CADDNAR

[CITE: McFall, et al. v. Department of Natural Resources, 14 CADDNAR 25 (2015]

 

 

[VOLUME 14, PAGE 25]

 

 

Cause #: 12-211W

Caption: McFall, et al. v. Department of Natural Resources

Administrative Law Judge: Jensen

Attorney: pro se (McFall); Grow (DNR)

Date: July 9, 2015

 

 

[See Editor’s note at end of this document regarding change in the decision’s original format.]

 

 

FINAL ORDER

 

48.The Restoration Order issued by the Department on November 5, 2012 is hereby affirmed as a Notice of Violation issued under Indiana Code § 14-25.5-2-3.

 

49. Within sixty (60) days of the issuance of the final order in this proceeding the Claimants shall take one of the following actions to resolve the violation noted in the Restoration Order:

 

a.      Apply for a permit in accordance with Ind. Code §14-28-1-26 and 312 IAC 10-4-3 and fulfill all requirements, including, if necessary, the revision of previously made additions to the McFall Cabin and Subject Property, necessary for the Department’s issuance of such permit; or

b.     Restore the McFall Cabin and the Subject Property to its previous condition by removing all additions to the McFall Cabin and the Subject Property that were made without a permit.

 

50. If the Claimants fail to take timely action in accordance with paragraph 49, the Department is authorized to take further enforcement action as prescribed by Indiana Code §§ 14-28-1 et seq. and Indiana Code §§ 14-25.5 et seq.  In the event further enforcement action is necessary the “Restoration Order” issued by the Department on November 7, 2012 shall be treated as a “Notice of Violation” issued in accordance with Indiana Code § 14-25.5-2-3. 

 

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 

Case Summary and Procedural History:

 

1.     On December 12, 2012, James A. McFall, Jr. (“J. McFall”) filed correspondence with the Natural Resources Commission “(Commission”) stating the he was “making a written request for an appeal within the 30 days allowed by Jon Eggan.”  McFall added,

 

I do not understand what I am appealing, as Mr. Eggan just states we are illegal.  We were not.  We bought a “CABIN” that was grandfathered in.  It was built by the Bullock Garage Company, but was never a garage.  It was built to be a cabin with a full bathroom, kitchen sink, cabinets, chimney for a wood burner, wired, and finished off with ceiling tile and paneling.  There is a well, and two septic tanks on the property.  One for the cabin and one for the shower house.

 

2.     Administrative Law Judge Jensen, who was appointed by the Commission to preside, scheduled a prehearing conference that occurred on January 23, 2013. 

 

3.     During the prehearing conference it was ascertained that the Department of Natural Resources (“Department”) had issued a “Restoration Order” requiring McFall to remove additions that had been made to a structure located on property in a floodway.  Counsel for the Department, at that time Eric Wyndham, confirmed that the restoration order did not require the removal of the original structure.[1]  

 

4.     During the prehearing conference the parties determined that efforts would be made to resolve the issues in dispute.  From January 2013 until near August 2014 those efforts, which required McFall and McIntosh to make alterations to the structure on the property, continued. 

 

5.     Ownership of the property at issue has been fluid throughout the pendency of this proceeding.  During the prehearing conference McFall explained that the property in question was owned by himself and Diann McIntosh (“McIntosh”) and was also subject to a land sale contract conveying interest in the property to Mary McFall and Danny McFall (collectively referred to as “M. & D. McFall”).  McIntosh and M. & D. McFall were in attendance and consented to being joined as Claimants to this proceeding.  During a subsequent telephone status conference, conducted on June 4, 2013, M. & D. McFall explained that they had executed a quitclaim deed relinquishing all interest in the property to McFall and McIntosh and requested to be dismissed as parties to the proceeding.  A final order of dismissal of M. & D. McFall was entered on June 11, 2013.  On August 22, 2014, the Department provided notice that McFall and McIntosh had entered into a second Contract for Sale of Real Estate on June 25, 2014 with DuWayne Phillips (“Phillips”).

