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 Whether Petitioners' rental property was licensed under Chapter 509, Florida Statutes (2003).
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing, the following findings of fact are made: Petitioners, Robert Meller, Jr., and Kristine M. Meller, were owners of a rental property (a house located at 4516 Bowan Bayou) in Sanibel, Florida. In addition, they owned a condominium in the same area. Respondent Cross held a valid real estate license at all times material to matters at issue. Respondent Cross had a business relationship with Petitioners, which antedated the purchase of the Bowen Bayou house as a result of being the leasing agent for a condominium association with which Petitioners were associated. Respondent DBPR is the State of Florida agency which represents the FREC in matters such as this matter. In January 2000, Petitioners purchased the house in Sanibel located at 4516 Bowan Bayou. On or about January 20, 2000, Respondent Cross mailed a Rental Property Management Agreement to Petitioners for the property located at 4516 Bowan Bayou, Sanibel, Florida. The parties to this contract were Petitioners and Properties in Paradise, Inc. Petitioner, Robert Meller, Jr., signed the contract and returned the contract to Respondent Cross. Petitioners maintain that the Rental Property Management Agreement was not signed by Petitioner, Robert Meller, Jr., and that his name is forged. He maintains that he entered into an oral agreement with Respondent Cross, individually, to manage the property. From the purchase of the house in January 2000 through April 2001, Petitioners received correspondence, including a monthly "owner statement" reflecting short-term rental income, commissions, and debits for maintenance, from Properties in Paradise, Inc., regarding all aspects of the business relationship contemplated by the Rental Property Management Agreement. By letter dated January 20, 2000, Petitioner, Robert Meller, Jr., authorized "Revonda Cross of Properties in Paradise as my agent in establishing telephone and electrical service and so forth for my property on Sanibel Island at 4516 Bowen's [sic] Bayou Road." Thereafter, Petitioners received correspondence from Respondent Cross relative to the subject property wherein she is identified as "Operations Manager, Properties in Paradise, Inc." During the relevant time period, Petitioners' property was rented at least 22 times; once for 17 days, four times for 14 days, once for nine days, thirteen times for seven days, and once for five days. The frequency and term of these rentals qualify for the statutory definition of a "resort dwelling" and transient rental dwelling. Properties in Paradise, Inc., listed the property located at 4516 Bowan Bayou in the list of properties it provided the Division of Hotels and Restaurants as licensed in accordance with Chapter 509, Florida Statutes (2005). In April 2001, Properties in Paradise, Inc., through an attorney, notified clients that it had effectively ceased doing business. At that time, Petitioners were owed $11,588.06, which went unpaid. Petitioners made a claim in July 2001, against Respondent Cross to recover their loss from the Florida Real Estate Recovery Fund. In October 2003, Petitioners' claim was denied by the Florida Real Estate Recovery Fund.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent, Department of Business and Professional Regulation, enter a final order denying Petitioners' claim for recovery from the Florida Real Estate Recovery Fund. DONE AND ENTERED this 21st day of February, 2006, in Tallahassee, Leon County, Florida. S JEFF B. CLARK 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 21st day of February, 2006. COPIES FURNISHED: Joseph A. Solla, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite 801N Orlando, Florida 32801-1757 Robert L. Meller, Jr., Esquire Best & Flanagan, LLP 225 South 6th Street, Suite 4000 Minneapolis, Minnesota 55402-4690 Revonda Stewart Cross 1102 South East 39th Terrace, No. 104 Cape Coral, Florida 33904 Nancy B. Hogan, Chairman Florida Real Estate Commission 400 West Robinson Street, Suite 801N Orlando, Florida 32801 Josefina Tamayo, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue Whether Respondent, a condominium association, violated Section 718.112(2)(c), Florida Statutes; by holding board meetings on January 2, 7, and 16 or 17, 1985, which were not open to all unit owners and for which notice was not posted; If so, what sanctions should be imposed.
Findings Of Fact Petitioner, the Department of Business Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes, is the state agency charged with the duty of enforcing Chapter 718, Florida Statutes, the Florida Condominium Law. Respondent, Windsor Park Condominium Association, Inc., is the condominium association responsible for a 64-unit residential condominium known as the Windsor Park North Condominium ("Condominium") located at 120 Wettaw Lane, North Palm Beach, Florida. In their Prehearing Stipulations, the parties agreed that the disputed issues are whether the Association, contrary to law, held condominium board meetings on January 2, 6 and 16 and 17, 1985, which were not open to all unit owners and for which notice was not posted. The Association contends that if such meetings were, in fact, held, they were "emergency" meetings for which notice was not required under the statute. In December 1984, a five-member board of administration was elected by the members of the Association to run the condominium association in 1985; Muriel Siebern was elected President. Until November 1984, Respondent had contracted with a professional management company known as First Columbia Management to manage the Condominium. Norma Calhoun carried out those management duties on behalf of the company. When the contract expired in November 1984, Harry Christie (then President of the Association) signed a new one-year contract, on behalf of the Association, with Florida Management Professionals, Inc., a newly formed management company which was owned by Norma Calhoun. Until November 1984, the First Columbia Management hired, fired, and supervised employees, maintenance personnel and repairmen billed and collected assessments of common expenses paid Association bills prepared the annual budget and year-end financial statements communicated with the Association's attorney and, attended unit owner meetings. From November until early January, 1985, these functions continued to be performed by Norma Calhoun, on behalf of her newly formed management company. But in early January 1985, the newly elected board of administration terminated the Association's contract with Ms. Calhoun's company and began performing the management duties of the Association without the assistance of a professional management company. II. The newly elected board of administration of the Association held four meetings between January 2 and January 17, 1985. Advance notice of these meetings was not posted on the Condominium property; and no unit owners other than members of the present (or past) board attended. The first meeting was held on January 2, 1985, at the former management company's offices in North Palm Beach. Four members of the board (a quorum) were present: Muriel Siebern, President; Sue Day, Vice President; Fred Kelly, Treasurer; and Lori Powers, Member-at-Large. Ms. Calhoun, and Harry Christie, President of the outgoing board, were also present. One purpose of this meeting was to affect a turn-over of the Association's records to the new board. Mr. Christie, outgoing president, presented the key to the locker room, financial statements for the Association from January through October 1984, the book of minutes, a history of the names and addresses of all unit owners, and the results of the vote taken at the December 1984 annual meeting. The board, however, also discussed with Ms. Calhoun the nature and performance of her management duties, reviewed various contracts, and discussed with her a pending court hearing in a lawsuit in which the Association was a party. No emergency conditions surrounded this meeting which would have precluded the posting of notice at least 48 hours in advance. Ms. Siebern had called Ms. Calhoun five days before the meeting to ask her to attend. III. On January 7, 1985, Ms. Siebern and two other members of the board (a quorum) met in the offices of Richard Breithart (the attorney who now represents the Association) to discuss the management contract which Mr. Christie had signed with Florida Management Professionals, Inc., in November 1984. (The board members had discussed the contract on the way to attorney Breithart's offices and felt it was not binding.) After Mr. Breithart concurred, the board decided to fire Ms. Calhoun and terminate the contract with her management company. After polling the two absent board members (by telephone) and obtaining their concurrence, the three board members met with Ms. Calhoun that same day at First Columbia Management's offices, and informed her of their decisions. They asked that she turn over to them all of the Association's records, including all financial statements. Some of those records were not immediately available since they were kept at the former management company's offices in Clearwater. Ms. Calhoun responded that she would retrieve the material, but that it would take several weeks to receive it. The board members asked her to call them when it was received. No one told Ms. Calhoun that an emergency existed or that there was an urgent or pressing need for the records. The board members also asked that the Association's checkbook be returned. Although the Association asserts that these were emergency meetings which excuse their failure to post 48 hours notices, no emergency has been shown. Prior to their January 7 meeting, the individual board members were given at least 24 hours notice. The ostensible "emergency" was based on the need to obtain the Association's complete records from Ms. Calhoun, but Mrs. Siebern and other members of the board became aware of the need to obtain the Association's records as early as December 1984. Moreover, the board members, thereafter, did not articulate a need to obtain the records on an emergency basis, which precluded 48 hours notice. (See letter of Ms. Siebern to Mr. Cassels, dated February 12, 1984, attached to Petitioner's Exhibit No. 2). The Association's answers to the Division's interrogatories also fail to mention the existence of an emergency. (Petitioner's Exhibit No. 3) Finally, the Association has not shown any likelihood of injury if it had delayed its January 7 meeting an additional 24 hours in order to post 48-hour notices to all unit owners. Although the board encountered delay in obtaining the Association's complete records from Ms. Calhoun, no injury was shown. There is no evidence or even allegation that Ms. Calhoun was guilty of misappropriation of funds or that the Condominium's bills were not being timely paid. IV. On January 16 or 17, 1985, three board members, including Ms. Siebern, met again at the offices of attorney Breithart. After obtaining concurrence (by telephone) of the two absent board members, the board decided to dispense with the services of attorney Levine, who had been representing the Association in the pending lawsuit, and hire attorney Breithart in his place. The Association asserts that an emergency existed (precluding the need to post notice in advance of the meeting) since a hearing in the pending lawsuit was imminent. This emergency, however, was self-induced even if it existed, it was brought about by the board's failure to timely act. (The board members were dissatisfied with attorney Levine as early as December 1984, when he advised the members at the annual meeting of the Association that they would not prevail on the merits of the pending lawsuit. The board members were aware--then--that a hearing would be scheduled in the lawsuit during the next several weeks.) Another reason for firing attorney Levine was his alleged charging of expensive fees. But it has not been shown why action could not be taken to resolve this concern after giving 48 hours notice, as required by the Condominium Law.
