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BCC Minutes 03/23/2004 Closed Session (#12A-Health Care Reit./Merrill Gardens) MINUTES Health Care Reit. (Merrill Gardens) March 23 , 2004 IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA SECOND DISTRICT,POST OFFICE BOX 327,IAKELAND,FL 338024327 • • • May 18,2004 • s CASE NO.:2D034343 LT.No.:02-5002 CA Collier County,Florida, v. �a Upon Delinquent, Appellant I Petitioner(s), Appellee/mss). BY ORDER OF THE COURT: Appellant's motion for rehearing Is denied. Appellee's renewed motion for a tomele fees Is denied without prejudice to seek recovery of fees as damages for slander of Otte. i HEREBY CERTIFY that the forego is a true copy of the original court order. Served: Ernest J.Marquart,Esq. Dwight E Brock,Cleric Jacqueline Hubbard-Robinson,Esq. gieukt pm James Machold x1 I ..__._ aerk ` 4 Second District Court of Appeal Case Docket Page 1 of 2 Second District Court of Appeal Case Docket Case Number: 2D03-5343 Civil Certiorari Petition from Collier County COLLIER COUNTY,FLORIDA, vs. CERTAIN LAND UPON WHICH IMPACT FEES DELINQUENT, Lower Tribunal Case(s): 02-5002 CA 04/18/2013 11:18 Date Docketed Description Date Due Filed By Notes 11/26/2003 Case Filing Fee 11/26/2003 Petition Filed Jacqueline Williams Hubbard, SEPLY BOUND Esq.0468126 11/26/2003 Appendix SEP'LY BOUND AT Jacqueline Hubbard-Robinson,Esq.0468126 12/18/2003 certiorari response 01/072004 reply 10 days thereafter 01/02/2004 Motion for Extension off Ernest J.Marquart,Esq. to petition for writ of certiorari Time to File Response 0905860 01/07/2004 grant eot for cert 01212004 Reply due 22/04. response 01/22/2004 RESPONSE Ernest J.Marquart,Esq. with appendix(disk) 0905860 01222004 Request for Oral RS Ernest J.Marquart,Esq.0905860 Argument CC Dwight E.Brock,Clerk AT Jacqueline Hubbard-Robinson,Esq. 0468126 01/2212004 Motion For Attorney's Ernest J.Marquart,Esq. Fees 0905860 02/03/2004 REPLY Jacqueline Williams Hubbard, WITH APPENDIX DISK Esq.0468126 03/192004 Notice Jacqueline Williams Hubbard, of unavailability June 17 through July 6, Esq.0468126 2004 04/162004 Attorneys Fees/Deny/Appellee 04/162004 Denied-PC Denied 04232004 Motion For Rehearing Jacqueline Williams Hubbard, Esq.0468126 05/07/2004 RESPONSE Ernest J.Marquart,Esq. to motion for any fees 0905860 05/07/2004 Motion For Attorney's Ernest J.Marquart,Esq. renewed Fees 0905860 05/12/2004 REPLY Jacqueline Williams Hubbard, to response Esq.0468126 05/182004 ORD-DENYING REHEARING http://199.242.69.70/p1s/ds/ds docket 4/18/2013 Second District Court of Appeal Case Docket Page 2 of 2 05/18/2004 Deny Attorney's Fees- 69c 06/092004 Case Closed 08/10/2004 Case Permanent SET VIA AUTO PERMANENT APPLICATION 02222007 Case Destroyed http:11199.242.69.70/pls/ds/ds_docket 4/18/2013 March 23, 2004 TRANSCRIPT OF THE MEETING OF THE BOARD OF COUNTY COMMISSIONERS Naples, Florida, March 23, 2004 CLOSED SESSION Item #12A Health Care Reit, Inc. vs. Collier County LET IT BE REMEMBERED, that the Board of County Commissioners, in and for the County of Collier, and also acting as the Board of Zoning Appeals and as the governing board(s) of such special district as has been created according to law and having conducted business herein, met on this date at 12:00 p.m., in CLOSED SESSION in Building "F" of the Government Complex, East Naples, Florida, with the following members present: CHAIRMAN: Donna Fiala Tom Henning Jim Coletta Fred Coyle Frank Halas ALSO PRESENT: Jim Mudd, County Administrator David C. Weigel, County Attorney Jacqueline Hubbard, Assistant County Attorney Page 1 — Item #12A (Health Care Reit) March 23, 2004 Item #12A CLOSED ATTORNEY-CLIENT SESSION PURSUANT TO SECTION 286.011 (8), FLA. STAT., TO DISCUSS SETTLEMENT NEGOTIATION ISSUES IN HEALTH CARE REIT, INC., V. COLLIER COUNTY CASE NO. 02-5002-CA AND COLLIER COUNTY V. CERTAIN LANDS UPON WHICH IMPACT FEES ARE DELINQUENT CASE NO. 03-231-CA, NOW PENDING IN THE CIRCUIT COURT, NAPLES, FLORIDA. — CLOSED SESSION MR. WEIGEL: Commissioners, we will start agenda Item 12(A), the closed session, as identified on our agenda sheet we'll provide to our stenographer. We're here to discuss the settlement proposal and litigation expense issues of the current litigation, pending litigation case known as the Health Care Reit, Inc. versus Collier County, Case No. 02-5002-CA, and Collier County versus Certain