STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MADISON HIGHLANDS, LLC, AND AMERICAN RESIDENTIAL DEVELOPMENT, LLC,
Petitioners,
vs.
FLORIDA HOUSING FINANCE CORPORATION,
Respondent,
and
SP GARDENS, LLC, AND CITY EDGE SENIOR APARTMENTS, LTD,
Intervenors.
/
Case No. 18-1558BID
RECOMMENDED ORDER
Administrative Law Judge D. R. Alexander conducted a final hearing in this case on April 12, 2018, in Tallahassee, Florida.
APPEARANCES
For Petitioners: Douglas P. Manson, Esquire
Amy Wells Brennan, Esquire
Manson Bolves Donaldson Varn, P.A. Suite 300
109 North Brush Street Tampa, Florida 33602-2637
Craig D. Varn, Esquire
Manson Bolves Donaldson Varn, P.A. Suite 820
106 East College Avenue Tallahassee, Florida 32301-7740
J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. Suite 600
315 East Robinson Street Orlando, Florida 32801-1607
For Respondent: Christopher Dale McGuire, Esquire
Florida Housing Finance Corporation Suite 5000
227 North Bronough Street Tallahassee, Florida 32301-1329
For Intervenor: Lawrence E. Sellers, Esquire (SP Gardens) Holland & Knight, LLP
Suite 600
315 South Calhoun Street Tallahassee, Florida 32301-1872
For Intervenor: M. Christopher Bryant, Esquire (City Edge) Oertel, Fernandez, Bryant
& Atkinson, P.A. Post Office Box 1110
Tallahassee, Florida 32302-1110 STATEMENT OF THE ISSUE
The issue is whether Florida Housing Finance Corporation’s (Florida Housing) intended decision on January 29, 2016, to award low-income housing tax credits for an affordable housing development in Hillsborough County pursuant to Request for Applications 2015-107 (RFA-107) was contrary to Florida Housing’s rules, policies, or solicitation specifications; and, if so, whether that determination was clearly erroneous, contrary to competition, arbitrary, or capricious.
PRELIMINARY STATEMENT
On September 21, 2015, Florida Housing issued RFA-107, which solicited applications to compete for federal low-income housing tax credit funding (tax credits) for affordable housing developments in six counties, including Hillsborough County.
Applications in response to the Hillsborough County portion of the RFA were submitted by six applicants, including Madison Highlands, LLC (Madison); American Residential Development, LLC (ARD); SP Gardens, LLC (SP Gardens); City Edge Senior Apartments, Ltd. (City Edge); and three non-parties, West River 1A, LP (Bethune); West River Phase 2, LP (The Boulevard); and Mango Blossoms. The RFA provided that only one award for Hillsborough County would be made. On January 29, 2016, Florida Housing posted a notice of its intended decision to award funding to the top-ranked applicant, SP Gardens. Non-winners with eligible applications, in order of ranking, were Bethune, The Boulevard, City Edge, and Petitioners.
After Petitioners filed a formal written protest challenging the intended award, the protest was dismissed by Florida Housing for lack of standing on the ground the protest did not contain adequate allegations against all of the four higher-ranked applicants that, if proven, would result in Petitioners being ranked highest. Petitioners then sought review of their dismissal in the Fifth District Court of Appeal. Notwithstanding
the appeal, Florida Housing awarded tax credits to the highest ranked eligible applicant, SP Gardens. Later on, in the case of Madison Highlands, LLC v. Florida Housing Finance Corporation,
220 So. 3d 467 (Fla. 5th DCA 2017), the court reversed the dismissal of Petitioners’ protest. The Supreme Court declined to accept jurisdiction and denied a petition for review. Fla. Hous. Fin. Corp. v. Madison Highlands, LLC, 2017 Fla. LEXIS 2086
(Fla. Sup. Ct. Oct. 20, 2017). On remand, the parties engaged in settlement negotiations but did not resolve the dispute.
On March 26, 2018, Petitioners filed a Third Amended Formal Written Protest of Award and Petition for Administrative Hearing (Protest). On the same date, Florida Housing forwarded the Protest to the Division of Administrative Hearings to resolve the dispute. In their Joint Pre-hearing Stipulation, the parties have agreed that this challenge will not affect the award of tax credits to SP Gardens. They also agree that if Petitioners can establish that the applications of SP Gardens and City Edge are ineligible for funding, Petitioners will be funded through a forward allocation. Finally, they agree that if only SP Gardens’ application is determined to be ineligible, at the discretion of Florida Housing, City Edge may be awarded a forward allocation of credits.
