The Issue The issue for determination is whether Respondent discriminated against Petitioners in violation of the Fair Housing Act by failing to release them from a 20-year affordable housing deed restriction.
Findings Of Fact No dispute exists that Mr. Discher is handicapped, as indicated in his medical records, for purposes of the Fair Housing Act. John and Ruth Discher own the property located at 22916 Bluegill Lane, Cudjoe Key, Florida, with the following legal description: Lot 32, Block 10, Cudjoe Ocean Shores, as recorded in Plat Book 6, Page 76, of the Public Records of Monroe County, Florida. At the time of hearing, the Dischers did not live in the residential home on the property but rented it. No dispute exists that Monroe County is a political subdivision of the State of Florida having regulatory jurisdiction over the Dischers’ property. Since around 1979, Monroe County has been designated as an Area of Critical State Concern (ACSC). As an ACSC, increased State oversight of and involvement in local planning decisions is required by the Governor and Cabinet, sitting as the Florida Administrative Commission, and the Department of Community Affairs (DCA), as the State land planning agency. The Florida Legislature imposed a series of “principles for guiding development” in the Florid Keys. § 380.0552(7), Fla. Stat. One of the principles for guiding development imposed by the State is “to make available adequate affordable housing for all sectors of the population of the Florida Keys.” § 380.0552(7)(j), Fla. Stat. In 1992, the Rate of Growth Ordinance (ROGO) was adopted by the Florida Administrative Commission on behalf of Monroe County in order to limit growth in the Keys. The purpose and intent of ROGO was to facilitate implementation of goals, objective and policies set forth in Monroe County’s comprehensive plan relating to many areas of concern, including the protection of the environment (including endangered species and species on the concerned list), residents, and visitors; hurricane evacuation; road improvement; property and property development. ROGO consists of a competitive point system, based on a complex scoring system, and those who obtain the top points receive allocations. Point values are accessed on and using a number of criteria. Under the ROGO system, property owners, who wish to build houses on vacant land, must compete to receive a limited number of residential allocations. The yearly number of building allocations is limited by state administrative rule. Property owners seeking building allocations compete against each other in order to receive one of the limited number of allocations. In 1996, Monroe County’s comprehensive plan was effective. Prior to 1996, Monroe County received very few applicants for ROGO; however, after the comprehensive plan became effective the competition under ROGO increased tremendously. Developers and persons with high economic means became the majority of those able to receive points in order to obtain the majority of the limited allocations. With the increase in competition, affordable housing became a concern. The ultimate goal of Monroe County under the ACSC program is for it (Monroe County) to get into the position of being able to protect the environmental resources, provide for hurricane evacuation, and do everything that is required in Chapter 380, Florida Statutes, and be removed or “de-designated” as an ACSC. Applicable to the instant matter, affordable housing was defined in Monroe County Code, Land Development Regulations, Section 9.5-4, which provided in pertinent part: (A-5) Affordable housing means housing which: * * * With respect to a housing unit to be occupied by moderate-income persons, that monthly rents, or monthly mortgage payments, including taxes and insurance, do not exceed thirty (30) percent of that amount which represents one hundred twenty (120) percent of the median adjusted gross annual income for households within Monroe County, divided by 12 for a period of twenty (20) years. The dwelling unit must also meet all applicable requirements of the United States Department of Housing and Urban Development minimum property standards as to room sizes, fixtures, landscaping and building materials, when not in conflict with applicable laws of Monroe County. For the purposes of this section, “adjusted gross income” means all wages, assets, regular cash or noncash contributions or gifts from persons outside the household, and such other resources and benefits as may be determined to be income by rule of the department of community affairs, adjusted for family size, less deductions allowable under section 62 of the Internal Revenue code; and In which, if permitted by law, preference is given to local contractors. The threshold for a household’s income to qualify for affordable housing was set by this regulation. Further, Monroe County Code, Land Development Regulations, Section 9.5-266, applicable to the instant matter, provided in pertinent part: (a) Affordable Housing: (1) Notwithstanding the density limitation in section 9.5-262, the owner of a parcel of land shall be entitled to develop affordable housing as defined in section 9.5-4(A-5). . . . * * * Before any certificate of occupancy may be issued for any structure, portion or phase of a project subject to this section, restrictive covenant(s), limiting the required number of dwelling units to households meeting the income criteria described in paragraph (4)(a)-(f) of this subsection (a) running in favor of Monroe County and enforceable by the county, shall be filed in the official records of Monroe County. The covenant(s) shall be effective for twenty (20) years but shall not commence running until a certificate of occupancy has been issued by the building official for the dwelling unit or units to which the covenant or covenants apply. In order for the owner of a parcel of land to be entitled to the incentives outlined in this section, the owner must ensure that: a. The use of the dwelling is restricted to households that derive at least seventy (70) percent of their household income from gainful employment in Monroe County; and * * * e. The use of the dwelling is restricted for a period of at least twenty (20) years to households with an income no greater than one hundred twenty (120) percent of the median household income for Monroe County . . . . This regulation sets the limitation for covenants at 20 years, with the time period beginning to run at the issuance of the certificate of occupancy by the building department. Under the ROGO plan, a person was awarded additional points if the person agreed to the imposition of an affordable housing deed restriction. Being awarded the additional points meant that a person would receive an allocation in a shorter period of time. At that time, Mrs. Discher was an employee of the Monroe County Sheriffs Department. The Dischers completed a ROGO application. They wanted to be awarded additional points to reduce the period of time for them to receive an allocation for the construction of their home. The Dischers completed an Annual Affidavit of Qualification for Affordable Housing (Residential Dwelling Unit). The Affidavit provided, among other things, an acknowledgement by the Dischers that the Affidavit was a waiver of payment of the required impact fees; that Mrs. Discher was an employee of the Monroe County Sheriff’s Department and at least 70 percent of the household’s income was derived from that employment; that the single family home was restricted for 20 years to household’s with adjusted gross income of a certain amount; that the Dischers would file an approved deed restriction indicating “that, either (1) the deferred impact fees shall become due and owing if the unit no longer qualifies as Affordable Housing, or, (2) that the dwelling unit shall be restricted by the affordable housing criteria for twenty years commencing from the issuance of the certificate of occupancy”; and that the Dischers understood that, if affordable housing was used to gain points in the allocation system, the single-family home would be restricted by the covenants for 20 years. Mr. Discher prepared an affordable housing deed restriction for a residential dwelling unit in 1997. The Affordable Housing Deed Restriction, prepared by Mr. Discher, was executed by the Dischers on July 2, 1997. Provision II of the Affordable Housing Deed Restriction provided, among other things, an acknowledgement that “fair share impact fees” shall be paid by any person prior to receiving a building permit for any new land development. Provision III of the Affordable Housing Deed Restriction provided, among other things, an acknowledgement by the Dischers that they were being exempt from payment of their fair share impact fees for the single family home to be constructed by them on their property. Provision IV of the Affordable Housing Deed Restriction provided, among other things, that the sale, transfer or rental of their single family home shall only be to persons who qualify under Monroe County’s current affordable housing eligibility requirements as established and amended from time to time. Provision V of the Affordable Housing Deed Restriction provides, among other things, that the covenants shall be effective for 20 years and shall begin to run at the issuance of certificate of occupancy by the building department. Provision VI of the Affordable Housing Deed Restriction provides, among other things, that the Dischers used the affordable housing program to gain additional points in the permit allocation system. The Affordable Housing Deed Restriction contains no provision for removal of the affordable housing deed restriction. The Dischers were given additional points. Their wait-time for an allocation was reduced, and they received an allocation to build their single family home. The Dischers attempted to pay impact fees on or about October 2, 1997. They were informed by the building department that they were not required to pay the impact fees and their check for the impact fees was returned to them. They obtained a mortgage loan and completed their single family home. A certificate of occupancy was issued on June 30, 1999. Mr. Discher testified at hearing that the only reason that he and his wife applied for the ROGO program and that he prepared and he and his wife executed the Affordable Housing Deed Restriction was because an employee of the Monroe County Building Department informed him that they (the Dischers) could be released from the affordable housing deed restriction simply by paying the fair share impact fee at any time. Before ROGO, Monroe County had an affordable housing ordinance that permitted the removal from affordable housing by paying the impact fees. A household benefited by not initially paying impact fees; but, the household could later decide to pay the impact fees, come forward and pay the impact fees, and be removed from affordable housing. However, after ROGO was adopted, the option to later pay the impact fees and be removed from affordable housing no longer existed. ROGO contained no mechanism for a person to pay the impact fees and be removed from affordable housing before the time limit expired or to be removed from affordable housing before the time limit expired. At hearing, the building official was identified but did not testify. Insufficient evidence was presented to ascertain whether the building official had the apparent authority to allow the Dischers to pay the impact fees and remove them from the affordable housing restrictions prior to the 20 years. Consequently, the evidence is insufficient to demonstrate that the Dischers reasonably relied upon the building official’s representation to support a release from the affordable housing restrictions. No copy of any release from the affordable housing deed restrictions recorded in the official records of Monroe County was presented at hearing. The evidence is insufficient to demonstrate that Monroe County had released any persons from affordable housing deed restrictions. In 2005, the Dischers made a request to Monroe County for removal of the affordable housing deed restrictions. The Dischers were notified by Monroe County that no provision existed in the Monroe County Code or Monroe County’s Comprehensive Plan for removal of the affordable deed restrictions prior the effective date of their expiration or termination and that its Comprehensive Plan provided that affordable housing projects shall be required to maintain the project as affordable housing on a long-term basis in accordance with deed restrictions. Furthermore, the Dischers were notified by Monroe County that prospective occupant(s) of the affordable housing must meet the qualifications for affordable housing. The Dischers attempted to pay the impact fees in order to be released from the affordable housing deed restrictions. They attempted to pay the impact fees on at least two occasions— March 20, 2006, and February 20, 2007. On each occasion, their payment was refused by Monroe County. Monroe County determined that payment of the impact fees would not release the Dischers from the affordable housing deed restrictions, and, therefore, refused and returned the Dischers’ payments. Moreover, no provision in the Monroe County Code permitted the removal of the affordable housing deed restrictions. Monroe County admits that, under the guidelines in place when the Dischers obtained affordable housing, the Dischers are not restricted to a selling or renting price for their single family home. However, they are restricted as to the income of prospective buyer(s) or renter(s), i.e., the prospective buyer(s) or renter(s) must meet the income guidelines set forth in the Monroe County Code. Prior to and during the entire process involving the ROGO program, Mr. Discher was disabled. A copy of a letter written by the Dischers in September 1997, in which Mr. Discher indicated his disability, was forwarded to Monroe County. After the completion of the Dischers’ home, Mr. Discher’s health deteriorated. At hearing, Mr. Discher admitted that, prior to filing the discriminatory fair housing complaint, he had never mentioned his disability to Monroe County in relation to having the affordable housing deed restrictions removed. Moreover, at hearing, he admitted that Monroe County had not discriminated against him on the basis of his disability by refusing to remove the affordable housing deed restrictions. Mr. Discher’s physicians recommended to him that he move away from the Keys to improve his health. Furthermore, eventually, Mr. Discher needed to be closer to the locations where he was receiving his medical treatments, which were outside of the Keys. The Dischers finally moved away from the Keys to be closer to the locations where Mr. Discher was receiving his medical treatments. They rented their single-family home in Monroe County. Mrs. Discher was forced to return to work. If the Dischers are released from the affordable housing deed restrictions or if the affordable housing deed restrictions are removed, the Dischers would sell the single-family home. A Senior Planner with DCA, Ada Mayte Santamaria, testified at hearing as an expert in community planning. Ms. Santamaria testified that neither Monroe County’s Comprehensive Plan nor its Land Development Regulations allow for the removal of the Dischers’ affordable housing deed restrictions; and that, if the affordable housing deed restrictions were released, DCA would probably issue a notice of violation against Monroe County for not properly implementing its Comprehensive Plan and Land Development Regulations and probably recommend to the Administration Commission that Monroe County’s allocations for the year following such release be reduced because of the failure of Monroe County to enforce and implement its Comprehensive Plan and Land Development Regulations. Ms. Santamaria further testified that Monroe County is allowed to submit two proposed comprehensive plan amendments per year; and that, because of the process involved in proposed amendments, including review by DCA, a proposed amendment by Monroe County to release affordable housing deed restrictions would take a minimum of six months and could take up to a year and a half to complete the process. At a Monroe County Commission meeting held on January 17, 2007, the Dischers requested to be released from their affordable housing deed restrictions based on hardship due to Mr. Discher’s medical conditions. At the meeting, copy of his medical documents, identifying his disability, was distributed to the Commissioners. The Commissioners denied the Dischers’ request. However, the Commissioners also decided that they wanted to address extreme hardship situations and unanimously voted to direct its staff to begin work on an “exit strategy” for affordable housing deed restrictions on the basis of extreme hardship situations. The Commission staff represented at the meeting that such a process would take at least three months and indicated that Monroe County’s Comprehensive Plan may have to be amended in conjunction with what the Commission wanted. At the time of the final hearing in the instant matter, approximately a year and a half later, no “exit strategy” had been brought before the Commission. No evidence was presented that the Commission had decided that it no longer wanted to develop an “exit strategy.” No evidence was presented as to why the process had not begun. The Dischers are convinced that Monroe County wants to take their property. The evidence is insufficient to demonstrate that Monroe County wants to take the Dischers’ property.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order finding that Monroe County Commissioners did not commit a discriminating housing practice against John and Ruth Discher in violation of the Fair Housing Act by failing to release or remove the affordable housing deed restrictions. DONE AND ENTERED this 31st day of December, 2008, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 31st day of December, 2008.
