STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
YBOR III, LTD.,
Petitioner,
vs.
FLORIDA HOUSING FINANCE CORPORATION,
Respondent.
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) Case No. 03-1956
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RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in this case on January 30, 2004, in Tallahassee, Florida, before T. Kent Wetherell, II, the designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Geoffrey D. Smith, Esquire
Thomas Ross McSwain, Esquire Blank, Meenan & Smith, P.A.
204 South Monroe Street Tallahassee, Florida 32301
For Respondent: Hugh R. Brown, Esquire
Florida Housing Finance Corporation
227 North Bronough Street Tallahassee, Florida 32301
STATEMENT OF THE ISSUE
The issue is whether Petitioner is entitled to receive an allocation of affordable housing funds from the Florida Housing Finance Corporation as a result of the alleged improper scoring
of another applicant's application during the 2001 funding cycle.
PRELIMINARY STATEMENT
This proceeding was initiated on October 11, 2001, when Petitioner filed a Petition for Formal Administrative Proceeding (Petition) with the Florida Housing Finance Corporation (FHFC). The Petition alleged that during the 2001 funding cycle in which Petitioner and other developers were competing for an allocation of limited affordable housing funds, FHFC improperly scored the application submitted by TWC Sixty-five Development, Inc., developer of Windsong II (TWC). The Petition further alleged that if FHFC had properly scored TWC's application, then Petitioner would have received an allocation of low-income housing tax credits (tax credits) and other affordable housing funds.
FHFC dismissed the Petition, and Petitioner appealed to the First District Court of Appeal. The court reversed the dismissal and held that Petitioner was entitled to a formal administrative hearing on its Petition. Ybor, III v. Florida Housing Finance Corp., 843 So. 2d 344 (Fla. 1st DCA 2003).
Thereafter, on May 27, 2003, FHFC referred the matter to the Division of Administrative Hearings (Division) for the assignment of an administrative law judge to conduct the hearing requested by Petitioner.
Because it appeared to the undersigned that this proceeding could affect TWC's substantial interests, FHFC was directed to provide notice of this proceeding to TWC by Order dated June 17, 2003. See Fla. Admin. Code R. 28-106.109. In response to the notice given by FHFC, counsel for TWC filed a letter on June 23, 2003, stating that "TWC does not have any interest in the outcome of this litigation and will not be intervening in this matter."
The final hearing was initially scheduled for August 7, 2003, but it was continued at Petitioner's request on three occasions. The hearing was ultimately held on January 30, 2004.
At the hearing, Petitioner presented the testimony of Kerey Carpenter, and the deposition testimony of Debra King (Exhibit P12) and Greg Bailey (Exhibit P13). Petitioner's Exhibits P1 through P8, P10-A, P10-B, and P11 through P16 were received into evidence. FHFC also presented the testimony of Ms. Carpenter in its case-in-chief, and FHFC's Exhibits R1 through R3 were received into evidence.
At the hearing, official recognition was taken of the recommended and final orders in FHFC Case Nos. 2001-025, 2001- 064, 2001-091, 2002-023, 2002-051, and 2002-066, based upon
Petitioner’s unopposed motion filed January 30, 2004. Official recognition is hereby taken of the recommended and final orders in FHFC Case Nos. 1999-040C, 1999-041C, 1999-047C, 1999-069C,
2000-015C, 2000MF-038, 2000-095S, 2001-065, and 2003-034, based
upon Petitioner’s unopposed motion filed March 15, 2004.
The one-volume Transcript of the final hearing was filed with the Division on February 12, 2004. The parties requested and were given 30 days from the date that the Transcript was filed to file their proposed recommended orders (PROs). As a result, the parties waived the deadline for the submittal of this Recommended Order. See Fla. Admin. Code R. 28-106.216(2). The parties' PROs were timely filed on March 15, 2004, and were given due consideration by the undersigned in preparing this
Recommended Order.
FINDINGS OF FACT
Based upon the testimony and evidence received at the hearing and the parties' stipulations, the following findings
are made:
Parties
Petitioner is a Florida limited partnership that is engaged in the business of developing affordable housing projects.
FHFC is a statutorily-created public corporation. It is the State's designated "housing credit agency," and it is responsible for the allocation of tax credits and the distribution of other funds for the development of affordable housing projects.
FHFC is administratively housed in the Department of Community Affairs (DCA), and it is governed by a nine-member board. Eight members of the board are appointed by the Governor; the ninth member of the board is the Secretary of DCA, who serves in an ex officio capacity.
FHFC Programs
The programs administered by FHFC include the State Apartment Incentive Loan (SAIL) Program and the Low-Income Housing Tax Credits Program (Housing Credits Program).
The funds from the SAIL Program are used to provide low-interest loans to developers. The funds come from various sources of state revenue, and the loans are typically secured by a second mortgage on the property on which the affordable housing project is developed.
The Housing Credits Program is governed by federal law, namely Section 42 of the Internal Revenue Code. The program provides dollar-for-dollar federal tax credits to developers that can be used over a 10-year period so long as the related affordable housing project satisfies the requirements of the Internal Revenue Code throughout that period. The tax credits can be, and often are sold or "syndicated" by the developer in order to generate the funds necessary to construct the project.