  

6.     A “Notice of Telephone Status Conference and Notice of Proceeding to Potentially Interested Person” was issued by the administrative law judge on September 8, 2014 by which Phillips was notified of the instant proceeding and provided an opportunity to identify his interest, if any, in the matters at issue. 

 

7.     On October 7, 2014, a status conference was attended by Phillips, McFall and the Department.  The Department was then represented by counsel, Joy Grow.  Phillips was joined as a Claimant on that date and the parties engaged in the discussion of alternatives for resolving the instant proceeding. 

 

8.     Ultimately, the instant proceeding was scheduled for and an administrative hearing was conducted on April 14, 2015[2].

 

9.     On April 14, 2015, the Claimants were McFall, McIntosh and Phillips, who are collectively referred to as “the Claimants.”

 

10.  The instant proceeding involves an addition to a structure located within a floodway, which is governed by Indiana Code §§ 14-28 et seq., commonly referred to as the “Flood Control Act”, of “FCA”, and administrative rules adopted at 312 IAC 10 et seq.

 

11.  The FCA is administered by the Department under the authority of Indiana Code § 14-11-1-1(1)(B).

 

12.  While a formal notice of violation was never issued by the Department in accordance with Indiana Code § 14-25.5-2-3, it was agreed by the Department that the restoration order, which was intended by the Department as a precursor to the issuance of a formal notice of violation, was similarly subject to administrative review under Indiana Code §§ 4-21.5 et seq.

13.  The Commission is the ultimate authority with respect to actions of the Department taken under the authority of the FCA.  Indiana Code §§ 14-10-2-3 and 4-21.5-1-15 and 312 IAC 3-1-2.

 

14.  The Commission has jurisdiction over the parties and the subject matter of the instant proceeding.

 

[VOLUME 14, PAGE 26]

 

Findings of Fact:

 

15.  At the time of the administrative hearing McFall and McIntosh were the owners of property identified as Parcel Number 83-04-30-400-012.000-005, described as PT N ½ E ½ SE ¼ 30-18-9 7.388787 AC, commonly known as 5911 North Main, Cayuga, Vermillion County, Indiana (The property will be referred to as “the Subject Property”).  Claimants’ Exhibit C, Respondent’s Exhibit 3.  Phillips possesses an interest in the Subject Property through a Contract for Sale of Real Estate executed by and between McFall and McIntosh, as the sellers, and Phillips, as the buyer, on June 24, 2014.  Respondent’s Exhibit 8.

 

16.  The Subject Property is entirely within the floodway of the Vermillion River.  Testimony of Suzanne Delay.

 

17.  A structure, constructed in 1971, exists on the Subject Property. Testimony of Jon Eggen, Respondent’s Exhibits 1, 3, 5, 11 & 12.  (The structure will be referred to as “the McFall Cabin.”)

 

18.  The McFall Cabin, as originally constructed, was intended to be a one story cabin for human occupation with paneling, ceiling tiles, electrical wiring, plumbing, a bathroom and a kitchen.  Testimony of McIntosh.  The only evidence in the record characterizes the McFall Cabin as a residence.  Id., Claimants’ Exhibit C, Respondent’s Exhibit 2.

 

19.  The Vermillion County floodplain administrator made the Department aware of activity occurring at the Subject Property and with the McFall Cabin.  Based upon that notification, the Department initiated an inspection on or near October 23, 2012 that revealed a second story had been added to the McFall Cabin and a concrete pad had been constructed on the Subject Property.  Testimony of Jon Eggen, Respondent’s Exhibit 2, and Respondent’s Exhibit 6.

 

20.  The evidence overall supports Jon Eggen’s (“Eggen”) conclusion that the addition of the second story more than doubled the living space of the McFall Cabin.  Testimony of Eggen, comparison of photos attached to McFall’s December 12, 2012 correspondence and Respondent’s Exhibit 7.  However, no reliable evidence was presented regarding the current market value of the McFall Cabin as it was originally constructed[3] as compared to its current market value with the additions identified by the Department.  The Department offered conclusory testimony to the effect that the current value of the McFall Cabin would certainly be more than fifty percent (50%) greater than its original construction value in 1971.  It is not reasonable to consider property values in 1971 as compared to property values in 2015 to ascertain the true value attributable to the additions that were made to the McFall Cabin.