Lands Upon Which Impact Fees are Delinquent, Case No. 03-231-CA, now pending in the 20th Judicial Circuit Court, Collier County, Florida. This is agenda Item 12(A), the closed session, which has been advance noticed by County Attorney at prior board meeting and noticed through the agenda process prior to our hearing and meeting today. And Ms. Jacqueline Hubbard will present the matter. MS. HUBBARD: Yes, for the record, Jacqueline Hubbard, Assistant County Attorney. David Weigel, County Attorney, five members of the Board of County Commissioners, and James Mudd, the County Manager, all present. I have passed out to the group copies of Exhibit 1. And I'd like to go through that briefly with the Commissioners. First page is a -- one of several floor plans for the units at the Merrill Gardens facility. One of the things you will notice is that this unit has a full bath, full Page 2 — Item #12A (Health Care Reit) March 23, 2004 kitchen, walk-in closets, living room, dining room, bedroom. It's absolutely no different from any other apartment unit. I have spoken to the architect of record and he indicated to me that all of the units that were constructed at this facility met the then current building code for multi-family use, all right, so they weren't specifically designed nor built for any type of incapacitated person. They met the codes for simple multi-family housing. Second document is a drawing on the architectural renderings that shows you -- and by the way, this is extremely significant, the fact that this building -- this drawing represents the entire Merrill Gardens facility. The architect designed this building with an ALR section and an independent living section on one side. The units are essentially the same. The only difference is that in the ALR units, the ones that were designated to be for the licensing purposes, they did not put in a full- rank stove, you know, the range. They have cooking facilities. But when you look at the floor plans for the kitchen, you won't see these four little circles here that represent a full range. Some do, some don't. But they have some type of cooking facilities in there, but not a full stove. COMMISSIONER HALAS: Are you saying like a microwave or something of that nature? MS. HUBBARD: Right. So there's not a lot of significance to that, other than that fact, since a stove can always be put in. In any event, it was only until we met with the architect that we discovered that the license for the ALR units is only for this half of the building. There is no ALF license for the independent living side. Now, the significance of the license is that a Florida issued ALF license, which is of course renewable and you can terminate it when you want to, requires that if you have an ALR license, all of the residents have to be over the age of 18. And so therefore in the ALF section -- ALR section, as long as they have a license, they probably meet the requirement of being an adult only facility. Page 3 — Item #12A (Health Care Reit) March 23, 2004 But that's not really the issue. The issue is whether or not for the life of the building they will be an adult only facility. And there's no restriction whatsoever on the ILR (sic) section of the building, other than temporary restriction such as leases. There is no deed restriction on this property. So I wanted to make sure you understood that. And so the argument has always been that if you can convert one of these facilities to a multi-family use where children can reside, then you're not exempt from paying your school impact fees. And in this particular case, there is a part of their PUD that says independent living, which by the way, is not a code -- that's not in our code. We don't have a definition for independent living. So you just have to take it at what it means and what the architect designed it for. And it basically means that you can live independently in there. So the PUD allows independent living. The units can be converted quite easily into a simple multi-family use. The license as restricting the use to adults only applies to approximately one-half of the building, and that license is renewable. You can stop it, you can keep it, it's up to you. And the lease is obviously renewable leases. The second document in that package is a summary. I believe the only summary that has been released to the public is