Each state receives an annual allotment of tax credits from the federal government to be used in its Housing Credits
Program. For 2001, Florida's allocation of tax credits was approximately $23.9 million, of which approximately $20.7 million was available for allocation.
FHFC received requests totaling approximately $81.3 million in the 2001 funding cycle for the available $20.7 million in tax credits
Some of the available tax credits are apportioned by FHFC into a "set-aside" for projects in small counties. Only projects located in small counties compete for the tax credits in the small county set-aside.
For 2001, the small county set-aside was
$1,739,586.90, and FHFC received requests for those funds totaling approximately $5.5 million.
FHFC Evaluation Process
Because the funds requested from the SAIL Program and the Housing Credits Program typically exceed the available funds (as was the case in 2001), FHFC has established a competitive application process through which the applications are evaluated, scored, and ranked.
The applications are first reviewed for all of the "threshold" items identified in the application forms and FHFC’s rules.
If an application does not have all of the threshold items, it is rejected. By contrast, the failure to include non-
threshold items or the failure to provide complete, consistent, and accurate information in the format and location prescribed in the application forms results in the application not receiving the full amount of points available or the imposition of a penalty that reduces the overall score given to the application.
Next, FHFC staff reviews all of the applications that were not rejected for omitting a threshold item. That review results in a “preliminary score” for each application, which is provided to all of the applicants.
Then, there is a 10-day period in which applicants may challenge FHFC's preliminary scoring of their application or the preliminary scoring of any other applicant's application. Such a challenge is called a Notice of Possible Scoring Error (NOPSE).
FHFC provides each applicant the NOPSEs relating to its application as well as a statement of FHFC's position on the NOPSE. The applicants are then given a period of time -- referred to as the "cure period" -- to submit additional documentation, revised forms or other information they deem appropriate to address the issues raised in the NOPSEs, FHFC's comments on the NOPSEs, and/or FHFC's preliminary scoring of the application. The additional submittals are referred to as "cures."
After the cures are submitted, the applicants again have an opportunity to bring deficiencies in competing applications to FHFC's attention. The mechanism for doing so is a Notice of Alleged Deficiency (NOAD).
After reviewing the cures and any NOADs, FHFC staff prepares a revised score for each application. This score is referred to as the “pre-appeal score.”
Along with the pre-appeal scores, each applicant is given notice of its right to challenge its score through a formal administrative proceeding at the Division or through an informal proceeding before a hearing officer appointed by FHFC. Most applicants opt for an informal hearing because, as a result of the time constraints imposed by the funding cycle, those who opt for a formal hearing will not be funded until a subsequent cycle if they prevail at the hearing.
After all of the informal hearings are completed and any scoring adjustments are made based upon the results of those hearings, the applications are ranked based upon their “post- appeal scores.” The post-appeal scores and rankings are approved by the FHFC board and are used to award the available funds.
The standards and procedures for ranking applications for tax credits are set forth in the Qualified Allocation Plan
(QAP). The QAP is required by the Internal Revenue Code and it is adopted and incorporated by reference in FHFC's rules.
Among other things, the QAP establishes the priority of applications which receive the same scores. That priority is established through two "tie-breakers." The first tie-breaker is whether the application is in Group A or Group B, and the second tie-breaker is a random lottery number assigned to the application prior to the final rankings.
The group into which the application falls is determined based upon the Corporation Funding per Set-aside Unit (CFSU) amount identified on Form 10 of the application. Group A includes the 65 percent of the applications that have the lowest CFSU amounts.
Applications in Group A receive priority over applications in Group B in the event that the applications receive the same final score. For applications in the same group with the same score, priority is given to the application with the lower lottery number.
2001 Combined Cycle Generally
The 2001 funding cycle was referred to as a "combined cycle" because it combined the SAIL Program, the Housing Credits Program, and another program not implicated in this case called
the Home Investment Partnership Program (HOME Program), into a single application and review process.
The application package for the 2001 Combined Cycle included 23 numbered forms, not all of which were applicable to every applicant.
The applications submitted in the 2001 Combined Cycle, including those submitted by Petitioner and TWC, were reviewed and scored in accordance with the procedures described above.
Relevant Forms
Form 1 of the application is entitled "Applicant and Development Data."
Page 10 of Form 1 includes the following statements:
The Applicant and all Financial Beneficiaries understand and agree that full points will be awarded only in the event that all information required by each form is provided in accordance with the Application requirements. Failure to provide complete, consistent and accurate information in the format and location prescribed by the Application will result in a REDUCTION OF POINTS OR REJECTION OF THE
APPLICATION as indicated on each form. Only information contained within the
Application will be considered for purposes of points awarded or appealed. . . . .
Form 5 of the application is entitled "Local Government Contributions."
Page 1 of Form 5 states that:
Each applicable verification form must have an Original signature by one of the
designated signatories indicated on the appropriate verification form. Zero points will be awarded if Applicant uses the incorrect form or if the form is not signed by one of the designated signatories.