 

21.  Suzanne Delay (“Delay”) is a Hydraulic Engineer in the Compliance and Enforcement Section of the Department’s Division of Water.  Delay conducts inspections for possible violations and compliance checks associated with the Division’s permitting functions as well as preparing engineering reports or hydraulic calculation reports and floodway determinations for the Division.  Delay is a registered Professional Engineer with a degree Agricultural Engineering.  She has been employed by the Department’s Division of Water for nearly 20 years and in her present position for approximately two years.  Testimony of Delay

 

22.  Delay testified that hydraulic models developed in May 2013 to identify the Vermillion River 100-year frequency flood were used by the Federal Emergency Management Agency (“FEMA”) in creating the most current Flood Insurance Rate Maps published by FEMA on February 5, 2014.  These same hydraulic models were used to establish the Base Flood Elevations (“BFE”) for the Subject Property.  Id. and Respondent’s Exhibit 12.

 

23.  The BFE for the Subject Property is 506.3 ft. NAVD (“North American Vertical Datum”) or 506.6 ft. NGVD (“National Geodetic Vertical Datum”).  Respondent’s Exhibit 12.

 

24.  The Department has not issued any permits authorizing the additions made to the McFall Cabin or on the Subject Property and on November 7, 2012 the Department served a “Restoration Letter” upon McFall, McIntosh, and M. & D. McFall.  The “Restoration Letter” offered notice that the construction occurring on the Subject Property and with Respect to the McFall Cabin was non-compliant with the FCA because a permit had not been obtained.  Testimony of Eggen, Respondent’s Exhibit 2.

 

25.  The Claimants did not apply for a permit from the Department before commencing construction activities on the Subject Property and with respect to the McFall Cabin.

 

26.  Rodney Neese (“Neese”) is a Licensed Indiana Surveyor who has been employed as a surveyor by the Department for over 30 years.  For approximately two years Neese has served as the Surveying Section Head for the Department’s Division of Water.

 

27.  At the request of Eggen, on May 23, 2014, Neese conducted surveying activities necessary to ascertain the elevation of the second floor of the McFall Cabin.  Using the NGVD 1929, Neese established that the ground elevation at the main deck of the cabin existing on the Subject Property is 498.72 and the “approximate 2nd floor elevation of the McFall Cabin” is at 507.09 NGVD 1929.  Testimony of Neese, Respondent’s Exhibit 10.

 

28.  The flood protection grade applicable to the McFall Cabin is 508.6 feet NGVD.

 

29.  The Department has, throughout the pendency of this proceeding, maintained that the Claimants could abate the violation associated with the unpermitted construction in a floodway by removing the additions or by installing flood vents, evacuating all living space below the flood protection grade and relocating all living space and mechanicals within the McFall Cabin to a point above the flood protection grade.  Respondent’s Exhibit 7, Testimony of Eggen.

 

30.  The Claimants presented blueprints dated March 1968 obtained from the Indiana Department of Transportation (“INDOT”) associated with a nearby bridge construction project that represented “High Water Elev. 502.7” to support the contention that the Department’s surveying and BFE calculations were in error.  Claimants’ Exhibit F.

 

31.  Delay offered that while the 100-year flood frequency elevation is applicable to the present case, to her knowledge there is no requirement that bridges be designed to that same standard.  In reviewing the INDOT Blueprint, Delay noted that the datum used is not identified.  Therefore, it is impossible to be certain whether the 502.7 foot elevation figure is based on NGVD, as was used by the Department in this instance, or whether it is based on NAVD or some alternative datum, which would require conversion to ensure that the data was considered accurately.  However, Delay was able to identify, from information contained on the INDOT Blueprint, that the 502.7 foot elevation actually reflects the 25-year flood frequency elevation.  Consequently, the INDOT Blueprint failed to effectively refute the Department’s surveying and hydraulic modeling conclusions with respect to the 100-year flood elevation.

