The Issue Whether Petitioner meets the residency requirement prescribed by Section 458.347(7)(b)1.d., Florida Statutes, for certification as a physician assistant?
Findings Of Fact Based upon the record evidence, the following Findings of Fact are made: From May, 1957, until her retirement 33 years later, Petitioner was employed as a physician by a government agency in India. Her first position was that of an Assistant Surgeon. When she retired, she was the Chief Superintendent of a 350-bed hospital. Petitioner is now, and has been since November 11, 1959, happily married to Dayaldas M. Punwani. Petitioner and her husband were married in Bombay, India. They lived together in India until March, 1981, when Dayaldas moved to the United States. Petitioner remained in India with the couple's two children. At the time of their physical separation, Petitioner and her husband enjoyed a congenial relationship, as they have throughout their marriage. Their plan was for Petitioner to eventually join Dayaldas in the United States and live with him in the same household, but only following her retirement from government service and after their children were married and settled in accordance with Indian custom and tradition. When Dayaldas arrived in the United States, he first went to Boston, Massachusetts. Sometime in late 1981 or in 1982, he settled in Broward County, Florida and has lived there since. Using a visitor's visa to enter the United States, Petitioner visited her husband on two occasions after he had settled in Florida: from May, 1983, to August, 1983, and from November, 1985, to March, 1986. During her first visit, Petitioner and Dayaldas decided that when Petitioner joined Dayaldas in the United States to once again live with him, they would make Florida their permanent home. On neither of her visits to her husband did Petitioner come with the intention of staying for an indefinite period of time. Rather, she fully intended both times to return to India to continue her employment with the government until she reached retirement age 1/ and to discharge her responsibilities to her children. On February 8, 1990, Dayaldas became a permanent resident of the United States under this country's immigration laws. By February, 1990, both of Petitioner's and Dayaldas' children were married and settled. In April, 1990, Petitioner began to dispose of household items and other personal belongings in anticipation of her retirement and her subsequent move to Florida to join her husband. On May 30, 1990, at the age of 58, Petitioner retired from government service. The retirement age for physicians in government service in India is They have the opportunity, however, to seek reappointment to their position and work two years beyond their 58th birthday. Petitioner opted not to seek reappointment and extend her employment an additional two years because she wanted to move to Florida to live with her husband. At the time of her retirement, Petitioner was living in the same government-owned apartment in Bombay that she had been living in since September, 1964. The apartment was provided to her by the Indian government as part of her compensation package. 2/ Petitioner had a maximum of eight months following her retirement to vacate the apartment. Petitioner used only approximately one half of the allotted time. She vacated the apartment in December, 1990. On December 31, 1990, Petitioner arrived in Florida and moved in with her husband, with whom she has been living since. She came only with a few clothes. She had disposed of her other possessions, including her automobile, before leaving India. During the time that Petitioner was living in India and Dayaldas was living in the United States, Petitioner had an Indian driver's license and voted in local Indian elections. In or around April, 1991, Petitioner and Dayaldas filed a joint 1990 U.S. tax return. They subsequently filed an amended return. On June 14, 1991, Petitioner became a permanent resident of the United States under this country's immigration laws. On or around June 29, 1991, Petitioner mailed to the Board her completed application for certification as a physician assistant. On her application, she "list[ed her] place of residence on July 1, 1990," as "Bombay, Maharashtra, India."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Board of Medicine enter a final order finding that Petitioner is not qualified to be certified as a physician assistant pursuant to Section 458.347(7)(b)1., Florida Statutes, because she has not shown that she was a legal resident of Florida on July 1, 1990, or was licensed or certified in any state in the United States as a physician assistant on July 1, 1990. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 17th day of June, 1992. STUART M. LERNER 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 17th day of June, 1992. 1/ During both visits, she was on leave from her government position. 2/ The Indian government provides apartments to medical staff members regardless of their citizenship or immigration status. 3/ One may establish such a new residence in Florida without being a citizen of this country. See Pawley v. Pawley, 46 So.2d 464 (Fla. 1950); Perez v. Perez, 164 So.2d 561 (Fla. 3d DCA 1964). APPENDIX TO RECOMMENDED ORDER The following are the Hearing Officer's specific rulings on the findings of fact proposed by the parties: Petitioner's Proposed Findings of Fact 1-3. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order. To the extent that it suggests that Petitioner and her husband decided, during her 1983 visit, that they would both make Florida their permanent home from that moment on, rather than at some future date, this proposed finding has been rejected because it is not supported by persuasive competent substantial evidence. Otherwise, it has been accepted and incorporated in substance. Accepted and incorporated in substance. Rejected because it is more in the nature of a statement of the law than a finding of fact. 7-11. Accepted and incorporated in substance. The Board's Proposed Findings of Fact 1-4. Accepted and incorporated in substance. 5. First sentence: Rejected because it is a summary of testimony rather than a finding of fact based upon such testimony; Second and third sentences: Accepted and incorporated in substance. 6-7. Accepted and incorporated in substance. First and third sentences: Accepted and incorporated in substance; Second sentence: Rejected because it is a summary of testimony rather than a finding of fact based upon such testimony. Accepted and incorporated in substance. First and second sentences: Accepted and incorporated in substance; Third sentence: Rejected because it is a summary of testimony rather than a finding of fact based upon such testimony. COPIES FURNISHED: Julian Gonzalez, Esquire 150 Southeast 12th Street, Suite 401 Fort Lauderdale, Florida 33316 Edwin A. Bayo, Esquire Assistant Attorney General Department of Legal Affairs Suite LL04, The Capitol Tallahassee, Florida 32399-1050 Dorothy Faircloth, Executive Director Board of Medicine Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Jack McCray, Esquire General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue to be resolved in this proceeding is whether there is cause for termination of employment of Carolyn White with the employer, Palatka Housing Authority.
Findings Of Fact Petitioner, Palatka Housing Authority, is a local governmental entity responsible for low-income housing in Palatka, Florida. The Authority is governed by an appointed Board of Directors. The day-to-day operations of the Authority are managed by an Executive Director with back-up from the Deputy Executive Director. The Authority receives the vast majority of its money from the federal government, and the funds involved in this case were federal moneys. The Respondent, Carolyn White, was employed as the Deputy Executive Director by Petitioner, Palatka Housing Authority. The deputy directorship was a newly created position at the Public Housing Authority; however, Ms. White had worked for the Authority for many years and had worked her way up from a secretarial position to the deputy's position. As such a long- time employee, she unquestionably was aware or should have been aware that Public Housing Authority funds should not be converted for personal use. As part of her employment, the Respondent was responsible for the fiscal and purchasing operations of the Palatka Housing Authority. She was responsible for overseeing such things as travel vouchers, petty cash disbursements, payment of bills, and purchases. Carolyn White also reviewed the monthly credit card statements and made notations on the statements to indicate some information about a given charge. Around June 1995, the Public Housing Authority hired George Arias as Executive Director. At about the same time Petitioner was appointed Deputy Executive Director. Sometime in August 1995, Mr. Arias asked the Board Chairman, Gene Buchanan, for permission to apply for a Barnett Visa credit card in the name of the Public Housing Authority. Mr. Buchanan thought a credit card was a good idea and authorized Mr. Arias to apply for the credit card. On August 19, 1995, Mr. Arias applied for and received a Barnett Visa credit card in the name of Public Housing Authority. Three cards were issued with an initial credit limit of $5,000. The credit cards were given to Mr. Arias, Ms. White, and Mr. Buchanan. The credit card statement was paid out of the Public Housing Authority travel account, which was derived from federal money. At some point Mr. Arias told Ms. White she could use the credit card for personal expenses. Mr. Arias' "policy" was not communicated to the Board or approved by the Board, and Mr. Arias had no authority to authorize public funds for private use. Over the next few months charges to the credit account exceeded the credit limit. Mr. Arias asked Mr. Buchanan to increase the credit limit, and the limit was eventually increased to $10,000. However, around March 1996, Mr. Buchanan grew suspicious at the request to increase the credit limit and asked the Public Housing Authority's CPA to look at the credit card statements. When the auditor reviewed the credit card statements it was discovered that both Mr. Arias and Ms. White had used the Public Housing Authority credit card to purchase personal items and pay personal bills. In the case of Ms. White, the evidence clearly demonstrated that she used the Public Housing Authority credit card (1) to pay money on her installment credit account she had used to buy furniture at Badcock Furniture on January 10, 1996; (2) to purchase an item of jewelry from Friedman's Jewelry on January 12, 1996; (3) to pay for hotel or food bills for a weekend visit to Melbourne where no Public Housing Authority business was scheduled or performed on February 18, 1996; and (4) to pay for automobile repairs on her personal vehicle on January 5, 1996. Ms. White's use of the credit card for these purposes was clearly improper and constitutes grounds for termination of her employment with the Public Housing Authority. Once the personal use of the credit card was discovered by the CPA, both Mr. Arias and Ms. White claimed that they intended to pay the money back once the total amount of the personal expenditures was established in the year-end audit currently being conducted. However, there was no indication in the books and records of the Public Housing Authority that any items of a personal nature were marked or identified as personal for a reviewer to find. On balance, the claim of intended repayment is not credible. However, even assuming the repayment statement to be true, the use of and the lack of fiscal controls for documenting or identifying the personal expenditures on the credit card statements were totally inadequate. The lack of controls amounted to a failure of Ms. White to perform her duty as Deputy Executive Director overseeing fiscal operations. The use of the credit cards for personal expenditures clearly violated the federal and Public Housing Authority rules prohibiting use of federal or Public Housing Authority money for personal use. It was the responsibility of Ms. White to be familiar with these prohibitions and the need for fiscal control irrespective of Mr. Arias' permission to use the credit cards for personal use. Mr. Arias did not have the legal ability to authorize the unlawful use of the credit cards, and that is something Ms. White should have known as the Deputy Executive Director. Additionally, she was responsible for familiarizing herself with federal and state rules regarding use of state or federal funds. Ms. White should have known that neither state, federal, or Public Housing Authority funds could be used for personal use. Ms. White was in charge of the preparation, review, and approval of travel vouchers. The evidence was clear that travel vouchers were not done in a timely manner since many vouchers for travel almost a year past were not done. These vouchers were only prepared when requested by the CPA for his review. Again there were not fiscal controls sufficient to process the travel vouchers or to ensure their accuracy. In several instances per diem for meals had been paid to Petitioner and several other employees. However, when the travel occurred, meals were charged on the Visa credit card. The per diem was never reimbursed and the result was a double payment by the Public Housing Authority for meals. Other instances of double payments occurred when petty cash was used to pay for items purchased at various merchants such as Pic-N-Save and Wal-Mart when those same items had been charged to the Visa. These duplicate payments were a direct result of poor or no fiscal controls. Given these facts, the evidence demonstrates that Ms. White failed to perform her duties as Deputy Executive Director and converted Public Housing Authority funds to her personal use. She should therefore be terminated from that position.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That a Final Order be entered by the Petitioner Palatka Housing Authority terminating the employment of Carolyn White. DONE AND ENTERED this 26th day of September, 1997, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 26th day of September, 1997. COPIES FURNISHED: Donald E. Holmes, Esquire 222 North Third Street Palatka, Florida 32177 Paul M. Meredith, Esquire 626 Reid Street Palatka, Florida 32177 Stanley Hodge, Chairman Palaka Housing Authority Post Office Box 1277 Palatka, Florida 32178