Recommendation Accordingly, based on the foregoing, it is RECOMMENDED: That the Association be found guilty of four violations of Section 718.112(2)(c), Florida Statutes; that it be required to submit a certified check for $4,000 to the Division; and that it be ordered to henceforth conduct all board meetings in accordance with the notice and open meeting requirements of the Condominium Law. DONE and ORDERED this 26th day of February, 1986, in Tallahassee, Florida. R. L. CALEEN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 1986. COPIES FURNISHED: Karl M. Scheuerman, Esq. 725 S. Bronough St. Tallahassee, FL 32301 Richard O. Breithart, Esq. 818 U.S. Highway One, Suite 8 North Palm Beach, FL 33408 APPENDIX RULINGS ON PETITIONER'S PROPOSED FINDINGS OF FACT 1-7. Approved, in substance. 8. Adopted, except the last nine lines are rejected as not supported by a preponderance of the evidence. 9-31. Adopted, in substance. RULINGS ON RESPONDENT'S PROPOSED FINDINGS OF FACT 1-2. Adopted, in substance. 3a-d; 4-7. Rejected as not supported by a preponderance of the evidence.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following Findings of Fact: The Respondent, Ocean Dunes Development Corporation, is the developer of a residential condominium known as Ocean Dunes, located in Highland Beach, Palm Beach County, Florida. Count One The first closing on a unit in Ocean Dunes occurred on April 30, 1982. The Respondent controlled the operation of the condominium association from the incorporation of the association up to February 4, 1986, when unit owners other than the developer elected a majority of the members of the board of administration of the condominium association. Pursuant to the Articles of Incorporation of the condominium association, the board of directors is composed of three members. According to the by-laws of the association, unit owners other than the developer are entitled to elect at least one-third of the members of the board when they own fifteen per cent of the units in the condominium. The by-laws further provide that within sixty days after unit owners other than the developer are entitled to elect a member of the board, the association shall call and give not less than thirty days notice of a meeting of the unit owners for this purpose. on July 15, 1982, unit owners other than the developer owned fifteen per cent of the total number of units in the condominium. The first association unit owner meeting after July 15, 1982, occurred in April of 1983. Present at the meeting were several unit owners and Mr. Philip Connor, president of both the association and the developer corporation. According to the association by-laws, a quorum is achieved by a majority of the votes of the entire membership. In April of 1983 there were 48 units in the condominium, 17 units were owned by someone other than the developer. Therefore, the developer's unit votes were absolutely necessary to achieve a quorum. At the beginning of the meeting, Mr. Connor, the president of the developer corporation, stated that he was not authorized to utilize the developer's unit votes through proxy or otherwise. Mr. Connor stated: First item, obviously is to determine whether we have a quorum in order to properly conduct business. I am not voting on behalf of the developing company this evening. Mr. Hubert (the general counsel of the developer) as far as I know we do not have a quorum. Therefore, the meeting is officially adjourned. But, Mr. Connor went on to add: However, I would like to spend some time with you this evening to go over and formulate any questions or problems, et cetra. Unit owners other than the developer did not elect a member of the board of administration of the association until April 17, 1984. Count Two While operating the condominium association, the Respondent used condominium association common funds to pay for certain carpentry expenses in the amount of $1,836. The carpentry expenses were the responsibility of the Respondent as developer. During the initial phases of the investigation of this case by the Department of Business Regulation, the Respondent agreed that the carpentry expenses were the developer's responsibility and reimbursed $1,836 to the association on August 29, 1984. Count Three An "election period" is a mechanism by which the developer, as the owner of units, is excused from the payments of assessments against those units for a certain period of time. See Section 718.116(8)(a)(1), Florida Statutes. During an election period, the developer does not pay assessments on developer-owned units, but instead pays the difference between the common expenses of the association and monies received from other unit owners in the form of assessments during that period of time. In other words, if assessments collected from other unit owners are insufficient to meet common expenses, the developer is required to pay the deficiency. The election period must terminate no later than the first day of the fourth calendar month following the month in which the first closing of a unit in a condominium occurs. See Section 718.116(8)(a)(1), Florida Statutes. The first closing on the first unit in Ocean Dunes Condominium occurred on April 30, 1982. During the election period, the developer periodically funded the association and made available to it funds to pay required bills on a current, "as-due" basis. Thus, the Respondent attempted to satisfy its election period payment requirements on a cash accounting basis. The developer did not perform an election period calculation on the condominium's books and records to determine the difference between expenses incurred during the election period and assessments collected form other unit owners. Mr. Larsen, a certified public accountant and the Petitioner's expert witness, reviewed the condominium's financial records and calculated an election period deficit of $45,077.88. Mr. Larsen arrived at the figure of $45,077.88 by calculating that assessment revenues from non-developer unit owners amounted to $5,393.92 and that common expenses during the period amounted to $50,471.40, the difference being $45,077.88. The $45,077.88 figure arrived at by Larsen was composed in part of unfunded reserves during the election period, certain association bills which were left unpaid during the election period but had balances which came due later and certain prepaid assessments from other unit owners paid in advance, but which would have come due after the expiration of the election period. In arriving at the election period deficit of $45,077.88, Larsen completed a review or compilation of the financial records of the association using generally accepted principles of accounting for a review or compilation of financial statements. Count Four Unit owners other than the developer remitted their assessments on a quarterly basis. In contrast, the Respondent developer provided some funds to the association on a monthly, "as-needed" basis. Typically, when the association funds became inadequate to pay outstanding bills, the developer would contribute its assessments. At the end of each calendar year, the developer calculated an outstanding assessment liability on its inventory units and recognized that liability on the association's books. The Declaration of Condominium at Article 6.2, provided that assessments not paid on a timely basis would bear interest at the rate of 10% per annum from the date when due until paid. Although unit owners were paying their assessments on a quarterly basis, neither the Declaration of Condominium nor the by-laws established a date when assessments were due. Count Five The percentage of ownership interest of each individual unit owner in the common elements of Ocean Dunes Condominium is set forth in Exhibit B to the Declaration of Condominium. The percentage of common elements per unit ranged from a minimum of .01959 to a maximum of .02170. The quarterly assessments to unit owners were not based on the percentages of their ownership of the common elements as outlined in the recorded Declaration. Prior to the formal hearing, the Respondent acknowledged that the proper percentages were not being assessed, and adjustments were made for all unit owners' assessments. Count Six A condominium association's annual budget must include a reserve account (unless specifically waived by the association) for capital expenditures and deferred maintenance. The reserve account of the association is set aside for long term items such as roof replacement, building painting and pavement resurfacing. See Section 718.112(2)(f), Florida Statutes. Ocean Dunes Condominium Association established a budgeted annual reserve figure of $6,000 per year (reserves were not waived). On December 31, 1984, the reserve account, if fully funded, would have contained $16,569.86. While in control of the condominium association, the Respondent did not maintain a separate, funded reserve account. Rather, the Respondent showed the reserve account as a liability in its accounting statements. The listing of a reserve account as a liability on a financial statement would not violate, nor be contrary to, generally accepted principles of accounting. The Respondent believed in good faith that it was allowed to carry reserves as liability in the association's financial books. Count Seven The Respondent employed the accounting firm of Coopers and Lybrand to handle the financial books and records of the condominium association. Coopers and Lybrand has offices in both Broward and Palm Beach Counties. Although the Respondent maintained the corporate books and records of the association at the Royal Palm Beach Bank in Palm Beach County, portions of the accounting records were routinely transferred between Coopers and Lybrand's offices in Palm Beach and Broward Counties. Count Eight On February 4, 1986, unit owners other than the developer assumed control of the condominium association. After turnover, the Respondent provided the association with the annual audits performed by the accounting firm of Coopers and Lybrand. The annual audits did not cover the election period and the period early in 1986 which the audit for the year 1985 did not cover. After turnover of counsel of the association, the annual audits were the only review of the association's financial records provided to the association by the developer. After turnover, the association at all times made the corporate books and records available to the developer. Upon turnover, the Respondent offered to the association 9 pages of separate plans and specifications utilized in the construction of the condominium. Although the plans contained the certificate of a surveyor, only one of the nine plans contained a signed affidavit that the plans were authentic.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is. RECOMMENDED that a Final Order be entered: Requiring the Respondent pay to the association $45,077.88 (representing the deficit which existed during the developer election period) no later than 45 days from the date of the Final Order; Requiring that Respondent obtain, and provide to the association, no later than 60 days from the date of the Final Order, a turnover review of the financial records of the association prepared in strict compliance with Section 718.301(4)(c), Florida Statutes, and Rule 7D-23.03, Florida Administrative Code; Requiring that Respondent obtain and deliver to the association no later than 60 days from the date of the Final order, a copy of the construction plans of the condominium with a certificate in affidavit form prepared in strict compliance with Section 318.301(4)(f), Florida Statutes; and Assessing a civil penalty of $5,000. DONE AND ORDERED this 22nd day of December, 1986, in Tallahassee, Florida. W. MATTHEW STEVENSON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1986. COPIES FURNISHED: Karl M. Scheuerman, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Philip R. Connor, Jr., President Ocean Dunes Development Corporation Suite 205 2929 East Commercial Boulevard Ft. Lauderdale, Florida 33308 James Kearney, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Thomas A. Bell, Esquire General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 Richard Coats, Director Division of Florida Land Sales, Condominiums and Mobile Homes Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32399-1007 APPENDIX The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner: Addressed in Procedural Background section. Adopted in Finding of Fact 1. Adopted in Finding of Fact 3. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 4. Adopted in substance in Findings of Fact 5 and 9. Adopted in substance in Findings of Fact 6, 7 and 8. Addressed in Conclusions of Law section. Adopted in substance in Findings of Fact 10 and 11. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 12. Adopted in substance in Finding of Fact 13. Adopted in substance in Finding of Fact 16. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 15. Rejected as a recitation of testimony. Rejected as misleading as stated, but adopted in substance in Finding of Fact 18. Rejected as misleading as stated, but adopted in substance in Findings of Fact 19, 20 and 21. The last sentence of Paragraph 19 is rejected as not supported by the weight of the evidence. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 22. Adopted in substance in Finding of Fact 23. Addressed in Conclusions of Law section. Addressed in Conclusions of Law section. Partially adopted in Finding of Fact 25. Matters note contained therein are rejected as subordinate. Partially adopted in Findings of Fact 25 and 26. Matters not contained therein are rejected as subordinate. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 29. Addressed in Conclusions of Law section. Adopted in substance in Finding of Fact 32. Rejected as a recitation of testimony. Rejected as a recitation of testimony. Partially adopted in Finding of Fact 34. Matters not contained therein are rejected as argument and/or subordinate. Adopted in substance in Finding of Fact 33. Adopted in substance in Finding of Fact 35. Rulings on Proposed Findings of Fact Submitted by the Respondent: Partially adopted in Findings of Fact 2, 3, 4, 5, 6, 7 and 8 Matters not contained therein are rejected as Subordinate and/or a recitation of testimony. Rejected as not supported by the weight of the evidence. The first sentence of this paragraph is rejected as contrary to the weight of the evidence. The remainder of the paragraph is adopted in substance in Findings of Fact 12, 13, 14, 15, 16, 17 and 18. Matters contained in Paragraph 3 which are inconsistent with the Findings of Fact previously mentioned are rejected as contrary to the weight of the evidence and/or subordinate. Partially adopted in Findings of Fact 19, 20 and 21. Matters not contained therein are rejected as contrary to the weight of the evidence and/or subordinate. Adopted in substance in Findings of Fact 22 and 23. Partially adopted in Findings of Fact 24, 25, 26 and 27. Matters not contained therein are rejected as contrary to the weight of the evidence. Adopted in substance in Finding of Fact 29. Rejected as contrary to the weight of the evidence and/or a recitation of testimony.
