19-001034RU Asian American Hotel Owners Association, Inc; And Sh Sarasota, Llc vs. Department Of Revenue Status: Closed DOAH Final Order on Thursday, April 25, 2019.

Summary: The Petitioner failed to establish standing to maintain the unadopted Rule Challenge.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ASIAN AMERICAN HOTEL OWNERS

ASSOCIATION, INC, 1/

Petitioner,

vs.

Case No. 19 - 1034RU

DEPARTMENT OF REVENUE,

Respondent.

_______________________________/

FINAL ORDER

On March 27, 2019, Administrative Law Judge Robert J.

Telfer III, of the Florida Division of Administrative Hearings

(Division) , conducted a duly - noticed hearing in Tallahassee,

Florida.

APPEARANCES

For Petitioner: H. French Brown, Esquire

Will iam D. Hall, III, Esqu ire

Dean Mead & Dunbar

215 South Monroe Street, Suite 815

Tallahassee, Florida 32301

For Respondent: Timothy E. Dennis, Esquire

Office of the Attorney General

Revenue Litigation Bureau

The Capitol, Plaza Level 01

Tallahassee, Florida 32399 - 1050

Jacek P. Stramski, Esquire

Florida Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

STATEMENT OF THE ISSUE

Whether certain statements contained within a Voluntary

Compliance Agreement (Airbnb Agreement), entered into between

Responde nt , Department of Revenue (Department) , and Airbnb , Inc. ,

constitute an unadopted rule, in violation of sections 120.52(2),

120.54, and 120.56(4), Florida Statutes ( 2018 ) .

PRELIMINARY STATEMENT

On February 26, 2019, Petitioner s, Asian American Hotel

Owners Association, Inc. (AAHOA) , and SH Sarasota, LLC, filed a

Petition to Determine the Invalidity of an Agency Statement

Defined as an Unadopted Rule. The Petition sought a

determin ation that the Airbnb Agreement, as well as another

alleged agreement between the Department and HOMEAWAY.COM,

constituted unadopted rules, and also al leged that the Airbnb

Agreement and the agreement between the Department and

HOMEAWAY.COM were invalid exercises of delegated legislative

authority, in violation of section 120.52(8 ) . On February 27,

2019, Chief Judge Robert Cohen issued an Order of Assignment,

which assigned this matter to the undersigned administrative law

judge (ALJ).

On March 8, 2019, the Department filed a Motion to Dismiss,

contending that: (1) the Division la cked subject matter

jurisdiction; (2) Petitioners lacked standing to challenge the

Airbnb Agreement and the alleged agreement between the Department

and HOMEAWAY.COM as unadopted rules or invalid exercises of

delegated legislative authority; (3) the Airbnb Agreement and the

alleged agreement between the Department and HOMEAWAY.COM were

not statements of general applicability, and thus not subject to

rule challenge proceedings; (4) Petitioners failed to identify

particular provisions of the alleged agreement between the

Department and HOMEAWAY.COM that they wished to invalidate; (5)

the Petition ignored the due process concerns of third parties;

and (6) the PetitionÓs allegations (contained in Count II)

concerning invalid exercise of delegated legislative aut hority

was inappropriate in an unadopted rule challenge proceeding.

On March 11, 2019, Petitioners filed two motions:

(1) a Motion for Protective Order; and (2) a Motion to Determine

the Confidentiality of Certain Documents and to Compel Discovery.

On March 12, 2019, Petitioner SH Sarasota , filed a Notice of

Voluntary Dis missal of I ts Participation in T his Action.

On March 14, 2019, AAHOA filed a Response to the

DepartmentÓs Motion to Dismiss, and the Department filed a

Response in Opposition to Peti tionersÓ Motion for Protective

Order, as well as a Response in Opposition to PetitionersÓ Motion

to Determine the Confidentiality of Certain Documents and to

Compel Discovery.

The undersigned conducted a live hearing on all pending

motions on March 15, 201 9. Consistent with the undersignedÓs

oral rulings at the March 15, 2019, hearing, the undersigned

issued an Order Granting, in Part, and D enying, in Part, the

DepartmentÓs Motion to Dismiss on March 18, 2019, which:

(1) granted the DepartmentÓs Motion t o Dismiss as to Count II of

the Petition, which contended that the alleged unadopted rule

was also an invalid exercise of delegated legislative authority,

as this was improper in a proceeding brought under

section 120.56(4); and (2) denied the Department Ós Motion to

Dismiss in all other respects, with the opportunity for the

parties to present evidence and legal argument at the final

hearing as to whether Petitioner had standing, a nd whether the

Airbnb Agreement and the alleged agreement between the Depar tment

and HOMEAWAY.COM were agency statements that constitute an

unadopted rule. 2 /

Next, consistent with the undersignedÓs oral ruling at the

March 15, 2019, motion hearing, the undersigned issued an Order

Concerning PetitionerÓs Motion to Determine the Co nfidentiality

of Certain Documents and to Compel Discovery (Confidentiality

Order) , which allowed AAHOA to serve an amended Interrogatory 4.,

to seek certain information that would not request confidential

and exempt information under sections 213.053(2)(a ) and

213.21(3)(a), Florida Statutes, and provided time frames for the

service and response to such an amended interrogatory. AAHOA

served, and the Department responded to , an amended interrogatory

within the time frame set forth in the Confidentiality Or der .

Additionally, at the March 15, 2019, motion hearing, the

parties agreed to confer further, at the undersignedÓs urging, in

an attempt to agree to the terms of an acceptable confidentiality

agreement . Thereafter, on March 19, 2019, the parties filed a

Joint Motion for Entry of Stipulated Protective Order, and on

March 20, 2019, the undersigned entered a Stipulated Protective

Order.

The undersigned conducted the final hearing on March 27,

2019. 3 / The undersigned admitted into evidence Joint Exhibits 1

and 2. 4 / AAHOA presented the testimony of Rachel Humphrey, the

interim president and chief executive officer of AAHOA. The

undersigned accepted PetitionerÓs Exhibits P1 through P8 into

evidence; the Department objected to Exhibits P5 and P6 on

hearsay gr ounds. 5 / The Department presented the testimony of

George Hamm, Esquire, the deputy general counsel of the

Department. The undersigned accepted RespondentÓs Exhibits R1

through R4, without objection.

The T ranscript of the final hearing was filed with the

Division on April 4, 2019. At the final hearing, the undersigned

provided the parties with a deadline of April 8, 2019, to submit

proposed final orders. Both parties timely filed proposed final

orders, which the undersigned has considered in the prepara tion

of this Final Order . 6 /

All statutory references are to the 2018 codification of the

Florida Statutes unless otherwise indicated.

FINDING S OF FACT

THE PARTIES

1. AAHOA is a nationwide trade association that represents

the hotel industry. According to Ms. Humphrey, AAHOA members own

approximately 60 percent of all hotels in the United States.

Ms. Humphrey characterized AAHOA as Ðthe voice of American hotel

owners[.]Ñ

2. Ms. Humphrey testified that AAHOAÓs Florida members

constitute its third largest membership, by volume, of all it s

members per state. Ms. Humphrey further testified that most of

AAHOAÓs members are active hoteliers, actively engaged in the

ownership and operations of their properties.

3. The undersigned has reviewed AAHOAÓs membersh ip list as

it pertains to Florida members, which the undersigned accepted as

an exhibit in this proceeding, subject to the Stipulated

Protective Order. Broadly speaking, this membership list

indicates a large membership, with individual members (and

spous es) listing various Ðorganizations,Ñ many of which appear to

be recognized hotel names, as part of their memberships.

4. Ms. Humphrey testified that its members own hotels in a

variety of forms: sole proprietorships; joint ventures;

partnerships; and var ious corporate forms, including limited

liability companies. When pressed at the final hearing during

cross - examination, Ms. Humphrey was unable to identify whether

any of the individuals or entities listed in the Florida

membership list owned a hotel in Florida.

5. The Department is the state agency responsible for

administering FloridaÓs revenue laws.

T RANSIEN T R ENTAL T AX

6. Among its many duties, the Department is responsible for

imposing and collecting FloridaÓs transient rentals tax (TRT), a

type of tax imposed on short - term accommodations rentals.

See §§ 20.21, 212.03, and 213.05, Fla. Stat.

7. Section 212.03(1)(a) provides the general basis for TRT:

It is hereby declared to be the legislative

intent that every person is exercising a

taxable priv ilege in the business of renting,

leasing, letting, or granting a license to

use any living quarters or sleeping or

housekeeping accommodations in, from, or a

part of, or in connection with any hotel,

apartment house, roominghouse, tourist or

trailer camp, mobile home park, recreational

vehicle park, condominium, or timeshare

resort. . . . For the exercise of such

taxable privilege, a tax is hereby levied in

an amount equal to 6 percent of and on the

total rental charged for such living quarters

or sleepin g or housekeeping accommodations by

the person charging or collecting the rental.

Such tax shall apply to hotels, apartment

houses, roominghouses, tourist or trailer

camps, mobile home parks, recreational

vehicle parks, condominiums, or timeshare

resorts, whether or not these facilities have

dining rooms, cafes, or other places where

meals or lunches are sold or served to

guests.