Separate verification forms are included in Form 5 for the different types of local government contributions. There are separate verification forms for grants (Form 5, page 6), fee waivers (Form 5, page 7), loans (Form 5, page 8), tax exempt bond financing (Form 5, page 9), “other contributions” (Form 5, page 10), and exemptions from ad valorem taxation (Form 5, page 11).
The verification form for fee waivers states that “[n]o credit will be given for fee waivers unless the computations by which the total amount of each waiver is determined accompanies this verification form in the Application.” That same language is not included on the verification form for "other contributions”; however, that verification form includes a sentence stating that “[t]he amount of this contribution was calculated as shown behind the tab labeled ‘Form 5, Exhibit .’”
The verification form for “other contributions” also includes the following statement:
THIS FORM MUST BE SIGNED BY THE MAYOR, CITY MANAGER, COUNTY MANAGER/ADMINISTRATOR, CHAIRPERSON OF THE CITY COUNCIL/COMMISSION OR CHAIRPERSON OF THE BOARD OF COUNTY COMMISSIONERS. . . . . OTHER SIGNATORIES
ARE NOT ACCEPTABLE. THE APPLICANT WILL NOT RECEIVE CREDIT FOR THIS CONTRIBUTION IF THE VERIFICATION FORM IS IMPROPERLY SIGNED AND/OR DOES NOT HAVE AN ORIGINAL SIGNATURE IN THE ORIGINAL APPLICATION.
Form 6 of the application is entitled "Local Government Planning Efforts."
Pages 2 and 3 of Form 6 are the verification forms for any affordable housing incentives being offered for the project by the applicable local government. Both pages include the following statement:
This form must be signed by the MAYOR, CITY MANAGER, COUNTY MANAGER/ADMINISTRATOR, OR CHAIRPERSON of the CITY COUNCIL/COMMISSION OR CHAIRPERSON of the BOARD OF COUNTY COMMISSIONERS. OTHER SIGNATORIES ARE UNACCEPTABLE. ZERO POINTS WILL BE AWARDED.
. . . .
The application and all of these forms are adopted and incorporated by reference in FHFC's rules.
Applications Submitted by Petitioner and TWC
Petitioner submitted an application for an allocation of $561,000 in tax credits and for an award of funding under the SAIL Program for its proposed Ochlocknee Pointe development in Gadsden County. Petitioner's application was designated by FHFC as No. 01-131CS.
A competing application for $890,000 in tax credits was filed by TWC for its proposed Windsong II development in Columbia County. TWC's application did not seek funding under
the SAIL Program. TWC’s application was designated by FHFC as No. 01-125C.
Neither Petitioner nor TWC applied for funds under the HOME Program.
Because of their locations, the applications submitted by Petitioner and TWC were competing for the tax credits available in the small county set-aside. There were also seven other applicants competing for the tax credits in the small county set-aside.
Alleged Deficiencies in TWC's Application and Initial Scoring by FHFC Staff
Form 5 of TWC's original application indicated that the project had not received any local government contributions. As a result, the original application did not include any executed local government contribution verification forms.
Form 6 of TWC's original application did not identify any affordable housing incentives being offered by the local governments. As a result, the original application did not include any executed verifications forms for such incentives.
As part of its cure submittals, TWC submitted a revised Form 5 and a revised Form 6. The revisions were made because TWC had received verification of local government contributions and affordable housing incentives.
The revisions included executed verification forms for Form 5 (page 10)1 and for Form 6 (pages 2 and 3). The verification forms at issue in this proceeding were executed by Dale Williams; the title listed for Mr. Williams was County Coordinator.
A letter signed by Mr. Williams was included along with the “other contributions” verification form (Form 5, page 10). The letter was on the letterhead of the Board of County Commissioners of Columbia County and includes the words "County Coordinator" under Mr. Williams name and signature.
The letter was designated as and included in the cure submittal behind a tab marked "Form 5, Exhibit A." The letter states that "Columbia County will provide the installation of roadway turn lanes at Branford Highway to service Windsong II Apartments for a contribution equivalent to a total value of
$102,000."
The letter does not include any calculations showing how the “total value of $102,000” was computed, and no such calculation was included elsewhere in TWC's cure submittals.
There is nothing in TWC’s cure submittals that explained the nature of the County Coordinator position or stated that Columbia County does not have a County Manager/Administrator designated as such.
TWC was not awarded four points on Form 6 because County Coordinator was not specifically listed along with “City Manager, County Manager/Administrator, or Chairperson of the City Council/Commission or Chairperson of the Board of County Commissioners” as an authorized signatory for that form.
For that same reason, TWC also was not awarded any points on Form 5 for the $102,000 local government contribution referred to in Mr. Williams' letter. That contribution was worth 7.64 points.
TWC was also penalized 1.5 points on Form 5 because no documentation was provided showing how the "total value of
$102,000" was calculated for the local government contribution described in Mr. Williams' letter.
These scoring determinations were made by Debra King, the FHFC staff person who reviewed TWC’s application and cure submittals, and they were concurred in by Ms. King’s “scoring partner.”
