertainment program that

demonstrates a minimum of $850,00 0 in total

qualified expenditures for the entire run

of the project, versus the budget on a

single episode, within the fiscal year from

July 1 to June 30. However, the maximum

reimbursement that may be made with respect

to any filmed entertainment progra m is $2

million. All reimbursements under this

section are subject to appropriation.

Payments made under this section in a fiscal

year shall be made to qualified productions

according to a production's principal

photography start date, for those qualifie d

productions having entered into the first

queue as cited in subparagraph 1. or the

second queue cited in subparagraph 2. within

the first 2 weeks after the queue's opening.

All other qualified productions entering

into either queue after the initial 2 - w eek

openings shall be on a first - come, first -

served basis until the appropriation for

that fiscal year is exhausted. On February

1, of each year, the remaining funds within

both queues shall be combined into a single

queue and distributed based on a proje ct's

principal photography start date. The

eligibility of qualified productions may not

carry over from year to year, but such

productions may reapply for eligibility

under the guidelines established for doing

so. The Office of Film and Entertainment

sha ll develop a procedure to ensure that

qualified productions continue on a

reasonable schedule until completion. If a

qualified production is not continued

according to a reasonable schedule, the

office shall withdraw its eligibility and

reallocate the fun ds to the next qualified

productions already in the queue that have

yet to receive their full maximum or 15 -

percent financial reimbursement, if they

have not started principal photography by

the time the funds become available.

* * *

(d) A qualif ied production . . .

applying for a payment under this section

must submit documentation or claimed

qualified expenditures to the Office of Film

and Entertainment.

(e) The Office of Film and

Entertainment shall notify the Office of

Tourism, Trade, and Economic Development

whether an applicant meets the criteria for

reimbursement and shall recommend the

reimbursement amount. The Office of

Tourism, Trade, and Economic Development

shall make the final determination for

actual reimbursement.

(5) POLICIES AND PROCEDURES. -- The

Office of Tourism, Trade, and Economic

Development shall adopt policies and

procedures to implement this section,

including, but not limited to, requirements

for the application and approval process,

records required for sub mission for

substantiation for reimbursement, and

determination of and qualification for

reimbursement.

73. The 2005 incentive program's policies and procedures

do not specifically reference either the 2004 or the 2005

statutes. However, Respondent's June 1, 2005, letter clearly

refers to the applicability of "new laws" and House Bill 1120,

which became Chapter 2005 - 233, Laws of Florida, with an

effective date of July 1, 2005. Both statutes and the policies

and procedures leave no doubt that the ince ntive program is

contingent on a specific appropriation for each fiscal year,

running July 1 through June 30. Petitioner knew or should have

known that the 2005 statutes applied and was not deprived of due

process when Respondent applied them in evaluatin g the

application at issue here.

74. More important, the 2005 statutes apply as a matter of

law. In Lavernia, M.D. v. Department of Professional

Regulation, Board of Medicine , 616 So. 2d 53, 53 - 54 (Fla. 1st

DCA 1993), the court stated as follows:

Florida follows the general rule that a

change in a licensure statute that occurs

during the pendency of an application for

licensure is operative as to the

application, so that the law as changed,

rather than as it existed at the time the

application wa s filed, determines whether

the license should be granted. See e.g. ,

Bruner v. Board of Real Estate, Department

of Professional Regulation , 399 So. 2d 4

(Fla. 5th DCA 1981); See also 51 Am. Jur.

2d, Licenses and Permits, Section 46 (1970)

and Ziffrin, Inc . v. United States , 318 U.S.

73, 78, 63 S.Ct. 465, 469, 87 L.Ed. 621, 625

(1943). In Ziffrin , the United States

Supreme Court reasoned that just as a change

in the law between a nisi prius and an

appellate decision requires the appellate

court to apply th e changed law, so, by like

token, a change of law pending an

administrative hearing or act must be

followed in relation to a permit for the

doing of a future act. Otherwise, said the

court, the administrative body would be

issuing a permit contrary to exi sting

legislation.

