The Issue Whether Florida Housing Finance Corporation’s (Florida Housing) intended decision to award Respondent, Brixton Landing, Ltd., low-income housing tax credits is contrary to Florida Housing’s governing statutes, rules, or the solicitation specifications.
Findings Of Fact Respondent, Florida Housing, is a public corporation created pursuant to section 420.504, Florida Statutes (2015). Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Petitioners, Madison Hollow, LLC, and American Residential Development, LLC (Madison Hollow or Petitioners), are Florida limited liability corporations engaged in the business of affordable housing development. Brixton Landing, is a Florida limited liability corporation also engaged in the business of affordable housing development. Florida Housing is the housing credit agency for the State of 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, which are made available to the states annually by the United States Department of the Treasury. The State Housing Tax Credit Program is established in Florida under the authority of section 420.5093, Florida Statutes. Florida Housing is the designated entity in Florida responsible for allocating federal tax credits to assist in financing the construction or substantial rehabilitation of affordable housing. Because the demand for tax credits provided by the federal government far exceeds the supply available under the State Housing Tax Credit Program, qualified affordable housing developments must compete for this funding. On November 21, 2015, Florida Housing issued Request for Applications 2014-115, Housing Credit Financing for Affordable Housing Developments in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties (the RFA). No challenge was filed to the terms, conditions, or requirements of the RFA. According to the RFA, Florida Housing expected to award up to approximately $15,553,993 in tax credits for qualified affordable housing projects in those six large counties. Florida Housing received approximately 58 applications in response to the RFA. Madison Hollow, Brixton Landing, Sheeler Club Apartments, Sheeler Club Apartments-Phase II, Banyan Station, Lauderdale Place, and Lake Sherwood timely submitted applications in response to the RFA requesting financing of their affordable housing projects from the funding proposed to be allocated through the RFA. Petitioners requested an allocation of $2,110,000 in annual tax credits for their development, Madison Hollow, located in Orange County. Brixton Landing requested an allocation of $1,330,000 in annual tax credits for Brixton Landing’s proposed development in Orange County. On May 8, 2015, the Board of Directors of Florida Housing approved the preliminary rankings and allocations, and issued its Approved Preliminary Awards/Notice of Intended Decision (Notice of Intended Decision), in which Florida Housing scored both Madison Hollow’s and Brixton Landing’s projects as eligible for funding and awarded each application 23 points. In addition, Sheeler Club Apartments, Sheeler Club Apartments- Phase II, Banyan Station, Lauderdale Place, and Lake Sherwood were all found to be eligible applications. On that same date, Florida Housing published on its website the Notice of Intended Decision, which included a three- page spreadsheet listing all applications made in response to the RFA and identifying those which were eligible and ineligible. Ranking and Selection Process Applications were evaluated for eligibility and scoring by a Review Committee appointed by Florida Housing’s executive director. Applications were considered for funding only if they were deemed “eligible,” based on the terms of the RFA. Of the 58 timely-submitted applications, 52 were deemed eligible and six were deemed ineligible. The highest scoring applications were determined by first sorting all eligible applications from highest score to lowest score. Pursuant to the RFA, applicants could achieve a maximum score of 23 points. Eighteen (18) of those 23 points were attributable to “proximity” scores based on the distance of the proposed development from services needed by tenants. The remaining five points were attributable to Local Government Contributions. In scoring housing tax credit applications, many applicants achieved tie scores. In anticipation of that occurrence, Florida Housing designed the RFA and rules to incorporate a series of “tie breakers” to separate any scores that tied as follows: First by the Application’s eligibility for the “SAIL RFA 2014-111 Unfunded Preference”, which is outlined in Section One of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference). Next, by the Application’s eligibility for the Development Category Funding Preference which is outlined in Section Four A.5.c.(1)(a)(iii) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next by the Application’s eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.12.e. of the RFA, (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next by the Application’s Leveraging Classification (applying the multipliers outlined in Exhibit C below and having the Classification of A be the top priority); Next by the Application’s eligibility for the Florida Job Creation Preference which is outlined in Exhibit C below (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and Finally by lottery number, resulting in the lowest lottery number receiving preference. The Leveraging Classification is essentially a ranking of eligible applications based upon the cost per unit (referred to in the RFA as Total Corporation Funding Per Set-Aside Unit), with the most cost-effective project at the top of the list and the least cost-effective at the bottom. The top 90 percent of applications on the list were classified as Group A and the bottom 10 percent of applications classified as Group B. Applicants in Group B are not eligible for funding until all applicants in Group A are funded. Pursuant to Item 9 of Exhibit C to the RFA, Florida Housing classified Brixton Landing and Madison Hollow in the Group A Leveraging Classification, and classified Sheeler Club Apartments, Sheeler Club Apartments-Phase II, Banyan Station, and Lauderdale Place in the Group B Leveraging Classification. Both Brixton Landing and Madison Hollow were scored identically by Florida Housing, and both developments are located in Orange County. Because the RFA provided that only one project will be funded in each county, and because Brixton Landing had a lower lottery number than Madison Hollow, Brixton Landing was selected for funding. A total of 52 applications were found to be eligible for funding. According to the leveraging calculations, the Group B applications were removed from consideration for funding. Brixton Landing was number 45 on the list, thus classified in Group A. Brixton Landing will be moved to Group B classification, if at least two of the five applications in Group B are found to be ineligible. If Brixton Landing is moved into Group B, Madison Hollow will be eligible for funding. The Challenged Applications Madison Hollow alleges that the applications for Sheeler Club Apartments and Sheeler Club Apartments-Phase II should have each been found ineligible for failure to demonstrate the “ability to proceed” required in the RFA. Madison Hollow also alleges that the applications for Banyan Station and Lauderdale Place should have each been found ineligible for failure to fully disclose the principals of the applicant and developer.1/ Madison Hollow is thus in the unusual position of challenging four applicants who were not selected for funding and are not parties to this case. Brixton Landing is in the equally unusual position of defending the applications of those four unfunded applicants. Sheeler Club Atlantic Housing Partners (Atlantic) submitted two applications in response to the RFA. Sheeler Club Apartments was an application for development of affordable multifamily units to serve a family demographic. Sheeler Club Apartments- Phase II was an application for development of multi-family garden homes to serve an elderly demographic. The projects were proposed to be located adjacent to each other. The RFA sets forth the following specific requirements for applicants to demonstrate the ability to proceed: 5.f. Ability to Proceed: The Applicant must demonstrate the following Ability to Proceed elements as of Application Deadline, as outlined below. * * * Status of Site Plan Approval. The Applicant must demonstrate the status of site plan approval as of the Application Deadline by providing, as Attachment 7 to Exhibit A, the properly completed and executed Florida Housing Finance Corporation Local Government Verification of Status of Site Plan Approval for Multifamily Developments form (Form Rev. 11-14). Appropriate Zoning. The Applicant must demonstrate that as of the Application Deadline the proposed Development site is appropriately zoned and consistent with local land use regulations regarding density and intended use or that the proposed Development site is legally non-conforming by providing, as Attachment 8 to Exhibit A, the applicable properly completed and executed verification form: The Florida Housing Finance Corporation Local Government Verification that Development is Consistent with Zoning and Land Use Regulations form (Form Rev. 11-14); or The Florida Housing Finance Corporation Local Government Verification that Permits are not Required for this Development form (Form Rev. 11-14). Similarly, the RFA requires applicants to submit forms to demonstrate availability of electricity, water, sewer, and roads to serve the proposed development. The Verification of Status of Site Plan Approval form (Site Plan form) must be completed by the local government official responsible for determination of issues related to site plan approval within the applicable jurisdiction. The official must choose between two optional paragraphs related to proposals for new construction: (1) the proposed development “requires additional site plan approval or similar process” and the “final site plan . . . was approved on or before the submission deadline for the” RFA; or (2) the proposed development “requires additional site plan approval or similar process” and either the jurisdiction requires preliminary or conceptual site plan approval, “which has been issued,” or (b) the jurisdiction provides neither preliminary nor conceptual site plan approval, “nor is any other similar process provided prior to issuing final site plan approval,” but the site plan, in the applicable zoning designation, has been reviewed. Orange County provides neither preliminary nor conceptual site plan approval. Thus, the local government official must certify that the site plan for the proposed project has been reviewed. The Local Government Verification that Development is Consistent with Zoning and Land Use Regulations form (Zoning form), requires that the local government official responsible for issues related to comprehensive planning and zoning certify the following: (1) the zoning designation applicable to the property; (2) that the proposed number of units and intended use are consistent with current land use regulations and the zoning designation; (3) that there are no additional land use regulation hearings or approvals required to obtain the zoning classification or density proposed; and (4) that there are no known conditions that would preclude construction of the proposed development on the site. It is undisputed that Atlantic submitted both verification forms with its application. Olan Hill, Chief Planner for Orange County, reviewed, completed, and signed each of these forms, attesting that in his opinion both of the proposed projects would be in compliance with local zoning and land use regulations. Mr. Hill was fully authorized to sign the forms on behalf of Orange County. The two Atlantic projects are proposed adjacent to one another on a site which has a Planned Development (PD) zoning approval for development of 152 single-family townhome units in the Medium Density Residential Future Land Use category (MDR), which allows a maximum density of 20 units per acre. The County’s PD zoning approval was based on review of Atlantic’s Land Use Plan (LUP) for the site. According to Mr. Hill, the LUP is a “bubble plan” outlining the general entitlements and development program for the site. In the case at hand, the Atlantic site also has an approved preliminary subdivision plan (PSP), which is the first step to subdivide the property. Under the PSP, the property is proposed to be subdivided into 152 lots for development of single-family townhomes. For purposes of certifying the Site Plan and Zoning forms, Mr. Hill reviewed the PD LUP, not the PSP. Regarding the Site Plan form, Mr. Hill certified that, although the County requires no preliminary or conceptual site plan approval process and the final site plan approval has not yet been issued, the site plan for the project in the applicable zoning classification, the PD LUP, had been reviewed. With respect to the Zoning form, Mr. Hill first certified that the proposed number of units and intended use are consistent with current land use regulations and the PD zoning designation. The PD LUP limits the total number of units to 152, which would accommodate either of the Sheeler Club applications (Sheeler Club Apartments proposes 88 units, while Sheeler Club-Phase II proposes 64 units). The MDR land use category allows the multi-family uses proposed for the development up to 20 units per acre. Under the MDR category, the 21.4-acre site could be approved for well over 152 units. Mr. Hill next certified that there are no additional land use regulation hearings or approvals required to obtain the zoning classification or density described in that zoning classification. The PD zoning is final and is not dependent upon whether Atlantic goes forward with subdivision of the property as proposed in the existing PSP. Atlantic could subdivide the property for a different number of lots, or in a different configuration, without changing the zoning of the property. Finally, Mr. Hill certified that there are no known conditions that would preclude construction of the referenced Development on the proposed site, assuming compliance with the applicable land use regulations. There are numerous county approvals needed throughout the development approval process. The Zoning form does not require the local government official to certify that no additional approvals are needed following site plan review, or that the proposed project is ready to begin construction. Petitioners contend that neither of the Sheeler Club applications should have been deemed eligible because, despite Mr. Hill’s authorized certifications to the contrary, the projects do not have the ability to proceed. Petitioners do not contend that Mr. Hill was not authorized to execute the forms, or that the certifications were obtained through fraud or other illegality. As to the Site Plan form, Petitioners contend first that Mr. Hill did not review a site plan for either project proposed by Atlantic: Sheeler Club Apartments, 88 multi-family units; or Sheeler Club Apartments-Phase II, 64 garden apartments. Instead, Mr. Hill reviewed and certified the site plan for Sheeler Avenue Townhomes PD, which provides for development of single-family townhomes in a single phase over the entire site. Petitioners argue that the PD is conditioned upon development of townhomes in single ownership complying with section 38-79(20) of the Orange County Code of Ordinances, which is unrelated to construction of the “garden apartments” proposed by Atlantic in its application to Florida Housing for financing. Thus, Petitioners conclude, Mr. Hill has not reviewed a site plan for either Sheeler Club Apartments or Sheeler Club Apartments-Phase II. Mr. Hill testified that his certification did not depend on whether either or both of the proposed projects was eventually developed, but that the overall site has a PD zoning approval for a total of 152 units. Ken Reecy is the Director of Multi-family Programs for Florida Housing. He testified the purpose of the Site Plan form, and, for that matter, the Zoning form, is to verify “high- level” approval of the site. For example, if the applicant proposes a 64-unit project, Florida Housing wants verification that the developer will be able to deliver 64 units. As to the Zoning form, Petitioners present a parade of objections. Petitioners argue that the proposed use of the property for multi-family apartments and garden apartments is inconsistent with the zoning approval for single-family townhomes; thus, additional land use regulation approvals are required, contrary to the certified Zoning form. Petitioners point to the PSP approved for the subdivision of the property and argue that neither Sheeler Club project could be built in conformity with the PSP, which proposes to subdivide the property into 152 townhome lots. Relying on the PSP, Petitioners also argue that Sheeler Club Apartments-Phase II has no public road access without the Sheeler Club Apartments development, thus, Mr. Hill’s certification as to Phase II was incorrect and the project is not ready to proceed. Moreover, Petitioners argue that Atlantic “gerrymandered” the boundaries of the two projects in order to secure the most advantageous location for the “development location point”; therefore, the lot layout proposed in the PSP cannot be achieved on either of the two projects. Likewise, Petitioners argue the boundary is a change from the approved PSP, which requires additional land use approvals from the Board of County Commissioners. It is Florida Housing’s practice to accept the zoning and land use certifications by local officials, which it followed in this case. Florida Housing does not have the expertise, resources, or authority to evaluate local zoning and land use decisions. Petitioners would have the undersigned perform the analysis that Florida Housing did not and make a determination whether the Atlantic projects, as proposed, meet the requirements for zoning and land use approvals set forth in the certifications signed by Mr. Hill. Petitioners would have this tribunal interpret the Orange County Code of Ordinances and make findings regarding: whether the LUP PD would have to be amended for Atlantic to build the projects proposed in its funding application to Florida Housing; whether said amendments would constitute “substantial changes” to the approved PD, thus requiring additional public hearings; and, ultimately, whether the Site Plan and Zoning forms were executed in error. The undersigned declines to do so, as set forth more fully in the Conclusions of Law. In this particular case, Mr. Reecy testified that Orange County was aware of the issues raised by Madison Hollow and that he relied on Mr. Hill’s knowledge to make the right call on these forms. While there was certainly an abundance of testimony attempting to call into question the decisions of the Orange County authorities, the evidence does not support a finding that Florida Housing’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the solicitation specifications, or that it was clearly erroneous, contrary to competition, arbitrary, or capricious. In light of that finding, the audio recordings of Orange County Commission Meetings proffered by both Petitioners and Brixton Landing are not admitted. The recordings are irrelevant in this proceeding and have not been relied upon by the undersigned. Banyan Station and Lauderdale Place Madison Hollow alleges that two other applications, Banyan Station and Lauderdale Place, should have been found ineligible for failure to disclose the principals of the applicant and the developers, as required by RFA section Four.A.3. Both the applicants for, and developers of, Banyan Station and Lauderdale Place are limited liability companies (LLCs). Section Four.A.3.d.(2) requires applicants that are LLCs to provide a list identifying the principals of the applicant and the principals of each developer as of the application deadline. The RFA also directs applicants to Section 3 of Exhibit C “to assist the [a]pplicant in compiling the listing.” Exhibit C provides, “[t]he Corporation is providing the following charts and examples to assist the Applicant in providing the required list[.] The term Principal is defined in Section 67-48.002, F.A.C.” Florida Administrative Code Rule 67-48.002(93) reads, in relevant part, as follows: (93) ‘Principal’ means: With respect to an Applicant or Developer that is a limited liability company, any manager or member of the Applicant or Developer limited liability company, and, with respect to any manager or member of the Applicant or Developer limited liability company that is: 3. A limited liability company, any manager or member of the limited liability company. Exhibit C provides the following chart applicable to disclosures by LLC applicants: Identify All Managers And Identify all Members and For each Manager that is a Limited Partership: For each Manager that is a Limited Liability Company: For each Manager that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder and For each Member that is a Limited Partnership: For each Member that is a Limited Liability Company: For each Member that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder For any Manager and/or Member that is a natural person (i.e., Samuel S. Smith), no further disclosure is required. Exhibit C further provides examples of fictitious applicants and developers followed by disclosure listings of managers, members, general and limited partners, officers, directors, and shareholders, as applicable. Banyan Station, applicant, HTG Banyan is a limited liability company. HTG Banyan listed its managers as Matthew and Randy Rieger, and its members as Camillus-Banyan, LLC, and Housing Trust Group, LLC. It then listed Camillus House, Inc., and RER Family Partnership, Ltd., as sole members of those LLCs, respectively. Applicant’s developer is also a limited liability company, HTG Banyan Developer, LLC. HTG Banyan Developer listed Matthew and Randy Rieger as the developer’s managers, and Camillus-Banyan, LLC, HTG Affordable, LLC, and Reiger Holdings, LLC, as its members. It listed Camillus House, Inc., RER Family Partnership, Ltd., and Balogh Family Investments Limited Partnership, as members of those LLCs. HTG Banyan Developer disclosed Matthew Reiger as the sole member of Rieger Holdings. Likewise, Lauderdale Place applicant, HTG Anderson, LLC, identified its managers and members, although some members were identified as LLCs. In each case, the applicant identified the principals of the applicant and the developer down “two levels” of organizational structure, even though in some cases this did not result in the disclosure of natural persons. Petitioners urge an interpretation of the disclosure requirement that would require an LLC to continue to identify members and managers until natural persons are identified. Respondents maintain that the rule and the RFA require disclosure of only “two levels” of organizational structure, as shown on the charts in Exhibit C. Petitioners did not make a showing that Florida Housing’s interpretation of the rule and the RFA is unreasonable. The definition of “principal” of an LLC includes members which are likewise LLCs. The assistive chart includes disclosures at only two levels of organizational structure. Furthermore, in Exhibit C, example 3, the disclosure for ABC, LLC, includes XYZ, LLC, as a member without further disclosure. In support of its argument, Petitioners rely upon the language below the chart which states, “[f]or any Manager and/or Member that is a natural person (i.e., Samuel S. Smith), no further disclosure is required.” The plain language of the chart states that when disclosing managers and members of an LLC, for any manager or member who is a natural person, no further disclosure is required. The language does not state, as Petitioners would prefer, when disclosing managers and members of an LLC, disclosure must be made until all natural persons are disclosed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order affirming Brixton Landing for funding under RFA 2014-115. DONE AND ENTERED this 29th day of October, 2015, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK 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 October, 2015.
