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BP Business Economic Loss Claim Appeal 2015-1324: Non profit homebuilder for needy not excluded developer

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The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.


Claimant, a non-profit home building entity in central Florida, appeals the denial of its BEL claim on the basis it is an excluded real estate developer.

Claimant requested and received a more detailed denial summary. The Settlement Program (SP) based its exclusion on these essential facts:

In August 1999 claimant platted a subdivision. In 2010 claimant earned over $4.6 million in program service revenues with $3.4 million identified as first mortgage revenues. In 2010 claimant transferred 5 lots from the above-referenced subdivision and 3 more in 2011. During the fiscal year ending September 2011 70 homes were transferred to homeowners and 37 were under refurbishing/reconditioning. For the previous year, 38 homes were transferred and 45 were under construction.

The SP concluded claimant had not ceased real estate development activity because it improved and sold multiple lots during 2010 and 2011 within a subdivision it had previously platted. BP argues these facts are ample support for invocation of the exclusion of Section 2.2.4.7 of the Settlement Agreement because any activity indicative of real estate development suffices notwithstanding the provisions of Policy 468 suggesting to the contrary.

In response to the above contentions claimant observes: on its tax returns claimant used NAICS code 624229,”Other Community Housing Services”. It did not describe itself as a real estate developer therein. Further claimant could not do so because it has never held permits or licenses issued by the state of Florida authorizing such activities. The amount of revenue truly earned in 2010 from first mortgages only 11% of total revenues. Likewise, any sums expended for “Insurance Builder’s Risk” in 2010 was $2,923.80 or .04% of total revenues in 2010. Relative to the transfer of 8 homes in 2010 and 2011 claimant attests these were transfers of homes that occurred prior to 2010 but because of defaults they reverted to claimant and transferred again to other needy families. Beyond those activities of record claimant declares it engaged in no other activities such as improving assets or inventory or changing designs or platting of same. Finally claimant argues it qualifies under the construction contractor exception of Policy 468, Section F.2.

Recent discretionary review decisions make it clear that the Settlement Agreement and Policy 468 should be read together. See decisions cataloged on March 9, 2015. Using the three guideposts delineated in Policy 468, the sum total of relevant factors do not equate to persuade this panelist that claimant more likely than not was sufficiently engaged in real estate development activity in 2010 that it can reasonably be said claimant was a real estate developer. Any such actionable activities are attributable to pre-existing events i.e., prior to 2010 that carried over into subsequent periods. Moreover recent panel decisions support claimant’s contention it qualifies for the construction contractor exception of Policy 468. In 2010 there is no record proof claimant engaged in zoning, platting or subdividing unimproved land; that outside of building new homes claimant did no other development of related infrastructure such as sidewalks, curbs or sewers; and that claimant engaged in building commercial, industrial or non-residential properties for sale.

For the foregoing reasons, the decision of the Claims Administrator that claimant was an excluded real estate developer is overturned and set aside; and this claim is remanded for further evaluation as that of a non-excluded entity under the applicable BEL provisions of the Settlement Agreement.

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