8 . Section 212.03(2) provides the procedure for the

collection of TRT:

[TRT] shall be in addition to the total

amount of the r ental, shall be charged by the

lessor or person receiving the rent in and by

said rental agreement to the lessee or person

paying the rental, and shall be due and

payable at the time of the receipt of such

rental payment by the lessor or person, as

defined in this chapter, who receives said

rental or payment. The owner, lessor, or

person receiving the rent shall remit the tax

to the department at the times and in the

manner hereinafter provided for dealers to

remit taxes under this chapter. The same

dutie s imposed by this chapter upon dealers

in tangible personal property respecting the

collection and remission of [TRT]; the making

of returns; the keeping of books, records,

and accounts; and the compliance with the

rules and regulations of the department i n

the administration of this chapter shall

apply to and be binding upon all persons who

manage or operate hotels, apartment houses,

roominghouses, tourist and trailer camps, and

the rental of condominium units, and to all

persons who collect or receive suc h rents on

behalf of such owner or lessor taxable under

this chapter.

9. Also included in the DepartmentÓs responsibilities is

its obligation to identify the person who has a duty to register

as a ÐdealerÑ for the purpose of collecting and remitting TRT.

See £ 212.18(3)(c)2.b., Fla. Stat. The term Ðdealer,Ñ in the

context of the issues raised in this unadopted rule challenge,

means:

[A]ny person who leases, or grants a license

to use, occupy, or enter upon, living

quarters, sleeping or housekeeping

acco mmodations in hotels, apartment houses,

roominghouses, tourist or trailer camps, real

property, space or spaces in parking lots or

garages for motor vehicles, docking or

storage space or spaces for boats in boat

docks or marinas, or tie - down or storage

spa ce or spaces for aircraft at airports.

The term ÐdealerÑ also means any person who

has leased, occupied, or used or was entitled

to use any living quarters, sleeping or

housekeeping accommodations in hotels,

apartment houses, roominghouses, tourist or

tra iler camps, real property, space or spaces

in parking lots or garages for motor vehicles

or docking or storage space or spaces for

boats in docks or marinas, or who has

purchased communications services or electric

power or energy, and who cannot prove tha t

the tax levied by this chapter has been paid

to the vendor or lessor on any such

transactions.

§ 212.06(2)(j), Fla. Stat.

10 . Florida law provides that all dealers must register

with the Department. § 212.18(3)(a), Fla. Stat. Florida

Administrative Code Rule 12A - 1.060(1)(a)9. further defines who

must register as a ÐdealerÑ:

(1) Persons required to register as dealers.

(a) Every person desiring to engage in or

conduct any one of the following businesses

in this state as a ÐdealerÑ must register

wit h the Department of Revenue and obtain a

separate certificate of registration for each

place of business:

* * *

9. Lease, let, rental, or granting licenses

to use any living quarters or sleeping or

housekeeping accommodations subject to the

transient rental tax imposed under

Section 212.03, F.S.

11. All dealers must remit all TRT collected to the

Department. ÐAny person who . . . fails to remit taxes collected

under this chapter is guilty of theft of state funds.Ñ

§ 212.15(2), Fla. Stat.

12. The undersigned finds that, under the above - described

statutory and regulatory structure, hotels are considered

ÐdealersÑ that mu st register with the Department and collect and

remit TRT to the Department.

THE AIRBNB AGREEMENT

13. Airbnb is an internet - base d platform, through which a

third party desiring to offer accommodations (hosts), and a third

party desiring to book an accommodation (guests), have the

opportunity to communicate, negotiate, and consummate a booking

transaction for accommodations pursuant to a direct agreement, in

which Airbnb is not a direct party.

14. Airbnb utilizes third - party payment processors to

provide a secure payment processing service, which allows hosts

to receive payments from guests electronically. When the host

accepts and confirms a guestÓs reservation request, Airbnb,

acting through third - party payment processors, electronically

processes the guestÓs payment, which is typically held for

approximately 24 hours after the guest checks into the hostÓs

property, and then is re leased directly to the host, less an

applicable service fee.