Findings Of Fact For purposes of the Motions to Dismiss filed by Agrico and the Department, the following findings of fact are based upon the pleadings in this case, matters to which the parties have stipulated, and DOAH Case Number 86-3618, as well as final agency action resulting therefrom: On or about August 26, 1986, Petitioners filed with the Department a petition for formal administrative proceeding which challenged the dredge and fill permit that the Department intended to issue to Agrico. The Department transmitted this matter to the Division of Administrative Hearings for hearing, and it was assigned to the undersigned Hearing Officer as DOAH Case Number 86- 3618. Petitioners relied upon Sections 120.57(1) and 403.412(5), Florida Statutes, to "initiate" DOAH Case Number 86-3618 as is clearly set forth in paragraph 20 of their Petition filed in that case. In their Motion for Fees and Costs at paragraph 3, Petitioners further allege, and thereby concede, that they "initiated the above styled proceeding (DOAH Case Number 86-3618)." A final hearing was scheduled to begin on April 28, 1987 in DOAH Case Number 86-3618. However by letter to the Department dated March 2, 1987, Agrico voluntarily withdrew its application for a dredge and fill permit which was the subject of that case. Thereafter, a telephone conference call was held on March 17, 1987, following which an Order Closing File was filed in DOAH Case Number 86-3618 on that same date, and jurisdiction was relinquished to the Department. The Final Order in Case Number 86-3618 was entered by the Department on May 18, 1987 which states: Upon consideration, it is ORDERED that the withdrawal of permit application number 53-1093999 is GRANTED with prejudice to further Department consideration of the application, but without prejudice to the future submission of another dredge and fill application covering the same tract of land covered by application number 53-1093999. The withdrawal of permit application number 53-1093999 divests the Department of jurisdiction to proceed with consideration of (Booker Creek and Manasota's) petition. Humana of Florida, Inc., v. Department of Health and Rehabilitative Services, 500 So.2d 186 (Fla. 1st DCA 1986). Accordingly, the above-captioned case (DOAH Case Number 86-3618) is DISMISSED as moot. On July 16, 1987, Petitioners timely filed their Motion for Fees and Costs which was assigned to the undersigned Hearing Officer and given DOAH Case Number 87-3007F. Petitioners are each incorporated as not-for-profit corporations within the State of Florida, with principal off ices in Florida, and each having less than twenty-five full time employees, as well as a net worth of not more than two million dollars.
The Issue The issue is whether Petitioner, Boynton Associates, Ltd., is entitled to receive additional points for Form 5 of its application, related to local government contributions, for the Florida Housing Finance Corporation's 2001 Combined Rental Cycle and, if so, whether Petitioner qualifies for an allocation of federal low-income housing tax credits.
Findings Of Fact Petitioner, Boynton Associates Ltd., a Florida Limited Partnership, is the Applicant and owner of property know as Boynton Terrace Apartments located in Boynton Beach, Palm Beach County, Florida ("City" or "City of Boynton Beach"). To encourage the development of low-income housing for families, in 1987, Congress created the federal Low-Income Housing Tax Credit Program that is allotted to each state, including Florida Tax Credits, each year. The low-income housing credits equate to a dollar-for-dollar reduction of the holder's federal tax liability. This reduction can be taken for up to ten years if the project satisfies the Internal Revenue Code's requirements each year. Each state receives an annual allotment of housing credits, primarily on a per capita basis. For the year 2001, Florida's allotment of low-income housing credits is $23,973,567, of which $20,695,689 is available for allocation. The Florida Housing Finance Corporation is the "housing credit agency" responsible for the allocation and distribution of Florida's low-income housing tax housing credits to applicants for the development and/or substantial rehabilitation of low-income housing. See Subsection 420.5099(1), Florida Statutes. Pursuant to state and federal mandates, the Florida Housing Finance Corporation has established a competitive application process for the award of low-income housing credits. Rule 67-48.004, Florida Administrative Code, as adopted on February 22, 2001, established the process by which the Florida Housing Finance Corporation evaluates, scores, and competitively ranks the applicants for the award of funds and the allocation of housing credits. Under the review and application process, staff of the Florida Housing Finance Corporation first conducts a preliminary review of the applications. Based on that review, a preliminary score is assigned to each application. After the Florida Housing Finance Corporation's preliminary review and scoring, all applicants may review the applications and challenge what they believe to be scoring errors made by the Florida Housing Finance Corporation. Any applicant alleging scoring errors must make such challenges, in writing, on a Notice of Possible Scoring Error Form (NOPSE) within ten days of the applicant's receiving the preliminary score. This form is an official form developed and provided by the Florida Housing Finance Corporation. The Florida Housing Finance Corporation then reviews each timely filed NOPSE, adjusts scores where applicable, and issues a position paper to the affected applicants informing them of the decision relative to the NOPSE. Affected applicants are then given an opportunity to submit supplemental information, documentation, or revised documents that might address challenges made in any NOPSE. Any such submission by an applicant whose scores have been challenged is called a "Cure." The Florida Housing Finance Corporation provides a Cure Form on which the challenged applicant may submit its statement of explanation addressing the issues raised in the NOPSEs. Following the submission of a Cure by an applicant whose application has been challenged, competitors are allowed to review the supplemental or corrective information which comprises the Cure. After reviewing the Cure, competitors may point out what they perceive to be errors or deficiencies on the challenged applicant's Cure. These perceived errors or deficiencies are then submitted to the Florida Housing Finance Corporation, in writing, on a form entitled, Notice of Alleged Deficiency (NOAD), that was developed and provided by the Florida Housing Finance Corporation. The Florida Housing Finance Corporation reviews the Cure submitted by the applicant whose application has been challenged and the NOADs submitted by competing applicants. Following this review, the Florida Housing Finance Corporation assigns each application a pre-appeal score. Boynton submitted an application to Florida Housing Finance Corporation for the 2001 Combined Rental Cycle ("2001 Combined Cycle") to receive annually $559,025.14 in tax credits for the rehabilitation of Boynton Terrace, a multifamily housing property. The application was submitted on February 26, 2001, the deadline for submitting applications for the 2001 Combined Cycle. Pursuant to the review and scoring procedures set forth in the 2001 Combined Cycle Application Form and Rule 67- 48.004, Florida Administrative Code, as adopted February 22, 2001, described in paragraphs 7 through 12 above, the Florida Housing Finance Corporation scored the application of Boynton. The application for the allocation of housing credits consists of several forms. However, the only form at issue in this case is Form 5, entitled "Local Government Contributions." Form 5 indicates a local government's support of the affordable housing project for which tax credits are being sought. In scoring Form 5, Florida Housing Finance Corporation awards points based on the amount of "tangible, economic benefit that results in a quantifiable cost reduction and are development specific." The maximum number of points that can be awarded on Form 5 is 20 points. To obtain the maximum number of points for Form 5, the applicant must provide evidence of a local government contribution for which the dollar amount is equal to or greater than one of the following: (1) a specified amount according to the county in which the proposed project is located, or (2) ten percent (10%) of the total development costs of the project listed in Form 4 of the application. In this case, Boynton's application indicated that the local government contribution was 10 percent of its total development costs of $5,096,789, or $509,678.90. At or near the time Boynton's application was submitted, the Florida Housing Finance Corporation determined that the application was complete and, thereafter, conducted a preliminary review of the application. Based on its preliminary review of Boynton's application, the Florida Housing Finance Corporation awarded a total of 618 points to Boynton. Of this preliminary score, the Florida Housing Finance Corporation awarded Boynton 20 points, the maximum allowed, for Form 5. The Florida Housing Finance Corporation's preliminary award of 20 points to Boynton for its Form 5 was based on local government contributions listed on the application as follows: donation of landscaping materials valued at $50,000 and donation of dumpsters during the rehabilitation of Boynton Terrace valued at $19,845; (2) waiver of tipping fees at the local landfill of $25,500 and waiver of building permit fees of $61,609; and (3) $353,196 for waiver of the requirement to construct 58 parking spaces at $6,089.60 per space. Form 5 provides that a local government contribution for a waiver of parking space requirements will not be recognized except in certain circumstances. Among the circumstances in which a waiver of parking space requirements is expressly recognized as a local government contribution are rehabilitation developments located in areas targeted for neighborhood revitalization by local governments. Once this threshold requirement is established, the local government must also verify that the existing local government code would require the additional parking, and that the parking requirements are waived specifically for the subject development. As part of the information required by Form 5, Boynton provided a letter from Mr. Michael Rumph, the Director of Planning and Zoning for the City of Boynton Beach, verifying that Boynton Terrace is a rehabilitation development located in an area targeted for revitalization by the local government. Additionally, the letter stated in part the following: In support of the [Boynton Terrace Apartments] housing development, the City of Boynton Beach has accepted and processed an application for a variance to provide relief from the City of Boynton Beach Land Development Regulations, Chapter 2, Zoning, Section 11 Supplemental Regulations, H. 16. a.(2)., requiring a minimum parking space ratio of 2 spaces per unit, to allow a reduction of 58 spaces or a 1.3 space per unit variance. The Boynton Terrace Apartments rehabilitation development is located in an area targeted for neighborhood revitalization by the local government. As such, if parking requirements are waived for the project, such waiver or variance is recognized as a local contribution. Boynton Terrace is comprised of 84 multi-family residential units. For each unit in the development, the City of Boynton Beach Land Development Regulations requires two parking spaces. Accordingly, based on the City's regulations, 168 parking spaces would be required for the Boynton Terrace development. Boynton applied for a variance to be able to construct fewer parking spaces than the 168 spaces, since much of the area currently occupied by existing parking would be encroached upon by the construction of the new clubhouse/community center, the new landscaping, and other amenities. The City Commission for the City of Boynton Beach, after a full hearing on Boynton's request, granted the variance, which obligated Boynton to provide 1.3 parking spaces for every multi-family residential unit at the property rather than two parking spaces for every such unit. As a result of the City Commission's decision, the Boynton Terrace development was required to have 110 parking spaces instead of the 168 spaces required by the City of Boynton Beach Land Development Regulations. On Form 5 of its application, Boynton indicated that the City reduced the required number parking spaces from 168 to 110. Form 5 of the application also indicated that by the City's reducing the required number of parking spaces by 58 spaces, the local government contribution with regard to parking spaces was the cost of constructing 58 parking spaces at a cost of $6,089.60 per space, or $353,196.80. An attachment to the City's "contribution letter" referred to in paragraph 21, and part of Boynton's application, indicated that as a result of the City's reducing the number of parking spaces required at Boynton Terrace, the City's contribution to the Boynton Terrace development was $353,196.80. According to the aforementioned attachment, this amount represented the cost of constructing 58 parking spaces at a cost of $6,089.60 per space. After the Florida Housing Finance Corporation issued it preliminary scores, three competing applicants submitted NOPSEs, challenging