The Issue At issue in this proceeding is whether the actions of the Florida Housing Finance Corporation (“Florida Housing”) concerning the review and scoring of the responses to Request for Applications 2016-110, Housing Credit Financing for Affordable Housing Developments Located in Medium and Small Counties (the “RFA”), was clearly erroneous, contrary to competition, arbitrary or capricious. Specifically, the issue is whether Florida Housing acted contrary to the agency’s governing statutes, rules, policies, or the RFA specifications in finding that the applications of Petitioners JPM Outlook One Limited Partnership (“JPM Outlook”) and Grande Park Limited Partnership (“Grande Park”) were ineligible for funding.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: JPM Outlook is a Florida limited partnership based in Jacksonville, Florida, that is in the business of providing affordable housing. Grande Park is a Florida limited partnership based in Jacksonville, Florida, that is in the business of providing affordable housing. Hammock Ridge is a Florida limited liability company based in Coconut Grove, Florida, that is in the business of providing affordable housing. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. For the purposes of this proceeding, Florida Housing is an agency of the State of Florida. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low-income housing tax credits. The low income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. These tax credits are awarded competitively to housing developers in Florida for rental housing projects that qualify. The credits are then normally sold by developers for cash to raise capital for their projects. The effect of this sale is to reduce the amount that the developer would have to borrow otherwise. Because the total debt is lower, a tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the tax credits. Housing tax credits are not tax deductions. For example, a $1,000 deduction in a 15-percent tax bracket reduces taxable income by $1,000 and reduces tax liability by $150, while a $1,000 tax credit reduces tax liability by $1,000. The demand for tax credits provided by the federal government exceeds the supply. Florida Housing is authorized to allocate housing tax credits and other funding by means of a request for proposal or other competitive solicitation in section 420.507(48). Florida Housing has adopted chapter 67-60 to govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing allocate its housing tax credits, which are made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3). In their applications, applicants request a specific dollar amount of housing tax credits to be given to the applicant each year for a period of 10 years. Applicants will normally sell the rights to that future stream of income tax credits (through the sale of almost all of the ownership interest in the applicant entity) to an investor to generate the amount of capital needed to build the development. The amount which can be received depends upon the accomplishment of several factors, such as a certain percentage of the projected Total Development Cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated area of some counties. This, however, is not an exhaustive list of the factors considered. Housing tax credits are made available through a competitive application process commenced by the issuance of a Request for Applications. A Request for Applications is equivalent to a “request for proposal,” as indicated in rule 67-60.009(3). The RFA in this case was issued on October 7, 2016. A modification to the RFA was issued on November 10, 2016, and responses were due December 2, 2016. A challenge was filed to the terms, conditions, or requirements of the RFA by parties not associated with the instant case, but that challenge was dismissed prior to hearing. Through the RFA, Florida Housing seeks to award up to an estimated $12,312,632 of housing tax credits to qualified applicants to provide affordable housing developments in Medium Counties, as well as up to an estimated $477,091 of housing tax credits to qualified applicants to provide affordable housing developments in Small Counties other than Monroe County. By the terms of the RFA, a review committee made up of Florida Housing staff reviewed and scored each application. These scores were presented in a public meeting and the committee ultimately made a recommendation as to which projects should be funded. This recommendation was presented to Florida Housing’s Board of Directors (“the Board”) for final agency action. On March 24, 2017, all applicants received notice that the Board had approved the recommendation of the review committee concerning which applications were eligible or ineligible for funding and which applications were selected for awards of housing tax credits, subject to satisfactory completion of the credit underwriting process. The notice was provided by the posting on Florida Housing’s website (www.floridahousing.org) of two spreadsheets, one listing the “eligible” and “ineligible” applications and one identifying the applications which Florida Housing proposed to fund. Florida Housing announced its intention to award funding to 10 developments, including Intervenor Hammock Ridge. Petitioners JPM Outlook and Grande Park were deemed ineligible. If JPM Outlook and Grande Park had been deemed eligible, each would have been in the funding range based on its assigned lottery number and the RFA selection criteria. If Grande Park had been deemed eligible, Hammock Ridge would not have been recommended for funding. Petitioners JPM Outlook and Grande Park timely filed notices of protest and petitions for administrative proceedings. The scoring decision at issue in this proceeding is based on Florida Housing’s decision that Petitioners failed to submit as Attachment 1 to Exhibit A the correct and properly signed version of the Applicant Certification and Acknowledgment Form. Petitioners’ admitted failure to submit the correct Applicant Certification and Acknowledgement Form was the sole reason that Florida Housing found Petitioners’ applications to be ineligible for funding. Section Four of the RFA was titled, “INFORMATION TO BE PROVIDED IN APPLICATION.” Listed there among the Exhibit A submission requirements was the Applicant Certification and Acknowledgement Form, described as follows: The Applicant must include a signed Applicant Certification and Acknowledgement form as Attachment 1 to Exhibit A to indicate the Applicant’s certification and acknowledgement of the provisions and requirements of the RFA. The form included in the copy of the Application labeled “Original Hard Copy” must reflect an original signature (blue ink is preferred). The Applicant Certification and Acknowledgement form is provided in Exhibit B of this RFA and on the Corporation’s Website http://www.floridahousing.org/Developers/ MultiFamilyPrograms/Competitive/2016- 110/RelatedForms/ (also accessible by clicking here). Note: If the Applicant provides any version of the Applicant Certification and Acknowledgement form other than the version included in this RFA, the form will not be considered. The final sentence of the quoted language is referred to by Florida Housing as the “effects clause.” The November 10, 2016, modifications to the RFA were communicated to applicants in three ways. First, Florida Housing provided a Web Board notice. The Florida Housing Web Board is a communication tool that allows interested parties and development partners to stay apprised of modifications to procurement documents. Second, each RFA issued by Florida Housing, including the one at issue in this proceeding, has its own specific page on Florida Housing's website with hyperlinks to all documents related to that RFA. Third, Florida Housing released an Official Modification Notice that delineated every modification, including a “blackline” version showing the changes with underscoring for emphasis. Brian Parent is a principal for both JPM Outlook and Grande Park. Mr. Parent received the Web Board notification of the RFA modifications via email. Upon receiving the email, Mr. Parent reviewed the modifications on the Florida Housing website. The modification to the RFA, posted on Florida Housing’s website on November 10, 2016, included the following modification of the Applicant Certification and Acknowledgement Form, with textual underscoring indicating new language: Pursuant to Rule 67-60.005, F.A.C., Modification of Terms of Competitive Solicitations, Florida Housing hereby modifies Item 2.b.(4) of the Applicant Certification and Acknowledgement Form to read as follows: (4) Confirmation that, if the proposed Development meets the definition of Scattered Sites, all Scattered Sites requirements that were not required to be met in the Application will be met, including that all features and amenities committed to and proposed by the Applicant that are not unit- specific shall be located on each of the Scattered Sites, or no more than 1/16 mile from the Scattered Site with the most units, or a combination of both. If the Surveyor Certification form in the Application indicates that the proposed Development does not consist of Scattered Sites, but it is determined during credit underwriting that the proposed Development does meet the definition of Scattered Sites, all of the Scattered Sites requirements must have been met as of Application Deadline and, if all Scattered Sites requirements were not in place as of the Application Deadline, the Applicant’s funding award will be rescinded; Note: For the Application to be eligible for funding, the version of the Applicant Certification and Acknowledgement Form reflecting the Modification posted 11-10-16 must be submitted to the Corporation by the Application Deadline, as outlined in the RFA. Rule 67-48.002(105) defines “Scattered Sites” as follows: “Scattered Sites,” as applied to a single Development, means a Development site that, when taken as a whole, is comprised of real property that is not contiguous (each such non-contiguous site within a Scattered Site Development, is considered to be a “Scattered Site”). For purposes of this definition “contiguous” means touching at a point or along a boundary. Real property is contiguous if the only intervening real property interest is an easement, provided the easement is not a roadway or street. All of the Scattered Sites must be located in the same county. The RFA modification included other changes concerning Scattered Sites. Those changes either modified the Surveyor Certification Form itself or required applicants to correctly provide information concerning Scattered Sites in the Surveyor Certification Form. Each Petitioner included in its application a Surveyor Certification Form indicating that its proposed development sites did not consist of Scattered Sites. The Surveyor Certification Forms submitted were the forms required by the modified RFA. There was no allegation that Petitioners incorrectly filled out the Surveyor Certification Forms. However, the Applicant Certification and Acknowledgement Form submitted by each of the Petitioners was the original form, not the form as modified to include the underscored language set forth in Finding of Fact 20 regarding the effect of mislabeling Scattered Sites on the Surveyor Certification Form. The failure of JPM Outlook and Grande Park to submit the correct Applicant Certification and Acknowledgement Form was the sole reason that Florida Housing found them ineligible for funding. In deposition testimony, Ken Reecy, Florida Housing’s Director of Multifamily Programs, explained the purpose of the Applicant Certification and Acknowledgement Form: There’s a number of things that we want to be sure that the applicants are absolutely aware of in regard to future actions or requirements by the Corporation. If they win the award, there are certain things that they need to know that they must do or that they are under certain obligations, that there’s certain obligations and commitments associated with the application to make it clear what the requirements--what certain requirements are, not only now in the application, but also perhaps in the future if they won awards. At the conclusion of a lengthy exposition on the significance of the modified language relating to Scattered Sites, Mr. Reecy concluded as follows: [W]e wanted to make sure that if somebody answered the question or did not indicate that they were a scattered site, but then we found out that they were, in fact, a scattered site, we wanted to make it absolutely clear to everyone involved that in the event that your scattered sites did not meet all of those requirements as of the application deadline, that the funding would be rescinded. Petitioners argue that the failure to submit the modified Applicant Certification and Acknowledgement Form should be waived as a minor irregularity. Their simplest argument on that point is that their applications did not in fact include Scattered Sites and therefore the cautionary language added to the Applicant Certification and Acknowledgement Form by the November 10, 2016, modifications did not apply to them and could have no substantive effect on their applications. Petitioners note that their applications included the substantive changes required by the November 10, 2016, modifications, including those related to Scattered Sites. Petitioners submitted the unmodified Applicant Certification and Acknowledgement Form as Attachment 1 to their modified Exhibit A. Petitioners further note that the “Ability to Proceed Forms” they submitted with their applications on December 2, 2016, were the forms as modified on November 10, 2016. They assert that this submission indicates their clear intent to acknowledge and certify the modified RFA and forms, regardless of their error in submitting the unmodified Applicant Certification and Acknowledgement Form. Petitioners assert that the Scattered Sites language added to the Applicant Certification and Acknowledgement Form by the November 10, 2016, modifications was essentially redundant. Mr. Reecy conceded that the warning regarding Scattered Sites was not tied to any specific substantive modification of the RFA. The language was added to make it “more clear” to the applicant that funding would be rescinded if the Scattered sites requirements were not met as of the application deadline. Petitioners point out that this warning is the same as that applying to underwriting failures generally. Petitioners assert that the new language had no substantive effect on either the Applicant Certification and Acknowledgement Form or on the certifications and acknowledgements required of the applicants. Even in the absence of the modified language, Petitioners would be required to satisfy all applicable requirements for Scattered Sites if it were determined during underwriting that their applications included Scattered Sites. Petitioners conclude that, even though the modified Applicant Certification and Acknowledgement Form was not included with either of their applications, the deviation should be waived as a minor irregularity. Florida Housing could not have been confused as to what Petitioners were acknowledging and certifying. The unmodified Applicant Certification and Acknowledgement Form was submitted with a modified Attachment 1 that included all substantive changes made by the November 10, 2016, modifications to the RFA. Petitioners gained no advantage by mistakenly submitting an unmodified version of the Applicant Certification and Acknowledgement Form. The submittal of the unmodified version of the form was an obvious mistake and waiving the mistake does not adversely impact Florida Housing or the public. Mr. Reecy testified that he could recall no instance in which Florida Housing had waived the submittal of the wrong form as a minor irregularity. He also observed that the credibility of Florida Housing could be negatively affected if it waived the submission of the correct form in light of the “effects clause” contained in Section Four: Due to the fact that we did have an effects clause in this RFA and we felt that, in accordance with the rule requirements regarding minor irregularities, that it would be contrary to competition because we wanted everybody to sign and acknowledge the same criteria in the certification; so we felt that if some did--some certified some things and some certified to others, that that would be problematic. And the fact that we had very specifically instructed that if we did not get the modified version, that we would not consider it, and then if we backed up and considered it, that that would erode the credibility of the Corporation and the scoring process. Mr. Reecy testified that the modification to the Applicant Certification and Acknowledgement Form was intended not merely to clarify the Scattered Sites requirement but to strengthen Florida Housing’s legal position in any litigation that might ensue from a decision to rescind the funding of an applicant that did not comply with the Scattered Sites requirements as of the application deadline. He believed that waiving the “effects clause” would tend to weaken Florida Housing’s legal position in such a case. Petitioners had clear notice that they were required to submit the modified Applicant Certification and Acknowledgement Form. They did not avail themselves of the opportunity to protest the RFA modifications. There is no allegation that they were misled by Florida Housing or that they had no way of knowing they were submitting the wrong form. The relative importance of the new acknowledgement in the modified form may be a matter of argument, but the consequences for failure to submit the proper form were plainly set forth in the effects clause. Florida Housing simply applied the terms of the modified RFA to Petitioners’ applications and correctly deemed them ineligible for funding.
Recommendation Based on the foregoing, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order confirming its initial decision finding JPM Outlook One Limited Partnership and Grande Park Limited Partnership ineligible for funding, and dismissing each Formal Written Protest and Petition for Administrative Hearing filed by JPM Outlook One Limited Partnership and Grande Park Limited Partnership. DONE AND ENTERED this 29th day of June, 2017, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 29th day of June, 2017.
The Issue The issues in this bid protest are whether, in making the decision to award funding pursuant to Request for Applications 2017-103, Housing Credit and State Apartment Incentive Loan ("SAIL") Financing to Develop Housing in Medium and Large Counties for Homeless Households and Persons with a Disabling Condition (the "RFA"), Florida Housing Finance Corporation ("Florida Housing" or "Respondent"), acted contrary to a governing statute, rule, or solicitation specification; and, if so, whether such action was clearly erroneous, contrary to competition, arbitrary, or capricious. The question of whether the application of Northside Commons Residential, LLC ("Northside"), met the requirements of the RFA with respect to demonstrating the availability of water and sewer services as of the Application Deadline is the only question at issue in this case. No other parts of its Application are being challenged, and the parties all agree that its Application was otherwise properly scored. No parties have raised objections to any parts of Warley Park's application, and all parties agree that its Application was properly scored.