Scoring Appeals by Petitioner and TWC
FHFC completed the scoring process for the 2001 Combined Cycle on August 1, 2001, when it advised the applicants of their pre-appeal scores.
TWC's pre-appeal score was 608.86, which included the penalty and point reductions described above.
Petitioner's pre-appeal score was 620.5, which included a 1.5 point penalty for Petitioner’s failure to specify a unit of measurement on Form 7.
TWC and Petitioner both requested informal hearings to challenge their pre-appeal scores. Those hearings, which are commonly referred to as “scoring appeals,” were conducted by hearing officers appointed by FHFC.
At the informal hearing on TWC’s scoring appeal, FHFC conceded that Mr. Williams was an authorized signatory for Forms
5 and 6 because, as the "County Coordinator," Mr. Williams was the de facto County Manager/Administrator for Columbia County. FHFC also conceded that documentation relating to the computation of the $102,000 in roadway improvement being contributed by Columbia County was not necessary because it was a lump-sum contribution. FHFC agreed to re-score TWC's application in light of those concessions.
The concession that Mr. Williams was an authorized signatory was based upon FHFC staff's review of the job description for the County Coordinator position and the organizational chart for Columbia County attached to TWC's Petition for Informal Administrative Hearing as well as phone calls that FHFC staff made to Columbia County after receiving that information to confirm that the county did not have a County Manager/Administrator designated as such.
The concession that a document showing how the local government contribution was calculated was based upon FHFC staff’s review of excerpts from prior applications that were attached to TWC’s Petition for Informal Administrative Hearing. Those applications apparently received full points for their “other contributions” even though they did not include detailed calculations for the contributions; however, almost all of the excerpts showed at least a general breakdown of the items which made up the total shown on the verification form.
As a result of FHFC's concessions, the hearing officer concluded that the TWC’s scoring appeal was "moot" and she issued a Recommended Order which contained no findings of fact or conclusions of law. The hearing officer's Recommended Order, which FHFC adopted in toto as its Final Order, recommended that TWC's application "be rescored to reflect the removal of the 1.5-point penalty to Form 5; to add 7.64 points to Form 5; and to add 4 points to Form 6."
The net effect of that rescoring was that TWC's application received a post-appeal score of 622.
Petitioner did not fare as well in its scoring appeal.
The hearing officer made the following findings of fact with respect to the 1.5-point penalty assessed based upon Petitioner's failure to specify the unit of measure on Form 7:
Form 7, Page 11, is entitled "Local Government Verification that Development is Consistent with Zoning and Land Use Regulation." On Page 11 of Form 7, there is a requirement to state the "Size of Parcel (acreage, number of lots, or square footage)." In its Revised Page 11 of Form 7 [Petitioner], in response to that requirement entered the numbers "9.99" without any accompanying unit of measure.
It is clear from a review of other pertinent parts of the application that the appropriate unit of measure to accompany the number "9.99" is "acres." Further, its [sic] reasonable to conclude on the face of [Petitioner's] Revised Page 11 of Form 7, when read in conjunction with the entire application . . . , that the number "9.99" refers to acres.
(Citations omitted).
Despite those findings, the hearing officer recommended that the 1.5-point penalty be affirmed. That recommendation was based primarily on the following conclusion of law:
The instructions on Page 11 of Form 7 require a unit of measure be appended to the number of units placed in the answer blank. While it may be true that such a result is particularly frustrating to the applicant in light of the reality that its omission has created no confusion or inconsistency nor diminished the accuracy of the application, [FHFC] has nevertheless adopted rules requiring strict compliance with regard to providing complete information in the format and location prescribed by the instructions on the forms. That rule cannot be ignored. Thus, the failure of [Petitioner] to include a unit of measure on its Revised Page 11 of Form 7 is an error that does result in a single 1.5-point penalty.
FHFC adopted the hearing officer's findings of fact, conclusions of law, and recommendation in toto as its Final Order, and Petitioner did not seek judicial review of the Final Order. As a result, Petitioner's pre-appeal score of 620.5 became its post-appeal score.
Petitioner's application was in Group B, and its lottery number was 68. TWC's application was in Group A, and its lottery number was 27. Thus, in the event that Petitioner and TWC received the same final score, priority for funding would be given to TWC.
If Petitioner's application had received a higher score than TWC's application, then Petitioner's application would have been in the "funding range" and Petitioner would have received an allocation of tax credits for its project. If Petitioner had received the tax credits, it would have also received SAIL funding.
The record does not reflect the total amount of tax credits and SAIL funding that Petitioner would have received; however, if TWC's application was moved below Petitioner's application on the final funding list (Exhibit R2), then
$339,164.90 in tax credits would have been available to Petitioner after the higher-ranked applicants were fully funded.2
Additional Facts Established at the De Novo Final Hearing in this Case
The $102,000 “total value” for the roadway improvements referred to in Mr. Williams' letter is reasonable. Indeed, the itemized cost-estimate prepared by professional engineer Greg Bailey in the design phase for the improvements was $106,064.