15. The Department and Airbnb entered into the Airbnb

Agreement on December 1, 2015. The Airbnb Agreement states that

the parties entered into the Airbnb Agreement:

[T]o facilitate the reporti ng, collection and

remittance of the Transient Rental Tax

imposed by Florida Statute § 212.03; the

Discretionary Sales Surtax imposed pursuant

to Florida Statute 212.054; and the Tourist

Development Tax imposed by Florida Statute

§ 125.0104 by those count ies that have not

adopted an ordinance providing for the self -

collection and administration of their

respective Tourist Development Tax pursuant

to Florida Statute § 125.0140(10)

(hereinafter collectively, ÐTRTÑ), resulting

from Rental Transactions complet ed by Hosts

and Guests on the Platform for the occupancy

of accommodations located in the State of

Florida (the ÐStateÑ)[.]Ñ

16. The Department also considered the following factors

when entering into the Airbnb Agreement, consistent with

sect ion 213.21 (7)(b), which provide the Department with the

authority to settle and compromise tax due under voluntary self -

disclosure , and when the D epartment is able to determine that a

settlement and compromise is in the best interests of the state:

(a) I ts legal au thority to designate ÐdealersÑ for purposes

of registration, collection, and remittance of state taxes and

the provisions of r ule 12A - 1.061(9);

(b) T he difficulty of identifying persons who may be

attempting to engage in a transient rental, particularly t hose

exclusively utilizing a third - party platform;

(c) T he ÐsignificantÑ administrative burden of identifying,

registering, tracking, accounting for, and processing returns and

payments from a significant number of individual ÐhostsÑ

utilizing the Airbnb platform , while designating Airbnb as a

ÐdealerÑ would be more efficient;

(d) T he difficulty it would encounter in enforcing and

collecting from the individual Ðhosts . Ñ T he Department stated

that it would expend extraordinary resources and time, without

guarantee of success, in identifying, auditing, assessing, and

collecting from these individual Ðhosts . Ñ T hrough designating

Airbnb as a Ðdealer,Ñ collections and the auditing process would

be more stable and simplified because Airbnb, as the Ðdealer,Ñ

ag reed to be liable for audit by the Department and agreed to

provide records sufficient to determine its liability with a much

higher degree of confidence than if the Department attempted to

identify and audit the individual ÐhostsÑ;

(e) T he Department ret ained the ability to hold ÐhostsÑ

liable for any applicable taxes, penalties, and interest, if a

ÐhostÑ were to make material misrepresentations to Airbnb or the

Department;

(f) T he benefits of the Airbnb AgreementÓs providing

predictability in terms of l egal issues that could arise between

Airbnb and the Department; and

(g) T he future voluntary compliance of taxpayers and the

best interests of the state.

17. Mr. Hamm confirmed that the Department considered these

factors, as enunciated in section 213.21 (7)(b), and further

testified that the Airbnb Agreement was the result of an ÐuniqueÑ

set of circumstances that operates in the best interest of the

state.

18. Under the Airbnb Agreement, Airbnb:

[A]g rees to assume the duties of a TRT

ÐdealerÑ during the period in which this

[Airbnb] Agreement as described in Section

212.03(2) and Section 212.18 of the Florida

Statutes with respect to Rental Transactions

between Hosts and Guests completed on the

Platform for which TRT . . . is applicable.

19. The Airbnb Agreement also provides that Airbnb shall

collect and remit TRT for all Florida - based rental transactions

that users complete on the Airbnb platform.

20. The Airbnb Agreement provides that the Department

agrees to not directly audit guests or hosts, stati ng:

[T]he Department agrees that any audit of

[Airbnb]Ós Rental Transactions covered by

this [Airbnb] Agreement will be based on TRT

returns filed with the Department by [Airbnb]

and [Airbnb]Ós supporting documentation for

such returns, and the Department agrees that

it will not directly or indirectly audit

Guests or Hosts for such Rental Transactions

that are transacted through the Platform.

21. The Airbnb Agreement also states that, with respect to

a hostÓs activities on the Airbnb platform, the Depart ment will

not require the host to individually register with the Department

to collect, remit, and report TRT to the Department under

section 212.18. 7 /

AAHOAÓS UNADOPTED RULE CHALLENGE

22. AAHOAÓs Petition alleges that the Airbnb Agreement

constitutes an unadopted rule because it was not adopted pursuant

to the requisite procedures identified in section 120.54.

23. AAHOA contends that the Airbnb A greement provides broad

rights and statutory waivers to hosts that are not available to

hoteliers in Florid a, which comprise its membership ranks.

24. AAHOA alleges that the Airbnb Agreement substantially

affect s its members because Florida law requires its members to

register, collect, and remit TRT, to register as dealers with the

Department for each place o f business, and to subject themselves

to Department audit; conversely, they contend that the Airbnb

Agreement waives these same legal requirements for hosts that use

the Airbnb platform.

25. According to AAHOA, with the Airbnb Agreement in

effect, its Flo rida members must incur regulatory costs and

burdens that hosts under the Airbnb platform Ï who are direct

competitors to AAHOAÓs Florida members Ï do not.