On April 3, 2018, Bethune and The Boulevard, who each had filed a Notice of Appearance and Request to Intervene with
Florida Housing in March 2016, filed a Notice of Withdrawal stating that they no longer were substantially affected by the proceeding. Florida Housing now agrees that the applications of Bethune and The Boulevard are ineligible for funding because they failed to disclose all principals. Accordingly, Petitioners’ unopposed Motion for Order of Dismissal of Bethune and The Boulevard is granted. Petitioners’ Motion to Dismiss City Edge for lack of standing was denied at the outset of the hearing.
At the final hearing, Petitioners presented the testimony of one witness. Petitioners’ Exhibits 1 through 18 were accepted in evidence. Florida Housing presented the testimony of one witness. SP Gardens presented no witnesses or exhibits. City Edge presented the testimony of one witness. A ruling was reserved on City Edge Exhibit 1. That exhibit is accepted.
Finally, Joint Exhibits 1 through 7 were accepted.
A one-volume Transcript of the hearing was prepared. All parties filed proposed recommended orders (PROs), which have been
considered.
FINDINGS OF FACT
The Parties
Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. One of its responsibilities is to award low-income housing tax credits, which developers use to finance the construction of affordable
housing. Tax credits are made available to states annually by the United States Treasury Department and then are awarded pursuant to a competitive cycle that starts with Florida Housing’s issuance of an RFA. This proceeding concerns RFA-107.
Madison is an applicant entity for a proposed affordable housing development in Hillsborough County. ARD is a developer entity of affordable housing.
SP Gardens and City Edge are entities in the business of providing affordable housing and filed applications pursuant to RFA-107.
Background
On September 21, 2015, Florida Housing published on its website proposed solicitation RFA-107, inviting applications for the award of tax credits for the development of affordable housing located in six counties, including Hillsborough County. The RFA provided that only one applicant would be awarded tax credits for Hillsborough County.
In response to the RFA, six applications were submitted for Hillsborough County. A scoring committee appointed by Florida Housing evaluated the applications and submitted a recommendation to the Board of Directors (Board). On January 29, 2016, all participants received notice that the Board had determined which applicants were eligible or ineligible for
consideration of funding. Only the application filed by a non- party, Mango Blossoms, was found ineligible.
The Board determined that SP Gardens and City Edge satisfied all mandatory and eligibility requirements for funding and received “perfect” scores of 28 points out of a total of
28 points. They were ranked one and four, respectively, based on random lottery numbers assigned by the luck of the draw. Because Bethune and The Boulevard are no longer parties, and their applications have been deemed to be ineligible by Florida Housing, SP Gardens and City Edge are now ranked one and two.
The Board also determined that Petitioners satisfied all mandatory and eligibility requirements for funding; however, they received a score of 23 out of 28 total points, and were ranked below SP Gardens and City Edge.
In this bid dispute, Petitioners contend that Florida Housing erred in the scoring, eligibility, and award decision of the applications of SP Gardens and City Edge. But for the incorrect scoring of those two applications, Petitioners argue they would have been entitled to an allocation of housing credits or would have been moved up in the ranking.
SP Gardens
Consistent with its policy, even though an appeal was taken by Petitioners, in 2016, Florida Housing awarded tax credits to the highest ranked applicant, SP Gardens. On
April 21, 2016, Florida Housing issued an invitation to credit underwriting, which was accepted by the applicant on April 25, 2016. SP Gardens closed on the purchase and sale agreement, as amended, on June 15, 2016, and Florida Housing issued a carry- over allocation agreement on August 5, 2016. The applicant has since completed a credit underwriting with a positive recommendation, closed on the financing with the tax credit investor, and commenced construction of its development.
Petitioners contend the application of SP Gardens is deficient in three respects, which renders the applicant ineligible for funding. First, they contend SP Gardens failed to demonstrate control over the site of the project, as required by the RFA. Second, they contend the purchase and sale agreement is invalid because the applicant cannot enforce the specific performance of the contract. Finally, they contend the development location point (DLP) is not located on the parcel where most of the units will be constructed.
Section 4.A.8.a. of the RFA requires in part that the applicant demonstrate site control in the following manner:
The Applicant must demonstrate site control by providing, as Attachment 15 to Exhibit A, the documentation required in Items a., b., and/or c., as indicated below. If the proposed Development consists of Scattered Sites, site control must be demonstrated for all of the Scattered Sites.
SP Gardens submitted documentation to satisfy item a., which requires that an “eligible contract” be provided with the application in order to demonstrate control over the project site. An applicant typically submits an address, property description, metes and bounds, folio number, intersections of streets, or other information that describes the subject property. Florida Housing’s practice is to accept the representations of an applicant. SP Gardens’ purchase and sale agreement (contract) identifies the subject property using an engineer’s drawing with sketched hash marks, a description of the property as “approximately two acres,” and an address of “1108 E. Bloomingdale Avenue” in Valrico. County records do not reflect that such an address exists. However, the records do indicate an address of 1108 East Bloomindale Avenue that is on the proposed site and is owned by GF Financial, LLC, the seller
of the property. Except for this scrivener’s error, the purchase and sale agreement is otherwise an acceptable agreement.