The $102,000 in roadway improvements cannot be characterized as a lump-sum contribution. As Mr. Bailey’s cost- estimate shows, the improvements include 16 components such as paving, grading, and drainage; and a cost-per-unit and an estimated quantity is listed for each component.
At the time Mr. Bailey prepared the cost-estimate, he was working for C&W Land Trust. Accordingly to one of the documents in TWC’s application (Form 7, Exhibit A), C&W Land Trust was the landowner from whom TWC acquired the property where its Windsong II project will be located.
Mr. Bailey provided the cost-estimate to the county engineer for Columbia County for his use in evaluating bids submitted for the construction of the roadway improvements. The county engineer forwarded a memo to Mr. Williams on June 14, 2001, stating that the construction cost for the improvements “is estimated to be $102,000.00.”
Requiring documentation to support the calculation of a local government contribution is important because it helps prevent an applicant from “gaming” the system in order gain an advantage in the scoring of its application. For example, where the contribution is based upon a per-unit amount, the calculations help to ensure that the number of units committed by the applicant as a basis for the local government contribution is the same number of units committed by the applicant in the application to FHFC.
Documentation showing the calculation of the $102,000 local government contribution referenced in Mr. Williams letter is equally important because without such documentation there was no way for FHFC to determine during its review whether that figure is a reasonable estimate of the cost of the roadway improvements which are being contributed by Columbia County. It is necessary for FHFC to be able to make such a determination because the points awarded to the applicant for the contribution are based in large part on the amount of the contribution.
At the time that TWC submitted the verification forms and letter signed by Mr. Williams, Columbia County did not have a position called County Manager or County Administrator. The County Coordinator position was the de facto County Manager/Administrator.
The County Coordinator was appointed by the Board of County Commissioners to "administer all programs and to ensure that County government operates efficiently and effectively." The County Coordinator reported directly to the Board of County Commissioners and, among other duties, the position supervised all department heads (except the head of Public Works Department) and provided "direction, leadership and supervision to all County Department heads."
Presently, Columbia County has a County Manager and Mr. Williams serves in that position. The job duties for the County Manager position are virtually identical to those of the County Coordinator position. Indeed, even though text of the position description no longer excepts the Public Works Department from Mr. William’s supervision, the county’s organizational chart still shows the Public Works Department outside of Mr. Williams chain of command.
CONCLUSIONS OF LAW
The Division has jurisdiction over the parties to and subject matter of this proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2003). See also Ybor, III, 843 So. 2d at 347.
Petitioner has the burden of proof in this proceeding.
See Dept. of Transportation v. J.W.C. Co., 396 So. 2d 778, 788 (Fla. 1st DCA 1981) ("In accordance with the general rule,
applicable in court proceedings, the burden of proof, apart from statute, is on the party asserting the affirmative of an issue before an administrative tribunal.") (internal quotations omitted). The standard of proof is a preponderance of the evidence. See § 120.57(1)(j), Fla. Stat. (2003).
FHFC is an agency for purposes of Chapter 120, Florida Statutes. See § 420.504(2), Fla. Stat. (2000).
Section 420.507(22)(f), Florida Statutes (2000), directed FHFC to “[e]stablish, by rule, the procedure for evaluating, scoring, and competitively ranking applications” under the SAIL Program. Accord § 420.5087(6)(c) and (f), Fla. Stat. (2000).
Section 420.5099(3), Florida Statutes (2000), authorized FHFC to request from applicants the necessary information to enable it to fully allocate the tax credits so as to encourage the development of affordable housing.
The rules adopted pursuant to these statutes that applied to the 2001 Combined Cycle were codified in Florida Administrative Code Rule Chapter 67-48.3
The application package for the 2001 Combined Cycle and all of the forms therein were adopted and incorporated by reference in Florida Administrative Rules 67-48.002(11) and 67- 48.004(1). As a result, the instructions on the application
forms have the force and effect of agency rules, which must be followed by the applicants and FHFC.4
FHFC’s final orders have adopted a stringent standard for evaluating compliance with the application submittal requirements in cases where the applicant “appeals” the scoring of its own application. The standard requires strict and literal compliance with the submittal requirements, no matter how technical or immaterial the requirements may seem to be. See, e.g., Ybor, III, supra (sustaining point deductions based upon the applicant’s failure to include the word “acres” when describing the size of the property even though it was clear from the application that the unit of measure was acres); Bayside at Town Center, supra (rejecting application because the name of the developer contained “Corp.” in some places and “Inc.” in others).
Petitioner argues in its PRO that the strict compliance standard applied by FHFC in scoring appeals should be applied in this case. FHFC does not argue that a different standard, such as the more lenient standard that applies in bid protests, should be applied in this proceeding even though this case is arguably more akin to a bid protest than a typical scoring appeal.5 Instead, FHFC argues in its PRO that the cases relied upon by Petitioner are distinguishable on their facts. Accordingly, the stringent, strict compliance standard will be
applied by the undersigned in determining whether FHFC properly conceded TWC’s scoring appeal.