26. Ms. Humphrey testified that AAHOA Ðis the voice of

American hotel owners . . . and our members as h oteliers always

have an interest in making sure that thereÓs a level playing

field among businesses that operate in the same space.Ñ

27. Ms. Humphrey further commented on how the Airbnb

Agreement affects AAHOAÓs Florida members:

Any time a hotelier is req uired to register

or collect, remit, and be subject to audit,

there are inherent labor costs involved with

that. There are daily, weekly, monthly and

annual reconciliations that need to take

place. Any time employees are tasked with

activities in further ance of compliance

efforts, thatÓs time theyÓre not spending in

other areas to drive revenues, to drive

[return on investment]. Additionally, many

hoteliers will outsource or have accounting

or other third parties who assist with that

process. And thereÓ s an actual expense, of

course, in hiring any of those. Any time you

have labor and expenses in one area, thatÓs

pulling away from the [return on investment].

28. AAHOA maintains that the expenses it outlined in

paragraphs 24 through 27 above, which aff ect its Florida - based

hotel - owning membersÓ return on investment, cause it injury, when

compared to an Airbnb host which, under the Airbnb Agreement,

will not incur such expenses.

29. However, the undersigned finds that AAHOA was unable to

identify with a ny level of specificity, or to quantify any

damages suffered or would suffer, or identify negative effects on

the return on investment of any of its Florida - based hotel - owning

members, as a result of the Airbnb Agreement.

30. The undersigned finds that, r egardless of the existence

of the Airbnb Agreement, any ÐdealerÑ in Florida, including any

of AAHOAÓs Florida - based hotel - owning members, is required to

comply with the applicable laws concerning registering as a

dealer, and collecting and remitting TRT. Further, any ÐdealerÑ

remains subject to a possible audit. AAHOAÓs Florida - based

hotel - owning members are incurring the regulatory cost s it

contends negatively affect its return on investment, regardless

of the existence of the Airbnb Agreement.

31. The Airbnb Agreement provides that Airbnb collects

service fees from guests and hosts, which it calculates as a

percentage of the rental transaction amount that hosts set. The

Airbnb Agreement also provides that Airbnb will impose TRT on the

rental transactio n amount, but not these service fees. Thus, the

undersigned finds that hosts incur a cost, outside of TRT, that

it must pay to Airbnb under the Airbnb Agreement.

32. AAHOA did not establish that any of the individuals or

entities listed in its Florida me mbership list owned a hotel in

Florida. Further, the undersigned finds that AAHOA did not

establish that a substantial number of its members have a

substantial interest that is affected by the Airbnb Agreement.

33. The undersigned finds that AAHOA failed to introduce

any evidence to corroborate its claimed injury that the Airbnb

AgreementÓs requirement that Airbnb collect and remit TRT, as

opposed to hosts doing so, or eliminating the need for hosts to

register or be subject to audits, caused any harm to any of its

members, let alone a substantial number of them.

34. To that end, the undersigned notes that AAHOA failed to

identify any Florida - based hotel - owning member who specifically

identified the Airbnb Agreement as affecting that memberÓs return

on in vestment for any hotel property.

35. Additionally, AAHOA failed to introduce any evidence

that would demonstrate that the Airbnb Agreement has affected the

economic performance of its Florida - based hotels in any way.

Although AAHOA has consistently stat ed that Ðbasic logicÑ

establishes that the Airbnb Agreement affects a substantial

number of its members, the undersigned finds that AAHOA simply

fell short of establishing this important fact.

36 . The undersigned finds that AAHOA has not presented any

com petent substantial evidence to demonstrate that a substantial

number of its members are affected by the Airbnb AgreementÓs

requirement that Airbnb, and not hosts, register, collect, and

remit TRT, and be subject to audit for those transactions

effected on its platform. Accordingly, the undersigned finds

that AAHOAÓs claimed injury Ï that is, that its Florida - based

hotel - owning members are injured because the Airbnb Agreement

exempts hosts from certain requirements, thus causing an Ðunlevel

playing fieldÑ Ï is based on speculation.

CONCLUSIONS OF LAW

37 . The Division has jurisdiction over the subject

matter and the parties to this proceeding in accordance with

sections 120.54 and 120.56.

38 . Section 120.56(1)(e) describes the nature of an

unadopted rule chal lenge proceeding:

Hearings under this section shall be de novo

in nature. The standard of proof shall be

the preponderance of the evidence. Hearings

shall be conducted in the same manner as

provided in ss. 120.569 and 120.57, except

that the administrati ve law judgeÓs order

shall be final agency action.

STANDING

39 . The standard for standing in a rule challenge

proceeding is less demanding that in an action brought under

section 120.57. The ability to challenge a rule Ðwas intended to

create an opportu nity for a citizen - initiated check on rule

making that exceeded delegated statutory authority.Ñ DepÓt of

ProfÓl Reg., Bd. of Dentistry v. Fla. Dental Hygenist AssÓn,

Inc. , 612 So. 2d 646, 652 (Fla. 1st DCA 1993)(quoting Patricia A.