The Issue The issues in this case are whether the Florida Housing Finance Corporation (“Florida Housing”) employed an unadopted rule when it used rounding on a competing application to place Petitioner’s application for Low Income Housing Tax Credits (“HC” or “Tax Credits”) in the 2004 Universal Application Cycle in the “B” leveraging tie-breaker group, and if so, whether Florida Housing complied with the requirements of Section 120.57(1)(e), Florida Statutes, when it employed rounding.
Findings Of Fact Petitioner is a Florida limited partnership. Reliance- Andrews, LLC, the sole general partner of Petitioner, is a non- profit entity under Florida Administrative Code Rule 67- 48.002(81). Petitioner’s address is 516 Northeast 13th Street, Fort Lauderdale, Florida 33304. The affected agency is the Florida Housing Finance Corporation (“Florida Housing”), 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301-1329. Florida Housing is a public corporation organized under Part V, Chapter 420, Florida Statutes, to provide and promote the public welfare by administering the governmental function of financing and refinancing houses and related facilities in Florida in order to provide decent, safe, and sanitary housing to persons and families of low, moderate, and middle income. Petitioner filed an application, number 2004-102C, with Florida Housing for tax credits under the Housing Credit (“HC”) program for a proposed development in Broward County, Florida, known as Flagler Point. Under the HC program, successful applicants receive a dollar-for-dollar reduction in federal tax liability in exchange for the development of units to be occupied by low-income households. Florida Housing is designated as the housing credit agency for the State of Florida and is authorized to establish procedures necessary for the allocation of Tax Credits under Section 420.5099, Florida Statutes. Florida Housing scores and ranks applications for the HC program pursuant to the Universal Application Package Instructions ("Application Instructions") which are adopted as rules pursuant to Florida Administrative Code Rule 67- 48.002(111). The applicants for housing credits are sophisticated, and the application process is highly competitive. Most applicants achieve a perfect score on applications, so Florida Housing has created a series of “tiebreakers” to determine which projects receive allocations of tax credits. These include “leveraging,” (the amount of requested funding over the number of set-aside units), proximity to services, proximity of other Florida Housing developments, and, finally, a lottery. Petitioner and numerous other applicants for the HC program received the maximum score on the application, 66 points. Florida Housing then ranked the applications that received perfect scores to determine priority for funding according to certain Ranking and Selection Criteria as outlined in the Application Instructions. Part of the Ranking Selection Criteria process includes "tie-breakers" as enumerated in the Application Instructions. The first of the applicable tie-breakers separates the applications into groups A and B based upon a formula used by Florida Housing to determine funding request per set-aside unit. Group A is comprised of the 80 percent of applications with the lowest amount of total funding request per set-aside unit. The 20 percent of applications with the highest per unit request amount are placed in Group B. Applications in Group A receive preference over Group B. The A/B leveraging tiebreaker alone does not determine who gets funded. Some leveraging Group B projects are funded. The total number of set-aside units for each Application is computed by multiplying the total number of units within the proposed development by the highest total set- aside percentage the applicant committed to in the Set-Aside Commitment section of the Application. Florida Housing rounded up the total set-aside units on application 2004-084C from 182.7 (the product of the total number of units (203) and the highest total set aside percentage (90%)) to 183. Rounding this figure produces a lower per unit funding request amount for application 2004-084C ($51,857.95 instead of $51,943.10). Petitioner's per unit funding request is $51,882.28, which would be lower than application number 2004-084C if the total set-aside unit figure was not rounded. Petitioner's application was placed in Group B instead of Group A. On May 7, 2004, Petitioner filed a Notice of Possible Scoring Error ("NOPSE") requesting correction of the set-aside unit rounding, which Petitioner contended was in error. Respondent did not adopt Petitioner’s NOPSE, and on May 28, 2004, issued its scoring summary for application number 2004- 084C indicating a per unit Florida Housing funding request of $51,857.95. On July 9, 2004, Respondent issued the 2004 Final Score Corporation Funding Per Set-Aside for A and B Groups indicating that Petitioner had been placed in Leveraging Group B. Florida Housing has used rounding to determine the number of set-aside units in the same manner each year from the 2002 Universal Application Cycle through the 2004 Universal Application Cycle. Applicants are encouraged to, and more often than not do, set aside 100 percent of the units for low or very low income tenants. As most applicants for Tax Credits do just that, rounding is not often an issue. The number of set-aside units represents a commitment the developer makes in return for funding, and the number in the application is the number of set aside units the developer must provide, and is used to determine whether the development is in compliance with its commitment to Florida Housing, and to the Internal Revenue Service. As a practical matter, the number of set-aside units cannot be a fraction of a unit. Rounding up to the next whole number is the only option, because if the unit number is rounded down, the percentage of set-aside units would be below the set- aside commitment, the IRS would deem that the property had not met its set-aside commitment, and the investors would not receive their tax credits. Florida Housing revises its Universal Cycle Application and Instructions through the rulemaking process each year, in response to stakeholder input, in reaction to litigation, and to clarify issues which arise during the year. During the rulemaking process, there is considerable dialogue between developers and Florida Housing. Public hearings (rule development workshops) are noticed in the Florida Administrative Weekly, with the agendas being posted on Florida Housing’s website and also made available for distribution at the public hearings. The affordable housing development community is small and its members pay close attention to Florida Housing’s application process, which is intensely competitive. Petitioner is an experienced developer, and has previously received funding from Florida Housing. Petitioner is a member of a coalition of affordable housing developers, which meets before the rule development workshops to discuss the agenda, and to attempt to reach consensus on agenda issues. Petitioner is part of the development community, which normally participates in the rule development process, and Petitioner has been an active participant in the 2005 rule development process. An active member of the affordable housing developer’s coalition, and a veteran participant in the Florida Housing application and funding process, would have been aware of Florida Housing’s use of rounding to determine the number of set-aside units to which each applicant committed. The rounding issue that is at the heart of this proceeding has been addressed by Florida Housing in its proposed rule amendments to Florida Administrative Code Rule 67-48.002 for the 2005 Universal Application Cycle.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be issued in this case dismissing the petition and denying all relief sought by Petitioner. DONE AND ENTERED this 18th day of November, 2004, in Tallahassee, Leon County, Florida. S MICHAEL M. PARRISH 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 18th day of November, 2004.
The Issue Whether Petitioners maintained a separate household within a multiple occupant displacement dwelling for purposes of calculating the appropriate amount of their relocation assistance benefits.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Petitioners, Anthony T. Black and Melissa Owen, formerly resided in a mobile home at 5315 Drew Street, Brooksville, Florida. Respondent, Department of Transportation (DOT), recently began acquiring property for the construction of the Suncoast Parkway, a non-federal-aid, limited access toll facility which will run forty miles from just north of Tampa, Florida, to Brooksville, Florida. Among other properties, DOT has acquired parcel number 144.001T on which Petitioners once resided, and they have been forced to relocate to another residence. This controversy concerns a determination as to the appropriate amount of relocation benefits to which Petitioners are entitled. The amount of benefits due a displaced person is determined by a federally-mandated formula codified in 49 Code of Federal Regulations, Part 24, and adopted by DOT. The regulations provide that if multiple persons live in the same dwelling, and those persons can establish that they maintained separate households within a single-family dwelling, they are entitled to greater benefits than if all persons are considered a single household. Federal regulations contain no definitive guidelines on this issue, but rather they leave that determination to the discretion of the state agency administering the program. In this unusual case, Petitioners contend that they were a "separate household" within a single-family dwelling which was jointly shared with another person. DOT contends, however, that Petitioners are entitled only to a prorata share of a single payment to all occupants of the dwelling. The seven-room mobile home at 5315 Drew Street was owned by Margie Black, the mother of Anthony T. Black. Beginning in January 1995, she allowed her son, his girlfriend, Melissa Owen, and a friend of her son, Daniel L. Bell, to live in the mobile home rent-free, but the tenants were required to pay for taxes, utilities, and the upkeep of the premises. At different points in time, other persons also shared the home, but they vacated the premises before this dispute arose. There was no written agreement between the three tenants on how to allocate living space or pay expenses, but they informally agreed that they would share in common expenses, such as utilties and maintenance repairs. Bell lived in one of the three bedrooms in the mobile home, while Petitioners shared another. In order to qualify for assistance, a tenant must have occupied the premises for at least 90 days before the displacement occurred, a requirement easily met by Petitioners. Also, replacement housing assistance is restricted to an amount not to exceed $5,250.00 per household. This cap may be exceeded when a person qualifies for a super rent supplement in order to place the displaced person in "last resort housing." In this case, Petitioners qualifed for such a supplement because there were no comparable mobile homes in the area. In calculating the amount of the super rent supplement, DOT is required to ascertain the amount of rent paid by the displaced persons, their income, and their monthly utility bills. To assist it in gathering this information, DOT utilizes a private consulting firm, Universal Field Services (UFS), whose representatives meet with the displaced persons. Although the parties have disagreed as to the degree of cooperation UFS and DOT received from Petitioners in verifying their income, utility bills, and rent, they have ultimately agreed that, if the three tenants are treated as multiple occupants of one displacement dwelling, then based on Petitioners' annual income and utility payments in 1995 and 1996, Petitioners are entitled to $9,027.08 in total relocation assistance payments, including the super rent supplement. This amount represents two-thirds of the total payment of $13,541.22, which is the product of a federally-mandated formula. Bell, the other tenant, received the remaining one-third of the payment. The parties also agree that if only a single household existed, DOT's calculation is correct. Petitioners contend, however, that they maintained a separate household from the third tenant, and thus they are entitled to a greater amount of assistance. Although there are no written state guidelines on how to make this determination, as a matter of policy, DOT requires that the tenants provide written documentation and other proof to establish that the tenants maintained separate households within a single residence. While it has never been confronted with a "separate household" claim before, to establish a good claim, DOT suggested that, at a minimum, the claimants would need to have a written lease by each of the tenants reflecting the rental of certain space for a specific amount of rent each week or month, and perhaps written rules regarding the use of the space that tenants must comply with. In addition, the dwelling would have to have separate and exclusive living areas for each tenant, such as separate entrances, kitchens or efficiency areas, that would not cross over into any common areas. Examples of such dwellings would be a boarding room, hotel, adult congregate living facility, duplex, or mother-in-law suite. In this case, there was no written lease agreement by any of the tenants concerning each tenant's respective space since all persons lived rent-free on the premises. There was also no formal agreement or rules governing the use of common living areas by the tenants. While it is true that Bell had a separate entrance to his bedroom, he was allowed to keep food in the same refrigerator used by Petitioners, he occasionally cooked or ate meals on the premises, and he was not prohibited from using other common areas of the home. Given these circumstances, and the lack of any documentation to the contrary, it must be found that all persons occupying the dwelling shared a single- family dwelling and that a separate household did not exist. Petitioners contended that the process was flawed because UFS personnel made only one visit to the premises before making a recommendation in the case. Petitioners were, however, allowed to submit further documentation after that visit to substantiate their claim, and at least one other UFS representative visited the premises on a later date. In addition, a DOT supervisor visited the home and made the final agency decision. Petitioners also suggested that the allocated benefits are insufficient to cover their new rent. But DOT has no discretion except to follow the federal formula in allocating benefits. Petitioners further asserted that the "comparable" property found by DOT to replace the rent-free mobile home was too expensive. Unfortunately, however, this concern is not an issue in this proceeding. Finally, Petitioners pointed out that other displaced persons have experienced difficulty in dealing with UFS personnel. Even if this were true, it would have no bearing on the issues in this case since all UFS determinations are preliminary in nature and subject to DOT review and an evidentiary hearing if requested by the parties.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Transportation enter a Final Order denying Petitioners' request for greater relocation benefits, and that it reaffirm the amount previously awarded. DONE AND ENTERED this 16th day of April, 1998, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 Filed with the Clerk of the Division of Administrative Hearings this day 16th of April, 1998. COPIES FURNISHED: Diedre Grubbs, Agency Clerk Department of Transportation 605 Suwannee Street Mail Station 58 Tallahassee, Florida 32399-00458 Anthony Black Melissa Owen Post Office Box 10868 Brooksville, Florida 34603 Andrea V. Nelson, Esquire Department of Transporation 605 Suwannee Street Mail Station 58 Tallahassee, Florida 32399-0458 Pamela S. Leslie, Esquire Department of Transportation 562 Haydon Burns Building Tallahassee, Florida 32399-0450
