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					FOR PUBLICATION

ATTORNEY FOR APPELLANT:                      ATTORNEYS FOR APPELLEE:

RICK C. GIKAS                                ANTHONY DeBONIS, JR.
Gikas & Sams                                 Smith & DeBonis, LLC
Merrillville, Indiana                        Highland, Indiana
                                             Attorney for East Chicago Fire Civil
                                             Service Commission

                                             MICHAEL W. BOSCH
                                             Bosch & Banasiak
                                             Hammond, Indiana
                                             Attorney Appellee/Intervenor


                              IN THE
                    COURT OF APPEALS OF INDIANA

LOUIS AGUILERA,                              )
                                             )
       Appellant-Petitioner,                 )
                                             )
              vs.                            )     No. 45A05-0106-CV-270
                                             )
CITY OF EAST CHICAGO, FIRE CIVIL             )
SERVICE COMMISSION,                          )
                                             )
       Appellee-Respondent.                  )


                    APPEAL FROM THE LAKE SUPERIOR COURT
                           CIVIL DIVISION ROOM THREE
                      The Honorable Roger Bradford, Special Judge
                             Cause No. 56D01-0003-MI-21




                                    May 30, 2002
                           OPINION - FOR PUBLICATION


MATHIAS, Judge

       Louis Aguilera (“Aguilera”) appeals from the City of East Chicago Fire Civil

Service Commission’s (“the Commission”) order, in which the Commission sustained

Aguilera’s discharge from the City of East Chicago Fire Department (“ECFD”), raising

the following issues for our review:

       I.     Whether the Commission’s 1999 disciplinary action against Aguilera
              was brought in a timely fashion;

       II.    Whether the East Chicago Ordinance is constitutional;

       III.   Whether the Commission acted in an arbitrary and capricious or
              otherwise illegal manner when it refused to expunge a 1998 drug test
              from Aguilera’s file and whether that refusal violated his Fourth
              Amendment and Fourteenth Amendment rights; and

       IV.    Whether the Commission acted in an arbitrary and capricious or
              otherwise illegal manner in upholding Aguilera’s dismissal from the
              ECFD based in part upon the aforementioned 1998 drug test.

       We affirm.
                             Facts and Procedural History

       The facts most favorable to the Commission’s ruling reveal that at all relevant

times Aguilera was a full-time, paid member of the ECFD, a member of the Firefighters

Pension Fund, and subject to the Fire Civil Service Act of 1972 (“the Act”), which

provides that no member of the service may be “removed, suspended, demoted or

discharged except for cause, and only upon the written accusation of the appointing

power, or any citizen or tax payer, a written statement of which accusation in general

terms shall be served upon the accused, and a duplicate filed with the Commission.”

                                           2
Appellant’s App. p. 194.1 In October of 1998, Aguilera, pursuant to City of East Chicago

Ordinance No. 97-0005 (“the Ordinance”), section 9, was randomly tested for drugs.2 On

October 27, 1998 Aguilera received notice that his random drug test was positive for

metabolites of cocaine, and pursuant to section 16 of the Ordinance, Aguilera was

suspended.3

        On October 30, 1998, and again on November 3, 1998, Aguilera filed a timely

notice of appeal (known as Aguilera I) with the Commission, and requested to participate

in the Employee Assistance Program (“EAP”) pursuant to section 16 of the Ordinance.

Aguilera’s EAP request was granted, and he began a rehabilitation program under the

supervision of a substance abuse professional. Aguilera was allowed to return to work

while he completed the program. The Commission scheduled Aguilera’s appeal hearing

for December 8, 1998, but the Commission failed to adequately notify Aguilera pursuant

to section 29 of the Ordinance.4


1
   The Fire Civil Service Act of 1972, formerly Indiana Code section 19-1-37.5-1, et seq., was repealed in
1981. However, the Indiana General Assembly provided that a city could retain the merit system it had in
place for its fire department under the 1972 Act by ordinance of the City’s legislative body enacted before
January 1, 1983. The provision required that the ordinance incorporate all of the provisions of the prior
1972 statute. Accordingly, the East Chicago City Council, through Ordinance No. 3339, retained the Fire
Civil Service Act of 1972 in effect for the City of East Chicago. Br. of Appellee City of East Chicago at
4.
2
   Section 9 of the Ordinance establishes that all persons employed by the government as firefighters,
including officers, supervisors, and civilian employees having responsibilities relating to firefighting
activities, are required to undergo random drug and alcohol testing in the manner specified by the
Ordinance. Appellant’s App. p. 184.
 3
   Section 16 of the Ordinance provides that
         [a]n employee who has a verified positive test result or who refuses to undergo testing
         shall be immediately terminated from employment. Such termination shall not be
         imposed on an employee who requests and agrees to participate in an Employee
         Assistance Program (EAP), including evaluation and rehabilitation and who agrees to
         follow-up testing as required by Section 13 of this ordinance.
 Appellant’s App. p. 89.
4
   Section 29 of the Ordinance provides in pertinent part:
                                                    3
        As a result of the Commission’s inadequate notification, Aguilera filed a motion to

dismiss on December 28, 1998, requesting that the Commission dismiss the proceedings

against him, restore all vacation or sick days used and/or any lost pay as a result of the

proceedings, and that the drug test results be expunged from his record. On September 8,

1999, the Commission granted nearly all of Aguilera’s requests.                    The Commission

ordered all charges of misconduct from the October 1998 drug test dismissed with

prejudice and further ordered the City to restore any and all lost wages, vacation time, or

sick leave time lost as a result of its action with respect to the October 1998 drug test.

Appellant’s App. p. 79. Lastly, the Commission ordered that any reference to any

suspension, attempt to discharge, or statement of misconduct appearing in Aguilera’s

employment record arising from the October 1998 drug test be expunged. Id. However,

the Commission denied Aguilera’s request to expunge or remove the test results

themselves from his record. Id.

        Meanwhile, on August 26, 1999, and while Aguilera’s motion to dismiss in

Aguilera I was still pending, Aguilera was summoned for a follow-up drug test pursuant

to section 13 of the Ordinance.5 On August 28, 1999, Aguilera again tested positive for



        [t]he Fire Civil Service Commission shall deliver written notice of the hearing to the
        employee in person or by a certified letter sent to his or her last and usual place of
        residence. Said notice shall be delivered to the employee within thirty (30) days of
        receipt of written request for hearing. The notice must state: 1. The time and place of
        hearing; 2. The charges against the employee; 3. The specific conduct that comprises the
        charges; 4. That the employee is entitled to be represented by Counsel; at the employees
        own expense; 5. That the employee is entitled to call and cross-examine witnesses; 6.
        That the employee is entitled to require the production of evidence.
Appellant’s App. p. 91.
5
  Section 13 of the Ordinance states in pertinent part:
         An employee who has been tested under any provision of this ordinance and is found to
         be positive and subsequently participated in an Employee Assistance Program and upon
                                                   4
metabolites of cocaine. On September 8, 1999, the same day the Commission dismissed

Aguilera I, after reviewing and verifying the second drug test, Dr. Timothy W.

Raykovich (“Dr. Raykovich”) the ECFD Medical Review Officer, notified Fire Chief

James Dawson (“Chief Dawson”) of Aguilera’s test results. The next day, September 9,

1999, Chief Dawson notified Aguilera in writing about the positive test results, and

advised that he would conduct a hearing on September 10, 1999 regarding the charges.

At the September 10, 1999 hearing, Chief Dawson found that Aguilera had violated the

Ordinance for a second time and terminated Aguilera’s employment.6

       Aguilera filed another request for appeal (known as Aguilera II) with the

Commission, and another request for participation in the EAP. After proper notification

to Aguilera, the Commission held an evidentiary appeal hearing in Aguilera II on

November 22, 1999. On December 8, 1999, the Commission issued its Findings of Fact

and Conclusions of Law. In its Findings and Conclusions, the Commission sustained

Aguilera’s discharge under the Ordinance, finding that Aguilera had twice obtained a

positive result on a substance abuse test, the second after having completed a qualifying

EAP or rehabilitation program and returning to work. Appellant’s App. pp. 189-90.




         completion of such program is allowed to return to work shall be subject to follow up
         testing. Such follow up testing shall be on a random basis and shall be conducted a
         minimum of six times during the twelve month period immediately following his/her
         return to work.
Appellant’s App. p. 89.
6
  According to Section 17 of the Ordinance, if an employee is found to have a positive test after
completing participation in an EAP or rehabilitation program and returns to work, the employee “shall be
immediately terminated and shall not be permitted to participate in the EAP or other treatment or
rehabilitation program for this second offense. Such an employee so terminated shall not again be
eligible for employment by the City of East Chicago.” Appellant’s App. p. 89.
                                                   5
       Aguilera sought judicial review of the Commission’s findings, and after several

preliminary motions, including motions for change of judge and a motion for change of

venue, Aguilera I and Aguilera II were consolidated in the Lake Superior Court.7 After

conducting oral arguments on Aguilera’s petition for judicial review, the trial court

affirmed the Commission’s ruling and Aguilera’s petition was denied. Aguilera now

appeals. Additional facts will be provided as necessary.