75. Here as in Lavernia , Petitioner's application was

filed and preliminarily denied while the 2004 statute was

effective. After Petitioner requested a formal de novo

administrative hearing and pending a final order in this case,

the 2005 law became effective and applicable. Respondent has no

authority to approve a 2005 financial incentive subject to any

law other than the one in effect when the 2005 specific

appropriation became available.

76. The second question is whether the 20 05 incentive

program policies and procedures that Respondent applied to deny

Petitioner's application are agency statements of general

applicability, which have not been adopted as rules. If so, the

third question becomes whether those policies and proced ures

meet the requirements of Section 120.57(1)(e), Florida Statutes

(2005). The final question is whether Respondent properly

applied its valid policies and procedures, if any, under the

facts of this case. These questions are answered below as to

the t wo reasons for denial in Respondent's June 13, 2005, letter

and the four reasons for denial in Respondent's June 24, 2005,

letter.

77. Section 120.52(15), Florida Statutes (2005), defines a

rule as follows in pertinent part:

(15) "Rule" means ag ency statement of

general applicability that implements,

interprets, or prescribes law or policy or

describes the procedure or practice

requirement of an agency and includes any

form which imposes any requirement or

solicits any information not specificall y

required by statute or by an existing rule.

78. Section 120.54 (1)(a), Florida Statutes (2005), states

as follows in relevant part:

(a) Rulemaking is not a matter of

agency discretion. Each agency statement

defined as a rule by s. 120.52 shall be

adopted by the rulemaking procedure provided

by this section as soon as feasible and

practicable.

79. Section 120.57(1)(e), Florida Statutes (2005), states

as follows in pertinent part:

(e)1. Any agency action that

determines the substantia l interests of a

party and that is based on an unadopted rule

is subject to de novo review by an

administrative law judge.

2. The agency action shall not be

presumed valid or invalid. The agency must

demonstrate that the unadopted rule:

a. I s within the powers, functions,

and duties delegated by the Legislature or,

if the agency is operating pursuant to

authority derived from the State

Constitution, is within that authority;

b. Does not enlarge, modify, or

contravene the specific prov ision of law

implemented;

c. Is not vague, establishes adequate

standards for agency decisions, or does not

vest unbridled discretion in the agency;

d. Is not arbitrary or capricious. A

rule is arbitrary if it is not supported by

logic or the necessary facts; a rule is

capricious if it is adopted without thought

or reason or is irrational;

e. Is not being applied to the

substantially affected party without due

process;

f. Is supported by competent and

substantial evidence; and

g. Does not impose excessive

regulatory costs on the regulated person,

county or city.

80. OTTED does not have general authority to adopt rules

regarding the incentive program. OTTED only has authority to

adopt rules related to travel and entertai nment expenses of

certain individuals, including Respondent's staff. See Sections

288.1253(2) and 288.1253(4), Florida Statutes (2005).

I. No applications will be accepted if they are postmarked

before June 13, 2005.

81. Respondent's policies prohibit the acceptance of an

application postmarked before June 13, 2005. This policy

implements and interprets Section 288.1254, Florida Statutes

(2005), in a manner not specifically authorized by statute. It

clearly describes Respondent's procedure for receiv ing

applications. Therefore, the policy is a rule as defined by

Section 120.52(15), Florida Statutes (2005).

82. The postmark requirement fails the test of Section

120.57(1)(e), Florida Statutes (2005), in two respects. First,

the imposition of a post mark requirement is not within the

powers delegated to Respondent by the Legislature in violation

of Section 120.57(1)(e)2.a., Florida Statutes (2005), because

Respondent has no rulemaking authority and the 2005 statute does

not refer to a postmark require ment or the Legislature's intent

to deny any application mailed or received before any date.

Second, the imposition of a postmark requirement enlarges

Section 288.1253, Florida Statutes (2005), contrary to Section

120.57(1)(e)2.b., Florida Statutes (2005) .

83. Because the postmark requirement is not valid,

Respondent may not rely upon it to deny Petitioner's

application. In any event, Respondent misapplied the postmark

requirement under the facts of this case because the only

postmark on Petitioner's a pplication was June 13, 2005.

II. The application did not contain any documents containing

proof of financing.

