The Issue The issues are as follows: (a) whether Respondent failed to follow applicable policies and procedures in evaluating responses to Request for Proposal P-01-01 ("the RFP"); and (b) whether two of the bidders colluded in filing their proposals.
Findings Of Fact On October 15, 2003, Respondent, through the City's procurement office, issued the RFP for the purpose of obtaining professional services for technical assistance in the administration of Respondent's DBE program. The City received six responses to the RFP including proposals from the following: (a) Petitioner, a joint venture/strategic partnership with Carroll & Carroll Consulting, Inc. and Tracking Systems of America, Inc.; (b) a joint venture consisting of Renaissance Design Build Group of Jacksonville, Inc., OTAi, Inc., and J & W. Consultants of Jacksonville, Inc. (Renaissance); and (c) Anderson & Associates, P.A. with OK Consulting Agency, Inc. as a sub-consultant (Anderson). Pursuant to the RFP as amended, the bidders had to deliver their proposals to the City's Department of Administration and Finance, Procurement and Supply Division, by November 14, 2003. The City placed a date-stamp on the proposals to establish the date and time of their receipt. The City also maintained a list/sign-in sheet of each proposal timely delivered, whether by mail or hand delivery. Anderson was the third bidder listed on the sign-in sheet. J & W Consultants of Jacksonville, Inc., representing the Renaissance joint venture, was the fifth bidder listed on the sign-in sheet. Petitioner was the last bidder listed on the sign-in sheet. The fact that J & W Consultants of Jacksonville, Inc., signed the sign-in sheet on behalf of its joint venture or was listed on the sign-in sheet instead of Renaissance Design Build Group of Jacksonville, Inc., does not mean that the Renaissance proposal was not timely or properly filed. Any member of a joint venture could have signed the sheet or been listed on the sheet indicating the City's timely receipt of a joint venture proposal. The RFP stated that the proposals could not include more than 25 pages. There is no evidence that any of the proposals, including the Renaissance and Anderson bids, contained more than 25 pages. After receiving the proposals, Respondent's evaluation committee reviewed them, using a matrix to rank each bid in each of 11 categories. The evaluation committee did not make hand- written notes, positive or negative, regarding the proposals of Renaissance and Anderson. The committee did make notes regarding four of the proposals including Petitioner's bid. Specifically, the committee noted the following about Petitioner's bid: (a) no verification of financial stability information; (b) tracking the project vs. tracking payment; (c) past record of professional accomplishments not related to requested services; and (d) price, $752,000. There is no requirement for the evaluation committee to make notes during the evaluation process. Respondent did not violate its policies, procedures, laws, rules, or regulations by not making notes on all proposals or by making notes only on the four bids that received the lowest scores. The matrix used to evaluate the proposals was more than sufficient to differentiate the merits of each proposal in all 11 categories. Based on the overall scores, Respondent's decision to rank Renaissance in first-place, Anderson in second- place, and Petitioner in third-place was not clearly erroneous. The evaluation committee did not request any of the bidders to make oral presentations. The decision to request bidders to make oral presentations is discretionary with the evaluation committee. There is no evidence that the committee abused its discretion in not requesting the top three bidders, including Petitioner, to make oral presentations. The RFP as amended requires that bidders complete and file the following forms with each proposal: (a) Conflict of Interest Certificate; (b) Public Entity Crime Information; Certification of Eligibility; (d) Non-collusion Bidding Certification; (e) Public Official Disclosure; (f) Certification Regarding Lobbying; and (g) Certification of Primary Participant Regarding Debarment, Suspension, and Other Responsibility Matters. The proposals of Renaissance, Anderson, and Petitioner contained all of these required forms. The RFP as amended also contains forms that contractors and subcontractors are required to file in order for them to participate in Respondent's DBE program. These forms include the following: (a) Bidder's List; (b) Intent to Perform Contract as Subcontractor; (c) Declaration of Prime Contractor; Contractor's Request for Payment; and (e) Schedule of Subcontractors. The above-referenced forms clearly apply to the DBE program for which the winning entity will provide technical assistance. The record is not clear whether the forms also apply to the RFP. In any event, the forms could possibly apply to the instant proposals only if the bidders intended to use subcontractors or sub-consultants in performing the contract. The Renaissance proposal includes only the three members of the joint venture and does not include the participation of any subcontractors or sub-consultants. The Anderson proposal includes all the necessary forms for the participation of one sub-consultant. Petitioner's proposal includes all the forms listing its joint venture members/partners as sub-consultants. The RFP specifically states that consultants must have a local office and experience providing consulting or small disadvantaged minority business support for two or more years. The RFP does not require consultants to be certified as a DBE. Petitioner did not file a timely challenge to the qualifications for consultants as set forth in the RFP. Anderson's proposal on its face indicates that it is properly certified as a DBE by the City with a pending application for DBE certification by Respondent. Anderson's sub-consultant is certified as a DBE by the City and recognized by the UCAP to include DBE certification by Respondent. Anderson's proposal included the necessary forms to establish the DBE certification of its sub-consultant. The Renaissance proposal on its face indicates that the joint venture is made up of three certified minority-owned businesses. At the time that Renaissance submitted its proposal, Respondent had certified at least one joint venture member, OTAi, Inc. as a DBE consultant. Because Renaissance was a joint venture and did not intend to use subcontractors, it was not necessary to include forms in its proposal that are applicable only to subcontractors. The Renaissance and Anderson proposals show that they meet the RFP's experience requirements for consultants. There is no evidence to the contrary. The RFP includes a form for bidders to use entitled Cost or Price Summary Format for Jacksonville Transportation Authority. However, this form is not included as a mandatory form to be completed and filed with each proposal. Instead, the form is merely a suggested format. Anderson and Petitioner elected to use the suggested cost summary form in their proposals. They capped the cost of the contract at $123,528 and $752,000, respectively. Renaissance did not use the cost summary form. Instead, Renaissance listed all project tasks and designated specific team members to perform each task. Next, Renaissance provided Respondent with cost detail by estimating the total number of hours required to complete each project task by the designated team members. Renaissance then provided a billing rate for each team member. Even though Renaissance did not set forth a cap for the cost of its proposal, it provided more than enough information for Respondent to determine the cost by multiplying the number of hours for each task, times the billing rate for each team member performing that task. During the hearing, Petitioner's witness was able to calculate the cost of the Renaissance proposal, which was considerably higher than the proposals of Anderson and Petitioner. A member of the evaluation committee testified that she scored the cost element of Renaissance's proposal rather low (five out of a possible ten points). Even so, the greater weight of the evidence indicates that Renaissance's cost detail was not ambiguous and that the cost detail provided by all six proposals was responsive to the RFP. In a letter dated December 24, 2003, Respondent advised the City's procurement office that all six proposals were responsive to the RFP. Respondent listed Anderson, Petitioner, and Renaissance in alphabetical order as being the most interested, available and qualified proposals. In a letter dated January 8, 2004, the City's procurement office advised Respondent that it agreed with Respondent's decision regarding the three highest-ranked proposals. The letter stated that Respondent could proceed with fee and contract negotiations with the firm of its choice. Petitioner subsequently learned that it was the third- place proposal. Petitioner then requested copies of the Renaissance and Anderson proposals from the City's procurement office. In making those copies, the City's staff erroneously included an RFP-addendum acknowledgment from the Renaissance proposal in the copy of the Anderson proposal that the City provided to Petitioner. This clerical error is not evidence that Renaissance and Anderson engaged in collusion when filing their proposals. Additionally, it does appear that some participants in the Renaissance and Anderson proposals may have worked on the City's arena and ballpark project. However, there is no evidence that they worked on that project at the same time or even knew about the other's involvement with the project. In fact, there is no evidence that participants in the Renaissance and Anderson proposals knew of each other's existence until Respondent issued and Petitioner challenged the instant RFP.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent issue a final order dismissing the Detailed Formal Written Bid Protest. DONE AND ENTERED this 17th day of June, 2004, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 17th day of June, 2004. COPIES FURNISHED: Linda J. Platte Don Platte Florida Bureau of Legal Investigations 101 East Union Street, Suite 401 Jacksonville, Florida 32202 David Cohen, Esquire Jason R. Gabriel, Esquire Edwards and Cohen Attorneys at Law Six East Bay Street, Suite 500 Jacksonville, Florida 32202 Michael Blaylock, Executive Director Jacksonville Transportation Authority 100 North Myrtle Avenue Jacksonville, Florida 32203
The Issue The issue for determination is whether Respondent's intent to award a contract for bridge-tending services (RFP DOT 92/93 2088 REBID) to Intervenor constitutes fraudulent, arbitrary, capricious, illegal or dishonest action.
Findings Of Fact The parties stipulated to findings of fact set forth in paragraphs 1.-12., below. Stipulated Facts Respondent issued the RFP for bridge-tending services on May 14, 1993. Proposals submitted in response to the RFP were opened on June 16, 1993. Proposals were submitted by five firms, including Petitioner and Intervenor. All proposals were determined at the time to be responsive. A Technical Review Committee (TRC) was appointed to review the technical portion of the proposals. The three members of the TRC were Alan Hyman, J. L. Gillis, and Yingyong Sujjavanich. The members reviewed the technical portion of the proposals on June 17, 1993. The evaluation forms completed by the TRC and a summary score sheet were delivered to Respondent's purchasing office on the morning of June 18, 1993. The price proposal was evaluated by Respondent's purchasing office. The price evaluation of each proposal was performed by applying a formula which compared the submitted price quotations. After the scores for the technical proposal and the cost proposals were totalled, it was determined that Intervenor's proposal had earned the highest number of points. This result was presented to Respondent's District 2 Executive Committee and a recommendation was communicated by the Purchasing Director to award the RFP to Intervenor. The Executive Committee accepted the recommendation and directed that the contract be awarded to Intervenor. On June 18, 1993, at 4 p.m., the bid tabs were posted noticing Respondent's intent to award the contract to Intervenor. On or about July 6, 1993, Petitioner requested a meeting with Respondent's representatives regarding the RFP. That meeting was held on July 9, 1993. At the meeting, Petitioner raised an issue regarding an arithmetic error in the scoring of the technical proposals. Intervenor remained the proposer with the highest number of points. However, another proposal formerly ranked as number two was lowered to number three status and Petitioner, previously ranked number three, was raised to number two rank. On July 12, 1993, Respondent posted an amended bid tab indicating its intent to award the contract to Intervenor. Other Facts Respondent chose to score the bid pricing, a non- subjective task, in Respondent's District 2 office. Technical portions of the proposals were reviewed by the TRC, comprised of members from Respondent's District 5 office. This unusual step was taken by Respondent in order to reduce prejudice to any proposal in view of previous accusations made against District 2 employees. Bud Rosier, Respondent's employee, has overall responsibility for bridge determination that District 5 employees chosen as committee members were qualified to evaluate the proposals. Each response to the RFP contained a technical proposal and a price proposal. Intervenor's technical proposal received 1.33 points less than Petitioner's technical proposal. The price proposals, as noted above, were scored in accordance with a mathematical formula that compares price proposals to each other and does not take any subjective factors into consideration. Intervenor was awarded 5.55 points, compared to Petitioner who received no points for a proposal more than $140,000 higher for the initial year of the contemplated contract. Although members of the TRC were not given any background information by Respondent regarding the competing proposals, beyond that contained in the submitted bid packages, no information was withheld from the committee. The members were given adequate time to review the proposals and do any desired independent background checking regarding past performance of any proposer, although no requirement in the RFP mandated such a background review. At least one of the TRC members, Sujjavanich, chose not to independently research past performance of the Intervenor. No evidence was offered at hearing with regard to whether the other two members independently researched any of the proposers' past performances. Even if review of past performance, apart from the materials submitted by the proposers, were required by provisions of the RFP, failure of the evaluators to accomplish that task would result only in the loss to Intervenor of the 3.66 points awarded for past performance and Intervenor, with a remaining total of 81.89 points, would remain the highest ranked proposer. In view of the objective process used to arrive at the results of the evaluation of the prices of the competing proposals, there was no need to provide this information to the members of the TRC who were doing the technical proposal evaluation. Although the RFP provided that the TRC would be given such results, the failure of Respondent's personnel to provide this information to the evaluators could not have made any difference in the final result since the committee, using the objective price evaluation criteria, would have arrived at the same result as the purchasing office on cost scores. The admitted failure to provide the superfluous cost information to the TRC is inadequate to show that such omission resulted in prejudice to the final scores of any of the competing proposals and must be considered to be only a minor variation from the RFP by Respondent. Contrary to Petitioner's allegations, there is no competent substantial evidence to support any finding that the members of the TRC (Hyman, Gillis, and Sujjavanich) did not possess required background, experience or professional credentials adequate for evaluating proposals for bridge-tending services. All three members of the TRC were familiar with the RFP, attachments to the RFP, bridge-tending procedures and bridge-tending qualification procedures. There is no competent substantial evidence to establish that Intervenor's proposal is not financially feasible. Proposed utilization of 72 bridge-tenders by Intervenor for a total price of $673,333.44 does not mean that 72 bridge-tender positions would be established or filled, or that the positions would be paid at the rate proposed by Petitioner of $8.40 per hour. The evidence establishes that a proposer would need an optimum number of bridge requirements.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered granting the award of the bid in RFP DOT 92/93 2088 Rebid to Intervenor. DONE AND ENTERED this 4th day of October, 1993, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4271BID The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings. 1.-12. Accepted. 13.-16. Rejected, relevancy. 17. Accepted. 18.-19. Rejected, relevancy. 20.-25. Accepted. 26.-27. Rejected, cumulative. 28. Rejected, credibility. 29.-33. Rejected, relevancy. 34.-35. Accepted. 36.-37. Rejected, argumentative and mischaracterization. 38.-46. Rejected, subordinate to HO findings. 47.-51. Rejected, relevancy. Intervenor's Proposed Findings. 1.-2. Rejected, cumulative. 3.-4. Accepted. 5.-6. Rejected, unnecessary. Rejected, cumulative. Rejected, unnecessary. Rejected, argumentative. 10.-11. Rejected, unnecessary. 12.-13. Adopted by reference. 14.-16. Accepted, but not verbatim. 17.-22. Adopted by reference. 23. Rejected, unnecessary. 24.-30. Adopted, but not verbatim. 31. Rejected, narrative. 32.-35. Rejected, cumulative. Respondent's Proposed Findings. 1.-11. Adopted. 12. Rejected, unnecessary. 13.-17. Adopted, not verbatim. 18.-19. Rejected, cumulative. 20.-22. Adopted. 23. Rejected, recitation of RFP. 24.-26. Adopted. 27. Rejected, recitation of RFP. 28.-29. Adopted in substance. COPIES FURNISHED: Thomas Cassidy, III, Esquire. John O. Williams, Esquire Renaissance Square 1343 East Tennessee Street Tallahassee, Florida 32308 Carolyn S. Holifield, Esquire Mark D. Tucker, Esquire Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwanee Street Tallahassee, Florida 32399-0458 Timothy G. Schoenwalder, Esquire 204-B South Monroe Street Tallahassee, Florida 32302-3068 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399 Thornton J. Williams General Counsel Department of Transportation Haydon Burns Building # 562 605 Suwannee Street Tallahassee, Florida 32399
The Issue Whether the Department of Corrections (DOC) acted arbitrarily or illegally in selecting ARC Developmental Companies, Inc. (ARC) as the intended lessee under a proposed lease, Lease No. 700:0606? Whether, as DOC now advocates in its proposed recommended order, DOC should award the lease to LFFO because ARC's proposal is non-responsive? Whether DOC's interests would be best served by starting over?
Findings Of Fact In a single headquarters complex in Tallahassee, DOC has decided to consolidate administrative offices now scattered among various buildings. To that end, DOC's RFP for Lease No. 700:0606 seeks 56,154 square feet of office space by January 1, 1994, and (after other current leases expire) an additional 149,651 square feet of adjoining office space for occupancy on March 31, 1995. The RFP requires that DOC have the right to renew for each of two successive five-year terms, after an initial ten-year term. ARC has an option to purchase land on which it proposes to build all the office space it would lease to DOC. The RFP assumes that the office buildings to be leased do not yet exist, and requires only that "turn key" facilities be available at the times specified in the RFP. LFFO owns one of the buildings housing DOC offices now, and proposes to borrow money at commercial rates to finance construction of additional office space on adjacent land it already owns. After evaluating the competing proposals, DOC concluded that they were both responsive to the RFP, and assigned each points. ARC received a score of 97.66 points and LFFO received a score of 96.66 points. Over the initial ten- year term, ARC's proposal would require DOC to pay $30,175,129.10, while LFFO's proposal calls for payments aggregating $30,718,454.30 over the initial ten-year term. Joint Exhibit No. 4. Problematic Undertaking The RFP calls for some form of monetary assurance that a proposer will contract with DOC, if selected. Specifically, Paragraph IV(L) states: All Proposals shall include a Proposal Security Fee which may be in the form of cash, a Cashier's Check or Proposal Bond, and shall be in the amount of Ten Thousand Dollars ($10,000), payable to the Department of Corrections. The agency reserves the right to reject any security tendered. The Proposal Security fee ties [sic] will be returned with[in] thirty (30) calendar days after the agency and the accepted proposer have executed a written lease. Joint Exhibit No. 1 at 32. The purpose in requiring a security fee or a proposal bond was to satisfy DOC of the proposers' good faith, "that they intended to enter into a contract" (T.72) with DOC, if given the opportunity. LFFO met the security fee requirement with a $10,000 cashier's check, while ARC submitted a bond issued by Highlands Insurance Company of Houston, Texas (Highlands), at the behest of Brown & Root Building Company (Brown & Root). Designated as principal on the bond, Brown & Root and, in the event of Brown & Root's default, Highlands, as surety, are obligated to pay DOC $10,000, on conditions stated in the bond, which, however, could never arise, because Brown & Root did not submit a proposal to DOC. The bond specifies the undertaking: [I]f the Obligee [DOC] shall accept the bid of the Principal [Brown & Root] and the Principal shall enter into a contract with the Obligee in accordance with the terms of such bid, and give such bond or bonds as may be specified in the bidding or contract documents with good and sufficient surety for the faithful performance of such contract and for the prompt payment of labor and material furnished in the prosecution thereof, or in the event of the failure of the Principal to enter such contract and give such bond or bonds, if the Principal shall pay to the Obligee the difference not to exceed the penalty hereof between the amount specified in said bid and such larger amount for which the Obligee may in good faith contract with another party to perform the work covered by said bid, then this obligation shall be null and void, otherwise to remain in full force and effect. Joint Exhibit No. 2. Signed by the president of Brown & Root and an attorney in fact for Highlands, the bid bond submitted with the ARC proposal misidentifies Brown & Root as the bidder for DOC's "State Headquarter Building," a reference to proposed Lease No. 700:0606. Joint Exhibit No. 2. Brown & Root is a general contractor named in ARC's proposal as a member of the "ARC Team." Joint Exhibit No. 2 at 41, and section entitled "Construction Phase Management Plan"; T.72, 239. But ARC is the bidder, the offeror making ARC's proposal, as Mr. Arthur R. Collins, the sole officer, director and shareholder of ARC, has clearly and consistently stated. Deposition of Collins, at 44-45. This is also clear from the four corners of the ARC proposal itself. There is no partnership or joint venture agreement between ARC and Brown & Root. Deposition of Collins, p. 42; T. 59-60, 255. Mr. Collins testified that a letter to ARC from Brown & Root constitutes "a letter agreement" between ARC and Brown & Root, which "essentially gives ARC Developmental Companies all rights to market and represent Brown & Root Building Company specifically as relates to this particular project." Deposition of Collins, p. 44. Otherwise stated, ARC and Brown & Root have an "agreement in principle" (T.239) under which Brown & Root is "responsible for design, build and finance, all three components." (T.240) There are, however, "ongoing negotiations as to some of the details" (Deposition of Collins, p. 44) and the "final terms and conditions are under negotiation," (T.255) or were at the time of the hearing. ARC's proposal did not contain the letter said to embody the agreement in principle between it and Brown & Root, nor did the letter come in evidence at hearing. Apparently nobody has ever signed anything on behalf of ARC purporting to bind ARC to any agreement, even in principle, between ARC and Brown & Root. Whether or not ARC contemplated that Brown & Root would perform all financing, designing and building, it is ARC to whom DOC had to look to accept responsibility to perform as DOC's contractor. The RFP specifies that the successful proposer cannot assign or transfer the contract "or his power to execute such contract" to any person without prior written consent of the agency. Joint Exhibit No. 1, p. 34, IV(T). The RFP also provides that a "transfer shall not be requested prior to completion of the facility and acceptance by the agency." Joint Exhibit No. 1, p. 34, IV(T). DOC would not have accepted a proposal without a security fee or proposal bond. T. 138. DOC concluded that the bid bond furnished with ARC's proposal provided the assurance the RFP sought. T. 138-139. But the bid bond does not assure that DOC will receive $10,000, in the event that ARC refuses to execute a lease, if its proposal is accepted. Although the bid bond represents ARC's effort to fulfill the security deposit requirement set out in paragraph IV(L) of the RFP, (Deposition of Collins at 42, 43), the bid bond does not purport to bind ARC in any way. The bid bond submitted with ARC's proposal makes no mention of ARC Developmental Companies, Inc. Joint Exhibit No. 2; T. 75. While LFFO suffered a detriment in submitting its security deposit: loss of use of $10,000 for a period already lasting several months; and the proposal bond ARC submitted cost it nothing (although Brown & Root presumably paid the premium), it is not clear that ARC enjoyed a material competitive advantage, as a result. But the RFP security requirement also sought to protect DOC's investment of time and money in evaluating proposals it solicited. The security deposit requirement cannot, under DOC policy not called into question here, be waived; and ARC's proposal is not responsive to the requirement. DOC's determination that the bid bond constitutes good security cannot withstand scrutiny. DOC's conclusion that the bond was sufficient was based on the bid bond itself, and on nothing else. T. 138-139. Construing the bid bond to meet the RFP's "earnest money" requirement is an arbitrary distortion of its terms. The purpose of requiring a security deposit or a proposal bond -- to provide the contracting agency some assurance that the successful bidder would in fact enter into a contract with the agency (T.72) -- was frustrated. The bid bond submitted by ARC provides no security whatsoever to DOC that ARC will enter into a contract with the agency. Ability, Financial Resources, History and References Paragraph V(H) of the RFP indicated that an evaluation committee would review all proposals to determine, among other things, the [c]omposition of the group submitting the proposal and their financial resources available to accomplish this project. Joint Exhibit No. 1, pp. 44-5. The RFP also speaks of financial criteria that the proposer itself must meet: S. Qualification of Proposers: Each proposer shall be required, before the award, to show to the complete satisfaction of the agency that he has the necessary facilities, ability and financial resources, to furnish the service and facilities as specified herein in a satisfactory manner, and he may also be required to show past history and references which will enable the agency according to the foregoing requirements and will justify the agency in assessing his the proposal. Joint Exhibit No. 1, p. 34, IV (strike through and emphasis in original). The RFP states that time is of the essence, which may account for the concern it evinces over the financial ability of proposers. ARC has furnished DOC no balance sheet, audited or otherwise. In its proposal, information ARC provided relating to its financial resources consisted of a single credit report dated September 22, 1992, which disclosed only: NO PUBLIC RECORDS OR OTHER INFORMATION IN FILE VER INC 01-13-92, NO CREDIT REFS GIVEN Joint Exhibit No. 2. The testimony at hearing did not establish what financial resources ARC has acquired, if any, since its incorporation last year. ARC is involved with one other project, for which financing is currently being sought (T.249-252), but otherwise has no real estate development experience. T.254. Among things lenders who finance real estate development consider are "the history and the experience of the borrower or borrowing entity, . . . their numbers, . . . their financial capacity . . . what type of equity injection [they] are going to put into the deal, whether it be cash or hard land . . . ." T.153. ARC did not demonstrate its ability to "inject" any equity into this project. Tax-Exempt Financing Proposed ARC's proposal contains a September 18, 1992, letter from the Donaldson, Lufkin & Jenrette Securities Corporation, addressed to Brown & Root, the body of which states in its entirety: Regarding the issuance of tax-exempt debt to finance the proposed facility to be leased to the Florida Department of Corrections, as their state headquarters office building. Donaldson, Lufkin & Jenrette is pleased to participate in the successful development of the proposed project. Based upon current market conditions and the procurement of credit enhancement or an investment grade rating for the issue, we are confident that we can successfully underwrite a public offering of tax-exempt bonds. Joint Exhibit No. 2. This is not a firm commitment, only an undertaking to use "best efforts." Deposition of Shirey, p.24. After receiving the proposals, DOC solicited additional financial information from LFFO and from ARC by letters dated October 19, 1992, which state: The request for proposal stipulated that additional information pertaining to your capabilities to perform the project to our satisfaction may be necessary. The Chief of the Bureau of Finance and Accounting is charged with gathering the necessary information for determining if your group can realistically perform the project. This is considered a pass/fail criteri[on]. Joint Exhibit No. 8. The letters instructed both proposers to "[p]rovide a plan to finance both the construction and subsequent operation of the facility," including detailed information on all financing arrangements, specifically: A description of all financing arrangements (i.e. - debt, equity, lease agreement, etc.). A description of the proposed sources of financing for the construction and operation of the facility. Documentation should include specific commitment statements from financiers. The principal amount of debt to be issued or equity to be committed to finance the project. The annual interest rate for each debt component. A debt amortization schedule. An analysis of projected cash flow for both the construction period and the term of the lease. A description and value of all collateral to be pledged. Joint Exhibit No. 8. DOC anticipated that the proposers would respond with the financing plan they actually intended to use to finance construction of the project. Deposition of Biddy, p. 18; T. 98. In response to DOC's October 19, 1992, letter, ARC submitted a second letter from Donaldson, Lufkin & Jenrette, dated October 22, 1992. Joint Exhibit No. 11. The second Donaldson, Lufkin & Jenrette letter stated, in part: The final amount of the debt will be dependent on the final plan and specifications provided by the contractor and architect and negotiations with the ultimate investor. The final debt amount will be made available prior to the closing. The financing will provide 100 percent of the funds necessary to construct the project. The final interest rate or rates. (See Number 3 above). Debt Ammorization schedule. (See numbers 3 & 4 above). An accompanying Memorandum of Terms summarized some of the RFP requirements, gave a brief description of the property on which ARC has an option, and stated: FINANCING: Construction/Permanent financing will be obtained by selling tax exempt certificates of participation (the "Certificates") in the Lease Agreement. Proceeds from the sale of the Certificates will fund construction and provide permanent financing for the Facility. . . . It is anticipated that the Certificates will be rated or credit enhanced by a policy of municipal bond insurance. SECURITY: Certificate holders will be secured by an undivided interest in payments received pursuant to the Lease. Certificate holders will be additionally secured by a deed on the Property recorded in the name of the trustee on behalf of Certificate holders. Joint Exhibit No. 11. DOC was evidently satisfied with LFFO's response to its letter of October 19, 1992. Joint Exhibit No. 11. Following ARC's October 22, 1992, response to DOC's October 19, 1992 letter, however, DOC wrote ARC requesting still more financial information. DOC's letter stated: Thank you for responding so promptly to our letter of October 19, 1992 concerning the financial viability of the proposal submitted by ARC Development Companies, Inc. However, we do not see in your response the level of detail that is necessary to alleviate the concerns we have. Joint Exhibit No. 14. In response to this letter, ARC wrote DOC a letter dated November 6, 1992. Joint Exhibit No. 15. The response included a cash flow analysis, which assumed a bond issue of $27 million repayable over 20 years, with interest at 8 3/4 percent; along with a resolution from the City of Midway, purporting to authorize the creation of a nonprofit corporation to issue some $29 million worth of revenue bonds to finance the construction of the project (in Tallahassee). Joint Exhibit No. 15. The cash flow analysis assumed $170,000 would be borrowed from some other, unidentified source, and did not indicate how cash flow shortfalls projected for 1994 and 1995 were to be covered. At ARC's October 23, 1992, oral presentation to DOC officials, Mr. Collins emphasized that ARC's proposal was based on tax-exempt financing. Joint Exhibit No. 7, pp. 9, 27, 60, 72-73. ARC's post-submittal correspondence with DOC concerning financial arrangements reiterated reliance on tax exempt financing. Joint Exhibits Nos. 11, 14, 17 and 18. Mr. Collins' testimony at hearing assumed tax exempt financing would be available to ARC to build and operate the proposed headquarters. Contingent Award On December 18, 1992, DOC announced its decision to award Lease No. 700:0606 to ARC, contingent upon ARC's "providing to the Department within 45 days of this notice, and to the Department's satisfaction, sufficient commitments to ensure ARC's ability to finance construction of the project as presented in their proposal." Joint Exhibit No. 16. The December 18, 1992, award letter shows on its face that the Department was not "completely satisfied" with ARC's financing proposal at the time it made the award. Mr. Kronenberger admitted as much in his testimony. T. 146. At hearing DOC's Mr. Kronenberger also testified that the award was made contingent so that DOC could satisfy itself that ARC's proposal did not contemplate a lease-purchase and that tax-exempt financing was appropriate for this project. T. 131-132. The contingent award letter made no reference, however, either to a lease-purchase or to the tax-exempt nature of the proposed financing. Joint Exhibit No. 16; T. 145, 147. Before December 18, 1992, ARC's proposed financing involved the City of Midway's authorizing a nonprofit corporation to issue bonds. Joint Exhibit No. 14. Mr. Collins' testimony at hearing suggested that ARC has now abandoned efforts to involve the City of Midway with financing the project. To allow ARC to substitute another financing proposal at this juncture would afford ARC a competitive advantage over LFFO, and would constitute an arbitrary departure from prescribed procedure. DOC's letters of inquiry during the proposal evaluation process were intended to elicit from the proposers "the financing plan" they actually intended to use. Deposition of Biddy, p. 18; T.98. Allowing ARC 45 additional days to submit an acceptable financing proposal gave it a material competitive advantage over LFFO. ARC could "shop around" for financing as the intended awardee, and not merely as a bidder. "[I]f a developer . . . had an award in hand, he would be in a very advantageous situation to shop [for] the best deal he could get . . . considering rate, term, structure, price, so forth " T.154. Governmental Lessee ARC's proposal to use tax-exempt financing raises "two types of concerns. One is the ability to get the tax opinion and do the deal, and then there's the issue of state law." Deposition of Kubik, p. 50. Unless reputable tax counsel are of the opinion that (possibly imputed) interest paid from lease payments to holders of bonds or certificates of participation sold (to raise the money needed to build DOC's headquarters building) as tax-exempt qualify for tax exemption under the Internal Revenue Code, the paper cannot be marketed as tax- exempt. The purpose of the pertinent Internal Revenue Code provisions is to subsidize state and local governments, not private developers, by allowing governmental borrowing at lower rates. Certain financing arrangements involving private developers may, however, entail issuance of tax-exempt securities where state or local government is, in economic effect, borrowing money, legal technicalities notwithstanding. Deposition of Piemont, p. 40. One such arrangement involves state or local government as a lessee under a lease including an agreement to purchase, so that the governmental entity is "building equity" (T.23) (or, if the facility depreciates, bearing the loss.) Certificates of participation in the stream of lease payments, or bonds to be retired by applying lease payments, are then sold as tax-exempt securities. The test is "that the income derived from the obligations be from the payment of governmental lessees to provide essential function facilities." Deposition of Arnspiger, p. 9 Brown & Root's financial consultant contemplates a lease under which DOC would have the option to purchase the property, after ten years, for "the amount remaining on the indebtedness." Deposition of Arnspiger, p. 14. In the twentieth year, the price "would be a dollar." Id. "For tax purposes the owner of the facility would be the lessee." Deposition of Harris, p. 11. A lease under which a governmental tenant expressly agrees to purchase the premises may be economically equivalent to a lease with an option to purchase at a nominal price so low as to be "irresistible." Florida law limits the circumstances under which state agencies can borrow money and pledge the state's taxing power to repay the debt. T.136. Section 255.25(1)(b), Florida Statutes (1992 Supp.) provides: (1)(b) When specifically authorized by the Appropriations Act and in accordance with s. 255.2501, if applicable, the Division of Facilities Management may approve a lease-purchase, sale-leaseback, or tax-exempt leveraged lease contract or other financing technique for the acquisition, renovation, or construction of a state fixed capital outlay project when it is in the best interest of the state. Specific authorization in an earlier Appropriations Act authorized the Division of Facilities Management to approve a tax-exempt financing technique for acquisition of office space for DOC, but that authorization expired unused. Here the RFP solicited offers by lessors to execute a standard state lease on a form drafted by the Department of General Services and attached as an appendix to the RFP. Under the standard state lease, the lessor retains ownership of the building at all times. The lessee is not obligated to file a form 8038 with the Internal Revenue Service or to monitor for compliance with arbitrage restrictions imposed by Section 148 of the Internal Revenue Code, both of which would be necessary if tax-exempt obligations were sold to finance the building. Deposition of Piemont, pp. 16-22. ARC's proposal amounts to an offer to employ a financing technique for the acquisition and construction of a state fixed capital outlay project that the legislature has not approved. ARC's proposal is not responsive to the RFP because the method of financing the proposal contemplates cannot be accomplished if the parties execute a standard state lease, as contemplated by the RFP.
Recommendation It is, accordingly, RECOMMENDED: That DOC reject ARC's proposal as nonresponsive and consider seeking the necessary approvals to draw an RFP soliciting proposals for a headquarters building that would eventually belong to the State of Florida. DONE AND ENTERED this 5th day of May, 1993, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of May, 1993. APPENDIX Petitioner's proposed findings of fact Nos. 1-6, 8, 11, 13-17, 19-36, 39- 41, 43, 44 and 46 have been adopted, in substance, insofar as material. With respect to petitioner's proposed finding of fact No. 7, DOC's determination of responsiveness was tentative, free-form action. Petitioner's proposed findings of fact Nos. 9, 10, 18, 38, 47, 48, 49 and 52 pertain to subordinate matters. With respect to petitioner's proposed finding of fact No. 12, the undertaking assumed Brown & Root had submitted a proposal. Petitioner's proposed finding of fact No. 37 pertains to an immaterial matter. With respect to petitioner's proposed finding of fact No. 42, the issuance of certificates can defeat tax exemption if certain requirements are not observed. With respect to petitioner's proposed finding of fact No. 45, the distinction between a lease including an agreement to purchase and a lease with the option to purchase is not necessarily dispositive for tax purposes. With respect to petitioner's proposed findings of fact Nos. 50 and 51, ARC's proposal contemplates a lease with an option to purchase. With respect to petitioner's proposed finding of fact No. 53, Mr. Piemont testified that one of the requirements for "on behalf of" financing "is that the governmental entity gets actual ownership." Deposition of Piemont, p. 41. Respondent's proposed findings of fact Nos. 1-11, 13, 14, 16, 17, 18, 20, 23, 25, 26, 27, 28, 30, 37, 38, 44-49, 58, 60, 64 and 65 have been adopted, in substance, insofar as material. With respect to respondent's proposed finding of fact No. 12, the exact cause of the differential was not proven. Respondent's proposed findings of fact Nos. 15, 32-36, 39-42, 51, 61, 62, 71, 72, 73 and 74 pertain to subordinate matters. Respondent's proposed findings of fact Nos. 19, 21, 22, 43, 63, 75 and 76 have been rejected as contrary to the weight of the evidence. With respect to respondent's proposed findings of fact Nos. 24 and 29, DOC witnesses testified that absent a bond the proposal would have been rejected as non-responsive; the bond ARC submitted was the equivalent of no bond at all. With respect to respondent's proposed finding of fact No. 31, the award letter shows on its face DOC's misgivings about ARC's ability to finance the project. With respect to respondent's proposed findings of fact Nos. 50, 52--57, 67, 68, 69 and 70 the proposed findings are correct only in the sense that "purchase", "ownership", and the like are understood to mean "for tax purposes." With respect to respondent's proposed finding of fact No. 66, if a government entity is lessee, a non-governmental lessor may issue certificates of participation in the lease payments. Intervenor's proposed findings of fact Nos. 1-4, 7, 9, 10, 13, 14, 19, 21, 23, 26 and 28 have been adopted, in substance, insofar as material. With respect to intervenor's proposed finding of fact No. 5, it is not clear what Brown & Root's contractual obligations are. With respect to intervenor's proposed finding of fact No. 6, the bond does not constitute an offer or proposal. Intervenor's proposed findings of fact Nos. 8 and 25 have been rejected as contrary to the weight of the evidence. Intervenor's proposed findings of fact Nos. 11, 12, 15, 16, 17, 22, 29, 30 and 31 pertain to subordinate matters. With respect to intervenor's proposed findings of fact Nos. 18 and 20, ARC's financing proposal was non-responsive, whether or not such an approach might be viable, if responsive to the RFP and otherwise lawful. With respect to intervenor's proposed finding of fact No. 24, insofar as it is not predicated on hearsay, there was no showing that any rating agency, insurer or bond fund is aware of applicable Florida law. With respect to intervenor's proposed finding of fact No. 27, what is required for tax purposes does not depend on whether the lessee has a legal right to forgo the purchase. COPIES FURNISHED: M. Christopher Bryant, Esquire Oertel, Hoffman, Fernandez & Cole, P.A. Post Office Box 6507 Tallahassee, FL 32314-6507 Stephen Ferst, Esquire Florida Department of Corrections 2601 Blair Stone Road Tallahassee, FL 32399-2500 Martha Harrell Chumbler, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. 215 South Monroe Street, #500 Tallahassee, FL 32301 Harry K. Singletary, Jr. Secretary Department of Corrections 2601 Blair Stone Road Tallahassee, FL 32399-2500 Louis A. Vargas, Esquire General Counsel 2601 Blair Stone Road Tallahassee, FL 32399-2500
Findings Of Fact The Respondent has at all times material to this matter been licensed by the Board of Real Estate as a real estate broker-salesman. For approximately the past year, she has been employed as a broker-salesman with Century 21 Realtors in Fort Walton Beach. Previously, for a period of approximately 18 months, she was employed with Kruse Realty, Fort Walton Beach, Florida, in the same capacity. During November, 1979, Mr. and Mrs. L. C. Lyons visited Kruse Realty. The Lyonses were seeking to purchase a lot upon which they could build a house. They were introduced to the Respondent. The Lyonses advised the Respondent that they had been approved for a loan by the Farmers Home Loan Administration (FHLA) for the financing of construction. They advised the Respondent that they would be able to spend only $6,000 for a lot and that the property would need to qualify for FHLA financing. The Respondent told the Lyonses that she had lots available that had been approved for FHLA loans. One of them was located in Wynn Haven Beach, and the other was owned by a Mr. Jack Piediscalzi. The Lyonses visited the Wynn Haven Beach property and decided to purchase a lot. This resulted in a contract for sale being signed by the Lyonses. The Lyonses specifically requested that the contract be made contingent upon their securing financing from FHLA. After the Lyonses executed the contract, Mrs. Lyons' father visited the lot. He observed some low-lying areas that he felt would cause building problems. Mrs. Lyons' father also visited the Piediscalzi property and urged that it would provide a better building site. The Lyonses decided to follow this advice, and they asked the Respondent if they could cancel their contract to purchase the Wynn Haven Beach property, and purchase one of the Piediscaizi lots. The Respondent requested that the Wynn Haven Beach property owner cancel the contract, which he did. Thereafter, the Lyonses entered into a contract to purchase a lot from Mr. Piediscalzi. The contract was executed on November 19, 1973. The Lyonses advised Respondent that they would pay for the lot with cash, but that they would be financing home construction through the FHLA loan. They inquired as to whether the contract should be made contingent upon FHLA approval. The Respondent advised the Lyonses that such a contingency clause would not be necessary because FHLA had already approved loans for construction of houses on the Piediscalzi lots. The day after they executed the contract to purchase one of the Piediscalzi lots, the Lyonses presented a loan approval package to FHLA. The FHLA representative immediately advised the Lyonses that the property would not qualify for FHLA financing because the road on which the lot fronted was merely an easement, not a county road as required by FHLA regulations. The FHLA representative advised the Lyonses that they were the first people to present a proposal for FHLA financing of one of the Piediscalzi lots. Mrs. Lyons called the Respondent later that same day. The Respondent's response was, "Well honey, what are you going to do with two lots?" The Respondent indicated that she would speak to her employer. Later, Mrs. Lyons spoke to Mr. Chamberlin, a real estate salesman who is also employed at Kruse Realty. Mr. Chamberlin advised that FHLA financing could be secured and that he would call her back within three days. He did not call her back in three days, and Mrs. Lyons contacted him. He advised that the property had not been approved, but that he would take steps to accomplish it. Mrs. Lyons also spoke to Mr. Kruse, the owner of Kruse Realty. Time was critical to the Lyonses because their FHLA loan package needed to be approved before available loan funds were distributed to other qualified purchasers. The steps that would need to be taken to secure FHLA financing were never accomplished, and the Lyonses did not secure the financing that they were seeking. Kruse Realty did not offer to compensate the Lyonses in any manner. Mrs. Lyons ultimately turned the property over to her father, who sold it. Mrs. Lyons filed a complaint with the Board of Real Estate, and with the Fort Walton Beach Board of Realtors. Mr. Chamberlin from Kruse Realty contacted Jack Piediscalzi sometime prior to November, 1979, about the prospects of Mr. Piediscalzi subdividing and selling his property. Mr. Piediscalzi decided that he would like to sell the property in parcels, and he signed an exclusive contract with Kruse Realty to handle the sales. Mr. Piediscalzi left details of dividing the property to Kruse Realty. Kruse Realty decided to sell the property through "meets and bounds sales" rather than by subdividing the property into lots as required by local planning and zoning regulations. A road was constructed through the property, and efforts were made to dedicate the road to Okaloosa County. The County did not, however, accept the road. Mr. Piediscalzi dealt primarily with Mr. Chamberlin at Kruse Realty. He did not deal directly with the Respondent. The Respondent was advised by Mr. Chamberlin and Mr. Kruse that they had talked to personnel at FHLA and that the property would qualify for FHLA loans. The Respondent saw two building permits that had been issued for lots on the property. The Respondent inquired of Mr. Kruse whether the property met local subdivision requirements, but she was assured that because it was being sold by "meets and bounds," it was not within subdivision requirements. The Piediscalzi-Lyons transaction was the first transaction in which the Respondent had dealt with an FHLA loan. The Respondent did not know specific FHLA requirements. She was not aware that the road through the Piediscalzi property had not been dedicated to Okaloosa County, nor that such dedication was required. The Respondent ceased dealing with the Lyonses after they advised her that FHLA had not approved their loan. Thereafter, the Lyonses dealt with Mr. Chamberlin and Mr. Kruse. The Respondent sought to cancel the Lyons-Piediscalzi contract, and she returned the $240 commission that she had received for the sale to Kruse Realty in January, 1980. She sought to get Kruse Realty to buy the property back, and she was willing to by up to one-third of it. Her employer was not, however, willing to purchase the property, nor to rescind the contract or refund commissions.
The Issue The issue is whether Respondent violated Subsections 489.129(1)(g)2., (j), and (m), Florida Statutes (2005),1 by allegedly engaging in financial mismanagement or misconduct in the practice of contracting that causes financial harm to a customer, abandoning a construction project, or committing misconduct or incompetence in the practice of contracting.
Findings Of Fact Petitioner is the state agency responsible for regulating the practice of contracting in the state. Respondent is licensed in the state as a certified general contractor pursuant to license number CGC59204. Respondent is the qualifier of South West Florida Development Corporation (South West) doing business as Back Bay Homes (Back Bay). On February 7, 2006, Respondent executed a contract with Gail and Gary Veith to build a residential home on a vacant lot located at 3218 Southwest 11th Place, Cape Coral, Florida. The contract price was $276,983.00 (the initial contract). The initial contract provided for the construction of a sea wall at a cost of $17,257.00 in addition to the contract price of $276,983.00. On February 7, 2006, Respondent entered into a second contract with Mr. and Mrs. Veith. The only difference between the initial and second contracts was the contract price of each contract. The second contract price was $289,686.00, excluding the sea wall cost of $17,257.00. Mr. and Mrs. Veith secured payment of the construction project with a construction loan from Market Street Mortgage Corporation (Market Street) in the original approximate amount of $412,000.00. The total loan amount was intended to be sufficient to cover the second contract price of $289,686.00 and the amount contracted by Mr. and Mrs. Veith for acquisition of the vacant lot (construction site), which was $128,000.00.2 Clear and convincing evidence shows that Respondent engaged in financial mismanagement or misconduct in the practice of contracting that caused financial harm to his customers in violation of Subsection 489.129(1)(g)2. Clear and convincing evidence also shows that Respondent committed incompetence and mismanagement in the practice of contracting. The percentage of completion of the residence, which was zero, was less than the percentage of the contract price paid to Respondent, which was 29 percent. Respondent received approximately $84,655.00 in construction loan proceeds from Market Street in two draws. Market Street paid the first draw at closing on May 5, 2006, in the amount of $42,901.20 and paid the second draw to Respondent on June 26, 2006, in the amount of $41,754.00. However, Respondent never commenced construction of the residence. Respondent reported a profit of $48,637.72 on the Veith property and completed only the sea wall at a cost of $17,257.00. Respondent paid the cost of the sea wall and other expenses on the Veith property to keep the net profit at $48,637.72. Other expenses included $420.00 for surveys, $34.34 for blue prints, $1,707.75 for plan drafts, $350.00 for septic engineering, and $3,138.19 for construction loan interest. Respondent was not entitled by the terms of the contract to retain the funds paid to Respondent by Market Street. The loan agreement provided that draws were to be made at the discretion of Market Street based on work completed and materials incorporated into improvements. Respondent never commenced construction of the residence. Respondent did not obtain permits for the job. Mr. Winston testified that when Market Street transferred a single, lump sum deposit to his company in the amount of $41,754.00 on June 26, 2006, he did not know that he was appropriating funds he was not entitled to under the contract. When that testimony is weighed against evidence that the work Mr. Winston had performed was limited to a sea wall costing only $17,257.00, the testimony is persuasive evidence to the trier of fact that Respondent engaged in mismanagement.3 Respondent billed Market Street for payment of the sea wall when Respondent completed the sea wall. However, the draw schedule in the loan documents does not provide a draw payment for the sea wall. Respondent stopped paying construction interest that Respondent was obligated to pay under the terms of the construction loan. Thereafter, Mr. and Mrs. Veith paid construction interest of approximately $13,800.00. Clear and convincing evidence shows that Respondent abandoned the construction project within the meaning of Subsection 489.129(1)(j). Respondent failed to perform any work on the residence for 90 consecutive days without just cause. Respondent did not notify Mr. and Mrs. Veith that Respondent had abandoned the project. Rather, Mr. and Mrs. Veith started receiving requests for payment of construction loan interest. Respondent failed to conduct any construction activity on the project site for more than 90 consecutive days. On May 13, 2008, Mr. and Mrs. Veith received notice that their loan had been assigned from Market Street to Gulf Coast Bank & Trust Company (Gulf Coast). Gulf Coast sent Mr. and Mrs. Veith repeated demands for payment of the construction loan principal and interest. Mr. and Mrs. Veith entered into a transaction identified in the record as a "short sale" in which they sold the construction site, which they originally purchased for $128,000.00, for $20,000.00. The $20,000.00 sale proceeds were paid to Gulf Coast. Mr. and Mrs. Veith have been financially unable to make payments to Gulf Coast. They remain liable for the full amount of the loan, including delinquent principal and interest. Mr. and Mrs. Veith brought a civil action against Respondent. They were unable to sustain the action because they could not afford the attorney fees. Petitioner incurred investigative costs in this matter of $204.26. The investigative costs do not include attorney time.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a final order finding that Respondent is guilty of the violations alleged in the Administrative Complaint; imposing the fines enumerated in paragraph 24 of this Recommended Order; requiring Respondent to pay investigative costs in the amount of $204.26; and requiring Respondent to make full restitution to Mr. and Mrs. Veith in the amount of $61,747.72. DONE AND ENTERED this 12th day of July, 2010, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 12th day of July, 2010.
The Issue The issue in these cases is whether the Department of Juvenile Justice's (Department) proposed award of certain contracts to Bay Area Youth Services, Inc. (BAYS), based on evaluations of proposals submitted in response to a Request for Proposals is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact On July 2, 2003, the Department issued Request for Proposal (RFP) No. V6P01 for operation of IDDS programs in Judicial Circuits 1 through 20. The Department issued a single RFP and anticipated entering into 20 separate contracts, one for each circuit. Each contract was for a three-year period with the possibility of a renewal for an additional three-year period. The RFP was prepared based on a "contract initiation memo" generated within the Department and upon which the scope of services set forth in the RFP was based. The Department assigned one contract administrator to handle the procurement process. An addendum dated July 18, 2003, was issued to the RFP. As amended by the addendum, the RFP required submission of information in a tabbed format of three volumes. Volume I was the technical proposal. Volume II was the financial proposal. Volume III addressed past performance by the vendor. The addendum also allowed providers to submit some information in electronic format. The addendum requested, but did not require, that it be signed and returned with the submission. BAYS did not return a signed copy of the addendum in its proposal. Failure to sign and return the addendum was not fatal to the consideration of a proposal. The RFP set forth only two criteria for which noncompliance would be deemed "fatal" to a proposal. Failure to comply with a fatal criterion would have resulted in automatic elimination of a provider's response; otherwise, all responses submitted were evaluated. The proposals were opened on July 31, 2003. The contract administrator and staff reviewed the bids to ascertain whether required items were included, and noted the proposed costs on bid tabulation sheets. The first fatal criterion was failing to submit a properly executed "Attachment A" form to a submission. Attachment A is a bidder acknowledgment form. Both BAYS and JSP included a completed Attachment A in the responses at issue in this proceeding. The second fatal criterion was exceeding the Maximum Contract Dollar Amount. RFP Attachment B, Section XIII, provides in relevant part as follows: The Maximum Contract Dollar Amount will be the Annual Maximum Contract Dollar Amount multiplied by the number of years in the initial term of the Contract . . . . EXCEEDING THE ANNUAL MAXIMUM CONTRACT DOLLAR AMOUNT IS A FATAL CRITERION. ANY PROPOSAL WITH A COST EXCEEDING THE ANNUAL MAXIMUM CONTRACT DOLLAR AMOUNT WILL BE REJECTED. The information reviewed as to each provider's cost proposal was set forth in Volume II, Tab 1, which included RFP Attachment J. RFP Attachment J is a cost sheet where providers were required to set forth proposal costs identified as the "Maximum Payment" under their proposal. Attachment K to the RFP identifies the counties served in each circuit, number of available slots in each circuit, and the Annual Maximum Contract Dollar Amount for each circuit. JSP appears to have simply copied information from Attachment K onto Attachment J. The Department's contract administrator was the sole person assigned to review Volume II of the responses. Volume II included the cost proposal, the supplier evaluation report (SER), and the certified minority business enterprise (CMBE) subcontracting utilization plan. Neither BAYS nor JSP exceeded the Annual Maximum Contract Dollar Amount applicable to any circuit at issue in this proceeding. Both BAYS and JSP identified a Maximum Payment equal to the Annual Maximum Contract Dollar Amount as their proposal cost. Both BAYS and JSP received scores of 100 points for cost proposals in all responses at issue in this proceeding. JSP asserts that the instructions as to identification of the Annual Maximum Contract Dollar Amount were confusing and that its actual cost proposal was less than that set forth as the "Maximum Payment" on Attachment J. JSP asserts that it actually listed its cost proposal at the section identified on Attachment J as "renewal term dollar amount proposed." JSP asserts that the Department should have reviewed supporting budget information set forth in Attachment H to the RFP to determine JSP's cost proposal, and that the Department should have determined that JSP's actual cost proposal was less than that of BAYS. The Department did not review the budget information in Attachment H, but based its cost evaluation of the proposals on the total figures set forth on Attachment J. Nothing in the RFP suggests that underlying information as to cost proposals would be reviewed or evaluated. The evidence fails to establish that the Department's reliance on the information set forth on Attachment J was unreasonable or erroneous. The evidence fails to establish that the Department's scoring of the cost proposals was contrary to the RFP. The evidence fails to establish that JSP is entitled to have its cost proposal re-scored. One of the requirements of the RFP was submission of a "Supplier Evaluation Report" (SER) from Dunn & Bradstreet. The submission of the SER was worth 90 points. Dunn & Bradstreet transmitted most of the SERs directly to the Department, and the Department properly credited the providers for whom such reports were transmitted. The Department's contract administrator failed to examine BAYS submission for the SER, and BAYS did not receive credit for the SER included within its proposal. The failure to credit BAYS for the SERs was clearly erroneous. BAYS is entitled to additional credit as set forth herein. The RFP sought utilization of a CMBE in a provider's proposal. BAYS proposal included utilization of The Nelco Company, an employee leasing operation. The Nelco Company is a properly credentialed CMBE. Under the BAYS/Nelco arrangement, BAYS would retain responsibility for identification and recruitment of potential employees. BAYS performs the background screening and makes final employment decisions. BAYS retains the right to fire, transfer, and demote employees. The Nelco Company would process payroll and handle other fiscal human resource tasks including insurance matters. The Nelco Company invoices BAYS on a per payroll basis, and BAYS pays based on the Nelco invoice. JSP asserts that under the facts of this case, the participation of The Nelco Company fails to comply with the RFP's requirement for CMBE utilization. BAYS proposals also included utilization of other CMBEs. There is no credible evidence that BAYS utilization of The Nelco Company or of the other CMBEs included within the BAYS proposals fails to comply with the RFP's requirement for CMBE utilization. The Department assigned the responsibility for service proposal evaluation to employees located within each circuit. The contract administrator and staff distributed appropriate portions of Volume I of each proposal to the evaluators. The evidence establishes that the evaluators received the documents and evaluated the materials pursuant to written scoring instructions received from the Department. Some reviewers had more experience than others, but there is no evidence that a lack of experience resulted in an inappropriate review being performed. In two cases, the evaluators worked apart from one another. In one circuit, the evaluators processed the materials in the same room, but did not discuss their reviews with each other at any time. There is no evidence that evaluators were directed to reach any specific result in the evaluative process. JSP asserts that there was bias on the part of one evaluator who had knowledge of some unidentified incident related to JSP. The evidence fails to establish the facts of the incident and fails to establish that the incident, whatever it was, played any role in the evaluator's review of the JSP proposal. JSP also asserts that another evaluator had contact with JSP at some point prior to his evaluation of the RFP responses. There is no evidence that the contact was negative or was a factor either for or against JSP in the evaluation of the RFP responses. The RFP required that each provider's proposal include letters of intent from "local service resources" indicating a willingness to work with the provider and a letter of support from the State Attorney in the judicial circuit where the provider's program would operate. The RFP indicates that Volume I of a provider's response should contain five tabbed sections. The RFP provides that "information submitted in variance with these instructions may not be reviewed or evaluated." The RFP further provides that failure to provide information "shall result in no points being awarded for that element of the evaluation." JSP included letters of support in Tab 5 of Volume I. BAYS included letters of support in a tabbed section identified as Tab 6 of Volume I. JSP asserts that information included in Tab 6 of BAYS proposals should not have been evaluated and that no points should have been awarded based on the information included therein. The evidence fails to support the assertion. Based on the language of the RFP, submission of information in a format other than that prescribed is not fatal to a proposal. The Department reserved the authority to waive such defects and to evaluate the material. Here, the Department waived the variance as the RFP permitted, and reviewed the material submitted by BAYS. JSP asserts that BAYS proposal breached client confidentiality by inclusion of information regarding an individual who has allegedly received services through BAYS. Records regarding assessment or treatment of juveniles through the Department are deemed confidential pursuant Section 985.04, Florida Statutes (2003). The evidence fails to establish that an alleged violation of Section 985.04, Florida Statutes (2003), requires rejection of the BAYS proposals. There is no evidence that the information was released outside of the Department prior to the bid protest forming the basis of this proceeding. The evidence establishes that JSP misidentified the name of its contract manager in its transmittal letter. The evidence establishes that the misidentification was deemed immaterial to the Department, which went on to evaluate the JSP proposals. The results of the evaluations were returned to the contract administrator, who tabulated and posted the results of the process. On August 25, 2003, the Department posted a Notice of Intent to Award contacts based on the proposals submitted in response to the RFP. Insofar as is relevant to this proceeding, the Department proposed to award the contracts for Circuits 5, 6, and 20 to BAYS. The Department received four proposals from IDDS program providers in Circuit 5 (DOAH Case No. 03-3671BID). According to the Notice of Intended Contract Award, BAYS was the highest ranked bidder with 651.8 points. JSP was the second highest bidder with 642.6 points. White Foundation was the third highest bidder at 630.7 points, and MAD DADS was the fourth bidder at 442.8 points. The evidence establishes that BAYS included its SER in its Circuit 5 proposal. The Department neglected to examine BAYS submission for the SER, and BAYS did not receive credit for its SER. BAYS should have received an additional 90 points, bringing its total points to 741.8. The Department received two proposals from IDDS program providers in Circuit 6 (DOAH Case No. 03-3672BID). According to the Notice of Intended Contract Award, BAYS was the highest ranked bidder with 649.0 points. JSP was the second highest bidder with 648.8 points. The evidence establishes that BAYS included its SER in its Circuit 6 proposal. The Department neglected to examine BAYS submission for the SER, and BAYS did not receive credit for its SER. BAYS should have received an additional 90 points, bringing its total points to 739.0. The Department received two proposals from IDDS program providers in Circuit 20 (DOAH Case No. 03-3673BID). According to the Notice of Intended Contract Award, BAYS was the highest ranked bidder with 644.2 points. JSP was the second highest bidder with 620.6 points. The evidence establishes that BAYS included its SER in its Circuit 20 proposal. The Department neglected to examine BAYS submission for the SER, and BAYS did not receive credit for its SER. BAYS should have received an additional 90 points, bringing its total points to 734.2. MOTION TO DISMISS BAYS asserts that the Petitions for Hearing filed by JSP must be dismissed for failure to comply with Section 287.042(2)(c), Florida Statutes (2003), which requires that a protesting bidder post a bond or cash in an amount equal to one percent of the estimated contract amount by the time a formal written bid protest is filed. Item 8 of the RFP indicated that the bond or cash amount required was one percent of the total contract amount or $5,000, whichever was less. However, RFP Attachment "B," Section IX, indicates that it replaces RFP Item 8, and provides that the required bond or cash amount is one percent of the estimated contract amount. Pursuant to Section 120.57(3)(b), Florida Statutes (2003), JSP had 72 hours from the announcement of the bid award to file a Notice of Protest and an additional ten days to file a Formal Written Protest. The notice of intended bid award was posted on August 25, 2003. Accordingly, the written protest and appropriate deposits were due by September 8, 2003. The Department's Notice of Intended Award referenced the bond requirement and stated that failure to post the bond would constitute a waiver of proceedings. On September 8, 2003, JSP provided to the Department a cashier's check for $2,159.70 in relation to its protest of the award for Circuit 5. The contract amount was $647,910. One percent of the contract amount is $6,479.10. On September 8, 2003, JSP provided to the Department a cashier's check for $3,414.52 in relation to its protest of the award for Circuit 6. The contract amount was $1,025,857.50. One percent of the contract amount is $10,258.57. On September 8, 2003, JSP provided to the Department a cashier's check for $2,231.69 in relation to its protest of the award for Circuit 20. The contract amount was $669,507. One percent of the contract amount is $6,695.07. In response to JSP's insufficient cashier's checks, the Department, by letter of September 12, 2003, advised JSP of the underpayment and permitted JSP an additional ten days to provide additional funds sufficient to meet the requirements of the statute. JSP, apparently still relying on the superceded language in the RFP, forwarded only an amount sufficient to bring the deposited funds to $5,000 in each case. By letter dated September 25, 2003, the Department again advised JSP that the deposited funds were insufficient and provided yet another opportunity to JSP to deposit additional funds. On September 29, 2003, JSP forwarded additional funds to provide the appropriate deposits.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Juvenile Justice enter a Final Order as follows: Dismissing the Petition for Hearing filed by MAD DADS of Greater Ocala, Inc., in Case No. 03-3670BID based on the withdrawal of the Petition for Hearing. Dismissing the Petitions for Hearing filed by JSP for failure to comply with Section 287.042(2)(c), Florida Statutes (2003), and for the other reasons set forth herein. DONE AND ENTERED this 16th day of January, 2004, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 16th day of January, 2004. COPIES FURNISHED: James M. Barclay, Esquire Ruden, McClosky, Smith, Schuster & Russell, P.A. 215 South Monroe Street, Suite 815 Tallahassee, Florida 32301 Brian Berkowitz, Esquire Kimberly Sisko Ward, Esquire Department of Juvenile Justice Knight Building, Room 312V 2737 Centerview Drive Tallahassee, Florida 32399-3100 Larry K. Brown, Executive Director MAD DADS of Greater Ocala, Inc. 210 Northwest 12th Avenue Post Office Box 3704 Ocala, Florida 34478-3704 Andrea V. Nelson, Esquire The Nelson Law Firm, P.A. Post Office Box 6677 Tallahassee, Florida 32314 William G. Bankhead, Secretary Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-3100 Robert N. Sechen, General Counsel Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-3100
Findings Of Fact During 1984 Philip Dennis on his own behalf and on behalf of Medi Fund Inc. negotiated in Florida with William Kickliter for the purpose of arranging a mortgage loan. During those negotiations Respondent Dennis represented to Kickliter that both he and Respondent Medi Fund, Inc., were mortgage brokers licensed by the State of Florida. In his stated capacity as a mortgage broker, Respondent Dennis drafted and entered into an agreement with Kickliter whereby Kickliter would obtain a mortgage loan from Respondent Medi Fund, Inc., for financing an ongoing business. Respondent Dennis signed the agreement between Kickliter and Respondent Medi Fund, Inc., pursuant to which Kickliter gave to Respondent Dennis a refundable advance fee of $1,500 by check made payable to Respondent Medi Fund, Inc. No mortgage loan was ever consummated. When Kickliter made demand on Respondent Dennis for the return of his monies, Respondent Dennis sent to Kickliter a post-dated check for only $850 with a notation on that check that it was allegedly for full payment of the refundable advance fee. When Kickliter deposited that check, the check "bounced." Respondent Dennis then stopped payment on the check. Kickliter's refundable advance fee has never been refunded to him by either Respondent Dennis or Respondent Medi Fund, Inc. In 1983 Respondent Dennis negotiated in Florida with Robert N. Goldstein to secure financing so that Goldstein's company Hospitality Consultants, Inc., could acquire a hotel. Respondent Dennis drafted and presented to Goldstein and Goldstein's partner Thomas Palumbo an agreement between Respondent Dennis and Hospitality Consultants, Inc., whereby Respondent Dennis would seek mortgage funding for the corporation. In that agreement Respondent Dennis designated himself as "the broker", a designation which matched his oral representations to Goldstein that he was a mortgage broker licensed in the State of Florida. Respondent Dennis executed that agreement on March 11, 1983, on his own behalf. In 1985 Respondent Dennis negotiated in Florida with Bryan Miller of Deco Redevelopment Corp. to secure real estate mortgage loan financing for hotels located in Miami Beach. Respondent Dennis on behalf of Respondent Medi Funds Inc., drafted an agreement whereby Respondent Medi Funds Inc. would secure financing for real estate renovation and new construction of a hotel complex to be built in Miami Beach. Respondent Dennis entered into that agreement on behalf of Respondent Medi Fund Inc. Pursuant to, that agreement, Miller paid to Respondent Dennis on behalf of Respondent Medi Funds Inc., the sum of $5,000 as a refundable advance fee. Neither Respondent Dennis nor Respondent Medi Funds Inc. has arranged any mortgage loan to Deco Redevelopment Corp. Furthers the $5,090 Refundable advance fee paid to Respondents Dennis and Medi Fund Inc. has never been refunded. In 1985 Respondent Dennis while in Florida negotiated with Millie Bulkeley of Arizona for mortgage loan financing for a mobile home park in Arizona. Thereafter Respondent Dennis drafted and entered into an agreement with Bulkeley whereby Respondent Medi Fund Inc., would secure real estate financing for her. Pursuant to that agreement Bulkeley deposited into Respondent Dennis's bank account in New York $20,000 as a refundable advance fee. No financing was ever secured for the project by Respondent Dennis or Respondent Medi Fund Inc. and the refundable advance fee has never been refunded. During 1983, 1984, and 1985 Respondent Dennis represented himself as being an officer of Respondent Medi Fund Inc. and misrepresented to persons both orally and in writing that both Respondent Dennis and Respondent Medi Fund, Inc., were mortgage brokers licensed by the State of Florida. During the time period of December 1982 up to and including May 2, 1986, neither Respondent Dennis nor Respondent Medi Fund, Inc., has been a licensed mortgage broker. By Order entered April 16, 1986, in this cause Petitioner was awarded certain costs against Respondent Medi Funds Inc., as a result of Medi Fund, Inc.'s, refusal to engage in discovery. Those reasonable costs are $45 for the attendance of the court reporter, $318.10 for the travel expense incurred by Petitioner's attorney, and $1,275 as an attorney's fee for Petitioner's attorney. The Order of April 16, 1986, also required Respondent Medi Funds Inc. to return to Petitioner the witness fee and mileage fee paid to it before its non-appearance at its scheduled deposition.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered finding Respondents Philip Dennis and Medi Fund, Inc., guilty of the allegations contained within the Cease and Desist Order filed herein ordering Respondents Dennis and Medi Fund, Inc. to forthwith and immediately cease and desist from any further violations of Chapter 494, Florida Statutes, requiring Medi Funds Inc. to return to the State of Florida the witness fee and mileage paid to it pursuant to the April 16, 1986 Order entered herein and requiring Respondent Medi Funds Inc. to pay to the State of Florida the sum of $1,638.10, as further required by the April 16, 1986 Order entered herein. DONE and RECOMMENDED this 29th day of August 1986 at Tallahassee Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 1986. COPIES FURNISHED: Gerald Lewis, Comptroller State of Florida The Capitol Tallahassee, Florida 32301 Deborah Hoffman, Esquire Thomas E. Glick Esquire Office of Comptroller 401 N.W. 2nd Avenue, Suite 870 Miami Florida 33128 Philip Dennis 2124 Northeast 167 Street North Miami Beach, Florida 33160 Medi Funds Inc., a Florida Corporation c/o Philip Dennis 2124 Northeast 167 Street North Miami Beach, Florida 33160
The Issue Whether Respondent's application of the inflation protection clause of the agreement to purchase real estate, thereby increasing the purchase price, discriminated against Petitioner in violation of the Florida Fair Housing Act (FFHA) and Sections 760.20 through 760.37, Florida Statutes (2004).
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 dismissing Petitioner's Petition for Relief. DONE AND ENTERED this 24th day of January, 2006, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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 24th day of January, 2006. COPIES FURNISHED: Denise Crawford, Agency Clerk Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Tyrone Harrison 8412 Peterson Road Odessa, Florida 33556 Cristina A. Equi, Esquire Gray & Robinson, P.A. 301 East Pine Street, Suite 1400 Post Office Box 3068 Orlando, Florida 32802-3068 Cecil Howard, General Counsel Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue The issues in this protest are whether either or both of Respondent's intended actions in dispute——namely, (i) deeming one application eligible for funding despite the existence of reasonable grounds for uncertainty as to whether the amount of capital the applicant's equity proposal states will be invested during construction is sufficient to cover development costs; and (ii) awarding another applicant a number of proximity points based on information in its application that was later discovered to be mistaken——are contrary to governing statutes, administrative rules, or the specifications of the solicitation; and, if so, whether the erroneous action or actions are contrary to competition, clearly erroneous, or arbitrary or capricious.
Findings Of Fact FHFC is the housing credit agency for the state of Florida whose responsibilities include the awarding of low- income housing tax credits, which developers use to finance the construction of affordable housing. Tax credits are distributed pursuant to a competitive process similar to a public procurement that starts with FHFC's issuance of a request for applications.1/ On September 6, 2018, FHFC issued Request for Applications 2018-110 (the "RFA"). Applications were originally due on October 23, 2018, but this deadline was extended to December 4, 2018. FHFC received 191 applications in response to the RFA, through which FHFC seeks to award housing credits worth up to approximately $14.3 million for developments that will be located in medium counties. A Review Committee was appointed to evaluate the applications and make recommendations to FHFC's Board of Directors (the "Board"). Pursuant to the ranking and selection process outlined in the RFA, applicants were evaluated on eligibility items and were awarded points for other items. The eligibility items included Submission Requirements, Financial Arrearage Requirements, and a Total Development Cost Per Unit Limitation requirement. To be eligible for funding, an application must meet all of the eligibility items. A Funding Test in the RFA provides that "[a]pplications will be selected for funding only if there is enough funding available to fully fund the Eligible Housing Credit Request Amount." The Review Committee found 181 applications eligible (95 percent of the total), deemed ten applications ineligible, and selected ten applications for recommendation to the Board for funding. At a meeting on March 22, 2019, the Board approved the Review Committee's eligibility and funding recommendations. That same day, FHFC notified all applicants that the Board had approved the staff recommendations. The notice, which was posted on FHFC's website, listed the many eligible applicants along with the handful of eligible applicants that had been chosen for an intended award of housing credits. Among the putative successful applicants were Norton Commons and Harrison Parc.2/ Though deemed eligible, HTG Oak Valley, Harmony Pinewood, and Fountains were not recommended for funding. Harmony Pinewood. Harmony Pinewood timely submitted an application requesting an allocation of housing credits for an 86-unit housing development in Brevard County. FHFC determined that Harmony Pinewood's application was eligible for an award of housing credits but did not preliminarily select Harmony Pinewood for funding. In evaluating Harmony Pinewood's application, FHFC found that the applicant had earned enough proximity points to qualify for the Proximity Funding Preference, which gives Harmony Pinewood an advantage in the ranking over other applicants who failed to qualify for the preference. Applicants earn proximity points based on the distance between their Development Location Point ("DLP")3/ and the Transit Service or Community Service they select. The closer the applicant's DLP is to the corresponding Transit or Community Service, the more proximity points the applicant will receive. As an eligible Community Service, an applicant might choose a Grocery Store, Public School, Medical Facility, or Pharmacy. The RFA required applicants to "state[] [their respective DLPs] in decimal degrees, rounded to at least the sixth decimal place." Harmony Pinewood selected latitude 28.041319 and longitude -80.615026 as the coordinates for its DLP. As a Community Service, Harmony Pinewood identified a Grocery Store, Thrifty Specialty Produce, located at 2135 Palm Bay Road Northeast, Palm Bay, Florida 32905, latitude 28.035489, longitude -80.610050. The RFA instructed applicants to round up the distance between the DLP and selected service to the nearest hundredth of a mile. Harmony Pinewood's application declared the distance between its DLP and Thrifty Specialty Produce to be exactly one-half of a mile. The RFA required applicants to obtain a minimum of 7.0 proximity points to be eligible for funding. Applicants needed to earn 9.0 or more proximity points to be entitled to the Proximity Funding Preference. During the evaluation, FHFC does not independently calculate any distances based on the coordinates provided by applicants, but instead awards points based on the distances stated in the applications, which it accepts as true. The distance of 0.50 miles entitled Harmony Pinewood to an award of 3.5 proximity points for its Grocery Store, which contributed to the applicant's total proximity score of 9.0. Based on the coordinates provided in Harmony Pinewood's application, however, the distance between its DLP and Thrifty Specialty Produce is, in fact, 0.51 miles when rounded up to the nearest hundredth of a mile, as Brian Waterfield, testifying at hearing on behalf of Harmony Pinewood, admitted. According to Mr. Waterfield, Harmony Pinewood had intended to enter "28.041219" rather than "28.041319" as the latitude coordinate for its DLP but made a typographical error. He claimed that if the latitude had been entered correctly as "28.041219," then the distances shown in Harmony Pinewood's application would be correct. HTG Oak Valley protests the award of 3.5 Grocery Store proximity points to Harmony Pinewood's application, asserting that the score was based on an erroneously reported distance of one-half mile. HTG Oak Valley urges that this error be treated as a minor irregularity; that the distance in question be corrected to 0.51 miles in accordance with the RFA's directions concerning rounding; and that Harmony Pinewood's Grocery Store- related proximity points be reduced to 3.0 to conform to the revised DLP-to-service distance. This would bring Harmony Pinewood's total proximity score down to 8.5, rendering Harmony Pinewood ineligible for the Proximity Funding Preference. FHFC agrees with HTG Oak Valley. Harmony Pinewood contends that the error in its application was not in the reported distance but rather in the DLP latitude coordinate. Harmony Pinewood urges that this error be treated as a minor irregularity; that the latitude in question be corrected to 28.041219 in accordance with the applicant's intent; and that the initial scoring decision to award Harmony Pinewood 3.5 Grocery Store-related proximity points be upheld. The problem with Harmony Pinewood's position is that no one reviewing the information provided within the application could discover the alleged typographical error in the DLP latitude coordinate except Harmony Pinewood itself. In contrast, any party using the coordinates stated in the application could attempt to verify the accuracy of the reported distance between Harmony Pinewood's DLP and Thrifty Specialty Produce. Taking this a step further, the longitude and latitude coordinates of a DLP constitute the numerical expression of a subjective decision on the part of the applicant, a value judgment which is not falsifiable, despite the apparent exactitude of the figures. This is because the DLP is, by definition, "a single point selected by the Applicant on the proposed Development site that is located within 100 feet of a residential building existing or to be constructed as part of the proposed Development." Fla. Admin. Code R. 67-48.002(34) (emphasis added). There are, in other words, no right or wrong DLPs, only compliant and noncompliant DLPs. Harmony Pinewood's DLP, as described in its application, satisfies rule 67-48.002(34), and thus is a responsive, conforming, compliant DLP; there is nothing facially or inherently irregular about it. The selection of a DLP is, moreover, a competitive decision because the chosen location directly affects the number of proximity points to which an application may be entitled. It is a decision that makes an application more or less competitive relative to the other applications. In this respect, selecting a DLP is analogous to deciding upon a price to bid on a contract. Imagine a second-ranked bidder claiming that it had meant to bid $28,041,219 instead of $28,041,319, where $100 would make the difference between winning and losing. Unless there were clear evidence in the bid that the lower price had been intended, there would be no practical distinction whatsoever between "correcting" the supposed clerical error and "amending" the bid based on extrinsic evidence submitted post decision. The latter is clearly prohibited. See § 120.57(3)(f), Fla. Stat; cf. Fla. Admin. Code R. 67-60.009(4). Because post-deadline amendments to an application based on extrinsic evidence are impermissible, an applicant's subjective competitive decisions must be deemed both final as of the application deadline, and fully expressed within the four corners of the application. Thus, it should be rare for an alleged error in the expression of a competitive decision to be deemed a minor irregularity. To make such a finding of minor irregularity in an exceptional situation, two necessary (but perhaps not sufficient) conditions would have to be met: (i) the alleged error would need to be reasonably apparent to anyone on the face of the application and (ii) the intended statement, free of error, would need to be unmistakably expressed somewhere in the application. So, for an example, recall the previous hypothetical but assume, as additional facts, that the bid price of $28,041,319 is necessarily the product of a unit price ("a") times a certain number of units ("b"), and that both a and b are clearly stated in the bid. If a × b = $28,041,219 instead of $28,041,319, then someone other than the applicant would be able to discover the mathematical or clerical error in the bottom-line price quote, and it would be fairly clear from the face of the bid that $28,041,219 was the intended price. Such an error might be correctible in the agency's discretion.4/ That is not the situation here. The coordinates of Harmony Pinewood's DLP appear only once in its application. Because of the rounding involved, moreover, the "true" coordinates cannot be derived from the stated distance of miles. Unlike the product of a times b, which can be only one number, there are multiple DLP longitude-latitude pairs that correspond to the stated distance of 0.50 miles——or, at a minimum, the evidence fails to rule out such diversity. The only way for anyone besides Harmony Pinewood to know that the DLP latitude "should have been" 28.041219 is to hear it from Harmony Pinewood. Under these circumstances, the undersigned determines that the DLP coordinates in Harmony Pinewood's application must be considered the true and correct, full and final expression of the applicant's decision to select that particular location for its DLP. Therefore, the irregularity in Harmony Pinewood's application is not the stated DLP latitude; it is the stated distance between the DLP and the Grocery Store, which should be miles instead of 0.50 miles. Because the RFA requires an award of 3.0 proximity points for a distance of 0.51 miles, and because the distance irregularity does not otherwise render Harmony Pinewood's application nonresponsive, the correct, and only nonarbitrary, solution to the problem is for FHFC to reduce the number of Grocery Store proximity points awarded to Harmony Pinewood's application, from 3.5 as intended, to 3.0. Fountains. Fountains submitted an application requesting an allocation of housing credits for a proposed 120-unit housing development in Flagler County. FHFC determined that Fountains was eligible for an award of housing credits but did not preliminarily select the Fountains application for funding. HTG Oak Valley protests FHFC's intended decision to deem Fountains eligible for funding, alleging that Fountains' application is materially nonresponsive——and thus should be rejected as ineligible——for failing clearly to state that an amount of equity sufficient to cover the anticipated development costs would be invested in the project prior to construction completion. The RFA requires that an applicant must submit, as part of its application, a Development Cost Pro Forma detailing both the anticipated costs of the proposed development as well as the anticipated funding sources for the proposed development. In order to demonstrate adequate funding, the Total Construction Sources (including equity proceeds/capital contributions and loans), as shown in the pro forma, must equal or exceed the Total Development Costs reflected therein. During the scoring process, if a funding source is not considered or is adjusted downward, then Total Development Costs might wind up exceeding Total Construction Sources, in which event the applicant is said to suffer from a construction funding shortfall (deficit). If an applicant has a funding shortfall, it is ineligible for funding. The Development Cost Pro Forma does not allow applicants to include in their Total Construction Sources any equity proceeds to be paid after construction completion. Instead, the applicant must state only the amount of "Equity Proceeds Paid Prior to Completion of Construction." The pro forma defines "Prior to Completion of Construction" as "Prior to Receipt of a Final Certificate of Occupancy." The RFA requires, as well, that an equity proposal letter be included as an attachment to the application. For a housing credit equity proposal to be counted as a source of financing, it must meet the following criteria: Be executed by the equity provider; Include specific reference to the Applicant as the beneficiary of the equity proceeds; State the proposed amount of equity to be paid prior to construction completion; State the anticipated Eligible Housing Credit Request Amount; State the anticipated dollar amount of Housing Credit allocation to be purchased; and State the anticipated total amount of equity to be provided. (Emphasis added). As Attachment 14 to its application, Fountains submitted an equity proposal letter from RBC Capital Markets ("RBC") executed by David J. Urban (the "Equity Proposal"). In relevant part, the Equity Proposal states: Anticipated Total Equity to be provided: $15,510,849* Equity Proceeds Paid Prior to or simultaneous to closing the construction financing: $2,481,736* (min. 15%) Equity Proceeds to be Paid Prior to Construction Completion: $8,686,075 Pay-In Schedule: Funds available for Capital Contributions #1: $2,481,736* be paid prior to or simultaneously with the closing of the construction financing. Funds available for Capital Contribution #2 $2,326,627* prior to construction completion. Funds available for Capital Contribution #3 $3,877,712* concurrent with permanent loan closing. Equity Proceeds Paid at Lease Up $5,428,797* Equity Proceeds Paid at 8609 $1,395,977* *All numbers rounded to nearest dollar. The Pay-In Schedule in the Equity Proposal refers to "permanent loan closing" as the moment when Capital Contribution #3 will be made "available." The Equity Proposal does not, however, define or discuss permanent loan closing, and, to the point, does not specify when it is expected to occur. Of potential relevance in this regard is a letter from JP Morgan Chase Bank, N.A. (the "Chase Letter"), which is included as Attachment 16 to Fountains' application. Unlike the Equity Proposal, the Chase Letter, if not the last word on the subject, at least sheds some light on the timing of the crucial milestone, i.e., "permanent loan closing." Although the Chase Letter is full of escape clauses and does "not represent a commitment" or "an offer to commit," the document nevertheless outlines the terms for the closing of the proposed construction and permanent loans. The proposed terms call for the payment of a $10,000 Conversion Fee at permanent loan closing and impose preconditions for the conversion from the construction loan to the permanent loan, which include a requirement that there have been "90% economic and physical occupancy for 90 days." No evidence was presented as to the meaning of this language, but the term "physical occupancy" is clear and unambiguous——and it plainly happens after receipt of a final certificate of occupancy, which, under the RFA, is the end point of the construction phase. HTG Oak Valley argues that the Pay-In Schedule casts doubt on whether the entire amount stated in the Equity Proposal's line-item entry for "Equity Proceeds to be Paid Prior to Construction Completion" ($8,686,075) will be paid before the final certificate of occupancy is issued. According to HTG Oak Valley, the Pay-In Schedule shows that the third capital contribution will be paid after construction completion because the second capital contribution, which is the earlier of the two, is due to occur "prior to construction completion." Thus, HTG Oak Valley contends that Fountains' construction financing sources should be reduced by $3,877,712, thereby creating a construction financing shortfall and rendering the Fountains application ineligible for funding. HTG Oak Valley finds support for its position in an unlikely place, namely, FHFC's intended rejection of the application that The Vistas at Fountainhead Limited Partnership ("Vistas") submitted in response to Request for Applications 2019-105 ("RFA 2019-105"). That proposed agency action is relevant because Vistas had attached to its application an equity proposal letter from RBC whose terms and conditions——other than the dollar amounts and (obviously) the applicant's name——are identical to those of the Equity Proposal for Fountains. During the evaluation of applications under RFA 2019-105, which took place at around the same time as the review of applications pursuant to the RFA at issue here, FHFC's scorer determined that Capital Contribution #3 should be excluded from the amount of equity proceeds to be paid prior to construction completion, with the result that the Vistas application was deemed ineligible for funding due to a funding shortfall. The Vistas and Fountains applications, competing in separate solicitations, were scored by different FHFC staff members. The evaluator who scored the financial section of Vistas' application sought advice concerning her interpretation of the Equity Proposal, discussing the matter with FHFC's Director of Multifamily Programs and legal counsel at a reconciliation meeting that occurred before the Review Committee convened; this evaluator encountered no resistance to her plan of making a downward adjustment to Vistas' equity funding. The evaluator of the Fountains application did not likewise discuss her scoring rationale and thus received no input or guidance from FHFC's management. Ultimately, however, because each scoring determination belongs to the Review Committee member herself or himself, inconsistent or conflicting results are possible, as these cases demonstrate. Once in litigation, FHFC discovered that it had reached opposite scoring conclusions based on the same material facts. In these proceedings and in the Vistas Protest, FHFC has stressed its desire to take a consistent approach to the identical Equity Proposals. To that end, in the Vistas Protest, FHFC has reversed course and argued that, contrary to its intended action, the Equity Proposal provided by Vistas fully satisfies the requirements of RFA 2019-105; there is no funding shortfall; and Vistas' application is eligible and should be selected for funding. Deeming Vistas' application eligible would achieve consistency, of course, by giving favorable treatment to the applications of both Fountains and Vistas, which are similarly situated as to the Equity Proposal. Naturally, HTG Oak Valley urges that consistency be found the other way around, through the rejection of both applications. In support of its decision to change positions on Vistas' Equity Proposal, FHFC relies upon the following premises, which are equally applicable to the determination of Fountains' substantial interests: (i) the Equity Proposal plainly specifies, in the line-item entry for "Equity Proceeds to be Paid Prior to Construction Completion," the amount to be paid prior to construction completion; (ii) permanent loan closing does not necessarily have to occur after construction completion; and (iii) the information contained in the Pay-In Schedule is not information that is required by RFA 2019-105 (or the RFA at issue in this case). The disputes arising from the scoring of the Equity Proposal are solvable as matters of law and therefore will be addressed below.
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 rescinding the intended award to Harrison Parc due to ineligibility; finding HTG Spring and Fountains ineligible for funding; and reducing Harmony Pinewood's proximity points to 8.5, which requires the cancelation of its Proximity Funding Preference. It is further RECOMMENDED that, as a result of the foregoing final actions, HTG Oak Valley be selected for funding under RFA 2018-110 and Wildwood Preserve Senior Living (not a party to this litigation) be deselected for funding. DONE AND ENTERED this 16th day of July, 2019, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM 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 16th day of July, 2019.
Findings Of Fact The findings below are based on the undisputed facts set forth in Petitioner's Protest and supplements thereto, Respondent's Motion to Dismiss, Petitioner's Response in Opposition to Motion to Dismiss, and representations by the parties during the motion hearing. On October 7, 2009, Respondent electronically posted its final ranking of firms which had submitted proposals to provide mechanical engineering services for six HVAC projects for Respondent in 2010. Respondent's electronic posting of the final ranking of firms included the following language: "Failure to file a protest within the time prescribed in Section 120.57(3), shall constitute a waiver of proceeding under Chapter 120, Florida Statutes." On October 12, 2009, Petitioner filed a Notice of Intent to Protest the final rankings. On October 22, 2009, Petitioner filed its Protest. Although Petitioner's Protest was timely filed, Petitioner initially did not file a bond or other security. The Protest alleges that Petitioner was not required to file a bond, because Respondent did not include in its final ranking notice that a failure to post a bond would constitute a waiver of proceedings under Subsection 120.57(3)(a), Florida Statutes. Additionally, the Protest alleges that Respondent: (1) failed to provide Petitioner with notice of the estimated contract amounts within 72 hours, exclusive of Saturdays and Sundays and state holidays, of the filing of a notice of protest as required by Subsection 287.042(2)(c), Florida Statutes; and (2) because Respondent had not provided that notice, Petitioner was unable to calculate the amount of the bond required and was, therefore, relieved of the obligation to file a bond. On October 30, 2009, Respondent, through counsel, wrote to Petitioner. In this correspondence, Respondent informed Petitioner that Section 287.042, Florida Statutes, did not apply to Respondent because it was not an "agency" for purposes of that law. Respondent further informed Petitioner that Section 255.0516, Florida Statutes, allowed Respondent to require a bond in the amount of two percent of the lowest accepted bid or $25,000. Respondent also notified Petitioner that because it was protesting all six project awards, all awards must be included in the calculation of the bond amount required. Finally, Petitioner was allowed ten days within which to post a bond. On November 3, 2009, Petitioner submitted to Respondent a cashier's check in the amount of $3,143.70 and noted that the check was intended to serve as security for the Protest "as required by F.S. 287.042(2)(c)." In the letter which accompanied the check, Petitioner also noted that: (1) the amount of the check was determined by calculating one percent of the largest proposed contract award amount of $314,370.00; and (2) Petitioner was providing that amount "under duress," because Respondent had "just published the contract award amounts." The relief requested by Petitioner in the Protest is that: (1) it be awarded one of the six HVAC projects comprising the final ranking; and/or (2) alternatively, all six awards be rescinded and "start the entire process over." The final ranking which Petitioner protests included six separate projects, each of which had a separate construction budget. Those projects and their respective construction budgets are as follows: Northwest--$1,144,000; Tampa Palms--$2,649,081; Yates--$2,770,828; Ferrell--$2,550,758; Stewart--$2,805,437; and Erwin--$4,191,603. The proposed fees for each project were as follows: $97,240 (Northwest); $211,926 (Tampa Palms); $221,666 (Yates); $204,061 (Ferrell); $224,435 (Stewart); and $314,370 (Erwin).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Hillsborough County School Board, issue a final order dismissing the Protest filed by Petitioner, RHC and Associates, Inc. DONE AND ENTERED this 20th day of January, 2010, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 20th day of January, 2010.