Boynton's Form 5 score of 20. According to the NOPSEs, the competing applicants believed that Boynton was not entitled to be awarded points based on a local contribution of $353,196 for a waiver or variance of the number of parking spaces required for the development. According to the NOPSEs, Boynton was only receiving a cost savings from not having to construct 11 parking spaces because 157 parking spaces already existed at Boynton Terrace. Based on these challenges, the competing applicants indicated that the local government contribution for a waiver of the City's parking space requirement should be reduced from $353,196 to $66,985.60, the cost of Boynton's constructing 11 parking spaces at $6,089.60 per space. The Florida Housing Finance Corporation reviewed and considered the NOPSEs filed by competing applicants that challenged the local government contribution of $353,196 listed on Form 5 of Boynton's application. Following its review, the Florida Housing Finance Corporation reduced Boynton's preliminary score on Form 5 from 20 points to 8.79 points. This reduction in points represented a pro rata reduction based on the Florida Housing Finance Corporation's decision that the local government contribution, with regard to parking spaces, was $66,985.60 instead of $353,196, the amount stated on Form 5 of Boynton's application. As previously noted in paragraph 10, applicants whose applications have been challenged are permitted to submit a Cure in response to NOPSES filed by competing applicants. The Florida Housing Finance Corporation's Cure Form consists, in part, of a page entitled "Brief Statement of Explanation for Revision/Addition for Application 2001- ." In addition to submitting a Cure Form, pursuant to Rule 67.48.004 (11), Florida Administrative Code, as adopted February 22, 2001, Boynton was allowed to submit additional documentation, revised forms, and other information that it deemed appropriate to address the issues raised in the NOPSEs and to any score reductions imposed by the Florida Housing Finance Corporation. In response to the NOPSEs filed by the competing applicants and the Florida Housing Finance Corporation's reduction in Boynton's Form 5 score, Boynton submitted an explanation on a Cure Form, which stated in relevant part the following: [T]he application involves substantial rehabilitation with new amenity areas, a clubhouse/community center and dumpsters. To meet the demands called for under the proposed renovation, many of the parking spaces are lost to provide for the rehabilitation and other features called for within the application. As such, because of these significant changes, the applicant would have had have [sic] new parking areas and the incurred costs in providing for the new parking. In cooperation and conjunction with the City, the applicant was able to obtain specific cost savings for the parking and has evidenced same within the application as called for. The applicant is saving the stated number of spaces and the costs associated with otherwise having to build them. According to the Cure submitted by Boynton, the application "involves substantial rehabilitation with new amenity areas, a clubhouse/community center and dumpsters." Boynton also stated that "to meet the demands called for under the proposed renovation, many of the parking spaces are lost to provide for the rehabilitation and other features called for within the application." While the Cure submitted by Boynton referred generally to "amenity areas" and a "clubhouse/community and dumpsters," Form 7 of Boynton's application noted the specific features that would be included in the Boynton Terrace rehabilitation project. Form 7 of the application listed several features that could be included in the rehabilitation project. From this list, applicants were to mark the boxes, indicating the particular features that would be included in their respective developments. Form 7 including the category, "Quality of Design," includes Sections A, B, and C. Each section lists features which the applicant may provide as part of the rehabilitation project. At the end of the "Quality of Design" category" is the following pre-printed language: IMPORTANT! CHECKING ITEMS IN SECTIONS A, B, AND C OF QUALITY DESIGN COMMITS THE APPLICANT TO PROVIDE THEM. . . . On Form 7, Section B of the "Quality of Design" category, Boynton indicated that it would provide eight of the listed features. These features included the following: an exercise room, a community center or clubhouse, a playground/tot lot, a covered picnic area, an outside recreation facility for older children, and a library. After Boynton submitted its Cure Form, competing applicants filed (NOADs) with the Florida Housing Finance Corporation pursuant to Rule 67-48.004(12), Florida Administrative Code, as adopted on February 22, 2001. One NOAD indicated that no documents were submitted by Boynton to show the number of spaces that would have to be eliminated or demolished as part of the rehabilitation or how many spaces would have to be constructed as part of the rehabilitation process. Another NOAD stated that the Cure submitted by Boynton amounted to a "de facto appeal," because the initial application did not indicate that the renovation would involve the loss of parking spaces. The NOADs relied on a 1980 as-built survey to argue that Boynton Terrace already contained a parking lot with 157 spaces. Based on its review of Boynton's Cure Form and the NOADs submitted in response thereto, the Florida Housing Finance Corporation determined that Boynton should be awarded 8.79 points for Form 5. The Florida Housing Finance Corporation believes that the 8.79 points awarded to Boynton for Form 5 are appropriate based on its determination of the local government contribution listed on and substantiated by the application and the information provided on Boynton's Cure Form. In reducing Boynton's preliminary award for Form 5 from 20 points to 8.79, the Florida Housing Finance Corporation accepted and concurred with the statements expressed in the NOPSEs. According to those statements, described in paragraph 28, Boynton should receive credit for a local contribution of $66,985, the cost of building 11 parking spaces. The Florida Housing Finance Corporation does not accept that the proposed cost of constructing each new parking space is $6,089, as noted in Boynton's application, is the actual cost. Rather, it considers the proposed cost of $6,089 to be questionable. The reason the Housing Corporation questioned the proposed cost of $6,089 to construct each new parking space was that documentation reflected that during a period of less than three months, the projected cost went from $4,017.19 per space as of December 6, 2000, to $5,821 as of February 12, 2001, and finally to $6,089 as of February 23, 2001. During the time Boynton's application was being reviewed, Mr. Christopher Bushwell, a former construction manager with the Corps of Engineers and an auditor with the Florida Housing Finance Corporation, questioned the increased cost of the construction of each parking space from $4000 to $6000. Despite Mr. Bushwell's concern about the accuracy of the projected cost of construction of each parking space, no staff member of the Florida Housing Finance Corporation called to verify the figure with the City of Boynton Beach. The Florida Housing Finance Corporation produced no evidence to support its contention that the projected or estimated cost for construction of each parking space was not accurate. Yet it persisted in its belief that Boynton "back[ed] into" the parking space estimates solely for the purpose of presenting to the Florida Housing Finance Corporation a local government contribution equal to or near $353,196, a figure that would result in Boynton's being awarded the maximum of 20 points for Form 5. The projected cost of $4,017 for construction of a parking space was included on the City's Variance Review Report dated December 6, 2000. That report analyzed Boynton's request that a variance be granted that allowed one parking space per unit, or a total of only 84 parking spaces. It is unknown who arrived at this figure or how it was derived. On January 16, 2001, the City agreed to grant Boynton a variance to reduce the number of parking space by 58, thereby reducing the number of required parking spaces from two spaces per unit to 1.3 spaces per unit. After the variance was granted on January 16, 2001, on February 12, 2001, the City of Boynton Beach submitted a letter to the Florida Housing Finance Corporation stating that the variance had been granted reducing the required number of parking spaces from two spaces per unit to 1.3 spaces per unit. The letter stated that the cost for each parking space was $5,821, which would result in a local government contribution of $337,630. On February 23, 2001, the City of Boynton Beach submitted another letter to the Florida Housing Finance Corporation identical to the February 12, 2001, letter except that the attachment to the former letter indicated that the construction cost for each parking space was $6.089.60. This projected cost would result in the local government contribution of $353,196.80 for the reduction in required parking spaces. The estimates for the cost of constructing each parking space stated in the February 12 and February 23, 2001, letters were made by Jeffrey Kammerude and approved by the City's Engineering Department. Mr. Kammerude is a licensed contractor and the construction manager of Heritage Construction Company, the company that would be responsible for the renovation of Boynton Terrace. Mr. Kammerude changed the estimated cost of each parking space from $5,821 to $6,089 because at the time of the former estimate, it was his belief that the local building code required a 20-foot minimum driveway or aisle-way. However, after meeting with City officials, Mr. Kammerude was told that the 20-foot aisle-way that he had used in making the February 12, 2001, estimate was incorrect and that with the back-to-back parking that existed at Boynton Terrace, the aisle-way had to be 27 feet wide. The increased size of the aisle-way would require a corresponding increase in the required pavement and, thus, an increase in the cost of constructing each parking space. The reason given by Mr. Kammerude for increasing the estimated cost of each parking space was uncontroverted. Moreover, the greater weight of the evidence established that the estimated cost of $6,089 per parking space was not only reasonable, but was likely lower than the actual per space construction cost because it did not include the cost of curbing. In view of the credible testimony of Mr. Kammerude, the cost estimate of $6,089.60 for constructing a parking space at Boynton Terrace is reasonable. In February 2001, at or near the time Boynton submitted its application to the Florida Housing Finance Corporation, the parking lot at Boynton Terrace was in poor condition and had many potholes and cracks in the pavement. Given the condition of the parking lot, the rehabilitation of Boynton Terrace would require repaving of at least part of the parking lot. On October 31, 2001, about eight months after Boynton submitted its application, Mr. Bushnell went to Boynton Terrace to count the parking spaces and look at the parking lot. From his cursory observation, it appeared that the parking lot had been recently resurfaced and was in "excellent shape. However, Mr. Bushnell did not conduct a comprehensive inspection of the parking lot and was unable to determine the quality of the work done on the parking lot or whether the work complied with the requirements of the applicable provisions of the City of Boynton Beach Land Development Code. The City of Boynton Beach requires a permit for the repaving and/or repair of parking lots at developments such as Boynton Terrace. However, no permit was issued for the repaving and/or repair of the parking lot at Boynton Terrace referenced in the preceding paragraph. Consequently, the City never conducted an inspection of the parking lot to determine if the parking lot repairs and/or repaving at Boynton Terrace met the applicable City Code requirements. Based on the number of parking spaces that he counted while at Boynton Terrace, Mr. Bushnell questioned the cost reduction of eliminating spaces. Moreover, because Mr. Bushnell saw concrete pads in place for dumpsters, he did not believe that parking spaces needed to be eliminated in order to place dumpsters on the property. Finally, in reaching the conclusion that there would be no reduction in parking spaces, Mr. Bushnell did not consider the number of spaces that would be eliminated as a result of the addition of any of the new amenities to the property such as the clubhouse/community center, picnic areas, and mailbox kiosks, and the landscaping required under the City Code. Boynton had a site plan prepared on or near December 2000, which showed the placement of many of the new amenities to be included as a part of the rehabilitation of the Boynton Terrace development. The site plan was used as part of Boynton's submission and presentation to the City when it was seeking a parking space variance. According to the site plan, the clubhouse/community center would consume 25 to 30 parking spaces, the landscaping of the development would consume about 15 parking spaces, and the picnic area would consume about two to four parking spaces. The Florida Housing Finance Corporation did not consider that the addition of the new amenities would reduce the number of parking spaces at the property and result in the need to construct new parking spaces unless the City of Boynton Beach granted a variance to Boynton. Boynton did not include the December 2000 site plan as part of its application or Cure submitted to the Florida Housing Corporation. Moreover, Boynton did not provide information in its application or Cure regarding how many spaces would be eliminated as a result of construction of a clubhouse community center. At hearing, Boynton presented credible evidence that the clubhouse/community center would be constructed over existing parking spaces and that without a variance from the City of Boynton Beach, it would have to construct new spaces to replace those spaces lost to construction as well as to other features related to the rehabilitation of the development. Boynton also presented credible evidence that additional parking spaces at Boynton Terrace would be eliminated due to the City's landscaping requirements, the construction of a picnic area, a tot lot, and mail box kiosks. The City's Code requires 20 feet of landscaping for each parking space. However, this information was not included in the Cure submitted by Boynton to the Florida Housing Finance Corporation. The variance granted by the City of Boynton Beach amounted to a waiver of the parking space requirements applicable to the Boynton Terrace rehabilitation project which provided a tangible economic benefit that resulted in a quantifiable cost reduction that is specific to the development.