84. Respondent denied Petitioner's application due to a

failure to include adequate documentation showing "proof of

financing." Respondent imposed the "proof of financing"

requirement based on its interpretation of the 2005 law. In so

doing, Respondent attempts to implement the 2005 law by

soliciting information not specifically required by statute.

The "proof of financing" requirement is a rule as defined by

Section 120.52(15), Florida Statutes (2005).

85. The "proof of financing" requirement violates Section

120.57(1)(e), Florida Statutes (2005), in four respects. First,

Respondent has no rulemaking authority to implement the 2005

law, which does not refer to "proof of financing" or an

applicant's need to have sufficient financial support to

complete a project before it applies for the financial

incentive. Therefore, the financial requirement violates

Section 120.57(1)(e)2.a., Florida S tatutes (2005). Second, the

financial requirement violates Section 120.57(1)(e)2.b., Florida

Statutes (2005), because it enlarges the provisions of the law

implemented. Third, the financial requirement violates Section

120.57(1)(e)2.c., Florida Statutes (2005), because it is vague,

establishes inadequate standards for agency decisions, and vests

unbridled discretion in the agency. Respondent's policies do

not provide any guidance regarding the type of documents that

Respondent considers adequate "proof o f financing" or the

substance of those documents. Fourth, the financial requirement

violates Section 120.57(1)(e)2.d., Florida Statutes (2005),

because it appears that Respondent imposed the requirement

without thought or reason. The confusion about the requirement

on the part of Respondent's staff is persuasive evidence of this

violation.

86. Petitioner's application did not contain proof that it

had financing in place to cover its total production costs or

even its alleged estimated total qualified Florida expenditures

in the amount of $28,120,000. Even so, Respondent cannot rely

on its invalid "proof of financing" requirement to deny

Petitioner's application.

III. The submitted budget does not distinguish the production

costs as defined in Sectio n 288.1254(2)(b), Florida Statutes

(2005).

87. The requirement that an applicant's budget distinguish

production costs is not a rule as defined by Section 120.52(15),

Florida Statutes (2005). The requirement does not impose any

requirement or solicit an y information not specifically required

by statute.

88. Section 288.1254(2)(c), Florida Statutes (2005),

defines "qualified expenditures" as production costs arising

from certain expenditures in Florida. Section 288.1254(3)(a),

Florida Statutes (2005), gives Respondent the authority to

require applicants to provide information relative to production

costs. Section 288.1254(3)(d)2., Florida Statutes (2005),

allows Respondent to create an application form that inquires

about a broad range of production - r elated costs and activities,

including proposed total production budgets.

89. Respondent's policies include the statutory

definitions of production costs and qualified expenditures. In

discussing the decision - making process, Respondent's policies

stat e that the agency will review applications to determine,

among other things, the total cost of production. In describing

the evaluation of the general project overview and application,

Respondent's policies require it to review an applicant's budget

to de termine whether the applicant will spend the minimum amount

on qualified expenditures in this state.

90. Respondent's application form states that "[a]

breakout of the estimated Florida expenditures must accompany

your total production budget with this overview." The form then

inquires about certain Florida qualified expenditures and the

amount of the non - Florida production budget. The form also

highlights the importance of including a separate budget with

the application.

91. Reading the relevant statutes, policies, and portions

of the application form, all of which provide applicants with

instructions, it is clear that Respondent is acting consistently

with the statutory scheme set forth in Section 288.1254, Florida

Statutes (2005), when it requi res applicants to provide a budget

that distinguishes statutorily - defined production costs. The

requirement is not a rule but a policy authorized by Section

288.1254(5), Florida Statutes (2005.

92. In this case, Petitioner included a budget in

narrative form. Petitioner's budget states only that it will

spend $20,000,000 in Florida expenditures, including $1,000,000

in constructing four homes, and $15,000,000 in constructing a

neighborhood of homes. Because the policy is valid and because

Petitioner's b udget did not distinguish production costs as

statutorily defined, Respondent properly denied the application.

IV. The submitted budget does not contain an adequate breakout

of the estimated Florida expenditures.

