okay good morning Council Let's see we have set this case this morning for 15 minutes of argument for side and um you'll just announce your appearance for the record and let us know how much time you want to reserve for rebuttal good morning may it please this honorable Court my name is William Cornwell along with my colleague co-counsel Cynthia Angelos morning um and my partner Howard Weiss we're here on behalf of fvp Miami Lakes LLC I'd like to reserve two minutes and for rebuttal um this appeal arises from a declaratory judgment action to recover a portion of over $4 million in traffic Water and Sewer impact fees paid in 2005 for a proposed development of 207 acres in unincorporated Indian River County the the action also seeks uh a declaration that the Indian River County code section 20.08 is invalid to the extent that it permits and authorizes monthly water and sewer service charges against properties such as the properties we're here about which are not connected to Indian River County's water or sewer systems your client if I uh if I have my facts right uh acquired the property from lenar that is correct company that initially made a financial decision to pay these fees in The Upfront correct that is correct and you took ownership of the property knowing that had been done yes and we took an assignment of All rights to recovery if any right to the impact fees the impact fees that issue were paid by lenar and to obtain the required concurrency certificates to construct 462 single family dwellings the plans for which had already received preliminary approval from the county at the time the fees were paid the plans did not receive final approval and have no legal possibility of ever being constructed significantly in the 11 years since the impact fees were paid the land issue has imposed absolutely no impact on the County's water traffic or sewer services and the county has conferred no tangible benefit in the form of water or sewer improvements to the property it issued in addition since March 19 of 2005 when the impact fees were paid the County's Water and Sewer utility has levied service availability charges of over $10,000 a month on the properties in spite of the Undisputed facts that the properties are not connected to the County's water or sewer Services the properties do not now and never have had the capacity to connect to the County's water or sewer services and no building permits have ever been issued for construction of any improvements on the properties did the county undertake anything uh as a result of the payment of the fees did it do anything to expand in preparation for what they thought was going to be a construction of a new development the county um and this is we've not pursued recovery of the impact fees paid for traffic impact fees for the 315 units that were ultimately subsequently approved and the county will tell you they encumbered those funds in 20 6 for roadway improvements we're not pursuing recovery of those that's the only um expenditure that the county made uh as a result of these fees being paid yes the monthly charges back to the base facilities or service availability charges um which were paid through 2009 when my clients acquired the properties have accumulated with interest in P penalties assessed by the county to over $1.4 million which under the County's code serve as a lean against the properties the County's Water and Sewer utility continues to assess these monthly service charges as if the properties have 462 homes on them despite the fact that the county only ultimately approved 315 homes for construction in November of 2006 doesn't the case law though indicate that the mere availability of use confers a benefit by itself no it doesn't in fact and and I'll get to those cases in a few moments the cases if you look carefully at each and every one of them involve situations where someone is connected to the water sewer or has an improvement on the property and is obtaining garbage collection service for example and complains or chooses not to use the service those cases say it's the availability of the service that gives rise to the charge because the county has to stand ready to deliver service at any moment for example the one that comes to mind is the um the the town of Readington Shores and I think the I4 case that's cited L over and over by by the county where the complaint was either we're not making use of the service we have a 2-in water line for example and an 8 in line that we're being charged for because that 8 in line is available in case there's fire protection needed and we don't want to pay for the 8 in line those cases all uniformly hold that whether you use that service or not the county has to stand ready at any moment to deliver the service here importantly there's no service connection there isn't even any possibility of being connected to the service so you were uh attempting to get back if I understand correctly not the traffic but the water and sewer impact fees that were number one paid by lenar in advance and were you also paying the monthly assessments or those did not go on they were paid through 2009 since then they've accumulated as a lean against the property okay and go ahead I'm sorry no no you're right so if if we um looked at this and said look Lenard made a business decision back then before your client got involved um and decided to pay the fees Upfront for whatever reason they decided um would you separate that amount from the subsequent assessments that were made against your client uh monthly and now apparently some are unpaid and have a lean I mean can they be separated and I assume we're talking just about the service availability charges as distinct from the impact fees that were paid at the at the initial point in time is that I'm just trying to say like I can see in one respect that if lenar made a business decision to pay them upfront that they may have waved uh the argument that they are able to be recouped because they didn't build um and there was no impact on the county on the other hand ongoing after that happened the impact fee that are crewing each month some of which were paid some of which apparently now constitute a lean could be a different type of damage I I see clearly a waiver requires knowing voluntary and being seized with all the facts here both parties that is the county and lenar had this factual belief that 462 homes which had been preliminarily approved would be constructed and more importantly would be fully and