The Issue Whether the Petitions filed by Ambar Trail, Ltd.; Sierra Meadows Apartments, Ltd.; and Quail Roost Transit Village IV, Ltd., should be dismissed for lack of standing.
Findings Of Fact Florida Housing is a public corporation created under Florida law to administer the governmental function of financing or refinancing affordable housing and related facilities in Florida. Florida Housing administers a competitive solicitation process to implement the provisions of the housing credit program, under which developers apply and compete for funding for projects in response to RFAs developed by Florida Housing. The RFA in this case was specifically targeted to provide affordable housing in Miami-Dade County, Florida. The RFA introduction provides: 2 As this Recommended Order of Dismissal is based upon a motion to dismiss, the factual allegations of the three Petitions filed by the Petitioners in this consolidate case are accepted as true, and the Findings of Fact are derived from the four corners of those Petitions, see Madison Highlands. LLC v. Florida Housing Finance Corp., 220 So. 3d 467, 473 (Fla. 5th DCA 2017), and facts that are not otherwise in dispute. This Request for Applications (RFA) is open to Applicants proposing the development of affordable, multifamily housing located in Miami- Dade County. Under this RFA, Florida Housing Finance Corporation (the Corporation) expects to have up to an estimated $7,195,917 of Housing Credits available for award to proposed Developments located in Miami-Dade County. After Florida Housing announced its preliminary funding award decisions for RFA 2019-112 for Housing Credit Financing for Affordable Housing Developments Located in Miami-Dade County, each of the Petitioners filed Petitions challenging the decisions. Petitioners do not allege that Florida Housing improperly scored or evaluated the applications selected for funding, nor do they contend that Petitioners' applications should be funded. Instead, Petitioners allege that the evaluation was fundamentally unfair and seeks to have the entire RFA rescinded based on alleged improprieties of one responding entity and its affiliates. Petitioners claim that the evaluation process was fundamentally unfair is based entirely on allegations that several entities associated with Housing Trust Group, LLC (HTG), combined to submit 15 Priority I applications in contravention of the limitation in the RFA on the number of Priority I applications that could be submitted. Even assuming Petitioners' assertions are correct, there is no scenario in which Petitioners can reach the funding range for this RFA. In order to break ties for those applicants that achieve the maximum number of points and meet the mandatory eligibility requirements, the RFA sets forth a series of tie-breakers to determine which applications will be awarded funding. The instant RFA included specific goals to fund certain types of developments and sets forth sorting order tie-breakers to distinguish between applicants. The relevant RFA provisions are as follows: Goals The Corporation has a goal to fund one (1) proposed Development that (a) selected the Demographic Commitment of Family at questions 2.a. of Exhibit A and (b) qualifies for the Geographic Areas of Opportunity/SADDA Goal as outlined in Section Four A. 11. a. The Corporation has a goal to fund one (1) proposed Development that selected the Demographic Commitment of Elderly (Non-ALF) at question 2.a. of Exhibit A. *Note: During the Funding Selection Process outlined below, Developments selected for these goals will only count toward one goal. Applicant Sorting Order All eligible Priority I Applications will be ranked by sorting the Applications as follows, followed by Priority II Applications. First, from highest score to lowest score; Next, by the Application's eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application's eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.lO.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's eligibility for the Development Category Funding Preference which is outlined in Section Four A.4.(b)(4) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Applicant's Leveraging Classification, applying the multipliers outlined in Item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Applicant's eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and And finally, by lotterv number, resulting in the lowest lottery number receiving preference. This RFA was similar to previous RFAs issued by Florida Housing, but included some new provisions limiting the number of Priority I applications that could be submitted. Specifically, the RFA provided: Priority Designation of Applications Applicants may submit no more than three (3) Priority I Applications. There is no limit to the number of Priority II Applications that can be submitted; however, no Principal can be a Principal, as defined in Rule Chapter 67- 48.002(94), F.A.C., of more than three ( 3) Priority 1 Applications. For purposes of scoring, Florida Housing will rely on the Principals of the Applicant and Developer(s) Disclosure Form (Rev. 05-2019) outlined below in order to determine if a Principal is a Principal on more than three (3) Priority 1 Applications. If during scoring it is determined that a Principal is disclosed as a Principal on more than three (3) Priority I Applications, all such Priority I Applications will be deemed Priority II. If it is later determined that a Principal, as defined in Rule Chapter 67-48.002(94), F.A.C., was not disclosed as a Principal and the undisclosed Principal causes the maximum set forth above to be exceeded, the award(s) for the affected Application(s) will be rescinded and all Principals of the affected Applications may be subject to material misrepresentation, even if Applications were not selected for funding, were deemed ineligible, or were withdrawn. The Petitioners all timely submitted applications in response to the RFA. Lottery numbers were assigned by Florida Housing, at random, to all applications shortly after the applications were received and before any scoring began. Lottery numbers were assigned to the applications without regard to whether the application was a Priority I or Priority II. The RFA did not limit the number of Priority II Applications that could be submitted. Review of the applications to determine if a principal was a principal on more than three Priority 1 Applications occurred during the scoring process, well after lottery numbers were assigned. The leveraging line, which would have divided the Priority I Applications into Group A and Group B, was established after the eligibility determinations were made. All applications were included in Group A. There were no Group B applications. Thus, all applications were treated equally with respect to this preference. The applications were ultimately ranked according to lottery number and funding goal. . If Florida Housing had determined that an entity or entities submitted more than three Priority I Applications with related principals, the relief set forth in the RFA was to move those applications to Priority II. Florida Housing did not affirmatively conclude that any of the 15 challenged applications included undisclosed principals so as to cause a violation of the maximum number of Priority I Applications that could be submitted. All of the applications that were deemed eligible for funding, including the Priority II Applications, scored equally, and met all of the funding preferences. After the applications were evaluated by the Review Committee appointed by Florida Housing, the scores were finalized and preliminary award recommendations were presented and approved by Florida Housing's Board. Consistent with the procedures set forth in the RFA, Florida Housing staff reviewed the Principal Disclosure Forms to determine the number of Priority I Applications that had been filed by each applicant. This review did not result in a determination that any applicant had exceeded the allowable number of Priority I Applications that included the same principal. One of the HTG Applications (Orchid Pointe, App. No. 2020-148C) was initially selected to satisfy the Elderly Development goal. Subsequently, three applications, including Slate Miami, that had initially been deemed ineligible due to financial arrearages were later determined to be in full compliance and, thus, eligible as of the close of business on January 8, 2020. The Review Committee reconvened on January 21, 2020, to reinstate those three applications. Slate Miami was then recommended for funding. The Review Committee ultimately recommended to the Board the following applications for funding: Harbour Springs (App. No. 2020-101C), which met the Geographic Areas of Opportunity/SADDA Goal; Slate Miami (App. No. 2020-122C), which met the Elderly (non-ALF) Goal; and Naranja Lakes (App. No. 2020-117C), which was the next highest-ranked eligible Priority I Application. The Board approved the Committee's recommendations at its meeting on January 23, 2020, and approved the preliminary selection of Harbour Springs, Slate Miami, and Naranja Lakes for funding. The applications selected for funding held Lottery numbers 1 (Harbour Springs), 2 (Naranja Lakes), and 4 (Slate Miami). Petitioners' lottery numbers were 16 (Quail Roost), 59 (Sierra Meadows) and 24 (Ambar Trail). The three applications selected for funding have no affiliation or association with HTG, or any of the entities that may have filed applications in contravention of the limitation in the RFA for Priority I applications. The applications alleged in the Petitions as being affiliated with HTG received a wide range of lottery numbers in the random selection, including numbers: 3, 6, 14, 19, 30, 38, 40, 42, 44, 45, 49, 52 through 54, and 58. If Petitioners prevailed in demonstrating an improper principal relationship between the HTG applications, the relief specified in the RFA (the specifications of which were not challenged) would have been the conversion of the offending HTG applications to Priority II applications. The relief would not have been the removal of those applications from the pool of applications, nor would it have affected the assignment of lottery numbers to any of the applicants, including HTG. The Petitions do not allege any error in scoring or ineligibility with respect to the three applications preliminarily approved for funding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Petitioners lack standing and dismissing the Petitions with prejudice. DONE AND ENTERED this 3rd day of April, 2020, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III 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 3rd day of April, 2020. COPIES FURNISHED: Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC Suite 3-231 1400 Village Square Boulevard Tallahassee, Florida 32312 (eServed) Michael P. Donaldson, Esquire Carlton Fields Jorden Burt, P.A. 215 South Monroe Street, Suite 500 Post Office Drawer 190 Tallahassee, Florida 32302-0190 (eServed) Donna Elizabeth Blanton, Esquire Brittany Adams Long, Esquire Radey Law Firm, P.A. Suite 200 301 South Bronough Street Tallahassee, Florida 32301 (eServed) Hugh R. Brown, General Counsel Betty Zachem, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) J. Stephen Menton, Esquire Tana D. Storey, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 (32302) Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
The Issue Whether Florida Housing Finance Corporation’s (Florida Housing, Corporation, or Respondent) rejection of the funding for the application submitted by Capital Grove Limited Partnership (Capital Grove) was contrary to Florida Housing’s governing statutes, rules, policies, or the specifications of Request for Applications 2014-114 (the RFA). If so, whether Florida Housing’s decision to fund the application submitted by HTG Wellington Family, LLC (HTG Wellington), is contrary to governing statutes, rules, policies, or the RFA specifications.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote the 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 by Congress in 1986 to incentivize the private market to invest in affordable rental housing. Tax credits are competitively awarded to applicants in Florida for qualified rental housing projects. Applicants then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the owner would otherwise have to borrow. Because the debt is lower, a tax-credit property can offer lower, more affordable rents. Provided the property maintains compliance with the program requirements, investors receive a dollar-for-dollar credit against their federal tax liability each year over a period of ten years. The amount of the annual credit is based on the amount invested in the affordable housing. Tax credits are made available by the U.S. Treasury to the states annually. Florida Housing is authorized to allocate tax credits and other funding by means of request for proposal or other competitive solicitation in section 420.507(48), and adopted Florida Administrative Code chapter 67-60 to govern the competitive solicitation process for several different programs, including the one for tax credits. Rule 67-60.002(1) defines “Applicant” as “any person or legally-formed entity that is seeking a loan or funding from the Corporation by submitting an application or responding to a competitive solicitation pursuant to this rule chapter for one or more of the Corporation’s programs.” Applicants request in their applications a specific dollar amount of housing credits to be given to the applicant each year for a period of 10 years. Applicants typically 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 majority of the capital necessary to construct the Development. The amount of housing credits an Applicant may request is based on several factors, including but not limited to 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 areas of some counties. Florida Housing’s competitive application process for the allocation of tax credits is commenced by the issuance of a Request for Applications. In this case, that document is Request for Applications 2014-114 (the RFA). The RFA was issued November 20, 2014, and responses were due January 22, 2015. Capital Grove submitted Application No. 2015-045C in RFA 2014-114 seeking $1,509,500 in annual allocation of housing credits to finance the construction of a 94-unit residential rental development in Pasco County (a Medium County), to be known as Highland Grove Senior Apartments. HTG Wellington submitted Application No. 2015-101C seeking $1,510,000 in annual allocation of housing credits to finance the construction of a 110-unit multifamily residential development in Pasco County, Florida, to be known as Park at Wellington Apartments. Florida Housing has announced its intention to award funding to nine Medium County Developments, including Park at Wellington in Pasco County (Application No. 2015-101C), but not Highland Grove Senior Apartments. Florida Housing received 82 applications seeking funding in RFA 2014-114, including 76 for Medium County Developments. The process employed by Florida Housing for this RFA makes it virtually impossible for more than one application to be selected for funding in any given medium county. Because of the amount of funding available for medium counties, the typical amount of an applicant’s housing credit request (generally $1.0 to $1.5 million), and the number of medium counties for which developments are proposed, many medium counties will not receive an award of housing credit funding in this RFA. Florida Housing intends to award funding to nine developments in nine different medium counties. The applications were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of RFA 2014-114; Florida Administrative Code chapters 67- 48 and 67-60; and applicable federal regulations. Florida Housing’s executive director appointed a Review Committee of Florida Housing staff to evaluate the applications for eligibility and scoring. Applications are considered for funding only if they are deemed “eligible,” based on whether the application complies with Florida Housing’s various content requirements. Of the 82 applications submitted to Florida Housing in RFA 2014-114, 69 were found “eligible,” and 13 were found ineligible, including Capital Grove. Florida Housing determined that Capital Grove was ineligible on the ground that its Letter of Credit was deficient under the terms of the RFA. A five-page spreadsheet created by Florida Housing, entitled “RFA 2014-114 – All Applications,” identifying all eligible and ineligible applications was provided to all Applicants. In addition to scoring, Applicants received a lottery number to be applied in tie situations, with the lower number given preference. Capital Grove received lottery number 12. HTG Wellington received lottery number 9. On March 11, 2015, the Review Committee met and considered the applications submitted in response to the RFA, and made recommendations regarding the scoring and ranking of the applications to Florida