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation award to Petitioner, Boynton Associates, Ltd., the maximum number of 20 points for Form 5 of the 2001 Combined Cycle, and enter a Final Order awarding Boynton Associates, Ltd., a total of 622 points for it Combined Cycle Application. DONE AND ENTERED this 17th day of April, 2002, in Tallahassee, Leon County, Florida, CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of April, 2002. COPIES FURNISHED: Mark Kaplan, Executive Director Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Elizabeth G. Arthur, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Jon C. Moyle, Jr., Esquire Moyle, Flanigan, Katz, Kollins, Raymond & Sheehan, P.A. 118 North Gadsden Street Tallahassee, Florida 32301
The Issue The issues in this bid protest are whether, in making the decision to award funding pursuant to Request for Applications 2017-103, Housing Credit and State Apartment Incentive Loan ("SAIL") Financing to Develop Housing in Medium and Large Counties for Homeless Households and Persons with a Disabling Condition (the "RFA"), Florida Housing Finance Corporation ("Florida Housing" or "Respondent"), acted contrary to a governing statute, rule, or solicitation specification; and, if so, whether such action was clearly erroneous, contrary to competition, arbitrary, or capricious. The question of whether the application of Northside Commons Residential, LLC ("Northside"), met the requirements of the RFA with respect to demonstrating the availability of water and sewer services as of the Application Deadline is the only question at issue in this case. No other parts of its Application are being challenged, and the parties all agree that its Application was otherwise properly scored. No parties have raised objections to any parts of Warley Park's application, and all parties agree that its Application was properly scored.
Findings Of Fact The Parties Petitioner Warley Park, Ltd., is the applicant entity of a proposed affordable housing development to be located in Seminole County, Florida. Petitioners Warley Park Developer, LLC, and Step Up Developer, LLC, are Developer entities as defined by Florida Housing in Florida Administrative Code Rule 67-48.002(28). Northside is a Florida limited liability company based in Miami-Dade County, Florida, in the business of providing affordable housing. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The Programs The low income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. These tax credits are awarded competitively to housing developers in Florida for rental housing projects which qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect of this is to reduce the amount that the developer would have to borrow otherwise. Because the total debt is lower, a tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of up 50 years as consideration for receipt of the tax credits. SAIL provides low-interest loans on a competitive basis to affordable housing developers each year. This money often serves to bridge the gap between the development's primary financing and the total cost of the development. SAIL dollars are available to individuals, public entities, not-for-profit, or for-profit organizations that propose the construction or substantial rehabilitation of multifamily units affordable to very low-income individuals and families. Florida Housing is authorized to allocate housing tax credits, SAIL funding, and other funding by means of request for proposal or other competitive solicitation in section 420.507(48) and adopted chapter 67-60 to govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing allocate its housing tax credits, which were made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3). The RFA 2017-103 Housing tax credits and SAIL funding are made available through a competitive application process commenced by the issuance of a RFA. A RFA is equivalent to a "request for proposal" as indicated in rule 67-60.009(3). The RFA at issue here is RFA 2017-103, which was issued on March 22, 2017. A modification was issued on April 11, 2017, and responses were due April 20, 2017. Through the RFA, Florida Housing seeks to award up to an estimated $6,075,000 of housing tax credits, along with $11,500,000 of SAIL financing, to qualified applicants to provide affordable housing developments. A review committee, made up of Florida Housing staff, reviews and scores each application. Florida Housing scored applicants in six areas worth a total of 145 points: General Development Experience; Management Company Experience with Permanent Supportive Housing; Tenant Selection for Intended Residents; Community-Based General Services and Amenities Accessible to Tenants; Access to Community-Based Resources and Services that Address Tenants' Needs; and Approach Toward Income and Credit Status of Homeless Households Applying for Tenancy. Florida Housing scored Northside as the highest scoring applicant, awarding it 128 points. Warley Park was the fourth highest scored applicant with 112 points. These scores are presented in a public meeting and the committee ultimately makes a recommendation as to which projects should be funded. This recommendation is presented to Florida Housing's Board of Directors ("the Board") for final agency action. On June 16, 2017, Petitioners and all other participants in RFA 2017-103 received notice that the Board had determined which applications were eligible or ineligible for consideration for funding and selected certain applications for awards of tax credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets, one listing the "eligible" and "ineligible" applications and one identifying the applications that Florida Housing proposed to fund, on Florida Housing's website, www.floridahousing.org. Florida Housing announced its intention to award funding to three developments, including Northside. Warley Park's application was deemed eligible, but it was not selected for funding. The RFA at Section Four A.5.g. requires the applicant to demonstrate its "Ability to Proceed" by including the following as attachments to its application: Availability of Water. The Applicant must demonstrate that as of the Application Deadline water is available to the entire proposed Development site by providing as Attachment 9 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16); or A letter from the water service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. Availability of Sewer. The Applicant must demonstrate that as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site by providing as Attachment 10 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16); or A letter from the waste treatment service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. (emphasis added). Section 5.g. of Exhibit A to RFA 2017-103, the Application and Development Cost Pro Forma, requires that the applicant include the following information: Ability to Proceed: As outlined in Section Four A.5.g. of the RFA, the Applicant must provide the following information to demonstrate Ability to Proceed: Availability of Water. The Applicant must provide, as Attachment 9 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16). Availability of Sewer. The Applicant must provide, as Attachment 10 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16). The Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form requires the service provider to certify that on or before the submission deadline for the RFA, "Sewer Capacity or Package Treatment is available to the proposed Development." Similarly, the Verification of Availability of Infrastructure – Water form requires the service provider to certify that on or before the submission deadline for the RFA, "Potable water is available to the proposed Development." Each form also includes the following caveat: To access such [waste treatment] [water] service, the Applicant may be required to pay hook-up, installation and other customary fees, comply with other routine administrative procedures, and/or install or construct line extensions and other equipment, including but not limited to pumping stations, in connection with the construction of the Development. The RFA does not define the term "Development- specific," and the term is not used in Section 5.g. of Exhibit A to RFA 2017-103 where the requirement for the water and sewer letters is included. Further, the term "Development-specific" is not defined in any Florida Housing rule. Miami-Dade County has had a longstanding practice of refusing to complete Florida Housing's water and sewer verification forms. Florida Housing added the water and sewer letter as an additional method to demonstrate availability in light of the county's refusal. Thus, an applicant, such as Northside, has no alternative when proposing a Miami-Dade project other than providing a water and sewer letter as opposed to Florida Housing's Verification form. Northside's Water and Sewer Letter Accordingly, in response to this RFA requirement, Northside submitted a letter from Miami-Dade County Water and Sewer Department as Attachment 9 to its application. The letter was sought by Oscar Sol, one of the principals of the developer working with the applicant in the project at issue in this case. The WASA letter at issue in this case was dated December 12, 2016. It was addressed to "Northside Commons LTD," and referenced water and sewer availability for "Northside Commons," construction and connection of 108 apartments, located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The identical WASA letter was submitted as Attachments 10 and 11 to application 2017-155C in response to a prior RFA, RFA 2016-114. That prior application was submitted by Northside Commons, Ltd., for a 108-unit elderly development called Northside Commons, located at 8301 Northwest 27th Avenue, Miami- Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2016-114 was December 15, 2016. In the present case, Northside's application for RFA 2017-103, application 2017-254CSN, was submitted by Northside Commons Residential, LLC. It was for an 80-unit development for homeless persons and persons with disabling conditions, also to be called "Northside Commons," located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2017-103 was April 20, 2017. The WASA letter contains several paragraphs of details about hookups to water and sewer service, and also includes the following boilerplate language: "This letter is for informational purposes only and conditions remain in effect for thirty (30) days from the date of this letter. Nothing contained in this letter provides the developer with any vested rights to receive water and/or sewer service." Warley Park raised three issues regarding the WASA letter. First, was the letter valid for more than 30 days after it was signed? Second, did the letter meet the requirement of the RFA that it be "development specific?" Third, did the letter demonstrate the availability of sewer services? Was the WASA letter valid for more than 30 days after it was signed? Florida Housing and Northside contend that there is no provision in the WASA letter stating that it becomes "invalid" after 30 days, or that water and sewer services will not be available after 30 days. Douglas Pile, the representative for Miami-Dade County, testified that the second and third paragraphs of the letter included the conditions necessary to service the availability of water and sewer, and that it was these conditions that remained in effect for 30 days. He described the purpose of the 30-day language as follows: We're not saying that availability disappears or terminates after 30 days. We're just saying this letter is good for informational purposes for 30 days. We don't want people to come back a year later and say I bought this property based upon this letter of availability saying I have water and sewer under certain conditions, and then a year later the conditions are different and maybe they have to put in a water main