finally approved which wasn't the case um with respect to the service availability charges it it's a facial challenge to the ordinance itself because those charges are being levied and I'm going to get into this briefly in a minute as user fees and this court and the Supreme Court of this state yes have have have very specific factors governing the charging levying and collection of user fees first and foremost of which is that it's a service here there's absolutely no service being provided you're going to hear from the county oh yes there is we reserve capacity capity in our sewer and water plants well that's what the impact fees were paid for there's no service being paid and so we facially challenge that ordinance which by the way only allows one to quit paying these fees if and when they permanently disconnect from the Water and Sewer Service never been connected correct Eric olssen the director of utilities who I opposed in this case very candidly admitted that one who never connects will be charged these fees in perpetuity because you can't disconnect what's not connected correct but you're not just seeking the uh refund of the service fees or to get those eliminated you're also seeking the impact fees that were were prepaid by lard that's correct what was there any provision in the India River code for for refunds of uh the impact fees for the water and sewer there is no provision one way or the other the county argues that they don't allow for imp for refunds in fact the record shows they do allow for a process by which the erus that are issued when those fees are paid may be sold or exchanged with those who come in the future there's no prohibition against refund of the water and sewer impact fees there was a no refund rule applicable to the traffic impact fees um quite frankly that rule runs counter to cardillo versus Florida Keys Aqueduct Authority which is a very important case in fact the only case in Florida that's addressed this issue where in the underlying order from the administrative hearing officer the court concluded the fees were voluntarily paid the court concl or the officer concluded that the fees um were not refundable pursuant to both a Florida Administrative Code section and a specific Water Services agreement entered into between the developer and the authority and not withstanding that the Third District Court of Appeals when looking at at the the case and determining that the construction that had been undertaken and was stopped at the in Midstream because an adjoining land owner successfully challenged the issuance of the building permit concluded notwithstanding those facts that because there was no Nexus between the service being provided and the fee that had been paid the words they used was the it was um it defied logic and they reversed the administrative hearing officer's decision and ordered a refund of the fee here there's absolutely no evidence that there was a business decision made to prepay these impact fees the the evidence quite frankly and it's the only evidence factual from John Lynch the lenar representative who was in charge of the project at the time said that lenar felt it had no choice in in the decision because they could risk 1015 million developing these properties and if they waited until building permit issuance be told there was no capacity in the system they were being told at the time they needed to prepay the impact fees they didn't do so to save money is the point like they did in in cardillo is in cardillo they distinguishable because in that case the uh building permit was um res sended through no fault of the plain if in that case um well all cander I hear your point but it sort of a circular argument because they went and and sought approval from the permitting Authority representing that under the Land Development code in Monroe County the permit was issuable the county issued the permit based on the plaintiff's representations which later turned out to not be true so to say that it was due to no fault of the plaintiff is not entirely correct here the impact fees were paid based on both parties agreement that the plan submitted in preliminary preliminarily approved would allow for the construction of 462 homes which later turned out not to be true well was there any true legal impediment to actually building out 462 homes in in the these two projects yes there was I mean economic impediment well that's another business decision though well but there's there's no requirement that the landowner to justify the payment of impact fees make an economic decision to take an enormous loss and build property build out the property in a manner that wasn't the basis for which they paid the fees the fees were paid based on a specific set of plans that the parties agreed what wasn't that you know uh difference in the amount of homes that could be built due to uh Lenard's engineering error not anything that not the Vault of the county again an engineering error that was missed both by the county and and the engineers for lenar yes yes is the answer um but again the payment of the fees in order to be considered voluntary under the case law cited by the county um and and it's Supreme Court case law says very clearly that payment of fees based on a mistake of fact are in fact involuntary and compulsory and the fees may be recovered that's the north Miami case that's been cited by this very Court in its 1982 decision of vest Carpenter turning our attention to what the trial court did frankly the trial court granted summary judgment to the county on the basis of erroneous basis of the statute of limitations um the county urged that statute of limitations began to run in March 2005 um and under vest Carpenter which this court issued in 1982 which was a facial challenge in an instance where the municip IP ality had failed to enact a proper enabling ordinance um the fees were illegal on the date they were paid here we don't challenge the impact fee ordinance we don't say it was illegal on its face we say it wasn't until 2007 when subsequent plans were approved reducing the amount the density from 462 to 315 that as applied when we were denied the incremental um refund request in OCT October of 2007 that because the county could no longer justify the fees based on the Dual rational Nexus requirement under Supreme Court long established Supreme Court law that's when our claim arose with respect to the impact fee refund it was not until 2009 that lenar notified the county within the 