The Issue The issue is whether Florida Housing Finance Corporation’s (“Florida Housing”) review and scoring of the applications responding to RFA 2020-104 SAIL Funding for Farm Worker and Commercial Fishing Worker Housing (“the RFA”) were clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based on the evidence adduced at the final hearing, the record as a whole, the stipulated facts, and matters subject to official recognition, the following Findings of Fact are made: Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes (2020).2 Its purpose is to promote public welfare by administering the financing of affordable housing in Florida. Florida Housing is authorized by section 420.507(48), to allocate federal low income housing tax credits, State Apartment Incentive Loans (“SAIL”), and other funding by means of competitive solicitations. Florida Administrative Code Chapter 67-60 provides that Florida Housing will allocate its competitive funding through the bid protest provisions of section 120.57(3), Florida Statutes. Funding is available through a competitive application process commenced by the issuance of a Request for Applications, which is equivalent to a “request for proposal” as described in rule 67-60.009(4). 1 Pueblo Bonito’s Exhibit 1 is the deposition of Nancy Muller of Florida Housing. 2 Unless stated otherwise, all statutory references shall be to the 2020 version of the Florida Statutes. Through the RFA, Florida Housing seeks to award up to an estimated total of $5,131,050 in SAIL Financing for the construction or rehabilitation of affordable housing developments for farm workers and commercial fishing workers. The RFA was issued on April 15, 2020, and a modified version was issued on April 24, 2020. The application deadline was May 19, 2020. La Estancia and Pueblo Bonito submitted applications proposing the rehabilitation of existing farm worker housing in Hillsborough and Lee Counties, respectively. Both applications were deemed eligible for funding. A review committee was appointed to review the applications and make recommendations to Florida Housing’s Board of Directors (“the Board”). The scoring of the applications was based on a 100-point scale. Applicants submitting a Principal Disclosure Form that had been stamped “pre-approved” received five points. The remaining points were awarded based on the subjective scoring of narrative sections within the applications, and the maximum points were available as follows: Current and Future Need for Farm Worker or Commercial Fishing Worker Housing in the Area (“Need”): 15 points Experience Operating and managing Farm Worker or Commercial Fishing Worker Housing (“Experience”): 20 points Outreach, Marketing, and Referral (“Outreach”): 30 points Resident Access to Onsite and Offsite Programs, Services, and Resources (“Access”): 30 points. With regard to Need, the 2019 Rental Market Study prepared for Florida Housing by the Shimberg Center for Housing Studies at the University of Florida determined that 14.2 percent of Florida’s farm workers are employed in Hillsborough County and 2.55 percent are employed in Lee County. Pueblo Bonito noted in its application that its development is only three miles from the Collier County line, and 5.63 percent of the state’s farm workers are employed in Collier County. La Estancia did not reference Manatee County in its application but noted in its request for a formal administrative hearing that its development is a similar distance from Manatee County, and 6.88 percent of the state’s farm workers are employed there. The Shimberg study also calculated need for farm worker housing type by county with 3,813 multifamily units needed in Hillsborough County, 741 multifamily units needed in Lee County, 1,546 multifamily units needed in Collier County, and 2,337 multifamily units needed in Manatee County. For some RFAs, Florida Housing imposes additional conditions on applications for developments located in Limited Development Areas (“LDAs”). The main purpose of an LDA is to protect Florida Housing’s funded developments in a particular area. An LDA is generally an area that Florida Housing has placed a boundary around that limits different types of new development. Florida Housing annually publishes an LDA Chart on its website listing areas or counties that may apply in the RFA cycle for the coming year. The mere existence of an LDA does not prohibit development within the LDA. This is especially true for rehabilitation projects like those proposed in the instant case. An RFA must specifically reference the LDA in order for the LDA to apply. The first draft of the 2020 LDA Chart was not published by Florida Housing until May 29, 2020, and thus the modified RFA issued on April 24, 2020, included no reference to the LDA Chart. Nor did the RFA include any specific provisions regarding LDAs. The first draft of the 2020 LDA Chart and each subsequent draft or amendment included Lee County for farm worker housing. Florida Housing indicated that the basis for Lee County’s LDA designation was a downward trend in occupancy rates. The occupancy rate for the housing stock in Lee County for the period of August 2019 through January 2020 was 91.67 percent as compared to 95.83 percent for the period of September 2019 through February 2020. Based on this trend, Lee County was proposed as an LDA for the 2020/2021 Florida Housing RFA funding cycle, which became effective July 10, 2020. The following table reflects how the review committee awarded points to the two applicants: Pueblo Bonito La Estancia Principal Disclosure Form (5) 5 5 “Need” (15) 12 12 “Experience” (20) 16 17 “Outreach” (30) 27 27 “Access” (30) 25 24 Total (100) 85 85 In the event of a tie, Florida Housing designed the RFA and the associated rules to incorporate a series of “tie-breakers.” The tiebreakers, in the order of applicability, were: By points received for the Need criterion, with more points preferred. Both applicants received 12 points for need. By SAIL Request Amount Per Unit, with lower SAIL funds per unit preferred. Both applicants requested $50,000 in SAIL funds per unit. By Total SAIL Request Amount as a percentage of Total Development Cost (“TDC”), with applicants whose SAIL request amount is 90 percent or less of TDC preferred. Both applicants’ Total SAIL Request Amount was 90 percent or less of their respective TDCs. By a Florida Job Creation Preference. Both applicants satisfied this preference. By lottery numbers randomly assigned to the applications when they were submitted to Florida Housing. Pueblo Bonito had lottery number 1, and La Estancia had lottery number 2. Nancy Muller was the Review Committee member assigned to review and score the “Need” narrative section of the Applications responding to the RFA. Ms. Muller is currently a Policy Specialist with Florida Housing. Prior to her current position, Ms. Muller was, for many years, the Director of Policy and Special Programs. In reviewing and scoring the applications submitted to Florida Housing in the instant case, Ms. Muller indicated that she first read the narrative question of the RFA and broke the question down into four separate component parts. The components included: (a) current and future need for farm workers over the next 10 to 15 years; (b) location and proximity of farms and other types of farm work that typically use farm worker labor; (c) information concerning the types of crops, seasons, etc. and the demand for specific farm worker housing; and (d) whether waivers have been requested or granted for either the proposed Development or Developments in the area. Next, Ms. Muller reviewed each application against those component parts and ultimately awarded La Estancia and Pueblo Bonito 12 points each for their respective response to the need section. Marisa Button, Florida Housing’s corporate representative, testified that just because the documented need for farm worker housing is higher in Hillsborough County than it is in Lee County does not mean that La Estancia should have received a higher score in the narrative section than Pueblo Bonito because the RFA “sets forth a much more nuanced request for the description of the current and future needs in the area for the proposed development. So it’s not limited to just a flat-out look at the county under the Shimberg study. If [that] were the case, we wouldn’t need to have a narrative scoring component of the RFA.” Ms. Muller and Ms. Button persuasively testified that numeric need was just one of the components an applicant needed to address in responding to the needs question. In fact, Ms. Muller indicated she recognized the greater numeric need for farm worker housing in Hillsborough County, and the greater need factored into her consideration of that particular component. However, Ms. Muller pointed out that because both proposed projects were rehabilitation of existing units, neither was actually addressing nor reducing the numeric need for new units. Ms. Muller acknowledged that La Estancia’s response at this component of the need analysis was “stronger” because of the greater need. Nevertheless, Ms. Muller indicated that while La Estancia demonstrated a greater numeric need, Pueblo Bonito’s response was “stronger” in other areas of the overall need response. Specifically, Pueblo Bonito provided a stronger response as to the location and proximity of farms and other types of farm work that use farm worker labor. Ms. Muller considered and evaluated the strengths and weaknesses of each response and no one component was weighted greater than any other component. Based on the scoring and tie-breakers, the review committee recommended Pueblo Bonito for funding. However, the Board’s deliberations were not to be limited to the review committee’s recommendation or information provided by the review committee. With regard to the Board’s funding selection, the RFA stated that: [t]he Board may use the Applications, the Committee’s scoring, any other information or recommendation provided by the Committee or staff, and any other information the Board deems relevant in its selection of Applicants to whom to award funding. The Board met on July 17, 2020, to consider the review committee’s recommendation and preliminarily selected Pueblo Bonito for funding, subject to satisfactory completion of the credit underwriting process.3 Florida 3 The RFA also employed a “Funding Test” to be used in the selection of applications for funding. The “Funding Test” required that the amount of unawarded SAIL funding must be enough to fully fund that applicant’s SAIL request amount. After the selection of Pueblo Bonito for funding, there was only $1,131,050 in SAIL funding remaining, and that was not enough to fund La Estancia’s $4,200,000 SAIL request. Housing staff did not inform the Board that Lee County had been designated as an LDA for farm worker housing on the 2020 LDA Chart. Also, there is no evidence that any Board member knew of Lee County’s LDA status or of declining farm worker housing occupancy when they voted to select Pueblo Bonito for funding. La Estancia could not have presented the information regarding Lee County’s LDA status to the Board. The RFA contains a “noninterference” clause prohibiting an applicant or its representative from contacting Board members or Florida Housing’s staff “concerning their own or any other Applicant’s Application” during the period beginning with the application deadline and continuing until the Board “renders a final decision on the RFA.” If an applicant makes such contact in an attempt to influence the selection process, then that applicant’s application is disqualified. As a result, La Estancia was unable to correct the review committee’s omission of information regarding declining farm worker housing occupancy levels in Lee County. Ms. Button testified that it was Florida Housing’s practice not to apply new standards or requirements that changed after the application deadline when scoring applications. She stated that Florida Housing scores “based on the terms of the RFA and we wouldn’t retroactively apply something to those applications after they’ve been submitted.” She specifically testified that if a county is designated as an LDA after the application deadline, Florida Housing would not apply that designation to the application. She also testified that one of the reasons for not considering new requirements after the application deadline is that applicants would not be allowed to amend their applications to address these new requirements. Even if the July 10 LDA designation had applied to this RFA, there is no evidence that it would have changed Florida Housing’s scoring decision. The primary purpose for the LDA designation is to discourage new construction that could harm existing developments. In this case, both applicants are proposing to rehabilitate existing developments, and the evidence shows that Florida Housing would not prohibit the funding of a rehabilitation project even if it were in an LDA. Florida Housing has funded the rehabilitation of farm worker developments located in LDAs since 2013 or 2014. In RFA 2017-104, the only previous farm worker RFA in evidence, the LDA designation did not even apply to rehabilitation projects that were in Florida Housing’s portfolio. Ms. Muller testified that because the two applicants in this case both involved rehabilitation of developments in Florida Housing’s portfolio, the LDA designation would have been “moot,” unless the physical occupancy rates were dire, which they were not. She also testified that “preservation of existing developments is of much less, if any, importance related to LDA.” Ms. Button testified that she did not specifically inform the Board of the LDA designation “because it’s not relevant to the terms for which the applications were scored for this RFA, it was not a part of the RFA terms, and the applicants did not, you know, apply with that designation put in place. It’s for a future prospective funding cycle and it was not effective until after the application due date.” The greater weight of the evidence indicates that Florida Housing’s review and scoring of the applications responding to the RFA were not clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a Final Order dismissing La Estancia, Ltd.’s formal written protest and awarding funding to Partnership in Housing, Inc. DONE AND ENTERED this 1st day of October, 2020, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL 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 1st day of October, 2020. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Michael P. Donaldson, Esquire Carlton Fields Suite 500 215 South Monroe Street Tallahassee, Florida 32302 (eServed) Christopher Dale McGuire, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed)
The Issue The issue in this case is whether a portion of Florida Administrative Code Rule 67-48.0072 is an invalid exercise of delegated legislative authority.
Findings Of Fact The Petitioner is a limited partnership and developer of affordable housing in Florida. The Petitioner is seeking to construct a 116-unit affordable housing family apartment complex ("Elmwood Terrace") in Fort Myers, Lee County, Florida. The Petitioner has standing to initiate and participate in this proceeding. The Respondent is a public corporation organized under Chapter 420, Florida Statutes (2010), to administer state programs that provide financial support to developers seeking to construct affordable housing. Such support is provided through a variety of mechanisms, including the use of federal tax credits. The federal tax credit program was created in 1986 to promote the construction and operation of privately-developed affordable housing. The tax credits relevant to this proceeding provide a dollar-for-dollar credit against federal tax liabilities for a period of ten years. The Respondent is the designated Florida agency responsible for distribution of the federal tax credits. The tax credits are awarded pursuant to a "Qualified Allocation Plan" (QAP) that must be annually approved by the Governor and adopted as an administrative rule by the Respondent. As a matter of course, developers receiving the federal tax credits sell them through syndicators for discounted cash. The sale of the tax credits generates debt-free cash equity for developers. Developers seeking financial support to build affordable housing units submit applications to the Respondent during an annual competitive process known as the "Universal Cycle." Every three years, the Respondent commissions a study (the "Shimberg Report"), which measures, within each Florida county, the number of "cost-burden" renters earning 60 percent or less of an area's median income (AMI) who pay more than 40 percent of their income in rent. The AMI is determined by the federal government. The cost-burden households are further classified into four groups: families, the elderly, farm workers, and commercial fishermen. The Shimberg Report also assesses needs related to homeless people in the state. Developers seeking to obtain affordable housing financing are required to set aside a portion of the proposed units for income-limited residents. Access to affordable housing units is generally targeted towards persons receiving no more than 60 percent of the AMI. The Universal Cycle process allows the Respondent to target specific housing deficiencies in terms of geographic availability and population demographics and to preserve the stock of existing affordable housing. During the Universal Cycle process, the Respondent identifies areas where additional affordable housing is unnecessary, to discourage additional development in weak markets and to encourage development in those locations where there is a lack of access to affordable housing. The Respondent classifies areas where there is little need for additional affordable housing as "Location A" areas. Each application filed during the Universal Cycle is evaluated, scored, and competitively ranked against other applications filed during the same Universal Cycle. After the Respondent completes the competitive ranking of the applications submitted in the Universal Cycle, the applicants are provided with an opportunity to review and comment on the evaluation and scoring of the proposals. Applicants may also cure defects in their own proposals. After the close of the review and comment period, the Respondent publishes a revised competitive ranking of the proposals. Developers may challenge the second ranking through an administrative hearing. After the second ranking process is final, developers achieving an acceptable score receive preliminary funding commitments and proceed into a "credit underwriting" evaluation process. The credit underwriting process is governed by Florida Administrative Code Rule 67-48.0072. The Respondent selects an independent credit underwriter who reviews each proposal according to requirements set forth by administrative rule (the "Credit Underwriting Rule"). The cost of the credit underwriting review is paid by the developer. The credit underwriter considers all aspects of the proposed development, including financing sources, plans and specifications, cost analysis, zoning verification, site control, environmental reports, construction contracts, and engineering and architectural contracts. The responsibility for the market study is assigned by the credit underwriter to an independent market analyst. The credit underwriter prepares a report for each applicant invited into the process. The reports are submitted to the Respondent's nine-member, statutorily-created Board of Directors (Board). The Board approves or denies each application for financial support. The Petitioner applied for funds for the Elmwood Terrace project during the 2007 Universal Cycle. The Petitioner's application received a perfect score, maximum points, and was allocated tax credits in the amount of $1,498,680. The Petitioner thereafter entered the credit underwriting process. The credit underwriting analysis was performed by Seltzer Management Group (SMG). SMG contracted with a market analyst, Vogt, Williams & Bowen Research, Inc. (VWB), to prepare the required market study. The affordable units at Elmwood Terrace were initially intended for persons receiving incomes no more than 60 percent of the AMI. The VWB research indicated that the Elmwood Terrace project would adversely affect the existing affordable housing developments, if the Elmwood Terrace units were available to the 60 percent AMI population. The existing affordable housing developments, also serving the 60 percent AMI population, included two developments that had participated in the Respondent's "Guarantee Fund" program, addressed elsewhere herein. VWB determined that the impact of the Elmwood Terrace project on the existing developments could be ameliorated were some of the Elmwood Terrace units targeted during "lease-up" to persons at income levels of not more than 50 percent of the AMI. The lease-up period is the time required for a new development to reach anticipated occupancy levels. The issue was the subject of discussions between the Petitioner, VWB, and SMG. To resolve the anticipated negative impact on the existing affordable housing developments, the Petitioner agreed to target the 50 percent AMI population. In September 2008, the credit underwriter issued his report and recommended that the Petitioner receive the previously-allocated tax credits. On September 22, 2008, the Respondent's Board accepted the credit underwriting report and followed the recommendation. In the fall of 2008, after the Petitioner received the tax credits, the nation's economic environment deteriorated considerably. As a result, the syndicator with whom the Petitioner had been working to sell the tax credits advised that the sale would not occur. The Petitioner was unable to locate an alternate purchaser for the tax credits. The Petitioner considered altering the target population of the project in an attempt to attract a buyer for the tax credits, and there were discussions with the Respondent about the option, but there was no credible evidence presented that such an alteration would have resulted in the sale of the Petitioner's tax credits. Lacking a buyer for the tax credits, the Petitioner was unable to convert the credits to cash, and they were of little value in providing funds for the project. The Petitioner was not alone in its predicament, and many other developers who received tax credits in the 2007 and 2008 Universal Cycles found themselves unable to generate cash through the sale of their tax credits. In early 2009, Congress adopted the American Recovery and Reinvestment Act of 2009 (PL 111-5), referred to herein as ARRA, which incorporated a broad range of economic stimulus activities. Included within the ARRA was the "Tax Credit Exchange Program" that provided for the return by the appropriate state agency of a portion of the unused tax credits in exchange for a cash distribution of 85 percent of the tax credit value. The State of Florida received $578,701,964 through the Tax Credit Exchange Program. The ARRA also provided additional funds to state housing finance agencies through a "Tax Credit Assistance Program" intended to "resume funding of affordable housing projects across the nation while stimulating job creation in the hard-hat construction industry." On July 31, 2009, the Respondent issued a Request for Proposals (RFP 2009-04) to facilitate the distribution of the ARRA funds. The Respondent issued the RFP because the 2009 QAP specifically required the Respondent to allocate the relevant federal funds by means of a "competitive request for proposal or competitive application process as approved by the board." The 2009 QAP was adopted as part of the 2009 Universal Cycle rules. Projects selected for funding through the RFP would be evaluated through the routine credit underwriting process. Participation in the RFP process was limited to developers who held an "active award" of tax credits as of February 17, 2009, and who were unable to close on the sale of the credits. The RFP included restrictions against proposals for development within areas designated as "Location A." Although the location of the Elmwood Terrace project had not been within an area designated as "Location A" during the 2007 Universal Cycle process, the Respondent had subsequently designated the area as "Location A" by the time of the 2009 Universal Cycle. The RFP also established occupancy standards for projects funded under the RFP that exceeded the standards established in the Universal Cycle instructions and an evaluation process separate from the Universal Cycle requirements. Although the restrictions in the RFP would have automatically precluded the Petitioner from being awarded funds, the Petitioner submitted a response to the RFP and then filed a successful challenge to the RFP specifications (DOAH Case No. 09-4682BID). In a Recommended Order issued on November 12, 2009, the Administrative law Judge presiding over the RFP challenge determined that certain provisions of the RFP, including the automatic rejection of Location A projects, the increased occupancy standards, and the RFP evaluation criteria, were invalid. The Respondent adopted the Recommended Order by a Final Order issued on December 4, 2009, and invited the Petitioner into the credit underwriting process by a letter dated December 9, 2009. The credit underwriter assigned to analyze the Petitioner's project was SMG, the same credit underwriter that performed the original analysis of the Petitioner's project during the 2007 Universal Cycle. SMG retained Meridian Appraisal Group, Inc. (Meridian), to prepare the required market study. The Respondent was not consulted regarding the SMG decision to retain Meridian for the market analysis. The decision to retain Meridian for the market analysis was entirely that of SMG. The Respondent did not direct SMG or Meridian in any manner regarding the assessment or evaluation of any negative impact of the proposed project on existing affordable housing developments. Meridian completed the market study and forwarded it to SMG on January 26, 2010. The Meridian market analysis included a review of the relevant data as well as consideration of the actual economic conditions experienced in Lee County, Florida, including the extremely poor performance of the existing housing stock, as well as significant job losses and considerable unemployment. The Meridian market analysis determined that the Elmwood Terrace development would have a negative impact on two existing affordable housing apartment developments that were underwritten by the Respondent through a Guarantee Fund created at Section 420.5092, Florida Statutes, by the Florida Legislature in 1992. The existing Guarantee Fund properties referenced in the SMG recommendation are "Bernwood Trace" and "Westwood," both family-oriented apartment developments within five miles of the Elmwood Terrace location. The Guarantee Fund essentially obligates the Respondent to satisfy mortgage debt with the proceeds of Florida's documentary stamp taxes, if an affordable housing development is unable to generate sufficient revenue to service the debt. Because the Guarantee Fund program essentially serves to underwrite the repayment of mortgage debt for a "guaranteed" affordable housing development, the program increases the availability, and lowers the cost, of credit for developers. The Guarantee Fund program has participated in the financing of more than 100 projects, most of which closed between 1999 and 2002. Since 2005, the Respondent has not approved any additional Guarantee Fund participation in any affordable housing developments. The Respondent's total risk exposure through the Guarantee Fund is approximately 750 million dollars. Prior to October 2008, no claims were made against the Guarantee Fund. Since November 2008, there have been eight claims filed against the Guarantee Fund. Affordable housing financing includes restrictions that mandate the inclusion of a specific number of affordable housing units. Such restrictions are eliminated through foreclosure proceedings, and, accordingly, access to affordable housing units can be reduced if a development fails. Presuming that the eight claims pending against the Guarantee Fund eventually proceeded through foreclosure, as many as 2,300 residential units could be deducted from the stock of affordable housing. When there is a claim on the Guarantee Fund, the Respondent has to assume payment of the mortgage debt. The claims are paid from the Guarantee Fund capital, which is detrimental to the Respondent's risk-to-capital ratio. The risk-to-capital ratio is presently four to one. The maximum risk-to-capital ratio acceptable to rating agencies is five to one. The eight claims against the Guarantee Fund have ranged between ten and 18 million dollars each. The Respondent's bond rating has declined because of the eight claims. A continued decline in the Respondent's bond rating could result in documentary stamp tax receipts being used for payment of Guarantee Fund claims and directed away from the Respondent's programs that are intended to support the creation of affordable housing. In an effort to prevent additional claims against the Guarantee Fund, the Respondent has created the "Subordinate Mortgage Initiative" to provide assistance in the form of two- year loans to troubled Guarantee Fund properties. When preparing the 2010 market study, Meridian did not review the VWB market analysis performed as part of the 2007 application. Although the Petitioner has asserted that Meridian should have reviewed the 2007 VWB analysis, there is no evidence that Meridian's decision to conduct an independent market study without reference to the prior market review was inappropriate. On February 8, 2010, SMG issued a recommendation that the Petitioner's funding request be denied "because of the proposed development's potential financial impacts on developments in the area previously funded by Florida Housing and an anticipated negative impact to the two Guarantee Fund properties located within five miles of the proposed development." There is no evidence that the Meridian analysis was inadequate or improperly completed. There is no evidence that the SMG's reliance on the Meridian analysis was inappropriate. For purposes of this Order, the Meridian analysis and the SMG credit underwriting report have been accepted. Elmwood Terrace, a newer development with newer amenities, would compete for residents with the Bernwood Trace and Westwood developments. The financing for Bernwood Trace and Westwood was premised on projections that the affordable housing units would be leased to the 60 percent AMI population; however, the developments have been unable to maintain full occupancy levels, even though a number of units in the two properties are leased at reduced rates based on 50 percent AMI income levels. A rent reduction implemented by an existing development, whether based on economic conditions or resulting from competition, constitutes a negative impact on the development. There is no credible evidence that the occupancy rates are attributable to any difficulty in management of the two developments. It is reasonable to conclude that the leasing issues are related to economic conditions present in Lee County, Florida. In January 2010, VWB conducted an alternative market analysis. The VWB analysis was not provided to SMG or to the Respondent at any time during the credit underwriting process. Based on the 2010 VWB analysis, the Petitioner asserted that economic conditions in Lee County, Florida, have improved since the first credit underwriting report was completed in 2008 and that the improvement is expected to continue. There is no noteworthy evidence that economic conditions have improved or will significantly improve in the Lee County, Florida, market in the predictable future, and the VWB analysis is rejected. The Petitioner offered to mitigate any negative impact on the Guarantee Fund properties by committing affordable units to 50 percent AMI income levels. Given the existing economic and rental market conditions in Lee County, Florida, the evidence fails to establish that the offer would actually alleviate the negative impact on the affected Guarantee Fund developments. The 2010 VWB analysis states that there is substantial unmet demand for housing at 50 percent AMI and that there will be no impact on the Guarantee Fund units if the Elmwood Terrace units were set aside for such individuals. There is no credible evidence that there is a substantial and relevant unmet affordable housing demand in Lee County, Florida. The VWB analysis is rejected. Following the completion of each annual Universal Cycle process, the Respondent actively solicits feedback from developers and the public and then amends the Universal Cycle requirements to address the issues raised, as well as to reflect existing affordable housing needs and general concerns of the Board. The amendments are applicable for the following Universal Cycle. In 2009, the Respondent amended subsection (10) of the Credit Underwriting Rule as part of the annual revisions to the Universal Cycle process. The relevant amendment (referred to by the parties as the "Impact Rule") added this directive to the credit underwriter: The Credit Underwriter must review and determine whether there will be a negative impact to Guarantee Fund Developments within the primary market area or five miles of the proposed development, whichever is greater. The amendment was prompted by the Respondent's experience in the fall of 2008 when considering two separate applications for affordable housing financing. The potential negative impact of a proposed development on an existing Guarantee Fund property was central to the Board's consideration of one application, and the Board ultimately denied the application. In the second case, the Board granted the application, despite the potential negative impact on a competing development that was not underwritten by the Guarantee Fund. The intent of the language was to advise developers that the existence of Guarantee Fund properties within the competitive market area would be part of the credit underwriting evaluation and the Board's consideration. Notwithstanding the language added to the rule, the credit underwriter is charged with reviewing the need for additional affordable housing. Even in absence of the added language, consideration of any negative impact to competing developments based on inadequate need for additional affordable housing would be appropriate. In rendering the 2010 credit underwriting report on Elmwood Terrace, the credit underwriter complied with the directive. Prior to determining that the Petitioner's funding application should be denied, the Respondent's Board was clearly aware of the Petitioner's application, the credit underwriting report and market analysis, and the economic conditions in Lee County, Florida. There is no credible evidence of any need for additional affordable housing in Lee County, Florida. There is no credible evidence that the Lee County, Florida, market can sustain the addition of the units proposed by the Petitioner without adversely affecting the financial feasibility of the existing Guarantee Fund developments. The Board was aware that the Elmwood Terrace development could attract residents from the nearby Guarantee Fund properties and that local economic conditions threatened the financial viability of the properties. Given current economic conditions, approval of the application at issue in this proceeding would reasonably be expected to result in a negative impact to existing affordable housing developments. The protection of Guarantee Fund developments is necessary to safeguard the resources used to support the creation and availability of affordable housing in the state.
The Issue The issue in this bid protest matter is whether Respondent, Florida Housing Finance Corporation's, intended award of funding under Request for Applications 2020-203 was contrary to its governing statutes, rules, or the solicitation specifications.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to provide and promote public welfare by administering the governmental function of financing affordable housing in the state of Florida. For purposes of this administrative proceeding, Florida Housing is considered an agency of the state of Florida. Arthur Mays is a properly registered business entity in Florida and engaged in the business of providing affordable housing. Arthur Mays 2 On February 15, 2021, Florida Housing referred two other protests to RFA 2020-203 to DOAH, including DOAH Case Nos. 21-0611 and 21-0612. Florida Housing moved to consolidate all cases pursuant to Florida Administrative Code Rule 28-106.108, which was granted. As part of the Order of Consolidation, MHP, who was Petitioner in Case No. 21-0612, was joined as a Respondent in Case No. 21-0610. MHP subsequently moved to dismiss its separate, independent action in Case No. 21-0612, and continue as a party in Case No. 21-0610. Thereafter, Petitioner in Case No. 21-0611 (Hibiscus Grove, LP) voluntarily moved to dismiss its case, and the motion was granted. submitted an application to RFA 2020-203 seeking funding to help finance its housing redevelopment project in Miami-Dade County known as Arthur Mays Senior Villas. Arthur Mays' application was deemed eligible for, but was not selected for an award of, housing credits under RFA 2020-203. Florida Housing has been designated as the housing credit agency for the state of Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code. As such, Florida Housing is authorized to establish procedures to distribute low-income housing tax credits and to exercise all powers necessary to administer the allocation of those credits. § 420.5099, Fla. Stat. Florida Housing's low-income housing tax credit program (commonly referred to as "housing credits" or "tax credits") was enacted to incentivize the private market to invest in affordable rental housing. The affordable housing industry relies heavily on public funding, subsidies, and tax credits to support projects that may not be financially sustainable in light of the sub- market rents they charge. Because tax credits allow developers to reduce the amount necessary to fund a housing project, they can (and must) offer the tax credit property at lower, more affordable rents. As background, Florida Housing uses a competitive solicitation process to award low-income housing credits. Florida Housing initiates the solicitation process by issuing a request for applications ("RFA"). §§ 420.507(48) and 420.5093, Fla. Stat.; and Fla. Admin. Code Chapters 67- 48 and 67-60. The RFA competitive solicitation process begins when Florida Housing requests its Board of Directors (the "Board") to approve Florida Housing's plan for allocating resources through various RFAs. If the Board approves the plan, Florida Housing begins work on each individual RFA. The RFA at issue in this matter is RFA 2020-203, entitled "Housing Credit Financing for Affordable Housing Developments Located in Miami- Dade County." The purpose of RFA 2020-203 is to distribute funding to create affordable housing developments in Miami-Dade County, Florida. Through RFA 2020-203, Florida Housing intends to provide an estimated $7,420,440.00 of housing tax financing. Florida Housing's goal under RFA 2020-203 is to fund developments that qualified for the demographic commitment of Family, Elderly, and Urban Center Designation, selecting one Applicant per category. Florida Housing issued RFA 2020-203 on August 26, 2020.3 The RFA set forth the information each Applicant was required to provide. This information included a number of submission requirements, as well as a general description of the type of project that would be considered for funding. Applications were due to Florida Housing by November 17, 2020. Arthur Mays and MHP both timely applied for funding. Florida Housing appointed a Review Committee from amongst its staff to evaluate and score the applications. Florida Housing received 50 applications for housing credits under RFA 2020-203. The Review Committee reviewed, deemed eligible or ineligible, scored, and ranked applications pursuant to the terms of RFA 2020-203, as well as Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations.4 The Review Committee found 46 applications eligible for funding. Thereafter, through the ranking and selection process outlined in RFA 2020- 203, the Review Committee recommended three applications to the Board for funding for the Family, Elderly, and Urban Center Designation categories. On January 22, 2021, the Board formally approved the Review Committee recommendations. As part of its determinations, the Board selected MHP's development known as Southpointe Vista for the Urban 3 Florida Housing subsequently modified RFA 2020-203 on September 11, October 12, and November 9, 2020. 4 No protests were made to the specifications or terms of RFA 2020-203. Center Designation funding. The Board awarded $2,882,000 in tax credits to MHP to help finance Southpointe Vista. Arthur Mays protests the Board's selection of MHP's development instead of its own. Arthur Mays, the second ranked Applicant for the Urban Center Designation, challenges Florida Housing's determination of the eligibility of, and award to, MHP. If Arthur Mays successfully demonstrates that Florida Housing erred in accepting, then scoring, MHP's application, or the evidence demonstrates that MHP's application was ineligible or nonresponsive, then Arthur Mays will be entitled to an award of housing credits instead of MHP.5 Lewis Swezy testified on behalf of Arthur Mays. Mr. Swezy is a developer in South Florida and has vast experience developing major real estate developments in Miami-Dade County. Mr. Swezy also represented that he has significant experience with housing credit procurements having submitted well over 100 applications in response to Florida Housing RFAs. Mr. Swezy stated that Florida Housing has awarded him tax credits on approximately 20 occasions. Mr. Swezy raised two objections to MHP's application. Mr. Swezy argued that these two alleged deficiencies render MHP's application ineligible for funding. Therefore, Florida Housing should have disqualified MHP from an award of housing credits under RFA 2020-203. One of MHP's Principal Entities is not Registered to Transact Business in Florida as of the Application Deadline: First, Arthur Mays claims that information MHP included on its Principals of the Applicant and Developer(s) Disclosures Form causes MHP's application to be ineligible for consideration for housing credits. Arthur Mays specifically complains that one of the Second Level Principals that MHP identifies on its Principal Disclosures for the Applicant form (the "Principal 5 No party alleged that Arthur Mays' application failed to satisfy all eligibility requirements or was otherwise ineligible for funding under RFA 2020-203. Disclosures Form") is a foreign entity not authorized to do business in Florida. Arthur Mays argues that Florida law prohibits a corporate entity who has not obtained a certificate of authority from the Florida Department of State to transact business in Florida from serving as a principal of an Applicant for housing credits. Consequently, Florida Housing acted contrary to Florida statutes by considering MHP's application for housing credits under RFA 2020-203. To set the stage, RFA 2020-203 requires an Applicant for housing credits to produce evidence that it is legally formed in the State of Florida. Specifically, RFA 2020-203 Section Four, A.3.a(2), directs that: The Applicant must be a legally formed entity [i.e., limited partnership, limited liability company, etc.] qualified to do business in the state of Florida as of the Application Deadline. Include, as Attachment 2 to Exhibit A, evidence from the Florida Department of State, Division of Corporations, that the Applicant satisfies the foregoing requirements. Such evidence may be in the form of a certificate of status or other reasonably reliable information or documentation issued, published or made available by the Florida Department of State, Division of Corporations. Thereafter, RFA 2020-203 Section Four, A.3.c, entitled "Principals Disclosure for the Applicant and for each Developer," provides: (1) Eligibility Requirements To meet the submission requirements, upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019) ("Principals Disclosure Form") as outlined in Section Three above. * * * To meet eligibility requirements, the Principals Disclosure Form must identify, pursuant to Subsections 67-48.002(94), 67-48.0075(8) and 67- 48.0075(9), F.A.C., the Principals of the Applicant and Developer(s) as of the Application Deadline. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. For Housing Credits, the investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company must be identified on the Principal Disclosure Form. Rule 67-48.0075(8) further instructs that: Unless otherwise stated in a competitive solicitation, disclosure of the Principals of the Applicant must comply with the following: The Applicant must disclose all of the Principals of the Applicant (first principal disclosure level). * * * The Applicant must disclose all of the Principals of all the entities identified in paragraph (a) above (second principal disclosure level); The Applicant must disclose all of the Principals of all of the entities identified in paragraph (b) above (third principal disclosure level). Unless the entity is a trust, all of the Principals must be natural persons; With its application, MHP submitted a Principals Disclosure Form per RFA 2020-203 Section Four, A.3.c. In the Principal Disclosures for the Applicant portion, in accordance with rule 67-48.0075(8), MHP disclosed three levels of principals. In the First Principal Disclosure Level, MHP listed "MHP FL I Manager, LLC" as both a "Manager" and "Non-Investor Member" of MHP. On the Second Principal Disclosure Level, MHP identified the principals associated with MHP FL I Manager, LLC, to include Archipelago Housing, LLC ("Archipelago"), W. Patrick McDowell 2001 Trust, and Shear Holdings, LLC. On the Third Principal Disclosure Level, MHP named the "natural person" principals of Archipelago as Kenneth P. Lee and Michael C. Lee. Arthur Mays, through Mr. Swezy, argues that Florida law requires all principals, i.e., Archipelago, to be legally formed entities authorized to do business in the State of Florida. At the final hearing, Mr. Swezy represented that Archipelago is legally registered in the State of Delaware. However, as of the application deadline for RFP 2020-203, Archipelago did not have a certificate of authority from the Florida Department of State to operate as a foreign limited liability company in Florida. Consequently, Florida Housing should have disqualified and rejected MHP's application. As legal authority for its position, Arthur Mays asserts that the provisions of chapter 605, Florida Statutes, apply to this procurement. Section 605.0902(1) states: A foreign limited liability company may not transact business in this state until it obtains a certificate of authority from the [Department of State]. From a philosophical standpoint, Mr. Swezy urged that obtaining authority to transact business in Florida is more than a mere ministerial act. A foreign entity that secures the appropriate certification from the Department of State must disclose the identities of all of its directors and officers to the State of Florida. In addition, Mr. Swezy explained that Florida Housing maintains a "bad actors" list of those persons who are disqualified from an award of housing credits, such as: individuals in arrears to Florida Housing, individuals with certain felony convictions, and members of the Florida Housing Board, among others. Because Archipelago did not register with the Department of State, however, Florida Housing has no effective avenue to confirm whether Archipelago's management team (and hence MHP's Third Level Principals) is eligible for an award of housing credits. Consequently, Florida Housing cannot know for certain whether MHP's Principal Disclosures Form is accurate. Florida Housing is also ignorant regarding what persons are actually making business decisions for MHP and/or its principals. Mr. Swezy further asserted that, because MHP was not required to ensure that all its principals (i.e., Archipelago) obtained the necessary certification to transact business in Florida, MHP gained a competitive advantage over other Applicants who fully disclosed all their management team members. MHP garnered an unfair advantage because Florida Housing could more easily verify corporate information on other Applicants' principals who were registered with the State of Florida. MHP's Site Control Documentation Contains a Material Misrepresentation: Second, Mr. Swezy questioned whether MHP's site control documentation complies with RFA 2020-203 requirements. Specifically, Mr. Swezy asserted that MHP made a "material misrepresentation" in its application by artificially increasing the cost of the land it purchased for its development. This maneuver allegedly allowed MHP to request a higher amount of housing credits. Therefore, Mr. Swezy insisted that MHP's improper distortion of the price of its property should render its application ineligible for tax credit funding. See § 420.518(1)(a), Fla. Stat. For the legal authority behind his argument, Mr. Swezy pointed to RFA 2020-203 Section Four, A.7, which required an Applicant to establish control over its development site. Under RFA 2020-203 Section Four, A.7.a, an Applicant demonstrated site control by submitting documentation showing "that it is a party to an eligible contract or lease, or is the owner of the subject property." MHP, to demonstrate evidence of its site control, included in its application an Agreement, dated November 15, 2020, wherein MHP agreed to buy certain real property from McDowell Acquisitions, LLC ("McDowell"), for a purchase price of $7,000,000. As revealed in an "Underlying Contract" dated October 22, 2020, McDowell acquired the property from Cutler Ridge Investment Group, LLC ("Cutler Ridge"), also for the amount of $7,000,000. The property McDowell bought from Cutler Ridge consists of a two- acre parcel of land that was divided into two separate lots. However, the subsequent sale between MHP and McDowell, only involved one of the two lots.6 Consequently, Mr. Swezy decried the fact that MHP agreed to pay $7,000,000 for a piece of property that was worth half that amount one month earlier. Compounding this turn of events, MHP, in its application, reported the "Total Land Cost" of its one-acre development (Southpointe Vista) as $7,000,000. Mr. Swezy argued that the two "eligible contracts" evince that MHP misrepresented the value for the land on which it intends to construct Southpointe Vista ($7,000,000 versus $3,500,000). Furthermore, based on this manipulation of the purchase price, Mr. Swezy asserts that MHP will be unjustly enriched by an additional $300,000 in housing credits annually (or over three million dollars in the aggregate) in excess of what it should receive from Florida Housing had MHP reported the true value of the land on which it will locate its development. Mr. Swezy stated that Arthur Mays computed the alleged housing credit overpayment using what he referred to as the "gap calculation" formula. Mr. Swezy explained that MHP sought $2,882,000 in housing credits, which was the maximum amount available under RFA 2020-203. See RFP 2020-203 Section Four, A.10(1)(a). Mr. Swezy contended that the "gap calculation" formula indicates that if MHP recorded the "true" cost of its 6 Mr. Swezy remarked that the other one-acre lot was attached to another application for RFA 2020-203 from MHP MD Senior I, LLLP ("MHP Senior"), which shares some of the same principals with MHP. MHP Senior submitted an application for a project called Southpointe Senior. (The Southpointe Senior application was not selected for funding by Florida Housing.) MHP Senior also reported the total value of its one-acre piece of property as $7,000,000. property ($3,500,000), then MHP would have been awarded only $2,517,380 in housing credits for Southpointe Vista.7 Based on MHP's material misrepresentation, Mr. Swezy argues that Florida Housing should have deemed MHP's application ineligible for funding under RFA 2020-203. Instead, Florida Housing should have awarded housing credits to Arthur Mays as the next eligible Applicant. Otherwise, Florida Housing will be allowing MHP to receive an undeserved financial windfall. Florida Housing, in support of its intended award to MHP, presented the testimony of Marisa Button. Ms. Button is Florida Housing's Director of Multifamily Allocations. In her job, Ms. Button oversees Florida Housing's RFA process. At the final hearing, Ms. Button testified that Florida Housing appropriately deemed MHP's application for Southpointe Vista eligible for funding. Ms. Button agreed with Mr. Swezy that RFA 2020-203 required the Applicant (MHP) to demonstrate that it is a legally formed entity qualified to do business in the State of Florida. (Which MHP did.8) However, she advised that no language in chapter 420, chapter 67-48, or the RFA explicitly requires the Applicant to establish that its principals were also qualified to do business in Florida. Ms. Button specifically pointed to the language of RFA 2020-203 Section Four, A.3.a(2), which only directs the "Applicant" (and the "Developer entity") to be "a legally formed entity … qualified to do business in the state of Florida as of the Application Deadline." See also RFP 2020-203 Section Five, A.1. Conversely, Ms. Button testified that Florida Housing has never enacted or imposed a requirement that principals, other than the Applicant 7 As described in his testimony, the gap calculation determines the "gap need" between the total cost of the housing project and the housing credit financing actually needed to make the housing project feasible. 8 MHP filed to operate as a limited liability company with the Florida Department of State on October 9, 2020. itself, must register to transact business in Florida. The only related provision of RFA 2020-203 that applies to principals required that: [t]he Applicant, the Developer and all Principals are in good standing among all other state agencies and have not been prohibited from applying for funding.[9] Since the information in MHP's application reported that Archipelago was legally formed to operate in the State of Delaware, Ms. Button relayed that Florida Housing was satisfied that MHP met this condition at the time of the application deadline. Although, Ms. Button conceded that Florida Housing did not independently verify the veracity of MHP's Principal Disclosures Form. Instead, Florida Housing accepted MHP's application as valid on its face (as it did for all Applicants). As Mr. Swezy commented, Ms. Button articulated that the purpose behind the Principal Disclosures Form is to allow Florida Housing the means to survey all names associated with an application to ensure that no principal (or Applicant or Developer) is included on Florida Housing's "bad actors" list. Such entities, which would include companies or individuals who owe arrearages to Florida Housing or have taken part in certain criminal activities, are prohibited from participating in a competitive solicitation for housing credits. See Fla. Admin. Code R. 67-48.004(2). Consequently, an Applicant that does not fully disclose or misrepresents its principals may be rendered ineligible for an award through an RFA. Regarding MHP's application, Ms. Button was not aware of any principal identified on MHP's Principal Disclosures Form (particularly Archipelago) who was precluded from participating in RFA 2020-203. To further support her position, Ms. Button relayed that Florida Housing faced a similar situation in the case of Heritage Village Commons, Ltd v. Florida Housing Finance Corporation, FHFC Case No. 2012-013-UC (Fla. FHFC RO May 23, 2012; FO June 8, 2012). In Heritage Village, following an informal hearing under section 120.57(2), Florida Housing ultimately determined that neither the administrative rules (at that time) nor the relevant solicitation specifications required the Developer of an Applicant to be a legally formed entity in the State of Florida. Florida Housing reasoned that, because the governing law did not require the Developer to be a legally formed entity, Florida Housing could not penalize the applicant "for failure to comply with a nonexistent rule." Ms. Button advanced that Heritage Village offers an instructive analysis to apply to the present matter. Ms. Button further commented that Florida Housing believes that Heritage Village creates a precedent that it should follow regarding the legal status of a principal of an RFA Applicant. Regarding the applicability of chapter 605, Ms. Button asserted that chapter 605 does not control Florida Housing's competitive solicitation process. Instead, procurements involving housing credits are governed by the provisions of chapter 420, which do not contain any requirement that an Applicant's principals must be registered to transact business in the state of Florida. Ms. Button maintained that the specific language of section 605.0902(1) does not dictate who may receive housing credits under chapter 420 or chapters 67-48 and 67-60. Neither has Florida Housing incorporated section 605.0902 into the RFA competitive solicitation process. Similarly, Ms. Button stated that the terms of RFA 2020-203 only required MHP as the Applicant, as well as Southpointe Vista's Developer, to be legally formed entities qualified to do business in the state of Florida, not Archipelago, as one of MHP's Second Level Principals. Finally, Ms. Button testified that whether MHP's principals were officially registered to transact business in Florida was not considered during the scoring of RFA 2020-203. Therefore, the fact that Archipelago was 9 See RFA 2020-203, Applicant Certification and Acknowledgement Form ("Certification and Acknowledgement Form"), para. 13. registered in the State of Delaware, not Florida, did not have any impact on Florida Housing's selection of MHP's application for housing credits. Neither did it somehow give MHP's application a competitive advantage. Accordingly, because Florida Housing's governing statutes, administrative rules, and the RFA 2020-203 specifications did not independently require an Applicant's principals to be registered to transact business in the State of Florida, Ms. Button took the position that MHP's application is eligible for funding, despite Archipelago's legal status in Florida as of the application deadline. Therefore, since MHP disclosed the required information regarding its principals in its application, Ms. Button declared that Florida Housing's decision to award housing credits to MHP did not contravene applicable law. Regarding Arthur Mays' claim that MHP's application should be disqualified for misrepresenting the cost of the land MHP intends to use for its housing site, Ms. Button relayed that the property cost of a development's location has no relation to an Applicant's eligibility for housing credits. Therefore, the fact that MHP allegedly represented that its development property cost twice its actual value is not a "material" representation that would affect Florida Housing's award of tax credits. Ms. Button explained that Florida Housing only reviews the land cost during the credit underwriting phase, which occurs after the competitive solicitation process is completed.10 Consequently, the cost for MHP to obtain the Southpointe Vista property had no bearing on the Review Committee's evaluation of its application for tax credits under RFA 2020-203. Expanding on her testimony, Ms. Button initially expressed that the cost of purchasing land is not an "eligible cost" that Florida Housing considers in determining whether an Applicant qualifies for housing credits. In practice, an Applicant is required to submit with their application information regarding its "Total Land Cost" on a Development Cost Pro Forma form (the "Development Cost Form"). See RFA 2020-203 Section Four, A.10.c, and Fla. Admin. Code R. 67-48.0075(3). The Development Cost Form reports an Applicant's funding "sources/uses." In layman's terms, to provide Florida Housing a better understanding of the financial viability of its housing development, the Applicant completes the Development Cost Form to identify its funding "sources," as well as the anticipated expenses (i.e., "uses") of bringing its development to fruition. If an Applicant shows that its "sources" equal or exceed its "uses," then the Development Cost Form demonstrates to Florida Housing that an Applicant's development is financially feasible. MHP, on its Development Costs Form, wrote that its Total Land Cost was $7,000,000 (as attested by Mr. Swezy). MHP included this figure in calculating its Total Development Cost, which MHP anticipated would reach 10 See RFA 2020-203 Section Four, A.7.a, which states that Florida Housing: [W]ill not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation. During scoring the Corporation will rely on the properly executed Site Control Certification form to determine whether an Applicant has met the requirement of this RFA to demonstrate site control. … During credit underwriting, if it is determined that the site control documents do not meet the above requirements, [Florida Housing] may rescind the award. a combined amount of $41,747,241. On the other side of the ledger, MHP reported that its anticipated funding sources equaled $45,704,400. Based on these numbers, Ms. Button relayed that MHP showed that its development carries a funding surplus of $3,957,159. Therefore, MHP demonstrated that its housing development, Southpointe Vista, is financially feasible. (Conversely, if MHP's Development Cost Form revealed a funding shortfall, i.e., that the costs ("uses") to develop Southpointe Vista exceeded the funding "sources," then Florida Housing would have had serious concerns regarding the development's financial health, which would have led to Florida Housing finding MHP ineligible for funding.) Regarding Arthur Mays' allegation that MHP doubled the actual cost of its land from $3,500,000 to $7,000,000, Ms. Button was not alarmed that MHP may have overstated the value of the property on which it intends to locate Southpointe Vista. Because MHP reported a funding surplus, Ms. Button stated that even if the actual cost of the land was half of what MHP reported ($3,500,000), MHP still would have reported a funding surplus for its project. (In fact, the surplus would have been $3,500,000 larger.) Consequently, Ms. Button contended that the fact that MHP may have overvalued the cost of its property on its Development Cost Form did not affect MHP's eligibility for housing credits under the terms of RFA 2020-203. Further, Ms. Button rejected Arthur Mays' charge that by increasing its land cost, MHP was able to improperly request a larger tax credit. Ms. Button relayed that after Florida Housing selects an application for award of housing credits, the Applicant is invited to enter the credit underwriting process. During this stage, Florida Housing underwriters will evaluate the application to ensure that it complies with all RFA eligibility requirements.11 As part of this review, a property appraisal report will typically be ordered to calculate the impact of the land cost on the Applicant's development. The credit underwriters also specifically assess the "gap calculation result" in recommending the actual housing credit allocation. See Fla. Admin. Code R. 67-48.0072(28)(e), (f), and (g) and 67-48.0075(3). Ms. Button reemphasized that the property cost for MHP's development is only considered during the credit underwriting phase, not during the scoring of its application. Ms. Button expressed that based on the results of the credit underwriting review, the total tax credits that MHP requested for Southpointe Vista are not necessarily the amount that it will receive. Ms. Button relayed that if credit underwriting determines that an award of housing credits to MHP would be inappropriate based on the circumstances, or that MHP materially misrepresented information in its application, then Florida Housing would likely reduce, if not completely reject, the award of housing credits for MHP's development. Finally, Ms. Button reiterated that the development property cost that MHP associated with Southpointe Vista had no bearing on the Review 11 Florida Housing's credit underwriting procedures are described in rule 67-48.0072, which provides: 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 … The success of an Applicant in being selected for funding is not an indication that the Applicant will receive a positive recommendation from the Credit Underwriter or that the Development team's experience, past performance or financial capacity is satisfactory. The credit underwriting review shall include a comprehensive analysis of the Applicant, the real estate, the economics of the Development, the ability of the Applicant and the Development team to proceed, the evidence of need for affordable housing in order to determine that the Development meets the program requirements and determine a recommended … Housing Credit allocation amount … , if any. (emphasis added) Committee's evaluation of its application. The Review Committee did not consider land acquisition cost when it scored MHP's application. Therefore, Ms. Button maintained that the fact that MHP listed its Total Land Cost as $7,000,000 did not give MHP a competitive advantage. Neither did the fact that MHP may have overstated its Total Land Cost by $3,500,000 increase its chance of winning the housing credits. Consequently, the numbers MHP listed on its Development Costs Form did not adversely prejudice other Applicants. Neither did they provide MHP a scoring benefit during the competitive solicitation process. Ms. Button asserted that MHP's Total Land Cost did not have any impact on Florida Housing's decision to select MHP's development for award of tax credits under RFA 2020-203. Ms. Button also testified that RFA 2020-203 did not require applicants to provide a property appraisal to substantiate the land cost recorded on the Development Cost Form. She further added that no evidence shows that MHP's agreement to purchase the property from McDowell was an invalid contract, or that $7,000,000 was not a reasonable price for the one-acre lot for Southpointe Vista. Consequently, Ms. Button contended that the fact that MHP may have inflated the cost of its development site to twice its actual value is not a "material" representation that affected Florida Housing's award of tax credits to MHP. Ms. Button's explanation detailing why MHP's application was eligible for consideration for housing credits under RFA 2020-203 is credible and is credited. Ms. Button persuasively testified that the information MHP included in its application legally complied with RFA requirements and allowed Florida Housing to effectively evaluate its request for funding for its housing development. Ms. Button further capably refuted Arthur Mays' allegation that MHP somehow received a competitive advantage during the solicitation process. Accordingly, based on the evidence in the record, Arthur Mays did not demonstrate, by a preponderance of the evidence, that Florida Housing's award of housing credits to MHP was clearly erroneous, contrary to competition, arbitrary, or capricious. Therefore, Arthur Mays did not meet its burden of proving that Florida Housing's intended award of housing credit funding to MHP under RFA 2020-203 was contrary to its governing statutes, rules or policies, or the solicitation specifications.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order dismissing the protest of Arthur Mays. It is further recommended that the Florida Housing Finance Corporation select MHP's application as the recipient of housing credit funding for the Urban Center Designation under RFA 2020-203. DONE AND ENTERED this 26th day of May, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Lawrence E. Sellers, Jr., Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301 Christopher Dale McGuire, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 S J. BRUCE CULPEPPER Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of May, 2021. Tiffany A. Roddenberry, Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301 Jeffrey Stephen Woodburn, Esquire Woodburn & Maine 204 South Monroe Street Suite 201 Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire 215 South Monroe Street Suite, 750 Tallahassee, Florida 32301 Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Jason L. Maine, General Counsel Woodburn & Maine, Attorneys at Law 204 South Monroe St Suite 201 Tallahassee, Florida 32301 Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
The Issue The issue is whether the Petition for Relief was timely filed.
Findings Of Fact In January 2008, Petitioner filed a “Housing Discrimination Complaint” with FCHR and/or the U.S. Department of Housing and Urban Development. The complaint alleged that Respondent discriminated against Petitioner based upon her race (black) and religion (Christian) in its servicing of her home mortgage loan. On or about March 27, 2008, a “Determination” was issued finding no reasonable cause to believe that Respondent committed a discriminatory housing practice against Petitioner. On April 18, 2008, FCHR sent a “Notice of Determination of No Cause” to Petitioner by certified mail No. 7007 1490 0002 5958 0931. Petitioner received the Notice on April 22, 2008, according to the certified mail receipt included in the case file. The Notice advised Petitioner that “FCHR has determined reasonable cause does not exist to believe that a discriminatory housing practice has occurred.” The Notice further advised Petitioner that she could request an administrative hearing, and clearly stated that any such request “must be filed with the FCHR within 30 days of the date of mailing of this Notice.” A “Petition for Relief, in blank” was sent to Petitioner along with the Notice. On May 23, 2008, FCHR received a completed “Petition for Relief” form from Petitioner. The form was signed by Petitioner and dated May 20, 2008. Petitioner stated in her response to the Order to Show Cause that she “never received any paperwork on the above case” and that “the only paperwork that [she] received was on or a about June 9, 2008.”
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that FCHR issue a final order dismissing the Petition for Relief with prejudice. DONE AND ENTERED this 18th day of June, 2008, 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 18th day of June, 2008.
The Issue The issue is whether the Florida Housing Finance Corporation ("Florida Housing") properly rescinded the preliminary funding awarded to RST Fruitland Housing, L.P. ("RST"), pursuant to applicable rules, prior agency practice, and the existing case law.
Findings Of Fact RST is a limited partnership authorized to do business in Florida and is controlled by Roundstone Development, LLC ("Roundstone"). Roundstone is in the business of providing affordable rental housing. In addition to Florida, Roundstone operates in Texas, Arkansas, Mississippi, and South Carolina. Michael Hartman, the consultant for Roundstone, has been involved in the development of over 70 affordable housing developments, including many in Florida. Florida Housing is a public corporation created by Section 420.504, Florida Statutes, to administer the governmental function of financing or refinancing of affordable housing and related facilities in Florida. Florida Housing's statutory authority and mandates appear in Part V of Chapter 420, Florida Statutes. Florida Housing is governed by a Board of Directors consisting of nine individuals appointed by the Governor and confirmed by the Senate. On July 31, 2009, Florida Housing issued RFP 2009-04 (the "RFP") setting forth criteria and qualifications for developers to seek funding for affordable housing projects from funds that Florida received through the American Recovery and Reinvestment Act of 2009, PL 111-5 ("ARRA"). ARRA was enacted in 2009 by Congress as part of federal economic stimulus efforts. RST received notice of the RFP through e-mail notification on July 31, 2009. The RFP required applicants to submit proposals to Florida Housing no later than 2:00 p.m. on August 14, 2009. RST submitted an application and intended to seek financing for its affordable housing project by applying for funding from the sources that are proposed to be allocated through the RFP. Florida Housing's Programs Florida Housing administers numerous programs aimed at assisting developers to build affordable housing. These programs include: the Multi-Family Mortgage Revenue Bond Program ("MMRB") established under Section 420.509, Florida Statutes; the State Apartment Incentive Loan Program ("SAIL") created pursuant to Section 420.5087, Florida Statutes; and the Low Income Housing Tax Credit Program (the "Tax Credit program") established under the authority of Section 420.5093, Florida Statutes. These funding sources are allocated by Florida Housing to finance the construction or substantial rehabilitation of affordable housing. A portion of the units constructed based upon funding from these programs must be set aside for residents earning a certain percentage of area median income ("AMI"). For purposes of these proceedings, the primary program of interest is the Tax Credit program. Tax Credits The Tax Credit program was created in 1986 by the federal government. Tax Credits come in two varieties: competitively awarded nine percent tax credits, and non- competitively awarded four percent tax credits. For the nine percent credits, the federal government annually allocates to each state a specific amount of tax credits using a population- based formula. Tax Credits are a dollar for dollar offset to federal income tax liability over a 10-year period. A developer awarded Tax Credits will often sell the future stream of Tax Credits to a syndicator who in turn sells them to investors seeking to shelter income from federal income taxes. The developer receives cash equity with no debt associated with it. Thus, Tax Credits provide an attractive subsidy and, consequently, are a highly sought after funding source. Florida Housing is the designated agency in Florida to allocate Tax Credits to developers of affordable housing. Every year since 1986, Florida Housing has received an allocation of Tax Credits to be used to fund the construction of affordable housing. Universal Application Florida Housing has historically allocated funds from the MMRB, SAIL, and Tax Credit programs through a single annual application process. Since 2002, Florida Housing has administered the three programs through a combined competitive process known as the "Universal Cycle." The Universal Cycle operates much the same as an annual competitive bidding process in which applicants compete against other applicants to be selected for limited funding. Florida Housing has adopted rules which incorporate by reference the application forms and instructions for the Universal Cycle as well as general policies governing the allocation of funds from the various programs it administers. Typically, Florida Housing amends its Universal Cycle rules, forms, and instructions every year. The typical process used by Florida Housing to review and approve the Universal Cycle applications operates as set forth in Florida Administrative Code Rule 67-48.004, and is summarized as follows: Interested developers submit applications by a specified date. Florida Housing reviews all applications to determine if certain threshold requirements are met. A score is assigned to each application. Applications receive points towards a numerical score, based upon such features as programs for tenants, amenities of the development as a whole and of tenants' units, local government contributions to the specific development, and local government ordinances and planning efforts that support affordable housing in general. Florida Housing has built into its scoring and ranking process a series of "tiebreakers" to bring certainty to the selection process. The tiebreakers are written into the application instructions which, as indicated above, are incorporated by reference into Florida Housing's rules. After the initial review and scoring, a list of all applications, along with their scores, is published by Florida Housing on its website. The applicants are then given a specific period of time to alert Florida Housing of any errors they believe Florida Housing made in its initial review of the applications. An appeal procedure for challenging the scores assigned by Florida Housing is set forth in Florida Administrative Code Rule 67-48.005. Following the completion of the appeal proceedings, Florida Housing publishes final rankings which delineate the applications that are within the "funding range" for the various programs. In other words, the final rankings determine which applications are preliminarily selected for funding. The applicants ranked in the funding range are then invited into a "credit underwriting" process. Credit underwriting review of a development selected for funding is governed by Florida Administrative Code Rule 67-48.0072. In the credit underwriting process, third party financial consultants (selected by Respondent, but paid for by the individual applicants) determine whether the project proposed in the application is financially sound. The independent third party examines every aspect of the proposed development, including the financing sources, plans and specifications, cost analysis, zoning verification, site control, environmental reports, construction contracts, and engineering and architectural contracts. Subsection (10) of Florida Administrative Code Rule 67- 48.0072 expressly requires that an appraisal (as defined by the Uniform Standards of Professional Appraisal Practice), and a market study be ordered by the Credit Underwriter, at the applicant's expense. The Credit Underwriter is required to consider the market study, as well as the development's financial impact on other developments in the area previously funded by Florida Housing, and make a recommendation to approve or disapprove a funding allocation. RST's Application in the 2008 Universal Cycle RST timely submitted an application in the 2008 Universal Cycle seeking an award of Tax Credits and a supplemental loan to construct a 100-unit garden style apartment complex ("Plata Lago") in Fruitland Park, Lake County, Florida. RST complied with all of the requirements of the 2008 Universal Cycle Application and Instructions, and achieved a perfect score for its application. RST also achieved maximum tie-breaker points. As a result, RST was allocated by Florida Housing $1,334,333 in Tax Credits from the Universal Cycle allocation. Based on the final ranking of its application, RST was invited into the credit underwriting process on October 6, 2008. RST timely accepted the invitation and paid the necessary underwriting fees. Credit Underwriting Under the credit underwriting process, a professional credit underwriter is appointed by Florida Housing to review the proposed project that qualified for funding as a result of the Universal Cycle. The credit underwriter reviews and assesses numerous financial, demographic, and market factors concerning the proposed project. The credit underwriter selected by Florida Housing to review the RST application was Seltzer Management Group, Inc. ("Seltzer"). As required by the applicable 2008 Universal Cycle Application requirements and rule, the credit underwriting process required the preparation of a Market Study by an independent appraiser. Seltzer engaged Meridian Appraisal Group ("Meridian") to perform an independent appraisal and market study as required by the RFP. This initial Market Study was issued with the identified purpose defined as follows: Provide a site analysis for the subject property. Provide regional and neighborhood analyses for the subject property. Provide an Apartment Market Overview for the subject market area. Provide an evaluation of market demand within the competitive area for affordable rental apartment products. Identify and evaluate the relevant competitive supply of affordable apartments. Perform an income band analysis for the subject property based on achievable restricted rents. Perform a Capture Rate analysis for the subject property as a restricted property, and estimate an absorption rate. Establish rental estimates for the subject, both as a market rate project and as restricted by the Housing Credit program. Illustrate the difference between our estimate of the market rental rates and restricted rental rates. Estimate the impact of the subject project on the existing rental inventory. Economic Downturn By the fall of 2008, significant changes were taking place in the economic environment and the affordable housing market in particular. Many of the projects that had been awarded funding through Florida Housing allocation process were encountering difficulties and in many instances were unable to close. By the latter part of 2008, it became evident that the market for Tax Credits had precipitously dropped as a result of the changed economic environment. Shortly before RST was to complete the credit underwriting process, the syndicator who had originally expressed its intent to purchase the Tax Credits awarded to RST announced that it would not go forward with the syndication. This withdrawal was a direct result of the nationwide downturn in economic conditions. Many other projects that were awarded Tax Credits during the 2007 and 2008 (and later the 2009) Universal Cycles similarly experienced difficulty in finding syndicators to purchase the awarded Tax Credits and were also unable to proceed to closing. In early 2009, in recognition of the collapse of the housing market and the difficulty in marketing Tax Credits, the federal government, as part of its economic stimulus efforts, established mechanisms to assist in the development of affordable housing and offset some of the economic devastation to developers. ARRA The ARRA enacted by Congress and signed by the President on February 17, 2009, included specific provisions intended to address the collapse of the Tax Credit market. ARRA gives states the ability to return to the federal government previously awarded Tax Credits that had not been utilized. These Tax Credits are exchanged for a cash distribution of 85 cents for each tax credit dollar returned. The money that is awarded to the states for the return Tax Credits (the "Exchange Funds") is to be used by Florida Housing to fund developers who were unable to syndicate their Tax Credits due to the economic downturn. In other words, the Tax Credits that had not been utilized as a result of the declining economic conditions were allowed to be converted into cash from the federal government to be allocated to developers who were ready to proceed with their affordable housing projects but for the inability to syndicate their Tax Credits. ARRA also included a direct allocation of funds to state housing finance agencies under the Tax Credit Assistance Program ("TCAP"). These funds were allocated to the states to "resume funding of affordable rental housing