                                          Standard of Review

       Our review is limited to the trial court’s consideration of whether or not the

Commission adhered to proper legal procedure, made findings based on substantial

evidence, and violated any constitutional or statutory provisions in doing so. City of

Marion v. Alvarez, 151 Ind. App. 133, 138, 277 N.E.2d 916, 918-19 (1972). As our

supreme court has stated:

       “[O]n review of an administrative act or order where the court is said to
       hear the matter de novo, the burden is on the complainant to establish the
       invalidity of the administrative action and, in doing so, the trial court may
       not merely substitute its judgment for that of the administrative body. It
       may not interfere with the exercise of the discretionary authority of that
       body, unless it is made to appear that it acted in the exercise of that
       discretion in an arbitrary, capricious, fraudulent, or otherwise illegal
       manner.”

Id. at 138, 277 N.E.2d at 919 (quoting City of Evansville v. Nelson, 245 Ind. 430, 443,

199 N.E.2d 703, 710 (1964)) (emphasis added). Former Indiana Code section 19-1-37.5-

7, which was maintained by the City of East Chicago under the authority of Indiana Code


7
  Aguilera I was originally filed in Lake Superior Court, Room 5, and was subsequently venued on a
change of venue to Newton County. The cause was thereafter consolidated with Aguilera’s second
appeal. Aguilera II was originally filed in Lake Superior Court 3 and went through several changes of
judge before consolidation with Aguilera I. Br. of Appellee/Intervenor at 2.
                                                 6
section 36-8-3.5-1(b)8 and by city ordinance,9 further defines our review process, and

provides in relevant part:

        The circuit court shall thereupon proceed to hear and determine such appeal
        in a summary manner: Provided, however, that such hearing be confined to
        the determination of whether the judgment or order of removal, discharge,
        demotion or suspension made by the Commission, was or was not made in
        good faith for cause, and no appeal to such court shall be taken except upon
        such ground or grounds.

Former Ind. Code § 19-1-37.5-7 (emphasis added).

                                        Discussion and Decision
                                             I. Timeliness

        We must first address Aguilera’s claim that the Commission’s 1999 charges

against him, Aguilera II, were not timely filed.                    Aguilera argues that pursuant to

Commission Rule entitled, “Time Limitation on Charges,” adopted in 1983, all Aguilera

II charges must have been brought within four days of his alleged violation, and because

Aguilera was not charged accordingly, his dismissal was arbitrary and capricious. We

disagree.

        In pertinent part, the Time Limitation on Charges Rule reads:

        Anyone bringing charges against another individual shall put in writing the
        charge within four (4) calendar days of the possible violation and shall
        deliver said charge to his superior officer. The Assistant Chief or Acting
        Assistant Chief of that turn shall deliver the charge in a sealed envelope to
        the Administrative Office. In the event the Administrative Office is closed,
        the Assistant Chief or Acting Assistant Chief shall attach the sealed
        envelope to other documents pertaining to his turn.


8
  Indiana Code section 36-8-3.5-1(b) provides in relevant part:
         If a city had a merit system for its police or fire department under the former . . . IC 19-1-
         37.5, it may retain that system by ordinance of the city legislative body passed before
         January 1, 1983.
9
  Public Law 316-1981, §1.
                                                       7
Br. of Appellant at 36; Br. of Appellee City of East Chicago at 39. In its Findings of Fact

and Conclusions of Law, the Commission found that,

       It is the Commission’s conclusion that the 1983 regulation containing the
       four (4) day rule was intended to apply only to members of the Fire Civil
       Service who are preferring charges against other members. The use of the
       words in the regulation referring to a charging individual delivering the
       charge “to his superior officer” makes clear that the rule was adopted to
       require fire fighters to make charges against fellow fire fighters in a timely
       manner. Consequently, the MRO, in reporting a test result to the
       Department, cannot be said to be bound by this rule.

       Additionally, the medical review officer is not a member of the classified
       Fire Civil Service and cannot be deemed to be within the jurisdiction of the
       Commission’s rule making power. Thus, the time for bringing the charge
       begins to run when the Fire Chief had actual notice of the positive test
       result. The evidence is without dispute that the Chief received notice of the
       test result, at the earliest, on September 8. He notified Aguilera on
       September 9, and discharged him on September 10. The four (4) day rule
       was satisfied. . . . The Commission, therefore, concludes that the charges
       against Aguilera in 1999 were timely.

Appellant’s App. p. 195.

       The Commission’s reasoning is explained well, and we cannot say that its decision

“lacks a reasonably sound basis of evidentiary support.” City of Evansville, 167 Ind.

App. at 485, 339 N.E.2d at 572. We agree with the Commission’s conclusion that the

1983 four-day Rule was not intended to apply to Dr. Raykovich. We, therefore, find that

Aguilera II was brought in a timely manner.

                           II. Constitutionality of the Ordinance

       Before we address Aguilera’s argument that the Commission violated his

individual rights, we first must consider whether the Ordinance itself is constitutionally




                                              8
sound. In Oman v. State, 737 N.E.2d 1131 (Ind. 2000), our supreme court upheld the

constitutionality of a substantially similar drug ordinance. Id. at 1142.

       In Oman, Ronald Oman (“Oman”) was employed by Michigan City, Indiana, as a

firefighter. As a condition of employment, Oman was required to submit to a urinalysis

pursuant to Michigan City’s Drug and Alcohol Free Workplace Ordinance (“the

Michigan City Ordinance”).       Under the Michigan City Ordinance, safety-sensitive

employees, such as Oman, were required to submit to urine and breath tests for alcohol

and drugs upon the occurrence of certain events, such as accidents. Refusal to submit to

the test resulted in an automatic thirty-day suspension without pay and risk of

termination.

       In April 1998, Oman was the driver of one of two fire trucks involved in a

collision. Pursuant to the Michigan City Ordinance, Oman was ordered to submit to a

post-accident drug test. Oman’s drug test was positive for marijuana. Without seeking

leave of court, a deputy prosecutor issued a subpoena directing the testing lab to produce

Oman’s test results.    The lab complied, and Oman was subsequently charged with

Operating a Vehicle with a Controlled Substance in his Blood, a Class C misdemeanor.

Oman moved to suppress his test results, asserting that their use in his criminal

prosecution violated his Fourth Amendment rights.

       Reversing the court of appeals opinion, the Oman court relied on principles

enunciated by the United States Supreme Court in Skinner v. Ry. Labor Executives’

Ass’n, 489 U.S. 602 (1989) and Nat’l Treasury Employees Union v. Von Raab, 489 U.S.

656 (1989), which upheld the constitutionality of government testing programs very

                                             9
similar to the Michigan City Ordinance and the Ordinance here. Oman, 737 N.E.2d at

1142. Those landmark decisions relied on Fourth Amendment grounds and held that a

urinalysis is a search within the purview of the Fourth Amendment, and must therefore

meet the Fourth Amendment reasonableness requirement. Skinner, 489 U.S. at 616; Von

Raab, 489 U.S. at 665.       However, the Von Raab Court also stated that it is a

“longstanding principle that neither a warrant nor probable cause, nor indeed, any

measure of individualized suspicion, is an indispensable component of reasonableness in

every circumstance.” Von Raab, 489 U.S. at 665; see also Skinner, 489 U.S. at 619. “In

certain limited circumstances, the Government’s need to discover [latent or hidden illegal

acts, conditions, or dangers], or to prevent their development, is sufficiently compelling

to justify the intrusion on privacy entailed by conditioning such searches without any

measure of individualized suspicion.” Von Raab, 489 U.S. at 668.