5-year period of the concurrency certificate that it no longer intended to go forward with the construction of anything on the property and asked for the entire Water and Sewer impact fee uh refund which was not borred by the ordinances that the county responded that it wouldn't refund those fees and that broader impact fee refund claim came into existence we filed this action in October 2010 well within four years of that those two events both sides agree the statutes four years I'm sorry no that's okay I'm just uh to get the so you have the amount that lenar initially paid then you have these month assessments and you have the monthly assessments can actually be divided by what they assessed you versus what they authorized to be built there was a gap in there because they authorize less homes than the amount that you're being and you're continuing to be assessed for the total amount and not the lesser amount that was approved correct that's correct or what are we talking about in terms of dollars in those three categories it's it it it's about 20 to $22 a unit if I recall correctly L from having looked recently at the bills um the problem with that charge and I'm going to move right to that since your your honor has questions about it is that nowhere in the history of Florida Juris Prudence has any Court any appell at court ever approved service charges for unconnected Property Owners uh I I can't emphasize this enough um as I said previously the only way to avoid the charges once impact fees are paid under the code section is to disconnect permanently and if you never connect as I said the county admits you're going to be charged these fees in perpetuity and they're not small charges as I said they amount to about $10,000 a month um which with interest and Pen penalties accumulate right now to over $1.4 million um on just the things that happened after the payment was made by n yes okay yes would you like after 2009 when the sale EXC we're getting into your rebuttal time now if you want to just kind of wrap this up and continue and wrapping up I would simply say that um none of the cases cited by the the county Support these this charge um and none of these charges qualify as a valid user fee under the state versus city of Port Orange the seminal case from the Supreme Court um thank you for your patience thank you good morning may please the court my name is Casey Walker and together with my law partner Will Murphy we're here on behalf of the Apple Indian River County uh and I think it's important to start off uh to back up and take a look in the big picture of factually how this came about uh fp's predecessor lenar Holmes proposed to build two projects in the River County uh what happened in a nutshell is that when Lenard's own Engineers designed their comprehensive plan their proposed plan uh site plan they miscalculated uh on their drainage calculations it's what the applicable Land Development rules are is that you can build a project and you can you alter elevations you can raise uh building pads and you can construct roads but at the end of the day your project cannot shed any more storm water off uh of it than it did in its natural state so basically if you build up a housing pad here and a road here you've got to cut a lake over here so that you don't have storm water running off and and burdening uh an otherwise already burdened system in a nutshell an even smaller nutshell what happened here is that the engineers designed the Lakes they were too small so the Lakes had to get bigger in order for the uh Lakes to get bigger and maintain the same 462 units you had to do something with the units you either had to uh go multif family in portions the way uh Lenard's portfolio manager testified his deposition or as the County's Community uh development director said you could reduce the footprint of of the houses reduce the driveways basically you can take mcmansions and make them into town homes in spots that was purely a decision that was with within Lenard's purview I I'm not as concerned about Lenard's initial payment because I I to me it seems like it was a decision lenir made uh as a business decision like Southwest bought all the gas before the gas prices went up but I am concerned about the fact that the county continues to assess against the properties um monies and fees for services they they don't receive and I don't see where the County's done anything to have incurred any um cost to the county um that these fees would uh help defay well as our utilities director Eric Olson testified the county in fact did expand its Wastewater and sewer systems in addition to the Traffic Systems they built a they built wastewater treatment system expansions including the construction of an entirely new plant the expansion of an existing plant and a large Force main allowing the county to move waste water in the South End of the county where these projects were up to the north end where the main treatment facility was was that covered by the initial payment by lenar yes the okay so I'm not worried about that I'm worried about this continual assessment um that will happen until it's disconnected and can't be disconnected if it's never connected yes and and and I appreciate your honest concern along those lines and the very simple and direct answer is that once constructed and irrevocably maintained in perpetuity reserved in favor of lar homes this system capacity has to be maintained every user in the county pays the service availability charge which was then called a base facility charge which represents the cost to maintain the infrastructure that's separate and apart from the once you connect then you've got the volume charges Once you turn on the spigot and flush the toilet and turn on the shower that's not the charge that lenar Holmes and then fvp were were incurring they are incurring the cost to now maintain the infrastructure that was expanded at their request are other uh property owners in that area using this expanded facility now yes and they're so they're getting the benefit of it even though well I'm sorry go ahead well they're getting benefit of the expansion and lenar and um its successor now are not getting anything from it the system expansion that expansion that slice that wedge of the pie is reserved in favor of lenar Holmes initially and now fbp the appell in perpetuity it cannot be used by anyone else if someone else comes along and wants to build another project that capacity that's been reserved in