the one that doesn't have the name of the facilities in it. And we just say Facilities A through F -- I'm sorry, A through K. This summary, however, does not include all of the collections, because I believe there is an additional 200 and some odd thousand dollars that was collected just by the reviews that were engendered in our process and locating another one that hadn't been paid that was paid. MR. WEIGEL: Jackie, I'll interject briefly and that is we're here today, of course, to talk about the proposed settlement in regard to the cases at hand today. The last exhibit she's mentioning shows that by Page 4 — Item #12A (Health Care Reit) March 23, 2004 means of litigation -- litigation, correspondence, to some degree, some settlements, significant success has been achieved, both on the obtaining of school impact fees that ultimately go to the school board for their use, but also other impact fees for Collier County. And you will find in just a moment, I think you'll need to move into this, that it's no different in regard to this particular -- the cases of the Merrill Gardens facilities. Because we have both elements or issues of school impact fees and other impact fees that factor together into a settlement offer that has been made. MS. HUBBARD: Right. The main point I wanted to make by giving you these figures is that we have a net savings and gain of about 700 and some odd thousand dollars, and I think it's probably closer to over 900,000 when you factor in the other one. So the county has gained quite a bit from the litigation in terms of absolute funds that have been given back to the county. And the offer to settle on the Merrill Gardens property is basically this: He's basically saying I've incurred approximately $77,000 in attorney fees, and I suspect that if we go to trial I will incur an additional 40 to $50,000 in attorney fees, and you are liable for these attorney fees. That's his opinion. In my opinion, the first thing that he has to do is he has to win the one count which allows him to get attorney fees, and that's the slander of title count. In order to prevail on the slander of title count, he's going to have to show that there was some type of malicious or underhanded behavior on the part of the County Commission at the time you approved the filing of the lien. In my opinion and in the opinion of our office, you were acting as the Board of County Commissioners at the time you approved the filing of the lien, and you also were acting not only based upon your own deliberations but at the advice of your counsel and also at the recommendation, as I recall, of the Clerk of Courts. So I don't see any malicious behavior on the part of the Commission, I don't see any bad Page 5 — Item #12A (Health Care Reit) March 23, 2004 faith, I don't see any of those things that I would think you would have to prove in order to prove a malicious -- a slander of title in the imposition of this lien. So he would have to prevail first on that count. Then if he prevails first on that account, there's at least case law out there that says that if the causes of action involving attorney fee issues are different -- so we've got his slander of title, we've got our foreclosure of a lien, they're obviously quite different causes of action -- he would not be able to secure the return. Even if he prevails on the slander of title action, all of his attorney fees for the entire case, he would only be entitled to the reasonable attorney fees that he would have incurred for the slander of title action. And right now the slander of title action is stayed because following a motion to dismiss that was filed by our office on that count, which was denied by the trial court, I filed a writ of certiorari to the Second DCA, and they stayed that count. So there's nothing that can be done by him regarding that count until the DCA has ruled on that issue. So basically what he's saying is he wants you to accept as a settlement of this case that he will walk away and his client would pay his attorney's fees and you would pay whatever fees and costs have been incurred by our office, because we don't have any outside counsel fees. And they're entitled to a refund for an overpayment of transportation impact fees, and they will walk away from that. I mean, you know, they'll give us, we won't have to pay them for that. They owe