 

 

[VOLUME 14, PAGE 27]

 

32.  The Claimants offered no surveying data or hydraulic modeling data contradictory to that presented by the Department.

 

Conclusions of Law:

 

33.  The Indiana General Assembly has declared;

 

Sec. 1. The following are declared:

(1) The loss of lives and property caused by floods and the damage resulting from floods is a matter of deep concern to Indiana affecting the life, health, and convenience of the people and the protection of property. To prevent and limit floods, all flood control works and structures and the alteration of natural or present watercourses of all rivers and streams in Indiana should be regulated, supervised, and coordinated in design, construction, and operation according to sound and accepted engineering practices so as to best control and minimize the extent of floods and reduce the height and violence of floods.

(2) The channels and that part of the flood plains of rivers and streams that are the floodways should not be inhabited and should be kept free and clear of interference or obstructions that will cause any undue restriction of the capacity of the floodways.

Indiana Code § 14-28-1-1.

 

34.  The Department is authorized to take enforcement actions associated with a person’s violation of Indiana Code §§ 14-28 or rules adopted at 312 IAC 10 and may issue a notice of violation advising a person of (1) the “nature of the violation”, (2) the action appropriate to mitigate the violation, (3) the date by which the mitigation must be completed, and (4) the procedure to obtain administrative review under Indiana Code §§ 4-21.5.  Indiana Code §§ 14-25.5-2-2 and 3. 

 

35.  The “Restoration Letter” issued by the Department on November 7, 2012, was intended to serve as a notice preliminary to the issuance of a formal notice of violation.  It contains all the necessary components of a notice of violation except the explanation of the procedure to obtain administrative review.  It was concluded by the administrative law judge, and acknowledged by Department’s counsel, that the Restoration Letter would likely qualify for administrative review as a “determination of status” for purposes of Indiana Code § 4-21.5-3-5(a)(5) or as an order that “imposes a sanction…or terminates a legal right, duty, privilege, immunity, or other legal interest under Indiana Code § 4-21.5-3-6(a)(2)(A).  For this reason administrative review of the Restoration Order was conducted as if it were issued as a Notice of Violation in accordance with Indiana Code § 14-25.5-2-3.

 

36.  With respect to an addition to a residence already existing in a floodway, the following is applicable;

 

Sec. 26. (a) This section does not apply to the construction of an addition to a residence located in a boundary river floodway.

(b) Subject to:

(1) subsection (c); and

(2) the restrictions imposed by the unit (as defined in IC 36-1-2-23) in which the abode or residence is located;

a person may construct at least one (1) addition to an abode or a residence that is located in a floodway.

(c) A person may not construct an addition to an abode or a residence located in a floodway if the addition, in combination with all other additions to the abode or residence that have been constructed since the abode or residence was originally built, would increase the market value of the abode or residence to an amount more than fifty percent (50%) greater than:

(1) the market value of the abode or residence if no additions have been constructed since the abode or residence was originally built; or

(2) the approximate market value the abode or residence would have in the form in which the abode or residence was originally built if at least one (1) addition has already been constructed.

(d) For the purposes of subsection (c), the market value of an abode or a residence does not include the value of the land on which the abode or residence is built.

Indiana Code § 14-28-1-26.

 

37.  As applicable to Ind. Code §§ 14-28 et seq., a “boundary river” is defined as “the part of the Ohio River that forms the boundary between Kentucky and Indiana.”  Indiana Code § 14-28-1-1.2.  A “boundary river floodway” for purposes of Ind. Code §§ 14-28 is the floodway associated with the boundary river.  Indiana Code § 14-28-1-1.3.    

 

38.  The Vermillion River is not a boundary river and the Subject Property does not lie in a boundary river floodway.

 

39.  Exercise of the authority expressly granted by Ind. Code § 14-28-1-26 is subject to the compliance with administrative rules, adopted by the Commission to implement Ind. Code § 14-28-1-26.  Those administrative rules require an owner to apply for a permit as follows:

 

Sec. 3. (a) A person must not erect, use, or maintain in or on any floodway a permanent structure for use as an abode, except for an abode constructed before January 1, 1973. For purposes of this section, "constructed" means completed for use as an abode.