perpetuity for lenar Holmes and Nat's predecessor doesn't count that can't be used because that's been permanently and irrevocably even if it's never ever used well it yeah there's no actual use but the use that lenar Holmes and now his predecessor uh successor excuse me has is the ability to build these projects out tomorrow this system capacity is reserved in their benefit they have if they don't want to uh build the property out tomorrow they can Market the property as having these entitlements which run with the land the next the buyer of the property doesn't have to go through this process there's already system capacity reserved in favor of these projects so New Impact fees don't have to be charged so this monthly fee that was initially paid and now is AC crewing as a lean against the property is for the maintenance of the infrastructure that was built as a result of Lenard's initial payment exactly so exactly so and and it's for that reason that not only is there a benefit to the property by virtue of this reservation of capacity there's a correlative burden on Indian River County and and its taxpayers uh we would not have expanded this system absent this request therefore we would not be incurring these maintenance charges absent this request lenar Holmes was in the driver's seat at every turn of the road and you know for these service availability charges for these maintenance charges to be visited on the taxpayers of Indian River County at this point is just subsidizing a bad business decision apparently Bad Business decision by lar homes back in the day so that that burden on the taxpayer is is correlates precisely to the benefit that these properties enjoy from the reservation of capacity and so we we simply disagree that there's no benefit from the service there's a very clear benefit from the service uh that that's provided and that service is specifically the irrevocable reservation of capacity in perpetuity in favor of the owner of that property whoever it is and so that that is something that was done again purely at the request of the property owner that property owner has the ability to redesign design its property they can leave the courthouse today drive up to the County Administration Building and hand us a revised set a revised application for the full amount of the 462 units and we would be obliged to to process that if if lenar had not made that free payment of the impact fees would the city have built the infrastructure that they did or would they have waited until lar applied for the building permits and not even convinced doing the work that they did prior to that time the latter uh th those impact fees are not due and payable until the time of the filing of the of the application for the vertical building permit when you construct each home when each home is constructed the impact fee is due and payable what is done in the meantime is is as the the County Utilities director testified is that we maintain a a buffer of 20% capacity so such that we're ahead of the the game um in other words there's no requirement that we run our utility system at AB absolute maximum capacity 100% of the time uh before we're authorized and Allowed by law to expand it at the request of a of a customer uh that that system would be inherently fragile and and wouldn't wouldn't make sense um so the the the the simple fact of the matter is is that once that application is received for the vertical building permit there is system capacity there there's that 20% buffer but we have to add to that so we're going to take this this portion of the buffer that lar Hol is requesting and allocate that to our homes and start building again for the next guy one of the important questions that this case presents is is relative to the statute of limitations um and and and the question here is is when does a statute limitations run on a claim for the refund of a non-refundable fee and the the cases the city of Gainesville case and and and this Court's decision last year in Australian properties uh underscore that there's there's two interests to be served here when you're analyzing when the statute of limitations begins to run there's the right of the property owner to have notice of the fee or charge and have the ability to dispute it there's also the need for the utility for certainty in making it expend and and in economic certainty the proposals by the appon in this case uh that the statute limitations begins to run when the number of units was reduced or the reduced number was approved or the abandonment of the projects um we submit are utterly impracticable and unworkable for example uh the the idea that the statute limitations began to R run when the when lenar homes reduced the number of units rather than build multif family or reduced the size of the Lots or the size of the homes and driveways the problem with that is that it it's a hypothetical situation there are no buildings out there there are cows out there so that number is a moving Target it's not etched in stone in any way shape matter or form they can they have the ability the appellant does or or successor does to reapply with a revised application for the full number of units and and we stand ready to accomodate that that's a decision that's purely within the purview of of the appellant the other problem with this it's totally unilateral and there's no time limit on that that there's no reason in other words why the decision to voluntarily reduce the number of units couldn't come 5 10 15 years down the road that's fatal to the need for the utility to have certainty in in the economics of of its decisions so because of the policy uh considerations involved we should treat these uh impact fees as we do special assessment uh uh more certainly more in in the user the impact fees yes certainly more along those lines because we submit the only reliable and consistent way to to harmonize the interest of property owners on one hand to have the right to know that they have a challenge and the the need of the utility for certainty is to make the statute limitations run from the time the fee is paid when the non-refundable fee is paid that's frankly when you should start thinking about whether you want to challenge the refundability of that fee uh rather than manufactur reasons down the road why that fee is otherwise unjust unfair inequitable or unreasonable um the the lines are there the County's lines are there the they're ready to be hooked up for whomever wants them so it's it's