projects across the nation while stimulating job creation in the hard-hat construction industry." TCAP is a separate program included as part of ARRA to provide gap financing for affordable housing projects that have been affected by the economic downturn. The RFP In response to ARRA, on July 31, 2009, Florida Housing issued RFP 2009-04 (the "RFP"), setting forth criteria and qualifications for developers to seek funding for affordable housing projects from money that had been allotted by the federal government as part of economic stimulus efforts. RST received notice of the RFP through e-mail notification on July 31, 2009. The RFP required applicants to submit proposals to Florida Housing by no later than 2:00 p.m. on August 14, 2009. The RFP solicits proposals from applicants with an "Active Award" of Tax Credits who were unable to close and are seeking alternate funding to construct affordable housing utilizing Exchange Funds from the Tax Credit Exchange Program authorized under Section 1602 of ARRA. The RFP provides a general description of the type of projects that will be considered eligible for this alternate funding. The RFP also sets forth eligibility criteria that are a precondition to award of an allocation of Exchange Funds, and also specifies that projects allocated Exchange Funds and also specifies that projects allocated Exchange Funds will be required to meet new credit underwriting standards. Occupancy Standards Section 5B.1b. of the RFP states that a tentative funding award under the RFP will be rescinded "if the submarket of the Proposed Development does not have an average occupancy rate of 92% or greater for the same Demographic population, as determined by a market study ordered by the Credit Underwriter, and analyzed by the Credit Underwriter and Florida Housing staff, as well as approved by the Board." The RFP does not define "submarket." Likewise, there was no definition of "submarket" in the rules which governed the 2008 or 2009 Universal Cycle. The word "submarket" is included in the 2009 Universal Cycle Rule, but it is not defined. RST timely submitted a response to the RFP on August 14, 2009, which sought additional funding for the Plata Lago project. On August 20, 2009, Florida Housing issued a Notice of Awards for RFP #2009-04. Based on the Notice, RST was one of the responders awarded funds subject to successfully completing the underwriting criteria listed in the RFP. Accordingly, RST was once again invited into credit underwriting. By accepting the invitation, RST was required by the credit underwriter to update its Market Study ("2009 Study"). This Second Market Study, which was completed approximately eight months after the 2008 study, was also prepared by Meridian on July 14, 2009. Likewise, Seltzer was the assigned underwriter. On September 9, 2009, Seltzer issued a letter to Florida Housing concerning the Plata Lago project. In essence, Seltzer in the letter considered the 2009 Market Study and concluded that "the submarket average occupancy rate for the subject does not meet the minimum requirement of 92%." On October 23, 2009, Florida Housing's Board of Directors considered Seltzer's letter and a staff recommendation and voted to rescind funding to RST because of the alleged failure to satisfy the 92 percent occupancy requirement. This action effectively stopped the underwriting process. While RST timely filed its petition with the Division, it also intervened in a challenge to the provisions of the RFP. The challenge specifically involved a review of the 92 percent occupancy standard. In that matter, Elmwood Terrace Ltd. P'ship v. Fla. Hous. Fin. Corp., Case No. 09-4682BID, 2009 Fla. Div. Adm. Hear. Lexis 816 (Final Order entered December 7, 2009), the administrative law judge entered a Recommended Order on November 12, 2009, holding that the provision of the RFP which required a 92 percent occupancy rate is contrary to Florida Housing's governing statutes and rules. The administrative law judge concluded that Florida Housing is limited to using the 90 percent occupancy test established at Florida Administrative Code Rule 67-48.0072(10). Florida Housing issued its Final Order in the Elmwood case on December 7, 2009, adopting the administrative law judge's Recommended Order. Based upon the Final Order in Elmwood, Florida Housing has reevaluated the RST Market Study under the provisions of the 2009 Universal Cycle Rule which established a 90 percent occupancy test. Florida Housing has now concluded that RST's Market Study indicates an 87 percent occupancy rate. Accordingly, Florida Housing has not changed its previous position and refuses to allow Petitioner to move forward in the underwriting process. Unstipulated Findings of Fact Two market studies were commissioned by Florida Housing and Seltzer regarding the proposed Plata Lago development, the first in November 2008 and the second in July 2009. Both the First and Second Market Studies were performed by Meridian Appraisal Group and Robert Von, a state- certified general appraiser. While purported to be a new stand-alone study, the Second Market Study is identical in many respects to the First Market Study. However, the First Market Study predated the requirement of the occupancy test in Florida Administrative Code Rule 67-48.0072(10), while the Second Market Study included the 90 percent occupancy test analysis. In each of the two studies, a circle is drawn extending out 10 miles from the proposed location of the Plata Lago development. That circle represents the primary market area ("PMA") which includes Fruitland Park, Lady Lake, and Leesburg. The PMA is where generally two-thirds to three-quarters of the demand for a facility originates. In the Second Market Study, when the occupancy rate of the three existing senior apartment developments within the PMA is considered, the threshold requirement of 90 percent is met. If the PMA alone were considered, Florida Housing would not have rescinded the Tax Credits, and Petitioner would be entitled to move forward with its project. The Second Market Study, performed in 2009, added an additional factor to the analysis. The concept of a Competitive Market Area ("CMA") was introduced. A CMA was not designated in the 2008 Market Study. CMA is neither defined in the 2009 Universal Cycle Rule or RFP 2009-04. The delineation of a CMA was not a requirement of the RFP, nor was it otherwise requested by Florida Housing. CMA is not a term defined in either the development or market analysis industries. The term appears to have been created or borrowed by Florida Housing's designated market analyst based upon his experience as a certified appraiser. Unlike the PMA, the CMA was not mapped or otherwise designated in the Second Market Study. However, both the First and Second Market Studies included information regarding a development known as Lake Point Senior Village ("Lake Point"). Both Plata Lago and Lake Point are affordable housing developments targeted at the elderly demographic category. Lake Point is not in the PMA of the proposed Plata Lago development as PMA is defined in the Second Market Study. The PMA as defined in the Second Market Study is a predetermined geographic area used for purposes of demographic analysis, but not for competitive analysis. A set unmovable circle on a map could lead to skewed or absurd results if the nature and character of the developments within and without the circle are not considered by the appraiser. Lake Point is an elderly affordable housing development located 13 miles from the proposed location of Plata Lago. It is located in Tavares which is outside the 10-mile radius from the proposed development and is past two lakes that separate Tavares from those developments contained within the PMA. The analysis by Florida Housing's expert was that an individual moving into the Lake County area would look for elderly housing developments in close proximity to his or her work, shopping, health care, and other amenities they deemed important. The tenant does not necessarily look to see if other elderly housing developments are nearby. This is especially true when only four elderly developments are located in the county. Plata Lago and Lake Point are similar to each other, both serve the elderly demographic category, and each would compete with the other for residents if the Plata Lago development were built. It was appropriate for the Second Market Study to include Lake Point in its analysis of occupancy data for the purpose of determining whether Plata Lago passed the test set forth in the rule requiring a 90 percent occupancy rate in its applicable submarket. To address the requirement of the rule regarding occupancy rates for the submarket of the Plata Lago development, it was necessary for Florida Housing's consultant to determine what developments would compete with the proposed project. To do a competitive analysis, it is necessary for the consultant to move beyond the fixed PMA to a study of the market as real people in the real world look at it. In the Second Market Study, the term CMA is used to describe the "submarket" as it applies to the occupancy test of the rule, as well as to distinguish this area from the PMA and from other incidental uses of the term "submarket." Florida Housing's consultant investigated all the comparable properties and interviewed the manager of Lake Point about where the competition lay. The manager mentioned a property around the corner from the proposed Plata Lago (Silver Pointe) as a competitor which led the consultant to expand the CMA to include Lake Point. The manager at Silver Pointe named Lake Point as part of its competition. Florida Housing's appraiser considers the submarket to be where a project's competitive property is located. In this case, the submarket or competitive market is larger than the PMA. Lake Point suffered a drop in its occupancy between the First and Second Market Studies. This was most likely attributable to the nature of elderly developments. Elderly residents tend to expire or suffer health issues that cause them to move to facilities providing health care or assisted living services. On October 23, 2009, Florida Housing's Board of Directors met and considered the market study letter prepared by Seltzer along with its finding that the Plata Lago development did not pass the required occupancy test of 90 percent set forth in the rule. Based upon the occupancy rate being only 87 percent, as well as the results of the market study and credit underwriter recommendations, the Board voted to rescind Florida Housing's commitment to fund the Plata Lago development.
Recommendation it is Based upon the Findings of Fact and Conclusions of Law, RECOMMENDED that the Florida Housing Finance Corporation enter a final order rescinding funding to the Plata Lago development for failing to pass the occupancy standard set forth in Florida Administrative Code Chapter 67-48. DONE AND ENTERED this 9th day of June, 2010, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 9th day of June, 2010. COPIES FURNISHED: Wellington H. Meffert, II, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Michael P. Donaldson, Esquire Carlton Fields, P.A. 215 South Monroe Street, Suite 500 Post Office Drawer 190 Tallahassee, Florida 32302-0190 Hugh R. Brown, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Della Harrell, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
The Issue The ultimate issue is whether Emergency Rule 10 CER 80-11 is valid. Petitioner alleges that this rule is an invalid exercise of validly delegated legislative authority because it is over-broad and excludes Public Housing Authorities which have reserve funds when such reserve funds are required by rules and regulations of the federal housing authorities.
Findings Of Fact Dade County HUD is a Public Housing Authority (PHA). Dade County HUD applied for LIEAP benefits and was denied upon a determination that it was "fully compensated" pursuant to Emergency Rule 10 CER 80-11, Florida Administrative Code. Dade County HUD has standing to make this challenge on the rule. The U.S. Congress enacted as federal law 42 U.S.C. ..8607 which provides for the LIEAP program. The provisions of the federal statutes place payments to PHAs on an equal footing with those to individual households. See Section 308(b)(3)(A) and (B), 42 U.S.C. 8607. The State of Florida authorized the Department of Health and Rehabilitative Services to administer this program in Florida through Florida Statutes 409.508, which also authorizes DHRS to enact rules to implement this federal program. Pursuant to this authority, the Department prepared draft rules and regulations which were approved as required by the federal authorities and adopted in accordance with applicable state statutes as Emergency Rule 10 CER 80-11. The portion of Rule 10 CER 80-11.10, Florida Administrative Code, specifically challenged in this case, provides in pertinent part regarding PHAs: (2) The project must not be fully com- pensated. A low rent public housing authority project is not fully compensated when the sum of the project's reserve and approved subsidy does not equal or exceed the pro- ject's expenses less revenue. Other pro- jects are not fully compensated when the sum of the project's approved subsidy and revenue does not equal or exceed the pro- ject's expenses. The effect of this rule is to exclude from LIEAP benefits any PHA whose revenues and reserves exceeded its expenses. Pursuant to federal guidelines, the Department first arrived at a percentage of potentially eligible recipients in Florida residing in PHAs. It allocated to PHA this percentage of the $23 million available to Florida. This amounted to less than $700,000. Recognizing that all PHAs had been adversely affected by the increased cost of operation to include energy cost, the Department further determined that only the most vulnerable, i.e., those PHAs whose tenants might suffer the most in the absence of LIEAP payments, should be eligible. The Department adopted the objective criteria, as required by the federal authorities, set forth in Rule 10 CER 80-11.10, Florida Administrative Code. This criteria provided payments only to those PHAs who lacked money to pay heating bills. All the monies paid to PHAs were paid to paid to PHAs meeting the criteria stated in Rule 10 CER 80-11.10, supra. The rule and payments made under them were procedurally and substantively in accord with the applicable state and federal statutes.