(b) A person may make an addition to an abode constructed before January 1, 1973, if the addition would not increase the market value of the abode, excluding the value of the land, by more than fifty percent (50%) of:

(1) the market value of the abode if no addition was made since the abode was initially constructed; or

(2) the approximate market value the abode would have in the form in which it was originally constructed if the abode has at least one (1) prior addition.

(c) Where the application is made under subsection (b), the application must be accompanied by the following documentation:

(1) An appraisal by an appraiser who has an acceptable designation as follows, conforming with the requirements for appraisal reports, which establishes the value of the abode or place of residence before and after the proposed addition, excluding the value of the land:

(A) Acceptable designations of appraisers are any of the following:

(i) Member of the American Institute of Real Estate Appraisers (MAI).

(ii) Residential member of the American Institute of Real Estate Appraisers (RM).

(iii) Senior real estate analyst of the Society of Real Estate Appraisers (SREA).

(iv) Senior residential appraiser of the Society of Real Estate Appraisers (SRA).

(v) Senior real property appraiser of the Society of Real Estate Appraiser (SRPA).

(vi) Senior member of the American Society of Appraisers (ASA).

(vii) Accredited rural appraiser of the American Society of Farm Managers and Rural Appraisers (ARA).

(viii) Accredited appraiser of the Manufactured Housing Appraiser Society.

(B) Requirements for appraisal reports are the following:

(i) Identification of the property to include the location, legal description, and owner or occupant.

(ii) Neighborhood analysis, including land use, price range, and age of structures in the area, changing conditions, and all relevant information pertaining to value of structures in the area.

(iii) Description of the site, including the dimensions, site area, zoning classification, and compliance of present structure, highest and best use, real estate taxes, assessments utilities, description of site improvements, and easements.

(iv) Description of structural improvements, interior and exterior, considering depreciation, general market conditions, and additional features.

(v) Cost approach to value of present structure and proposed addition, with computative data based on an appraisal guideline in common usage among appraisers.

(vi) Market or sales comparison analysis, including adequate descriptions of three (3) recent comparable sales having the same highest and best use as the subject, weighted and analyzed in relation to the subject property, with adjustments not exceeding thirty percent (30%).

(vii) Reconciliation, including a summary:

(AA) of pertinent data of particular approaches and the appraiser's final conclusion, which conclusion cannot be based on an average; and

(BB) explaining strengths and weaknesses of each approach.

(viii) Certification by the appraiser that:

(AA) the property was personally inspected;

(BB) facts and data are true and correct;

(CC) the appraised value represents the appraiser's best judgment;

(DD) the appraiser has no interest in the property; and

(EE) an opinion of the estimated fair market value of the property, excluding the value of the land, established under subsection (b) and at the completion of the proposed addition.

 

[VOLUME 14, PAGE 28]

 

(ix) Percentage of increase in value that the proposed addition will make in the property, excluding the value of the land.

(x) Photographs of the property and comparable sales.

(xi) Verification by appraiser as to when the original structure was built and, if there have been additions made to the original structure, the date of these additions (appraiser must give source of this information and copies of the source material).

(xii) Designation of appraiser.

(2) Construction plans and specifications must:

(A) consider the effects of buoyance, dynamic, and erosive factors;

(B) be constructed with materials resistant to flood damage;

(C) be constructed by methods and practices that minimize flood damage; and

(D) be certified by a:

(i) professional engineer registered under IC 25-31-1; or

(ii) an architect registered under IC 25-4-1.

(3) Additions shall be designated and adequately anchored to prevent flotation, collapse, or lateral movement of the structure resulting from hydrodynamic and hydrostatic loads associated with the regulatory flood.

(d) Certification by a professional engineer registered under IC 25-31-1 or an architect registered under IC 25-4-1, that the proposed addition was built to the design criteria in subsection (c)(3), shall be submitted to the department, division of water, prior to the occupancy of the addition.

(e) A structure not used as an abode on January 1, 1973, does not qualify for a license under IC 14-28-1 and this article.

312 IAC 10-4-3.

 

40.  An "abode" is defined to include “a structure that is used or may be used primarily as a living quarters or residence” that, as relevant to this proceeding, includes a house or a “similar structure which provides permanent or temporary overnight lodging.” 312 IAC 10-2-2.

 

41.  Because the evidence available establishes that the McFall Cabin was constructed before January 1, 1973 as an abode within a floodway that is not a boundary river floodway, Ind. Code § 14-28-1-26 and 312 IAC 10-4-3 allows the Claimants the ability to obtain a permit to make “at least one addition” to the McFall Cabin.[4]

 

42.  A permit under Ind. Code § 14-28-1-26 and 312 IAC 10-4-3 would have allowed a compliant addition to be made to the McFall Cabin.

 

43.  However, the Claimants did not apply for an appropriate permit from the Department, which failure was solely responsible for creating the present situation.

 

44.  There is no evidence in the record upon which to conclude that the McFall Cabin’s present day market value with the addition is “more than fifty percent (50%) greater” than the present day market value of the McFall Cabin as it was originally constructed in 1971.

  

45.  The market value that must be considered in this case is the present day market value of the McFall Cabin as it was originally constructed in 1971 as compared to the present day market value of the McFall Cabin with the additions that have been made.

 

46.  The Department was not obligated to offer alternatives for the resolution of the matters at issue and was within its authority to order the removal of the additions to the Subject Property and the McFall Cabin for the sole reason that the floodway construction activities occurred without the Claimants first obtaining a permit.

 

47.  However, the Department offered to resolve the matters in dispute by allowing the Claimants to restore the McFall Cabin to its original condition by removing all of the addition that was made without a permit or by installing flood vents in the lower portion of the McFall Cabin and relocating all of the living space, mechanicals (electrical wiring and other infrastructure) and features within the McFall Cabin to an elevation above the flood protection grade of 508.6 feet NVGD[5].  The evidence does not indicate that the Department offered the Claimants the alternative of seeking a permit in accordance with Ind. Code § 14-28-1-26 and 312 IAC 10-4-3 as a possible remedy to the matter at hand.

 

[EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Order has been modified to correspond with CADDNAR format.  The Final Order, Paragraphs 48 through 50, have been relocated to the “Final Order” section at the beginning of this document.]


[1] McFall explained at the time of the prehearing conference that Vermillion County authorities had issued building permits for the structural additions.  Penny Barton, the Executive Director of the Vermillion County Zoning Commission/Building Commissioner, advised that the additions completed by McFall exceeded the authority granted by the building permits. McFall was advised that building permits would not supersede the need to obtain appropriated permits from the Department and Ms. Barton was advised that the Commission’s jurisdiction is statutorily limited and that disputes surrounding the building permits could not be addressed through this proceeding. 

[2] At the administrative hearing, Claimants’ Exhibits A through D, and F were admitted without objection and Respondent’s Exhibits 1 through 12 (including Exhibit 5A & 5B) were admitted without objection.  Claimants’ Exhibit E and Respondent’s Exhibit 15 were not admitted following objection by the opposing party.  Respondent’s Exhibits 13 and 14 were not offered.

[3] It would be reasonable to conclude based upon the testimony that the McFall Cabin as originally constructed was similar to the condition of the structure as depicted in photographs attached to the Claimants’ request for administrative review filed December 24, 2012.

[4] It is observed that in 1986 the Commission had the occasion to affirm a Department denial of a permit for the construction of an addition to a residence already existing in a floodway.  See Stephen Mitros, et ux. v. DNR, 3 CADDNAR 58 (1986).  However, Ind. Code § 14-28-1-26, previously Indiana Code § 13-2-22-13.4, was enacted by the Indiana General Assembly with an effective date of July 1, 1993.  P.L. 155-1993, § 4.

[5] Relocating living space to an elevation above the flood protection grade is a viable resolution with respect to a permit for the reconstruction of a residence in a boundary river floodway under Indiana Code § 14-28-1-24; however, this alternative solution is not provided for under Indiana Code § 14-28-1-26 with respect to the construction of an addition to a residence existing in a floodway.