simply not the case as was the case in the cardo case that Mr Cornell sites it's not the case that there's no actual or possible use of actual use of this system it's eminently possible it could happen tomorrow um because that that system capacity reservation has been made and and it continues the reservation is Perpetual it is irrevocable but that's exactly what lonar wanted exactly what lonar wanted that's exactly why they prepaid impact fees years before they would have otherwise had to do it and the simple fact of the matter is had they only waited until vertical building permits were applied for we wouldn't be here because we all know now they were never applied for these Fe were voluntarily paid uh because they weren't required to be paid at the time they were and that's the critical distinction when we're assessing the voluntariness of of of a fee the Touchstone is whether the payment is to obtain a benefit versus whether it's to avoid a penalty in this case there was no penalty in Lenard's waiting they paid prepaid the impact fees in order to obtain an irrevocable impact fee excuse me irrevocable system capacity reservation in its favor and that's what they got now their successor wants to revoke an irrevocable reservation um with the Court's permission I I would conclude with a simple observation that what the the scheme that the appellant is asking this court to put its blessing on is one in which had the projects gone forward every nickel of the profits would have inured and rightfully so to lenar Holmes The Fortune 500 company and it shareholders but now after the worst real estate collapse in US history the costs that lenar homes incurred that needs to be shifted to the taxpayers and so socialized they want a taxpayer bailout and you we submit that that inun County taxpayers could be forgiven for believing we've had enough of that already and the appellant has advanced no legally sufficient basis of reason why that those taxpayers would be wrong we'd ask the court to affirm both summary judgments under the thank you thank you very much Mr W very quickly Florida law under um Section 163 31801 provides in any action challenging an impact fee the government has the burden of proving by a preponderance of the evidence that the amount of the fee meets the requirements of state legal precedent the Supreme Court in our state has repeatedly said that in order to justify collection and expenditure of impact fees the government must show the existence of a dual rational Nexus and I hear your honors concerns about the business decision it's always a business decision to pay impact fees that doesn't defeat the requirement of this government to prove some rational Nexus between the fee collected and some benefit conferred on the property in this case well they're saying that the benefit conferred on the property is that at at your your decision they're ready to start off you know connecting you up that doesn't qualify or cut it under the case law frankly what they tell you is that they've went out and built a buffer in their water and sewer system a new water system for existing users is what they did they issued a 5-year concurrency certificate when we paid the impact fees saying the capacity for these projects already existed in their facilities so that's a misleading argument they didn't spend these impact fees to provide any benefit to this property and that's their burden and they failed to meet it they failed to even attempt to meet it in this case um the concurrency certificates are part of the record in this case and they're found at r96 d222 their exhibits I and J they were 5year concurrency certificates in which the county affirmatively represented that traffic Water and Sewer capacity existed for these projects on the date the impact Fe were paid um Furthermore with respect to what they characterize as user fees that is monthly charges that continue in perpetuity began in March of 05 for 462 homes there's absolutely no possibility of ever being constructed um the court found they were just and Equitable fees Florida statute section 15311 c Water and Sewer charges and sewer service charges says such rates fees and charges shall be just and Equitable and may be based on or computed upon the quantity of water consumed Andor upon the number and size of water of sewer connections or upon the number and kind of Plumbing fixtures in use in the premises connected with the sewer system or upon the number or average number of persons residing or working in or otherwise connected with such premises or upon any other Factor affecting the use of the facilities furnished or upon combination of the foregoing factors here the property is not connected has no possibility of being connected this is not a valid user fee it's simply a way of the county imposing the cost to maintain its water and sewer system which is legitimately the cost of existing users on anticipated future users this court has struck such ordinances in the city of Cooper City versus PCH it struck exactly it made that kind of determination and finding that you cannot subsidize existing users facilities by charging a disproportionate share cost to new users and in this case they're not users they're anticipated future users there's a real danger in affirming this kind of an ordinance you would lead to setting a precedent because no one has ever done so in this state or any other state that we can find allow to charge for unconnected unimproved properties based on anticipated future use there's simply no service here to justify the charge going all the way back to the beginning excuse me your position is though as I read your requests for Relief is that um this was appropriately decided on a summary judgment basis it's not that there are General issues that need to be decided there are virtually no issues of disputed fact and the facts are set forth in the underlying summary judgment proceedings um and in the briefs and papers submitted to this honorable Court um the bottom line is you'll have to ignore cardillo frankly to decide the impact fee claim in favor of the county and sustain these summary judgments it it was a business decision just like in this case to pay the impact fee and the court found that didn't matter because again the underpinning and basis for a government to charge or exact fees as a condition to a private property owner's use of their property is destroyed when there's no dual rational Nexus okay thank you Mr thank you and thank you thank you