       Relying on these holdings, the Oman court went on to find that departure from the

usual warrant and probable cause requirements of the Fourth Amendment is justified

when the affected employees are engaged in safety-sensitive tasks, and upheld the

validity of the Michigan City Ordinance. Oman, 737 N.E.2d at 1142. For all of these

reasons, we believe Oman controls in the instant case and that the ECFD drug testing

program at issue is constitutionally sound.

                           III. 1998 Records – Expungement

       Aguilera argues that the Commission acted in an arbitrary and capricious manner

and in violation of his Fourth Amendment rights against warrantless search and seizure



                                              10
and his Fourteenth Amendment due process rights when it utilized the Aguilera I

substance abuse test as evidence in his Aguilera II termination. We disagree.

      A.     Fourth Amendment

      Aguilera argues that his Fourth Amendment rights were violated by the

Commission’s requirement that Aguilera submit to mandatory follow-up testing and

enrollment in the EAP as a condition of employment in Aguilera I, pursuant to section 17

of the Ordinance. Specifically, he argues that, “conditioning retention of a protected

property interest in continued employment upon acceptance of an unconstitutional search

is in itself a violation of Aguilera’s due process rights and cannot be considered

“voluntary” as that word is defined by Indiana law.” Br. of Appellant at 32. We

disagree, and find Oman to the contrary.

      As previously noted, relying on the doctrine announced in Skinner and Von Raab,

the Oman court found that departure from the usual warrant and probable cause

requirements of the Fourth Amendment are justified when the affected employees, like

Aguilera, are engaged in safety-sensitive tasks. Oman, 737 N.E.2d at 1142. The Oman

court also held that Oman had agreed to submit to post-accident testing as a condition of

his employment in a safety-sensitive job. Id. at 1144. If Oman had objected to the

testing, he had the option of seeking employment elsewhere. Id.

      In like fashion, Aguilera voluntarily subjected himself to the testing procedures

prescribed by the Ordinance when he accepted employment with the ECFD. If he had

objected to the testing provision he could have refused employment and elected to work

elsewhere. Also, after his Aguilera I test, Aguilera could have elected not to enter the

                                           11
EAP and its follow-up testing, but rather to challenge the results of his drug test on the

merits. He did not do so. As such, Aguilera’s Fourth Amendment rights were not

violated by the Commission’s mandatory follow-up testing.

       B.     Fourteenth Amendment

       Aguilera has a statutorily created property interest in his continued employment.

Howard v. Inc. Town of North Judson, 661 N.E.2d 549, 553 (Ind. 1996) (holding that a

statute which required town to give police officer notice prior to termination gave officer

property interest in continued employment); Town of Speedway v. Harris, 169 Ind. App.

100, 106, 346 N.E.2d 646, 649 (1976) (holding that a probationary fireman had a

property interest in continued employment and was entitled to hearing prior to dismissal).

As such, Aguilera’s employment cannot be terminated without adherence to basic due

process procedures. Id. Aguilera argues that his due process rights extend to preclude

use of the Aguilera I drug test as evidence in the Aguilera II termination, and that the

Commission’s refusal to expunge the Aguilera I drug test violated his Fourteenth

Amendment due process rights. Again, we disagree.

       As previously indicated, the Commission’s expungement decision must be

examined under the “substantial evidence” and “arbitrary and capricious” standards.

“Substantial evidence is more than a scintilla. It means such relevant evidence as a

reasonable mind might accept as adequate to support a conclusion.” Bailey Seed Farms,

Inc. v. State Bd. of Tax Comm’rs, 542 N.E.2d 1389, 1391 (Ind. Tax Ct. 1989) (citations

omitted). “A finding should be set aside under the substantial evidence standard when it

lacks a reasonably sound basis of evidentiary support.” Id. (citation omitted). “Similarly,

                                            12
an act is arbitrary or capricious when it is without some basis which would lead a

reasonable and honest person to the same conclusion as the agency.”               Id. (citation

omitted).

        While the Federal Courts have held that that expungement may be an appropriate

remedy for due process violations, Ware v. Heyne, 575 F.2d 593, 596 (7th Cir. 1978);

Feagin v. Broglin, 693 F. Supp. 741, 746 (N.D. Ind. 1988), aff’d, 885 F.2nd 873 (7th Cir.

1989) the inherent authority to expunge is a narrow one exercised only in extraordinary

circumstances. Feagin, 693 F. Supp. at 746 (citing United States v. McMains, 540 F.2d

387, 390 (8th Cir. 1976); United States v. Henderson, 482 F. Supp. 234 (D.N.J. 1979)).

“Determination of the propriety of expungement involves a balancing of the harm caused

to the plaintiff by the record’s existence against the utility to the defendant of the record’s

maintenance.” Id. (citations omitted). By its nature, expungement involves the exercise

of discretion. While the procedure used to make the expungement decision is subject to

Fourteenth Amendment due process review, the discretionary expungement decision is

not.

       Because we have determined that Aguilera had a property interest in his continued

employment and therefore must be afforded due process rights, we must now determine

what process is due. It is a basic principle of due process that a deprivation of property

“be preceded by notice and opportunity for hearing appropriate to the nature of the case.”

Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542 (1985) (quoting Mullane v.

Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950)).                   However, these

requirements “need not be elaborate.” Id. at 545. As the Court indicated:

                                              13
       The essential requirements of due process . . . are notice and an opportunity
       to respond. The opportunity to present reasons, either in person or in
       writing, why proposed action should not be taken is a fundamental due
       process requirement. The tenured public employee is entitled to oral or
       written notice of the charges against him, an explanation of the employer’s
       evidence, and an opportunity to present his side of the story. To require
       more than this prior to termination would intrude to an unwarranted extent
       on the government’s interest in quickly removing an unsatisfactory
       employee.

Id. at 546, (internal citations omitted).

       Based on the record before us on appeal, it is clear that Aguilera was afforded his

full due process rights. Although negative consequences eventually befell Aguilera as a

result of the Aguilera I positive drug test results, these negative consequences were not

the result of the ECFD’s failure to provide Aguilera with adequate notice during Aguilera

I or a failure to afford Aguilera an opportunity to be heard. On September 8, 1999, the

Commission hearing officer granted Aguilera’s motion to dismiss because the ECFD had

failed to provide adequate notice regarding Aguilera I. The Commission held that “no

negative consequences can attach to Mr. Aguilera’s terms of employment. Accordingly,

reference to any suspension or specific charge of misconduct arising from the failed drug

test should be stricken and expunged from his record.” Appellant’s App. p. 78. The

Commission went on to restore all of Aguilera’s lost wages, vacation time, or sick leave

time as a result of the actions taken by the ECFD for Aguilera’s 1998 drug test. All of

these actions were consistent with ensuring compliance with Aguilera’s due process

rights. Nevertheless, the Commission denied Aguilera’s request to expunge the Aguilera

I drug test and test result from his record, holding that,



                                              14
       [n]o objection has been made by anyone in these proceedings to the testing
       regime itself, to the manner in which Aguilera was chosen for the test or to
       the manner in which the test was carried out. It is only those proceedings
       subsequent to the test which are in issue and to which the order of
       expungement should apply.

Id. Aguilera, however, enjoyed full employment status following the Commission’s

ruling, with a full reversal of all consequences stemming from the disciplinary action that

was dismissed due to the lack of adequate notice. Id.

       Following his positive drug test in 1999, Aguilera was given a pretermination

hearing before Chief Dawson, where he was afforded an opportunity to respond to the

allegations against him, present evidence, challenge his Aguilera I drug test, and argue

against termination.     Following his pretermination hearing before Chief Dawson,

Aguilera was afforded a full appeal hearing to further ensure that his due process rights

were not violated. See Hunt v. Shettle, 452 N.E.2d 1045, 1051 (Ind. Ct. App. 1983)

(citations omitted) (holding that if there is a property interest requiring due process, it is

not necessary that a full evidentiary hearing be held at the outset as long as a hearing

satisfying the requirements of procedural due process is held at some time after the initial

taking). In light of this substantial evidence, we find that the Commission’s refusal to

expunge the Aguilera I drug test and test results from his employment record was not

arbitrary, capricious, or otherwise illegal.

        Aguilera further argues that because proper notice was a prerequisite to the

Commission’s jurisdiction, Aguilera I is a legal nullity, and the drug test upon which it

was based should also be nullified. Br. of Appellant at 20. In support of his argument he

relies on Lipinski v. Town of Chesterton, 151 Ind. App. 109, 280 N.E.2d 628 (1972) and

                                               15
City of New Haven v. LeFever, 143 Ind. App. 88, 238 N.E.2d 487 (1968). Aguilera’s

argument is misplaced. Lipinski and LeFever hold only that failure to strictly follow

statutorily guaranteed due process procedures will render the disposition of a proceeding

void. Lipinski, 151 Ind. App. at 117, 280 N.E.2d at 629; LeFever, 143 Ind. App. at 90,

238 N.E.2d at 489. Contrary to Aguilera’s argument, Lipinski and LeFever do not stand

for the proposition that failure to strictly follow notice procedures renders underlying

evidence that served to initiate the proceeding void. The Commission dismissed Aguilera

I based on inadequate notice. Lipinski and LeFever do not require the Commission to

expunge the Aguilera I drug test results upon dismissal of the Aguilera I proceedings that

were based upon those results.         We do not find, therefore, that the refusal of the

Commission to expunge the Aguilera I drug test from his employment file was arbitrary

and capricious or otherwise illegal.

                                        IV. Dismissal

       Finally, Aguilera argues that the Commission acted in an arbitrary and capricious

or otherwise illegal manner in dismissing him as a firefighter from the ECFD because he

was never found guilty of a violation of the drug policy by Chief Dawson in Aguilera I.

Br. of Appellant at 33.      However, Aguilera misconstrues the requirements of the

Ordinance.    According to section 17 of the Ordinance, “[a]ny employee who has

completed participation in an EAP or rehabilitation program and returned to work and

has a second positive drug/alcohol test shall be immediately terminated and shall not be

permitted to participate in the EAP or other treatment or rehabilitation program for this

second offense.” Appellant’s App. p. 89 (emphasis added). Clearly, a finding of guilty is

                                              16
not required for a dismissal to occur following a second positive test result, and the

Commission correctly upheld Aguilera’s dismissal based on his second positive drug test

for cocaine in 1999.      Under these facts and circumstances, the decision of the

Commission was not arbitrary and capricious or otherwise illegal.

                                       Conclusion

      Based on the foregoing we find that Aguilera II was timely filed. We further find

that the ECFD’s testing procedure is constitutional and that the Commission did not act in

an arbitrary and capricious or otherwise illegal manner by refusing to expunge the

Aguilera I test result in violation of his Fourth Amendment or Fourteenth Amendment

rights. Finally, we find that the Commission correctly upheld Aguilera’s dismissal based

on his second drug test in 1999. The order of the Commission is therefore affirmed.

      Affirmed.

RILEY, J., concurs.

BROOK, C. J., dissents with separate opinion.




                                           17
                                IN THE
                      COURT OF APPEALS OF INDIANA

LOUIS AGUILERA,                                         )
                                                        )
        Appellant-Petitioner,                           )
                                                        )
                vs.                                     )     No. 45A05-0106-CV-270
                                                        )
CITY OF EAST CHICAGO FIRE CIVIL                         )
SERVICE COMMISSION,                                     )
                                                        )
        Appellee-Respondent.                            )



BROOK, Chief Judge, dissenting

        I respectfully disagree with the majority’s conclusion on the timeliness issue,

which I believe to be dispositive.           I would reverse the Commission’s discharge of

Aguilera on the basis that Dr. Raykovich did not report Aguilera’s positive test result to

the ECFD within four days of receiving the test result.10

        “When asked to interpret an ordinance, this court will apply the same principles as

those employed for the construction of statutes.”                 T.W. Thom Constr. v. City of

Jeffersonville, 721 N.E.2d 319, 324 (Ind. Ct. App. 1999).

                The interpretation of a statute is a question of law reserved for the
        courts.…      [W]hen the language is susceptible to more than one
        construction, we must construe the statute to determine the apparent
        legislative intent. The task of appellate courts with respect to statutory
10
   See EAST CHICAGO, IND., CODE ch. 2.64.160 (1997) (“An employee who has a verified positive test
result or who refuses to undergo testing shall be terminated from employment. Such termination shall not
be imposed on an employee who requests and agrees to participate in an employee assistance program
(EAP), including evaluation and rehabilitation and who agrees to follow-up testing as required by Section
2.64.140 of this chapter.”).
                                                   18
       interpretation has been summarized as follows: We ascertain and
       implement legislative intent by giving effect to the ordinary and plain
       meaning of the language used in the statute. The statute is examined and
       interpreted as a whole and the language itself is scrutinized, including the
       grammatical structure of the clause or sentence at issue.

State v. Rans, 739 N.E.2d 164, 166 (Ind. Ct. App. 2000), trans. denied (2001) (paragraph

format altered and citations and quotation marks omitted). “[A]n agency’s interpretation

of the statutes and regulations which the agency is charged to enforce is entitled to some

weight [but] if an agency’s interpretation is erroneous, it is entitled to no weight. Miller

Brewing Co. v. Bartholomew County Beverage Co., 674 N.E.2d 193, 200 (Ind. Ct. App.

1996) (citation omitted), trans. denied (1997). “Ultimately … courts are charged with the

responsibility of resolving questions of statutory interpretation and thus are not bound by

an agency’s interpretation of a statute or rule.” Id.

       Any citizen or taxpayer may bring charges against an ECFD employee. See EAST

CHICAGO, IND., CODE ch. 2.22 (1982) (providing that no employee of the ECFD may be

“removed, suspended, demoted or discharged except for cause, and only upon the written

accusation of the appointing power, or any citizen or taxpayer ….”) (adopted December

30, 1982, by East Chicago Ordinance 3339; formerly Ind. Code § 19-1-37.5-7 (repealed

1981)) (emphasis added). Additionally, the Commission rule entitled “Time Limitation

on Charges” provides in relevant part that “[a]nyone bringing charges against another

individual shall put in writing the charge within four (4) calendar days of the possible

violation and shall deliver said charge to his superior officer.”

       Adopting the reasoning of the Commission, the majority assumes that the “his” in

“his superior officer” refers to the person bringing charges. In order to reconcile the rest

                                             19
of the rule with this assumption, the majority concludes that “anyone” refers only to

ECFD employees. The effect of this interpretation, of course, is that the four-day rule

does not apply to citizens and taxpayers.

       As previously noted, the rule clearly applies to “[a]nyone bringing charges[.]”

Given that citizens and taxpayers at large do not have superior officers, the only

reasonable interpretation of “his superior officer” is as a reference to the employee

against whom the charges are being brought. My interpretation of the rule is that anyone,

citizens and taxpayers at large included, who brings charges against an ECFD employee

must do so within the four-day limit and must deliver the charges to the alleged violator’s

superior officer.

       The majority’s interpretation of the rule renders the four-day limit essentially

meaningless. Under that interpretation, if an ECFD employee becomes aware of a

violation but fails to report it within four days, the employee could simply recruit a

citizen or taxpayer at large to report the alleged violation on the employee’s behalf. That

citizen or taxpayer would be able to report the alleged violation at any time. This is

clearly an absurd and unacceptable result.        Because Dr. Raykovich failed to report

Aguilera’s positive test result to Aguilera’s superior officer within four days of receiving

the result, I would reverse on that basis.




                                             20
ss

         1.      Overall Purpose of the Business: To provide a return to investors and lenders,
        while serving the general region by job creation and revenues. My Town
        Motel 5 will be a high quality lodging establishment, providing lodging and
        meeting rooms which will be an asset to the region.

         2. Specific purpose of the business: My Town Motel 5 is a service
        business in the hospitality industry. It will be a mid-market lodging
        establishment with 75 rooms on a 3 acre site in My Town, a beautiful
        wooded area overlooking the Your Town area. The standard size room
        will be 11’4” x 25’6”. The project is designed to attract the mid-to-higher-
        priced hotel patron by providing comparable quality accommodations and
        amenities at competitive prices. The premises will include an indoor
        swimming pool, meeting facilities, and food and beverage service. Plans
        include the addition of an adjacent restaurant, with adjoining meeting room,
        which will attract business clients as well as budget leisure travelers.

C.   Marketing Strategy

         1. As a retail business, in a free standing location, sales and advertising will be
        directed to the business traveler, tourist, and others traveling along Highway 77,
        a major U.S. Interstate highway. Service and quality will be important
        factors, along with the Motel 5 franchise systems, which contribute to
        promotion, advertising and reservations.

         2.     The primary marketing tools include:
                  a. Motel 5 advertising & reservation systems for business and individual
                  clients
                  b. Billboards on reservation and surrounding areas to attract tourists
                  c. Direct marketing of local, business and corporate businesses for meetings,
                  food service and lodging requirements.
                  d. Classified advertising
                  e. Display advertising
                  f. Yellow page advertising
                  g. Direct Mail
                  h. Client referrals
                  i. Word of mouth and referral


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                   BUILDING YOUR WINNING BUSINESS
________________________________________________________________________
D.   Production Process

        1.    Management and Operations will be provided by hiring qualified hospitality
                industry managers to get started, and hiring and training service-oriented
                employees. Motel 5 provides an intensive hospitality management training
                program for franchises, which includes classes on more than 45 subjects,
                including guest relations, sales presentation strategies, team building,
                supervisory skills, cash flow analysis, rate management, and room inventory
                pooling.

E.   Management Team

        1.       My Town Motel 5 is a Corporation owned and operated by
                 Joe Smith, a successful My Town businessman who has owned and
                 operated a retail business in My Town for approx. 10 years. He has
                 considerable experience, education and background in business management
                 and business operations. Conventional organizational structure for a Motel 5
                 will be utilized, with a General Manager reporting directly to Mr. Smith.
                 The General Manager typically will organize operations where employees
                 report directly for Front Desk, Housecleaning and Audit. These key
                 employees will be responsible for supervision of staff in performing the
                 day-to-day operations.

F.   Objectives of the Management Team

        1.   The objective of the Motel 5 management team is to implement the overall
                 goals of the franchise; to create a lodging experience that will leave the
       customer wanting to return to relive the experience. The hired manager will
       report directly to owner/operator Joe Smith. Joe will oversee the
       operation, but the day-to-day management of operations will be left up to the
       qualified management team.

G.   Financial Considerations

        1.     Anticipated profits for the first three years of operations are as follows:
              a.   Year 1       $72,500
              b.    Year 2      $81,800
              c.   Year 3       $95,100

        2.     Sources of funds for financing are as follows for:
              a.   Equity by owner                                                    $ 300,000
              b.   Loan secured by property & FF&E                                    2,000,000
                          TOTAL SOURCES                                             $ 2,300,000

         3.   Uses of funds are as follows:
                a. Purchase Land*                                                      $ 45,000
                b. Construction Costs**                                               2,000,000
                c. Fixtures, Furnishings & Equipment+                                   150,000
                d. Startup Expenses                                                     105,000
                         TOTAL USES                                                 $ 2,300,000

                         Notes to above
                         *Land purchase is for 3 acres of Highway 77 property (see maps
                          attached).
                       **Construction Costs are an estimate only.

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                                          16
                   BUILDING YOUR WINNING BUSINESS
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                          +FF&E estimated conservatively at $2,000 per room. See
                           FF&E estimates attached.

         4. The Projected Key Balance Sheet Ratios for the next three years will be as
         follows:

               Year 1 Current ratio: 2.9
                   Debt to Equity ratio: 5.8
                   Return on Equity ratio: 20.9%
               Year 2 Current ratio: 2.8
                   Debt to Equity ratio: 4.9
                   Return on Equity ratio: 20.4%
               Year 3 Current ratio: 2.7
                   Debt to Equity ratio: 4.1
                   Return on Equity ratio: 20.6%


                                   II.   PRODUCTS AND SERVICES

   A.    My Town Motel 5 will offer the following amenities:

          1.     75 rooms, approx. 12’ x 25’, configured with a mix of bed configurations,
                 including allowances for disabled and non-smoking rooms. The majority
                 of the rooms will be configured as double/doubles, with two beds, to offer
                 the maximum flexibility to patrons.

          2.     Meeting rooms in-house for use of organizations, meetings and business
                 and civic groups in the area.

          3.     Indoor swimming pool

          4.     Food and beverage service or adjacent restaurant to be developed.

    B.     Motel 5 Features

          1.     Motel 5 was founded in 1970 by Atlanta real estate developer John Five, who
                 started out with a group of six no-frills motels. They were
                 acquired by Hospitality Franchise Systems, Inc. in 1994, which makes
                 them a part of the largest motel system in the world. With approx. 1,500
                 properties in 49 states, Motel 5 is presently the fastest mid-market
                 lodging chain, and the third largest hotel organization. Motel 5 has
                 consistently achieved high occupancy rates chain-wide. At one point,
                 the average occupancy for properties less than five years old was over
                 80 percent.

          2.     To boost franchisee’s occupancy rates, the chain currently promotes
                 five corporate membership programs, each aimed at a different
                 demographic group. For example, one club targets senior citizens,
                 whereas another caters to budget-minded business travelers. Yet
                 another is aimed at government employees.

          3.     Franchisee’s properties are linked via a satellite-communications
                 reservations network, which supplies nearly 40 percent of chain-wide
                 reservations. Franchisees also receive national and regional media
                 exposure, listings in major hotel directories and travel references, and

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                                          17
                   BUILDING YOUR WINNING BUSINESS
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               representation in airline reservation systems.

   C.    Future Products and Services

        1.     Expansion possibilities exist for the marketplace, with a 75-unit project
               actually being on the small side for new Motel 5 properties. Their
               typical new project consists of 115 rooms. This project was chosen at
               its smaller size due to capital limitations of the developer and not lack
               of support for larger facilities.

        2.     A restaurant addition is planned for the first year, with an outside
               developer or owner/operator being sought. A Denny’s or other
               franchise would be optimal, with a high success ratio present
               nationally in locating with Motel 5 projects.


                                    III.   INDUSTRY ANALYSIS

   A.    Lodging Industry Profile

        1.   The Lodging Industry is the largest segment of the Hospitality Industry,
               which is the fastest growing major industry in the U.S. today, and the
               largest industry worldwide. By the year 2000 the Hospitality Industry is
               expected to be the largest employer in the U.S. and World. The Lodging
               Industry for the U.S. consists of approx. 45,000 properties, 3.3 million rooms,
               $61.7 billion in sales, with an average occupancy rate of 63.6% (source:
               Amer. Hotel & Motel Assoc., 1993).

        2.   The Economy Market segment of the Lodging Industry is the fastest
               growing, most profitable segment of the industry, representing approx.
               34% of the total Lodging Industry. Motel 5 falls within the economy
               segment, and has been the best performing of all major competitors,
               including Travelodge, Super 8, Quality Inns, Motel 6, Fairfield Inn, Econo-
               Lodge, Comfort Inns, and Budgetel. They control 14% of the market,
               with the 2nd largest competitor representing 10%, and #3 7%. Their
               reservations system is the largest in the U.S., with six centers throughout
               the country, almost twice the size of their closest competitor.

        3.     The Lodging Industry has proven to be cyclical, and the industry is just
               pulling out of a period of overbuilding in the 1980’s. The Economy
               Market has not been subject to this trend however, and has steadily
               exhibited grown and acquired market share from the high-end hotels.
               Industry analysts are predicting steady improvement in occupancy rates
               during the 1990’s, with much improvement noted since 1992. The
               biggest challenge facing the industry, according to Arthur Andersen & Co,
               is maintaining rates at a higher level. Motel 5 has benefited from what
               might be considered this long term trend toward more economy minded-
               ness.

        4.     The Hospitality and Lodging Segment in Arizona have grown faster than
               the National averages. According to a 1995 Business Journal article, the
               average occupancy rates in the state have been running over 75%, with
               larger gains noted for the economy segment of the market. The Arizona
               Department of Tourism, local Chambers of Commerce and Visitors
               & Convention Bureaus have been effective at promoting the state as both

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                                          18
                   BUILDING YOUR WINNING BUSINESS
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               a desirable product and good value.

        5.     The Navajo County includes a large section of Highway 77, which is a
               major U.S. highway, and boasts the largest traffic patterns through the
               state. Interstate commerce, tourism and statewide travelers all represent
               large users of this corridor. The Grand Canyon reports over 4 million
               visitors per year annually, most of which use this section of Highway 77
               for thoroughfare. Copies of traffic surveys through this area are shown as an
               exhibit to demonstrate demand via traffic, and a copy of the latest Tourism
               Site Visitation list is also shown as an attached schedule.

   B.    Market Definition

        1.     Who is the customer? The major customer of My Town Motel 5 will
               be a tourist traveling the region. Secondary customer groups would be
               the regional business traveler and local populations using facilities and
               meeting rooms.

        2.   Travel and tourism is the world’s largest industry and the worlds largest
               generator of jobs. Tourism ranks as the number one industry and
               employer in Arizona, and is the fastest growing industry statewide.

   C.    Competition

        1.     The only local competitor for this project is the No Tell Motel,
               located in downtown Your Town. It is a 56-unit project, owned and
               operated by corporation. Other lodging facilities falling within a 60
               mile radius include other cities, which has over 20 motel
               properties.

        2.   Strengths and weaknesses. The No Tell Motel is an older project,
               approx. 30 years old, and their rooms are smaller than that planned for
               this project. Well furnished with Southwest design, they have demonstrated
               occupancy rates in excess of 65%, despite a high rate structure, with rooms
               starting at $65. Their location is approx. 3 miles east of this project,
               along Highway 77 with good visibility and appearance. Their rooms are
               located in a separate wing from a main restaurant/dining facility, and have
               an older-style outside entrance with a dark parking lot for access. Service
               is minimal, with few amenities typically found in higher priced projects.

   D.    Major Influences on the Business and the Industry

        1.   Government. Regulation is minimal for the industry, with consideration
               required for American With Disabilities Act considerations, Health and
               Safety, and local taxation.

        2.   Business cycle. With tourism being the primary customer, the business
               should be somewhat seasonal, with larger revenue months during the
               Spring and Summer months. Consideration in the plan was given to
               lower occupancy and rates for off-season months. Generally, with a
               Motel 5 franchise, separate rate structures for off-season months are
               only required in the more highly competitive markets.




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                   BUILDING YOUR WINNING BUSINESS
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                                          IV.   MARKETING PLAN

   A.     Marketing Overview

          I.      As a retail business, in a free standing location, sales and advertising will be
        directed to the business traveler, tourist, and others traveling along Highway
        77, a major U.S. Interstate highway. Service and quality will be important
        factors, along with the Motel 5 franchise systems, which contribute to
        promotion, advertising and reservations.

         2.    The primary marketing tools include:
                 a. Motel 5 advertising & reservation systems for business and individual
                          clients
                 b. Billboards on reservation and surrounding areas to attract tourists
                 c. Direct marketing of local, business and corporate businesses for meetings,
                 food service and lodging requirements.
                 d. Classified advertising
                 e. Display advertising
                 f. Yellow page advertising
                 g. Direct Mail
                 h. Client referrals
                 i. Word of mouth and referral


                                     V.     THE PRODUCTION PLAN

   A.     Facility Requirements

         1.      The basic design and schematics are shown in attached schematics. These
                 are preliminary and subject to change, but demonstrate the general quality
                 and appearance for the project. Construction cost estimates are also shown
                 as an attachment.

         2.      Furnishings, Fixtures and Equipment are shown as a separate schedule.
                 We have allowed $2,000 per room, which is higher than the preliminary
                 estimates attached.

          3.     Labor. Management staff will probably be hired from the
                 Hospitality Industry, probably from out of the area initially. It is our
                 intent to train and promote from within over time, and to utilize local
                 citizens whenever possible for employees.

          4.     Training. Hospitality Franchise Systems provides training and classes for
                 management and other employees. They provide a comprehensive training
                 program for new franchisees. The curriculum covers property management
                 supervisory and sales skills, financial analysis, and related legal and
                 industrial topics. Outlet managers receive a two-week orientation at the
                 Day Learning Center in Atlanta. An operating team is assigned to every
                 new property to oversee hotel development and staff training.




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                                          20
                   BUILDING YOUR WINNING BUSINESS
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                                     VI.     COMPANY STRUCTURE

   A.     How Company Will be Structured

         1.    My Town Motel 5 is owned by Joe Smith, Inc., a corporation
                 wholly owned by Joe Smith.

    B.    Business Advisors

         1.    Accountant:           Brian Adams
                                             c/o Epic Records
                                             100 W. Buffalo St., Holbrook, AZ 86025
                                             Phone (520) 524-1000

          2.     Business Consultant:         Mark Engle
                                              Small Business Development Center
                                              P.O. Box 610, Holbrook, AZ 86025
                                              Phone (800) 266-7232

         3.    Lawyer:                        Larry Landers
                                              P.O. Box 650
                                              Your Town, AZ 85900
                                              Phone (520) 223-7000

         4.    Banker:                        Dan Manning
                                              Yourtown State Bank
                                              P.O. Box 101, Your Town, AZ 85900
                                              Phone: (520) 223-5567




                                      VII.   THE FINANCIAL PLAN

   A.     Summary: We used Risk Management Association figures to estimate costs for the
              project. On the income side, the estimates were based on actual results
              Motel 5 has compiled for their other state operations, which would be
              very comparable for this operation. We were conservative on occupancy
              rates and average daily room rates used. Refer to the state
              statistics in a letter attached, and specific assumptions shown below in
              section C.

   B.     Projected Financial Proformas - see attached

         1.    Profit and loss
         2.    Break-even analysis
         3.    Balance sheet
         4.    Cash Flow
         5.    Operating Budgets
         6.    Ratio Analysis




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                   BUILDING YOUR WINNING BUSINESS
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  C.    Financial Assumptions

                                                            ----Years -------
                                                     _ 1        2     3      4   5
       1. Income assumptions were based on:
               Average Daily Rate                          $45 $48 $53 $55 $55
               Occupancy %                                 60% 65% 70% 70% 70%
               Other Income (mtg facilities, etc.)         $12 $12 $12 $12 $12

       2. Expense Assumptions:
               Operating Expenses (RMA%)                   83% 83% 83% 83% 83%
               Other Overhead (Dep, int., etc)             8.7% 8.7% 8.7% 8.7% 8.7%
               Income Tax                                          35% 35% 35% 35% 35%

       3. Balance Sheet:                                             ----All Years -----
               Cash                                     13.7% of sales
               Inventory                                            6,9% “ “
               Subject Loan $2MM $240Mpmts, CPLTD $60M, Interest $180M
               A/P                                                   2% of COGS




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                                          22
                   BUILDING YOUR WINNING BUSINESS
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                            FILL-IN-THE-BLANKS
                          BUSINESS PLAN OUTLINE

                              TABLE OF CONTENTS

I. EXECUTIVE SUMMARY
      Statement of Purpose                          Question 1
      Legal Structure                                  “     2
      Owners                                           “     3
      Location                                         “     4
      Business Concept                                 “     5
      Mission Statement                                “     6
      Business Image                                   “     7
      Tax, Licensing requirements                      “     8
      Consultants                                      “     9

II. MANAGEMENT & ORGANIZATION
      Management Team                                    “    10
      Hiring Practices                                   “    11
      Organizational Structure                           “    12
      Staffing Expense/Benefits                          “    13

III. PRODUCTS & FACILITIES
       Initial Products or Services                      “    14
       Proprietary Features                              “    15
       Future Planned Products or Services               “    16
       Physical Facilities                               “    17
       Equipment Requirements                            “    18
       Production & Process Capacity                     “    19

IV. INDUSTRY ANALYSIS
      Background for Industry                            “    20
      Typical customers & buying patterns                “    21
      Marketing niche                                    “    22
      Competitors                                        “    23
             Strengths                                   “    24
             Weaknesses                                  “    25
      Unique Selling Proposition                         “    26

V. THE MARKETING PLAN
     Overall Plan                                        “    27
     Marketing Objectives                                “    28
     Promotion Plans                                     “    29
     Sales & Distribution                                “    30
     Warrantees, guarantees, serving issues              “    31

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                                          23
                   BUILDING YOUR WINNING BUSINESS
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VI. THE FINANCIAL PLAN
      Assumptions for projections                    Question 33

ATTACHMENTS

Resume(s)
Personal Financial Statement(s)
Historical Business Financial Statements
Projections
Break-even Analysis
RMA Study Analysis
Financial Ratio Analysis
Fixed asset cost breakdowns
Schematics, drawings, etc.