extension or maybe their local pump station is in moratorium. When asked specifically whether the entire letter was valid for only 30 days, he responded, "Right. Well, the conditions are – the nearby water and sewer facilities that the project would connect to." Mr. Pile explained that the letter is "a snapshot of what our facilities are at the time they make the request." He further stated that: the letter . . . has to have an expiration date either explicit or implicit. If a utility is going to give a letter saying they have water and sewer availability, that cannot be forever, you know. You assume a natural termination point . . . we just explicitly say this letter is good for 30 days. In its Pre-Hearing Position Statement, Florida Housing argued that it did not interpret this language to mean that the letter became invalid after 30 days. However, according to Mr. Reecy,1/ there was no "interpretation" done by Florida Housing. Specifically, when asked how Florida Housing interpreted the phrase, he stated: We have basically ignored that phrase. We actually do not know what--given the context of this situation, how, within 30 days, the--that information is only good for 30 days. So we have not considered that to be a relevant factor in our consideration of the information provided in the letter. A plain and common reading of the quoted language indicates Miami-Dade limited the validity of the information in the letters to 30 days. Florida Housing provided no explanation for its decision to ignore the language and made no attempt to inquire of Miami-Dade County as to what it intended by including the language. This 30-day limitation is generally known by the applicants and nearly every previously funded application included a letter from Miami-Dade County dated within 30 days of the application deadline. Only one Miami-Dade WASA letter submitted by applicants within the last two RFAs was dated outside of the 30-day window. That letter was deemed ineligible for other reasons. Had Petitioner wanted to demonstrate availability as of the application deadline, it only needed to request a letter from Miami-Dade County within the 30 days prior to the application deadline, giving Miami-Dade sufficient time to respond. In fact, the letter was initially submitted as part of a response to RFA 2016-114, with a due date of December 15, 2016. Because the letter was issued on December 12, 2016, it remained valid through the application deadline for RFA 2016-114. There is no limit to the number of times a developer can obtain a letter of availability from Miami-Dade County. The requirements of the RFA are clear that water and sewer availability must be shown "as of the Application Deadline." Because the WASA letter submitted with Petitioner's Application only provided a snapshot of availability for a 30-day window after the issuance of the letter (or until January 11, 2017), the letter failed to address the availability of water or sewer services as of April 20, 2017. As a practical matter, the WASA letter provides that water hook-up is readily available to existing infrastructure and sewer availability is dependent upon a developer building a pumping station. It could be inferred that these conditions would remain available at this location for 12 months. However, the testimony of Mr. Pile makes clear that Miami-Dade County is not willing to make that assumption for a period beyond 30 days due to the possibility of intervening events.2/ Presumably, this is why the vast majority of applicants for this type of RFA secures and provides a Miami-Dade WASA letter dated within 30 days of the RFA application deadline. Because the WASA letter was not valid beyond January 11, 2017, Petitioner cannot demonstrate availability of water and sewer as of the Application Deadline. The fact that the WASA letter was no longer valid is fatal to Petitioner's application in that it failed to satisfy a mandatory requirement of RFA 2017-103, i.e., the availability of water and sewer services. Was the WASA letter "development specific?" The RFA requires that the Applicant demonstrate water and sewer service availability for "the entire proposed Development site," and it also requires that the letter from the service provider be "Development-specific." The application in this matter was filed by Northside Commons Residential, LLC, for an 80-unit development for the homeless and persons with disabling conditions. However, the WASA letter was issued to, and discussed the availability of water and sewer service for, a different entity, Northside Commons, Ltd., the applicant for a 108-unit elderly development. According to Mr. Reecy, the reuse of a letter that was previously submitted in a different application does not follow the "letter" of the criteria in the RFA. Florida Housing and Northside even agree that the letter does not reference the specific proposed development that is at issue and instead focuses on the location of the proposed development. Mr. Sol, Northside's representative, suggested that it is "irrelevant" to which entity the letter is issued because what is relevant is whether water and sewer availability exists. However, as stated by Mr. Reecy, what Florida Housing considers when determining whether a letter of availability is "Development-specific" is the location, the number of units, and the applicant. Because the WASA letter was issued to a entirely different applicant, based upon Mr. Reecy's testimony, it is not "Development-specific." However, Mr. Reecy noted that such a letter could be considered a Minor Irregularity if there is some commonality between the applicant entities. Northside argues that the failure of the letter to be "Development-specific" should be waived as a Minor Irregularity. This issue was not considered during scoring, nor was it a determination made by the Board of Florida Housing prior to awarding funding to Northside. Mr. Reecy acknowledged that it is a judgment call when determining whether a letter addressed to a different entity with different principals is a Minor Irregularity. That call depends upon the number of common principals. While the number of principals that must be the same is discretionary, there must be at least some commonality of principals for it to be considered a Minor Irregularity. The principals of Northside Commons, Ltd., the entity to which the letter was actually issued and the applicant that originally submitted the WASA letter, are completely different from the principals of Northside Commons Residential, LLC. Despite a full understanding of all the similarities between the two applications and the differences in the requirements of the RFA and being given a number of opportunities to change his position, Mr. Reecy repeatedly declined to do so. Mr. Sol suggested that it is common practice for Florida Housing to accept letters issued to entities other than the applicant and with different principals. After hearing Mr. Sol's opinion and discussing the issue further with Northside, Mr. Reecy remained steadfast in his position that the error in the Letter could not be waived as a Minor Irregularity. At the request of Northside, Mr. Reecy agreed to review past practices of the agency during a break in the hearing. As stated by counsel for Florida Housing, if it is established that Florida Housing has a long-standing practice of accepting similar letters, then the question is whether Northside Commons may rely upon that practice. The review during the break was limited to the issue of whether Florida Housing had previously accepted Miami-Dade letters addressed to an entity who was not the applicant and who shared no principals in common with the applicant. No such long- standing practice was demonstrated. Mr. Reecy directed staff to pull all of the Miami-Dade letters of availability from the last two RFAs, to determine, first, whether or not there were sewer letters addressed to someone other than the applicant entity. Second, for those so identified, staff was to compare the principals of the applicant entity and the entity that was the addressee for commonality. Mr. Reecy was provided a list of approximately a dozen letters from the past several RFAs that compared the applicant entity and the addressee entity. This list did not identify whether or not the letters were submitted by successful credit applicants. Based upon this list, Mr. Reecy then reviewed each letter to determine whether or not it was issued to the applicant. He then reviewed the principals list for the applicant as identified in the application and compared that to data from the state of Florida's Sunbiz.org website for the addressee of the letter. Mr. Reecy compared this information to determine if the two had any principals in common. After reviewing this information, Mr. Reecy recanted his earlier testimony and stated that he felt that Florida Housing historically accepted letters with addressees that were not the applicant entity and did not have common principals. Mr. Reecy further testified that based upon this understanding of Florida Housing's past practice, the Northside's letter should be accepted. The information Mr. Reecy reviewed, specifically that obtained from the state of Florida's Sunbiz.org website, did not demonstrate, as Mr. Reecy believes, that Florida Housing previously accepted Miami-Dade WASA letters from applicants in a similar position to that of Northside. Notably, Florida Housing does not accept documentation from the Sunbiz.org website to demonstrate the principals of the Application as required by this and other RFAs. The Sunbiz.org website does not identify the level of detail of principals which Florida Housing requests in its "Principals of the Applicant and Developer(s) Disclosure Form". Further, even if Sunbiz.org did identify all of the principals Florida Housing requires to be disclosed, in this case, the Sunbiz.org information reviewed was dated 2017.3/ As this information was filed after the application deadlines for the respective RFAs, it fails to identify any of the principals related to the entities in the "comparable" letters for the 2015 and 2016 RFAs. No information was provided as to any of the principals in either 2015 or 2016. Accordingly, Mr. Reecy and Mr. Sol's belief that Florida Housing had previously accepted letters in a similar position to that of Northside Commons' letter has not been demonstrated. Because Mr. Reecy's new position, that Northside Commons' letter should be accepted, is based upon this incorrect understanding, and the alleged prior agency action was not demonstrated, Mr. Reecy's initial testimony is found to be more credible. Therefore, the record demonstrates that the WASA letter was not "Development-specific" and, therefore, contrary to the solicitation specifications. Did the letter demonstrate availability of sewer services? The RFA requires each applicant to provide a form or letter demonstrating that "as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site." Petitioner presented the testimony of Jon Dinges, P.E., an environmental engineer with expertise in designing wastewater systems who was accepted as an expert in civil engineering, specifically in the area of sewer infrastructure and design. Mr. Dinges' testimony was simply that the problem with the WASA letter in this case is that it does not actually say that capacity is available. In a prior RFA, Florida Housing rejected an application that included a Miami-Dade WASA letter because it specifically stated that no gravity sewer capacity analysis had been conducted. According to Mr. Dinges, without conducting a gravity sewer capacity analysis, it is not possible to determine whether capacity, if any, exists. However, the RFA makes no mention of requiring a gravity sewer capacity analysis to demonstrate availability. Mr. Reecy testified that Florida Housing has been accepting WASA letters without mention of gravity analysis from Miami-Dade County for many years. He stated that the detailed description of how a proposed project could connect to an existing sewer service met the requirement of the RFA that the Applicant demonstrate the availability of sewer service. He also testified that if Florida Housing were to change its position and determine that the form of the letter was not adequate to demonstrate capacity, it would do so in a public process. The testimony was clear that Florida Housing does not do any independent analysis of whether water and sewer service is actually available to a proposed development, but instead relies on the expertise of the local government to do this analysis. Applicants are not required to include or demonstrate the specific requirements or technical specifications of how a connection to water or sewer services will be made. This interpretation is consistent with the specifications of the RFA.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order amending its preliminary decision awarding funding to Warley Park by: finding Northside ineligible for funding; and awarding funding to Warley Park as the next highest scoring eligible applicant. DONE AND ENTERED this 19th day of October, 2017, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 2017.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondents be found guilty of violating Subsection 718.301(4)(c) , Florida Statutes, and that a $500 civil penalty be imposed; the remaining charge should be DISMISSED. DONE and ENTERED this 12th day of January, 1983 in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of January, 1983.