Findings Of Fact The Parties Petitioner Warley Park, Ltd., is the applicant entity of a proposed affordable housing development to be located in Seminole County, Florida. Petitioners Warley Park Developer, LLC, and Step Up Developer, LLC, are Developer entities as defined by Florida Housing in Florida Administrative Code Rule 67-48.002(28). Northside is a Florida limited liability company based in Miami-Dade County, Florida, in the business of providing affordable housing. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The Programs The low income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. These tax credits are awarded competitively to housing developers in Florida for rental housing projects which qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect of this is to reduce the amount that the developer would have to borrow otherwise. Because the total debt is lower, a tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of up 50 years as consideration for receipt of the tax credits. SAIL provides low-interest loans on a competitive basis to affordable housing developers each year. This money often serves to bridge the gap between the development's primary financing and the total cost of the development. SAIL dollars are available to individuals, public entities, not-for-profit, or for-profit organizations that propose the construction or substantial rehabilitation of multifamily units affordable to very low-income individuals and families. Florida Housing is authorized to allocate housing tax credits, SAIL funding, and other funding by means of request for proposal or other competitive solicitation in section 420.507(48) and adopted chapter 67-60 to govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing allocate its housing tax credits, which were made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3). The RFA 2017-103 Housing tax credits and SAIL funding are made available through a competitive application process commenced by the issuance of a RFA. A RFA is equivalent to a "request for proposal" as indicated in rule 67-60.009(3). The RFA at issue here is RFA 2017-103, which was issued on March 22, 2017. A modification was issued on April 11, 2017, and responses were due April 20, 2017. Through the RFA, Florida Housing seeks to award up to an estimated $6,075,000 of housing tax credits, along with $11,500,000 of SAIL financing, to qualified applicants to provide affordable housing developments. A review committee, made up of Florida Housing staff, reviews and scores each application. Florida Housing scored applicants in six areas worth a total of 145 points: General Development Experience; Management Company Experience with Permanent Supportive Housing; Tenant Selection for Intended Residents; Community-Based General Services and Amenities Accessible to Tenants; Access to Community-Based Resources and Services that Address Tenants' Needs; and Approach Toward Income and Credit Status of Homeless Households Applying for Tenancy. Florida Housing scored Northside as the highest scoring applicant, awarding it 128 points. Warley Park was the fourth highest scored applicant with 112 points. These scores are presented in a public meeting and the committee ultimately makes a recommendation as to which projects should be funded. This recommendation is presented to Florida Housing's Board of Directors ("the Board") for final agency action. On June 16, 2017, Petitioners and all other participants in RFA 2017-103 received notice that the Board had determined which applications were eligible or ineligible for consideration for funding and selected certain applications for awards of tax credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets, one listing the "eligible" and "ineligible" applications and one identifying the applications that Florida Housing proposed to fund, on Florida Housing's website, www.floridahousing.org. Florida Housing announced its intention to award funding to three developments, including Northside. Warley Park's application was deemed eligible, but it was not selected for funding. The RFA at Section Four A.5.g. requires the applicant to demonstrate its "Ability to Proceed" by including the following as attachments to its application: Availability of Water. The Applicant must demonstrate that as of the Application Deadline water is available to the entire proposed Development site by providing as Attachment 9 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16); or A letter from the water service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. Availability of Sewer. The Applicant must demonstrate that as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site by providing as Attachment 10 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16); or A letter from the waste treatment service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. (emphasis added). Section 5.g. of Exhibit A to RFA 2017-103, the Application and Development Cost Pro Forma, requires that the applicant include the following information: Ability to Proceed: As outlined in Section Four A.5.g. of the RFA, the Applicant must provide the following information to demonstrate Ability to Proceed: Availability of Water. The Applicant must provide, as Attachment 9 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16). Availability of Sewer. The Applicant must provide, as Attachment 10 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16). The Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form requires the service provider to certify that on or before the submission deadline for the RFA, "Sewer Capacity or Package Treatment is available to the proposed Development." Similarly, the Verification of Availability of Infrastructure – Water form requires the service provider to certify that on or before the submission deadline for the RFA, "Potable water is available to the proposed Development." Each form also includes the following caveat: To access such [waste treatment] [water] service, the Applicant may be required to pay hook-up, installation and other customary fees, comply with other routine administrative procedures, and/or install or construct line extensions and other equipment, including but not limited to pumping stations, in connection with the construction of the Development. The RFA does not define the term "Development- specific," and the term is not used in Section 5.g. of Exhibit A to RFA 2017-103 where the requirement for the water and sewer letters is included. Further, the term "Development-specific" is not defined in any Florida Housing rule. Miami-Dade County has had a longstanding practice of refusing to complete Florida Housing's water and sewer verification forms. Florida Housing added the water and sewer letter as an additional method to demonstrate availability in light of the county's refusal. Thus, an applicant, such as Northside, has no alternative when proposing a Miami-Dade project other than providing a water and sewer letter as opposed to Florida Housing's Verification form. Northside's Water and Sewer Letter Accordingly, in response to this RFA requirement, Northside submitted a letter from Miami-Dade County Water and Sewer Department as Attachment 9 to its application. The letter was sought by Oscar Sol, one of the principals of the developer working with the applicant in the project at issue in this case. The WASA letter at issue in this case was dated December 12, 2016. It was addressed to "Northside Commons LTD," and referenced water and sewer availability for "Northside Commons," construction and connection of 108 apartments, located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The identical WASA letter was submitted as Attachments 10 and 11 to application 2017-155C in response to a prior RFA, RFA 2016-114. That prior application was submitted by Northside Commons, Ltd., for a 108-unit elderly development called Northside Commons, located at 8301 Northwest 27th Avenue, Miami- Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2016-114 was December 15, 2016. In the present case, Northside's application for RFA 2017-103, application 2017-254CSN, was submitted by Northside Commons Residential, LLC. It was for an 80-unit development for homeless persons and persons with disabling conditions, also to be called "Northside Commons," located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2017-103 was April 20, 2017. The WASA letter contains several paragraphs of details about hookups to water and sewer service, and also includes the following boilerplate language: "This letter is for informational purposes only and conditions remain in effect for thirty (30) days from the date of this letter. Nothing contained in this letter provides the developer with any vested rights to receive water and/or sewer service." Warley Park raised three issues regarding the WASA letter. First, was the letter valid for more than 30 days after it was signed? Second, did the letter meet the requirement of the RFA that it be "development specific?" Third, did the letter demonstrate the availability of sewer services? Was the WASA letter valid for more than 30 days after it was signed? Florida Housing and Northside contend that there is no provision in the WASA letter stating that it becomes "invalid" after 30 days, or that water and sewer services will not be available after 30 days. Douglas Pile, the representative for Miami-Dade County, testified that the second and third paragraphs of the letter included the conditions necessary to service the availability of water and sewer, and that it was these conditions that remained in effect for 30 days. He described the purpose of the 30-day language as follows: We're not saying that availability disappears or terminates after 30 days. We're just saying this letter is good for informational purposes for 30 days. We don't want people to come back a year later and say I bought this property based upon this letter of availability saying I have water and sewer under certain conditions, and then a year later the conditions are different and maybe they have to put in a water main extension or maybe their local pump station is in moratorium. When asked specifically whether the entire letter was valid for only 30 days, he responded, "Right. Well, the conditions are – the nearby water and sewer facilities that the project would connect to." Mr. Pile explained that the letter is "a snapshot of what our facilities are at the time they make the request." He further stated that: the letter . . . has to have an expiration date either explicit or implicit. If a utility is going to give a letter saying they have water and sewer availability, that cannot be forever, you know. You assume a natural termination point . . . we just explicitly say this letter is good for 30 days. In its Pre-Hearing Position Statement, Florida Housing argued that it did not interpret this language to mean that the letter became invalid after 30 days. However, according to Mr. Reecy,1/ there was no "interpretation" done by Florida Housing. Specifically, when asked how Florida Housing interpreted the phrase, he stated: We have basically ignored that phrase. We actually do not know what--given the context of this situation, how, within 30 days, the--that information is only good for 30 days. So we have not considered that to be a relevant factor in our consideration of the information provided in the letter. A plain and common reading of the quoted language indicates Miami-Dade limited the validity of the information in the letters to 30 days. Florida Housing provided no explanation for its decision to ignore the language and made no attempt to inquire of Miami-Dade County as to what it intended by including the language. This 30-day limitation is generally known by the applicants and nearly every previously funded application included a letter from Miami-Dade County dated within 30 days of the application deadline. Only one Miami-Dade WASA letter submitted by applicants within the last two RFAs was dated outside of the 30-day window. That letter was deemed ineligible for other reasons. Had Petitioner wanted to demonstrate availability as of the application deadline, it only needed to request a letter from Miami-Dade County within the 30 days prior to the application deadline, giving Miami-Dade sufficient time to respond. In fact, the letter was initially submitted as part of a response to RFA 2016-114, with a due date of December 15, 2016. Because the letter was issued on December 12, 2016, it remained valid through the application deadline for RFA 2016-114. There is no limit to the number of times a developer can obtain a letter of availability from Miami-Dade County. The requirements of the RFA are clear that water and sewer availability must be shown "as of the Application Deadline." Because the WASA letter submitted with Petitioner's Application only provided a snapshot of availability for a 30-day window after the issuance of the letter (or until January 11, 2017), the letter failed to address the availability of water or sewer services as of April 20, 2017. As a practical matter, the WASA letter provides that water hook-up is readily available to existing infrastructure and sewer availability is dependent upon a developer building a pumping station. It could be inferred that these conditions would remain available at this location for 12 months. However, the testimony of Mr. Pile makes clear that Miami-Dade County is not willing to make that assumption for a period beyond 30 days due to the possibility of intervening events.2/ Presumably, this is why the vast majority of applicants for this type of RFA secures and provides a Miami-Dade WASA letter dated within 30 days of the RFA application deadline. Because the WASA letter was not valid beyond January 11, 2017, Petitioner cannot demonstrate availability of water and sewer as of the Application Deadline. The fact that the WASA letter was no longer valid is fatal to Petitioner's application in that it failed to satisfy a mandatory requirement of RFA 2017-103, i.e., the availability of water and sewer services. Was the WASA letter "development specific?" The RFA requires that the Applicant demonstrate water and sewer service availability for "the entire proposed Development site," and it also requires that the letter from the service provider be "Development-specific." The application in this matter was filed by Northside Commons Residential, LLC, for an 80-unit development for the homeless and persons with disabling conditions. However, the WASA letter was issued to, and discussed the availability of water and sewer service for, a different entity, Northside Commons, Ltd., the applicant for a 108-unit elderly development. According to Mr. Reecy, the reuse of a letter that was previously submitted in a different application does not follow the "letter" of the criteria in the RFA. Florida Housing and Northside even agree that the letter does not reference the specific proposed development that is at issue and instead focuses on the location of the proposed development. Mr. Sol, Northside's representative, suggested that it is "irrelevant" to which entity the letter is issued because what is relevant is whether water and sewer availability exists. However, as stated by Mr. Reecy, what Florida Housing considers when determining whether a letter of availability is "Development-specific" is the location, the number of units, and the applicant. Because the WASA letter was issued to a entirely different applicant, based upon Mr. Reecy's testimony, it is not "Development-specific." However, Mr. Reecy noted that such a letter could be considered a Minor Irregularity if there is some commonality between the applicant entities. Northside argues that the failure of the letter to be "Development-specific" should be waived as a Minor Irregularity. This issue was not considered during scoring, nor was it a determination made by the Board of Florida Housing prior to awarding funding to Northside. Mr. Reecy acknowledged that it is a judgment call when determining whether a letter addressed to a different entity with different principals is a Minor Irregularity. That call depends upon the number of common principals. While the number of principals that must be the same is discretionary, there must be at least some commonality of principals for it to be considered a Minor Irregularity. The principals of Northside Commons, Ltd., the entity to which the letter was actually issued and the applicant that originally submitted the WASA letter, are completely different from the principals of Northside Commons Residential, LLC. Despite a full understanding of all the similarities between the two applications and the differences in the requirements of the RFA and being given a number of opportunities to change his position, Mr. Reecy repeatedly declined to do so. Mr. Sol suggested that it is common practice for Florida Housing to accept letters issued to entities other than the applicant and with different principals. After hearing Mr. Sol's opinion and discussing the issue further with Northside, Mr. Reecy remained steadfast in his position that the error in the Letter could not be waived as a Minor Irregularity. At the request of Northside, Mr. Reecy agreed to review past practices of the agency during a break in the hearing. As stated by counsel for Florida Housing, if it is established that Florida Housing has a long-standing practice of accepting similar letters, then the question is whether Northside Commons may rely upon that practice. The review during the break was limited to the issue of whether Florida Housing had previously accepted Miami-Dade letters addressed to an entity who was not the applicant and who shared no principals in common with the applicant. No such long- standing practice was demonstrated. Mr. Reecy directed staff to pull all of the Miami-Dade letters of availability from the last two RFAs, to determine, first, whether or not there were sewer letters addressed to someone other than the applicant entity. Second, for those so identified, staff was to compare the principals of the applicant entity and the entity that was the addressee for commonality. Mr. Reecy was provided a list of approximately a dozen letters from the past several RFAs that compared the applicant entity and the addressee entity. This list did not identify whether or not the letters were submitted by successful credit applicants. Based upon this list, Mr. Reecy then reviewed each letter to determine whether or not it was issued to the applicant. He then reviewed the principals list for the applicant as identified in the application and compared that to data from the state of Florida's Sunbiz.org website for the addressee of the letter. Mr. Reecy compared this information to determine if the two had any principals in common. After reviewing this information, Mr. Reecy recanted his earlier testimony and stated that he felt that Florida Housing historically accepted letters with addressees that were not the applicant entity and did not have common principals. Mr. Reecy further testified that based upon this understanding of Florida Housing's past practice, the Northside's letter should be accepted. The information Mr. Reecy reviewed, specifically that obtained from the state of Florida's Sunbiz.org website, did not demonstrate, as Mr. Reecy believes, that Florida Housing previously accepted Miami-Dade WASA letters from applicants in a similar position to that of Northside. Notably, Florida Housing does not accept documentation from the Sunbiz.org website to demonstrate the principals of the Application as required by this and other RFAs. The Sunbiz.org website does not identify the level of detail of principals which Florida Housing requests in its "Principals of the Applicant and Developer(s) Disclosure Form". Further, even if Sunbiz.org did identify all of the principals Florida Housing requires to be disclosed, in this case, the Sunbiz.org information reviewed was dated 2017.3/ As this information was filed after the application deadlines for the respective RFAs, it fails to identify any of the principals related to the entities in the "comparable" letters for the 2015 and 2016 RFAs. No information was provided as to any of the principals in either 2015 or 2016. Accordingly, Mr. Reecy and Mr. Sol's belief that Florida Housing had previously accepted letters in a similar position to that of Northside Commons' letter has not been demonstrated. Because Mr. Reecy's new position, that Northside Commons' letter should be accepted, is based upon this incorrect understanding, and the alleged prior agency action was not demonstrated, Mr. Reecy's initial testimony is found to be more credible. Therefore, the record demonstrates that the WASA letter was not "Development-specific" and, therefore, contrary to the solicitation specifications. Did the letter demonstrate availability of sewer services? The RFA requires each applicant to provide a form or letter demonstrating that "as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site." Petitioner presented the testimony of Jon Dinges, P.E., an environmental engineer with expertise in designing wastewater systems who was accepted as an expert in civil engineering, specifically in the area of sewer infrastructure and design. Mr. Dinges' testimony was simply that the problem with the WASA letter in this case is that it does not actually say that capacity is available. In a prior RFA, Florida Housing rejected an application that included a Miami-Dade WASA letter because it specifically stated that no gravity sewer capacity analysis had been conducted. According to Mr. Dinges, without conducting a gravity sewer capacity analysis, it is not possible to determine whether capacity, if any, exists. However, the RFA makes no mention of requiring a gravity sewer capacity analysis to demonstrate availability. Mr. Reecy testified that Florida Housing has been accepting WASA letters without mention of gravity analysis from Miami-Dade County for many years. He stated that the detailed description of how a proposed project could connect to an existing sewer service met the requirement of the RFA that the Applicant demonstrate the availability of sewer service. He also testified that if Florida Housing were to change its position and determine that the form of the letter was not adequate to demonstrate capacity, it would do so in a public process. The testimony was clear that Florida Housing does not do any independent analysis of whether water and sewer service is actually available to a proposed development, but instead relies on the expertise of the local government to do this analysis. Applicants are not required to include or demonstrate the specific requirements or technical specifications of how a connection to water or sewer services will be made. This interpretation is consistent with the specifications of the RFA.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order amending its preliminary decision awarding funding to Warley Park by: finding Northside ineligible for funding; and awarding funding to Warley Park as the next highest scoring eligible applicant. DONE AND ENTERED this 19th day of October, 2017, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 19th day of October, 2017.
The Issue The issue in Case No. 98-3441RX is whether a 15 percent penalty provision of the Florida Housing Finance Corporation's 1998 Application Package for Low Income Housing Tax Credits, adopted and incorporated into the Florida Administrative Code, by reference pursuant to Rules 67-48.002(10) and 67-48.004(1), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority. The issue in Case No. 98-3873 is whether Respondent appropriately applied the 15 percent penalty to Petitioner on its 1998 Application for Low Income Housing Tax Credits.
Findings Of Fact The Parties. Petitioner, Lakewood Senior Apartments Limited Partnership (hereinafter referred to as "Lakewood"), was an applicant for 1998 Low Income Housing Tax Credit funding. Respondent, the Florida Housing Finance Corporation (hereinafter referred to as "FHFC"), has been designated by the State of Florida to administer a Low Income Housing Tax Credit Program. Section 420.5099, Florida Statutes. FHFC is governed by a nine-member board (hereinafter referred to as the "Board"). The members of the Board are appointed by the Governor. Intervenors, LCA Development, Inc. (hereinafter referred to as "LCA"), The Gatehouse Group, Inc. (hereinafter referred to as "Gatehouse"), Vestcor Equities, Inc. (hereinafter referred to as "Vestcor"), and The Wilson Company (hereinafter referred to as "Wilson"), were all applicants for 1998 Low Income Housing Tax Credit funding. The Low Income Housing Tax Credit Program. To encourage the development of low-income housing for families, Section 42 of the Internal Revenue Code of 1986, creates federal income tax credits that are allocated to each of the states for award through state-administered programs to developers of rental housing for low-income and very low-income families. Tax credits allocated to developers through the program may be sold by the developer to generate a substantial portion of the funding necessary for construction of low-income housing projects. The program has been in existence in Florida since 1987. Since its inception, in excess of 43,000 affordable housing units have been produced in Florida through the program. Every year each state receives an annual allotment of tax credits. Generally, Florida's annual allotment of tax credits is apportioned among three county groupings based on population: large counties, medium counties, and small counties. Applicants compete for the tax credits allocated to a group based upon which county an applicant's proposed housing is to be located in. Section 420.5099, Florida Statutes, establishes FHFC's responsibility for the allocation of Florida's share of tax credits: The corporation shall adopt allocation procedures that will ensure the maximum use of available tax credits in order to encourage development of low- income housing in the state, taking into consideration the timeliness of the application, the location of the proposed housing project, the relative need in the area for low-income housing and the availability of such housing, the economic feasibility of the project, and the ability of the applicant to proceed to completion of the project in the calendar year for which the credit is sought. Section 42 of the Internal Revenue Code of 1986, requires that each state ensure that the minimum amount of tax credits necessary for an applicant to implement a proposed project are awarded in order to ensure the maximum use of a state's available credits. How tax credits are allocated is required to be reviewed at three distinct phases in order to carry out this goal: the first phase is the initial application/allocation phase; the second phase is a credit underwriting carryover stage; and the last phase is a final cost certification stage. Section 42 of the Internal Revenue Code of 1986, requires that each state establish a qualified allocation plan (hereinafter referred to as the "Allocation Plan") establishing the procedures to be followed in awarding low income tax credits allocated to the state. Consistent with this requirement, FHFC has adopted an Allocation Plan for Florida through the adoption of Chapter 67-48, Florida Administrative Code. The Allocation Plan establishes a competitive application process intended to carry out the first stage required by the Internal Revenue Code. The actual application (hereinafter referred to as the "Application") used to carry out the first stage of the allocation process provided for in the Application Plan is revised by FHFC on an annual basis. The Application is adopted as part of an Application Package, which includes the Application, tabs, and instructions thereto adopted by FHFC. The Application Package is amended each year to refine and clarify the Application Package, and to implement any new directives from the Board. Once revised, the Application Package is adopted by rule. Once the annual Application Package is adopted and an annual application cycle opens, the adopted Application Package is made available to interested persons for completion and submission to FHFC. Completed Applications received by FHFC are evaluated and scored pursuant to the Application Package, projects are ranked within their respective county groupings, and the highest ranked projects are invited to participate in the second stage of the allocation process, credit underwriting. Once an applicant completes credit underwriting and receives a Preliminary Allocation Certification indicating the amount of tax credits preliminarily allocated to the project, the applicant may proceed to construct the project. Once the project is completed, the applicant enters the final phase of the process, the Final Cost Certification phase. The Internal Revenue Code requires that all credits allocated to a state for a particular year must be allocated by December 31 of that year. Any credits not allocated go into a national pool consisting of all credits not used by December 31. All states that use all their credits by December 31 are then eligible to share in the credits available in the national pool. FHFC makes every effort to ensure that it allocates all of Florida's allocated credits so that the State may participate in the national pool. The Application Process. Prior to each application cycle, FHFC revised its previous year's Application Package and adopts an Application Package for the upcoming year by rule. After adopting the Application Package by rule, FHFC opens the cycle and makes the Application Package available. All Applications are required to be fully completed and filed by a date certain specified in the rules. Information contained in the Application is required to be certified true and accurate by the applicant. All submitted Applications are evaluated and scored by a Review Committee pursuant to the procedures established in the rules. See Rule 67-48.004, Florida Administrative Code. In 1998, the Review Committee was a committee of eight persons designated by the rules to organize the scoring of all applications. The Review Committee was made up of seven members of the staff of FHFC appointed to by the Board and one member of the staff of the Department of Community Affairs. Rule 67- 48.002(80), Florida Administrative Code. Following the notification of preliminary scores, applicants are given a week to review the scores of all applicants. See Rule 67-48.005, Florida Administrative Code. Once notified of the preliminary scores, applicants have the right to file a written Notification of Possible Scoring Error (hereinafter referred to as a "NOPSE"). A NOPSE could be filed to point out a possible scoring error on the applicant's score or on any other applicants' score. All NOPSE's filed during the 1998 cycle were reviewed by FHFC to determine if any modification in an applicant's score should be made. Following the resolution of all NOPSE's, the preliminary scores of all applicants are reviewed by the Board. After the Board's review and approval of the preliminary scores and the ranking of applicants, notice of intended funding is provided to each applicant. Following approval of preliminary scores by the Board, applicants are given a second opportunity to challenge their preliminary score or the preliminary score of any other applicant by filing a Direct or Competitive Appeal. See Rule 67-48.005, Florida Administrative Code. No authority for re-scoring any Application, other than as the result of the filing of a NOPSE or a Direct or Competitive Appeal, was authorized for the 1998 cycle pursuant to Chapter 67- 48, Florida Administrative Code. Following the resolution of all Direct or Competitive Appeals, the Board approves the final scores awarded to each Application by final order of the FHFC. Final scores are ranked by county grouping and a "funding line" is determined. The funding line is the point on the ranking sheet for each county group which represents the cut- off between those applicants that will be funded and those that will not. Applicants ranked above the funding line are given the opportunity to advance to the next two phases of the process required for them to receive funds. See Rule 67-48.026, Florida Administrative Code. For example, for the large county group, the amount of tax credits requested by the highest ranked applicant is deducted from the total tax credits available for the large county group. The amount of tax credits sought by the next highest ranked applicant is then deducted from the remaining tax credits. This process is followed until all the tax credits available for the large county group are allocated. The Credit Underwriting Phase. Those applicants to whom tax credits are tentatively allocated during the application process are next invited to "credit underwriting." Rule 67-48.026, Florida Administrative Code. A "credit underwriter" is defined in Rule 67- 48.002(25), Florida Administrative Code, as follows: (25) "Credit Underwriter" means the legal representative under contract with [FHFC] having the responsibility for providing stated credit underwriting services. Such services shall include, but not be limited to, reviewing the financial feasibility and viability of Projects and proposing to the Corporation the amount of a SAIL or HOME loan and/or the amount of Tax Credit needed, if any. The credit underwriter provides a comprehensive analysis of the preliminarily approved Applications, the applicant, the real estate market, the development economics, and the project's ability to proceed. The credit underwriter verifies the accuracy of information contained in the Application, confirms that the Application complies with applicable statutory and rule requirements of the FHFC, and determines whether the project is financially feasible as presented. Although Applications are required by the rules to be reviewed on their face, during the credit underwriting phase the credit underwriter is allowed to look at pertinent information not contained within the submitted Application. The credit underwriter verifies the accuracy and reasonableness of the information provided in an Application. The credit underwriter looks at the availability of financing, the structure of the proposal, and the estimated total project cost. The credit underwriter may adjust the financial projections set forth in the Application. Historically, the credit underwriter typically increases project costs. Ultimately, the credit underwriter recommends a preliminary allocation of tax credits to each applicant above the funding line. The amount of tax credits recommended may differ from that requested by the applicant. The amount initially requested by the applicant, however, cannot be exceeded. The applicant is limited to the lower of the amount applied for, the lowest amount needed for financial viability, or the qualified basis calculation amount. FHFC may accept, modify, or reject the credit underwriter's recommendations. Rule 67-48.026(10), Florida Administrative Code. Applicants successfully completing the credit underwriting phase are issued a Preliminary Allocation Certification which indicates the amount of tax credits preliminarily allocated to the project. The Final Cost Certification Phase. Construction of the project typically takes two to three years from the submittal of the Application. If a project cannot be completed by the end of the calendar year, the applicant must enter into a Carryover Agreement. Pursuant to this agreement, FHFC promises to allocate a "not to exceed" amount of tax credits to the project if it is completed within two years in accordance with the Carryover Agreement. Once the project is completed, the applicant is required to submit a Final Cost Certification. The Final Cost Certification details the actual costs incurred in completing the project, verified by an independent certified public accountant. Prior to 1998, the Final Cost Certification had to be certified by a credit underwriter. One purpose for the Final Cost Certification is to ensure that actual costs are consistent with, and do not exceed, those allowed by federal and state requirements. The applicant is issued an IRS Form 8609 which establishes the amount of tax credits allocated to the applicant. The amount of tax credits allocated after the Final Cost Certification may be less than the originally approved tax credits for the project. The 1998 Application Package; Project Funding & Economic Viability (Project Cost Pro Forma), Form 4. Effective January 6, 1998, FHFC adopted by reference in its rules the 1998 Application Package, "Form CAP98." Rules 67- 48.002(10) and 67-48.004(1), Florida Administrative Code. The adoption of the 1998 Application Package and the allocation of tax credits through the application phase was consistent with the description of the application process, supra. Among the forms required to be submitted as part of the 1998 Application was Form 4, "Project Funding & Economic Viability (Project Cost Pro Forma)." The purpose of Form 4 is to ensure that an applicant had firm commitments for funding from financially capable sources sufficient to cover the costs of the project which would not be covered by tax credits. A total of 150 points were available for the information on Form 4. This was the highest possible single award of points in the 1998 Application. To the extent that firm commitments were not demonstrated on Form 4, an applicant was to be awarded less than 150 points. In two places on Form 4, applicants are informed that they could not request a developer fee in excess of the limits established by the FHFC rules and the 1998 Application Package. For Lakewood's Application, the maximum developer fee was 20 percent of project cost. The parties stipulated that Lakewood's Form 4 demonstrated that all necessary funding for its project was firmly secured. Therefore, the parties agreed that, but for the imposition of the penalty provision at issue in this proceeding, Lakewood was entitled to an award of 150 points for Form 4. The 15% Penalty. The following provision appears on Form 4 of the 1998 Application: FULL POINTS WILL BE AWARDED ONLY IN THE EVENT THAT ALL INFORMATION REQUIRED BY THIS FORM IS PROVIDED IN STRICT ACCORDANCE WITH THE FORM'S REQUIREMENTS. FAILURE TO PROVIDE COMPLETE, ACCURATE INFORMATION IN THE FORMAL AND LOCATIONPRESCRIBED BY THIS FORM WILL RESULT IN A 15% REDUCTION OF POINTS FOR FORM 4. ONLY INFORMATION CONTAINED WITH THIS APPLICATION WILL BE CONSIDERED FOR PURPOSES OF POINTS AWARDED OR APPEALED. (This provision will hereinafter be referred to as the "15% Penalty"). The 15% Penalty appears in materially identical form on Forms 5, 6, 7, 8, 10, and 22 of the 1998 Application. The Development of the 15% Penalty. Since the inception of the Low Income Housing Tax Credit Program in Florida, the application process has become increasingly competitive and litigious. For example, for the 1998 cycle FHFC received Applications for approximately 72.6 million dollars but only approximately 10.7 million dollars of tax credits available. Consequently, only eleven of the ninety Applications will likely be funded from the 1998 cycle. Because of the increased competitiveness and the litigious nature the application process, the Board appointed a Combined Cycle Committee (hereinafter referred to as the "Cycle Committee") to work with the staff of FHFC to improve the Application and application process for the 1998 cycle. The Board also instructed staff to strictly construe the Application, make sure forms in the 1998 Application were as clear as possible, and to implement a penalty for failures to follow the instructions. The development of the 1998 Application Package began in the spring of 1997. On July 14, 1997, the first rule development workshop was held. The purpose of the workshop, which was attended by approximately forty individuals, was to provide a forum for comments and suggestions from developers and other interested persons concerning the Application Package and the process. Following the July 1997 workshop, FHFC prepared a draft of the 1998 Application Package. The draft consisted of the 1997 Application Package with changes proposed for the 1998 cycle noted with strike-through for deleted language and underlining for added language. See Respondent's Exhibit 2, the "Red Book." Among the proposed changes to the 1997 Application Package contained in the Red Book was the inclusion of the following language on Page 1 of the Instructions: FULL POINTS WILL BE AWARDED ONLY IN THE EVENT THAT ALL INFORMATION REQUIRED BY EACH FORM IS PROVIDED IN STRICT ACCORDANCE WITH THE APPLICATION REQUIREMENTS. FAILURE TO PROVIDE COMPLETE, ACCURATE INFORMATION IN THE FORMAT AND LOCATION PRESCRIBED BY THE APPLICATION WILL RESULT IN A REDUCTION OF POINTS AS INDICATED ON EACH FORM. ONLY INFORMATION CONTAINED WITH THIS APPLICATION WILL BE CONSIDERED FOR PURPOSES OF POINTS AWARDED OR APPEALED. This language was repeated throughout the Red Book, modified only to specify that the penalty was 15 percent and to refer to the specific section or form the language was included in. The 15% Penalty applied only to the points available for a form on which an error or omission occurred. The penalty applied regardless of the number of errors or omissions on a form and regardless of the significance of the error or omission. FHFC was aware at the time that it was considering the 15% Penalty that the point difference between the highest and lowest point totals above the funding line for the 1997 cycle for the large county category was 43.03 points. FHFC also knew that historically only a half point to two points separated funded applicants and unfunded applicants. The 15% Penalty modified the previous treatment of errors or omissions on Applications. Prior to 1998 if an error was made in an Application, the Application was either rejected if the error related to certain specified "threshold requirements" or staff simply corrected the error. For example, if an applicant requested a developer fee in excess of the developer fee cap, scorers would adjust the claimed fee downward. No penalty would be imposed on the applicant. Copies of the Red Book were made available to interested persons to review before and during a second rule development workshop held on September 22, 1997. The purpose of this workshop was to review the proposed changes in the Red Book and to give the approximately sixty-five individuals that attended the workshop an opportunity to make comments and suggestions as to how to improve the Application Package and the application process. The 15% Penalty was specifically explained during the September 22, 1997, workshop. Lakewood was represented at the meeting. The following explanation of the 15% Penalty was given: Before we go on into rules and QAP things, I want to add one more global comment to be sure everybody in this room understands the new big change in the application whereby you [sic] if you don't fill it out exactly the way the instructions tell you, you're going to get penalized then and there, okay? There's a 15% penalty on many of these forms. On Form 3 we set out a chart for you to show that if you don't give all the information exactly where you say it is in the application, all your T's are crossed and your I's dotted, you're going to get reduced points. Now, the whole purpose of this is not to make your life miserable or to make our lives miserable. It is to make you pay attention to the application and to reduce appeals, okay? FHFC Exhibit 11. In addition to the two workshops, two public meetings were held by the Cycle Committee to discuss the proposed Application Package. Questions and comments concerning the proposed Application Package were invited. FHFC staff were also available to answer questions concerning the 1998 Application Package and the process at any time up until the deadline for submittal of the 1998 Application. Throughout the period of time during which the 1998 Application Package was being developed, FHFC staff emphasized the need for accuracy on the Application and explained to prospective applicants that the 15% Penalty existed. FHFC formally adopted the 1998 Application Package containing the 15% Penalty. No challenges to the rule which incorporated the 1998 Application Package were filed before the rule became effective. Full-day workshops were subsequently conducted by FHFC throughout the State to explain how to complete the 1998 Application and to answer questions thereon. The 15% Penalty was explained during these workshops. Purpose for the 15% Penalty. It is important for Applications to be complete and accurate during the application phase. The application phase is FHFC's first opportunity to analyze proposed projects in accordance with the Internal Revenue Code and FHFC's rules. The Internal Revenue Code requires that the minimum number of tax credits necessary to complete a project be determined during the application phase. Therefore, even though modifications may be made during the credit underwriting and final phases, FHFC is still required to make sure that Applications approved in the application phase are as accurate as possible. FHFC's purpose for adopting the 15% Penalty was described by Gwen Lightfoot, Deputy Development Officer for FHFC: Well, it's - we have to go into a little bit of history in order to really understand from whence this approach came. When I first came to the Agency, that was in 1992, we had enough credits that everybody that applied that was really ready to go would be able to get the credits. And there were times at the end of the year when staff would be frantically calling up developers and saying, Do you have a site, are you ready to go? You know, you told me that you were going to turn this application in and we didn't get it and we need one more to secure the national pool. And so, you know, that was the atmosphere under which the credit program was operating six years ago. It was critical for us to get the national pool in those days because that would add, oh, $6 million to the amount of credits that we would have, which is thousands of unit. So, each year we got more and more competitive, more and more developers learned about the program, more and more developers realized that they could make a good living with, you know, affordable housing. The mechanism that the code creates encourages public/private partnerships, so this is a good way for the private community to provide affordable housing and make a living. So, the competition became more and more intense. In 1997, by then, it was extremely contentious, litigious, extremely competitive. I can remember - I think it was in 1996, it might have been the year before, we had over 300 issues on appeal, and that's just insanity. So in this scope of things we tried to come up with a way to make sure that this application was accurate and complete and - well, I guess those are the best words - because we have a mandate in the Federal code and in the State code that we can allocate no more credits than is absolutely necessary for the project viability. That means it is critical for us to have an accurate and complete application. The overall purpose of the app is to be an objective mechanism by which we can maximize the use of the credits. We have got to have a way to be sure that we are getting the best bang for our buck, I guess is a good way to say it. So, when we laid the penalty over the entire application, we were searching for a rational, fair, objective approach which was designed to reduce appeals, to be fair to everybody, come up with a mechanism by which we could award partial points for people who had done, you know, the main thrust of the particular question but had for some reason not done it perfectly, rather than make them lose all of the points for an issue, we only make them lose a%age of the points. The other big thing that played into the decision to go with this penalty approach is that in the six years that I have been reviewing these applications there is a very strong and direct correlation between an applicant's ability to put together a complete, thorough, accurate, well thought out and organized application. And the product that they produce and the way that they handle the compliance period. These properties are not just coming in the door, getting their credits and going out the door and never seeing the agency again. We have to monitor them for 50 years. So, the attention to detail is so critical that, in addition to being a mechanism to select between really good applicants, it is also - it lets them know, it helps teach the applicant what they are in for with regard to detail and long-term commitments. It is just the whole thing to help us get an accurate and complete application so we can accurately allocate credits. (Transcript 71) By its terms, the 15% Penalty applied regardless of the magnitude of the error committed on an Application. For example, if an amount was overstated by $1.00, a 15 percent penalty applied. The application of the 15% Penalty was based upon an objective determination of whether an error occurred. The staff had no discretion to make a subjective determination as to the significance of an error or omission. Although it was not the intent of FHFC for the imposition of the 15% Penalty to be the determining factor in whether an applicant was awarded tax credits, the effect of the 15% Penalty can have that impact. Imposition of the 15% Penalty on Lakewood. On or about March 10, 1998, Lakewood submitted a completed 1998 Application to FHFC for 1998 tax credit funding. Lakewood sought approximately 1.14 million dollars in tax credits for a 150-unit apartment complex to be located in Orange County, Florida. Lakewood's Application was completed by Don Paxton, an employee of the developer, contractor, and management company for Lakewood. Mr. Paxton attended the September 22, 1997, rule development workshop. Mr. Paxton was aware and understood that the 15% Penalty had been included in the 1998 Application and that it was intended to punish for inaccuracies contained in submitted Applications. He also was aware that the 15% Penalty applied to inaccuracies on Form 4. Finally, Mr. Paxton was aware that the developer fee available for Lakewood's proposed project was limited to 20 percent of project cots. On Form 4 of Lakewood's Application, Lakewood claimed a developer fee in excess of the 20 percent of project cost limitation Lakewood was subject to. The developer fee requested by Lakewood was $1,959,714.00, or $240,000.00 in excess of the maximum developer fee Lakewood could request. The excess amount included in the developer fee cost claimed by Mr. Paxton represented an advisory fee which Lakewood had agreed to pay to Affordable Housing, an advisory group specializing in the development and marketing of tax credit- financed housing for senior citizens. Nothing in Lakewood's submitted 1998 Application informed FHFC that the excess amount included as a development fee by Lakewood was attributable to Affordable Housing. Based upon what was provided to FHFC by Lakewood in its Application, it was reasonable for FHFC to conclude that Lakewood was requesting a developer's fee in excess of 20 percent of project cost. Mr. Paxton included the advisory fee because of an instruction of page 10 of Form 4 that "Consulting fees, if any, must be paid out of the developer fee." Mr. Paxton knew, however, that Affordable Housing was not a consultant as the term "consultant" is used in the 1998 Application Package. Mr. Paxton's interpretation of the instruction concerning the payment of consultant fees on page 10 of Form 4 was not reasonable. Mr. Paxton also included the advisory fee as part of the developer fee because that was the only way for Lakewood to treat the $240,000.00 fee as a cost eligible for tax credit reimbursement. While it was a part of the total project cost, it was not part of the project cost eligible for reimbursement with tax credits. The inclusion of the advisory fee as part of the developer fee did not diminish the fact that Lakewood's Form 4 demonstrated secure financing and, consequently, the economic feasibility of its project and its ability to proceed. Due to the excessive developer fee included by Lakewood on Form 4, the scorers of Lakewood's Application imposed the 15% Penalty. A total of 22.5 points was deducted from the 150 points Lakewood would otherwise have been entitled to for Form 4. With the reduction of Lakewood's total score by 22.5 points, Lakewood fell below the funding line for the 1998 cycle. Without the 22.5 point penalty, Lakewood would have been above the funding line. Other Applications of the 15% Penalty. FHFC applied the 15% Penalty to other applicants during the 1998 cycle for errors on Form 4, including the inclusion of developer fees in excess of applicable limits. For example, the penalty was imposed on Applications 8, 9, 30, 58, and 59. FHFC initially imposed the 15% Penalty on the Application of Kay Larkin because the requested developer fee combined with the requested consulting fee, which was separately listed, exceeded the applicable developer fee. FHFC took this position even though the separately listed consulting fee was included as an ineligible cost. Kay Larkin challenged the 15% Penalty. FHFC subsequently agreed to remove the penalty because it was decided that FHFC should not have combined the eligible developer costs and the ineligible consulting fee. The developer fee standing alone did not exceed the developer fee cap. The Kay Larkin matter is distinguishable from this matter because Lakewood listed the entire amount as an eligible developer fee. In the case of the 1998 Application filed by Harvard House, FHFC did fail to impose the 15% Penalty for the inclusion of a developer fee in excess of the developer fee cap. It failed to impose the penalty through oversight. Although Lakewood pointed this error out in a NOPSE it filed concerning its score, no NOPSE or direct or competitive appeal was filed by any applicant concerning the Harvard House Application. FHFC, therefore, had no authority pursuant to the 1998 Application to modify the score it had awarded Harvard House. FHFC committed the same error in scoring the Application submitted by Orchid Trace, which had included a developer fee in excess of the limit of $1.00. Again, although Lakewood raised this error in a NOPSE concerning its score, no NOPSE or direct or competitive appeal concerning Orchid Trace's score was filed. FHFC's imposition of the 15% Penalty to Applications which included developer fees in excess of the developer fee caps was consistent except to the extent that FHFC inadvertently failed to impose the penalty on Harvard House and Orchid Trace. Some applicants failed to include a general contractor fee on the Project Cost Pro Forma of Form 4. General contractor fees were limited to 14 percent of project cost. FHFC did not, however, impose the 15% Penalty on those applicants for their omission. Two applicants above the funding line, Magnolia Pointe and Nantucket Bay, failed to include any general contractor fee on the appropriate line. Most applicants, including Lakewood, left some line blank on the 1998 Application and were not penalized. The following instruction was included on page 1 of the 1998 Application: BE SURE TO ANSWER ALL QUESTIONS, FOLLOW ALL INSTRUCTIONS AND FILL IN ALL LINES. DO NOT LEAVE ANY BLANKS. IF AN ITEM IS NOT APPLICABLE TO THIS PROJECT, INDICATE BY USING "N/A". INCOMPLETE OR BLANK ITMES WILL RESULT IN LOSS OF POINTS. Applicants were not specifically required to report a general contractor fee on their Form 4. In some cases, applicants did not incur general contractor fees. Consequently, on those forms where the applicant did not include a general contractor fee, the FHFC had to assume that the applicant did not intend to pay a general contractor fee. Where a particular item was not specifically required or FHFC could not know whether an item had been left off in error, FHFC interpreted the 15% Penalty to not require the imposition of a penalty for merely failing to mark the item "N/A." Intervenors' Standing. Intervenors are engaged in the business of providing affordable residential rental units for low income and/or very low income persons. Intervenors, through subsidiaries or affiliates, submitted Applications to FHFC seeking allocation of tax credits from the 1998 combined cycle pursuant to Section 420.5099, Florida Statutes (1998). Intervenors, through subsidiaries or affiliates, also submitted Applications seeking tax credits from one or both of the preceding two cycles (1996 and 1997), and anticipate filing Applications in the 1999 cycle. For the 1998 cycle, Intervenors, through subsidiaries or affiliates, submitted the following Applications for projects located in FHFC's large county group and were awarded the following points: Company Project Scores LCA 050C - Magnolia Pointe 652.75 Gatehouse 075CS - Nantucket Bay Apartments 644.47 077C - The Rosemary 656.00 Vestor 040C - Courtney Manor Apartments 640.75 Wilson 047C - Windermere Apartments 640.75 The scores for Intervenors' projects were based upon FHFC staff's comparative review and scoring of the Applications submitted in the 1998 cycle, resolution of all direct and competitive appeals, informal hearings conducted by FHFC designated Hearing Officers, and Board action at its August 21 and September 11, 1998, meetings. At the commencement of the final hearing in these cases, the Board had not entered final orders on the scoring of the 1998 Application. The projects of LCA and Gatehouse, however, were above the funding line and were issued "at risk" invitations to credit underwriting. The projects of Vestcor and Wilson were tied with a third applicant for the remaining tax credits for the large county group, which was not sufficient to fund all three projects. On October 16, 1998, the Board voted to issue final orders confirming the scores of all applicants except Lakewood. The Board issued final orders for the funding of all of Intervenors' projects. If Lakewood prevailed in this proceeding and the 15% Penalty was not imposed, its score would rank it ahead of Vestcor's and Wilson's projects. Based upon the Board's action at the October 16, 1998, meeting, however, the projects of Vestcor and Wilson will still be funded.
The Issue The issue to be resolved in this proceeding is whether there is cause for termination of employment of George Arias with the employer, Palatka Housing Authority.
Findings Of Fact Petitioner, Palatka Housing Authority, is a local governmental entity responsible for low-income housing in Palatka, Florida. The Authority is governed by an appointed Board of Directors. The day-to-day operations of the Authority are managed by an Executive Director with back-up from the Deputy Executive Director. The Authority receives the vast majority of its money from the federal government and the funds involved in this case were federal moneys. Around June 1995, the Respondent, George Arias, was employed as the Executive Director by Petitioner, the Palatka Housing Authority. Previously, Mr. Arias had been the assistant director of the San Antonio Texas Housing Authority for many years. Part of Mr. Arias’ employment agreement with the Palatka Housing Authority, included a provision that the Palatka Housing Authority pay Mr. Arias up to $3,000.00 for his moving expenses from San Antonio, Texas, to Palatka, Florida. Additionally, Mr. Arias was to receive compensation of about $45,000.00. The salary was not based on an hourly wage, and Mr. Arias did not have a fixed work schedule. However, Mr. Arias was expected to achieve on average over-time a forty (40) hour week. As part of his employment, the Respondent was directly responsible for the day-to-day management of the Palatka Housing Authority in accordance with the local, state, and federal regulations. He was responsible for overseeing such things as employee supervision, travel vouchers, petty cash disbursements, and payment of bills and purchases. He was also responsible for ensuring implementation of appropriate fiscal controls over the flow of the Palatka Housing Authority funds in order to demonstrate that such funds were disbursed appropriately and for appropriate purposes. In this endeavor, Mr. Arias was assisted by Carolyn White the Deputy Executive Director. It was Carolyn White who reviewed the monthly credit card statements and made notations on the statements to indicate some information about a given charge. Sometime in August 1995 Mr. Arias asked the Board Chairman, Gene Buchanan, for permission to apply for a Barnett Visa credit card in the name of the Public Housing Authority. Mr. Buchanan thought a credit card was a good idea and authorized Mr. Arias to apply for the credit card. On August 19, 1995, Mr. Arias applied for and received a Barnett Visa credit card in the name of the Public Housing Authority. Three cards were issued with an initial credit limit of $5,000. The credit cards were given to Mr. Arias, Ms. White, and Mr. Buchanan. The credit card statement was paid out of the Public Housing Authority travel account which was derived from federal money. At some point, Mr. Arias told Ms. White she could use the credit card for personal expenses as he was doing. Mr. Arias' "policy" was not communicated to the Board or approved by the Board. Mr. Arias had no authority to authorize public funds for private use. Additionally, Mr. Arias’ “policy” was not communicated to George Buchanan, the other card holder at the Palatka Housing Authority. Over the next few months charges to the credit account exceeded the credit limit. Mr. Arias asked Mr. Buchanan to increase the credit limit. The limit was eventually increased to $10,000. However, around March 1996, Mr. Buchanan grew suspicious at the request to increase the credit limit and asked the Public Housing Authority's CPA to look at the credit card statements. When the auditor reviewed the credit card statements, it was discovered that both Mr. Arias and Ms. White had used the Public Housing Authority credit card to purchase personal items and pay personal bills. Mr. Buchanan used the credit card two or three times, all of which were for Palatka Housing Authority business purposes. In the case of Mr. Arias the evidence clearly demonstrated that he used the Palatka Housing Authority credit card (1) to pay for a personal vacation for him and his wife to Las Vegas, Nevada; and (2) to pay for several hotel rooms, meals, gas, transportation and other personal expenses while on personal visits to San Antonio, Texas, and when no Palatka Housing Authority business was scheduled or performed. These charges far exceeded the $3,000.00 allotted for moving expenses and were not items connected with Mr. Arias’ move from San Antonio, Texas. Mr. Arias’ use of the credit card for these purposes was clearly improper and constitutes grounds for termination of his employment with the Palatka Housing Authority. Once the personal use of the credit card was discovered by the CPA both Mr. Arias and Ms. White claimed that they intended to pay the money back once the total amount of the personal expenditures was established in the year-end audit currently being conducted. However, there was no indication in the books and records of the Public Housing Authority that any items of a personal nature were marked or identified as personal for a reviewer to find. On balance, the claim of intended repayment is not credible. However, even assuming the repayment statement to be true, the use of and the lack of fiscal controls for documenting or identifying the personal expenditures on the credit card statements were totally inadequate. The lack of controls amounted to a failure of Mr. Arias to perform his duty as Executive Director responsible for fiscal operations. The use of the credit cards for personal expenditures clearly violated the federal and Public Housing Authority rules prohibiting use of federal or Public Housing Authority money for personal use. It was the responsibility of Mr. Arias to be familiar with these prohibitions and the need for appropriate fiscal controls over the Authority’s funds. Moreover, given Mr. Arias’ long employment with public housing authorities, he unquestionably was aware of these problems and the need for appropriate fiscal controls. Mr. Arias was also responsible for ensuring that there were sufficient fiscal controls over the preparation and approval of travel vouchers and ensuring that these processes were followed. The evidence was clear that travel vouchers were not done in a timely manner since many vouchers for travel almost a year past were not done. These vouchers were only prepared when requested by the CPA for his review. Again there were not fiscal controls sufficient to process the travel vouchers or to ensure their accuracy. In several instances per diem for meals had been paid to Petitioner and several other employees. However, when the travel occurred meals were charged on the Visa credit card. The per diem was never reimbursed and the result was a double payment by Public Housing Authority for meals. Other instances of double payments occurred when petty cash was used to pay for items purchased at various merchants such as Pic-N-Save and Wal-Mart, when those same items had been charged to the Visa credit card. These duplicate payments were a direct result of poor or no fiscal controls. Additionally, in at least one instance, Palatka Housing Authority paid for Mr. Arias’ wife to travel to a business conference with him. Ms. Arias’ airfare was never reimbursed to the Palatka Housing Authority. Similar problems of personal expense items being charged and paid by Palatka Housing Authority, occurred with the authority’s gas credit cards. These items of personal expense were never reimbursed by the person incurring the charge. Again, the lack of fiscal controls is apparent. Finally, around December 8, 1995, Mr. Arias authorized a retroactive pay increase for himself in the amount of $6,175.00, and Carolyn White in the amount of $2,160.76. Tapes of the September 25, 1995, Palatka Housing Authority board meeting, at which the salary increases were discussed, revealed that the board intended to revisit the issue of increased pay if Mr. Arias and Ms. White received good evaluation scores prior to March 31, 1996. In short, the board never authorized the pay increases, but only planned to revisit the issue. Mr. Arias and Ms. White both received good evaluation scores. However, the board never revisited the pay issue, and never authorized the pay increase. Therefore, the salary increase was inappropriate. Given these facts, the evidence demonstrates that Mr. Arias failed to perform his duties as Executive Director and should be terminated from that position.
Recommendation Based upon the findings of fact and conclusions of law, it is, RECOMMENDED: That a Final Order be entered by the Petitioner Palatka Housing Authority terminating the employment of George Arias. DONE AND ENTERED this 30th day of September, 1997, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 30th day of September, 1997. COPIES FURNISHED: Donald E. Holmes, Esquire 222 North Third Street Palatka, Florida 32177 Paul M. Meredith, Esquire 626 Reid Street Palatka, Florida 32177 Stanley Hodge, Chairman Palaka Housing Authority Post Office 1277 Palatka, Florida 32178
The Issue The issue for determination is whether Respondent's proposed amendment to the Qualified Allocation Plan (QAP), specifically paragraph 16 of the proposed 2012 QAP allowing Respondent to allocate certain tax credits by means of Request for Proposals (RFPs), adopted by and incorporated by reference into Florida Administrative Code Rule 67-48.002(94), constitutes an invalid exercise of delegated legislative authority pursuant to section 120.52(8), Florida Statutes.
Findings Of Fact Petitioner Allapattah Housing Partners, LLC, is a Florida limited liability company whose address is 1172 South Dixie Highway, Suite 500 Coral Gables, Florida 33146. Petitioner Tower Road Gardens, Ltd., is a limited partnership whose address is 5709 NW 158 Street, Miami Lakes, Florida 33014. Petitioner City River Apartments, Ltd., is a limited partnership whose address is 1666 Kennedy Causeway, Ste. 505, North Bay Village, Florida 33141. Respondent is a public corporation created by section 420.504, Florida Statutes, to administer the governmental function of financing or refinancing affordable housing and related facilities in Florida. Respondent's statutory authority and mandates appear in Part V of chapter 420, Florida Statutes. See §§ 420.501 through 420.55, Fla. Stat. Respondent is governed by a Board of Directors consisting of nine individuals appointed by the Governor and confirmed by the Senate. Respondent's address is 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301. In the July 1, 2011, Florida Administrative Weekly (FAW), Volume 37, No. 26, pages 1831 through 1872, Respondent gave notice of the proposed amendments to Florida Administrative Code Chapter 67-48 and to forms and instructions that make up the Universal Cycle Application Package, incorporated by reference into Florida Administrative Code Rule 67-48.004(1)(a). The July 1, 2011, Notice of Proposed Rule indicated that a public hearing would be held at Respondent's office in Tallahassee, Florida, on Tuesday, July 26, 2011, at 10:00 a.m. The Amended Petition was filed within ten days of the final public hearing and, thus, is timely pursuant to section 120.56(2), Florida Statutes. Under federal law memorialized in Section 42 of the Internal Revenue Code (IRC or the Code), each state is given an amount of federal Low-Income Rental Housing Tax Credits (Housing Credits) based upon its population. In 2011, each state is entitled to $2.15 per capita of Housing Credits. Florida is entitled to receive approximately $40,422,817.00 in 2011 Housing Credits. These Housing Credits are then allocated to specific qualifying housing projects and can be utilized by project investors each year for a ten-year period. Accordingly, the 2011 Florida Housing Credits entitlement will represent a total value of $404,228,170.00 ($40,422,817.00 each year for ten years) in Housing Credits. Developers typically sell the tax credits to investors to generate equity investments in such projects. For example, an equity "price" of 90 cents for each dollar of the 2011 allocation of Housing Credits would generate approximately $360 million in investor equity for the statewide allocation. More than seven million seven hundred thousand dollars ($7,700,000.00) of 2011 Housing Credits remain unallocated by Respondent. The amount of Housing Credits available for 2012 will not be known until the Internal Revenue Service publishes its state population estimates in early 2012. As in 2011, the amount will be the product of Florida's population multiplied by $2.15. Section 42 of the Code requires that each state designate a "housing credit agency" which is responsible for the proper allocation and distribution of Housing Credits in compliance with the criteria and guidelines of section 42. Respondent's rules incorporate section 42 of the Code at Florida Administrative Code Rule 67-48.002(71). Respondent is designated as Florida's housing credit agency by section 420.5099, Florida Statutes, and, as such, is responsible for the allocation and distribution of Housing Credits. Respondent administers various federal and state affordable housing programs, including the Housing Credit Program, pursuant to section 420.5099 and chapter 67-48. Respondent's rulemaking authority to implement this process is set forth in section 420.507(12), Florida Statutes. Under federal law, Respondent must distribute Low- Income Rental Housing Tax Credits to applicants pursuant to a specific QAP. IRC § 42(m)(l)(A)v. The QAP must contain certain criteria mandated by federal law, referred to as "Selection Criteria." IRC § 42(m)(l)(B). The Code further provides that a state's federal Housing Credit award will be deemed to be zero if its QAP fails to include a complete plan setting forth (a) selection criteria, (b) preferences for lowest income, longest terms and development in qualified census tracts, and (c) procedures for monitoring and reporting a project's non- compliance. IRC § 42(m)(l)(A). Respondent's QAP must be approved by its Board of Directors and by the Governor and must be adopted as a rule. IRC § 42(m)(A)(i); § 120.56. Typically, each year, Respondent embarks on a public rule-making process to adopt the applicable rule and QAP which control the complex and critical processes for evaluation, review, notice, opportunity to be heard, and, ultimately, ranking and approval of developments to receive allocations of Housing Credits for that year. Because the demand for allocation of Housing Credits exceeds that which is available under the Housing Credit Program, applicants of qualified affordable housing developments must compete for this funding. Applicants apply for funding, under various affordable housing programs, through Respondent's Universal Cycle application process, which is set forth in Florida Administrative Code Rules 67-21.002 through -21.00351 and 67-48.001 through -48.005. Applicants for tax credits provide information as required by the forms and instructions of the Universal Cycle Application Package, which is adopted by and incorporated into rule 67-48.004(1)(a). To assess the relative merits of proposed developments, Respondent has established a competitive application process known as the Universal Cycle. Fla. Admin. Code Chapter 67-48. Respondent scores and competitively ranks the applications to determine which applications will be allocated Housing Credits. Respondent's scoring and evaluation process for Housing Credit applications is set forth in rule 67-48.004. Under these rules, the applications are evaluated and scored based upon factors contained in the Universal Cycle Application Package and Respondent's adopted rules. Respondent then issues preliminary scores to all applicants. Fla. Admin. Code R. 67- 48.004(3). Following release of the preliminary scores, competitors can alert Respondent of alleged scoring errors in other applications by filing a written Notice of Possible Scoring Error (NOPSE) within a specified time frame. Respondent reviews the NOPSE and notifies the affected applicant of its decision by issuing a NOPSE scoring summary. Fla. Admin. Code R. 67-48.004(4). Applicants then have an opportunity to submit "additional documentation, revised pages and such other information as the Applicant deems appropriate ('cures') to address the issues" raised by preliminary or NOPSE scoring. See Fla. Admin. Code R. 67-21.003 and 67-48.004(6). In other words, within parameters established by the rules, applicants may cure certain errors and omissions in their applications pointed out during preliminary scoring or raised by a competitor during the NOPSE process. After affected applicants submit their "cure" documentation, competitors can file a Notice of Alleged Deficiency (NOAD) challenging the sufficiency of an applicant's cure. Respondent considers the challenged cure materials and reviews the NOADs, then issues final scores for all the applications. Fla. Admin. Code R. 67-48.004(9). Florida Administrative Code Rule 67-48.005 establishes a procedure through which an applicant can challenge the final scoring of its application. The Notice of Rights that accompanies an applicant's final score advises an adversely affected applicant of its right to appeal Respondent's scoring decision in a proceeding conducted under chapter 120. Ultimately, Respondent ranks each application and allocates available Housing Credits based on such rankings. The last time the QAP in the State of Florida was promulgated and adopted as a rule was in 2009, which allocated 2009 Housing Credits. During 2010, there were no new amendments to Respondent's rules or the QAP. At the end of 2010, Respondent drafted a 2011 QAP, which was signed by the Governor, but never adopted as a rule. The draft 2011 QAP allocated Housing Credits in accordance with a Universal Application Cycle, but Respondent did not adopt the QAP as a rule pursuant to chapter 120.56. The 2011 Cycle did not take place. On June 26, 2011, Respondent's Board authorized publication of proposed rule amendments to chapter 67-48. The proposed rule amendments adopt and incorporate the 2012 QAP by reference at proposed rule 67-48.002(94). Proposed rule 67-48.002(94) provides: "QAP" or "Qualified Allocation Plan" means, with respect to the HC Program, the 2012 Qualified Allocation Plan which is adopted and incorporated herein by reference, effective upon approval by the Governor of the state of Florida, pursuant to Section 42(m)(1)(B) of the IRC and sets forth the selection criteria and the preferences of the Corporation for Developments which will receive Housing Credits. The QAP is available on the Corporation's Website under the 2011 Universal Application link labeled Related References and Links or by contacting the Housing Credit Program at 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301-1329. The 2012 QAP proposed rule purports to govern the process and allocation for both 2011 and 2012 Housing Credits. The only mention in the 2012 QAP proposed rule of the allocation of 2011 Housing Credits is contained in Paragraph 16 of the 2012 QAP proposed rule, which states in its entirety: "Any available 2011 Housing Credit Allocation Authority may be awarded by the FHFC [Respondent's] Board by means of Request for Proposals based on criteria approved by the FHFC [Respondent's] Board." Petitioners challenge proposed rule 67-48.002(94) (which incorporates by reference the 2012 QAP proposed rule) and those portions of the 2012 QAP proposed rule which purport to govern the allocation of 2011 Housing Credits. It is undisputed that Petitioners have standing to initiate and participate in this rule challenge proceeding. § 120.56(1)(a).
The Issue The issues are (1) whether Florida Administrative Code Rules 67-48.002(95) and 67-60.010(3) are invalid exercises of delegated legislative authority; and (2) whether certain statements in Request for Application 2016-113 (RFA-113) issued by Respondent, Florida Housing Finance Corporation (Florida Housing or agency), are unlawful unadopted rules in violation of section 120.54(1)(a), Florida Statutes (2016).
Findings Of Fact The Parties Florida Housing is a public corporation created pursuant to section 420.504. One of its responsibilities is to award low-income housing tax credits, which developers use to finance the construction of affordable housing. Tax credits are made available to states annually by the United States Treasury Department and are then awarded pursuant to a competitive cycle that starts with Florida Housing's issuance of an RFA. This proceeding concerns RFA-113. Petitioners ARD and Madison are developers of affordable housing units and submit applications for tax credits. Law and Wolf are principals of a developer of affordable housing units. Berkshire, Hawthorne, and Southwick are limited partnerships that have submitted applications for tax credits. All Petitioners intend to submit applications in response to RFA-113 and will be subject to rule chapters 67-48 and 67-60. Intervenors Heritage and HTG are developers of affordable housing who intend to file applications pursuant to RFA-113. Background On October 28, 2016, Florida Housing published on its website proposed solicitation RFA-113, a 121-page document inviting applications for the award of up to $14,669,052.00 in housing tax credits for the development of affordable, multifamily housing located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties. After Petitioners gave notice of their intent to challenge RFA-113, Florida Housing attempted to resolve the dispute by modifying the solicitation on November 13, 2016. The modification did not resolve the dispute. On November 14, 2016, Petitioners timely filed with DOAH two Petitions, each challenging rules 67-48.002(95) and 67-60.010(3) and various statements in RFA-113. On the same date, they filed with Florida Housing two petitions challenging certain specifications in the solicitation. Although the Petitions include allegations that two existing rules are invalid, Petitioners' main concern appears to be directed at various provisions in RFA-113 that they assert limit their ability to be awarded tax credits. These contentions are addressed separately below. C. Rule 67-48.002(95) The federal Low-Income Housing Credit Program is governed by 26 U.S.C.S. § 42 (section 42). The program allocates annually federal income tax credits to states on a per capita basis to help facilitate private development of affordable low-income housing. As the housing credit agency for the State of Florida, Florida Housing has the authority to administer various federal and state affordable housing programs, including the Low-Income Housing Credit Program. See § 420.5099(1), Fla. Stat. Section 42(m)(l)(A)(i) requires each state that administers low-income housing credits to adopt a QAP, which identifies the selection criteria used for distributing the housing credits. To comply with this requirement, rule 67-48.002(95) adopts and incorporates by reference the 2016 QAP. The rule reads as follows: (95) "QAP" or "Qualified Allocation Plan" means, with respect to the HC [Housing Credit] program, the 2016 Qualified Allocation Plan which is adopted and incorporated herein by reference, effective upon the approval by the Governor of the State of Florida, pursuant to Section 42(m)(1)(B) of the IRC and sets forth the selection criteria and the preferences of the Corporation for Developments which will receive Housing Credits. The QAP is available on the Corporation's Website under the Multifamily Programs link or by contacting the Housing Credit Program at 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301-1329, or from http://flrules.org/Gateway/reference/asp?No= Ref-07355. The 2016 QAP is a five-page document that replaces the 2015 QAP and generally describes the process for allocating 2017 housing credits. In summary, it identifies Florida Housing as the housing credit agency for the State, lists the federally- mandated preferences and selection criteria to be used when allocating housing credits, describes in brief terms the competitive solicitation process, describes the process for awarding competitive and noncompetitive housing credits, and describes the procedures for monitoring and reporting a project's noncompliance with IRC requirements. Section 42(m)(1)(C) lists ten selection criteria that must be incorporated into the QAP. To comply with this requirement, section I.B. of the 2016 QAP provides that the following selection criteria will be considered when determining the allocation of housing credits: project location; housing needs characteristics; project characteristics including housing as part of a community revitalization plan; sponsor characteristics; tenant populations with special housing needs; public housing waiting lists; tenant populations of individuals with children; projects intended for eventual tenant ownership; energy efficiency of the projects; and historic nature of project. These criteria are identical to those listed in section 42(m)(1)(C) and are intended to provide general guidance for the entire housing credit program, and not just RFA-113. Other than the ten criteria, the IRC requires no further detail regarding the selection criteria. However, more specific guidance is found in the individual RFAs, tailored to each type of solicitation. Since late 2013, when the RFA solicitation process began, around 15 to 20 RFAs have been issued annually. Petitioners assert the QAP violates the IRC by not listing the RFA criteria. However, neither the Department of Housing and Urban Development nor the Internal Revenue Service has ever told Florida Housing that the QAP does not comply with the IRC or other applicable federal regulations. The rule cites section 420.507 as Florida Housing's rulemaking authority. That statute has 49 subsections that identify the various powers necessary for Florida Housing to carry out and effectuate the provisions of the law. Pertinent to this dispute is subsection (12), a general grant of authority for Florida Housing "[t]o make rules necessary to carry out the purposes of [part V, chapter 420]," which governs the various low-income housing programs administered by the agency. The rule cites section 420.5099(1) as the law being implemented. That provision designates Florida Housing as the housing credit agency for the state, along with its "responsibility and authority to establish procedures necessary for proper allocation and distribution of low-income housing tax credits and [to] exercise all powers necessary to administer the allocation of such credits." While consistency with section 42 is required in order to satisfy federal requirements, the IRC is not the law being implemented. Petitioners allege the rule exceeds the agency's grant of rulemaking authority and enlarges, modifies, or contravenes the specific provisions of law implemented. See § 120.52(8)(b) and (c), Fla. Stat. In short, they contend that other than the generic selection criteria required by section 42(m)(1)(C), the QAP fails to include the other selection criteria in RFA-113 that are used during the competitive process. D. Rule 67-60.010(3) Petitioners also challenge rule 67-60.010(3). The entire rule, entitled "Funding Preferences," reads as follows: In connection with any competitive solicitation, where all other competitive elements are equal, the Corporation may establish a preference for developers and general contractors who demonstrate the highest rate of Florida job creation in the development and construction of affordable housing. In any competitive solicitation, the Corporation may prescribe a priority to fund affordable housing projects in the Florida Keys Area of Critical State Concern and the City of Key West Area of Critical State Concern where, due to challenging environmental, land use, transportation, workforce, and economic factors, it is extremely difficult to successfully finance, develop, and construct affordable housing. The Corporation may establish other funding priorities as deemed appropriate for a competitive program or solicitation. The rule cites section 420.507(12) as the source of rulemaking authority. That statute is a general grant of authority allowing Florida Housing to adopt rules necessary to carry out the purposes of part V, chapter 420, which includes the issuance of tax credits under the Low-Income Housing Credit Program. The rule cites sections 420.507(47), (48), and (49), 420.5087, 420.5089(2), and 420.5099 as the laws being implemented. In their totality, those provisions authorize Florida Housing to adopt rules and procedures for allocating housing credits and loans for programs that it administers pursuant to chapter 420. One authorized procedure is the authority to use RFAs when awarding low-income housing tax credits. See § 420.507(48), Fla. Stat. On the faulty premise that RFA-113 derives its authority from subsection (3) of the rule, rather than statutory law, Petitioners argue that Florida Housing is allocating low- income housing tax credits in a manner that violates section 42 and chapter 420. They contend authority is delegated by the RFA to local governments to choose which developer will receive local funding, thus giving that developer more preferential treatment in the selection process. By doing so, Petitioners assert subsection (3) violates section 120.52(8)(d) by failing to establish adequate standards for agency decisions and vesting unbridled discretion in the agency. As the record shows, the authority to allocate tax credits is not derived from a rule. The source of authority is a statute. Subsection (3) simply informs readers that, besides the statutorily-mandated procedures spelled out in subsections (1) and (2), other types of funding priorities or preferences may be enacted at some future time by the legislature. As these changes occur, the reader is told that specific rules will be adopted to implement those changes. Agency Statements The allegations concerning unadopted rules, all in the RFA, are somewhat confusing. In their PFO, Petitioners request that a final order be entered determining "the policies that make up virtually all of RFA 2016-113 are invalid non-rule policies." Pet'r PFO, p. 23. In paragraph 38 of the PFO, they make reference to RFA pages 2, 13, 20, 22, 40-45, 53-54, 62-63, 67-68, 72, and 110, but elsewhere provide the actual text of only six statements and a brief description of a few others. In the parties' Joint Stipulation, Petitioners assert only that "RFA 2016-113 contains numerous provisions that are invalid exercises of non-rule policy and are without a basis in or are contrary to the law implemented." Jt. Stip., p. 2, § B.1. No statements are identified or described. As detailed in endnote 1, however, their initial Petitions identify the text of some statements and provide a brief description of others, along with the page number on which they are found.1/ Only these statements will be addressed. Petitioners contend that Florida Housing must immediately discontinue all reliance upon them, stop the solicitation process, and issue a new RFA. It is unnecessary to recite each statement in full in order to resolve this dispute. An RFA is issued for each solicitation involving low- income housing credits. Before posting an RFA, Florida Housing typically conducts workshops and posts on-line information to inform prospective applicants of all requirements and any new provisions. By reading the RFA, each prospective applicant is placed on equal footing with the others. RFA-113 consists of six sections: Introduction; Definitions; Procedures and Provisions; Information to be Provided in Application; Evaluation Process; and Award Process. The definitions and funding selection criteria being challenged are found in sections Two and Four, respectively. A lengthy Exhibit A is attached to RFA-113, which includes various forms, instructions, and the like. The evidence shows that RFAs in the low-income rental housing program are not always the same, as they vary depending on such things as the type of project, size of the county, applicable selection criteria, proximity of other developments, program being implemented, demographics being served, and economic conditions in the area. Also, changes in the substantive law or federal regulations require a modification of an RFA's terms and conditions from time to time. For example, RFA-113 contains new criteria used by Florida Housing for the very first time. In short, RFA-113 is tailored to a very narrow class of persons in the six-county area who seek tax credits to build affordable low-income rental property in that area. The selection criteria in RFA-113 are not cast in stone and some are subject to discretionary application. And applicants can achieve points in different ways. During the review process, evaluators have the discretion to either waive or enforce irregularities, depending on how they characterize the irregularity. It is fair to assume from the record that different members of the evaluation committee might assign a different score to the same section of an application. Is Rulemaking Impracticable? Petitioners contend that Florida Housing must adopt by rule the detailed selection criteria, preferences, and definitions contained in every RFA. These terms and conditions change from cycle to cycle and would require Florida Housing to engage in repetitive rulemaking each year, which more than likely would unduly delay the solicitation process. Assuming arguendo the statements are a rule, which they are not, under the circumstances presented here, it is not reasonable to adopt by rule precise or detailed principles, criteria, or standards for every solicitation. See § 120.54(1)(a)2.a., Fla. Stat. Attorney's Fees and Costs As a condition precedent to seeking an award of attorney's fees and costs against an agency for having an illegal unadopted rule, the person bringing the challenge must give the agency 30 days' notice before filing a petition under section 120.56(4), which notice must inform the agency that the disputed statement might constitute an unadopted rule. See § 120.595(4)(b), Fla. Stat. The parties have stipulated that Petitioners failed to provide this notice.
Findings Of Fact Having heard oral argument on the issues and considered the record transmitted to the respondent by the BTA, as supplemented by the testimony of Mr. Kurtgis, the following relevant facts are found: Petitioner is the owner of that property located at 114 S.W. 10th Street in Ft. Lauderdale, Florida, more particularly described as "Lot's 15, 17 Block 7 /Croissant Park, River Station 7-50B. Lot's 19, 21, 23 Block 16 Croissant Park, River Section 7-50B" Byron P. Kurtgis was the petitioner's Secretary from July of 1972 through July of 1973. In February of 1973, Kurtgis experienced a broker finger and was unable to use his hand for at least one month. For this reason, he got behind in his affairs and was unable to process the exemption application or to turn necessary documents over to the Club's certified public accountant. His regular employment took precedence over his club work, and he turned the papers over to the CPA when he realized he would not make the April 1st deadline. The exemption application and return was dated April 12, 1973, and received by the Tax Assessor on April 16, 1973. On June 1, 1973, the Tax Assessor notified petitioner that the application for tax exemption had been denied for the reason that it was received after April 1st. Were it not for the untimely filing of the exemption application, the Tax Assessor would have granted petitioner a charitable exemption from ad valorem taxation. Upon appeal by petitioner to the Broward County BTA on the stated grounds of "clerical error and mistake in failure to file return on time, and denial was contrary to law," the BTA granted the tax exemption to petitioner on July 18, 1973. The BTA notified the respondent of the change in the assessor's action. The staff recommendation of the respondent was to invalidate said change on the ground that petitioner failed to demonstrate that it came within an exception to the waiver rule of 196.011 and therefore the change by the BTA lacked legal sufficiency and/or the evidence presented was insufficient to overcome the assessor's presumption of correctness. Petitioner requested a hearing to review the staff recommendation, the Executive Director of the respondent requested the Division of Administrative Hearings to conduct the hearing, and the undersigned was assigned as the Hearing Officer.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the action of the Broward County Board of Tax Adjustment granting the exemption be invalidated. Respectfully submitted and entered this 12th day of February, 1976, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of February, 1976. COPIES FURNISHED: Mr. J. Ed Straughn Executive Director Department of Revenue Room 102, Carlton Building Tallahassee, Florida 32304 Charles G. Brakins, Esquire ROGERS, MORRIS & ZIEGLER 800 East Broward Boulevard 700 Cumberland Building Fort Lauderdale, Florida 33301 Stephen Mitchell, Esquire Assistant Attorney General Office of Legal Affairs The Capitol Tallahassee, Florida 32304 Gaylor Wood, Esquire WOOD & GOHEN 603 Courthouse Square Building 200 Southeast Street, 6th Street Ft. Lauderdale, Florida 33301
The Issue Whether Rule 67-48.005, Florida Administrative Code, and Section VII on Page 16 of Form 1 of the 1999 Housing Credit Application Package adopted by Rule 67-48.002(10) Florida Administrative Code, are invalid exercises of delegated legislative authority. If so, whether Petitioners are entitled to an award of attorney's fees and costs.
Findings Of Fact Part V of Chapter 420, Florida Statutes, consisting of Sections 420.501 - 420.517, Florida Statutes, is the Florida Housing Finance Corporation Act. Respondent, Florida Housing Corporation (FHFC), is a public corporation created by the provisions of Section 420.504, Florida Statutes. Pursuant to Section 420.5099, Florida Statutes, FHFC is the designated housing agency for the State of Florida. FHFC administers the Low Income Housing Tax Credit Program and other housing programs in Florida pursuant to other provisions of the Florida Housing Finance Corporation Act. Pursuant to Section 420.504(2), Florida Statutes, FHFC is an agency of the State of Florida for the purposes of Chapter 120, Florida Statutes. FHFC is governed by an independent member Board of Directors appointed by the Governor. The Board members come from specifically designated industries and backgrounds as set forth in Section 420.504(3), Florida Statutes. Pursuant to Section 420.507, Florida Statutes, FHFC has all the powers necessary or convenient to carry out and effectuate the purposes and provisions of the Florida Housing Finance Corporation Act, including the power to enact rules. 2/ Petitioner submitted an application to the FHFC for 1999 Low Income Housing Tax Credits. The parties stipulated that Petitioner has standing to challenge the validity of the rules at issue in this proceeding. The parties further stipulated that Shepland does not have standing to challenge the validity of the rules at issue in this proceeding. Intervenors, Miami River Park, Ltd., and Wynwood Tower Apartments, Ltd., submitted applications to FHFC for 1999 Low Income Housing Tax Credits. The parties stipulated that these two entities have standing to intervene in this proceeding. The Low Income Housing Tax Credit Program is a federal program whose purpose is to encourage the development of housing for low-income families in the various states. 3/ Section 42 of the Internal Revenue Code (Title 26 of the United States Code) creates federal income tax credits that are allocated to each state and are awarded through state-administered programs to developers of low-income housing projects. The tax credits equate to a dollar-for-dollar reduction of the holder's tax liability which can be taken each year that the project satisfies the Internal Revenue Code requirements, for up to ten years. The developer typically sells or syndicates the tax credit to generate funding for the proposed project. Section 42 of the Internal Revenue Code requires that each state adopt a Qualified Allocation Plan (QAP) establishing procedures to be followed in awarding low-income credits allocated to the states. Section 420.5099, Florida Statutes, provides as follows: The Florida Housing Finance Corporation is designated the housing credit agency for the state within the meaning of s. 42(h)(7)(A) of the Internal Revenue Code of 1986 and shall have the responsibility and authority to establish procedures necessary for proper allocation and distribution of low-income housing tax credits and shall exercise all powers necessary to administer the allocation of such credits. The corporation shall adopt allocation procedures that will ensure the maximum use of available tax credits in order to encourage development of low-income housing in the state, taking into consideration the timeliness of the application, the location of the proposed housing project, the relative need in the area for low-income housing and the availability of such housing, the economic feasibility of the project, and the ability of the applicant to proceed to completion of the project in the calendar year for which the credit is sought. The corporation may request such information from applicants as will enable it to make the allocations according to the guidelines set forth in subsection (2), including, but not limited to, the information required to be provided the corporation by chapter 9I-21, Florida Administrative Code. The executive director of the corporation shall administer the allocation procedures and determine allocations on behalf of the corporation. Any applicant disputing the amount of an allocation or the denial of a request for an allocation may request an appeal to the board of directors of the corporation. For purposes of implementing this program in Florida and in assessing the property for ad valorem taxation under s. 193.011, neither the tax credits, nor financing generated by tax credits, shall be considered as income to the property, and the rental income from rent restricted units in a low-income tax credit development shall be recognized by the property appraiser. The corporation is authorized to expend fees received in conjunction with the allocation of low-income housing tax credits only for the purpose of administration of the program, including private legal services which relate to interpretation of s. 42 of the Internal Revenue Code of 1986, as amended. Pursuant to the provisions of Section 420.5099, Florida Statutes, FHFC has established rules for processing applications for housing tax credits. These rules, found in Chapter 67-48, Florida Administrative Code, constitute Florida's QAP. A prime consideration in developing the application process is that the process be completed in a timely manner, since the failure of a state to use all of its allocated credits in a timely manner will result in a loss of housing tax credits. Such a loss is contrary to the statutory mandate that FHFC ensure the maximum use of available tax credits. Petitioner has challenged FHFC's Rule 67-48.005, Florida Administrative Code, which is entitled Applicant Administrative Appeal Procedures, and provides, in pertinent part, as follows: Following the Review Committee's determination of preliminary scores and ranking, notice of intended funding or denial of funding will be provided to each Applicant with a statement that: Applicants who wish to contest the decision relative to their own Application must petition for review of the decision in writing within 10 calendar days of the date of the notice. The request must specify in detail the forms and the scores sought to be appealed. Unless the appeal involves disputed issues of material fact, the appeal will be conducted on an informal basis. The Review Committee will review the appeal and will provide to the Applicant a written position paper which recommends either no change in score or an increase or decrease in a score which it deems to be in error. If the Applicant disagrees with the Review Committee's recommendation, the Applicant will be given an opportunity to participate in the informal administrative appeal hearings scheduled by the Review Committee. If the appeal raises issues of material fact, a formal administrative hearing will be conducted pursuant to Section 120.57(1), Florida Statutes. Failure to timely file a petition shall constitute a waiver of the right of the Applicant to such an appeal. Applicants who wish to notify the Corporation of possible scoring errors relative to another Applicant's Application must file with the Corporation, within 10 calendar days of the date of the notice, a written request for a review of the other Applicant's score. Each request must specify in detail the assigned Application number, the forms and the scores in question. Each request is limited to the review of only one Application's score. Requests which seek the review of more than one Application's score will be considered improperly filed and ineligible for review. There is no limit to the number of requests which may be submitted. The Review Committee will review each written request timely received and will prepare a written position paper, which will be provided to each Applicant who timely filed a notification and to the Applicant whose score has been questioned, which recommends either no change in score or an increase or decrease in a score which it deems to be in error. Failure to timely and properly file a request shall constitute a waiver of the right of the Applicant to such a review. Notice will be provided to all Applicants whose score is reduced or whose Application is deemed ineligible pursuant to 67-48.005(1)(b) that they may contest the decision relative to their own Application by petitioning for review of the decision in writing within 10 calendar days of the date of the notice. The request must specify in detail the forms and the scores sought to be appealed. Unless the appeal involves disputed issues of material fact, the appeal will be conducted on an informal basis. The Review Committee will review the appeal and will provide to the Applicant a written position paper which recommends either no change in score or an increase or decrease in a score which it deems to be in error. If the Applicant disagrees with the Review Committee's recommendation, the Applicant will be given an opportunity to participate in the informal administrative appeal hearings scheduled by the Review Committee. No Applicant or other person or entity will be allowed to intervene in the appeal of another Applicant. If the appeal raises issues of material fact, a formal administrative hearing will be conducted pursuant to Section 120.57(1), Florida Statutes. Failure to timely file a petition shall constitute a waiver of the right of the Applicant to such an appeal. Petitioner has also challenged the following portion of the application form which has been adopted by reference by FHFC's Rule 67-48.002(10), Florida Administrative Code: . . . In consideration for the Corporation processing and scoring this Application, the Applicant and all Financial Beneficiaries hereby understand and agree that the Corporation will hear appeals only on the Applicant's own score. . . . In 1996, FHFC combined the application processes for the subject low-income tax credit program, the State Apartment Incentive Loan (SAIL) Program (Section 420.587, Florida Statutes) and the Home Investment Partnership (HOME) Program (Section 420.5089, Florida Statutes) to make the application process easier and more efficient. Each year FHFC initiates rulemaking to refine the application process from the previous year and to implement any changes in the application process. The administrative rules, with any amendments, are adopted annually. All prospective applicants under any of the three combined programs are invited to attend rulemaking workshops. After the allocation of tax credits for Florida is known, a Notice of Funding Availability setting forth that allocation, is published in the Florida Law Weekly. For the 1999 allocation period, the notice was published on October 23, 1998. Due to the limited number of housing credits available in each annual application cycle and the number of applications for those credits, there are not enough credits available for distribution in Florida for all applicants to receive housing credits in the year in which they apply. Consequently, applicants are competing for a fixed pool of resources. For the 1999 period, the application cycle was opened and the application form was available to interested persons on October 30, 1998. From November 9 through 11, 1998, application workshops were held in Tallahassee, Miami, and Orlando, to address any questions regarding the application process. Applicants are given what is referred to as the Application Package, which contains all pertinent forms and sets forth the instructions and criteria by which the applications will be evaluated by FHFC staff. Applicants were required to complete the applications and submit them to FHFC by January 7, 1999. Ninety applications for the three combined programs were filed. Each application was evaluated by FHFC staff pursuant to the instructions and criteria contained in the Application Package. Partly because FHFC staff is required to verify information reflected in each application, the evaluation process takes six to eight weeks to complete. The evaluation process results in a score for each application. The scores are reviewed and approved by a Review Committee, consisting of FHFC staff. On March 12, 1999, after scores were approved by the Review Committee, a pre-review score was mailed to each applicant. After the applicants were notified of their pre-review score, they had the week beginning March 15, 1999, to review the scoring of all applications. FHFC rules provide an opportunity for an applicant to question its pre-review score and to challenge the pre-review scores received by other applicants. The challenge to an applicant's own score is referred to as a Direct Appeal. The challenge by an applicant to another applicant's score is referred to as a Competitive Appeal. All Direct and Competitive Appeals were due on or before March 22, 1999. Upon receipt of the Direct Appeals and Competitive Appeals, FHFC staff first review the Competitive Appeals and draft a Competitive Appeal Position Paper for each unique issue raised. The Competitive Appeal Position Papers are approved by the Review Committee before being released, which, for 1999, was on April 5, 1999. The same process is followed for the Direct Appeals. The Direct Appeal Position Papers were approved by the Review Committee and released on April 7, 1999. An applicant whose application was adversely affected by a Competitive Appeal Position Paper (as the result of a Competitive Appeal filed by a competing applicant) has the opportunity to file what is referred to as a Direct Appeal of a Competitive Appeal (DACA). Thereafter, FHFC staff evaluates all issues raised by the Direct Appeals and by the DACAs, and prepares a position paper for each issue. On April 27, 1999, the Review Committee approved the Direct Appeal and DACA position papers. On May 4, 1999, these position papers were mailed to the interested parties. An applicant who was not satisfied with the Direct Appeal or DACA position paper for its application was given a limited period to request a proceeding pursuant to Chapter 120, Florida Statutes. If there were no disputed issues of material fact, the matter proceeded as an informal hearing. If there were disputed issues of material fact, the matter proceeded as a formal hearing. On June 11 and July 30, 1999, the Board of Directors of FHFC considered the Recommended Order that resulted from each administrative hearing and entered a Final Order, which determined the final scores for each application. Thereafter, the final ranking of the competing applications were completed and approved. Preliminary approval of a tax credit allocation to an applicant is based on the final ranking. An applicant selected for a tax credit allocation is thereafter "invited" by FHFC to a "credit underwriting" whereby the credit-worthiness of the applicant and the proposed project is further scrutinized by a credit underwriter and a draft credit underwriting report is prepared. The credit underwriting process takes fifty to sixty days to complete. For the 1999 cycle, the draft credit underwriting reports were due September 28, 1999. Once the credit underwriting reports are finished, the successful applicant is given a preliminary tax credit allocation. For the 1999 cycle, the applicant then must complete its project or certify that it has expended at least ten percent of its reasonably expected tax credit basis. If the project cannot be completed by the end of the calendar year, the applicant must enter into a Carryover Agreement. The applicant must have expended ten percent of its reasonably expected tax credit basis before it can enter into a Carryover Agreement. The applicant typically has to be prepared to spend large sums of money in a relatively short period of time to meet these requirements. An applicant does not have the opportunity for an administrative hearing pursuant to Chapter 120, Florida Statutes, on the scoring of a competing application after the Competitive Appeal Position Paper has been issued by FHFC staff. 4/ Pursuant to the challenged rules, an applicant who was not satisfied with the Direct Appeal or DACA position paper for another applicant's application is not permitted a Chapter 120 proceeding and is not permitted to intervene if the other applicant has requested a Chapter 120 proceeding. Such appeals, referred to as Cross Appeals, were once permitted by the rules of FHFC. FHFC determined that Cross Appeals disrupted the application process and placed too great a burden on the FHFC staff. Cross Appeals resulted in a process that was difficult to bring to closure and resulted in litigation expenses that were assessed against the total project cost for the development. Using rule development workshops that were appropriately advertised, FHFC adopted rules permitting Competitive Appeals, but prohibiting Cross Appeals. FHFC did not act arbitrarily or capriciously in adopting these rules.