Florida Administrative Code Rule 67-48.004 provides in pertinent part:
(3) All Applications must be complete, consistent, accurate, legible and timely when submitted, except as further described below [in relation to the NOPSE and “cure” process]. . . . . [FHFC] staff may not assist any Applicant by copying, collating, or adding documents to an application nor shall any Applicant be permitted to use the [FHFC]’s facilities or equipment for purposes of compiling or completing an Application. . . . .
* * *
(5) Failure to submit an Application completed in accordance with the Application instructions and these rules will result in rejection of the Application, imposition of penalties or a score less than the maximum available on each form in accordance with the instructions in the Application and this Rule Chapter.
Page 10 of Form 1 of the application (quoted in Finding of Fact 29) includes statements similar to those in Florida Administrative Code Rules 67-48.004(3) and (5), as well as the more direct statement that “[o]nly information contained within this Application will be considered for purposes of points awarded or appealed.” As explained in numerous FHFC Final Orders, the effect of these provisions is to restrict
FHFC’s review to the information within the “four corners” of the application.6
As noted by the hearing officer in Camilla Pointe, supra, this limitation is complicated slightly by the authority given to FHFC “verify” certain information presented in the application. In this regard, page 10 of Form 1 states that:
verification of ALL information contained in this Application will be obtained and any funding award preliminarily secured by the Applicant is expressly conditioned upon such verification and the successful completion of credit underwriting.
More specifically, page 3 of Form 5 provides that:
ALL Local Government contributions will be verified by Florida Housing Staff during the scoring process. The government contact person listed on the Verification of Local Government Contribution form(s) will be contacted to verify the nature and amount of the contribution.
Because “verification” necessarily requires a comparison of the information provided in the application with information obtained by FHFC from another source, the provisions quoted above must be narrowly construed against FHFC. Cf. Ybor,
III Recommended Order, at 11 (concluding that any ambiguities in the application should be construed in the applicant’s favor); Eagle Ridge Recommended Order, at 11 (noting that the “stringent time constraints” and the “highly competitive application process” mitigate against allowing FHFC to make judgments
regarding the reason that an item was omitted from the application). Otherwise, the provisions of the application and FHFC’s rules that restrict the scope of FHFC’s review to the “four corners” of the application would be meaningless and the scoring process would become arbitrary (if FHFC staff were allowed to chose what information they “verified” out of each application) or unduly cumbersome (if FHFC staff were required to “verify” all of the information in the applications). See Eagle Ridge, supra.
County Coordinator as an Authorized Signatory for Forms 5 and 6
Petitioner first argues that FHFC improperly conceded that Mr. Williams was an authorized signatory for Forms 5 and 6. In response, FHFC argues that its determination on that issue was the result of FHFC staff’s “verification” that the County Coordinator position in Columbia County is the functional equivalent of the County Manager/Administrator, and that such “verification” is specifically authorized by the forms quoted above.
This argument is rejected. First, Form 5 only allows FHFC to verify the “nature and amount of the contribution”; it does not allow FHFC to verify the job functions and/or nature of the position of the listed local government contact person. Second, Form 5 requires the verification to occur “during the
scoring process” and in this case, verification of the functions of the County Coordinator position did not occur until FHFC reviewed the documents provided by TWC as an attachment to its Petition for Informal Administrative Hearing, which was after the scoring process had been completed. See Camilla Pointe Recommended Order at 10-12 (construing the phrase “during the scoring process” on another form which allowed verification and concluding that the “verification efforts must be concluded prior to the date upon which an applicant is permitted to submit its cure documentation”).
Accordingly, even though the preponderance of the evidence in this de novo proceeding establishes that the County Coordinator position was indeed the functional equivalent of the County Manager/Administrator position in Columbia County, FHFC’s “verification” of that fact after the completion of the scoring process was impermissible under FHFC’s rules and prior final orders. See Camilla Pointe, supra. And cf. Ybor, III Recommended Order, at 9 (affirming penalty imposed on Petitioner for its failure to specify a unit of measure in a particular location on one form despite “the reality that its omission has created no confusion nor inconsistency nor diminished the accuracy of the application”); Buena Vista Gardens v. Florida
Housing Finance Corp., FHFC Case No. 2000MF-038 (FHFC Hearing Officer April 5, 2000; adopted in toto by FHFC April 25, 2000)
(refusing to consider a post-application letter from the local government building official which confirmed the statements in the application that the local government did not issue the type of letters required by the application).
Therefore, FHFC’s concession of this issue at the informal hearing on TWC’s scoring appeal was inappropriate, and TWC should not have received the additional 7.64 points on Form
5 or the additional four points on Form 6.
Failure to Include Calculations for the Roadway Improvements Identified in Form 5 as an “Other Contribution"
Petitioner next argues that FHFC improperly conceded the issue of TWC’s failure to include calculations for the roadway improvements contributed by Columbia County. In response, FHFC argues that a calculation was not required because the improvements were a lump-sum contribution rather than a contribution based upon the number of units in the project. In support of its position, Respondent points out that the verification form for “other contributions” (Form 5, page
10) does not include a requirement that the calculations for the contribution be shown whereas the verification form for “fee waivers” (Form 5, page 7) does include such a requirement. FHFC’s argument is rejected.
