The Issue The issue for determination in this consolidated bid protest proceeding is whether the Florida Housing Finance Corporation’s (“FHFC”) intended award of tax credits for the preservation of existing affordable housing developments was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact FHFC and Affordable Housing Tax Credits FHFC is a public corporation that finances affordable housing in Florida by allocating and distributing low income housing tax credits. See § 420.504(1), Fla. Stat. (providing that FHFC is “an entrepreneurial public corporation organized to provide and promote the public welfare by administering the governmental function of financing or refinancing housing and related facilities in this state.”); § 420.5099(2), Fla. Stat. (providing that “[t]he corporation shall adopt allocation procedures that will ensure the maximum use of available tax credits in order to encourage development of low-income housing in the state, taking into consideration the timeliness of the application, the location of the proposed housing project, the relative need in the area for low-income housing and the availability of such housing, the economic feasibility of the project, and the ability of the applicant to proceed to completion of the project in the calendar year for which the credit is sought.”). The tax credits allocated by FHFC encourage investment in affordable housing and are awarded through competitive solicitations to developers of qualifying rental housing. Tax credits are not tax deductions. For example, a $1,000 deduction in a 15-percent tax bracket reduces taxable income by $1,000 and reduces tax liability by $150. In contrast, a $1,000 tax credit reduces tax liability by $1,000. Not surprisingly, the demand for tax credits provided by the federal government exceeds the supply. A successful applicant/developer normally sells the tax credits in order to raise capital for a housing development. That results in the developer being less reliant on debt financing. In exchange for the tax credits, a successful applicant/developer must offer affordable rents and covenant to keep those rents at affordable levels for 30 to 50 years. The Selection Process FHFC awards tax credits through competitive solicitations, and that process is commenced by the issuance of a Request for Applications (“RFA”). Florida Administrative Code Rule 67-60.009(2) provides that unsuccessful applicants for tax credits “may only protest the results of the competitive solicitation process pursuant to the procedures set forth in Section 120.57(3), F.S., and Chapter 28-110, F.A.C.” For purposes of section 120.57(3), an RFA is equivalent to a “request for proposal.” See Fla. Admin. Code R. 67.60.009(4), F.A.C. FHFC issued RFA 2015-111 on October 23, 2015, and responses from applicants were due on December 4, 2015. Through RFA 2015-111, FHFC seeks to award up to $5,901,631 of tax credits to qualified applicants that commit to preserve existing affordable multifamily housing developments for the demographic categories of “Families,” “the Elderly,” and “Persons with a Disability.” FHFC only considered an application eligible for funding from RFA 2015-111, if that particular application complied with certain content requirements. FHFC ranked all eligible applications pursuant to an “Application Sorting Order” set forth in RFA 2015-111. The first consideration was the applicants’ scores. Each application could potentially receive up to 23 points based on the developer’s experience and the proximity to services needed by the development’s tenants. Applicants demonstrating that their developments received funding from a U.S. Department of Agriculture (“USDA”) Rural Development program known as RD 515 were entitled to a 3.0 point proximity score “boost.” That proximity score boost was important because RFA 2015-111 characterized counties as small, medium, or large. Applications associated with small counties had to achieve at least four proximity points to be considered eligible for funding. Applications associated with medium-sized counties and those associated with large counties had to achieve at least seven and 10.25 proximity points respectively in order to be considered eligible for funding. Because it is very common for several tax credit applicants in a particular RFA to receive identical scores, FHFC incorporated a series of “tie-breakers” into RFA 2015-111. The tie-breakers for RFA 2015-111, in order of applicability, were: First, by Age of Development, with developments built in 1985 or earlier receiving a preference over relatively newer developments. Second, if necessary, by a Rental Assistance (“RA”) preference. Applicants were to be assigned an RA level based on the percentage of units receiving rental assistance through either a U.S. Department of Housing and Urban Development (“HUD”) or USDA Rural Development program. Applicants with an RA level of 1, 2, or 3 (meaning at least 75 percent of the units received rental assistance) were to receive a preference. Third, by a Concrete Construction Funding Preference, with developments incorporating certain specified concrete or masonry structural elements receiving the preference. Fourth, by a Per Unit Construction Funding Preference, with applicants proposing at least $32,500 in Actual Construction Costs per unit receiving the preference. Fifth, by a Leveraging Classification favoring applicants requiring a lower amount in housing credits per unit than other applicants. Generally, the least expensive 80 percent of eligible applicants were to receive a preference over the most expensive 20 percent. Sixth, by an Applicant’s specific RA level, with Level 1 applicants receiving the most preference and Level 6 the least. Seventh, by a Florida Job Creation Preference, which estimated the number of jobs created per $1 million of housing credit equity investment the developments were to receive based on formulas contained in the RFA. Applicants achieving a Job Creation score of at least 4.0 were to receive the preference. Eighth, by lottery number, with the lowest (smallest) lottery number receiving the preference. Rental assistance from the USDA or HUD is provided to existing developments in order to make up for shortfalls in monthly rent paid by tenants. For example, if an apartment’s base rent is $500 per month and the tenant’s income limits him or her to paying only $250 towards rent, then the USDA or HUD rental assistance pays the other $250 so that the total rent received by the development is $500. As evident from the tie-breakers incorporated into RFA 2015-111, the amount of rental assistance, or “RA Level,” played a prominent role in distinguishing between RFA 2015-111 applicants having identical scores. RFA 2015-111 required that applicants demonstrate RA Levels by providing a letter containing the following information: (a) the development’s name; (b) the development’s address; (c) the year the development was built; (d) the total number of units that currently receive PBRA and/or ACC;/3 (e) the total number of units that would receive PBRA and/or ACC if the proposed development were to be funded; (f) all HUD or RD financing program(s) originally and/or currently associated with the existing development; and (g) confirmation that the development had not received financing from HUD or RD after 1995 when the rehabilitation was at least $10,000 per unit in any year. In order to determine an applicant’s RA Level Classification, RFA 2015-111 further stated that Part of the criteria for a proposed Development that qualifies as a Limited Development Area (LDA) Development to be eligible for funding is based on meeting a minimum RA Level, as outlined in Section Four A.7.c of the RFA. The total number of units that will receive rental assistance (i.e., PBRA and/or ACC), as stated in the Development Category qualification letter provided as Attachment 7, will be considered to be the proposed Development’s RA units and will be the basis of the Applicant’s RA Level Classification. The Corporation will divide the RA units by the total units stated by the Applicant at question 5.e. of Exhibit A, resulting in a Percentage of Total Units that are RA units. Using the Rental Assistance Level Classification Chart below, the Corporation will determine the RA Level associated with both the Percentage of Total Units and the RA units. The best rating of these two (2) levels will be assigned as the Application’s RA Level Classification. RFA 2015-111 then outlined a Rental Assistance Level Classification Chart to delineate between the RA Levels. That chart described six possible RA Levels, with one being developments that have the most units receiving rental assistance and six pertaining to developments with the fewest units receiving rental assistance. A development with at least 100 rental assistance units and greater than 50 percent of the total units receiving rental assistance was to receive an RA Level of 1. FHFC also utilized a “Funding Test” to assist in the selection of applications for funding. The Funding Test required that the amount of unawarded housing credits be enough to satisfy any remaining applicant’s funding request. In other words, FHFC prohibited partial funding. In addition, RFA 2015-111 applied a “County Award Tally” designed to prevent a disproportionate concentration of funded developments in any one county. As a result, all other applicants from other counties had to receive an award before a second application from a particular county could be funded. After ranking of the eligible applicants, RFA 2015-111 set forth an order of funding selection based on county size, demographic category, and the receipt of RD 515 financing. The Order was: One RD 515 Development (in any demographic category) in a medium or small county; One Non-RD 515 Development in the Family Demographic Category (in any size county); The highest ranked Non-RD 515 application or applications with the demographic of Elderly or Persons with a Disability; and If funding remains after all eligible Non- RD 515 applicants are funded, then the highest ranked RD 515 applicant in the Elderly demographic (or, if none, then the highest ranked RD 515 applicant in the Family demographic). Draft versions of every RFA are posted on-line in order for stakeholders to provide FHFC with their comments. In addition, every RFA goes through at least one workshop prior to being finalized. FHFC often makes changes to RFAs based on stakeholder comments. No challenge was filed to the terms, conditions, or requirements of RFA 2015-111. A review committee consisting of FHFC staff members reviewed and scored all 24 applications associated with RFA 2015-111. During this process, FHFC staff determined that none of the RD-515 applicants satisfied all of the threshold eligibility requirements. On June 24, 2016, FHFC’s Board of Directors announced its intention to award funding to five applicants, subject to those applicants successfully completing the credit underwriting process. Pineda Village in Brevard County was the only successful applicant in the Non-RD 515 Family Demographic. The four remaining successful applicants were in the Non-RD 515 Elderly or Persons with Disability Demographic: Three Round Tower in Miami-Dade County; Cathedral Towers in Duval County; Isles of Pahokee in Palm Beach County; and Lummus Park in Miami- Dade County. The randomly-assigned lottery number tie-breaker played a role for the successful Non-RD 515 applicants with Three Round Tower having lottery number one, Cathedral Towers having lottery number nine, and Isles of Pahokee having lottery number 18. While Lummus Park had a lottery number of 12, the County Award Tally prevented it from being selected earlier because Three Round Tower had already been selected for funding in Miami-Dade County. However, after the first four applicants were funded, only $526,880 of credits remained, and Lummus Park was the only eligible applicant with a request small enough to be fully funded. All Petitioners timely filed Notices of Protest and petitions for administrative proceedings. The Challenge by Woodcliff, Colonial, and St. Johns Woodcliff is seeking an award of tax credits in order to acquire and preserve a 34-unit development for elderly residents in Lake County.4/ Colonial is seeking an award of tax credits in order to acquire and preserve a 30-unit development for low-income families in Lake County.5/ St. Johns is seeking an award of tax credits to acquire and preserve a 48-unit development for elderly residents in Putnam County.6/ FHFC deemed Woodcliff, Colonial and St. Johns to be ineligible because of a failure to demonstrate the existence or availability of a particular source of financing relied upon in their applications. Specifically, FHFC determined that the availability of USDA RD 515 financial assistance was not properly documented. For applicants claiming the existence of RD 515 financing, RFA 2015-111 stated: If the proposed Development will be assisted with funding under the United States Department of Agriculture RD 515 Program and/or RD 538 Program, the following information must be provided: Indicate the applicable RD Program(s) at question 11.b.