93. Respondent's application form requ ires applicants to

submit a separate total production budget that contains a

breakout of Florida expenditures. This policy is not a rule as

defined by Section 120.52(15), Florida Statutes (2005), because

it does not impose any requirement or solicits any information

not specifically required by statute.

94. Section 288.1254(2)(c), Florida Statutes (2005),

defines qualified expenditures as certain Florida production

costs. Section 288.1254(2)(d), Florida Statutes (2005), defines

a qualified production a s filmed entertainment that makes

expenditures in Florida. Section 288.1254(3)(a), Florida

Statutes (2005), requires applicants to provide Respondent with

sufficient information to determine the qualified expenditures.

Section 288.1254(3)(d)2., Florida S tatutes (2005), allows

Respondent to create a form that inquires about planned Florida

expenditures. Section 288.1254(4)(a), Florida Statutes (2005),

sets forth the maximum and minimum amounts that are reimbursable

for qualified expenditures.

95. Respo ndent's policies include the statutory

definitions of qualified expenditures and qualified productions

both of which refer to Florida costs or expenses. Respondent's

policies discuss the need to review qualified expenditures as

part of the decision - making process. The policies explain that

Respondent will review an applicant's budget to determine

whether the production will spend the minimum amount on

qualified expenditures in Florida.

96. The application form requires an applicant to list

certain Flor ida qualified expenditures. It also requires an

applicant to include a breakout of Florida expenditures in a

separate total production budget. The application highlights

the importance of including a budget.

97. Reading the statutes, policies, and por tions of the

application form together, it is clear that Respondent has

authority to require applicants to include a breakout of Florida

expenditures in their budget. In so doing, Respondent is acting

consistently with the statutory scheme set forth in Se ction

288.1254, Florida Statutes. The requirement is not a rule but a

policy authorized by Section 288.1254(5), Florida Statutes.

98. In this case, Petitioner did not include a breakout of

Florida expenditures in its budget. Respondent properly denied

Petitioner's application based on this valid policy.

V. Designated recipients of state incentives must be a party to

the application and subsequent contractual agreements.

99. Respondent's requirement for designated recipients of

state incentives to be a party to the application and subsequent

contractual agreements interprets and implements Section

288.1254, Florida Statutes (2005), in a manner not specifically

authorized by statute. The requirement is therefore a rule as

defined by Section 120.52(1 5), Florida Statutes (2005).

100. One must consider Section 288.1254, Florida Statutes

(2005), to determine whether the policy requiring designated

recipients of state incentives to be a party to the application

and subsequent contractual agreements me ets the requirements of

Section 120.57(1)(e), Florida Statutes (2005). Section

288.1254, Florida Statutes (2005), does not define designated

recipients or prohibit the payment of financial incentives to

individuals who are not a party to the application o r subsequent

contractual agreements. The statute does not refer to

contractual agreements between Respondent and applicants in any

respect.

101. Section 288.1254(3)(a), Florida Statutes (2005),

authorizes any company engaged in a Florida film productio n to

submit an application to receive reimbursement through the

incentive program. Section 288.1254(3)4., Florida Statutes

(2005), requires Respondent to notify applicants of their

qualification for reimbursement and to notify OTTED of the

applicants' app roval and amount of reimbursement. Section

288.1254(4)(a), Florida Statutes (2005), addresses the

eligibility of qualified productions to receive reimbursement

for qualified expenditures.

102. Respondent's policies do not specifically state that

a rec ipient of funds must be a party to the application.

Additionally, Respondent's policies state that a written

contract will be drafted and executed between the production

company and the agency. However, as of the date of the hearing,

Respondent had not d rafted any such contract. There is no

evidence regarding the substance of the contracts.

acking the 2005 statute, Respondent's policies also

state that any company engaged in a Florida film production may

submit an application to receive fund un der the incentive

program. According to Respondent's policies, Respondent must

notify applicants of their qualification for reimbursement and

notify OTTED of the applicants' approval and amounts of

reimbursement. The policies address the eligibility of

q ualified productions to receive reimbursement for qualified

expenditures. The policies do not describe the substance of the

contracts.