An eligible contract must include a specific performance remedy. Petitioners contend the purchase and sale agreement cannot be enforced because of various alleged deficiencies in the agreement, including a failure to provide a legal description of the property and language in the agreement which does not reflect a meeting of the minds of the buyer and seller. However, a legal description of the property is not
required. Then, too, Florida Housing does not attempt to determine if there was a meeting of the minds of the parties or if the agreement is legally enforceable. Only a circuit court may do so. See § 26.012, Fla. Stat.
Petitioners also contend the DLP is not located on a parcel where most of the units will be constructed. The DLP is located on the property that is identified in the purchase and sale agreement. Whether or not the property ends up consisting of scattered sites will be addressed during the credit underwriting process. Florida Administrative Code Rule 67- 48.0072 provides in part that “credit underwriting is a de novo review of all information supplied, received or discovered during or after any competitive solicitation scoring and funding preference process, prior to the closing on funding.” Pursuant to this rule, during the credit underwriting process, a scattered site applicant must demonstrate compliance with the RFA. Also, in the final site plan approval process, the configuration of the proposed development will be fleshed out. With the advantage of hindsight in this case, this is exactly what SP Gardens did after it was issued an invitation to credit underwriting. By providing all required forms, a DLP, and appropriate assurances that it would comply with all RFA terms, SP Gardens has satisfied all RFA requirements. See, e.g., Brownsville Manor, LP v. Redding Dev.
Partners, LLC, 224 So. 3d 891, 894 (Fla. 1st DCA 2017).
The preponderance of the evidence supports a finding that the application of SP Gardens is eligible for funding.
City Edge
Petitioners allege that City Edge failed to disclose all of the principals of the applicant and developer. They also contend that City Edge is unable to pursue specific performance of its sale and agreement contract against the developer or the seller of the property.
The RFA requires an applicant to “provide a list identifying the principals for the applicant and for each developer.” The application identifies City Edge as the applicant entity. It also identifies the general partner of the applicant entity, City Edge Senior GP, LLC, and its limited partner, The Richman Group of Florida, Inc. (TRGF). TRGF is both the limited partner of the applicant entity and the developer entity for City Edge.
City Edge identified the principals for TRGF as of the application deadline. Florida Housing determined that this form was adequate to meet the requirements of the RFA. The application names James P. Hussey as the developer entity’s Treasurer. At hearing, Mr. Hussey’s position with TRGF was verified by TRGF’s vice president and a corporate document.
Petitioners point out that, according to a printout of the annual report filed by TRGF with the Secretary of State, as
shown on the SunBiz website, at the time the application was filed, the Treasurer of TRGF was Doreen Cole, and not Mr. Hussey. However, the evidence shows that Ms. Cole was removed from the position of Treasurer on or about September 1, 2015, and she subsequently separated from the company in late 2015. Through sworn testimony and a corporate record, City Edge established that Mr. Hussey was Treasurer at the time of the application deadline, November 5, 2015.
Notably, Florida Housing does not rely on SunBiz for establishing who the principals of an entity are as of the application deadline. This is because SunBiz does not definitively identify the corporate officers as of the application deadline, and it sometimes contains errors. See, e.g., Warley Park, LTD v. Fla. Housing Fin. Corp., Case No. 17-
3996BID (Fla. DOAH Oct. 19, 2017; FHFC Dec. 8, 2017). For this
reason, Florida Housing does not require applicants to provide SunBiz printouts to verify the names of the principals.
Petitioners also contend that because of various deficiencies, the purchase and sale agreement cannot be enforced in circuit court. For the reasons expressed above, this determination does not lie within the jurisdiction of Florida Housing. In any event, the RFA requires that if the owner of the property is not a party to the eligible contract, the applicant must submit documents evidencing intermediate agreements between
or among the owner, or other parties, and the applicant. Here, City Edge included in its application: (a) a purchase and sale agreement between 301 and Bloomingdale, LLC (the seller), and TRGF (the purchaser), and (b) a purchase and sale agreement between TRGF (the seller) and City Edge (the buyer). The latter document is the intermediate contract and meets all RFA-specified requirements for an intermediate contract.
The documents reflect that TRGF possesses a specific performance remedy to compel 301 and Bloomingdale, LLC, to sell the property, and City Edge possesses the right to compel TRGF to perform under the intermediate contract. For purposes of ascertaining compliance with the RFA, the documents submitted by City Edge suffice.
In a similar vein, Petitioners contend City Edge did not demonstrate site control because it did not include an eligible contract. Currently, 301 and Bloomingdale, LLC, is the owner of the property on which the housing will be built. City Edge attached to its application a purchase and sale agreement and an intermediate contract. The two contracts satisfy the elements of an eligible contract necessary to demonstrate control over the project site, they provide a specific performance remedy, and they conform to the RFA.
