Department of Natural Resources v. Sailfish Club of Florida, Inc.

• Decision Date: 23 July 1985
• Docket Number: No. BD-56,BD-56
• Citation: 473 So.2d 261,10 Fla. L. Weekly 1778
• Parties: 10 Fla. L. Weekly 1778 DEPARTMENT OF NATURAL RESOURCES, Appellant, v. SAILFISH CLUB OF FLORIDA, INC., Appellee.
• Court: Florida District Court of Appeals

Page 261

473 So.2d 261

10 Fla. L. Weekly 1778

DEPARTMENT OF NATURAL RESOURCES, Appellant, v. SAILFISH CLUB OF FLORIDA, INC., Appellee.

No. BD-56.

District Court of Appeal of Florida First District.

July 23, 1985.

Rehearing Denied Aug. 22, 1985.

Bruce Barkett, Asst. Gen. Counsel and Spiro T. Kypreos, Asst. Gen. Counsel, Dept. of Natural Resources, Tallahassee, for appellant.

Thomas M. Beason and Jon Moyle, of Moyle, Flanigan, Katz, FitzGerald & Sheehan, Tallahassee, for appellee.

SHIVERS, Judge.

Appellant Department of Natural Resources (DNR) appeals final order of the Division of Administrative Hearings that Florida Administrative Code (FAC) Rule 16Q-21.05(1)(b)4 and proposed FAC Rule 16Q-21.11 are invalid exercises of delegated legislative authority. We reverse.

At issue are:

(1) Whether the Hearing Officer applied the correct standard of review to the Trustees' authority to manage sovereignty land;

(2) Whether the fee structure for leases in proposed FAC Rule 16Q-21.11 is invalid;

(3) Whether the economic impact statement for the proposed rule is incomplete;

(4) Whether the FAC Rule 16Q-21.05(1)(b)4 constitutes an invalid exercise of delegated legislative authority.

The following material facts are primarily derived from the Final Order.

Appellee Sailfish Club of Florida, Inc. (Sailfish) is a nonprofit Florida corporation which operates a 550-member private club in Palm Beach County. Its facilities include a swimming pool, large dining room, cocktail lounge, private dining rooms, card rooms and a marina with three docks and 62 slips. Sailfish's annual membership dues are $925 per member. The marina docks are constructed over 94,815 square feet of submerged lands owned by the State of Florida Board of Trustees of the Internal Improvement Trust Fund (Trustees). The wet slip space comprises 2,531 linear feet. Marina slips are available to members and are rented at $39.60 per linear foot per year. DNR administers and implements the Trustees' policies.

Prior to March 10, 1970, the Trustees' policy permitted the use of "sovereignty" submerged lands without charging annual fees. At present, all docks, piers and other structures on sovereignty lands which were in existence prior to March 10, 1970, are "grandfathered" and are not subject to the current lease requirements until January 1, 1998.

Beginning March 10, 1970, the Trustees adopted a new policy of licensing sovereignty lands which were used in the operation of marinas, charter boat docks and other commercial mooring facilities. The licensees were required to pay at least 2cents per square foot annually for those sovereignty lands severed from public use, with the licenses renewable annually upon receipt of the appropriate fee.

On August 25, 1970, the Trustees and Sailfish entered into a license agreement whereby Sailfish agreed to pay the Board 2cents per square foot for the sovereignty lands occupied. The license states that it shall be renewable annually. Sailfish thereupon expended $205,000 for the construction of docks and other facilities related to the marina function of the club.

Beginning in August 1971 Sailfish began to annually renew its license for one year periods by tendering the license fees of 2cents per square foot for the 94,815 square feet of submerged lands occupied by the marina. From 1970 until 1980, Sailfish paid the Trustees each year a license fee of $1,896.

In June 1982 DNR informed Sailfish its marina license would increase each year at the rate of 10%. Sailfish declined DNR's suggestion that Sailfish convert its license into a five-year lease. In August 1983 Sailfish paid DNR $2,776.37 for its 1983-84 annual marina license.

On August 1, 1983, DNR adopted amendments to Chapter 16Q-21, FAC, which chapter governs sovereignty submerged lands management. Rule 16Q-21.05(1)(b)4 now requires that existing licenses for use of sovereignty submerged lands be converted into leases upon expiration or renewal date of the license:

(1) All activities on sovereignty lands shall require a lease, easement, consent of use, or other form of approval. The following shall be used to determine the form of approval required:

(b) Lease--is required for:

4. Existing licenses upon the date of expiration or renewal.

The leases would be for terms up to 25 years, renewable at the Trustees' option. Rule 16Q-21.08, FAC (1983 Supp.). As amended in August 1983, the annual lease fee would be computed at a base rate of 6 1/2cents per square foot, with an additional 20% of the lease fee to be charged for the first annual fee and the per square foot base rate to be revised each year. Marinas open to the public on a first come, first serve basis were allowed a 30% discount per square foot per year. Rule 16Q-21.11(1), FAC (1983 Supp.).

In November 1983 DNR advised Sailfish it would need to obtain a sovereignty submerged land lease to continue to operate, and warned Sailfish if DNR did not receive Sailfish's lease application within 90 days it would assume Sailfish no longer wished to maintain the legal use of its facility and would proceed under the removal structures provisions of Sailfish's license. Sailfish failed to submit a lease application. The annual lease fee would have been $6,162.98 plus 20% surcharge of $1,232.59 for the first year of the lease. A $200 processing fee would also have been required.

In the February 24, 1984 issue of the Florida Administrative Weekly, DNR gave notice of its intent to amend Rule 16Q-21.11 relating to standard annual lease fees. The stated purpose: "to establish a framework for more equitable compensation to [Trustees] ... for exclusionary uses of state-owned submerged lands." The amendment establishes the annual lease fee as the base fee of 6 1/2cents per square foot or 7% of the total potential annual revenues from the wet slip rental area, whichever is greater, to be calculated:

by multiplying the total number of linear feet for rent in the wet slip rental area times the weighted average monthly per linear foot rental times 12. The weighted average per linear foot rental will be derived from the monthly rates (seasonal rates included). Any ancillary charges, such as membership fees, dues, or miscellaneous fees which are required to rent a wet slip, shall also be proportionately factored into the average monthly rate. Rule 16Q-21.11(1)(a)1.

Thus, the formula prescribed by rule for establishing the rental fee is 7% of the total number of linear feet for rent times the average posted rental rate times 12 (months). The average monthly rental rate is weighted to include a proportionate amount of those fees which the marina owner require the renter to pay in order to rent a space such as membership fees, dues, or other miscellaneous required fees.

The lease fee formula was the result of the work of an interagency task force appointed by the Trustees and comprised of the Executive Directors of DNR, the Department of Revenue and the Governor's Office of Planning and Budgeting, plus staff.

The economic impact statement indicates:

There will be an increase in lease fees for certain existing and new lessees. The amount of increase, if any, will be directly proportional to the lessee's rental rates for wet slips. Generally speaking, the fee increases over the current existing base rate will be higher in the South Florida Coastal areas and lower in the Northwest and Northeast Florida area. Some lessees in certain rural and low rental rate areas will remain at the current base rate and experience no fee increase. There will also be geographical differentials within a particular region which will cause some lessees in highly desirable, high demand boating areas to pay more than those lessees in the less desirable lower demand areas.

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