(2) of Exhibit A. For a proposed Development that is assisted with funding from RD 515 and to qualify for the RD 515 Proximity Point Boost (outlined in Section Four A.6.b.(1)(b) of the RFA), the Applicant must: Include the funding amount at the USDA RD Financing line item on the Development Funding Pro Forma (Construction/Rehab Analysis and/or Permanent Analysis); and Provide a letter from RD, dated within six (6) months of the Application Deadline, as Attachment 17 to Exhibit A, which includes the following information for the proposed Preservation Development: Name of existing development; Name of proposed Development; Current RD 515 Loan balance; Acknowledgment that the property is applying for Housing Credits; and Acknowledgment that the property will remain in the USDA RD 515 loan portfolio. (emphasis added). FHFC was counting on the letter mentioned directly above to function as proof that: (a) there was RD 515 financing in place when the letter was issued; and that (b) the RD 515 financing would still be in place as of the application deadline for RFA 2015-111. FHFC deemed Woodcliff, Colonial and St. Johns ineligible because their RD letters were not dated within six months of the December 4, 2015, deadline for RFA 2015-111 applications. The Woodcliff letter was dated May 15, 2015, the Colonial letter was dated May 15, 2015, and the St. Johns letter was dated May 5, 2015. FHCA had previously issued RFA 2015-104, which also proposed to award Housing Credit Financing for the Preservation of Existing Affordable Multifamily Housing Developments. The deadline for RFA 2015-104 was June 23, 2015, and Woodcliff, Colonial, and St. Johns applied using the same USDA letter that they used in their RFA 2015-111 applications. Woodcliff, Colonial, and St. Johns argued during the final hearing that FHFC should have accepted their letters because: (a) they gained no competitive advantage by using letters that were more than six months old; (b) waiving the six- month “shelf life” requirement would enable FHFC to satisfy one of its stated goals for RFA 2015-111, i.e., funding of an RD 515 development; and (c) other forms of financing (such as equity investment) have no “freshness” or “shelf life” requirement. However, it is undisputed that no party (including Woodcliff, Colonial, and St. Johns) challenged any of the terms, conditions, or requirements of RFA 2015-111. In addition, Kenneth Reecy (FHFC’s Director of Multifamily Programs) testified that there must be a point at which FHFC must ensure the viability of the information submitted by applicants. If the information is “too old,” then it may no longer be relevant to the current application process. Under the circumstances, it was not unreasonable for FHFC to utilize a six-month shelf life for USDA letters.7/ Furthermore, Mr. Reecy testified that excusing Woodcliff, Colonial, and St. Johns’ noncompliance could lead to FHFC excusing all deviations from all other date requirements in future RFAs. In other words, applicants could essentially rewrite those portions of the RFA, and that would be an unreasonable result. Excusing the noncompliance of Woodcliff, Colonial, and St. Johns could lead to a “slippery slope” in which any shelf- life requirement has no meaning. The letters utilized by Woodcliff, Colonial, and St. Johns were slightly more than six months old. But, exactly when would a letter become too old to satisfy the “shelf life” requirement? If three weeks can be excused today, will four weeks be excused next year? St. Elizabeth’s and Marian Towers’ Challenge St. Elizabeth is seeking low-income housing tax credit financing in order to acquire and preserve a 151-unit development for elderly residents in Broward County, Florida. Marian Towers is an applicant for RFA 2015-111 funding seeking low-income housing tax credits to acquire and preserve a 220-unit development for elderly residents in Miami-Dade County, Florida. The same developer is associated with the St. Elizabeth and Marian Towers projects. In its scoring and ranking process, FHFC assigned St. Elizabeth an RA Level of two. RFA 2015-111 requires that Applicants demonstrate RA Levels by providing a letter from HUD or the USDA with specific information. That information is then used to establish an RA Level for the proposed development. As noted above, the RFA requires the letter to contain several pieces of information, including: (a) the total number of units that currently receive PBRA and/or ACC; and (b) the total number of units that will receive PBRA and/or ACC if the proposed development is funded. RFA 2015-111 provided that a development with at least 100 rental units would receive an RA Level of one. St. Elizabeth included with its application a letter from HUD’s Miami field office stating in pertinent part that: Total number of units that currently receive PBRA and/or ACC: 99 units. Total number of units that will receive PBRA and/or ACC if the proposed Development is funded: 100 units*. The asterisk in the preceding paragraph directed readers of St. Elizabeth’s HUD letter to a paragraph stating that: HUD is currently processing a request from the owner to increase the number of units subsidized under a HAP Contract to 100 by transferring budget authority for the one additional unit from another Catholic Housing Services Section 8 project under Section 8(bb) in accordance with Notice H-2015-03. Because of the foregoing statement from HUD, FHFC concluded that St. Elizabeth did not have 100 units receiving rental assistance as of the application deadline. Accordingly, FHFC used 99 units as the total number of units that would receive rental assistance when calculating St. Elizabeth’s RA Level, and that led to FHFC assigning an RA Level of two to St. Elizabeth’s application.8/ If St. Elizabeth had been deemed eligible and if FHFC had used 100 units as the total number of units that would receive rental assistance, then St. Elizabeth would have received an RA Level of one. Given the application sorting order and the selection process outlined in RFA 2015-111, St. Elizabeth (with a lottery number of six) would have been recommended for funding by FHFC, and that outcome would have resulted in Intervenors Isles of Pahokee and Lummus Park losing their funding. St. Elizabeth asserted during the final hearing that the 100th unit had obtained rental assistance financing since the application deadline on December 4, 2015. However, FHFC could only review, score, and calculate St. Elizabeth’s RA Level based on the information available as of the application deadline. While St. Elizabeth argues that the asterisk paragraph sets forth a “condition,” Kenneth Reecy (FHFC’s Director of Multifamily Housing) agreed during the final hearing that the asterisk paragraph was more akin to information that was not explicitly required by RFA 2015-111. FHFC did not use that additional information to declare St. Elizabeth’s application ineligible for funding. Despite being assigned an RA Level of two, St. Elizabeth’s application still could have been selected for funding because RFA 2015-111 merely established RA Level as a basis for breaking ties among competing applications. However, too many applicants for RFA 2015-111 had identical scores, and RFA 2015-111’s use of RA Level as a tiebreaker forced St. Elizabeth’s application out of the running. Under the circumstances, FHFC’s treatment of St. Elizabeth’s application was not clearly erroneous, contrary to competition, arbitrary, or capricious. As noted above, tie- breakers are very important, because there is often very little to distinguish one application for tax credits from another. Given that there was a degree of uncertainty about whether St. Elizabeth’s would have 100 qualifying units, FHFC acted reasonably by assigning St. Elizabeth’s application an RA Level of two for this tie-breaker rather than an RA Level of one. St. Elizabeth and Marian Towers argue that other applications contained language that indicated a degree of uncertainty. Nevertheless, those other applications received an RA Level of one. For example, FHFC assigned an RA Level of one to Three Round and Haley Sofge even though their HUD letters stated that both developments would be “subject to a Subsidy Layering Review to be conducted by HUD.” Marian Towers argued that if FHFC does not accept HUD or RD letters containing conditional language about the number of units that will be subsidized, then FHFC should have assigned an RA Level of six to Three Round and Haley Sofge. If Three Round and Haley Sofge had been assigned an RA Level of six, then Marian Towers (with a lottery number of five) would have been recommended for funding. St. Elizabeth and Marian Towers cited another instance in which an application received an RA Level of one, even though its application contained a letter from the RD program stating that “USDA Rural Development will consent to the transfer if all regulatory requirements are met.” (emphasis added). However, St. Elizabeth and Marian Towers failed to demonstrate that the language cited above applied only to those particular applications rather than to all applications for tax credits. For example, if all applications are subject to a subsidy layering review and compliance with all regulatory requirements, then inclusion of such language in a HUD letter (in and of itself) should not prevent an applicant from being assigned an RA Level of one. St. Elizabeth and Marian Towers also cited a HUD Letter used in another recent RFA by an applicant that received an RA Level of one. The HUD letter in question contained an asterisk followed by the following statement: “It is HUD’s understanding that two separate applications are being submitted – one for each tower comprising St. Andrew Towers. If funded, HUD will consider a request from the owner to bifurcate the St. Andrew Towers HAP contract in order to facilitate the separate financing of each tower.” However, St. Elizabeth and Marian Towers failed to demonstrate why the language quoted directly above should have resulted in the applicant in question being awarded an RA Level less than one. There is no indication that the total number of units receiving rental assistance would change.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order awarding funding to Three Round Tower A, LLC; Cathedral Towers, Ltd; Isles of Pahokee Phase II, LLC; SP Manor, LLC; and Pineda Village. DONE AND ENTERED this 18th day of October, 2016, in Tallahassee, Leon County, Florida. S G.W. CHISENHALL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of October, 2016.