about $118,000 in school impact fees, and it's been delinquent, I believe, since the filing of the lien, somewhere around November 5th or 7th of last year, and it has been accumulating interest at the rate, I believe, of nine percent per year. So -- COMMISSIONER COYLE: Don't collect it, just keep it going. MS. HUBBARD: If it were -- you know, there are other issues too -- Page 6 — Item #12A (Health Care Reit) March 23, 2004 COMMISSIONER HALAS: And you said the transportation that they paid, the overcharge was 17,000. MS. HUBBARD: It was really about nine, but if you calculate the -- they're calculating interest at 12 percent, which we don't agree with, but -- on that since 1997. That's how he came up with the 17. COMMISSIONER HALAS: This has been on since 1997, huh? MS. HUBBARD: Uh-huh. And we don't agree that we would owe interest on that money in the first place, but anyway, that's his proposal. MR. WEIGEL: Jackie, a question for us, and that is do we still have ongoing -- or do we have ongoing in this lawsuit a question of statute of limitations, or not? MS. HUBBARD: Yes, we have several issues that are, in my opinion, anyway, and David's, I believe, are so significant that -- the first one is our ordinance, as adopted by the Board of County Commissioners in 1992 has a provision in it that says when the county discovers that an impact fee has not been paid, the county may begin the collection proceedings. The statute of limitations on a government collecting, you know, unpaid bills and whatever, is four years. So the argument that they're making is that we have four years from the date the building permit was issued, which was in 1997. And our argument is that we have four years from the date the county discovered that the fees have not been paid. So that issue -- they filed a motion to dismiss on that basis, and it was denied. So the issue is still essentially alive. I guess it depends -- it's really I think going to be a question of law and not a question of fact. I think the ultimate issue is going to be can a local government have in place an ordinance such as that that sets the time for the statute of limitations to run. COMMISSIONER HALAS: So when did you discover this discrepancy? What's the timeline that we have left? MS. HUBBARD: Well, we discovered the discrepancy in 2000 -- I believe in 2002. And so we filed our lawsuit in 2003 or 2004. So Page 7 — Item #12A (Health Care Reit) March 23, 2004 we're well within our -- we notified them in -- no, 2000. We notified them in 2001 that there was an underpayment. COMMISSIONER HALAS: This living -- whether it's assisted or unassisted living, how do these people pay? MS. HUBBARD: It's a lease. They're all leaseholds. COMMISSIONER HALAS: And it's private money, it's not anything to do with government money like -- MS. HUBBARD: Welfare, Medicare, no. These are all -- these are very expensive units. COMMISSIONER HALAS: This is for-profit enterprises. MS. HUBBARD: Very profitable enterprises. In fact, in the -- COMMISSIONER HALAS: Go after them. MR. WEIGEL: Well, regardless the profit or not for profit, it's really the structure itself and the use of that structure on the premises which sets up the various impact fees that are collected. COMMISSIONER HENNING: Or the potential use. COMMISSIONER HALAS: Or the potential use, right. MR. WEIGEL: Or the potential use. And again, part of the reason this came to our attention back a few years ago -- and when I say attention, I mean all our attention -- is because there was a case that went through Volusia County which had to do with not assisted living facilities, but had to do with a 55 and over community that may have been like a mobile home kind of community where they did not have deed restrictions in place, and that's what we have used is when the case law became more apparent, the clerk felt that therefore, school impact fees should be collected. It was at that point historically that the Board directed us to pursue the outstanding impact fees. And in that pursuit -- COMMISSIONER HALAS: That's why we've got all these right here, these other ones. MR. WEIGEL: That's exactly right. COMMISSIONER HALAS: Right, I understand. Page 8 — Item #12A (Health Care Reit) March 23, 2004 MR. WEIGEL: So it has been a favorable outcome to this point. Ultimately then the question really on this case is -- and we'll be