Dore, Access to Florida Administrative Proceedings , 13 Fla. St.

U. L. Rev. 965, 1014 (1986)).

40 . Section 120.52(13)(b) provides that a party to an

administrative proceeding is Ðany person . . . whose substantial

interests will be affected by the proposed agency action . . . .Ñ

41 . A party is substantially affected if the rule will

(a) result in a real or immediate injury in fact, and (b) the

alleged interest is within the zone of interest to be protected

or regulated. See Jacoby v. Fla. Bd. of Med. , 917 So. 2d 358,

360 (Fla. 1st DCA 2005).

42 . To satisfy the sufficiently real and immediate injury

in fact element, an injury must not be based on pure speculation

or conjecture. See Off . of Ins. Reg. v. Secure Enters., LLC ,

124 So. 3d 332, 336 (Fla. 1st DCA 2013).

43 . For a n association to establish standing as a party

(i.e., associational standing), it must prove that a substantial

number of its members, but not necessarily a majority, have a

substantial interest that reasonably could be affected, that the

subject matter of the proposed activity is within the general

scope of the interests and activities for which the organization

was created, and that the relief requested is of the type

appropriate for the organization to receive on behalf of its

members. See Fla. Home Bui lders AssÓn v. DepÓt of Labor & Emp.

Sec. , 412 So. 2d 351, 353 - 54 (Fla. 1982). See also NAACP, Inc.

v. Fla. Bd. of Regents , 863 So. 2d 294 (Fla. 2003) (applying Fla.

Home Builders , 412 So. 2d at 297 - 300 ) .

44 . AAHOA posits that NAACP , B oar d of Dentistry , a nd

Rosenzweig v. Department of Transportation , 979 So. 2d 1050 (Fla.

1st DCA 2008), provide a basis for associational standing in this

proceeding.

4 5 . In NAACP , the Florida Supreme Court applied the test

for associational standing enunciated in Florida Ho me Builders

Association , to conclude that amendments to rules that would

eliminate certain affirmative action policies by FloridaÓs state

universities had an ÐobviousÑ impact on African - American

students, as compared to nonminority students. NAACP , 863 So . 2d

at 299. The NAACP court found that a Ðsubstantial number of the

associationÓs members were both prospective applicants to the

State University System and were minorities that would obviously

be affected by any change in policy concerning minority

adm issions.Ñ Id . Based on these findings, the NAACP court held

that Ðthe association has demonstrated a sufficient impact on its

student members as genuine prospective candidates for admission

to the state university system to meet the requirement of

substa ntial impact.Ñ Id . at 300.

4 6 . In Board of Dentistry , a n association of Florida dental

hygienists challenged a proposed rule that designated the Alabama

Dental Hygiene Program as an approved dental hygiene college

within the meaning of the licensing stat ute. Bd. of Dentistry ,

612 So. 2d at 647 - 48. The court, in determining that the

appellee had standing, noted that it required Ðno flight of

imagination to reason that if the rule would produce a flood of

lesser - trained hygienists, presumably available fo r employment

for less compensation, this would have an economic impact on the

existing pool of more highly - trained individuals.Ñ Id . at 649.

The court further found that Ðthose hygienists who are already

qualified, licensed and practicing in Florida have a sufficient

interest in maintaining the levels of education and competence

required for licensing to afford them standing to challenge an

unauthorized encroachment upon their practice.Ñ Id . at 651. The

court determined that the Ðprofessional and econom ic interestsÑ

of current dental hygienists were directly affected, and

concluded that the association had standing to challenge the

rule.

47 . In Rosenzweig , an individual and two organizations

devoted to bicyclists challenged the D epartment of

Transportat ion Ós (DOT) implementation of a statute pertaining to

the design and placement of bicycle lanes in conjunction with the

resurfacing, restoration, and rehabilitation of State Road A1A in

Palm Beach County. Rosenzweig , 979 So. 2d at 1052. DOT

challenged th e appellantsÓ standing, relying on decisions

concerning whether taxpayers could challenge the decision of a

legislative body to make an expenditure. I d . at 1053. The

court, noting that one of the legislative purposes of the

Administrative Procedures Act was to expand public access to the

activities of governmental agencies, held:

The statute . . . sets forth a policy for

incorporating bicycle lanes in construction

and reconstruction projects, and it further

delineates situations where the Department

need not establish the bicycle lanes.

