STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FLORIDA HOUSING AFFORDABILITY, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 93-2904
) FLORIDA HOUSING FINANCE AGENCY, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on July 26, 1993, in Tallahassee, Florida.
APPEARANCES
For Petitioner: Joseph J. Savino, President
Florida Housing Affordability, Inc. West State Road 434, Suite 1150
Longwood, Florida 32279
For Respondent: Michelle L. Oxman, Esquire
Department of Community Affairs 2740 Centerview Drive
Tallahassee, Florida 32399-2100 STATEMENT OF THE ISSUES
Petitioner's application for a loan under the State Apartment Incentive Loan (SAIL) program administered by Respondent was awarded 886.50 points in the 1993 competitive funding cycle. Petitioner claims that it should have received an additional 25 points for its commitment to pay off the loan in ten years or less, and that it was entitled to an additional two points related to quality of design. The issue for resolution in this proceeding is whether the award of additional points is appropriate.
PRELIMINARY STATEMENT
Petitioner's request for formal hearing on the score and ranking of its 1993 SAIL application was forwarded to the Division of Administrative Hearings on May 26, 1993. As required by the Hearing Officer's June 9th order, the agency provided notices to other applicants whose ranking could be affected by the outcome of this proceeding. After consultation with the parties, the hearing was scheduled for July 26, 1993.
Arrangements were made for Petitioner to participate in the hearing by telephone, with concurrence by Respondent.
A petition for leave to intervene was filed by applicants, Citrus Glen and Dakota Park, but the petition was withdrawn at the commencement of the hearing when the issues were limited to the appropriate scores for Florida Housing Affordability, Inc.'s application.
At the hearing, Petitioner's president, Joseph Savino, testified and presented argument to support the petition. Without objection, Petitioner's exhibit #1, the scoring summary, was received in evidence.
Respondent presented the testimony of two witnesses: John Gordon Benton and David Mahlert.
Petitioner's application for funding was received as Joint Exhibit #1.
The transcript was filed on August 11, 1993, and both parties submitted proposed recommended orders by August 23rd. Petitioner's proposed finding of fact #1 is adopted here; finding of fact #2 is rejected as contrary to the evidence; and findings of fact #3 and #4 are addressed as argument.
Respondent's proposed findings #1-21 are adopted in substance or addressed as argument.
FINDINGS OF FACT
Petitioner, Florida Housing Affordability, Inc. (FHA) is a private nonprofit corporation which develops, manages and maintains low income housing in Florida. Its corporate office is in Longwood, Florida.
The application at issue is dated February 18, 1993 and is seeking funding under the Low Income Housing Tax Credit (LIHTC) program and State Apartment Incentive Loan (SAIL) program. The application proposes a 28-unit apartment complex, Bay Pointe II, in Pasco County, Florida.
Under the SAIL program, the Florida Housing Finance Agency (Agency) makes loans to developers of low income housing at interest rates significantly below the market rate. The loans are non-amortizing until maturity. Interest is deferred if the cash flow of the project is insufficient to pay it after meeting certain expenses. Repayments of SAIL funds are used by the agency for subsequent loans to developers.
The agency determines which developers will be offered SAIL loans pursuant to a competitive application process and has adopted the SAIL/LIHTC application packet for use in scoring the loan applications. The packet forms must be completed by the applicant and any supporting documentation must be attached.
FHA's application for the 1993 funding cycle was scored by the agency committee and was awarded 886.5 points out of a maximum of 1,025 points. FHA claims that it is entitled to an additional 25 points on Form 11, and 2 points on Form 14.
SAIL loans are generally issued for a term of 15 years. Form 11 in the application packet is a commitment to repay the loan in a shorter period. An applicant who commits to repay the loan in 10 years or less is awarded 25 points.
FHA indicated on Form 11 that it would repay the loan in 10 years or less. The form requires a description of how repayment will be made, and requires supporting documentation. The description and documentation are required to assure the agency that repayment in a shorter period is feasible.
FHA's documentation was exhibit 1 to Form 11, "Analysis of Early Repayment of SAIL". This analysis states:
LIHTC proceeds are not required for project funding of the Bay Pointe II project.
However, we intend to dedicate some or all
of the proceeds from sale of LIHTC toward the early repayment of the SAIL.
The early repayment of the SAIL will be accomplished by this method as follows:
SAIL request $485,000
ANNUAL LIHTC request 103,680
Estimated cash from
sale of LIHTC @ .45/dollar 46,656
(Joint Ex. #1, attachment to Form 11)
Form 11 in the application packet requires that early retirement of SAIL debt through cash flow must be evidenced by commitment from the developer and exhibited in a pro forma. The operating pro forma attached to Form 10 in FHA's application packet does not reflect that the loan will be paid off in 10 years.
Developers are able to use tax credits to generate cash by syndicating or selling those credits. In such cases, the syndication agreement is attached to the application as documentation of the source of cash for early repayment.
FHA characterizes its use of the tax credits as an "internal sale". Since it is a multi-asset entity, it plans to repay the SAIL loan early with the tax savings it would realize from its use of tax credits in the future. The tax liability which it expects the credits to reduce would be created by its other assets and operations. The .45 per dollar of credit that is reflected in FHA's analysis described above will not actually be paid by any purchaser of the tax credits. This is a hypothetical sales price. Because the data submitted in the attachment to Form 11 does not state how the .45 per dollar is derived, the documentation is insufficient. As explained by Joseph Savino, the approximate
$46,000 a year is an estimate of available equity from the use of the tax credits.