Housing’s Board of Directors (the Board). Capital Grove’s Letter of Credit The RFA provides for a Withdrawal Disincentive in which an applicant could either provide a $25,000 check or a $25,000 Letter of Credit that would be forfeited if the application was withdrawn by the applicant before a certain period of time. Applicants so withdrawing would also suffer a deduction from the full developer-experience point total in certain future Requests for Applications issued by Florida Housing. According to specifications in the RFA, any Letter of Credit submitted must be in compliance with all the requirements of subsection 4.a. of Section Three, Procedures and Provisions of the RFA, which provides in pertinent part: 4. $25,000 Letter of Credit. Each Applicant not submitting a $25,000 Application Withdrawal Cash Deposit (as outlined in 3 above) must submit to the Corporation a letter of Credit that meets the following requirements with its Application: a. The Letter of Credit must: Be issued by a bank, the deposits of which are insured by the FDIC, and which has a banking office located in the state of Florida available for presentation of the Letter of Credit. Be on the issuing bank’s letterhead, and identify the bank’s Florida office as the office for presentation of the Letter of Credit. Be, in form, content and amount, the same as the Sample Letter of Credit set out in Item 14 of Exhibit C of the RFA, and completed with the following: Issue Date of the Letter of Credit (LOC) which must be no later than January 22, 2015. LOC number. Expiration Date of the LOC which must be no earlier than January 22, 2016. Issuing Bank’s legal name. Issuing Bank’s Florida Presentation Office for Presentation of the LOC. Florida Housing’s RFA number RFA 2014- 114. Applicant’s name as it appears on the Application for which the LOC is issued. Development name as it appears on the Application for which the LOC is issued. Signature of the Issuing Bank’s authorized signatory. Printed Name and Title of the Authorized Signatory. The Sample Letter of Credit included in Exhibit C, Item 14 of the RFA reads: (Issuing Bank’s Letterhead) Irrevocable Unconditional Letter of Credit To/Beneficiary: Florida Housing Finance Corporation Issue Date: [a date that is no later than January 22, 2015] Attention: Director of Multifamily Programs 227 N. Bronough Street, Suite 5000 Tallahassee, Florida 32301 Letter of Credit No.: Expiration Date: [a date that is no earlier than January 22, 2016] Issuing Bank: Florida Presentation Office: FHFC RFA # 2014-114 Applicant: Development: Gentlemen: For the account of the Applicant, we, the Issuing Bank, hereby authorize Florida Housing Finance Corporation to draw on us at sight up to an aggregate amount of Twenty- Five Thousand and No/100 Dollars ($25,000.00). This letter of credit is irrevocable, unconditional, and nontransferable. Drafts drawn under this letter of credit must specify the letter of credit number and be presented at our Florida Presentation Office identified above not later than the Expiration Date. Any sight draft may be presented to us by electronic, reprographic, computerized or automated system, or by carbon copy, but in any event must visibly bear the word “original.” If the document is signed, the signature may consist of (or may appear to us as) an original handwritten signature, a facsimile signature or any other mechanical or electronic method of authentication. Payment against this letter of credit may be made by wire transfer of immediately available funds to the account specified by you, or by deposit of same day funds in a designated account you maintain with us. Unless we notify you in writing at least thirty (30) days prior to the Expiration Date, the Expiration Date of this letter of credit must be extended automatically for successive one-month periods. This letter of credit sets forth in full the terms of our obligations to you, and such undertaking shall not in any way be modified or amplified by any agreement in which this letter is referred to or to which this letter of credit relates, and any such reference shall not be deemed to incorporate herein by reference any agreement. We engage with you that sight drafts drawn under, and in compliance with, the terms of this letter of credit will be duly honored at the Presentation Office. We are an FDIC insured bank, and our Florida Presentation Office is located in Florida as identified above. Yours very truly, [Issuing Bank] By Print Name Print Title Despite these requirements, Capital Grove submitted an “Irrevocable Standby Letter of Credit” issued by PNC Bank National Association (PNC). Capital Grove’s Letter of Credit provides, in pertinent part: Beneficiary: Applicant: Florida Housing Finance Westbrook Housing Corp. Corp. Development, LLC 4110 Southpoint Blvd., 227 North Bronough Street Ste 206 Suite 5000 Jacksonville, Fl 32216 Tallahassee, Fl 32301 ATTENTION: DIR. OF MULTI- FBO CAPITAL GROVE FAMILY PROGRAMS LIMITED PARTNERSHIP IRREVOCABLE STANDBY LETTER OF CREDIT OUR REFERENCE: 18123166-00-00 AMOUNT: USD $25,000.00 ISSUE DATE: JANUARY 20, 2015 EXPIRY DATE: JANUARY 22, 2016 EPIRY PLACE: OUR COUNTER RE: FHFC RFA #2014-114 DEVELOPMENT: HIGHLAND GROVE SENIOR APARTMENTS GENTLEMEN: WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. 18123166-00-000 IN FAVOR OF FLORIDA HOUSING FINANCE CORPORATION FOR THE ACCOUNT OF WESTBROOK HOUSING DEVELOPMENT LLC AVAILABLE FOR PAYMENT AT OUR COUNTERS IN AN AMOUNT OF USD $25,000.00 (TWENTY FIVE THOUSAND AND 00/100 UNITED STATES DOLLARS) AGAINST BENEFICIARY'S PURPORTEDLY SIGNED STATEMENT AS FOLLOWS: "I (INSERT NAME AND TITLE) CERTIFY THAT I AM AN AUTHORIZED REPRESENTATIVE OF FLORIDA HOUSING FINANCE CORPORATION AND HEREBY DEMAND PAYMENT OF USD (INSERT AMOUNT) UNDER PNC BANK, NATIONAL ASSOCIATION LETTER OF CREDIT NO. 18123166-00-000. I FURTHER CERTIFY THAT WESTBROOK HOUSING DEVELOPMENT, LLC HAS FAILED TO COMPLY UNDER THE PROJECT NAME: HIGHLAND GROVE SENIOR APARTMENTS BETWEEN FLORIDA HOUSING FINANCE CORPORATION AND WESTBROOK HOUSING DEVELOPMENT, LLC." Ken Reecy, Director of Multifamily Programs for Florida Housing, personally reviewed all Letters of Credit submitted by RFA applicants, and reported his findings to the Review Committee. The Review Committee recommended finding Capital Grove’s application nonresponsive and ineligible for funding because Capital Grove failed to include a responsive Letter of Credit. The Review Committee also found four other applications ineligible for failing to meet the Letter of Credit requirements, all of which used PNC Bank and involved entities related to Capital Grove, including Westbrook Housing Development, LLC, appearing as Co-Developer. All such PNC Letters of Credit failed for the same reasons. Mr. Reecy and the Review Committee found that the Letters of Credit from PNC Bank (including that submitted by Capital Grove) did not meet the facial requirements of the RFA, in that the Letters of Credit were not in the name of the applicant. The General Partner of the applicant, Capital Grove Limited Partnership, is Capital Grove GP, LLC. The Co-Developer entities are JPM Development, LLC, and Westbrook Housing Development, LLC. Co-Developer Westbrook Housing Development, LLC, a Michigan Company authorized to conduct business within the State of Florida, is a different legal entity from Co-Developer JPM Development, LLC. Mr. Reecy and the Review Committee also found the PNC Letters of Credit (including that submitted by Capital Grove) nonresponsive to the specification of the RFA because the Letters included a condition requiring Florida Housing, in order to draw on the Letter of Credit, to certify that the Co- Developer (and not the applicant) had “failed to comply under the project name: Highland Grove Senior Apartments.” However, under the RFA specifications, the action that is the basis for the presentment of the Letter of Credit is a withdrawal of the application by the applicant, not the developer. Only an applicant may withdraw an application. If the Letter of Credit cannot be drawn upon, the RFA provides that the applicant, “shall be responsible for the payment of the $25,000 to the Corporation; payment shall be due from the applicant to the Corporation within 10 calendar days following written notice from the Corporation.” Applicant Capital Grove is a single-purpose entity that has no assets. In order to collect on the Letter of Credit submitted by Capital Grove, Florida Housing would have to submit a different certification than that called for under the RFA sample letter of credit. According to Kathleen Spiers, Vice President of PNC Bank, to draw down the Letter of Credit, Florida Housing would have to copy the statement outlined in paragraph 2 of the Capital Grove Letter of Credit, sign it, and submit it to PNC to draw upon the letter of credit. At the final hearing, Mr. Reecy testified, “I am not prepared to certify to something that isn’t true. I am not going to certify that the developer didn’t comply by the Applicant withdrawing.” All other Letters of Credit submitted by applicants under this RFA were accepted as responsive. HTG Wellington’s Unit Count HTG Wellington indicated in its application to Florida Housing that its proposed Park at Wellington Development would be 110 multifamily units. In its application for Local Government Support, HTG Wellington described the Development as a 120-unit, multifamily development in five three-story buildings. The RFA requires a minimum $50,000 Local Government Contribution in Pasco County for an applicant to receive the maximum of five points. In order to obtain a Local Government Contribution, tax credit developers must submit an application to Pasco County at least six weeks before the matter is presented to the Board of County Commissioners for approval. Pasco County, in turn, has their underwriter, Neighborhood Lending Partners ("NLP"), organize the applications and create an underwriting package. NLP does not make a recommendation to the Board of County Commissioners for funding. Rather, NLP alerts Pasco County if there is a red flag concerning the Development and scores the applications based upon financial stability of the organization, financing of the project, and the development pro forma. HTG Wellington submitted an application for Local Government Contribution to Pasco County in November 2014. The application contemplated a 120-unit development. Impact fees schedules are adopted by the Pasco County Board of Commissioners. Pasco County has established an impact fee rate for affordable and non-affordable development and the difference between the two is multiplied by the number of units to determine the impact fee amount. The impact fee waiver amount approved for Park at Wellington Apartments was $219,600. This amount was calculated based upon 120 units contemplated in November 2014, multiplied by $1830.00, which is the difference between the normal impact fee rate, minus the rate for affordable housing development. The $219,600 figure was used in HTG Wellington’s application. At 110 units (as opposed to 120 units), the total Local Government Contribution available to HTG Wellington is $201,300. Either amount ($219,600 or $201,300) meets the minimum for HTG Wellington to receive five points for its Local Government Contribution. The change in the contribution amount would have no effect on the scoring of the HTG Wellington application. Pasco County’s Manager of Community Development and Officer of Community Development, George Romagnoli, testified that for approximately 15 years, Pasco County has employed a strategy to approve all applications for Local Government Contribution and then let Florida Housing choose which Development will receive tax credits. Pasco County is not concerned about the ultimate accuracy of the number of units submitted for a Contribution –- as stated by Mr. Romagnoli: "We funded 84, 120, whatever. It's really not material to the approval one way or the other." Although Florida Housing approved HTG Wellington’s application before discovering the discrepancy, had Florida Housing discovered the discrepancy in the number of units during the scoring process, the discrepancy would have been deemed a minor irregularity unless the discrepancy resulted in a change in scoring or otherwise rendered the application nonresponsive as to some material requirement and the discrepancy would generally be handled with a simple adjustment to the amount presented on the application Pro Forma, if necessary. Additionally, changes to the number of units in a development may be increased (but not decreased) under certain circumstances during the credit underwriting process which follows the competitive solicitation process. The discrepancy in the number of units does not provide any competitive advantage to HTG Wellington. The discrepancy in the number of units does not provide a benefit to HTG Wellington not enjoyed by others. Florida Housing’s waiver of the discrepancy in the number of units does not adversely impact the interests of the public. HTG Wellington’s Bus Stop The RFA allows an applicant to obtain 18 proximity points, including six points for a Public Bus Transfer Stop. Florida Housing awarded HTG Wellington 4.5 proximity points for its purported Public Bus Transfer Stop. The RFA defines a Public Bus Transfer Stop as: This service may be selected by all Applicants, regardless of the Demographic Commitment selected at question 2 of Exhibit For purposes of proximity points, a Public Bus Transfer Stop means fixed location at which passengers may access at least three routes of public transportation via buses. Each qualifying route must have a scheduled stop at the Public Bus Transfer Stop at least hourly during the times of 7 am to 9 am and also during the times of 4 pm to 6 pm Monday through Friday, excluding holidays on a year-round basis. This would include both bus stations (i.e. hub) and bus stop with multiple routes. Bus routes must be established or approved by a Local Government department that manages public transportation. Buses that travel between states will not be considered. In response to this requirement HTG Wellington submitted a Surveyor Certification Form which lists coordinates submitted to qualify for a Public Bus Transfer Stop. The site identified by HTG Wellington as a Public Bus Transfer Stop, however, is not a fixed location where passengers may access at least three routes of public transportation. While another bus stop which serves an additional two routes is within 700 feet, stops cannot be combined for purposes of the RFA. Therefore, the site designated as a Public Bus Transfer Stop by HTG Wellington is not a “fixed location” for purposes of the RFA and HTG Wellington is not entitled to obtain proximity points for a Public Bus Transfer Stop. Not including the 4.5 proximity points for a Public Bus Transfer Stop, HTG was awarded 11.5 total proximity points for selected Community Services. The required minimum total of proximity points for developments located in a medium county that must be achieved in order to be eligible to receive the maximum amount of 18 points as set forth in the RFA is 9. HTG had more than the required minimum total of proximity points to receive the maximum award of 18 proximity points based on its Community Services score alone. The disqualification of HTG’s submitted Public Bus Transfer Stop would have no effect on the scoring or ranking of the HTG Wellington application, nor affect its ranking relative to any other application, nor affect the ultimate funding selection. The RFA requires each applicant to read and sign at Attachment A, an Applicant Certification and Acknowledgement Form (the Form). The signing of the Form is mandatory. Page 5, Paragraph 8 of the Form provides: In eliciting information from third parties required by and/or included in this Application, the Applicant has provided such parties information that accurately describes the Development as proposed in this Application. The Applicant has reviewed the third party information included in this Application and/or provided during the credit underwriting process and the information provided by any such party is based upon, and accurate with respect to, the Development as proposed in this Application. Even though there was a discrepancy in the unit numbers submitted to Pasco County for a Local Government Contribution and its application submitted in response to the RFA, HTG signed the Form. No evidence was submitted indicating that HTG signed the Form with knowledge of the discrepancy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order: Rejecting Capital Grove’s application as nonresponsive and denying the relief requested in its Petition; Concluding that Capital Grove lacks standing to bring allegations against HTG Wellington; and, Upholding Florida Housing’s scoring and ranking of the HTG Wellington application. DONE AND ENTERED this 3rd day of August, 2015, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida32399-3060 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 2015.
The Issue In 2009, Elmwood Terrace Limited Partnership (Petitioner) filed an application with the Florida Housing Finance Corporation (Respondent), seeking funding to develop an affordable housing apartment complex in Ft. Myers, Florida. The Respondent denied the application. The issue in this case is whether the Petitioner's application should have been granted.
Findings Of Fact The Petitioner is a limited partnership and developer of affordable housing in Florida. The Petitioner is seeking to construct a 116-unit affordable housing family apartment complex ("Elmwood Terrace") in Fort Myers, Lee County, Florida. The Petitioner has standing to initiate and participate in this proceeding. The Respondent is a public corporation organized under Chapter 420, Florida Statutes (2010), to administer state programs that provide financial support to developers seeking to construct affordable housing. Such support is provided through a variety of mechanisms, including the use of federal tax credits. The federal tax credit program was created in 1986 to promote the construction and operation of privately-developed affordable housing. The tax credits relevant to this proceeding provide a dollar-for-dollar credit against federal tax liabilities for a period of ten years. The Respondent is the designated Florida agency responsible for distribution of the federal tax credits. The tax credits are awarded pursuant to a "Qualified Allocation Plan" (QAP) that must be annually approved by the Governor and adopted as an administrative rule by the Respondent. As a matter of course, developers receiving the federal tax credits sell them through syndicators for discounted cash. The sale of the tax credits generates debt-free cash equity for developers. Developers seeking financial support to build affordable housing units submit applications to the Respondent during an annual competitive process known as the "Universal Cycle." Every three years, the Respondent commissions a study (the "Shimberg Report"), which measures, within each Florida county, the number of "cost-burden" renters earning 60 percent or less of an area's median income (AMI) who pay more than 40 percent of their income in rent. The AMI is determined by the federal government. The cost-burden households are further classified into four groups: families, the elderly, farm workers, and commercial fishermen. The Shimberg Report also assesses needs related to homeless people in the state. Developers seeking to obtain affordable housing financing are required to set aside a portion of the proposed units for income-limited residents. Access to affordable housing units is generally targeted towards persons receiving no more than 60 percent of the AMI. The Universal Cycle process allows the Respondent to target specific housing deficiencies in terms of geographic availability and population demographics and to preserve the stock of existing affordable housing. During the Universal Cycle process, the Respondent identifies areas where additional affordable housing is unnecessary, to discourage additional development in weak markets and to encourage development in those locations where there is a lack of access to affordable housing. The Respondent classifies areas where there is little need for additional affordable housing as "Location A" areas. Each application filed during the Universal Cycle is evaluated, scored, and competitively ranked against other applications filed during the same Universal Cycle. After the Respondent completes the competitive ranking of the applications submitted in the Universal Cycle, the applicants are provided with an opportunity to review and comment on the evaluation and scoring of the proposals. Applicants may also cure defects in their own proposals. After the close of the review and comment period, the Respondent publishes a revised competitive ranking of the proposals. Developers may challenge the second ranking through an administrative hearing. After the second ranking process is final, developers achieving an acceptable score receive preliminary funding commitments and proceed into a "credit underwriting" evaluation process. The credit underwriting process is governed by Florida Administrative Code Rule 67-48.0072. The Respondent selects an independent credit underwriter who reviews each proposal according to requirements set forth by administrative rule (the "Credit Underwriting Rule"). The cost of the credit underwriting review is paid by the developer. The credit underwriter considers all aspects of the proposed development, including financing sources, plans and specifications, cost analysis, zoning verification, site control, environmental reports, construction contracts, and engineering and architectural contracts. The responsibility for the market study is assigned by the credit underwriter to an independent market analyst. The credit underwriter prepares a report for each applicant invited into the process. The reports are submitted to the Respondent's nine-member, statutorily-created Board of Directors (Board). The Board approves or denies each application for financial support. The Petitioner applied for funds for the Elmwood Terrace project during the 2007 Universal Cycle. The Petitioner's application received a perfect score, maximum points, and was allocated tax credits in the amount of $1,498,680. The Petitioner thereafter entered the credit underwriting process. The credit underwriting analysis was performed by Seltzer Management Group (SMG). SMG contracted with a market analyst, Vogt, Williams & Bowen Research, Inc. (VWB), to prepare the required market study. The affordable units at Elmwood Terrace were initially intended for persons receiving incomes no more than 60 percent of the AMI. The VWB research indicated that the Elmwood Terrace project would adversely affect the existing affordable housing developments, if the Elmwood Terrace units were available to the 60 percent AMI population. The existing affordable housing developments, also serving the 60 percent AMI population, included two developments that had participated in the Respondent's "Guarantee Fund" program, addressed elsewhere herein. VWB determined that the impact of the Elmwood Terrace project on the existing developments could be ameliorated were some of the Elmwood Terrace units targeted during "lease-up" to persons at income levels of not more than 50 percent of the AMI. The lease-up period is the time required for a new development to reach anticipated occupancy levels. The issue was the subject of discussions between the Petitioner, VWB, and SMG. To resolve the anticipated negative impact on the existing affordable housing developments, the Petitioner agreed to target the 50 percent AMI population. In September 2008, the credit underwriter issued his report and recommended that the Petitioner receive the previously-allocated tax credits. On September 22, 2008, the Respondent's Board accepted the credit underwriting report and followed the recommendation. In the fall of 2008, after the Petitioner received the tax credits, the nation's economic environment deteriorated considerably. As a result, the syndicator with whom the Petitioner had been working to sell the tax credits advised that the sale would not occur. The Petitioner was unable to locate an alternate purchaser for the tax credits. The Petitioner considered altering the target population of the project in an attempt to attract a buyer for the tax credits, and there were discussions with the Respondent about the option, but there was no credible evidence presented that such an alteration would have resulted in the sale of the Petitioner's tax credits. Lacking a buyer for the tax credits, the Petitioner was unable to convert the credits to cash, and they were of little value in providing funds for the project. The Petitioner was not alone in its predicament, and many other developers who received tax credits in the 2007 and 2008 Universal Cycles found themselves unable to generate cash through the sale of their tax credits. In early 2009, Congress adopted the American Recovery and Reinvestment Act of 2009 (PL 111-5), referred to herein as ARRA, which incorporated a broad range of economic stimulus activities. Included within the ARRA was the "Tax Credit Exchange Program" that provided for the return by the appropriate state agency of a portion of the unused tax credits in exchange for a cash distribution of 85 percent of the tax credit value. The State of Florida received $578,701,964 through the Tax Credit Exchange Program. The ARRA also provided additional funds to state housing finance agencies through a "Tax Credit Assistance Program" intended to "resume funding of affordable housing projects across the nation while stimulating job creation in the hard-hat construction industry." On July 31, 2009, the Respondent issued a Request for Proposals (RFP 2009-04) to facilitate the distribution of the ARRA funds. The Respondent issued the RFP because the 2009 QAP specifically required the Respondent to allocate the relevant federal funds by means of a "competitive request for proposal or competitive application process as approved by the board." The 2009 QAP was adopted as part of the 2009 Universal Cycle rules. Projects selected for funding through the RFP would be evaluated through the routine credit underwriting process. Participation in the RFP process was limited to developers who held an "active award" of tax credits as of February 17, 2009, and who were unable to close on the sale of the credits. The RFP included restrictions against proposals for development within areas designated as "Location A." Although the location of the Elmwood Terrace project had not been within an area designated as "Location A" during the 2007 Universal Cycle process, the Respondent had subsequently designated the area as "Location A" by the time of the 2009 Universal Cycle. The RFP also established occupancy standards for projects funded under the RFP that exceeded the standards established in the Universal Cycle instructions and an evaluation process separate from the Universal Cycle requirements. Although the restrictions in the RFP would have automatically precluded the Petitioner from being awarded funds, the Petitioner submitted a response to the RFP and then filed a successful challenge to the RFP specifications (DOAH Case No. 09-4682BID). In a Recommended Order issued on November 12, 2009, the Administrative law Judge presiding over the RFP challenge determined that certain provisions of the RFP, including the automatic rejection of Location A projects, the increased occupancy standards, and the RFP evaluation criteria, were invalid. The Respondent adopted the Recommended Order by a Final Order issued on December 4, 2009, and invited the Petitioner into the credit underwriting process by a letter dated December 9, 2009. The credit underwriter assigned to analyze the Petitioner's project was SMG, the same credit underwriter that performed the original analysis of the Petitioner's project during the 2007 Universal Cycle. SMG retained Meridian Appraisal Group, Inc. (Meridian), to prepare the required market study. The Respondent was not consulted regarding the SMG decision to retain Meridian for the market analysis. The decision to retain Meridian for the market analysis was entirely that of SMG. The Respondent did not direct SMG or Meridian in any manner regarding the assessment or evaluation of any negative impact of the proposed project on existing affordable housing developments. Meridian completed the market study and forwarded it to SMG on January 26, 2010. The Meridian market analysis included a review of the relevant data as well as consideration of the actual economic conditions experienced in Lee County, Florida, including the extremely poor performance of the existing housing stock, as well as significant job losses and considerable unemployment. The Meridian market analysis determined that the Elmwood Terrace development would have a negative impact on two existing affordable housing apartment developments that were underwritten by the Respondent through a Guarantee Fund created at Section 420.5092, Florida Statutes, by the Florida Legislature in 1992. The existing Guarantee Fund properties referenced in the SMG recommendation are "Bernwood Trace" and "Westwood," both family-oriented apartment developments within five miles of the Elmwood Terrace location. The Guarantee Fund essentially obligates the Respondent to satisfy mortgage debt with the proceeds of Florida's documentary stamp taxes, if an affordable housing development is unable to generate sufficient revenue to service the debt. Because the Guarantee Fund program essentially serves to underwrite the repayment of mortgage debt for a "guaranteed" affordable housing development, the program increases the availability, and lowers the cost, of credit for developers. The Guarantee Fund program has participated in the financing of more than 100 projects, most of which closed between 1999 and 2002. Since 2005, the Respondent has not approved any additional Guarantee Fund participation in any affordable housing developments. The Respondent's total risk exposure through the Guarantee Fund is approximately 750 million dollars. Prior to October 2008, no claims were made against the Guarantee Fund. Since November 2008, there have been eight claims filed against the Guarantee Fund. Affordable housing financing includes restrictions that mandate the inclusion of a specific number of affordable housing units. Such restrictions are eliminated through foreclosure proceedings, and, accordingly, access to affordable housing units can be reduced if a development fails. Presuming that the eight claims pending against the Guarantee Fund eventually proceeded through foreclosure, as many as 2,300 residential units could be deducted from the stock of affordable housing. When there is a claim on the Guarantee Fund, the Respondent has to assume payment of the mortgage debt. The claims are paid from the Guarantee Fund capital, which is detrimental to the Respondent's risk-to-capital ratio. The risk-to-capital ratio is presently four to one. The maximum risk-to-capital ratio acceptable to rating agencies is five to one. The eight claims against the Guarantee Fund have ranged between ten and 18 million dollars each. The Respondent's bond rating has declined because of the eight claims. A continued decline in the Respondent's bond rating could result in documentary stamp tax receipts being used for payment of Guarantee Fund claims and directed away from the Respondent's programs that are intended to support the creation of affordable housing. In an effort to prevent additional claims against the Guarantee Fund, the Respondent has created the "Subordinate Mortgage Initiative" to provide assistance in the form of two- year loans to troubled Guarantee Fund properties. When preparing the 2010 market study, Meridian did not review the VWB market analysis performed as part of the 2007 application. Although the Petitioner has asserted that Meridian should have reviewed the 2007 VWB analysis, there is no evidence that Meridian's decision to conduct an independent market study without reference to the prior market review was inappropriate. On February 8, 2010, SMG issued a recommendation that the Petitioner's funding request be denied "because of the proposed development's potential financial impacts on developments in the area previously funded by Florida Housing and an anticipated negative impact to the two Guarantee Fund properties located within five miles of the proposed development." There is no evidence that the Meridian analysis was inadequate or improperly completed. There is no evidence that the SMG's reliance on the Meridian analysis was inappropriate. For purposes of this Order, the Meridian analysis and the SMG credit underwriting report have been accepted. Elmwood Terrace, a newer development with newer amenities, would compete for residents with the Bernwood Trace and Westwood developments. The financing for Bernwood Trace and Westwood was premised on projections that the affordable housing units would be leased to the 60 percent AMI population; however, the developments have been unable to maintain full occupancy levels, even though a number of units in the two properties are leased at reduced rates based on 50 percent AMI income levels. A rent reduction implemented by an existing development, whether based on economic conditions or resulting from competition, constitutes a negative impact on the development. There is no credible evidence that the occupancy rates are attributable to any difficulty in management of the two developments. It is reasonable to conclude that the leasing issues are related to economic conditions present in Lee County, Florida. In January 2010, VWB conducted an alternative market analysis. The VWB analysis was not provided to SMG or to the Respondent at any time during the credit underwriting process. Based on the 2010 VWB analysis, the Petitioner asserted that economic conditions in Lee County, Florida, have improved since the first credit underwriting report was completed in 2008 and that the improvement is expected to continue. There is no noteworthy evidence that economic conditions have improved or will significantly improve in the Lee County, Florida, market in the predictable future, and the VWB analysis is rejected. The Petitioner offered to mitigate any negative impact on the Guarantee Fund properties by committing affordable units to 50 percent AMI income levels. Given the existing economic and rental market conditions in Lee County, Florida, the evidence fails to establish that the offer would actually alleviate the negative impact on the affected Guarantee Fund developments. The 2010 VWB analysis states that there is substantial unmet demand for housing at 50 percent AMI and that there will be no impact on the Guarantee Fund units if the Elmwood Terrace units were set aside for such individuals. There is no credible evidence that there is a substantial and relevant unmet affordable housing demand in Lee County, Florida. The VWB analysis is rejected. Following the completion of each annual Universal Cycle process, the Respondent actively solicits feedback from developers and the public and then amends the Universal Cycle requirements to address the issues raised, as well as to reflect existing affordable housing needs and general concerns of the Board. The amendments are applicable for the following Universal Cycle. In 2009, the Respondent amended subsection (10) of the Credit Underwriting Rule as part of the annual revisions to the Universal Cycle process. The relevant amendment (referred to by the parties as the "Impact Rule") added this directive to the credit underwriter: The Credit Underwriter must review and determine whether there will be a negative impact to Guarantee Fund Developments within the primary market area or five miles of the proposed development, whichever is greater. The amendment was prompted by the Respondent's experience in the fall of 2008 when considering two separate applications for affordable housing financing. The potential negative impact of a proposed development on an existing Guarantee Fund property was central to the Board's consideration of one application, and the Board ultimately denied the application. In the second case, the Board granted the application, despite the potential negative impact on a competing development that was not underwritten by the Guarantee Fund. The intent of the language was to advise developers that the existence of Guarantee Fund properties within the competitive market area would be part of the credit underwriting evaluation and the Board's consideration. Notwithstanding the language added to the rule, the credit underwriter is charged with reviewing the need for additional affordable housing. Even in absence of the added language, consideration of any negative impact to competing developments based on inadequate need for additional affordable housing would be appropriate. In rendering the 2010 credit underwriting report on Elmwood Terrace, the credit underwriter complied with the directive. Prior to determining that the Petitioner's funding application should be denied, the Respondent's Board was clearly aware of the Petitioner's application, the credit underwriting report and market analysis, and the economic conditions in Lee County, Florida. There is no credible evidence of any need for additional affordable housing in Lee County, Florida. There is no credible evidence that the Lee County, Florida, market can sustain the addition of the units proposed by the Petitioner without adversely affecting the financial feasibility of the existing Guarantee Fund developments. The Board was aware that the Elmwood Terrace development could attract residents from the nearby Guarantee Fund properties and that local economic conditions threatened the financial viability of the properties. Given current economic conditions, approval of the application at issue in this proceeding would reasonably be expected to result in a negative impact to existing affordable housing developments. The protection of Guarantee Fund developments is necessary to safeguard the resources used to support the creation and availability of affordable housing in the state.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order denying the application for funding filed by Elmwood Terrace Limited Partnership. DONE AND ENTERED this 6th day of October, 2010, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of October, 2010. COPIES FURNISHED: Hugh R. Brown, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 J. Stephen Menton, Esquire Rutledge, Ecenia, & Purnell, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32302 Wellington Meffert, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Della Harrell, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
The Issue Whether HTG Harbor Village, Ltd's, as Applicant for Crestwood Apartments, ("Petitioner" or "Crestwood") application for funding of Housing Credits and Exchange Funding awards should be granted by Florida Housing Corporation ("Florida Housing").
Findings Of Fact Based on the entire record of this proceeding including the necessary stipulated facts submitted by parties, oral and documentary evidence presented at the final hearing, the following findings of fact are made: Florida Housing is a public corporation organized under chapter 420, Florida Statutes, promote the public welfare by administering the governmental function of financing and refinancing houses and related facilities in Florida in order to provide decent, safe, and affordable housing to persons and families of low, moderate, and middle income. Florida Housing is governed by the Board consisting of nine individuals appointed by the Governor and confirmed by the Florida Senate. Florida Housing provides funding through a number of different federal and state programs to assist in the development of affordable housing in this state. As required by the federal government, the state each year adopts a Qualified Allocation Plan ("QAP"), which is incorporated into Florida Housing's rules. The QAP sets forth the selection criteria and the preferences for developments that will be awarded Housing Credits each year. Each year Florida Housing conducts a "Universal Cycle," through which applicants for certain Florida Housing multi- family programs submit a single application by which projects are evaluated, scored, and competitively ranked. Among the programs included in the Universal Cycle is the Housing Credit program, which was created by the federal government in 1986. Housing Credits (also called tax credits) come in two varieties: competitively awarded nine percent credits and non-competitively awarded four percent credits. For the nine percent credits, the federal government annually allocates to each state a specific amount of credits using a population-based formula. Housing Credits are a dollar for-dollar offset to federal income tax liability over a 10-year period. Developers receiving the federal awarded Housing Credits often sell the future stream of credits to a syndicator, which in turn sell the credits to investors seeking to shelter income from federal income taxes. The sale of the credits generates dept-free cash equity for developers. With the recent economic downturn, the market for Housing Credits dropped significantly. A number of development projects awarded funding in recent Universal Cycles have been unable to close on such funding because of the poor market for Housing Credits. In recognition of the Housing Credit market collapse, the federal government, as part of its economic stimulus efforts, established mechanisms to assist in the development of affordable housing. The American Recovery and Reinvestment Act ("ARRA"), was enacted on February 17, 2009, and includes provisions relating to the Low Income Housing Tax Credit Program. Among those provisions are the Tax Credit Exchange Program, which allows agencies that allocate Housing Credits (such as Florida Housing) to "exchange" a portion of their 2009 Housing Credit ceiling, as well as previously awarded and returned housing credits, for cash grants from the U.S. Treasury that can be used to make "sub-awards" to finance the construction of, or acquisition and rehabilitation of, qualified low-income buildings. Following the enactment of ARRA, Florida Housing issued several Requests for Proposals ("RFPs")to take advantage of the federal stimulus funds. The federal programs have quick deadlines to stimulate activity. RFP 2010-04, issued on February 26, 2010, anticipated that $150 million in Exchange Funding would be available through the RFP. In order to be eligible for funding under RFP 2010-04, applicants were required to have an active award of nine percent Housing Credits. RFP 2010-04 provided that proposed developments receiving Exchange Funding would be governed by the same rules that govern the Universal Cycle's Housing Credit Program, including credit underwriting requirements.1 HTG Harbor Village Ltd,2 a Florida-limited partnership, submitted an application for funding for Crestwood to Florida Housing in 2009. Crestwood is a proposed 114-unit affordable housing complex in Palm Beach county that will serve elderly residents. Crestwood submitted an application for nine-percent low-income Housing Tax Credits during the 2009 Universal Application Cycle. On February 26, 2010, the Board approved the final rankings for the 2009 Universal Application Cycle and Crestwood was awarded the Housing Credits. Florida Housing staff issued an invitation to Crestwood to enter into the credit underwriting. Crestwood also received a recommendation for Exchange Funding pursuant to RFP 2010-04, which the Board accepted on March 17, 2010. Subsequently, Crestwood was included in the ranked list of proposed developments that were awarded Exchange Funding and invited into credit underwriting. The credit underwriting process is governed by Florida Administrative Code Rule 67-48.0072 ("Credit Underwriting Rule"). Florida Housing is obligated to satisfy mortgage dept under its Guarantee Fund. It has close to $800 million in outstanding mortgage guarantee commitments. Florida Housing's Guarantee Fund has paid out eight claims since November 2008 for approximately 90 million dollars when borrowers failed to make their payments. Each payout impacted Florida Housing's risk-to capital-ratio. Before the 2009 Universal Cycle in order to try to prevent future defaults and protect the fund from additional claims, the Board amended rule 67-48.0072(10) to require the credit underwriter to review and determine whether a proposed development "will be a negative impact on a Guarantee Fund development within the primary market area." The costs associated with the credit underwriting review is paid by the developer, including the credit underwriting fee and costs of a market study. Florida Housing selects an independent credit underwriter for each developer who reviews each proposal according to requirements set forth by the Credit Underwriting Rule. The credit underwriter prepares a report, known as the Preliminary Recommendation Letter ("PRL"), for each applicant invited into the process. The reports are submitted to Florida Housing's Board, who makes the final decision for funding by approving or denying each application. Florida Housing chose Seltzer Management Group, Inc. ("Seltzer") as the credit underwriter for Crestwood. Seltzer conducted both the credit underwriting for Crestwood's Housing Credit allocation and its Exchange Funding simultaneously. As the credit underwriter, Seltzer, has to re-evaluate the proposed development by performing a comprehensive analysis of all of the aspects of the proposed development. Seltzer sent Crestwood an email checklist to complete in order to have the PRL ready for the July 2010 Board meeting. The responsibility for the market study is assigned by the credit underwriter to an independent market analyst. Seltzer retained Clobus, McLemore & Duke, Inc. ("CMD") of Fort Lauderdale to conduct the market study for Crestwood. CMD completed the market study and issued it on April 6, 2010. CMD's market study report stated in its cover letter that: There are two Elderly Guarantee Fund Developments within the subject's PMA. It is CMD's opinion that the subject's units will not have a negative impact on one or any of the Guarantee Fund Developments. Historically, low-income properties are not significantly affected by new developments other than during lease-up. Occupancy is lower now primarily due to the current economic conditions, not over-improvement. There has always been a demand for low- income housing and the impact on additional properties, including Guarantee Fund Developments may be on occupancy during lease-up. In mid-April of 2010, Seltzer provided a copy of the market study to Crestwood's developers. Crestwood compared CMD's market study with their own conducted by Reinhold Wolff and determined that it was a positive market study. The determination helped Petitioner decide to continue the credit underwriting process and increase its efforts to comply with Seltzer's checklist and quick driven federal deadlines by expending additional funds to complete the process. While seeking credit underwriting approval, Crestwood was required to expend considerable time and money to proceed as an applicant in the process seeking credit underwriting approval. Crestwood developers spent approximately $653,854.94. Soon thereafter, Seltzer prepared the Crestwood PRL signed by John Elasser and emailed it to Florida Housing on May 3, 2010. The cover email stated that the PRL draft was attached. The PRL discussed the CMD market study noting specifically that CMD's opinion is that Crestwood "will not have a long-term negative impact" on Guarantee fund properties near the proposed development. Seltzer concludes the May 3, 2010, PRL by recommending that Crestwood receive both Exchange Funding and Housing Credits. Three days later, on May 6, 2010, Lindsay Lockhart, Florida Housing's Guarantee Program Asset Manager, sent an email to Ben Johnson, the president of Seltzer, providing additional information on Windsor Park Apartments ("Windsor"), one of the Guarantee Fund developments referenced in the May 3, 2010, PRL. Lockhart's email discussed occupancy figures for Windsor, as well as rent concession policies and marketing strategies of Windsor. Windsor was built in the late 1990s and is 1.4 miles northeast of the proposed Crestwood site. Historically, Windsor has struggled financially. Windsor has had over three-and-half million dollars in operating deficits. The next day, May 7, 2010, Seltzer's president emailed Tatreau, Director of multi-family development programs at Florida Housing and stated: The market study indicated that adding the Crestwood units may have a negative impact on the Guarantee Properties during the lease up period. I have reviewed the market study and other economic data and I think that I support that conclusion. That being said, what additional data, analysis, conclusions, recommendations, etc., are you requesting that we include in the PRL? I would appreciate w[hat] ever guidance you ca[n] give us. On May 12, 2010, Johnson followed up and emailed his employee, Elasser, instructing him to incorporate and wordsmith the language attached to the email and utilize it while revising the PRL. On May 13, 2010, Elasser signed and sent a second draft Crestwood PRL to Florida Housing. His cover email states: Revised Preliminary Recommendation Letter for Crestwood, with expanded discussion of Windsor Park and Pinnacle Palms (the two Guarantee fund transactions within Crestwood's submarket). The May 13, 2010, draft PRL again referred to the CMD market study not anticipating "a long-term negative impact" on any Guarantee Fund properties. However, the letter further delineated some of Seltzer's "concerns" regarding Windsor Park by stating: Crestwood will provide potential Windsor Park residents an additional choice when looking for rental housing-an option that will be newer and with a better unit mix. CMDuke suggests, and it is reasonable to conclude, that occupancy at Windsor may drop during Crestwood's lease-up. It is difficult, however, to quantify the number of units lost or how long Crestwood will impact Windsor Park. Seltzer again concludes its May 13, 2010, PRL by recommending that Crestwood receive both Exchange Funding and Housing Credits. Two days after the second draft PRL was sent by Seltzer to Florida Housing, Tatreau emailed Johnson and set up a teleconference call meeting with Florida Housing staff to discuss several proposed developments under review by Seltzer that have Guarantee Fund developments nearby. Crestwood was specifically included. The call took place the following day, May 19, 2010. Most of the talking was done by the Guarantee Fund staff. During the Crestwood credit underwriting process, numerous appropriate communications took place between Seltzer and Florida Housing staff about the impact that the Crestwood transaction would have on Windsor Park and Pinnacle Palms. Florida Housing Staff wanted to make sure that Seltzer had enough information relating to Guarantee Fund developments in the Crestwood market area for Seltzer's analysis and recommendation to be complete. Throughout the process, Florida Housing staff provided Seltzer some of Windsor's data. Seltzer received Windsor information including the: demographic demand; good management; poor unit design of 2/3 bedrooms; occupancy problems; good maintenance; long term struggling finances; operating deficit; and rental concessions and incentives. On May 26, 2010, Seltzer sent a third draft Crestwood PRL to Florida Housing. Unlike the first two draft PLRs, Seltzer had looked through all the information received regarding Windsor for the May 26, 2010, PRL and recognized Windsor's vulnerability to new developments. Even though the third draft was signed by both Elasser and Johnson, and reversed Seltzer's earlier recommendation that Crestwood receive funding, Florida Housing neither told nor instructed Seltzer to change its recommendation for Crestwood. Seltzer concluded after its complete analysis the following: Based upon the information presented in CMDuke's Market Study and its own Due Diligence, SMG concludes that the average occupancy rate within the Subject's submarket meets the minimum requirement of 90%. In accordance with the RFP 2010-04, however, SMG finds its concerns with regard to historical and current occupancy rates for the Elderly at prior and existing Guarantee Fund Properties within the Subject's submarket leads it to recommend FHFC rescind Applicant's tentative award of Exchange Program Funding. Construction of the Subject Development has the potential to negatively impact Affordable Housing Properties previously funded by FHFC in the area, especially the' two Guarantee Fund Properties located within Crestwood's submarket. Seltzer subsequently sent a fourth draft PRL to Florida Housing on June 1, 2010, and a fifth final PRL to Florida Housing on June 3, 2010. The last PRL's cover email stated "Here is the final." The negative recommendations remained in both the PRL of June 1 and 3, 2010, even though the language was slightly different from the language used in previous PRLs. The final June 3, 2010, PRL discusses the operating deficits and Seltzer's "serious concerns." It recommends not only that Crestwood's Exchange Funding be rescinded, but that its Housing Credit allocation also be taken back. Additionally, the recommendation in the June 1 PRL and the final June 3 PRL is based only on an the negative impact on Windsor Park, not on any other Guarantee Fund development or other affordable housing development in the area. The final version provides: Information presented by CMDuke's Market Study and developed through its own Due Diligence leads SMG to conclude the average occupancy rate within the Subject's submarket meets the minimum requirement of 90% for the same demographic population. RFP 2010-04, however, also requires consideration of the potential impact of the Subject Development on existing Guarantee Fund Properties. Based upon marginal occupancy rates and resulting Operating Deficits, SMG has serious concerns regarding the potential negative impact of the Subject Development on Windsor Park. SMG therefore recommends FHFC rescind Applicant's HC allocation award and its Exchange Program Funding. The June 3, 2010, PRL from Seltzer concerning Crestwood was the subject of the Staff Recommendation from the Florida Housing staff to the Florida Housing Board on June 18, 2010. The Staff Recommendation states: Staff has received a preliminary recommendation letter for Crestwood Apartments (Exhibit A) containing a negative recommendation because the Development would cause a negative impact on a Guarantee Fund transaction in the area. Staff has reviewed this report and finds that the Development does not meet all of the requirements of Rule Chapter 67-48., F.A.C. and RFP 2010-04 to be approved for further credit underwriting consideration. The Staff Recommendation concluded by recommending that the Board "[r]escind and return the nine-percent Low-Income Housing Tax Credit award and Exchange Funding to Florida Housing Finance Corporation." Petitioner was first notified of the negative recommendation concerning Crestwood by email on June 2, 2010. After notification of the negative recommendation, Crestwood's developer presented several proposals to Florida Housing's staff in an effort to mitigate any impact of Crestwood on Windsor, the nearby Guarantee Fund development. All of Crestwood's proposals were rejected including the proposal to provide a reserve after Florida Housing determined that what was offered did not mitigate the risk for the Guaranteed Fund. At the June 18, 2010, Florida Housing Board meeting, the Board considered the final PRL of June 3, 2010, with the Crestwood application. Seltzer's president, Johnson, presented Seltzer's recommendation and stated "[it] just doesn't match what's happening on the ground" and that he found it "prudent" to protect the Windsor development.3 There was no discussion at the Board meeting about Seltzer's first two draft recommendations to approve the Housing Credit allocation and Exchange Funding for Crestwood. Steve Auger, executive director of Florida Housing, admitted to the Board at the meeting that he did not know whether Crestwood would have any negative impact on Windsor, but said: And, Mr. Chair, if I may, just one thing, potential impact is all we've got. You know, we're talking about a development that's not built and we're talking about guessing about people's behavior. So potential - we will never have anything other than potential when we're talking about, you know, the possibilities there. At the meeting, the Florida Housing Board considered the Staff Recommendation for Crestwood and voted unanimously to accept it, which denied Crestwood's application and rescinded the award of Housing Credits and Exchange Funding. Petitioner received formal notice of Florida Housing's decision to rescind the Housing Credit and Exchange Program funding awarded to Crestwood on June 25, 2010. On July 12, 2010, Crestwood filed a petition with Florida Housing that commenced this proceeding. A day after the hearing closed, on January, 21, 2011, the Florida Housing Board voted through Item N on its Consent Agenda to approve a credit underwriting letter authorizing $1.8 million loan to Windsor from RFP 2010-16. The credit underwriting letter states "[T]he Guarantee Program's credit exposure will be eliminated or greatly reduced." Upon the approval, staff was directed to proceed with loan closing activities. During 2010, Windsor Park's occupancy rate increased. The occupancy report for Windsor shows the following occupancy rate increases: January 2010, 87.08 percent; February 2010, 88.75 percent; March 2010, 87.50 percent; April 2010, 89.17 percent; May 2010, 89.58 percent; June 2010, 88.75 percent; July 2010, 92.25 percent; August 2010, 94.17 percent; September 2010, 96.25 percent; and October 2010, 95.00 percent. No credible evidence was presented to show that the increased occupancy rate trend had a correlating financial improvement for Windsor's long term financial struggles. There is insufficient evidence to show that the addition of Crestwood to the Windsor market area would not adversely affect the financial feasibility of the existing Guarantee Fund. Florida Housing's priority to protect the Guarantee Fund is necessary to safeguard the resources used to support the creation and availability of affordable housing in the state.
Recommendation Upon consideration of the Findings of Fact and the Conclusions of Law reached, it is RECOMMENDED that the Florida Housing enter a final order denying Petitioner's application for funding. DONE AND ENTERED this 16th day of March, 2011, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 2011.
The Issue The issue is whether Florida Housing Finance Corporation’s (“Florida Housing”) review and scoring of the applications responding to RFA 2020-104 SAIL Funding for Farm Worker and Commercial Fishing Worker Housing (“the RFA”) were clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based on the evidence adduced at the final hearing, the record as a whole, the stipulated facts, and matters subject to official recognition, the following Findings of Fact are made: Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes (2020).2 Its purpose is to promote public welfare by administering the financing of affordable housing in Florida. Florida Housing is authorized by section 420.507(48), to allocate federal low income housing tax credits, State Apartment Incentive Loans (“SAIL”), and other funding by means of competitive solicitations. Florida Administrative Code Chapter 67-60 provides that Florida Housing will allocate its competitive funding through the bid protest provisions of section 120.57(3), Florida Statutes. Funding is available through a competitive application process commenced by the issuance of a Request for Applications, which is equivalent to a “request for proposal” as described in rule 67-60.009(4). 1 Pueblo Bonito’s Exhibit 1 is the deposition of Nancy Muller of Florida Housing. 2 Unless stated otherwise, all statutory references shall be to the 2020 version of the Florida Statutes. Through the RFA, Florida Housing seeks to award up to an estimated total of $5,131,050 in SAIL Financing for the construction or rehabilitation of affordable housing developments for farm workers and commercial fishing workers. The RFA was issued on April 15, 2020, and a modified version was issued on April 24, 2020. The application deadline was May 19, 2020. La Estancia and Pueblo Bonito submitted applications proposing the rehabilitation of existing farm worker housing in Hillsborough and Lee Counties, respectively. Both applications were deemed eligible for funding. A review committee was appointed to review the applications and make recommendations to Florida Housing’s Board of Directors (“the Board”). The scoring of the applications was based on a 100-point scale. Applicants submitting a Principal Disclosure Form that had been stamped “pre-approved” received five points. The remaining points were awarded based on the subjective scoring of narrative sections within the applications, and the maximum points were available as follows: Current and Future Need for Farm Worker or Commercial Fishing Worker Housing in the Area (“Need”): 15 points Experience Operating and managing Farm Worker or Commercial Fishing Worker Housing (“Experience”): 20 points Outreach, Marketing, and Referral (“Outreach”): 30 points Resident Access to Onsite and Offsite Programs, Services, and Resources (“Access”): 30 points. With regard to Need, the 2019 Rental Market Study prepared for Florida Housing by the Shimberg Center for Housing Studies at the University of Florida determined that 14.2 percent of Florida’s farm workers are employed in Hillsborough County and 2.55 percent are employed in Lee County. Pueblo Bonito noted in its application that its development is only three miles from the Collier County line, and 5.63 percent of the state’s farm workers are employed in Collier County. La Estancia did not reference Manatee County in its application but noted in its request for a formal administrative hearing that its development is a similar distance from Manatee County, and 6.88 percent of the state’s farm workers are employed there. The Shimberg study also calculated need for farm worker housing type by county with 3,813 multifamily units needed in Hillsborough County, 741 multifamily units needed in Lee County, 1,546 multifamily units needed in Collier County, and 2,337 multifamily units needed in Manatee County. For some RFAs, Florida Housing imposes additional conditions on applications for developments located in Limited Development Areas (“LDAs”). The main purpose of an LDA is to protect Florida Housing’s funded developments in a particular area. An LDA is generally an area that Florida Housing has placed a boundary around that limits different types of new development. Florida Housing annually publishes an LDA Chart on its website listing areas or counties that may apply in the RFA cycle for the coming year. The mere existence of an LDA does not prohibit development within the LDA. This is especially true for rehabilitation projects like those proposed in the instant case. An RFA must specifically reference the LDA in order for the LDA to apply. The first draft of the 2020 LDA Chart was not published by Florida Housing until May 29, 2020, and thus the modified RFA issued on April 24, 2020, included no reference to the LDA Chart. Nor did the RFA include any specific provisions regarding LDAs. The first draft of the 2020 LDA Chart and each subsequent draft or amendment included Lee County for farm worker housing. Florida Housing indicated that the basis for Lee County’s LDA designation was a downward trend in occupancy rates. The occupancy rate for the housing stock in Lee County for the period of August 2019 through January 2020 was 91.67 percent as compared to 95.83 percent for the period of September 2019 through February 2020. Based on this trend, Lee County was proposed as an LDA for the 2020/2021 Florida Housing RFA funding cycle, which became effective July 10, 2020. The following table reflects how the review committee awarded points to the two applicants: Pueblo Bonito La Estancia Principal Disclosure Form (5) 5 5 “Need” (15) 12 12 “Experience” (20) 16 17 “Outreach” (30) 27 27 “Access” (30) 25 24 Total (100) 85 85 In the event of a tie, Florida Housing designed the RFA and the associated rules to incorporate a series of “tie-breakers.” The tiebreakers, in the order of applicability, were: By points received for the Need criterion, with more points preferred. Both applicants received 12 points for need. By SAIL Request Amount Per Unit, with lower SAIL funds per unit preferred. Both applicants requested $50,000 in SAIL funds per unit. By Total SAIL Request Amount as a percentage of Total Development Cost (“TDC”), with applicants whose SAIL request amount is 90 percent or less of TDC preferred. Both applicants’ Total SAIL Request Amount was 90 percent or less of their respective TDCs. By a Florida Job Creation Preference. Both applicants satisfied this preference. By lottery numbers randomly assigned to the applications when they were submitted to Florida Housing. Pueblo Bonito had lottery number 1, and La Estancia had lottery number 2. Nancy Muller was the Review Committee member assigned to review and score the “Need” narrative section of the Applications responding to the RFA. Ms. Muller is currently a Policy Specialist with Florida Housing. Prior to her current position, Ms. Muller was, for many years, the Director of Policy and Special Programs. In reviewing and scoring the applications submitted to Florida Housing in the instant case, Ms. Muller indicated that she first read the narrative question of the RFA and broke the question down into four separate component parts. The components included: (a) current and future need for farm workers over the next 10 to 15 years; (b) location and proximity of farms and other types of farm work that typically use farm worker labor; (c) information concerning the types of crops, seasons, etc. and the demand for specific farm worker housing; and (d) whether waivers have been requested or granted for either the proposed Development or Developments in the area. Next, Ms. Muller reviewed each application against those component parts and ultimately awarded La Estancia and Pueblo Bonito 12 points each for their respective response to the need section. Marisa Button, Florida Housing’s corporate representative, testified that just because the documented need for farm worker housing is higher in Hillsborough County than it is in Lee County does not mean that La Estancia should have received a higher score in the narrative section than Pueblo Bonito because the RFA “sets forth a much more nuanced request for the description of the current and future needs in the area for the proposed development. So it’s not limited to just a flat-out look at the county under the Shimberg study. If [that] were the case, we wouldn’t need to have a narrative scoring component of the RFA.” Ms. Muller and Ms. Button persuasively testified that numeric need was just one of the components an applicant needed to address in responding to the needs question. In fact, Ms. Muller indicated she recognized the greater numeric need for farm worker housing in Hillsborough County, and the greater need factored into her consideration of that particular component. However, Ms. Muller pointed out that because both proposed projects were rehabilitation of existing units, neither was actually addressing nor reducing the numeric need for new units. Ms. Muller acknowledged that La Estancia’s response at this component of the need analysis was “stronger” because of the greater need. Nevertheless, Ms. Muller indicated that while La Estancia demonstrated a greater numeric need, Pueblo Bonito’s response was “stronger” in other areas of the overall need response. Specifically, Pueblo Bonito provided a stronger response as to the location and proximity of farms and other types of farm work that use farm worker labor. Ms. Muller considered and evaluated the strengths and weaknesses of each response and no one component was weighted greater than any other component. Based on the scoring and tie-breakers, the review committee recommended Pueblo Bonito for funding. However, the Board’s deliberations were not to be limited to the review committee’s recommendation or information provided by the review committee. With regard to the Board’s funding selection, the RFA stated that: [t]he Board may use the Applications, the Committee’s scoring, any other information or recommendation provided by the Committee or staff, and any other information the Board deems relevant in its selection of Applicants to whom to award funding. The Board met on July 17, 2020, to consider the review committee’s recommendation and preliminarily selected Pueblo Bonito for funding, subject to satisfactory completion of the credit underwriting process.3 Florida 3 The RFA also employed a “Funding Test” to be used in the selection of applications for funding. The “Funding Test” required that the amount of unawarded SAIL funding must be enough to fully fund that applicant’s SAIL request amount. After the selection of Pueblo Bonito for funding, there was only $1,131,050 in SAIL funding remaining, and that was not enough to fund La Estancia’s $4,200,000 SAIL request. Housing staff did not inform the Board that Lee County had been designated as an LDA for farm worker housing on the 2020 LDA Chart. Also, there is no evidence that any Board member knew of Lee County’s LDA status or of declining farm worker housing occupancy when they voted to select Pueblo Bonito for funding. La Estancia could not have presented the information regarding Lee County’s LDA status to the Board. The RFA contains a “noninterference” clause prohibiting an applicant or its representative from contacting Board members or Florida Housing’s staff “concerning their own or any other Applicant’s Application” during the period beginning with the application deadline and continuing until the Board “renders a final decision on the RFA.” If an applicant makes such contact in an attempt to influence the selection process, then that applicant’s application is disqualified. As a result, La Estancia was unable to correct the review committee’s omission of information regarding declining farm worker housing occupancy levels in Lee County. Ms. Button testified that it was Florida Housing’s practice not to apply new standards or requirements that changed after the application deadline when scoring applications. She stated that Florida Housing scores “based on the terms of the RFA and we wouldn’t retroactively apply something to those applications after they’ve been submitted.” She specifically testified that if a county is designated as an LDA after the application deadline, Florida Housing would not apply that designation to the application. She also testified that one of the reasons for not considering new requirements after the application deadline is that applicants would not be allowed to amend their applications to address these new requirements. Even if the July 10 LDA designation had applied to this RFA, there is no evidence that it would have changed Florida Housing’s scoring decision. The primary purpose for the LDA designation is to discourage new construction that could harm existing developments. In this case, both applicants are proposing to rehabilitate existing developments, and the evidence shows that Florida Housing would not prohibit the funding of a rehabilitation project even if it were in an LDA. Florida Housing has funded the rehabilitation of farm worker developments located in LDAs since 2013 or 2014. In RFA 2017-104, the only previous farm worker RFA in evidence, the LDA designation did not even apply to rehabilitation projects that were in Florida Housing’s portfolio. Ms. Muller testified that because the two applicants in this case both involved rehabilitation of developments in Florida Housing’s portfolio, the LDA designation would have been “moot,” unless the physical occupancy rates were dire, which they were not. She also testified that “preservation of existing developments is of much less, if any, importance related to LDA.” Ms. Button testified that she did not specifically inform the Board of the LDA designation “because it’s not relevant to the terms for which the applications were scored for this RFA, it was not a part of the RFA terms, and the applicants did not, you know, apply with that designation put in place. It’s for a future prospective funding cycle and it was not effective until after the application due date.” The greater weight of the evidence indicates that Florida Housing’s review and scoring of the applications responding to the RFA were not clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a Final Order dismissing La Estancia, Ltd.’s formal written protest and awarding funding to Partnership in Housing, Inc. DONE AND ENTERED this 1st day of October, 2020, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of October, 2020. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Michael P. Donaldson, Esquire Carlton Fields Suite 500 215 South Monroe Street Tallahassee, Florida 32302 (eServed) Christopher Dale McGuire, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed)
The Issue Whether any Respondent committed a discriminatory act upon Petitioner in violation of Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Act of 1988 and Chapter 760 of the Florida Statutes?
Findings Of Fact The Florida Commission on Human Relations is the state agency charged with the responsibility of promoting and encouraging fair treatment in housing in accordance with the provisions of Chapter 760, Florida Statutes. Such authority includes, but is not limited to, issues involving the Fair Housing Act found at Sections 760.20-760.37, Florida Statutes. In 1995, Petitioner, Ms. Davis, applied to purchase a home using financing through a high-risk, public/private partnership government home loan program operated by the Duval County Housing Finance Authority (DCHFA) entitled the Value Homes Program II. Following conversations with Mr. Mike Martin, the Finance Director of DCHFA, Petitioner was initially informed that she could purchase a home up to the value of $98,000, depending on her income and past credit history. Petitioner was directed to Ms. Holly Cleveland, a loan specialist for First Union National Bank (FUNB) for processing. Upon review, Ms. Cleveland informed Ms. Davis of an outstanding judgement on her credit file in an amount of $1,000. Ms. Davis denied owing the amount, refused to satisfy the judgement, and provided a written explanation of the alleged debt obligation. Ms. Davis was prequalified by FUNB for a loan amount not to exceed $86,900 at an interest rate of 6.11 percent. After selecting the model type, Petitioner signed a contract with Mr. Jack Daniels, a representative for the Respondent Atlantic Builders to construct the new home. FUNB contacted Petitioner regarding loan documents relating to the Value Homes Program II, and requested additional information explaining the default information from USA Loan on her credit report. Petitioner provided the bank with the information, and Ms. Scott relayed it to Mr. Pocapanni, the director of Duval County's loan program. On April 5, 1996, Petitioner's Realtor, Ms. Maestas, informed Ms. Davis that she had been approved for the loan. Minutes later, Ms. Davis received a call from Ms. Scott, confirming the approval. However, on August 23, 1996, Ms. Scott inquired again about the judgement and urged Petitioner to speak with Mr. Rick Homes, FUNB Representative to rectify the situation. On August 28, Ms. Davis was advised by the representatives of FUNB that they were having difficulties securing the money from Duval County's Value Homes Program II due to the outstanding judgement against her. The closing on her new home had been delayed. In an effort to facilitate the closing, FUNB agreed to assist her and pay the outstanding judgement. Ms. Davis was informed that she would close on her new home on August 30, 1996. On August 30, Petitioner and Mr. Maestas attended the final inspection of the home. Mr. Daniels, the contractor, strongly urged her to make an immediate decision on the home because interest rates were escalating. Ms. Davis felt his behavior was unprofessional toward her and Mr. Maestas. Duval County Housing Finance Autholrity (DCHFA) Pursuant to DCHFA's loan program rules, gifts of cash for all or part of the closings costs, pre-paids or optional down payment are permitted only if the donation is a bona fide gift, and repayment is neither expected nor implied. Additionally, the gift donor may not be a party who has a direct interest in the sale of the property, such as the builder, seller, lender, or any one associated with them. In addition, all outstanding charge-offs, judgements and liens are required to be satisfied prior to closing. At least thirty other applicants have been turned down due to outstanding judgements under the Value Homes Program II, many of which were filed as a result of the non-payment of rent. Since 1992, 66 percent of the county's SHIP funds, consisting of seven affordable housing loan programs including Value Homes II, have gone to minority families. Ms. Davis had a judgement entered against her for nonpayment of rent which she refused to pay. The Value Homes Program II policy clearly states that an outstanding judgement must be paid in full before a purchase money mortgage loan can be made. It has been the requirement of the program since its inception in 1992. Although FUNB and her Realtor offered to pay the judgement for Ms. Davis, it was not permitted under the guidelines. Thereafter, FUNB offered to make Ms. Davis a program authorized unsecured loan to pay the judgement yet she refused. There is no evidence of discrimination. First Union National Bank (FUNB) As stated previously, Petitioner applied for a residential mortgage with FUNB under the Value Homes Program II, a public-private partnership between the Duval County Housing Finance Authority and seven local banks, including FUNB. Her application was submitted to FUNB by the Jacksonville Housing Partnership in accordance with the program guidelines. Ms. Davis' initial loan request was $88,200 to finance the purchase of an existing home. On her application, she disclosed the outstanding judgement entered against her. Mistakenly however, the loan officer, who was unfamiliar with all of the program guidelines, informed Ms. Davis that she would submit her application to the underwriter for processing. She was locked in at the interest rate of 6.11 percent for a period of 90 days. On March 26, 1996, Petitioner signed a contract with Atlantic Builders for the construction of a new home. Petitioner completed another loan application for a lower amount of $78,295. Ms. Davis' loan application was held pending receipt of (1) evidence of the source of funds at closing; (2) an explanation letter for late payments on a loan to USA group; and (3) receipt of the new contract to purchase. FUNB received Petitioner's credit report on March 25, 1996, which reflected the judgement referenced in her application, as well as a customer statement concerning the judgement submitted to the credit bureau in May 1994. Petitioner's financing was conditionally approved on April 5, 1996. She was provided a commitment letter requiring her to furnish FUNB with a note and a first mortgage. Due to delays in the completion of the home, Ms. Davis was locked in for an additional 90 days at the existing program mortgage rate of 6.00 percent in June 1996. Construction of the new house was completed in early August of 1996, and Ms. Davis was scheduled to close on August 28, 1996. FUNB noticed that upon receipt and review of the title commitment, that the judgement in the amount of $1,035 held by Ann J. Wall remained. Unless the judgement was satisfied, FUNB was unable to comply with the loan guidelines and possess a first mortgage or a title policy reflecting a first lien on the property. Ms. Davis was informed that the judgement had to be satisfied prior to closing. She refused and maintained that it was unjust. Although Ms. Davis submitted a written explanation for the judgement, the Value Homes Program II loan could not be closed without satisfaction of the judgement. The DCHFA declined the loan for the Value Homes Program II because of Petitioner's refusal to satisfy the loan. There is no evidence of discrimination. In further efforts to get Petitioner in the home, FUNB offered to satisfy the judgement and provide Ms. Davis with 100 percent financing in its Affordable Homes Program at the market rate of 8.25 percent. Ms. Davis refused the offer. Atlantic Builders Atlantic Builders was not involved in the financing of Petitioner's home, and had no direct relationship with the Housing Authority or FUNB. Although they attempted to accommodate Petitioner while she secured satisfactory financing, Atlantic Builders agreed to refund her $500 deposit in the event she was unable to extend the locked rate or lock period to her satisfaction. Ms. Davis agreed to release Atlantic Builders from their obligations under the contract in the event the deposit was returned to her. Atlantic Builders worked with Ms. Davis for six months before the contract was ultimately terminated and both parties were released from further claims and/or liabilities. The evidence revealed that Mr. Jack Daniels of Atlantic Builders exhibited unprofessional and rude behavior. However, there is no evidence of discrimination.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, and the lack of evidence of discrimination against Petitioner, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order denying Ms. Davis' petition. DONE AND ENTERED this 16th day of October, 2000, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of October, 2000. COPIES FURNISHED: Brenda Davis 5170 Collins Road, Apartment 1808 Jacksonville, Florida 32244 Kimberly Gilyard, Esquire 50 North Laura Street, Suite 3100 Jacksonville, Florida 32202 Steve Rohan, Esquire 117 West Duvall Street, Suite 480 Jacksonville, Florida 32202 Sharon Moultry, Clerk Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149 Dana L. Baird, General Counsel Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149
The Issue The issue is whether Petitioner has a disability (handicap), and, if so, was denied a reasonable accommodation for his disability by Respondents, in violation of the Florida Fair Housing Act (FFHA), as amended.
Findings Of Fact The record in this discrimination case is extremely brief and consists only of a few comments by Mr. Homer, cross- examination by Respondents' counsel, and Respondents' exhibits. Petitioner resides at Golfside Villas, a condominium complex located in Winter Park, Florida. At hearing, Petitioner asserted that he suffers from a disability, narcolepsy, but he offered no competent evidence to support this claim. Thus, he does not fall within the class of persons protected against discrimination under the FFHA. Golfside is the condominium association comprised of unit owners that is responsible for the operation of the common elements of the property. Hara is the corporate entity that administers the association, while Mr. Michaud, a Hara employee, is the community manager. In September 2016, Mr. Homer became involved in a dispute with Golfside over late fees being charged to his association account and issues concerning ongoing repairs for water damage to his unit that were caused by flooding several years earlier. Because some of his telephone calls were not answered by "Lorie" (presumably a member of management staff), on September 23, 2016, Mr. Homer sent an email to Mr. Michaud, the community manager, expressing his displeasure with how his complaints were being handled. He also pointed out that "I have a disability." The email did not identify the nature of the disability, and it did not identify or request an accommodation for his alleged disability. There is no evidence that Respondents knew or should have known that Mr. Homer had a disability or the nature of the disability. Also, there is no evidence that narcolepsy is a physical impairment "which substantially limits one or more major life activities" so as to fall within the definition of a handicap under the FFHA. See § 760.22(7)(a), Fla. Stat. Here, Petitioner only contends that at times it causes him to speak loudly or yell at other persons. As a follow-up to his email, on September 26, 2016, Mr. Homer spoke by telephone with Mr. Michaud and reminded him to look into the complaints identified in his email. If a request for an accommodation ("work with me") was ever made, it must have occurred at that time, but no proof to support this allegation was presented. Mr. Homer acknowledged that he was told by Mr. Michaud that in the future, he must communicate by email with staff and board members rather than personally confronting them in a loud and argumentative manner. On September 26, 2016, Mr. Michaud sent a follow-up email to Mr. Homer informing him that he must "work with my staff, without getting loud or upset, no matter how frustrated you may be at the time." The email also directed staff to answer Mr. Homer's questions regarding repairs for water damage to his unit, to "look into some late charges on his account," and to "work with Mr. Homer to help him get both his unit and his account in order." On November 15, 2016, Mr. Homer filed his Complaint with the FCHR alleging that on September 26, 2016, Golfside, Hara, and Mr. Michaud had violated the FFHA by "collectively" denying his reasonable accommodation request. Later, a Petition for Relief was filed, which alleges that Gulfside and Hara (but not Mr. Michaud) committed the alleged housing violation. However, the findings and conclusions in this Recommended Order apply to all Respondents.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing the Petition for Relief, with prejudice. DONE AND ENTERED this 14th day of December, 2017, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of December, 2017. COPIES FURNISHED: Tammy S. Barton, Agency Clerk Florida Commission on Human Relations Room 110 4075 Esplanade Way Tallahassee, Florida 32399-7020 (eServed) John Homer Unit 609 1000 South Semoran Boulevard Winter Park, Florida 32792-5503 Candace W. Padgett, Esquire Vernis & Bowling of North Florida, P.A. 4309 Salisbury Road Jacksonville, Florida 32216-6123 (eServed) Cheyanne M. Costilla, General Counsel Florida Commission on Human Relations 4075 Esplanade Way, Suite 110 Tallahassee, Florida 32399-7020 (eServed)
The Issue The issue in this case is whether the specifications, terms, and conditions of the Request for Proposals 2009-04 issued by Respondent are contrary to Respondent’s governing statutes, rules, or policies.
Findings Of Fact Elmwood is a Florida limited partnership and is engaged in the development of affordable housing in Florida. RST is a Florida limited partnership authorized to do business in Florida and is in the business of providing affordable housing. Florida Housing is a public corporation created by Section 420.504, Florida Statutes (2009),1 to administer the governmental function of financing or refinancing of affordable housing and related facilities in Florida. Florida Housing’s statutory authority and mandates are contained in Chapter 420, Part IV, Florida Statutes. Florida Housing is governed by a Board of Directors (Board), consisting of nine individuals appointed by the Governor and confirmed by the Senate. On July 31, 2009, Florida Housing issued the RFP, setting forth criteria and qualifications for developers to seek funding for affordable housing projects from funds that Florida has received through the American Recovery and Reinvestment Act of 2009, PL 111-5 (ARRA). ARRA was enacted in 2009 by Congress as part of the federal economic stimulus efforts and was signed into law on February 17, 2009. Elmwood and RST received notice of the RFP through e-mail notification on July 31, 2009. The RFP required applicants to submit proposals to Florida Housing no later than 2:00 p.m. on August 14, 2009. Elmwood and RST are “applicants” as defined in the RFP. Elmwood and RST submitted separate applications, intending to seek financing for their affordable housing projects by applying for funding from the sources that are proposed to be allocated through the RFP. On August 5, 2009, Elmwood timely submitted notice of its intent to protest the RFP, and, on August 17, 2009, timely filed its Formal Written Protest and Petition for Administrative Hearing, in accordance with the provisions of Subsection 120.57(3)(b), Florida Statutes, and Florida Administrative Code Rule 28-110.004. As an interested developer, who intended to, and did, seek funding from the sources being allocated through the RFP, Elmwood’s substantial interests are affected by the terms of the RFP. On August 18, 2009, Florida Housing issued its RFP 2009-04 Statement of Necessity to Continue RFP Process After Bid Protest is Filed (Statement of Necessity), pursuant to Subsection 120.57(3)(c), Florida Statutes. The Statement of Necessity was not challenged. On August 20, 2009, Florida Housing proceeded with making determinations of eligibility for funding under the RFP. Both RST and Brownsville were selected for funding and invited into credit underwriting as provided in the RFP. Elmwood was not selected for funding. On September 9, 2009, RST filed its Petition for Leave to Intervene on behalf of Elmwood to challenge the minimum occupancy standard of 92% required in the RFP. On September 10, 2009, Brownsville filed its Petition for Leave to Intervene on behalf of Florida Housing. Florida Housing administers several programs aimed at assisting developers to build affordable multi-family rental housing in an attempt to protect financially marginalized citizens in Florida from excessive housing costs. The programs through which Florida Housing allocates resources to fund such affordable housing in Florida include: a federally funded multi-family mortgage revenue bond program (MMRB), established under Section 420.509, et. seq., Florida Statutes; the State Apartment Incentive Loan Program (SAIL), created pursuant to Section 420.5087, et seq., Florida Statutes; and the federal Low Income Housing Tax Credit Program (the Tax Credit Program), established in Florida pursuant to Section 420.5099, Florida Statutes. These funding sources are allocated by Florida Housing to finance the construction or substantial rehabilitation of affordable housing. A portion of the units constructed based on funding from these programs must be set aside for residents earning a certain percentage of area median income (AMI). Generally, the units are targeted to tenants earning 60% of AMI or below. The primary program at issue in this proceeding is the Tax Credit Program. The Tax Credit Program was created by the Federal Income Tax Reconciliation Act of 1986, as a means to induce the private sector to construct and manage affordable housing projects. The Tax Credit Program is governed by the Internal Revenue Code, 26 U.S.C. Section 42. Low income housing tax credits (Tax Credits) come in two varieties: competitively awarded “9%” Tax Credits and non- competitively awarded “4%” Tax Credits. For the 9% Tax Credits, the federal government annually allocates a specific amount of Tax Credits to each state using a population-based formula. Tax Credits are a dollar-for-dollar offset to federal income tax liability. Developers awarded the Tax Credits get the credit amount every year for ten years. The developer will often sell the future stream of Tax Credits to a syndicator, who, in turn, sells them to investors seeking to shelter income from federal income taxes. For example, a developer who receives a $1,000,000 award of Tax Credits is entitled to that amount of tax credit paid each year for ten years, for a face value of $10,000,000. The developer sells the Tax Credits to a syndicator or investor who has tax liability sufficient to absorb the amount of credits. If the selling price is 85 cents on the dollar, the sale of the Tax Credits would generate $8,500,000 cash. Unlike a loan or the proceeds from issuance of bonds, a developer who is awarded Tax Credits and syndicates those Tax Credits receives cash equity with no debt associated with it. Thus, Tax Credits provide an attractive subsidy and, consequently, are a highly sought-after funding source. Florida Housing is the designated agency in Florida to allocate Tax Credits to developers of affordable housing, pursuant to Section 420.5099, Florida Statutes. Every year since 1986, Florida has received an allocation of Tax Credits to be used to fund construction of affordable housing. As required by Section 42 of the Internal Revenue Code, each year Florida Housing adopts a Qualified Allocation Plan (QAP), which sets forth the allocation methodology for the competitive 9% Tax Credits. The QAP must be approved by the Governor each year. The QAP is also adopted and incorporated by reference into Florida Housing’s rules. See Fla. Admin. Code R. 67-48.002(95). The 2009 QAP includes the following provision: In order for the Corporation to implement the provisions of the Recovery and Reinvestment Act of 2009 (the “2009 Stimulus Act”), any funds received pursuant to 2009 Stimulus Act may be allocated by a competitive request for proposal or competitive application process as approved by the Board. Any such process will be governed by Section 42, IRC, and Chapter 67- 48, F.A.C., as applicable, or, an emergency rule authorized by the Florida Legislature specifically for the 2009 Stimulus Act, if any. The 2009 QAP was adopted as part of the 2009 Universal Cycle rules by Florida Housing’s Board on March 13, 2009. At that time, Florida Housing had not yet received guidance from the federal government as to how the ARRA funds should be allocated. The Florida Affordable Housing Guarantee Program was created in Section 420.5092, Florida Statutes, for the purposes of stimulating creative private section lending activities to increase the supply and lower the cost of financing or refinancing eligible housing, creating security mechanisms to allow lenders to sell affordable housing loans in the secondary market, and encouraging affordable housing lending activities that would not have taken place or that serve persons who would not have been served but for the creation of this program. Florida Housing has accomplished these goals by issuing capitalizing bonds to create the Guarantee Fund, which lowers the interest paid on the MMRB bond debt by serving as a credit enhancer. Since 2002, Florida Housing has allocated funding from the MMRB, SAIL, and Tax Credit Programs through a single annual competitive application process known as the “Universal Cycle,” in which the applicants compete against one another for funding. The Universal Cycle and the attendant complex application review process are intended to equitably and reasonably distribute affordable housing throughout Florida. Florida Housing has adopted rules which incorporate by reference the application forms and instructions for the Universal Cycle to govern the allocation of funds from the various programs it administers. Florida Housing amends it Universal Cycle rules, forms, and instructions every year. Following the completion of the Universal Cycle, Florida Housing engages in an extensive public comment process through which it solicits feedback and comments from developers for the next year’s cycle. Any new amendments are adopted to take effect prior to an established Application Deadline for the ensuing year. The process used by Florida Housing to review and approve the Universal Cycle applications is set forth in Florida Administrative Code Rule 67-48.004. Florida Housing reviews all timely-filed applications to determine if threshold requirements are met and scores each application based on factors such as programs for tenants, amenities of the development as a whole and of the tenants’ units, local government contributions to the specific development, and local government ordinances and planning efforts that support affordable housing in general. The process includes a series of tiebreakers to choose among applications with otherwise equal scores. After the initial review and scoring by Florida Housing, all applications and included exhibits, along with the scores for the applications, are posted on Florida Housing’s website. Applicants are given a specific time period to alert Florida Housing of any errors they believe Florida Housing made in its initial scoring. Florida Administrative Code Rule 67- 48.005 sets forth an appeal procedure for challenging the scores. After any appeal proceedings, Florida Housing publishes final rankings which determine which applications are preliminarily selected for funding. The applicants for those applications selected are invited to participate in the credit underwriting process, which is governed by Florida Administrative Code Rule 67-48.0072. A third party financial consultant, who is selected by Florida Housing but paid for by the individual applicant, determines whether the proposed project is financially sound. The credit underwriter reviews all aspects of the proposed development, including financing sources, plans and specifications, cost analysis, zoning, site control, environmental reports, construction contracts, and engineering and architectural contracts. Florida Administrative Code Rule 67-48.0072(10) requires an appraisal and market study. The credit underwriter is required to consider the market study, as well as the development’s financial impact on other developments in the area previously funded by Florida Housing, and make a recommendation for approval or disapproval of funding. Each year the Universal Cycle provides a mechanism for selecting applications to meet statutory geographic requirements; for certain targeting goals that address housing needs of particular demographic groups, such as farm workers, commercial fishery workers, the homeless, or the elderly; for specific set-asides or targeting goals aimed at addressing identified needs, such as the Florida Keys, inner city areas, or rural development; and for the preservation of existing affordable housing complexes. Each set-aside group essentially has its own separate funding from its share of the funds distributed by Florida Housing. After the set-aside goals are addressed, Florida Housing then uses the final rankings to try to achieve a distribution of affordable housing units among the county groupings (small, medium, and large, based on population) in accordance with the adopted percentages. Each of the three groups must receive at least 10% of the funds. Within the county size groups, Florida Housing uses a formula called SAUL, which is an acronym for Set-Aside Unit Limitation. The formula is set forth in the application instructions and incorporated by reference into the rules for each Universal Cycle in an attempt to evenly distribute the units. As part of the Universal Cycle process, Florida Housing designates certain geographic areas of the state that are considered soft markets as “Location A” areas. Florida Housing first began incorporating into its application process a mechanism for identifying weak markets, known as “Location A” in 2003. The Location A designations are included in the Universal Cycle Application Instructions, which are incorporated by reference in the rules of Florida Housing. Elmwood timely filed an application in the 2007 Universal Cycle, seeking an award of Tax Credits and a supplemental loan to construct a 116-unit family apartment complex, Elmwood Terrace, in Fort Myers, Lee County, Florida. Elmwood’s application received a perfect score and maximum tiebreaker points. As a result, Elmwood was allocated $1,498,680 in Tax Credits. During the credit underwriting process, Elmwood committed to set aside more than the required units for Extremely Low-Income (ELI) households. Based on the final ranking of its application, Elmwood was invited into the credit underwriting process. The credit underwriter designated by Florida Housing conducted the analysis required under Florida Housing’s rules and issued a favorable recommendation for funding. The Credit Underwriting Report for Elmwood Terrace was accepted by the Florida Housing Board on September 22, 2008. By the fall of 2008, significant changes were taking place in the economic environment and the housing market in particular, and it became evident that the market for Tax Credits had precipitously dropped. Tax credits had typically sold in the range of 85 to 95-cents on the dollar in recent years, but the value of Tax Credits had plummeted in the last two years. Sales, when a buyer can be found, are currently in the low 60-cents on the dollar range. Shortly before Elmwood was scheduled to close on its Tax Credits in the fall of 2008, the syndicator who had originally expressed its intent to purchase Elmwood’s Tax Credits informed Elmwood that it would not go forward with the syndication. Many other projects that were awarded Tax Credits during the 2007 and 2008 Universal Cycles similarly experienced difficulty in finding syndicators to purchase the awarded Tax Credits and, thus, were unable to proceed to closing. In order to accomplish the legislative mandate to pay, Florida Housing attempted to assist these troubled projects by granting extensions of time to meet various benchmarks in the Tax Credit program. In January 2009, the Florida Legislature met in special session to address budget revenue shortfalls for the 2008-2009 fiscal year. Legislation was adopted and signed into law on January 27, 2009, which swept trust fund balances, transferred $30 million from multi-family housing programs to the State Housing Initiative Partnership (SHIP) program, and required Florida Housing to pay $190 million in previously appropriated funds to the treasury by June 1, 2009. These funds were to be taken first from developments that would provide new construction. In order to accomplish the legislative mandate to pay $190 million to the treasury, Florida Housing had to deobligate approximately $80 to $90 million of funds preliminarily committed to SAIL-funded projects and from funds preliminarily committed to the Community Workforce Housing Innovation Pilot Program (CWHIP) projects. For the first time in Florida Housing’s history, it was compelled to take money away from people at the Legislature’s direction. In early 2009, in recognition of the collapse of the housing market and the difficulty in marketing Tax Credits, the federal government, as part of it economic stimulus efforts, established mechanisms to assist in the development of affordable housing and offset some of the economic devastation to developers. Congress included specific provisions in ARRA intended to address the condition of the Tax Credit market. Section 1602 of ARRA allows the state Tax Credit allocating agencies to return up to 40% of the state’s annual Tax Credit allocation, as well as Tax Credits awarded in 2007 and 2008 to the federal government, to be exchanged for a cash distribution of 85 cents for each tax credit dollar returned. The exchange of Tax Credits generated a pool of $578,701,964 for the State of Florida. The Tax Credit Assistance Program (TCAP), a separate provision in ARRA, includes a direct allocation of funds to state housing finance agencies from the Department of Housing and Urban Development to provide gap financing for affordable housing projects that have been affected by the economic downturn. These funds were allocated to the states to “resume funding of affordable rental housing projects across the nation while stimulating job creation in the hard-hat construction industry.” Florida Housing issued the RFP as the method for allocating the Exchange Funds and to provide an opportunity for applicants to request TCAP funds. The RFP solicits proposals from applicants with an “Active Award” of Tax Credits who were unable to close and are seeking alternate funding to construct affordable housing utilizing Exchange Funds from the Tax Credit Exchange Program authorized under Section 1602 of ARRA. Section 4D.2 of the RFP provides: Proposed Developments located within a 2009 Location A Area are eligible to apply only under the following circumstances: Developments where the original Application for the Proposed Development was funded under the Housing Credit Hope VI goal. Developments where the Original Application for the Proposed Development reflects the Housing Credit Preservation Designation. Proposed Developments that are located in a 2009 Location A Area that does not have a Guarantee Fund Development with the same Demographic category located in the same county. (Emphasis in original) The Location A areas in the RFP are the Location A areas in the rules adopted for the 2009 Universal Cycle. The Elmwood Terrace project is located in Lee County, which was not designated as a part of Location A in the 2007 Universal Cycle. The rules for the 2008 Universal Cycle provided that Location A included that part of Lee County lying south of State Road 80 and the Caloosahatchee River. The 2008 Location A for Lee County did not specify demographic categories. For the 2009 Universal Cycle, all of Lee County was designated Location A for both the family and elderly designations. The Universal Application Package, which is incorporated by reference in Florida Administrative Code Rule 67-48.004(1)(a), provides: (1) Set-Aside Location A Development (Threshold) A proposed Development qualifies as a Set- Aside Location A Development if the location of the proposed Development is within a Set- Aside Location A Area and the Applicant selected the applicable Demographic Commitment (Elderly or Family) at Part III.D of the Application. The only exception to this provision is if the proposed Development also qualifies as a HOPE VI Development at Part III.A.2.d. of the Application. Applicants with a Set-Aside Location A Development must meet the following set- aside requirements: Applicants requesting Competitive HC must commit to set aside 100 percent of the Development’s residential units at 50 percent AMI or less; or Applicants requesting MMRB must commit to set aside at least 85 percent of the Development’s residential units at 50 percent AMI or less. All Applicants must meet the minimum ELI Set-Aside threshold set out in Part III E.1.b.(2)(a)(iii) of these instructions. Because Elmwood’s proposed development is located in Lee County, Florida, the specifications of the RFP prohibit Elmwood from being considered for the allocation of funds in exchange for its Tax Credits. The RFP provides that any project that receives an allocation of Exchange Funds and/or TCAP Funds will be required to go through the credit underwriting process, including an assessment of market need and impact. Section 5B.1b of the RFP states that a tentative funding award under the RFP will be rescinded “if the submarket of the Proposed Development does not have an average occupancy rate of 92% or greater for the same Demographic population, as determined by a market study ordered by the Credit Underwriter, and analyzed by the Credit Underwriter and Florida Housing staff, as well as approved by the Board.” The term “submarket” is used in Florida Housing’s credit underwriting rules in Florida Administrative Code Rule 67-48.0072. “Submarket” and “primary market area” are synonymous terms. Determining a submarket or primary area market is very subjective; even two adjacent sites may have different submarkets. Determination of a submarket is an art that involves making judgments. The market analysis, which is required to be done as part of the credit underwriting process, will delineate the primary market area or submarket area of the proposed project. Such delineation will be based on criteria which may be unique to that proposed site. Thus, it is not practical to specify what criteria are used to establish the primary market area or submarket area of a proposed project. The RFP provides that the demographic grouping submitted in the original application cannot be changed. The RFP allows applicants to change other aspects of their original proposal, including that an applicant may increase the number of proposed units. Subsequent to the withdrawal of its anticipated equity syndicator in September 2008, Elmwood explored other options that could potentially enable it to proceed to closing. One option that Elmwood proposed to Florida Housing was to change the demographic grouping of Elmwood Terrace to an elderly project. Elmwood formally requested a change to its demographic grouping in a letter from Elmwood’s attorney, Warren Husband, to Florida Housing’s deputy development officer, Deborah Blinderman, dated January 26, 2009. That request was not approved. Elmwood contends that the prohibition on changing a development’s demographic grouping is contrary to Florida Housing’s policy of allowing other developers to change their demographic groupings. Florida Housing did allow two developments to change their demographic groupings. On April 24, 2009, the Board granted River Trace Senior Apartments’ request to change its demographic grouping from elderly to family. River Trace Senior Apartments was a development which had been funded in 2000 as an elderly development. It operated for eight years as an elderly development without achieving satisfactory occupancy in its 178 units. Based on the development’s history, the Board allowed a demographic grouping change in hopes of achieving satisfactory occupancy levels. Unlike Elmwood’s proposed development, River Trace Senior Apartments was a housing development, which was already built and in operation. In October 2008, Florida Housing approved a request for a change in demographic grouping in a proposed project. The proposed development, Bradenton Village II, was the third phase of a large HOPE VI redevelopment project and consisted of 36 units designated as family units. During the permitting process, the City of Bradenton informed the developer that the proposed site could not accommodate the number of parking spaces required for a family development, but the required parking could be provided if 32 of the units were designated as elderly units. Bradenton Village had an investor who was willing to remain in and go forward with the project redesignated as elderly. Florida Housing did not allow changes in pending deals after the Legislature’s special session budget action in January 2009 because of the large number of projects that had lost their funding and proposed changing the scope of their projects to qualify for ARRA funds. These included a number of CWHIP projects. The director for Florida Housing felt that he could not justify allowing Elmwood to change its demographic designation while refusing to allow the deobligated CWHIP developers to change their target markets. The evaluation process for the RFP is set forth in Section 7 of the RFP and provides that the Florida Housing Review Committee will: [S]elect Applicants most likely to be considered for award, make any adjustments deemed necessary to best serve the interest of Florida Housing’s mission, and develop a recommendation or series of recommendations to the Board. The Committee will then rank the Applications deemed eligible for funding with preference given to Applications that are Shovel-Ready. The Board may use the Proposals, the Committee’s scoring, and any other information or recommendation provided by the Committee or staff, and any other information the Board deems relevant in the selection of Applicants to whom to award funding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding: The specifications of the RFP which exclude consideration of funding for projects located in a Location A area without regard to whether the applicant is willing to lower the AMI for its units to 50% or less are contrary to Florida Housing’s governing statutes. The provision in the RFP which precludes the applicant from changing its demographic grouping is not contrary to Florida Housing’s policies. The provision of the RFP which requires 92% occupancy is contrary to Florida Housing’s governing statutes. The lack of a definition of “submarket” in the RFP is not arbitrary, capricious, clearly erroneous, or contrary to competition. The provisions of the RFP which eliminate from consideration for funding any project in a county with a Guarantee Fund development is contrary to Florida Housing’s governing statutes. The evaluation criteria in Section 7 of the RFP which sets forth the evaluation procedure is contrary to the Florida Housing’s governing rules and statutes. DONE AND ENTERED this 12th day of November, 2009, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL 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 12th day of November, 2009.