The preponderance of the evidence supports a finding that City Edge’s application is eligible for funding.
CONCLUSIONS OF LAW
Petitioners’ protest to Florida Housing’s proposed contract award is governed by section 120.57(3)(f) as follows:
In a competitive-procurement protest, other than a rejection of all bids, proposals, or replies, the administrative law judge shall conduct a de novo proceeding to determine whether the agency’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the solicitation specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious.
To prevail, Petitioners must prove, by a preponderance of the evidence, that Florida Housing’s proposed scoring action is either contrary to its governing statutes, contrary to its rules or policies, or contrary to the specifications of the RFA. The standard of proof Petitioners must meet to establish that the scoring action violates this statutory standard of conduct is whether Florida Housing’s decision was clearly erroneous, contrary to competition, or arbitrary or capricious, that is, an abuse of discretion. See, e.g., R.N. Expertise, Inc. v. Miami- Dade Cnty. Sch. Bd., Case No. 01-2663BID (Fla. DOAH Feb. 4, 2002;
Sch. Bd. Miami-Dade Mar. 20, 2002).
Agency action will be found to be clearly erroneous if it is without rational support and, consequently, the Administrative Law Judge has a “definite and firm conviction that
a mistake has been committed.” U.S. v. U.S. Gypsum Co., 333 U.S.
364, 395 (1948).
An act is contrary to competition if it: (1) creates the appearance of opportunity for favoritism; (2) erodes public confidence that contracts are awarded equitably and economically;
(3) causes the procurement process to be genuinely unfair or unreasonably exclusive; or (4) is unethical, dishonest, illegal, or fraudulent. Syslogic Tech. Servs., Inc. v. S. Fla. Water
Mgmt. Dist., Case No. 01-4385BID (Fla. DOAH Jan. 18, 2002),
modified in part, Case No. 2002-051 (SFWMD Mar. 6, 2002).
Finally, section 120.57(3)(f) requires an agency action to be set aside if it is “arbitrary, or capricious.” If the decision is not supported by facts or logic or is despotic, it is an arbitrary decision. A capricious decision is one taken without thought or reason.
For the reasons previously found, Petitioners have failed to demonstrate that Florida Housing’s scoring decision was contrary to the agency’s governing statutes, rules, or solicitation specifications, or that the action was clearly erroneous, arbitrary or capricious, or contrary to competition. Therefore, Florida Housing’s determination that SP Gardens is eligible for funding under RFA 107 is correct. Because only one award will be made, and City Edge and Petitioners are ranked
number two and three, respectively, no allocation of tax credits should be made to those applicants.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that Florida Housing Finance Corporation enter a final order dismissing the Protest of Petitioners. It is further recommended that Florida Housing reaffirm its decision to award tax credits to SP Gardens.
DONE AND ENTERED this 6th day of June, 2018, in Tallahassee,
Leon County, Florida.
S
D. R. ALEXANDER Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 6th day of June, 2018.
COPIES FURNISHED:
Hugh R. Brown, General Counsel Florida Housing Finance Corporation Suite 5000
227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
Sarah Pape, Esquire
Zimmerman, Kiser & Sutcliffe, P.A. Suite 600
315 East Robinson Street Orlando, Florida 32801-1607 (eServed)
J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. Suite 600
315 East Robinson Street Orlando, Florida 32801-1607 (eServed)
Craig D. Varn, Esquire Manson Bolves Donaldson Varn Suite 820
106 East College Avenue Tallahassee, Florida 32301-7740 (eServed)
Christopher Dale McGuire, Esquire Florida Housing Finance Corporation Suite 5000
227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
Lawrence E. Sellers, Jr., Esquire Holland and Knight, LLP
Suite 600
315 South Calhoun Street Tallahassee, Florida 32301-1872 (eServed)
Tiffany A. Roddenberry, Esquire Holland & Knight, LLP
Suite 600
315 South Calhoun Street Tallahassee, Florida 32301-1872 (eServed)
M. Christopher Bryant, Esquire
Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110
Tallahassee, Florida 32302-1110 (eServed)
Amy Wells Brennan, Esquire
Manson Bolves Donaldson Varn, P.A. Suite 300
109 North Brush Street Tampa, Florida 33602-2637 (eServed)
Douglas P. Manson, Esquire
Manson Bolves Donaldson Varn, P.A. Suite 300
109 North Brush Street Tampa, Florida 33602-2637 (eServed)
Corporation Clerk
Florida Housing Finance Corporation Suite 5000
227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
10 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 |
---|---|---|
Jul. 27, 2018 | Agency Final Order | |
Jun. 06, 2018 | Recommended Order | Petitioners failed to prove that Florida Housing's intended award of tax credits violated section 120.57(3)(f). |
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