going back into open session after this luncheon period -- will be does the Board have any direction for the county staff, the County Attorney, in regards to accepting a settlement proposal which says let's walk and we collect nothing and they get no refund, or do we continue the litigation toward its logical end, wherever that may be. And there may be in fact an appeal issue in regard to the statute of limitations. Or there may not be. We just don't know at this point in time. MS. HUBBARD: If they rule against us, there will be. MR. WEIGEL: But our thought at this point is that we believe that the offer that's been provided by Mr. Marquart, the attorney for the Reit Merrill Gardens facilities, is not an offer that we recommend for the board to accept. MS. HUBBARD: Mr. Coletta? COMMISSIONER COLETTA: You know, I couldn't agree with you more on it. My -- a couple things that come up. We have a reasonable expectation of success, I would say so. I mean, if we didn't, I'm sure you would have told us that in the beginning. And I think this Commission's been setting a precedent in the fact that they're not willing to just roll over and play dead. They want the public to know out there, especially that public that's trying to use the legal end of the whole thing to get a settlement, that you better have your act together before you show up at the front door, because we're going to pursue it to the end. That's still the message I'd like to send out there is that's it, you know, let's pursue this thing to the end. Let everybody be aware of the fact that when we're right, you can't buy us off. And if you start to get to the point where you get a little bit -- if you haven't got the money to keep putting on the table for the ante, you're not going to say okay, let's all walk now and we'll call it even, just pay us what it is. Page 9 — Item #12A (Health Care Reit) March 23, 2004 But again, on the same note, if we do owe some impact fees on transportation, they should be given back to them. MS. HUBBARD: Right. And we've said that as an offset. The other thing that we want to make clear to you is that even at the outside limit of damages that we're talking about here, the county still has a net -- you will have netted a significant return on the litigation, even if in fact -- which I don't think will happen, but you can never guarantee litigation -- that he would prevail on the slander of title action. I find that hard to believe. But if he does, there's even another issue, and that issue is that under the tort claims against local government, 768.28, the attorney fee provision limits attorney's fees to 25 percent of the -- of what the attorney's fees are. He's trying to make the argument that since the damages and the attorney's fees are the same -- you see, there are no damages, the only damages are his attorney's fees that his client has to pay. COMMISSIONER COLETTA: He's running up the bill for his client. MS. HUBBARD: That he's entitled to the full 100 percent. So -- and the statute seems to say only 25 percent. So we may wind up appealing that one, too. COMMISSIONER COLETTA: I hate when this happens. That's what this attorney is doing. I hope we get it on the record, too. He's running up the bill for the client. MS. HUBBARD: That's the only count. And he filed that count where he could possibly even get attorney claims. MR. WEIGEL: There's no requirement for you to have discussion among yourselves. We wanted to air the issue with you so that when we're back out at the board meeting shortly from now, I will, with Jackie's assistance, bring this forward, looking for any board direction. And if that direction should be continued, that the board does not accept the offer towards settlement and direct us to continue Page 10 — Item #12A (Health Care Reit) March 23, 2004 with the litigation, it can be as simple as that. COMMISSIONER HALAS: It's amazing, we look at all the other senior citizen areas and they've all basically recognized they have to step up to the plate. You want this back? MS. HUBBARD: Yes, please. MR. MUDD: Commissioner, it wasn't without some teeth pulling from Jackie, she's been doing a great job. COMMISSIONER HALAS: I know that. I remember that going through that scenario. (Closed Session concluded for Item #12A; Continued to Closed Session Item #12C) ***** Page 11 — Item #12A (Health Care Reit)