First, even though the “other contributions” verification form does not include language identical to that on
the “fee waiver” verification form, it does include the statement that “[t]he amount of this contribution was calculated as shown behind the tab labeled ‘Form 5, Exhibit .’” That sentence clearly requires the applicant to show how the “other contribution” was calculated. Cf. Groves at Wimauma, Ltd. v.
Florida Housing Finance Corp., FHFC Case No. 2001-064 (FHFC Hearing Officer Sept. 10, 2001; adopted in toto by FHFC Sept. 20, 2001) (refusing to award points for local government contribution that applicant characterized as a “gift” based, in part, on the applicant's failure to provide a computation showing how the amount was calculated).
Second, it would not have been unreasonable to require or expect TWC to provide documentation showing how the $102,000 estimate for the roadway improvements was calculated since that information was readily-available from the county engineer or Mr. Williams. Cf. Groves at Wimauma, supra (rejecting the premise that “where no computation is used [to establish the value of the local government contribution], none should be required [to be provided in the application” where the applicant's failed to demonstrate that “the contribution was, [in fact,] a gift, unsupported by any mathematical computation”).
Third, as FHFC’s witness conceded at the hearing, FHFC had no way to determine whether the stated value of a
contribution such as the roadway improvements at issue in this case was reasonable or not without the supporting calculations. In this regard, the same rationale explained at the hearing for requiring calculations of fee waivers -- to eliminate the possibility of applicants inflating the value of the local government contributions to gain an advantage in the scoring process – equally applies to “other contributions” such as the roadway improvements at issue in this case.
Accordingly, even though the preponderance of the evidence in this de novo proceeding establishes that the
$102,000 value identified for the roadway improvements in TWC's application was reasonable, FHFC inappropriately conceded the
1.5 point penalty imposed on TWC based upon its failure to include documentation in its application showing how that amount was calculated. See Ybor, III Recommended Order, at 9 (affirming penalty imposed on Petitioner for its failure to specify a unit of measure in a particular location on one form despite “the reality that its omission has created no confusion nor inconsistency nor diminished the accuracy of the application”).
In reaching the foregoing conclusions, the undersigned has not overlooked FHFC’s argument that it is entitled to great deference in the interpretation of its own rules; however, as recognized in the cases cited by FHFC in its
PRO, that deference is not absolute.7 Where, as here, FHFC’s interpretation of its rules is unreasonable based upon the inconsistency of that interpretation with the standards announced and consistently applied in FHFC’s prior final orders, the undersigned is not bound by that interpretation.
In sum, TWC’s application received a total of 13.14 additional points based upon FHFC’s improper concessions at the informal hearing on TWC’s scoring appeal. Had TWC not received those additional points, its post-appeal score would have been 608.86, which is lower than Petitioner’s post-appeal score, thereby moving Petitioner into the funding range for an allocation/award of tax credits and SAIL funds. Therefore, Petitioner is entitled to receive an allocation/award of those funds in the next available cycle. See Fla. Admin Code R. 67- 48.005(2). Accord Transcript, at 12 (stipulation between the parties regarding Petitioner’s remedy in this proceeding).
Based upon the foregoing findings of fact and conclusions of law, it is
RECOMMENDED that the Florida Housing Finance Corporation issue a final order which determines that Petitioner is entitled to an allocation/award of tax credits and SAIL funds in the next available cycle.
DONE AND ENTERED this 30th day of March, 2004, in Tallahassee, Leon County, Florida.
S
T. KENT WETHERELL, II Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 2004.
ENDNOTES
1/ TWC’s cure submittal actually included two "other contributions" verification forms. One of the forms related to a deferral of water and sewer fees by Lake City; the other related to the construction of roadway turn lanes by Columbia County. The Lake City contribution and the verification form related to that contribution are not at issue in this proceeding.
2/ This amount is calculated as follows: $1,739,586.90 (total small county set-aside) less $380,250 (Jacaranda Trail) less
$485,000 (Grand Pines) less $535,172 (Tidewater); and it is
60.457 percent of the $561,000 requested by Petitioner in its application.
3/ All references to the Florida Administrative Code are to the rules in effect during the 2001 Combined Cycle, which were received into evidence as part of Exhibit P11.
4/ See § 120.52(15), Fla. Stat. (2000) (defining “rule” to include forms imposing requirements or soliciting information beyond that specified in a statute or rule); Cleveland Clinic v.
Agency for Health Care Admin., 679 So. 2d 1237, 1242 (Fla. 1st DCA 1996) (“Without question, an agency must follow its own rules.”). Accord Ybor, III, Ltd. v. Florida Housing Finance Authority, FHFC Case No. 2001-91, Recommended Order, at 11 (FHFC Hearing Officer Sept. 7, 2001; adopted in toto by FHFC Sept. 20, 2001) (“[FHFC] must be bound in the application of its rule in the same strict manner that an applicant is bound.”); Bayside at Town Center, Ltd. v. Florida Housing Finance Corp., FHFC Case No. 2001-065 (FHFC Hearing Officer Sept. 10, 2001; adopted in toto by FHFC Sept. 20, 2001) (“The application process is very competitive and [FHFC], as well as the applicant, is required to follow its rules which govern the process.”), aff’d, 823 So. 2d 766 (Fla. 1st DCA 2002) (table).