Findings Of Fact Petitioner herein is the State of Florida, Department of Business Regulation, Division of Florida Land Sales Condominiums and Mobile Homes. One Respondent in this matter is Tanwin Corporation (hereinafter "Tanwin") the developer of two residential condominiums known as Vista Del Lago Condominium I and Vista Del Lago Condominium II, located in West Palm Beach, Florida. The other Respondent is Vista Del Lago Condominium Association, Inc. (hereinafter "Association"), the condominium association for Vista Del Lago Condominiums I and II. Transition from developer control of the Association has not occurred, and at all times pertinent hereto, Respondent Tanwin has in fact controlled the operation of the Respondent Association. The Declaration of Condominium for Vista Del Lago Condominium I (hereinafter "Condo I") was recorded in the public records on December 12, 1980. The Declaration of Condominium for Vista Del Lago Condominium II (hereinafter "Condo II") was recorded in the public records on March 11, 1982. Condo I contains 16 units; and Condo II contains 18 units. Herbert and Judith Tannenbaum are the President and Secretary, respectively, of both Tanwin and the Association and are members of the Association's Board of Directors. The developer-controlled Association failed to provide a proposed budget of common expenses for Condo I for the fiscal year 1982. The developer-controlled Association failed to provide a proposed budget of common expenses for Condo I and Condo II for 1983 until the unit owner meeting in March or April of 1983. The budget provided at that time contained no provision for reserves. Although the document alleged to be the 1983 proposed budget admitted in evidence as Petitioner's Exhibit numbered 17 does contain an allocation for reserves, Petitioner's Exhibits numbered 17 is not the 1983 budget disseminated to unit owners at the annual meeting in 1983. In addition, the 1983 budget was received by the unit owners at the meeting at which the proposed budget was to be considered and not prior to the budget meeting. Statutory reserves were not waived during the period December, 1980 through December, 1983. The "start-up" budgets contained as exhibits to the Declarations of Condominium indicate that reserves were to be collected from unit owners at the rate of $15 per month per unit at least during the first year commencing December of 1980 with the first closing. Hence, reserves were not waived December, 1980 through December, 1981. From November, 1981 through December, 1983, no vote to waive reserves was taken by the unit owners. Although reserves were discussed at the 1983 meeting, no vote was taken during the period in question including 1983, to waive reserves. The developer as owner of unsold units; has failed to pay to the Association monthly maintenance for common expenses during the period December, 1980 through December, 1983. The developer Tanwin has, in the nature of an affirmative defense, alleged the existence of a guarantee of common expenses pursuant to Section 718.116(8), Florida Statutes, which purportedly ran from the inception of the condominiums to date. Accordingly, the initial issue for resolution is whether the developer pursuant to statute guaranteed common expenses. Section 718.116(8)(b) provides that a developer may be excused from payment of common expenses pertaining to developer-owned units for that period of time during which he has guaranteed to each purchaser in the declaration of condominium, purchase contract or prospectus, or by an agreement between the developer and a majority of unit owners other than the developer, that their assessments for common expenses would not increase over a stated dollar amount during the guarantee period and the developer agrees to pay any amount necessary for common expenses not produced by the assessments at the guaranteed level receivable from other unit owners, or "shortfall". Actual purchase agreements were admitted in evidence. Respondents seek to label certain unambiguous language in the purchase contracts as a guarantee. This language, uniform throughout all those contracts as well as the form purchase contract filed with Petitioner except that of Phillip May, provides as follows: 9. UNIT ASSESSMENTS. The Budget included in the Offering Circular sets forth Seller's best estimation of the contemplated expenses for operating and maintaining the Condominium during its initial year. Purchaser's monthly assessment under the aforementioned Budget is in the amount of $109.00. Until Closing of Title, Seller has the right (without affecting Purchaser's obligation to purchase in accordance with the provisions hereof, to modify the estimated Budget and assessments periodically if then current cost figures indicate that an updating of estimates is appropriate). [Emphasis added]. That portion of the purchase agreement set forth above does not constitute a guarantee. Instead, the purchase agreement simply includes a best estimation of expenses for the initial year. It does not govern assessments after the expiration of one year, and even as to the initial year, the language in the contract sets forth only a "best estimation" and not a guarantee that the assessments would not increase during the "guarantee period." Phillip May's purchase agreement reflects that he purchased his unit in August of 1983; after condominium complaints had been filed by the unit owners with the Florida Division of Land Sales Condominiums and Mobile Homes. His purchase agreement has been altered from the purchase agreement of earlier purchasers in that his purchase agreement expressly, by footnote contains a one- year guarantee running from closing. The guarantee contained in his purchase agreement was presented by the developer without any request from Mr. May for the inclusion of a guarantee in his purchase agreement. The guarantee language in this purchase agreement is useful for the purpose of comparing the language with those portions of the pre-complaint contracts which Respondents assert contain or constitute a guarantee. Similarly it is determined that no guarantee of common expenses exists in the Declarations of Condominium for Condo I and II or in the prospectus for Condo II. While Respondents seek to assert the existence of a guarantee in those documents, the portions of those unambiguous documents which according to Respondents contain a guarantee, have no relation to a guarantee or do not guarantee that the assessments for common expenses would not increase. Respondent Tanwin also seeks to prove the existence of an oral guarantee which was allegedly communicated to purchasers at the closing of their particular condominium units. However, purchasers were told by Herbert or Judith Tannenbaum only that assessments should remain in the amount of $109 per month per unit unless there existed insufficient funds in the Association to pay bills. This is the antithesis of a guarantee. During a guarantee period the developer in exchange for an exemption from payment of assessments on developer- owned units agrees to pay any deficits incurred by the condominium association. Accordingly, no guarantee was conveyed at the closing of condominium units. Further Respondent Tanwin's additional contention that an oral guarantee arose when the condominiums came into existence is plainly contradicted by the express language throughout the condominium documents and purchase agreements that there exist no oral representations and that no reliance can be placed on any oral representations outside the written agreements. Further, prior to December, 1983, no reference was ever made by the developer either inside or outside of unit owner meetings as to the existence of the alleged guarantee. Moreover, a comparison between on the one hand, the 1981 and 1982 financial statements prepared in March of 1983, and on the other hand, the 1983 financial statements, clearly reveals that even the accountant for Tanwin was unaware of the existence of a guarantee during the period in question. While the 1983 statements, prepared in 1984 after unit owners filed complaints with Petitioner contain references to a developer guarantee, the 1981 and 1982 statements fail to mention a guarantee. Instead, included in the 1981 and 1982 statements of the Association are references under the current liabilities portion of the balance sheets for those years, to a "Due to Tanwin Corporation" liability in the amounts of $2,138 for 1981 and $2,006 for 1982. Petitioner through Ronald DiCrescenzo, the C.P.A. for Tanwin, established that at a minimum, the $2,006 figure reflected in the 1982 balance sheet was in fact reimbursed to Tanwin. Section 7D-18.05(1),(c), Florida Administrative Code, entitled "Budgets" and effective on July 22, 1980, was officially recognized prior to the final hearing in this cause. That section requires each condominium filing to include an estimated operating budget which contains "[a] statement of any guarantee of assessments or other election and obligation of the developer pursuant to Section 718.116(8); Florida Statutes." The estimated operating budgets for Condo I and Condo II do not include a statement of any guarantee of assessments or other election or obligation of the developer. The testimony of Herbert Tannenbaum with regard to an oral (or written) guarantee is not credible. He first testified that an oral guarantee was communicated to purchasers at the closing of each unit. In contrast, Tannenbaum also testified that the first discussion he had regarding a guarantee occurred with his attorney after the filing of the Notice to Show Cause in this action. Tannenbaum further testified that he did not understand what a guarantee was until after this case had begun and was unaware of the existence of any guarantee prior to consulting with his attorney in regard to this case. Moreover, Ronald DiCrescenzo, the C.P.A. for Tanwin testified that it was Tannenbaum who informed DiCrescenzo of the existence of a guarantee but DiCrescenzo was unable or unwilling to specify the date on which this communication occurred. Respondent Tanwin also seeks to establish the existence of a guarantee through Petitioner's Exhibit numbered 5 which is a document signed by less than the majority of unit owners even including Tannenbaum and his son, and signed on an unknown date during 1984. The document provides: The undersigned Unit Owners at the Vista Del Lago Condominium do not wish to give up the benefits of the developer's continuing guarantee which has been in effect since the inception of the condominium and agreed to by a majority of unit owners and whereby the developer has continuously guaranteed a maintenance level of no more than $109.00 per month per unit, until control of the condominium affairs is turned over to the unit owners in accordance with Florida's Condominium law. According to Respondent Tanwin, Petitioner's Exhibit numbered 5 constitutes a memorandum signed by unit owners evidencing their belief that a continuous guarantee of the developer has been in effect. First, however, this document was never admitted into evidence for that purpose; rather the document was admitted only to establish the fact that a unit owner had signed the document. Second, this document, unlike the purchase agreements or other condominium documents is ambiguous and is not probative of the existence of a guarantee. Instead, the evidence is overwhelming that the document was prepared by the developer in the course of this litigation for use in this litigation. Moreover, unit owner testimony is clear regarding what Mr. and Mrs. Tannenbaum disclosed to unit owners as the purpose for the document when soliciting their signatures, to- wit: that the document was a petition evidencing the unit owners' desire that their monthly maintenance payments not be increased and that prior confusion as to whether reserves had been waived needed resolution. Respondent Tanwin did pay assessments on some developer-owned units during the period December, 1980 through December, 1983, a fact which is inconsistent with its position that a guarantee existed. Noteworthy is the statement by Ronald DiCrescenzo, the C.P.A. for Tanwin, in his August 16, 1983, letter to Herbert Tannenbaum wherein it is stated: "It is my understanding that you are doing the following: . . .