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                                          24
                   BUILDING YOUR WINNING BUSINESS
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                              EXECUTIVE SUMMARY

1. What is the overall purpose of your business?_________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

 2. What is your legal structure? (Proprietorship, partnership, corporation?) Who are the
key owners, officers, employees, etc? _________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

3. What is your location?___________________________________________________
________________________________________________________________________
________________________________________________________________________

4. What is your business concept? ___________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________



5. What is your mission statement? __________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

6. What is your business image? _____________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

7. What are your requirements for tax, licensing, etc.? ___________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

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                                          25
                   BUILDING YOUR WINNING BUSINESS
________________________________________________________________________



                        ORGANIZATIONAL STRUCTURE

8. Who will your consultants be? ____________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

9 Who will comprise your management team? _________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

10. What will your practices and policies be for hiring new employees? ______________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________


11. What will be your planned organizational structure? (Show an organizational chart if
appropriate)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

12. What are your goals for staffing expense and benefits? (Provide details if available)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________




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                                          26
                   BUILDING YOUR WINNING BUSINESS
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13. Prepare a Resume on yourself and other key personnel for your company. Attach to
your business plan.


                          PRODUCTION & FACILITIES

14. What are your initial products or services? (Show details such as color, menu items,
models, prices, sizes, styles, etc.) _____________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

15. What are your proprietary features? (Show patents, copyrights, other features unique
to your business) _________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________


16. What are your future planned products or services? (When to introduce, what are
R&D costs, expansion plans) ________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

17. What will be required in the way of physical facilites? (size of facility, location,
schematics, cost estimates, etc.) _____________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

18. What will your requirements be for equipment, vehicles, leasehold improvements,
etc. (include cost estimates if appropriate) _____________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

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                   BUILDING YOUR WINNING BUSINESS
________________________________________________________________________


19. Describe your production process and capacity. What if anything will be
subcontracted? ___________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________


                              INDUSTRY ANALYSIS

20. What is the background for your industry? (Describe number of firms, revenues,
trade associations, publications, trends, major influences) _________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________


21. Who is your target customer(s)? What is the typical purchase? How often?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

22. What is your market niche or position? ____________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

23. Who are your major competitors? _________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

24. What are your competitors strengths, and how can you overcome them? __________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________



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                   BUILDING YOUR WINNING BUSINESS
________________________________________________________________________
25. What are your competitors weaknesses, and how can you capitalize on them? ______
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

26. What will be your unique selling proposition? _______________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________



                                 MARKETING PLAN

27. What is your overall marketing plan? ______________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

28. What are your marketing objectives? ______________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

29. How will you promote your business? (Advertising, themes, media, budget, direct
mail, trade shows, catalogs, etc.) _____________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

30. How will you sell and distribute your products or services? (channels of distribution,
sales force, direct mail, tradeshows, telemarketing, catalogs, etc.) ___________________



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                                          29
                   BUILDING YOUR WINNING BUSINESS
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

31. What are your products warrantees or guarantees? Any servicing considerations?
Installation or maintenance issues? __________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

                        FINANCIAL ANALYSIS & SUPPORT

32. Prepare a personal financial statement. This is optional, but with most banks a small
business will have to stand behind their company with a guarantee, and sometimes a
pledge of personal assets. For this reason it may be required as part of your submission to
a lender that you include a copy of your personal financial statement.

A copy of a personal financial statement form is attached for your use.

33. Summarize your plan for the three to five years projected? (What are your key
points, assumptions based on, etc.) ___________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

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                                          30
                   BUILDING YOUR WINNING BUSINESS
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34. Include any historical financial statements, at least 2-3 years if available

35. Projections for 3-5 years of:      Balance Sheet
                                       Profit & Loss Statement
                                       Cash Flow

36. Projections for one year of:       Monthly Profit & Loss Statement (if required)
                                       Monthly Cash Flow (if required)

37. RMA Study Comparison

38. Financial Ratios Analysis




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                                          31
                                                BUILDING YOUR WINNING BUSINESS
                             ________________________________________________________________________

                                                             Sample Company
                                                         Cash Flow Statement
                                                             For Year Ending
                                                                                                                1/31/00 1/31/01 1/31/02 1/31/03 1/31/04
                        Feb-99 Mar-99 Apr-99 May-99 Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00
Cash Receipts
 Sales                   3465    3465   3465   3465   3465   3465   3465   3465   3465   3465   3465    3465     41580   45736   50312   55343   60877
 A/R Sales                   0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
 A/R Collections             0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
Total Cash Sales         3465    3465   3465   3465   3465   3465   3465   3465   3465   3465   3465    3465     41580   45736   50312   55343   60877
SaleFinancing Income
 Interest Income             0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
 Loan Proceeds               0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
 Other                       0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
Tot. Cash Receipt        3465    3465   3465   3465   3465   3465   3465   3465   3465   3465   3465    3465     41580   45736   50312   55343   60877


Cash Outflows
Cost of Goods            1750    1750   1750   1750   1750   1750   1750   1750   1750   1750   1750    1750     21000   23100   25412   27951   30746
Oper. Expenses           1105    1105   1105   1105   1105   1105   1105   1105   1105   1105   1105    1130     13285   14106   15144   16006   17000
Salary expenses           554    554    554     554    554    554   554    554    554    554     554     554      6648    6976    7328    7694    8078
Income taxes               -87    -86    -86    -85    -84    -84    -83    -82    -82    -81     -80     -87    -1006    -630    -258     254     804
Princ. Loan pmts          257    259    261     263    265    268   270    272    275    277     279     282      3228    3575    3959    4384    4855
Interest Loan pmts        171    169    166     164    162    160   157    155    153    150     148     146      1901    1554    1187     745     274
Capital Increase             0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
Inventory Inc(Dec)           0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
Owners Draw                  0      0     0       0      0     0      0      0      0      0       0       0         0       0       0       0       0
TOTAL CASH OUTFLOWS      3749    3750   3751   3751   3752   3753   3753   3754   3755   3756   3756    3775     45056   48681   52772   57034   61757
NET CASH FLOW             -284   -285   -286   -286   -287   -288   -288   -289   -290   -291    -291    -310    -3476   -2945   -2460   -1691    -879
Opening Cash Bal         2000    1716   1430   1145    858    571   283      -5   -294   -584    -875   -1166     2000   -1476   -4421   -6881   -8572
Cash Receipts            3465    3465   3465   3465   3465   3465   3465   3465   3465   3465   3465    3465     41580   45736   50312   55343   60877
Cash Outflows            3749    3750   3751   3751   3752   3753   3753   3754   3755   3756   3756    3775     45056   48681   52772   57034   61757
Ending Cash Bal.         1716    1430   1145    858    571    283     -5   -294   -584   -875   -1166   -1476    -1476   -4421   -6881   -8572   -9451



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                                          32
                                                 BUILDING YOUR WINNING BUSINESS
                              ________________________________________________________________________

                                                                  Sample Company
                                                                  Income Statement
                                                                  For Year Ending
                                                                                                                1/31/00 1/31/01 1/31/02 1/31/03 1/31/04
                    Feb-99 Mar-99 Apr-99   May-99 Jun-99 Jul-99    Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00
Gross Sales          3500    3500   3500     3500   3500   3500     3500    3500   3500    3500   3500   3500    42000   46200   50820   55902   61492
Less: Ret & Allow      35     35      35      35      35     35       35     35      35     35     35     35       420     464     508     559     615
    Net Sales        3465    3465   3465     3465   3465   3465     3465    3465   3465    3465   3465   3465    41580   45736   50312   55343   60877
 Cost of Goods       1750    1750   1750     1750   1750   1750     1750    1750   1750    1750   1750   1750    21000   23100   25412   27951   30746
GROSS PROFIT         1715    1715   1715     1715   1715   1715     1715    1715   1715    1715   1715   1715    20580   22636   24900   27392   30131


G & A Expenses
Salary Expense        500    500     500     500     500    500      500     500    500    500    500    500      6000    6300    6616    6947    7294
Rent                  500    500     500     500     500    500      500     500    500    500    500    500      6000    6300    6616    6947    7294
Payroll taxes          54     54      54      54      54     54       54     54      54     54     54     54       648     676     712     747     784
Travel & Enter.        50     50      50      50      50     50       50     50      50     50     50     50       600     632     664     697     732
Prof. & Acctg.         50     50      50      50      50     50       50     50      50     50     50     50       600     632     664     697     732
Depreciation Exp.     175    175     175     175     175    175      175     175    175    175    175    175      2100    2100    2100    2100    2100
Insurance Exp.         30     30      30      30      30     30       30     30      30     30     30     30       360     380     415     436     458
Interest              171    169     166     164     162    160      157     155    153    150    148    146      1901    1554    1187     745     274
Rep & Maint.           30     30      30      30      30     30       30     30      30     30     30     30       360     380     420     441     463
Util. & Phone         100    100     100     100     100    100      100     100    100    100    100    100      1200    1260    1388    1457    1530
Office Supplies       100    100     100     100     100    100      100     100    100    100    100    100      1200    1260    1388    1457    1530
Other Taxes             0      0       0        0      0      0        0      0       0      0      0      0         0       0       0       0       0
Marketing             245    245     245     245     245    245      245     245    245    245    245    270      2965    3262    3589    3874    4261