104. In the absence of statutory authority for Respondent

to restrict reimbursement payments to applicants and to re quire

recipients to enter into contractual agreements, the policy

violates Section 120.57(1)(e), Florida Statutes (2005), for the

following reasons: (a) the policy is not within Respondent's

statutory powers and duties in violation of Section

120.57(1)(e) 2.a., Florida Statutes (2005); (b) the policy

enlarges the law implemented contrary to Section

120.57(1)(e)2.b., Florida Statutes (2005); (c) the policy is

vague in violation of Section 120.57(1)(e)2.c., Florida Statutes

(2005), in that it provides no info rmation regarding the content

of contractual agreements; (d) the policy is arbitrary and

capricious contrary to Section 120.57(1)(e)2.d., Florida

Statutes (2005), because there is no record evidence to show

that it is supported by logic or facts or that it was adopted

with thought or reason; and (e) Respondent has applied the

policy without due process in violation of Section

120.57(1)(e)2.e., Florida Statutes (2005), because nothing in

the statutes or policies provide applicants notice that all

producers a nd co - producers must be a party to the application

and subsequent contracts.

105. Petitioner's application clearly revealed that

Station WTVI was a co - producer, who had to receive and disburse

all funds and approve all budgets. An undated letter from the

Director of PBS Plus and PBS Select emphasized the importance of

abiding by PBS's rules and regulations regarding the funding of

PBS shows. Under the facts of this case, Respondent improperly

denied Petitioner's application by imposing the invalid

req uirement that designated recipients must be a party to the

application and subsequent contractual agreements.

VI. There is inadequate evidence that the application was sent

via Federal Express or Certified Mail.

106. Respondent's policies prohibit th e acceptance of an

application unless the applicant sends it by Federal Express or

U.S. Certified Mail. This policy implements and interprets

Section 288.1254, Florida Statutes (2005), in a manner not

authorized by statute. It clearly describes Responden t's

procedure for receiving applications. Therefore, the policy is

a rule as defined by Section 120.52(15), Florida Statutes

(2005).

107. As an unadopted rule, the "method of delivery"

requirement fails the test of Section 120.57(1)(e), Florida

Statute s (2005), in three respects. First, the policy is not

within the powers delegated to Respondent by the Legislature in

violation of Section 120.57(1)(e)2.a., Florida Statutes (2005).

Respondent does not have rulemaking authority to implement the

2005 stat ute, which does not address the method of delivering

applications in any respect. Second, the policy enlarges

Section 288.1253, Florida Statutes (2005), contrary to Section

120.57(1)(e)2.b., Florida Statutes (2005). Third, the policy

violates Section 120 .57(1)(e)2.f., Florida Statutes (2005)

because it imposes excessive regulatory costs on applicants, who

must pay additional postage to send the application by Federal

Express or U.S. Certified Mail as opposed to less expensive

delivery methods.

108. Bec ause the "method of delivery" requirement is not

valid, Respondent may not rely upon it to deny Petitioner's

application. In any event, Respondent misapplied its policy

under the facts of this case because Petitioner's application

was sent by U.S. Certifi ed Mail.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED:

That Respondent enter a final order denying Petitioner's

application.

DONE AND ENTERED this 10th day of October, 2005, in

Tallahassee, Leon County, Florida.

S

SUZANNE F. HOOD

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 - 68 47

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 10th day of October, 2005.

COPIES FURNISHED :

Pamella Dana, Director

Office of Tourism, Trade,

and Economic Development

The Capitol, Suite 1902

Tallahassee, Fl orida 32399 - 0001

Susan Albershardt, Commissioner

Office of Film and Entertainment

The Capitol, Suite 202

Tallahassee, Florida 32399 - 0001

S. Elysha Luken, Esquire

Smith, Currie & Hancock, LLP

1004 DeSoto Park Drive

Tallahassee, Florida 32301

Tom Barnh art, Esquire

Office of the Attorney General

The Capitol, Plaza Level 1

Tallahassee, Florida 32399 - 1050

Ted Bonanno, Esquire

Office of the Governor

The Capitol, Suite 2001

401 South Monroe Street

Tallahassee, Florida 32399 - 0001

NOTICE OF RIGHT TO SUBMI T 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 should be filed with the agency that

will issue the final order in this case .