£ 335.065, Fla. Stat. The statuteÓs

straightforward purpose is to regulate the

placement of bicycle and pedestrian ways.

Reason dictates that a bicycle organization,

like appellants, can demonstrate that a

substantial n umber of its members will be

affected by the DepartmentÓs decisions

relating to the construction of bicycle

paths.

Id . at 1054.

48 . The undersigned concludes that NAACP , B oar d of

Dentistry , and Rosenzweig are distinguishable from the facts

adduced in the instant matter, and thus provide no basis for

AAHOAÓs arguments that it has established association standing to

sustain this unadopted rule challenge:

(a) In NAACP , the court found that a Ðsubstantial number of

the associationÓs members were both prosp ective applicants to the

State University System and were minorities that would obviously

be affected by any change in policy concerning minority

admissions[.] Ñ NAACP , 863 So. 2d at 299. In contrast, AAHOA

failed to establish, through competent substantia l evidence, that

any of the entities listed in its membership list owned a hotel

in Florida and failed to identify any Florida - based hotel - owning

member who specifically identified the Airbnb Agreement as

affecting that memberÓs return on investment;

(b) In Board of Dentistry , the court found that the

Ðprofessional and economic interestsÑ of current dental

hygienists were directly affected by the proposed rule. Bd. Of

Dentistry , 612 So. 2d at 651. As previously noted, AAHOA failed

to identify any Florida - based hotel - owning member who

specifically identified the Airbnb Agreement as affecting that

memberÓs return on investment. Additionally, any ÐdealerÑ in

Florida, regardless of the Airbnb Agreement, is required to

comply with applicable laws concerning r egistering as a dealer,

and collecting and remitting TRT; and

(c) In Rosenzweig , the court found that the bicyclist

organizations demonstrated that the DOTÓs decisions relating to

placement of bicycle paths affected a substantial number of its

members. R osenzweig , 979 So. 2d at 1054. The undersigned finds

that AAHOA failed to do the same.

49 . The undersigned concludes that AAHOA was unable to

establish associational standing in this matter because it failed

to prove that a substantial number of its memb ers, but not

necessarily a majority, have a substantial interest that

reasonably could be affected by the Airbnb Agreement.

50 . Based on the evidence presented, it was not Ðobvious,Ñ

as the NAACP court stated, it does not Ðstand[] to reason,Ñ as

the Rosen zweig court stated, and it would require a Ðflight of

fancy,Ñ as the Board of Dentistry court stated, for the

undersigned to conclude that a substantial number of AAHOAÓs

Florida - based hotel - owning members were affected by the Airbnb

Agreement.

51 . The un dersigned notes that AAHOAÓs Florida - based hotel -

owning members remain subject to requirements under Florida law

to register, collect, and remit TRT, and to be subject to

possible audit regardless of the existence of the Airbnb

Agreement . Further, althoug h not fully developed at the final

hearing, the service fees that Airbnb imposes on hosts and

guests, which are in addition to TRT, cuts against AAHOAÓs

argument that the Airbnb Agreement creates an unlevel playing

field.

52 . The undersigned also conclude s that AAHOA failed to

establish the Ðreal or immediate injury in factÑ requirement for

standing in a rule challenge proceeding. In Secure Enterprises,

124 So. 3d at 337 - 38, the court found that the appellees lacked

standing in a rule challenge proceeding , under the Ðreal or

immediate injury in factÑ element, because the alleged injury was

speculative and based on conjecture. See also K.M. v. Fla. DepÓt

of Health , 237 So. 3d 1 084, 1088 - 89 (Fla. 3d DCA 2017) (holding

that Ð[w]hile not requiring a strict Òbu t forÓ relationship

between the proposed administrative action and the alleged

injury, the nexus between the two . . . [must] not depend upon

conjecture or speculation. Ñ).

53 . The Secure Enterprises court, in reversing an ALJÓs

conclusion that a petition er had standing in a rule challenge,

noted that the ALJ found that injury in fact Ðmay be inferred

from the likelihood . . . [that the ruleÓs effect] would Ò likely

cause Ó Appellee economic injury, Ñ Secure Enterprises , 124 So. 3d

at 339. The court held tha t such findings confirmed that

petitioners failed to show that the rules and forms at issue

resulted in a Ðreal or immediateÑ injury in fact sufficient to

satisfy the substantially affected test. I d .

5 4 . Similarly, the undersigned concludes that AAHOA

pr esented no competent substantial evidence that the Airbnb

AgreementÓs requirement that Airbnb, and not hosts, register,

collect, and remit TRT and be subject to audit for those

transactions effected on its platform, affected any of its

Florida - based hotel - owning members. As held in Secure

Enterprises , if the alleged injury is speculative or based on

conjecture, it cannot satisfy this requirement. For this

additional reason, the undersigned concludes that AAHOA does not

have the requisite standing for this proceeding. 8 /

55. I n its P roposed F inal O rder, the Department requests

that the undersigned award it reasonable attorney Ós fees and

costs pursuant to section 120.595(4)(d). The undersigned, having

reviewed the file, and based on the foregoing Findings o f

Fact and Conclusions of Law, conclude s that the Depa rtment

shall no t be awarded attorney Ós fees and costs pursuant to

section 120.595(4)(d).

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that AAHOAÓs Petition to De termine the

Invalidity of an Agency Statement Defined as an Unadopted Rule is

hereby DISMISSED.

DONE AND ORDERED this 25th day of April , 2019 , in

Tallahassee, Leon County, Florida.

S

ROBERT J. TELFER III

Administrative La w Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 25th day of April , 2019 .

ENDNOTE S

1/ The undersigned dismissed SH Sarasota at the final hearing and

has modified the case style to reflect th is dismissal.

2 / At the March 15, 2019 hearing, and subsequently in the Joint

Pre - hearing Stipulation, AAHOA aban doned its unadopted rule

challenge with respect to any agreement between the Department

and HOMEAWAY.COM.

3 / On March 26, 2019, AAHOA filed a Motion for Official

Recognition, requesting the undersigned to take official

recognition of Florida Administrati ve Code Rules 12A - 1.060

and 12A - 1.061, as well as the DepartmentÓs Form DR - 1C, entitled

ÐApplication for Collective Registration of Living or Sleeping

Accommodations.Ñ On March 27, 2019, the undersigned entered an

Order Granting Motion for Official Recog nition.

4 / Joint Exhibit 2, AAHOAÓs member list, falls within the

protection of the Stipulated Protective Order as a trade secret

of AAHOA.

5 / Exhibits P7 and P8 are copies of the deposition transcripts

of Rachel Humphrey and George Hamm. The undersi gned notes

that Exhibits P7 and P8 are not the original deposition

transcripts of Ms. Humphrey or Mr. Hamm, and do not contain any

of the numerous exhibits discussed at length during these

depositions. The undersigned has reviewed these copies of the

tra nscripts, sans exhibits, and has accorded them their

appropriate weight.

6 / The undersigned notes that the Department timely submitted

redacted and unredacted proposed final orders. The DepartmentÓs

unredacted proposed final order contains matters that fall within

the Stipulated Protective Order.

7 / In doing away with the registration, collecting, and remitting

requirement for hosts under section 212.18, it appears that the

Airbnb Agreement also does away with the criminal penalties,

under section 212. 18(3)(c), for a hostÓs failure to register with

the Department.

8 / Because the undersigned concludes that AAHOA lacks standing to

pursue this unadopted rule challenge, the undersigned declines to

address the merits of AAHOAÓs Petition .

COPIES FURNISHE D:

H. French Brown, Esquire

Dean Mead & Dunbar

215 South Monroe Street , Suite 815

Tallahassee, Florida 32301

(eServed)

Michael B. Dobson, Esquire

Dean Mead & Dunbar

215 South Monroe Street , Suite 815

Tallahassee, Florida 32301

(eServed)

William D. Hal l, III, Esquire

Dean Mead & Dunbar

215 South Monroe Street , Suite 815

Tallahassee, Florida 32301

(eServed)

Mark S. Hamilton, General Counsel

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

Timothy E. Dennis, Esquire

Office of the Attorney General

Revenue Litigation Bureau

The Capitol , Plaza Level 01

Tallahassee, Florida 32399 - 1050

(eServed)

Jacek P. Stramski, Esquire

Florida Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

Jam es A. Zingale, Executive Director

Department of Revenue

Post Office Box 6668

Tallahassee, Florida 32314 - 6668

(eServed)

Ernest Reddick, Program Administrator

Anya Grosenbaugh

Florida Administrative Code and Register

Department of State

R. A. Gray Buildin g

5 0 0 South Bronough Street

Tallahassee, Florida 32 9 39 - 0250

(eServed)

Ken Plante, Coordinator

Joint Administrative Procedure s Committee

Room 680, Pepper Building

111 West Madison Street

Tallahassee, Florida 32 3 99 - 1400

(eServed)

NOTICE OF RIGHT TO JUD ICIAL 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 b y filing the original

notice of administrative appeal with the agency clerk of the

Division of Administrative Hearings within 30 days of rendition

of the order to be reviewed, and a copy of the notice,

accompanied by any filing fees prescribed by law, with the clerk

of the District Court of Appeal in the appellate district where

the agency maintains its headquarters or where a party resides or

as otherwise provided by law.