Total G&A Exp.       2005    2003   2000     1998   1996   1994     1991    1989   1987    1984   1982   2005    23934   24736   25759   26545   27452


Net Income BT         -290   -288   -285     -283   -281   -279      -276   -274    -272   -269   -267   -290    -3354   -2099    -859     847    2679
Income Taxes           -87    -86    -86      -85    -84    -84       -83    -82     -82    -81    -80    -87    -1006    -630    -258     254     804
Net Income AT         -203   -201   -200     -198   -197   -195      -193   -192    -190   -189   -187   -203    -2348   -1469    -601     593    1876




_____________________________________________________________________________________
                                          33
                                 BUILDING YOUR WINNING BUSINESS
              ________________________________________________________________________

                                               Sample Company
                                                Balance Sheet
                                               For Year Ending
                                      2/1/99       1/31/00     1/31/01   1/31/02   1/31/03   1/31/04
ASSETS
Current Assets
 Cash                                  2000         -1476       -4421     -6881     -8572     -9451
 Inventory                            20000         20000       20000     20000     20000     20000
 Account Receivable                       0             0           0         0         0         0
 Excess Cash                                            0           1         1         1         2
 Office Supplies                        500           500         500       500       500       500
 Prepaid / Deposits                     750           750         750       750       750       750
   Total Current Assets               23250         19774       16831     14371     12680     11800
 Land                                  5000          5000        5000      5000      5000      5000
 Buildings                             5000          5000        5000      5000      5000      5000
 Equipment                              500           500         500       500       500       500
 Other Fixed Assets                    5000          5000        5000      5000      5000      5000
 Accum Depreciation                       0         -2100       -4200     -6300     -8400    -10500
Total Net Fixed Assets                15500         13400       11300      9200      7100      5000
Total Assets                          38750         33174       28131     23571     19780     16800
LIABILITIES
Current Liabilities
  CPLTD                                3228          3575        3959      4384      5238         0
  Trade Payable                           0             0           0         0         0         0
  Accrued Salary                          0             0           0         0         0         0
  Taxes Payable                           0             0           0         0         0         0
  Other                                   0             0           0         0         0         0
  Total Current Liabilities            3228          3575        3959      4384      5238         0

Long Term Liabilities
 Term Debt LTP                        16772         13198        9239      4855      -383         0
 Other                                    0             0           0         0         0         0
 Total Long Term Liabilities          16772         13198        9239      4855      -383         0

Total Liabilities                     20000         16772       13198      9239      4855         0

OWNERS EQUITY
 Capital                              18750         16402       14933     14332     14925     16800
 Total Owners Equity                  18750         16402       14933     14332     14925     16800
Total Liabilities and Owners Equity   38750         33174       28131     23571     19780     16800




_____________________________________________________________________________________
                                          34
                               BUILDING YOUR WINNING BUSINESS
            ________________________________________________________________________

                                 Sample Company
                                  RMA Analysis
                                 For Year Ending
                     RMA             1/31/00 1/31/01 1/31/02 1/31/03 1/31/04
                     Std. Ind.    - - - - - - - - - - Common Size (%) - - - - - - - - - - - - - -
LIQUIDITY

Current Ratio            1.20       461%         354%         273%        202%        #DIV/0!
Acid Test Ratio          0.80       -52%         -1.40        -1.96       -2.05       #DIV/0!
A/R Turnover days         30         0%           0%           0%          0%           0%
Inventory days            45        772%         702%         638%        580%         528%
A/P turnover days         30         0%           0%           0%          0%           0%



SOLVENCY

Debt to Worth           1.200        85%          74%         54%          27%          0%
Debt to Assets          1.800        28%          26%         22%          14%          0%




PROFITABILITY

Return on Equity         0.12       -170%       -117%         -50%         47%         133%
Return on Assets         0.06       -169%       -124%         -61%         71%         266%




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                                          35
                              BUILDING YOUR WINNING BUSINESS
           ________________________________________________________________________

Sample Company
Assumptions to Projections



Depreciable years for Fixed Assets           5
Loan Amount                              20000
Interest Rate Assumption               10.25%
Amortization in Years                        5
Payment (Principal & Interest)         $427.41

                                     Year 1    Year 2    Year 3    Year 4    Year 5
Gross Revenues                         $42,000    46200     50820     55902     61492
Revenues Percent Increase                            10%       10%       10%       10%
General Expense Percent Increase                      5%        5%        5%        5%
COGS Percent                               50%       50%       50%       50%       50%
Marketing Expense Percent                 7.0%      7.0%      7.0%      7.0%      7.0%
Total Payroll Tax Percent              10.75% 10.75% 10.75% 10.75% 10.75%
Returns & Allowance Percent               1.0%      1.0%      1.0%      1.0%      1.0%
Income Tax Percent                         30%       30%       30%       30%       30%
A/R Turnover Days                            0         0         0         0         0
A/R Turnover Percentage                     0%        0%        0%        0%        0%




_____________________________________________________________________________________
                                          36
                               BUILDING YOUR WINNING BUSINESS
            ________________________________________________________________________

                               Sample Company
                               Financial Ratios
                               For Year Ending
                      2/1/99    1/31/00 1/31/01   1/31/02   1/31/03    1/31/04

LIQUIDITY

Current Ratio         7.20       5.53      4.25    3.28      2.42     #DIV/0!
Acid Test Ratio       0.62      -0.41     -1.12   -1.57     -1.64     #DIV/0!
A/R Turnover days                 0         0       0         0         0
Inventory days                   348       316     287       261       237
A/P turnover days                 0         0       0         0         0



SOLVENCY

Debt to Worth        1.067      1.023    0.884    0.645     0.325     0.000
Debt to Assets       0.516      0.506    0.469    0.392     0.245     0.000




PROFITABILITY

Return on Equity                -0.204   -0.141   -0.060    0.057     0.159
Return on Assets                -0.101   -0.075   -0.036    0.043     0.159




_____________________________________________________________________________________
                                          37
                              BUILDING YOUR WINNING BUSINESS
           ________________________________________________________________________

Payment Schedule
Sample Company

      Calculated Payment:                      427.41 Loan Amount:               20,000
      Entered Payment:*                               Years Amortization:             5
      Start Table at Pmt No:                        1 Interest Rate:            10.25%
      *Table uses entered payment if specified        Payments per year:             12

      Payment      Beginning                                     Ending
No.   Date         Balance             Interest       Principal Balance
    1     01/01/99             20000              171        257        19743
    2     02/01/99             19743              169        259        19485
    3     03/01/99             19485              166        261        19224
    4     04/01/99             19224              164        263        18960
    5     05/01/99             18960              162        265        18695
    6     06/01/99             18695              160        268        18427
    7     07/01/99             18427              157        270        18157
    8     08/01/99             18157              155        272        17885
    9     09/01/99             17885              153        275        17610
   10     10/01/99             17610              150        277        17333
   11     11/01/99             17333              148        279        17054
   12     12/01/99             17054              146        282        16772
   13     01/01/00             16772              143        284        16488
   14     02/01/00             16488              141        287        16202
   15     03/01/00             16202              138        289        15913
   16     04/01/00             15913              136        291        15621
   17     05/01/00             15621              133        294        15327
   18     06/01/00             15327              131        296        15031
   19     07/01/00             15031              128        299        14732
   20     08/01/00             14732              126        302        14430
   21     09/01/00             14430              123        304        14126
   22     10/01/00             14126              121        307        13819
   23     11/01/00             13819              118        309        13510
   24     12/01/00             13510              115        312        13198
   25     01/01/01             13198              113        315        12883
   26     02/01/01             12883              110        317        12566
   27     03/01/01             12566              107        320        12246
   28     04/01/01             12246              105        323        11923
   29     05/01/01             11923              102        326        11597
   30     06/01/01             11597               99        328        11269
   31     07/01/01             11269               96        331        10938
   32     08/01/01             10938               93        334        10604




_____________________________________________________________________________________
                                          38

				
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