FHA, through Mr. Savino, contends that since a commitment letter or syndication agreement is all that is necessary when the funds are generated from outside the applicant entity, the applicant's statement of commitment should be sufficient when it intends to generate the funds from an "internal sale".
The more reasonable position of the agency is, however, that a simple statement is not sufficient in this instance, because the documentation does not show where the dollars are coming from internally. The pro forma does not show other assets of the company or the generation of actual tax liabilities. If there is no evidence of an actual sale, then some other documentation must be
provided to show that the money will be available to repay the loan in the shorter time. The analysis provided as an attachment to Form 11 is not the required documentation. Moreover, the analysis conflicts with the pro forma that was included elsewhere in the application. That pro forma does not reflect early repayment of SAIL and is based instead on what Joseph Savino characterizes as conservative assumptions.
FHA is entitled to an additional 2 points on Form 14, relating to quality of design for an additional safety/security design feature for children. As stipulated by the agency, an "other" blank should have been included on the form so that applicants could add such features. The blank had been on an earlier version of the form, but was dropped inadvertently when Form 14 was revised. Other applicants added their own "other" blank to the form and received points for an additional design feature.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to section 120.57(1), F.S.
As applicant, FHA has the burden of proving its entitlement to the additional points it seeks. Dept. of Transportation v. JWC Co., Inc., 396 So2d 778 (Fla. 1st DCA 1981); Balino v. Dept. of Health and Rehabilitative Services, 348 So2d 349 (Fla. 1st DCA 1977).
Section 420.5087, F.S. creates the State Apartment Incentive Loan program for the purpose of providing first, second or other subordinated mortgage loans to sponsors, including for-profit, nonprofit and public entities, to provide housing affordable to very low-income persons. The agency is given authority to adopt rules establishing a scoring and evaluation system to rank applications submitted for the program.
Rule 9I-35.008, F.A.C. provides the scoring system and adopts by reference the Application Packet dated December 18, 1992.
Petitioner failed to prove that the agency's review of its submittals related to Form 11 is inconsistent with agency rules, the application forms or with past practice. Although FHA's approach was novel, and not specifically addressed in the form packet, the agency properly determined that sufficient documentation was not provided to support FHA's statement that the loan would be repaid in ten years or less.
As conceded by the agency in its proposed recommended order, the deletion to Form 14 was an error, and in fairness to FHA, the two additional points for its proposed design feature should be awarded.
Based on the foregoing, it is, hereby, RECOMMENDED:
That the agency enter its Final Order denying Petitioner's request for 25 points on Form 11, and granting two additional points for Form 14.
DONE AND RECOMMENDED this 28th day of October, 1993, in Tallahassee, Leon County, Florida.
MARY CLARK
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 28th day of October, 1993.
COPIES FURNISHED:
Michelle L. Oxman
Office of the General Counsel Department of Community Affairs 2740 Centerview Drive
Tallahassee, Florida 32399-2100
Joseph J. Savino, President
Florida Housing Affordability, Inc. West State Road 434, Suite 1150
Longwood, Florida 32279
Linda Loomis Shelley, Secretary Department of Community Affairs 2740 Centerview Drive
Tallahassee, Florida 32399-2100
Daphne E. Jones, Esquire
110 Southeast Sixth Street, 28th floor Fort Lauderdale, Florida 33302
Mark A. Hendrickson, Executive Director Florida Housing Finance Agency
Marathon Building, Suite 101 2574 Seagate Drive
Tallahassee, Florida 32301-5026
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
Issue Date | Proceedings |
---|---|
Oct. 28, 1993 | Recommended Order sent out. CASE CLOSED. Hearing held July 26, 1993. |
Aug. 23, 1993 | (DCA) Proposed Recommended Order filed. |
Aug. 06, 1993 | Request for Copies filed. (From Daphne E. Jones) |
Aug. 05, 1993 | (unsigned) Proposed Recommended Order filed. (From Joseph J. Savino) |
Jul. 30, 1993 | (DCA) Notice of Filing filed. |
Jul. 29, 1993 | Notice of Appearance filed. (From Daphne E. Jones) |
Jul. 26, 1993 | CASE STATUS: Hearing Held. |
Jul. 21, 1993 | (Joint) Prehearing Stipulation filed. |
Jul. 21, 1993 | (Affordable/Citrus Glen, Ltd. & Dakota Park Limited Partnership) Notice of Appearance; Petition for Leave to Intervene; & Cover Letter from J. Attaway filed. |
Jul. 20, 1993 | Order sent out. (Re: Motion to withdraw as counsel of record for Dennis LaRosa) |
Jul. 08, 1993 | (DCA) Notice of Right to Intervene filed. |
Jul. 08, 1993 | (Petitioner) Motion to Withdraw as Counsel of Record filed. |
Jun. 09, 1993 | Notice of Change of Style sent out. |
Jun. 09, 1993 | Order for Notice of Proceeding sent out. |
Jun. 09, 1993 | Prehearing Order sent out. |
Jun. 09, 1993 | Notice of Hearing sent out. (hearing set for 7/26/93; 11:00am; Tallahassee) |
Jun. 07, 1993 | Joint Response to Initial Order and Notice of Change of Style filed. |
May 28, 1993 | Initial Order issued. |
May 26, 1993 | Agency referral letter; Request for Administrative Hearing, letter form filed. |
Issue Date | Document | Summary |
---|---|---|
Oct. 28, 1993 | Recommended Order | Applicant failed to provide documentation of ability to repay loan early-not entitled to extra 25 points in competitive loan award. |