Findings Of Fact On October 14, 1985, Petitioner, Nicholas Cozzo, entered into a Stock Purchase Agreement for the sale of sixty (60) shares of the issued and outstanding capital stock of C & S Deli Sandwich and Fish, Inc., a Florida corporation, (the Company) to Robert A. Krueger and Joe Ellen Krueger (collectively, the Kruegers). As a result of the sale, Petitioner retained ownership of no further stock of the Company. (Exhibit A) On October 14, 1985, the Kruegers executed two (2) promissory notes in the amounts of $53,000.00 and $5,000.00, respectively, to Petitioner and a Security Agreement securing payment of the notes. (Composite Exhibit B and Exhibit C) On October 14, 1985, Petitioner tendered his resignation as Director, President and Treasurer of the Company. (Exhibit D) Petitioner's security interest to the furniture, furnishings, fixtures, equipment and inventory of the Company (the "collateral") was duly perfected by the filing of a Uniform Commercial Code Financing Statement with the Uniform Commercial Code Bureau, Florida Department of State, on October 21, 1985. (Exhibit E) A Uniform Commercial Code Financing Statement was recorded by the Petitioner in the Public Records of Pasco County, State of Florida, on October 15, 1985, in Official Records Book 1451, page 0493. (Exhibit F) In early 1987, the Kruegers defaulted under the terms of the promissory notes. Prior to April 24, 1987, Petitioner repossessed the furniture, furnishings, fixtures, equipment and inventory of the Company. No consideration was paid by Petitioner to the Company or the Kruegers upon his repossession of the foregoing described collateral. At no time did ownership of any of the capital stock of the Company revert back to Petitioner. On May 5, 1987, Petitioner by private sale disposed of the collateral to Vincent Lopez and Glen Delavega. (Exhibits G, H, and I) No surplus funds resulted from the sale of the repossessed collateral by Petitioner to Vincent Lopez and Glen Delavega. At no time material hereto did the Florida Department of Revenue issue a tax warrant against the Company respecting any unpaid sales tax. On or about May 6, 1987, Petitioner paid under protest to the Respondent Department of Revenue the delinquent unpaid sales tax of the Company in the amount of $1392.53. The Department is still attempting to verify that amount at this date. The Petitioner maintains he paid the amount in order for the Department to issue a sales tax certificate and number to Vincent Lopez and Glen Delavega. The Department maintains its procedure at the time was to issue a sales tax number to the new owners and then proceed against them under Section 212.10, Florida Statutes. It is the position of the Respondent that the Petitioner's repossession of the collateral constituted a sale within the purview of Section 212.10(1), Florida Statutes (1985), and Rule 12A-1.055, Florida Administrative Code, which places tax liability on the successor of a business whose previous owner has not satisfied outstanding sales tax obligations. Respondent further notes that the case Petitioner relies on, General Motors Acceptance Corporation v. Tom Norton Motor Corp., 366 So.2d 131 (Fla. 4th DCA 1979) was issued on January 10, 1979, while Section 679.105(5), Florida Statutes, which upholds tax laws when in conflict with security agreements, took effect January 1, 1980. Petitioner on the other hand claims that a lawful repossession of collateral under Florida's Uniform Commercial Code, Section 679.504, Florida Statutes (1985), does not constitute a "sale" of a business making him liable for the Company's unpaid sales tax. Petitioner continues to rely on GMAC, supra, and notes that it was cited by American Bank v. Con's Cycle Center, 466 So.2d 255 (Fla. 5th DCA 1985). A refund application was submitted by Petitioner to the Department of Revenue on June 10, 1987. This application was denied by the Department of Revenue by letter dated January 28, 1988. (Exhibit J)
The Issue Whether Respondents discriminated against Petitioner on the basis of sex when Respondents denied Petitioner's application to rent an apartment.
Findings Of Fact Mizner Park, located in Boca Raton, Florida, is a mixed use complex, consisting of apartments, retail stores, and offices. The apartment complex is owned and managed by Crocker Downtown Development Associates. Ms. Terrill Jaroszewicz (Jaroszewicz) is the property manager for Mizner Park. Ms. Mary Sims, who reports to Jaroszewicz, is in charge of the residential apartments in the complex. At the time in question, Ms. Jan Pratt (Pratt) was a leasing consultant for the apartments. Pratt's duties included taking applications from prospective tenants, processing the applications, and gathering the necessary information needed to make a decision on whether to approve the application. When Pratt had completed processing the application, she would take the application package to Sims, who would review the package and make a decision on whether to approve the application. Respondents, collectively referred to as Mizner, required that prospective tenants fill out an application form, agree to have a credit check performed, provide sufficient information to verify their current income, agree to a check of the tenants' residency history for the past two years, pay a $50, nonrefundable fee for processing the credit check, and provide a security deposit. Mizner wanted to rent its apartments to tenants who had a good credit history, had a monthly annual income of at least three times the amount of the lease amount, and had a good history as a tenant. On June 15, 1994, Petitioner, Sanford J. Gubernik (Gubernik), who is a male, met with Pratt and filled out an application to lease an apartment at Mizner Park. Gubernik had omitted his social security number when he completed the application. Pratt advised him that it would be necessary to have his social security number in order to do the credit check. Gubernik was reluctant to give Pratt his social security number and to have a credit check done. He gave Pratt a check for $50 for the credit check and a check for $885 as a security deposit. Gubernik is an independent contractor who works for a number of sunglass and eyewear companies. His annual income varies each year. When he filled out the application, Pratt asked Gubernik to provide her copies of his income tax returns for the last two years so that she could verify his income for the last two years. Pratt had a credit check run on Gubernik. Mizner's computers were down on the day that the credit check was performed so the company performing the credit check mailed her a copy of the credit report rather than having her receive the report via the computer, which was the normal method that Pratt received credit reports on prospective tenants. Gubernik had two federal income tax liens, which showed up on his credit report. One lien was dated October, 1993 in the amount of $10,058, and the other lien was dated February, 1991 for $36,829. Pratt advised Sims of the tax liens. Sims told Pratt that she should contact Gubernik and advise him that his credit was a problem. She further advised Pratt that if the credit report was correct and that Gubernik had not satisfied the liens or was not in good standing with the Internal Revenue Service that his application would be denied. Gubernik had traveled to New Orleans to visit clients. While there he received a message on his cellular telephone that Pratt needed to talk to him. He called Pratt and she advised him that there was a problem with his credit report and he should call the credit reporting company and get a copy of the report. Gubernik advised Pratt that the problem was two tax liens. Pratt advised him that they would hold the apartment but that he needed to come in and get the issue of the tax liens resolved by showing that he was trying to pay off the liens. When Gubernik returned from New Orleans he took copies of his income tax returns to Pratt. She advised him that she needed verification that he was making payments on the liens. Gubernik became very irate and told Pratt that he had never had a problem because of the tax liens and that he had no intention of paying them. Pratt advised Gubernik that his application was denied because of the tax liens. Still upset, Gubernik requested to see the manager. Sims was not in the office on that day so Pratt took the application file to Jaroszewicz and told her that a gentleman wanted to talk to her about the denial of his lease application. Jaroszewicz reviewed the application and immediately saw that the problem was the tax liens that appeared on the credit report. Pratt showed Gubernik to Jaroszewicz' office. Gubernik was visibly upset. Jaroszewicz told him that there was a problem with his credit report and that Mizner could not approve his lease application. Gubernik offered to pay his rent in advance. However, prepayment of rent was against Mizner's policy because of accounting reasons and the possibility of poor payment in the future when the prepayment amount was depleted. Gubernik offered to have his rent deducted from his monthly checks that he received from a sunglass company. Mizner's policy was not to have the rent deducted from the tenant's paycheck because the employee could change employers. Gubernik became more and more upset as the conversation with Jaroszewicz continued. Finally Jaroszewicz told Gubernik that there was no need to discuss the matter any further and showed him to the door. The apartment which Gubernik tried to rent was leased to a male in August, 1994. On June 2, 1994, a female applied to Mizner to rent an apartment. A credit check was done and revealed that the prospective tenant had two tax liens totalling approximately $36,000. The female's application was denied by Mizner because of the tax liens. In 1994, Mizner's first time rentals were divided about equally between single males, single females, and families. Gubernik claims that his application was denied not because he had tax liens but because he was a man. Mizner contends that the only reason that Gubernik's application was denied was because he had two tax liens for over $40,000 which represented meant to Mizner that Gubernik had a bad credit history.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding that Crocker Downtown Development Associates, Terrill Jaroszewicz, and Mizner Associates, Ltd. did not commit a discriminatory housing practice against Sanford J. Gubernik and denying his petition for relief. DONE AND ENTERED this 21st day of January, 1997, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 21st day of January, 1997. COPIES FURNISHED: Sanford J. Gubernik 212 Northwest 4th Avenue Boca Raton, Florida 33432 Patrick M. Muldowney, Esquire Shutts & Bowen 20 North Orange Avenue Orlando, Florida 32801 Sharon Moultry, Clerk Commission on Human Relations 325 John Knox Road, Building F, Suite 240 Tallahassee, Florida 32303-4149 Dana Baird, General Counsel Commission on Human Relations 325 John Knox Road, Building F, Suite 240 Tallahassee, Florida 32303-4149
Findings Of Fact At all times pertinent to the matters in issue here, Bellot Realty operated a real estate sales office in Inverness, Florida. The Department of Transportation was the state agency responsible for the operation of the state's relocation assistance payment program relating to business moves caused by road building operations of the Department or subordinate entities. Frank M. Bellot operated his real estate sales office and mortgage brokerage, under the name Bellot Realty, at property located at 209 W. Main Street in Inverness, Florida since July, 1979. He operated a barber shop in the same place from 1962 to 1979. He moved out in October, 1991 because of road construction and modification activities started by the Department in 1989. The office was located in a strip mall and the other tenants of the mall were moving out all through 1990. Mr. Bellot remained as long as he did because when the Department first indicated it would be working in the area, its representatives stated they would be taking only the back portion of the building. This would have let Mr. Bellot remain. As time went on, however, the Department took the whole building, including his leasehold, which forced him out. He received a compensation award from the Department but nothing from any other entity. Though the instant project is not a Federal Aid Project, the provisions of Section 24.306e, U.S.C. applies. That statute defined average annual net earnings as 1/2 of net earnings before federal, state and local income taxes during the two taxable years immediately prior to displacement. During 1988, Mr. Bellot's staff consisted of himself and between 3 and 5 other agents from whom he earned income just as had been the case for several prior years. In 1988 his Federal Corporate Income Tax return reflected gross income of $120,843.00 and his profit was reflected as $27,377.25. The Schedule C attached to his personal Form 1040 for that year reflected gross sales of $25,078.00 with deductions of $5,250.00 for a net income of $19,828.00. Two of his agents foresaw the downturn in business as a result of the road change and left his employ during 1989. A third got sick and her working ability, with its resultant income, was radically reduced. This agent was his biggest producer. For 1989, Petitioner's tax return reflected the company's gross receipts were down to $50,935.75 and his operating loss was $5,700.03. However, the Schedule C for the 1989 Form 1040 reflected gross revenue of $21,450 with a net profit of $14,503. In 1990, the Schedule C for the Form 1040 reflected gross receipts of $5,565.00 which, after deduction of expenses, resulted in a net profit of $1,665.00 for the year. The corporate return reflects gross receipts of $23,965.96 and a net income figure from operations of $1,282.21. Mr. Bellot contends that neither 1989 or 1990 were typical business years as far as earnings go. Aside from a loss of activity and a general decline in business in Inverness, his parents, who were always in the office due to a terminal illness, caused him lost work time as he was very busy with them. He was also involved in a move and in refurbishing a house. In 1990, Mr. Bellot decided he could no longer stay in his office location due to the fact that the Department decided to take his whole building. Even if the taking had been of only one-half the building, however, it still would have put him out of business because it would have taken his parking area. At that time, the Department was rushing Mr. Bellot to vacate the premises. He was in difficult financial straits, however, and it would not have been possible for him to move but for the Department's compensation payments. As it was, he claims, the compensation was after the fact, and he had to borrow $30,000.00 in his mother's name in order to rehabilitate the building he moved into. Instead of utilizing income figures from years in which business activity was normal, the Department chose to use the income figures from 1989 and 1990, both of which were, he claims, for one reason or another, extraordinary. In doing so, since the income in those years was much lower than normal, the compensation he received was also much lower, he claims, than it should have been. He received $8,725.50. Had the 1988 and 1989 years income been used, the payment would have been $20,000.00, the maximum. He also claims the Department used the incorrect operating expense figures concerning travel expense. The Schedule C reflects a higher deduction for automobile expense for both years, arrived at by the application of a standard mileage expense approved by the Internal Revenue Service. In actuality, the expense was considerably less and, if the real figures had been used, his income would have been increased substantially for both years. Mr. Bellot's appeal was reviewed by Ms. Long, the Department's administrator for relocation assistance who followed the provisions of departmental manual 575-040-003-c which, at paragraph (IV) on page 33 of 35, requires the displacee to furnish proof of income by tax returns or other acceptable evidence. At subparagraph (e) on page 31 of 35 of the manual, the requirement exists for the displaced business to "contribute materially" to the income of the displace person for the "two taxable years prior to the displacement." If those two years are not representative, the Department may approve an alternate two year period if "the proposed construction has already caused an outflow of residents, resulting in a decline of net income. " To grant an alternative period, then, the Department must insure that the loss of income is due to the Department's construction and not to other considerations. Here, the Department's District Administrator took the position it was not it's actions which caused the Petitioner's loss of income. Ms. Long took the same position. The Department's District 5 initially notified the people of Inverness of the proposed project somewhere around 1988. The project was to straighten Main Street out through downtown Inverness for approximately 2 miles. There is no evidence as to when the first affected party moved and Ms. Long does not know whether or not the project had an adverse effect on business in downtown Inverness. Petitioner's evidence does not show that it did.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner's appeal of the Department's decision to refuse to use alternate tax years or actual mileage deduction in its calculation of a relocation assistance payment be denied. RECOMMENDED this 29th day of December, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of December, 1992. APPENDIX TO RECOMMENDED ORDER 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. FOR THE PETITIONER: Accepted. & 3. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and, in part, incorporated herein. Rejected as not proven by competent, non-hearsay, evidence. Accepted. Not proven. Merely a statement of Petitioner's position. Accepted that Petitioner's business income dropped. It cannot be said that the road project's were the primary cause of the decline in Petitioner's business. There is no independent evidence of this. Accepted and incorporated herein. First sentence accepted. Balance not based on independent evidence of record. Not a proper Finding of Fact but a comment on the evidence. First sentence accepted. Second sentence rejected. Accepted and incorporated herein. Not a Finding of Fact but a restatement of and attempted justification of Petitioner's position. Accepted and incorporated herein. Rejected as argument and not Finding of Fact. Not a Finding of Fact but a recapitulation of the evidence. FOR THE RESPONDENT: Accepted. & 3. Accepted. - 6. Accepted and incorporated herein. Accepted and incorporated herein. Accepted. & 10. Accepted. 11. & 12. Accepted. 13. Accepted. COPIES FURNISHED: Charles G. Gardner, Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0458 James R. Clodfelter Acquisitions Consultant Enterprises, Inc. P.O. Box 1199 Deerfield Beach, Florida 33443 Ben G. Watts Secretary Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton Jpp. Williams General Counsel Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0458
The Issue Whether Petitioner Janice Brice was the subject of housing discrimination by Respondent based on Petitioner's race, color, and familial status, in violation of Florida's Fair Housing Act.
Findings Of Fact Petitioner is an African American female and, therefore, belongs to a class of persons subject to protection under Florida's Fair Housing Act, Sections 760.20 through 760.37, Florida Statutes (2006).1/ Petitioner is a dark-skinned African American, which she claims was a second factor underlying the alleged unlawful housing practice by Respondent. Petitioner is a single mother, which she stated in her complaint filed with the Commission, was a third factor that caused her to be discriminated against by Respondent. Respondent Concord Management, Ltd. (Concord), is a management company that operates over 100 apartment complexes around the country. It is the managing agent for Regatta Bay Apartments (Regatta Bay) located in Kissimmee, Florida. Respondent Sharon Harper Ivey is the director of compliance for Concord. She was not hired by Concord until after the events which form the basis of Petitioner's claim of housing discrimination. She communicated with the Commission during its investigation of Petitioner's complaint against Concord and was subsequently listed by the Commission as a Respondent when the case was referred to DOAH. That listing was an error. Petitioner has never claimed that Ms. Ivey had any role in the alleged unlawful housing practice. On August 4, 2005, Petitioner applied for a lease at Regatta Bay. Petitioner filled out some application forms and waited for a response. Concord conducts a financial credit and criminal background check of persons applying to become tenants at Regatta Bay. The credit check is made to determine whether the applicant has good or bad credit history and has the ability to pay the rent. Concord also conducts a separate compliance check to verify that the applicant is a qualifying tenant for purposes of the federal Low Income Housing Tax Credit Program which makes it possible for Concord to rent apartments at below-market rates. The information that Petitioner provided to the staff at Regatta Bay was sent to Concord's offices in Maitland, Florida, for review and handling. The Security Deposit and Surety Bond Concord completed its credit and criminal background check of Petitioner on August 22, 2005. Because Concord determined that Petitioner had poor credit history, based in part on being employed less than a year at her current place of employment, Petitioner was required to have someone co-sign her lease or pay a security deposit and purchase a security (surety) bond. Petitioner paid a security deposit of $873 and purchased a security bond in the amount of $175. Petitioner claims that it was an act of discrimination for Concord to have required both a security deposit and a security bond. The only basis for this claim, however, is Petitioner's interpretation of a form provided to tenants,2/ entitled "Frequently Asked Questions," which explains the security deposit and bond. Petitioner believes that the form explains that only the bond is needed, not a bond and a security deposit. However the form states that the bond "replaces (or supplements) a traditional security deposit." Sharon Ivey, Concord's director of compliance, testified that the requirement for a security deposit and security bond is applied uniformly to all tenants by Concord and produced exhibits showing that tenants at Regatta Bay who were not African Americans were required to pay a security deposit and purchase a security bond if they had poor credit histories. Petitioner produced no evidence to show that African Americans at Regatta Bay, dark-skinned African Americans, or single mothers, are treated differently by Concord with respect to security deposits and bonds. Qualification for Low Income Housing In order for Concord to qualify for the federal tax credits under the federal Low Income Housing Tax Credit Program, all of the tenants of Regatta Bay must have personal incomes that fall below 60 percent of the median annual income for persons living in the Orlando Metropolitan Statistical Area, taking into account the number of persons in the household.3/ Petitioner has two children and, therefore, in order to qualify to rent an apartment at Regatta Bay, she had to have an annual income less than the median annual income for three-person households in the Orlando area. Based on statistics used by the Florida Housing Finance Corporation, Petitioner's income had to be less than $29,760. To verify that Petitioner would qualify for tenancy at Regatta Bay, an employment verification form had to be filled out and submitted by her employer, Quest Diagnostics, Inc. The human resources representative at Quest Diagnostics filled out "Part B" of the employment verification form on August 17, 2005, indicating that Petitioner worked 20 hours per week and made $12 per hour. Jessica Reyes, a rental agent at Regatta, called Petitioner and discussed the fact that the employment verification form indicated she was only a part-time employee. Petitioner informed Ms. Reyes that she had just become a full-time employee. Ms. Reyes requested that Petitioner have the human resources representative at Quest Diagnostics send Regatta Bay another employment verification form and complete "Part A" of the form which asks for the employee's anticipated annual income and year-to-date income. A second employment verification form was sent to Regatta Bay on August 18, 2005, indicating that Petitioner's anticipated annual salary was $25,708.80. The human resources representative did not fill in the space provided for year-to- date income. Ms. Reyes was unable to get the year-to-date earnings information from Quest Diagnostics. Ms. Reyes filled-in the figure $17,144 in the space provided for Petitioner's year-to- date earnings on the employment verification form. In a written statement obtained later from her, Ms. Reyes stated that she thought the absence of this information on the form might cause the form to be "kicked back" by the compliance auditors at Concord. She stated that she calculated the year-to-date earnings of $17,144 from Petitioner's annual income. It appears that Ms. Reyes did not realize that Petitioner had only worked at Quest Diagnostics for five months, and that a year-to-date income of $17,144 would translate to an annual income that was above the limit to qualify for low income housing. Even though only a credit check had been completed on Petitioner, and not a compliance check to verify that she had qualifying income for the federal tax credit program, Petitioner was allowed to sign a lease and move into Unit 101 at Regatta Bay on or about September 20, 2005. On September 15, 2005, Robert Green, a compliance auditor with Concord, reviewed the paperwork he received from Regatta Bay concerning Petitioner, including the employment verification form. He determined that, based on the year-to- date earnings figure, Petitioner's income was too high to qualify for housing at Regatta Bay. In Ms. Reyes' written statement of December 9, 2005, she said she was asked to get pay stubs from Petitioner. Ms. Reyes stated that Petitioner brought in her last pay stub, which included her year-to-date earnings. Ms. Reyes claims to have recalculated Petitioner's year-to-date earnings using her pay stub and, although not $17,144, the recalculated number was still too high. The community director at Regatta Bay, Christine Lombardi, testified that Petitioner came in on September 20 or 21, 2005, and spoke to Ms. Reyes about her income. Ms. Lombardi said she saw Ms. Reyes with pay stubs in her hand and with a calculator tape that Ms. Reyes had used to calculate Petitioner's year-to-date income. Ms. Lombardi testified that she asked Ms. Reyes to make a copy of the pay stubs, but Petitioner would not allow them be copied. Petitioner was unaware that Ms. Reyes had altered the employment verification form to add a year-to-date income figure, but it is undisputed that Petitioner was told that her annual income had been calculated to be a figure over $31,000. Petitioner's pay stub for work through September 3, 2005, shows year-to-date earnings, including overtime, of $12,489.60.4/ Because Petitioner had worked for Quest Diagnostics for five months, the year-to-date figure from her pay stub would result in an estimated annual income of about $29,976. This amount is just over the maximum income allowed, but it includes some overtime work. It was not shown how Ms. Reyes came up with an estimate of $31,000, and her own statement on that point is unclear. However, if Ms. Reyes assumed that Petitioner had been working at Quest Diagnostics since January 1, 2005, the income shown on Petitioner's last pay stub would support an estimated annual income of about $32,000. Petitioner denies that she brought in her pay stubs to show Ms. Reyes, but she testified that Ms. Reyes "had her calculator in front of her, and she calculated it up." Petitioner asked Ms. Reyes to add her adult daughter to her household, so that she could qualify under the higher income allowed for a four-person household. On September 21, 2005, Ms. Lombardi sent Petitioner a letter informing Petitioner that she would have to move out of Regatta Bay because her income was too high. At the final hearing, Petitioner repeatedly referred to a comment in the letter that "we would like to point you in the right direction," which Petitioner took great offense to and perceived almost as a racial slur. However, the comment appeared in the following context: Whereas we are sincerely sorry for any inconvenience this may cause you, there are other communities in the area that do not have the same income guidelines. These communities might be able to accommodate you and we would like to point you in the right direction. In context, there is nothing about the comment that shows animus towards Petitioner's race, color, or familial status. On September 26, 2005, Ms. Lombardi sent Petitioner a letter stating "Per our conversation today . . . you and your daughter need to come into the office to fill out the proper paperwork." This letter indicates that Ms. Lombardi was willing to pursue Petitioner's suggestion to have Petitioner's daughter added to her household so that Petitioner would qualify to stay at Regatta Bay. However, Petitioner apparently abandoned this idea after she consulted with a lawyer. Petitioner refused to vacate the apartment. On October 13, 2005, Regatta Bay served Petitioner with a Seven Day Notice to Cure Noncompliance to satisfy the requirements of Section 83.56, Florida Statutes. On October 26, 2005, Regatta Bay served Petitioner with a Seven Day Notice of Noncompliance Without Opportunity to Cure. On November 5, 2005, Regatta Bay filed a Complaint for Tenant Eviction in the circuit court for Osceola County. Concord showed that it has filed eviction actions against non-African Americans that resided in Regatta Bay when Concord discovered that they were not qualified for low income housing at the time they began their tenancies. Before Petitioner received the first "seven day notice," she contacted a legal aide attorney to assist her regarding her dispute with Regatta Bay. She also contacted Florida Housing Finance Corporation (FHFC) for help. On November 30, 2005, Janet Peterson of FHFC made a request of Robin Robuck, senior vice president of Concord, for a written explanation of how Concord "arrived at the conclusion that [Petitioner] was ineligible." In her response, Ms. Robuck referred to the year-to- date income figure of $17,144 on the employment verification form prepared by Quest Diagnostics. Ms. Robuck made no mention of the recalculation of a $31,000 figure. The communication between Concord and FHFC soon revealed the discrepancy between the employment verification form prepared by Quest Diagnostics and the form that was altered by Ms. Reyes. Ms. Reyes was asked for an explanation of the discrepancy on December 9, 2005, which she then put in writing. On that same day, Ms. Reyes was fired by Concord for altering the employment verification form. Regatta Bay then voluntarily dismissed its eviction action against Petitioner in the circuit court. Petitioner claims that Jessica Reyes and Christine Lombardi were motivated by racial discrimination to prevent Petitioner from renting an apartment at Regatta Bay. Petitioner claims that racial discrimination was the motive for Ms. Reyes putting the figure of $17,144 on the employment verification form and the motivation for Ms. Lombardi to continue to demand that Petitioner move out despite having sufficient information to know that Petitioner qualified for housing at Regatta Bay. Petitioner raised several questions about the timing of and reason for certain events that occurred, which were never fully answered by the evidence presented by the parties. For example, why was Petitioner allowed to move in before the compliance review? Why wasn't the issue of Petitioner's income simply resolved by getting more information from the human resources representative at Quest Diagnostics? Did Ms. Reyes or Ms. Lombardi ever explain to Petitioner exactly how they determined that she made too much income? Why didn't Ms. Reyes or Ms. Lombardi tell Ms. Robuck about the recalculation of a $31,000 figure when Ms. Robuck was making her internal investigation? Unanswered questions, however, are not a sufficient basis to prove housing discrimination. Petitioner failed to establish that she was discriminated against on the basis of her race. No evidence was presented by Petitioner on her claims that Respondent discriminated against her because of her dark skin color or her familial status as a single mother. Mistreatment, even if proven, may have other motivations than discrimination. In this case, all that was proven by Petitioner was a fact never contested by Concord, that Ms. Reyes improperly altered the employment verification form. Petitioner did not prove that Ms. Reyes was motivated by discrimination. The evidence suggests that Ms. Reyes and Ms. Lombardi were inept at explaining to Petitioner how it was determined that her income was too high, but Petitioner's demeanor and testimony at the final hearing indicate that she was probably partly responsible for the poor communication between them on that subject. Petitioner remained a tenant at Regatta Bay until she voluntarily moved out in July 2007.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Sharon Harper Ivey be dismissed from the case; and The Petition for Relief be dismissed. DONE AND ORDERED this 31st day of August, 2007, in Tallahassee, Leon County, Florida. S BRAM D. E. CANTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of August, 2007.
The Issue The issue is whether Petitioner owes money to Respondent due to an overpayment of compensation.
Findings Of Fact At all relevant times, Respondent has employed Petitioner. By Stipulation, the parties agree that Respondent overpaid Petitioner the sum of $6282.41 by check dated February 14, 2005. The dispute is whether Respondent is entitled to repayment of an additional $2332 in withheld federal income taxes associated with the agreed-upon overpayment. On the date of the overpayment in February 2005, Respondent credited Petitioner with the gross sum of $9328. The net payment to Petitioner was $6282.41. The difference between the gross and the net was $2332 in withheld federal income taxes and $713.59 in employee-paid FICA and Medicaid. Respondent is not seeking repayment of the employee-paid FICA and Medicaid. Respondent discovered the error on December 31, 2005, so it was unable to process the paperwork necessary correct the situation with the tax withholding in the same tax year of 2005. By failing to discover the error in time to process the paperwork in the same tax year, Respondent was unable to effectively reverse the withholding transaction with the Internal Revenue Service. Thus, when Petitioner filed his 2005 federal income tax return, his gross income included this overpayment, and the amount of tax already paid included the $2332 that was erroneously withheld in Respondent's overpayment in February 2005. It is thus clear that Respondent overpaid Petitioner $6282.41 in net pay plus $2332 in income taxes that it withheld from Petitioner and submitted, to Petitioner's credit, to the Internal Revenue Service. The total overpayment is therefore $8614.41.
Recommendation It is RECOMMENDED that the Department of Juvenile Justice enter a final order determining that, due to an overpayment in 2005, Petitioner shall repay $8614.41, upon such terms, if any, as the department shall determine. DONE AND ENTERED this 24th day of October, 2006, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of October, 2006. COPIES FURNISHED: Anthony J. Schembri, Secretary Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-3100 Jennifer Parker, General Counsel Department of Juvenile Justice Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-1300 Michael B. Golen Assistant General Counsel Department of Juvenile Justice 2737 Centerview Drive Tallahassee, Florida 32399 Theodore E. Morakis 11904 Southwest 9th Manor Davie, Florida 33325
Findings Of Fact The Tax-Credit Allocation Program Section 42(h)(3) of the Internal Revenue Code of 1986, as amended, provides for federal income tax credits for the development of low income housing. The tax credits are allocated among the states based on state population. Respondent allocates the low income housing federal income tax credits available in Florida. The present case involves the 1992 tax credit- allocation cycle, which was unusual in one respect. The relevant provisions of Section 42 of the Internal Revenue Code are due to expire on June 30, 1992. Respondent expedited the application and evaluation process for the 1992 cycle because of uncertainty concerning whether credits not allocated by June 30 can be allocated after the expiration of Section 42. As in past cycles, applicants in the 1992 cycle sought more tax credits than Respondent had to allocate. In some categories, the sum of tax credits sought by applicants is four times greater than the total available tax credits. Since 1990, as a result of changes in the Internal Revenue Code, Respondent has implemented a competitive process to determine which applicants should be awarded tax credits. In general, the selection process consists of an application and evaluation process followed by an underwriting process involving only those applicants and projects that were determined to be in the funding range after completion of the application and evaluation process. The objective of both stages is to identify proposed projects that offer the best opportunities for the development of affordable housing in Florida. This case involves only the first stage in which Respondent evaluates the application. The Subject Applications General Each Petitioner is a limited partnership formed to develop a low income rental housing project in Osceola County. The Ravenwood project is in the unincorporated county, and the Oakcrest project is in St. Cloud. Ronnie C. Davis is the general partner of both partnerships and controls the activities of these entities. His accountant, Steven Scott, has worked closely with Mr. Davis in connection with these and numerous other similar projects. As it had done successfully in past cycles, Petitioners applied to obtain federal income tax credits and sell the limited partnership interests (with tax credits) to a third party. The third party would combine Petitioners' projects with others like them and syndicate limited partnership interests to individual investors seeking, among other things, the available tax credits in order to lower their federal income tax liability. This indirect federal subsidy of development costs is intended to encourage the development of affordable housing. The application completed by Petitioners and other applicants in the 1992 cycle consists of numerous questions divided into 16 Forms. Each applicant receives a maximum of 1285 points based on the answers to the questions. Varying amounts of points are available for 12 of the 16 Forms. (Four Forms seek background information or constitute request forms.) The Ravenwood Application Form 1 of the Ravenwood application, which is dated January 30, 1992, consists of summarized information, which, where important, is requested elsewhere in the application. Due to its background nature, Form 1 involves no points. Form 1 of the Ravenwood application describes the proposed project as consisting of 181 units with eight units each in 23 different buildings. (Three units are reserved for on- site workers.) The project is situated on 11 acres and is projected to cost $9,537,049. Petitioner Ravenwood seeks $858,334 in federal income tax credits. Form 1 states that there is federal, state, or local financing "committed or to be committed to this Project." The financing is SAIL financing in the amount of $1.3 million representing 13.6% of the total project cost. Form 1 also states that the present owner acquired the property by gift on November 18, 1991. Form 4 addresses project feasibility and ability to proceed. Form 4 offers a maximum of 225 points. With Form 5, which concerns project funding, Form 4 is worth the most points of all the Forms. Form 4 of the Ravenwood application states, among other things, that the developer controls the site by County deed, which is intended to serve the purpose of a warranty deed. Attached as an exhibit to Form 4 is a letter dated November 20, 1991, from the Osceola County Administrator to Mr. Davis accompanying the delivery of a deed to the property from Osceola County to Ravenwood of Kissimmee, Ltd. The deed, which is dated November 18, 1991, recites as consideration "general benefit of the public." The deed conveys title to 11 acres "conditioned upon the grantee being awarded a state apartment incentive loan and tax credits no later than December 31, 1992. If this condition is not met by December 31, 1992, the property described herein shall revert to the grantor." The manner by which the limited partnership acquired the property is also covered in Form 6, which addresses local government contributions and planning efforts. Form 6 is worth 155 points, which is more than any other Form except Forms 4 and 5. The first part of Form 6 is directed to local government contributions. The first portion of the first part states: Attach evidence of any contribution or recommendation. Maximum points shall be awarded only when evidence of a contribution includes a signed statement from a chief elected official or his designee detailing the contribution from the appropriate local government. The value of the contribution must be stated in terms of a percentage of cost savings to the project. . . . Form 6 of the Ravenwood application answers affirmatively the question, "Has this project received any contributions from a local government?" In response to the request, "Describe the type of contribution," the application states: "Land as well as other government support and assistance." Form 6 states that the value of the contribution is $1,089,000. In response to a question as to how the value was calculated, the application reports that the value was calculated by a "local realtor." The application notes that the total project cost is $9,537,049. Form 6 contains a scoring sheet that awards points based on the ratio of the value of the local government contribution to the total project cost. If the local government contribution amounts to at least 10% of the total project cost, then the maximum of 75 points are earned for the first part of Form 6. Lower percentages earn fewer points, as follows: 9%-- 67.5 points, 8% 60 points, 7%--52.5 points, 6%--45 points, 5%-- 37.5 points, 4%--30 points, 3%-- 22.5 points, 2%--15 points, and 1%--7.5 points. As support for the information provided in the first part of Form 6, the application contains various attachments in the back of Form 6. One attachment is a letter dated November 18, 1991, from Barney Veal, Broker/President of ERA--Osceola Brokerage Co., Realtor. The Veal letter, which is addressed to Mr. Davis, states in its entirety: Per your request, and after careful consideration, I have reviewed the value of the land donated to you by the Osceola County Board of County Commissioners. Weighted consideration was given for the following: *Development Improvements to the municipal water system *Development Improvements to the municipal sewer system *Development Improvements to the transportation system *Superior site use through off-site drainage *Ease of access via the John Young Parkway Extension to the "high tech" corridor of neighboring Orange County *Property aesthetics This property contains 11 acres, and has a current density of 18 units per acre, thus allowing construction of 198 multi-family units. Therefore, the estimated valuation is approximately $5500 per residential unit, which equals a total amount of 1,089,000 [sic]. Another attachment to Form 6 is a letter from Ron Howse, P.A., an engineering and land planning firm. Mr. Howse, whose office is in St. Cloud, incorporates Mr. Veal's letter and provides the above-described responses to the questions contained in the first part of Form 6. The remaining attachments to Form 6 address the second part, which involves local government planning efforts with respect to affordable housing. This part of Form 6 is not relevant to the subject case. The Oakcrest Application The Oakcrest application, which is also dated January 30, 1992, is similar to the Ravenwood application. Form 1 of the Oakcrest application describes the proposed project as consisting of 189 units with eight units each in 24 different buildings. (Three units are reserved for on-site workers.) The project is situated on 19.4 acres and is projected to cost $10,164,207. Petitioner Oakcrest seeks $914,778 in federal income tax credits. Form 1 states that there is federal, state, or local financing "committed or to be committed to this Project." The financing is SAIL financing in the amount of $1.4 million representing 13.8% of the total project cost. Form 1 also states that the present owner acquired the property by gift on November 21, 1991. Form 4 of the Oakcrest application states, among other things, that the developer controls the site by warranty deed. Attached as an exhibit to Form 4 is a letter dated November 21, 1991, from Larry F. Hopper, Executive Director of the St. Cloud Area Chamber of Commerce. The letter is to Mr. Davis and accompanies the delivery of a deed to the property from the St. Cloud Housing & Revitalization Agency, Inc. to Oakcrest of St. Cloud, Ltd. The deed, which is dated November 21, 1991, conveys title to 19.4 acres conditioned upon the grantee being awarded a state apartment incentive loan and tax credits to construct no less than 193 units, with construction thereon to commence no later than December 31, 1992. If the above cited incentive loan and tax credits are not received and construction not begun by December 31, 1992, the property described herein shall revert to the grantor. Form 6 of the Oakcrest application answers affirmatively the question, "Has this project received any contributions from a local government?" In response to the request, "Describe the type of contribution," the application states: "Land Contribution, as well as other government support and assistance." Form 6 states that the value of the contribution is $1,018,000. In response to a question as to how the value was calculated, the application reports that the value was calculated by a "local realtor." The application notes that the total project cost is $10,164,207. As support for the information provided in the first part of Form 6, the application contains various attachments in the back of Form 6. One attachment is a letter dated November 18, 1991, from Barney Veal, Broker/President of ERA--Osceola Brokerage Co., Realtor. The Veal letter, which is addressed to Mr. Davis, states in its entirety: Per your request, and after careful consideration, I have reviewed the value of the land donated to you by the St. Cloud Housing and Revitalization Agency, Inc. Weighted consideration was given for the following: *Development Improvements to the municipal water system *Development Improvements to the municipal sewer system *Development Improvements to the transportation system *Location Proximity to a new growth area *Property Aesthetics This property contains 19.4 acres, and has a current density of 10 units per acre, thus allowing construction of 194 multi-family units. Therefore, the estimated valuation is approximately $5250 per residential unit, which equals a total amount of $1,018,500. Another attachment to Form 6 is a letter from Ron Howse, P.A., an engineering and land planning firm. Mr. Howse, whose office is in St. Cloud, incorporates Mr. Veal's letter and provides the above-described responses to the questions contained in the first part of Form 6. Another attachment to Form 6 of the Oakcrest application is a copy of the first two pages of the Articles of Incorporation of the St. Cloud Housing & Revitalization Agency, Inc., a not-for-profit corporation. According to the articles, the not-for-profit corporation was incorporated by the St. Cloud Area Chamber of Commerce, Inc. Relevant Practices of Respondent The head of Respondent is its Board of Directors. Each review cycle, the Board appoints a Review Committee, which normally consists of five or six persons. Different employees of Respondent serve on the Review Committee each year. The Review Committee assigns scores for each Form of each application. These determinations are then submitted to the Board of Directors for further action. Certain practices have evolved in connection with the scoring of applications. To the extent that any of these practices may constitute nonrule policy, Respondent has amply explicated the practices, which appear to be necessary and proper to the discharge of its responsibilities in the allocation of low income housing federal tax credits. First, the Review Committee generally limits its review of an application to the material contained within the four corners of the application. The reason for this practice is that the Review Committee is typically operating under time pressures. However, there are two circumstances in which the Review Committee may refer to information not contained within the application. The first and more frequent exception to the general rule is if something is unclear in the application. In this case, a member of the Review Committee or staff of Respondent may contact the applicant to obtain a clarification. Sometimes, the contact may be with a third party, such as a third-party lender to whom questions concerning the scope of a commitment letter may be directed. By limiting these inquiries to clarifications, Respondent avoids the possibility of the eliciting information that constitutes post-deadline amendments of material aspects of the application. The second exception to the general rule is when a third party informs the Review Committee that certain information contained in an application is inaccurate. To a great extent, the accuracy of the contents of the application is checked in the underwriting stage of the allocation process. But, if time permits, the Review Committee or other representatives of Respondent may, if they so choose, undertake a necessarily limited investigation of statements in an application. In the couple of years that the allocation process has been competitive, the only application rejected as "untrue," aside from Ravenwood and Oakcrest, was an application for a project known as Woodside. Ironically, this application appears to have been challenged by Mr. Davis and Mr. Ginsburg, 1/ who alerted Respondent to the fact that, contrary to representations contained in the application, the Resolution Trust Corporation, not the developer, owned the site. 2/ It appears that, due to timing, the Board itself rejected the Woodside application because the true facts were uncovered during the underwriting stage, rather than the application and evaluation stage. It appears that, also during underwriting, another application was rejected due to ineligibility, if not actual untruthfulness. In that case, an application for a project known as Golden Acres was rejected when representatives of the Board checked the project site and confirmed that the buildings had already been placed in service and thus would not be eligible for any or a full tax credit. Except for one case in which the wrong application form was used, the record does not disclose if other applications have been summarily rejected for reasons other than satisfying a scoring threshold described in the application form and irrelevant to this case. Rather than reject an application, at least prior to the underwriting process, the Review Committee and Board will often rescore an application. Not infrequently, a developer submits an application containing information that may be described, in the words of one witness, as optimistic in nature. If the application contains sufficient material for the Review Committee or Board to rescore a Form, possibly with the assistance of a clarification from the applicant or a third party, the application will be rescored so that a lower score results. It is not always easy to describe what renders an application "untrue." One example of an untrue application would be if an applicant fabricated a loan commitment letter when no such commitment had been made. On the other hand, if the applicant claimed more points than the letter, on its face, justified due to its numerous contingencies and conditions, the application would clearly be rescored. Although it may contain inaccuracies, a true application must disclose all material facts so that each Form may be scored reasonably accurately. The materiality of an omitted fact depends largely on the importance and purpose of the requested information. The decisions as to what information is important, material, or untrue and when to reject and when to rescore an application must be based on a balancing of at least two considerations. The first is that the purpose of the application and evaluation and underwriting processes is to ensure that the available tax credits go to the best projects, in terms of meeting the critical needs of low income persons for affordable housing. Superior applications should not be rejected too readily. The second is that the integrity of the evaluation process would be compromised if the "untrue application" language is interpreted so that all instances of applicant untruthfulness are reduced to over-optimism, thus meaning that untrue applications would be always rescored and never rejected. Without the potential penalty of rejection, the process by which applications are evaluated and projects underwritten would become increasingly burdened by the chore of detecting growing numbers of misrepresentations. At some point, the resources of Respondent would become overtaxed, misrepresentations would probably escape detection, and the overall objective of the entire program--facilitating the availability of affordable housing--would eventually be defeated. V. Preliminary Scoring of the Applications in the 1992 Cycle In the present case, on or about February 27, 1992, the Review Committee tentatively scored all of the applications. For medium counties, 3/ eight applications fell within the funding range, one application fell partly in the funding range, 16 applications meeting the scoring threshold fell outside the funding range, and one application failed to meet the scoring threshold. The tentative scoring assigned Ravenwood 1190 points and Oakcrest 1153.87 points for the two highest scores among the nine projects tentatively allocated, in whole or in part, the tax credits requested. On March 6, 1992, the Board of Directors reviewed the tentative scoring determined by the Review Committee. By this time, representatives of Respondent had determined that the contribution of the land from the local governments, as asserted in both applications, was not as represented. The Board decided to reject both applications. If the Ravenwood and Oakcrest applications had been merely rescored so as to lose all 75 points for the first part of Form 6, they would have remained in the funding range. In fact, Ravenwood would have remained first, and Oakcrest would have been third, tied with another project. Respondent has implemented an appeal process by which scores set by the Board, following review of the tentative scoring of the Review Committee, may be re-evaluated by the Board. In the 1992 cycle, 36 applicants took advantage of this process. The appeals hearing, which took place on May 1, 1992, resulted in the issuance of the final scoring tabulation, which is Petitioner Exhibit 14. However, no material changes took place with respect to medium counties, and the Ravenwood and Oakcrest applications remained rejected. Facts Not Disclosed on Applications Ravenwood The basic problem with the Ravenwood application is that it states that the local government, Osceola County, contributed the raw land to the applicant. In substance, the County has conveyed nothing to the Ravenwood limited partnership. Through a series of step transactions, Mr. Davis, using an agent, obtained title to the land from a genuine third party, conveyed the land to the County, and caused the County to convey the land to the Ravenwood limited partnership. The few details of the transactions that are relevant begin with the fact that, by contract dated April 9, 1991, Mr. Davis agreed to pay the original owners $300,000 for 12.5 acres. On October 30, 1991, Mr. Davis assigned the contract to his accountant's brother, Jimmy Alan Scott. By quitclaim deed acknowledged November 9, 1991, Mr. Scott quitclaimed any interest he had in the land to Osceola County. On November 18, 1991, Mr. Davis, Mr. Scott, and Osceola County entered into a trilateral agreement. The parties agreed that Mr. Scott would convey the property to the County, which would convey the property to the Ravenwood limited partnership. Also, the County agreed that if the property reverted to it under the condition to be contained in its deed to the partnership, then it would reconvey the property to Mr. Scott. Another significant aspect of the trilateral agreement is that the deeds from Mr. Scott to the County and the County to the Ravenwood limited partnership are to be "held in escrow pending the County's negotiations with [other parties including the original owners of the subject land] to acquire additional property for the recreational complex." By letter dated March 2, 1991, the attorney for the Ravenwood limited partnership discloses that the escrow had not been broken, inferentially because escrow conditions remained unsatisfied, and the deeds had not been recorded. On November 16, 1991, Mr. Davis lent Mr. Scott the funds necessary to purchase the land from the original owners. A note for the amount was to be forgiven if Mr. Scott donated the land to Osceola County. By warranty deed dated January 6, 1992, the original owners conveyed the land to Mr. Scott, who, on the same date, conveyed the land to the County. The two deeds were identical except that deed into the County contains a reverter clause covering all but a small part of the property. The condition is that the majority of the land reverts to Mr. Scott if construction of no less than 184 units of affordable housing does not begin by December 31, 1991. The only deed from the County to the Ravenwood limited partnership is dated November 14, 1991. Copies of the deed were produced at the hearing and attached to the Ravenwood application in Form 4. In the instrument, the County "has granted, bargained and sold" the subject land to the Ravenwood limited partnership conditioned upon the partnership "being awarded a state apartment incentive loan and tax credits no later than December 31, 1992. If this condition is not met by December 31, 1992, the property described herein shall revert to the grantor." There are no warranties, such as a warranty of title, contained in this deed. The underlying problem with the Ravenwood application is as basic as the problem in the Woodside application, where Mr. Davis objected that the RTC, not the applicant, owned the land, contrary to the assertions contained in the application. The County has not contributed anything to the Ravenwood limited partnership because the partnership does not own the land. First, unspecified escrow conditions have left uncompleted the conveyances to the County and the Ravenwood limited partnership. Tied up in escrow, the deeds have not been delivered, which is as basic an aspect to the conveyance of property as is their execution. Second, the application shows that the limited partnership owns the land as a result of a deed from Osceola County. The deed predates the date on which the original owners conveyed the land to Mr. Scott and he purportedly, using an escrow arrangement, conveyed the land to Osceola County. In a deed without any warranties, it is questionable whether the doctrine of after- acquired interest or estoppel by deed would operate here. In light of the problems identified in the preceding two paragraphs, the overstatement problem is less substantial. Although the County has contributed something in the way of services, there is no evidence that the contribution of such services anywhere approaches the claimed amount of $1,089,000, which is more than three times the value of the land as of April, 1991. However, in view of the failure of the Ravenwood limited partnership to obtain any title to the land, the value of the contribution is not $1,089,000, but zero. Oakcrest The basic problem with the Oakcrest application also involves the contribution of raw land to the partnership. The land has not yet been conveyed to the partnership. The relevant details of the Oakcrest transactions are similar to those of the Ravenwood transactions. On November 18, 1991, Mr. Scott and a genuine third party entered into an agreement for deed for 19.4 acres for payment of $300,000. The condition of a closing, which is set for no later than January 5, 1993, is that the Oakcrest limited partnership be awarded tax credits no later than December 31, 1992. Notwithstanding its title as an agreement for deed, the subject instrument operates like a purchase and sales contract, in part because Mr. Scott has not placed any money unconditionally at risk and a closing is set at a point in the future once certain contingencies have been satisfied. On November 19, 1991, Mr. Scott conveyed by warranty deed to the St. Cloud Housing and Revitalization Agency, Inc. the same 19.4 acres subject to the condition that the "grantee [i.e., the Agency] being awarded a state apartment incentive loan and tax credits to construct no less than 193 units with construction thereon to commence no later than December 31, 1992." If the condition is unsatisfied, it provides for the property to revert to Mr. Scott. On November 21, 1991, the St. Cloud Housing and Revitalization Agency, Inc. conveyed by warranty deed to the Oakcrest limited partnership the same 19.4 acres subject to the same condition concerning 193 units. The Oakcrest transfers are ineffective and leave the Oakcrest limited partnership with no interest in the land and thus in receipt of no contribution from a local government. The application, which adequately discloses the nature of the St. Cloud Housing and Revitalization Agency, Inc. as other than a local governmental entity, contains only the warranty deed from the Agency to the Oakcrest limited partnership. The omission of the sales contract (i.e., Agreement for Deed) leaves the incorrect impression that the Agency had an interest to convey to the Oakcrest limited partnership. The Agency had no such interest because Mr. Scott had no such interest. 4/ But the valuation problem is greater in the Oakcrest case. Unlike the Ravenwood case, in which months passed between the contract and the date on which the applicant asserted the value of the land, the Oakcrest sales contract calling for a $300,000 purchase price was signed just three days before the deed purportedly conveying the land from the Agency to the Oakcrest limited partnership. Unlike the Ravenwood case, the Agency was making no other contributions to the partnership. Even assuming an effective conveyance, the application thus grossly overstates the value of the contribution at $1,018,500, when the original sellers only three days earlier agreed to sell the property, under substantial conditions favorable to the buyer, for only $300,000. Whether the Applications are Untrue For the reasons set forth above, the Ravenwood and Oakcrest applications were untrue at the time that they were submitted and were properly rejected by Respondent. The materiality of the omissions is indisputable. Contrary to the assertions in both applications, the applicant in each case not only had not received a contribution of the land from a local government, but the applicant had not even obtained an interest in the land.
Recommendation Based on the foregoing, it is hereby recommended that the Florida Housing Finance Agency enter a final order rejecting the Ravenwood and Oakcrest applications as untrue. RECOMMENDED this 9th day of June, 1992, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1992.
The Issue The parties stipulated that the following legal issues were presented on the facts: When the taxpayer fails to claim the tax credit for sales tax on bad debts charged off during the month for which the return is filed as permitted by Section 212.17(8) Florida Statutes, may the taxpayer claim a refund of the overpayment pursuant to Section 215.26, Florida Statutes? Does claiming a bad debt credit on a return for a month later than the month in which the charge-offs were made constitute an "application for refund" within the meaning of Section 215.26(2), Florida Statutes? STIPULATIONS The parties entered into a written stipulation of the issues, of the facts, and stipulated to the introduction into evidence of the attachments to the written stipulation of facts and the Exhibits 1 through 6. The following are the pertinent findings of fact in this case.
Findings Of Fact Causeway Lumber Company, Inc., (Causeway) is a Florida corporation engaged in the sale of lumber and building materials. During the years 1973- 1977 it operated two yards; one at 2701 South Andrews Avenue, Fort Lauderdale, Broward County, and one and 400 Northwest 2nd Avenue, Boca Raton, Palm Beach County. Because it operated in two counties, separate tax returns were filed for the Fort Lauderdale yard and the Boca Raton yard. Causeway uses the accrual method of accounting, the specific charge-off method of writing off bad debts, and its fiscal year ends March 31. Causeway did not collect the sales tax on credit sales at the time such sales were made, but billed sales tax to its customers as part of the credit sales. Although the sales taxes were not received by Causeway at the time the credit sales were made, Causeway reported and paid the sales tax on credit sales on the return for the month in which the sale was made as required in Section 212.06, Florida Statutes. In March of 1974, 1975, and 1976 the accounts receivable were reviewed and the account deemed worthless were written off as uncollectable and so reported on the corporation's income tax returns for those years. Causeway attempted to take as a credit in September of 1976 all of the bad debts written off in March of 1974, 1975 and 1976. The taking of this credit was questioned by the Comptroller, and Causeway paid the taxes due on the September 1976 sales tax remittance and then filed an application for refund on January 20, 1978, pursuant to provisions of Section 215.26, Florida Statutes. The Comptroller denied the application for refund stating as the grounds that there was no authority in Section 212.17, Florida Statutes, for a refund. Causeway's two outlets overpaid sales taxes in the following amounts in the years indicated: 1974 1975 1976 Boca Raton $ 1,072.51 $ 9,208.17 $ 30,477.11 Ft. Lauderdale 3,323.15 10,237.33 10,004.22 $ 4,395.66 $ 19,445.50 $ 40,481.33
Recommendation Based upon the foregoing findings of fact and conclusions of law, the Hearing Officer recommends to the Comptroller that the taxpayer be refunded the taxes overpaid in 1975, and 1976, in the total amount of $59,926.83. DONE and ORDERED this 9th day of October, 1978, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of October, 1978. COPIES FURNISHED: Richard W. Roe 2900 East Oakland Park Boulevard Fort Lauderdale, Florida 33306 Harold F. X. Purnell Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32304 Eugene J. Cella General Counsel Office of the Comptroller The Capitol Tallahassee, Florida 32304 =================================================================
Findings Of Fact At all times pertinent to the allegations contained in this Administrative Complaint, the Respondent was licensed as a registered real estate broker in the State of Florida. In the early part of 1982, Respondent entered into a partnership agreement for the purchase and operation of the Cleveland Street Apartments with several individuals including Mr. Bradwell, Mr. Boulson, Mr. Crouse, and Mr. Tafton (sp). Respondent was to be managing partner because of his status as a real estate broker responsible for the operation of the facility and the payment of all expenses including taxes. Periodically, the Respondent would notify the other partners of the status of their investment. This generally indicated a negative cash flow and required additional contributions from the partners in order to meet the expenses incurred in the operation. Specifically, among the obligations to be paid were county real estate taxes for the years 1983 and 1984. In response to Respondent's notification to the partners of the taxes due, each partner periodically forwarded his pro rata share of the expenses, including taxes, to the Respondent with the anticipation that these expenses would be met and the taxes would be paid. As it happened, however, when Mr. Boulson, one of the partners, went to the Palm Beach County Court House at some time in 1985 to inquire as to what the taxes for that year would be, he was advised that the 1983 and 1984 real property taxes on the property had not been paid and were delinquent. This came as a complete surprise to him, and he and the other partners were required to contribute additional funds to pay both the 1983 and 1984 property taxes and the interest accrued thereon. Respondent admits that he did not pay the 1983 and 1984 taxes as they were due. He contends, however, that because of the fact that the apartment was operated with a negative cash flow, and because of the fact that the other partners repeatedly made their makeup contributions after the fact and slowly, he was forced to advance the money for other expenses as far as he could and utilized the money when paid by the other partners for taxes, to make up the other expense shortfall that he could not or did not make. Respondent contends that if the other partners had paid their assessments in a timely fashion, the other bills could have been paid on time and it would not have been necessary for him to utilize the money contributed for tax payments for the payment of these other expenses. This argument is without merit. The accountant's testimony clearly shows that sufficient money was paid in by the partners to pay the expenses and that the inflow/outflow was in balance, assuming the taxes had been paid on time as required. The evidence is overwhelming that Respondent was derelict in his responses to his partners and in his availability to them when they attempted to contact him regarding apartment business. In addition, Mr. Sonderholm, the individual from whom Respondent and the other partners bought the property, and who held a purchase money mortgage on it, indicates that for the first year, Respondent faithfully made the mortgage payments on time. However, thereafter, he began to be delinquent in the payments and on at least five occasions, issued checks in payment of the monthly mortgage payment which were returned dishonored for non-sufficient funds. Each of these checks was in an amount in excess of two thousand dollars. Toward the end of the relationship, in August, 1985, Respondent submitted his last property operating statement to the partners which showed a net operating loss in excess of $800.00 for the period covered, along with a request that that sum be forwarded to Respondent for reimbursement of expenses. By the admission of Mr. Bradwell, this money was not paid to the Respondent because it was extremely difficult to contact him and repeated efforts by phone, mail, and in person at his office were unsuccessful. By this time, however, the property was being managed for the partnership by a different management agent and after Respondent stopped handling the property for the partnership, he was no longer furnished any statements regarding the partnership operations though he was officially still a partner. This was because, according to Mr. Bradwell, it was impossible to reach Respondent and no one knew where he was. There is, however, a letter from Mrs. Crouse, dated in October, 1985, which is addressed to Respondent at his address of record which he received. There is also evidence to indicate that other letters sent to him at this address by certified mail were returned undelivered. These letters were not offered into evidence, however, and there is no way to know if the nondelivery was due to an inadequate address or whether Respondent refused delivery. Respondent was not furnished tax form K-1 for his share of the partnership for 1985 in early 1986 because the other partners felt, after consultation with their attorney, that his unavailability, coupled with his failure to properly manage the funds of the partnership and his alleged misapplication thereof was sufficient to deprive him of his partnership interest. There is no evidence to indicate that Respondent failed to make 1985 tax payments as required. In 1984, Respondent entered into a partnership with James M. VanSleet to purchase and operate an apartment building in Lake Worth, Florida. Because Respondent was in the real estate brokerage business and operated a property management concern, he was given, as a part of his partnership function, the tasks of manager and rental agent for the building. This arrangement was, however, a partnership rather than a broker-client relationship. In his capacity as rental agent in May, 1984, Respondent rented a unit in the building to Anthony Grieco and received a check from Mr. Grieco in the amount of $900.00 which represented a $500.00 security deposit and the first month's rent in advance. Mr. Grieco occupied the premises until May, 1985 and upon moving out, requested that his security deposit be refunded. He was advised by the Respondent that an inspection was necessary and that if the inspection revealed no damage, the deposit would be refunded. Several days later, he was notified that the inspection was satisfactory and that the $500.00 would be refunded, however, repeated contacts both by Mr. Grieco and his father, as well as others on his behalf, failed to result in return of the deposit which has not been returned as of the date of hearing. In his efforts to secure the return of the deposit, Mr. Grieco was subjected to numerous delaying tactics such as being required to call back week after week because the refund check was not ready; a failure of Respondent to return calls left for him; and references to the other partner, Mr. VanSleet as the source of refund. Notwithstanding the fact that the $500.00 security deposit has not been returned to Mr. Grieco, there is no evidence as to what was done with it or whether it was misappropriated to Respondent's own use as alleged in the Administrative Complaint. Toward the end of 1985, Mr. VanSleet turned the operation of this building over to another rental agent. At that time, he had received several requests for the return of deposits which had been paid to Respondent and which Respondent had failed to reimburse. Mr. VanSleet's practice was to allow the tenant to remain an extra month in the unit without rent rather than pay back the cash deposit.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Respondent's license as a registered real estate broker in Florida be suspended for a period of two years; that he be required to demonstrate to the satisfaction of the Division of Real Estate his continuing education in the ethics of the real estate profession; and that he pay an administrative fine of $2,500.00. RECOMMENDED this 16th day of March, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1987. COPIES FURNISHED: Harold Huff, Executive Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Arthur R. Shell, Jr., Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32801 John E. Knowles 755 Huff Road West Palm Beach, Florida 33415 =================================================================