5/ Like this case, bid protests arise out of a competitive selection process and they commonly involve one competitor challenging the scoring of another competitor’s proposal; however, the courts have not applied a standard of strict compliance with the bid specifications in bid protest cases. See, e.g., Liberty County v. Baxter’s Asphalt & Concrete, Inc.,
421 So. 2d 505, 507 (Fla. 1982) (rejecting bid protest where bidder substantially complied with bid requirements and received no competitive advantage from the minor irregularities in the bid); Tropabest Foods, Inc. v. Dept. of General Servs., 493 So. 2d 50, 52 (Fla. 1st DCA 1986) (stating that deviation from bid specification is not material if it does not give the bidder a substantial advantage over the other bidders and does not restrict competition); Robinson Electrical Co. v. Dade County, 417 So. 2d 1032, 1034 (Fla. 3d DCA 1982) (same). See also § 120.57(3)(f), Fla. Stat. (2003) (to prevail in a challenge to the agency’s award of a bid to a competitor, the challenger must prove that the award is contrary to statute, the agency’s rules, or the bid specifications, and that the agency’s misstep was clearly erroneous, contrary to competition, arbitrary or capricious).
6/ See, e.g., Eagle Ridge Sebring Limited Partnership v. Florida Housing Finance Corp., FHFC Case No. 2003-034, Recommended Order at 11 (FHFC Hearing Officer Sept. 26, 2003; adopted in toto by FHFC Dec. 19, 2003) (“[FHFC] does not (with specified exceptions, none of which apply here) go outside the four-corners of the application before it.”) (footnote omitted); Camilla Pointe, Ltd. v. Florida Housing Finance Corp., FHFC Case No. 2002-051, Recommended Order at 10 (FHFC Hearing Officer Sept. 26, 2002; adopted in toto by FHFC on Oct. 10, 2002) (“Generally speaking, [FHFC]’s scoring of an application is to be based upon the four corners of the application submitted and
cured by the applicant.”); Walton County Development Corp. v. Florida Housing Finance Corp., FHFC Case No. 2002-066 (FHFC Hearing Officer Sept. 5, 2002; adopted in toto by FHFC Oct. 10, 2002) (rejecting application based in part on the applicant’s failure to include a funding commitment letter even though that letter was written by FHFC and concluding that Florida Administrative Code Rule 67-48.004(1) precluded FHFC from “supplementing” the application with the letter through official recognition); Tidewater Revitalization, Ltd. v. Florida Housing Finance Corp., FHFC Case No. 2002-023 (FHFC Hearing Officer
Oct. 2, 2002; adopted in toto by FHFC Oct. 10, 2002) (rejecting application based, in part, on the applicant’s failure to include a complete legal description for the property and explaining that “[n]o matter how ‘widely known’ the Tidewater Apartments may be to residents of Perry, Florida, the burden of [the applicant] in the application process was to demonstrate to [FHFC], whose staff is in Tallahassee, Florida, that it had control over the site”); R. H. Tourtelet Co. v. Florida Housing Finance Corp., FHFC Case No. 1999-069C (FHFC Hearing Officer June 3, 1999; adopted in pertinent part by FHFC Sept. 3, 1999) (sustaining scoring penalty for the failure to include a reference letter even though the omitted reference letter for the syndicator was contained in another application submitted by the applicant that was on file with FHFC).
7/ See Legal Environmental Assistance Foundation, Inc. v. Board of County Commissioners of Brevard County, 642 So. 2d 1081 (Fla. 1994); Miles v. Florida A & M University, 813 So. 2d 242 (Fla.
1st DCA 2002); Gulfcrest Nursing Home v. Agency for Health Care Admin., 662 So. 2d 1330 (Fla. 1st DCA 1995). Accord Cleveland v. Dept. of Children and Families, 2004 WL 546866, at *1 (Fla. 1st DCA March 22, 2004) ("[A]n agency's interpretation of a statute it is charged with administering should not be rejected so long as its interpretation is consistent with the legislative intent and is supported by competent, substantial evidence.")
COPIES FURNISHED:
Orlando J. Cabrera, Executive Director Florida Housing Finance Corporation
227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301
Wellington H. Meffert II, General Counsel Florida Housing Finance Corporation
227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301
Hugh R. Brown, Esquire
Florida Housing Finance Corporation
227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
Geoffrey D. Smith, Esquire Blank, Meenan & Smith, P.A.
204 South Monroe Street Tallahassee, Florida 32301
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of 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 | Document | Summary |
|---|---|---|
| May 18, 2004 | Agency Final Order | |
| Mar. 30, 2004 | Recommended Order | Petitioner entitled to an award of affordable housing funds because Respondent`s scoring of competitor`s application was based upon improper concessions and was inconsistent with strict compliance standards applied by Respondent to Petitioner and others. |
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