[Playing maintenance assessments on units completed but not sold." It is inconceivable that a developer during a "guarantee period" would pay assessments on some developer units as the purpose of the statutory guarantee is to exempt the developer from such assessments. The assessments for common expenses of unit owners other than the developer have increased during the purported guarantee period. At least some, if not all, unit owners paid monthly assessments of $128 - $130 for at least half of 1984. This fact is probative of the issue of whether a guarantee existed because unit owner assessments must remain constant during a guarantee period. At the Spring 1984 meeting chaired by Mr. Tannenbaum a vote was taken for the first time as to whether reserves should be waived. Although only 21 owners were present in person or by proxy; the vote was tabulated as 12 in favor and 12 opposed. Mr. Tannenbaum, therefore, announced an increase in monthly maintenance payments to fund reserves. Thereafter owners began paying an increased assessment. The fact that the developer-controlled Association collected increased assessments from unit owners during 1984, and had up to the time of the final hearing in this cause made no effort to redistribute those funds suggests that the developer-controlled Association and the developer considered themselves to be under no obligation to keep maintenance assessments at a constant level. There was no guarantee of assessments for common expenses by Tanwin from December, 1980, through at least December, 1983. Since there was no guarantee during the time period in question, Respondent Tanwin is liable to the Respondent Association for the amount of monthly assessments for common expenses on all developer-owned units for which monthly assessments have not been paid. In conjunction with the determination that Tanwin owes money to the Association (and not vice versa), Respondent Tanwin attempted to obtain an offset by claiming the benefit of a management contract between either Tannenbaum or Tanwin and the Association. No such management contract exists, either written or oral. Although a management contract is mentioned in one of the condominium documents there is no indication that one ever came into being, and no written contract was even offered in evidence. Likewise, no evidence was offered to show the terms of any oral contract; rather, Tannenbaum admitted that he may never have told any of the unit owners that there was a management contract. Tannenbaum's testimony is consistent with the fact that no budget or financial statement reflects any expense to the Association for a management contract with anyone. Likewise, the "budget" contained within Condo II's documents recorded on March 11, 1982, specifically states that any management fee expense was not applicable. Lastly, Tannenbaum's testimony regarding the existence of a management contract is contrary to the statement signed by him on February 10, 1981, which specifically advised Petitioner that the Association did not employ professional management. To the extent that Respondent Tanwin attempted to establish some quantum meruit basis for its claim of an offset, it is specifically found that no basis for any payment has been proven for the following reasons: Tannenbaum had no prior experience in managing a condominium, which is buttressed by the number of violations of the condominium laws determined herein; Tannenbaum does not know what condominium managers earn; no delineation was made as to specific duties performed by Tannenbaum on behalf of the Association as opposed to those duties performed by Tannenbaum on behalf of Respondent Tanwin; since there was no testimony as to duties performed for the Association, there was necessarily no testimony as to what duties were performed on behalf of the Association in Tannenbaum's capacity as President of the Association and member of the Association's Board of Directors as opposed to duties allegedly performed as a "manager." Tannenbaum's testimony as to the value of his "services" ranged from $10,000 to $15,000 a year to a lump sum of $60,000; it is interesting to note that the value of his services alone some years exceeded the Association's annual budget. Respondent Tanwin has failed to prove entitlement to an offset amount, either pursuant to contract or based upon quantum meruit. The financial statements of the Association--including balance sheets, statements of position, and statements of receipts and expenditures--for 1980-81 and for 1982 reveal consolidation of the records for Condo I and Condo II in these statements. Additionally, DiCrescenzo admitted that separate accounting records were not maintained for each condominium and Herbert Tannenbaum also admitted to maintaining consolidated records. Accordingly, the developer- controlled Association failed to maintain separate accounting records for each condominium it manages. The By-Laws of the Association provide: SECTION. 7. Annual Audit. An audit of the accounts of the Corporation shall be made annually by a Certified Public Accountant - and a copy of the Report shall be furnished to each member not later than April 1st of the year following the year in which the Report was made. The financial statement for 1981 bears the completion date of February 9, 1983. The 1982 financial statement contains a completion date of March 1, 1983. Both the 1981 and the 1982 statements were delivered to the unit owners in March or April, 1983. Accordingly, Respondents failed to provide the 1981 financial report of actual receipts and expenditures in compliance with the Association's By-Laws. As set forth hereinabove, statutory reserves were not waived during the period of December, 1980 through December, 1983. Being a common expense, reserves must be fully funded unless waived annually. In the instant case, Respondents, rather than arguing that reserves had in fact been fully funded, sought to prove that reserves had been waived during the years in question. The fact that reserves were not fully funded is established by reviewing the financial statements. In accordance with the start-up budgets, reserves were initially established at the level of $15.00 per unit per month. Therefore, during 1981, for Condo I containing sixteen units, the Association's reserve account should contain 16 multiplied by $15.00 per month multiplied by 12 months, or $2,880. Since the Declaration of Condominium for Condo II was not recorded until March 11, 1982, assessments for common expenses including allocations to reserves, were not collected from Condo II during 1981. Therefore, the balance in the reserve account as reflected in the balance sheet for the year 1981 should be no less than $2,880. The actual balance reflected in this account is $2,445. Both Tannenbaum and DiCrescenzo testified that most of the balance in that account was composed of purchaser contributions from the closing of each condominium unit "equivalent to 2 months maintenance to be placed in a special reserve fund" as called for in the purchase contracts. Tannenbaum further admitted that instead of collecting $15.00 per month per unit for reserves, the money that would have gone into the reserve account was used "to run the condominium." Similarly, for the year ending 1982, the balance in the reserve account also reflects that reserves were not being funded. First, the amount of reserves which should have been set aside in 1981 of $2,880 is added to the total amount of reserves which should have been collected for 1982 for Condo I ($2880), giving a total figure of $5,760. To this figure should be added the reserves which should have been collected from units in Condo II during 1982. This figure is derived by multiplying the total number of units in Condo II, 18 units, by $15.00 per unit multiplied by 8 months (since Condo II was recorded in March of 1982) to yield a figure for Condo II of $2,160. Adding total reserve assessments for Condo I and II, $2,160 plus $5,760 equals $7,920 the correct reserve balance at the close of 1982. The actual balance for the period ended December 31, 1982, is reflected to be $4,138. Similarly, the amount of reserves required for Condos I and II as of December 31, 1983, can be calculated using the same formula. Although the 1983 financial statement prepared in 1984 reflects the existence of a funded reserve account, both DiCrescenzo and Tannenbaum admitted there was no separate reserves account set up during the time period involved herein. Statutory reserves were not waived and were not fully funded for the period of December, 1980 through December, 1983. All parties hereto presented much evidence, unsupported by the books and records of the corporations, for the determination herein of the amounts of money owed by Respondent Tanwin to the Association to bring current the total amount which Tanwin should have been paying to the Association from the inception of each condominium for monthly maintenance on condominium units not yet sold by the developer, together with the amount owed by Tanwin to the Association so that a separate reserve account can be established and fully funded for all years in which the majority of unit owners including the developer have not waived reserves. No findings of fact determining the exact amount Tanwin owes to the Association will be made for several reasons: first, the determination of that amount requires an accounting between the two Respondents herein which is a matter that can only be litigated, if litigation is necessary, in the circuit courts of this state; second, the determination of the amount due between the private parties hereto is not necessary for the determination by Petitioner of the statutory violations charged in the Amended Notice to Show Cause; and third, where books and records exist; one witness on each side testifying as to conclusions reached from review of those records, even though the witnesses be expert, does not present either the quantity or the quality of evidence necessary to trace the income and outgo of specific moneys through different corporate accounts over a period of time, especially where each expert opinion is based upon questionable assumptions. It is, however, clear from the record in this cause that Respondent Tanwin owes money to the Respondent Association and further owes to the Respondent Association an accounting of all moneys on a specific item by item basis.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is, therefore, RECOMMENDED that a Final Order be entered: Finding Respondent Tanwin Corporation guilty of the allegations contained in Counts 1-7 of the Amended Notice to Show Cause; Dismissing with prejudice Count 8 of the Amended Notice to Show Cause; Assessing against Respondent Tanwin Corporation a civil penalty in the amount of $17,000 to be paid by certified check made payable to the Division of Florida Land Sales, Condominiums and Mobile Homes within 45 days from entry of the Final Order herein; Ordering Respondents to forthwith comply with all provisions of the Condominium Act and the rules promulgated thereunder; And requiring Tanwin Corporation to provide and pay for an accounting by an independent certified public accountant of all funds owed by the developer as its share of common expenses on unsold units and the amount for which Tanwin is liable in order that the reserve account be fully funded, with a copy of that accounting to be filed with Petitioner within 90 days of the date of the Final Order. DONE and RECOMMENDED this 9th day of August, 1985, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of August, 1985. COPIES FURNISHED: Karl M. Scheuerman, Esquire Thomas A. Bell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 Joseph S. Paglino, Esquire 88 Northeast 79th Street Miami, Florida 33138 E. James Kearney, Director Department of Business Regulation Division of Florida Land Sales Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, Florida 32301 Richard B. Burroughs, Jr., Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL CONSENT ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES DEPARTMENT OF BUSINESS REGULATION, DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES, Petitioner, CASE NO. 84-0437 DOCKET NO. 84001MVC TANWIN CORPORATION and VISTA DEL LAGO CONDOMINIUM ASSOCIATION, INC. Respondents. / FINAL CONSENT ORDER The Division of Florida Land Sales, Condominiums and Mobile Homes, (hereinafter the Division), Vista Del Lago Condominium Inc., (hereinafter the Association), and Tanwin Corporation, (hereinafter Tanwin), hereby stipulate and agree to the terms and issuance of this Final Consent Order as follows: WHEREAS, the Division issued a Notice to Show Cause directed to Respondents and, WHEREAS, after issuance of the Recommended Order in this cause, the parties amicably conferred for the purpose of achieving a settlement of the case, and WHEREAS, Tanwin is desirous of resolving the matters alleged in the Notice to Show Cause without engaging in further administrative proceedings or judicial review thereof, NOW, THEREFORE, it is stipulated and agreed as follows:
