The Issue The issue in this case is whether Florida Housing's proposed action to deem Madison Landing eligible for an award of housing tax credit funds, as contemplated under Request for Applications 2020-202 Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach and Pinellas Counties ("the 2020 RFA"), is contrary to governing statutes, rules or policies, or the 2020 RFA specifications. The standard of proof is whether Florida Housing's proposed action is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Florida Housing is a public corporation organized pursuant to Chapter 420, Part V, Florida Statutes, whose address is 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301, and for the purposes of these proceedings, an agency of the State of Florida. Madison Landing is an Applicant requesting an allocation of $1,950,000 in competitive housing credits in in the 2020 RFA. Its application, 2021-021C, was deemed eligible, but was not selected for funding by Florida Housing. Madison Park is an Applicant requesting an allocation of $2,881,960 in competitive housing credits in the 2020 RFA. Its application, 2021-004C, was deemed eligible, but was not selected for funding by Florida Housing. WRDG is an Applicant requesting an allocation of $2,375,000 in competitive housing credits in the 2020 RFA. Its application, 2021-025C, was deemed eligible and was preliminarily selected for funding by Florida Housing. Florida Housing administers various affordable housing programs, including the Housing Credit Program, pursuant to Section 42 of the Internal Revenue Code (the "IRC" or "the Code") and section 420.5099, under which Florida Housing is designated as the Housing Credit agency for the State of Florida within the meaning of Section 42(h)(7)(A) of the IRC, and Florida Administrative Code Chapters 67-48 and 67-60. Florida Housing has established, by rule, a competitive solicitation process known as the Request for Applications ("RFA") to assess the relative merits of proposed developments, pursuant to chapters 67-48 and 67-60. An RFA sets forth the information required to be provided by an Applicant, which includes a general description of the type of projects that will be considered eligible for funding and delineates the submission requirements. While there are numerous references to Florida Housing's rules throughout the RFA, RFAs themselves are not adopted or incorporated by rule. Florida Housing issues many RFAs each year. Although an issued RFA may be similar to these issued in previous years, each RFA is unique. The RFA process begins when Florida Housing requests the Florida Housing Board of Directors ("the Board") to approve Florida Housing's plan for allocating its resources through the various RFAs. If the plan is approved by the Board, Florida Housing begins working on each individual RFA. Florida Housing posts draft documents to its website for public review, such as a draft of the RFA, and holds a workshop in which the RFA is discussed in detail, highlighting language that changed from the previous year. The public is given the opportunity to ask questions and submit written comments for further suggestions and/or additional edits prior to the RFA's issuance. Marisa Button, Director of Multifamily Programs for Florida Housing, credibly and persuasively testified that Questions and Answers are provided as guidance, but do not provide new requirements to override the terms of an RFA. In the event of an inconsistency between Questions and Answers and another form of guidance for applicants, Florida Housing has maintained the position that the least restrictive guidance controls. Rule 67-60.006 provides, in pertinent part, that "[t]he failure of an Applicant to supply required information in connection with any competitive solicitation pursuant to this rule chapter shall be grounds for a determination of non-responsiveness with respect to its Application." By applying, each Applicant certifies that: Proposed Developments funded under this RFA will be subject to the requirements of the RFA, inclusive of all Exhibits, the Application requirements outlined in Rule Chapter 67-60, F.A.C., the requirements outlined in Rule Chapter 67-48, F.A.C. and the Compliance requirements of Rule Chapter 67-53, F.A.C. On August 26, 2020, Florida Housing issued the 2020 RFA, proposing to provide an estimated $18,669,520 of Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties. Modifications to the 2020 RFA were made on September 11 and October 12, 2020. The Application Deadline for the 2020 RFA was October 20, 2020. On or about October 20, 2020, 35 applications were submitted in response to the 2020 RFA. A Review Committee was appointed to review the applications and make recommendations to the Board. The Review Committee found 34 applications eligible and one application ineligible. Through the ranking and selection process outlined in the 2020 RFA, eight applications were recommended for funding. In accordance with the funding selection process set forth in the 2020 RFA, one application was selected from each of Duval, Palm Beach, Pinellas, Hillsborough, and Orange counties; two applications were selected from Broward County; and one application (WRDG) was selected from any of these counties. On December 4, 2020, the Board approved these recommendations. On December 17, 2020, Madison Landing timely filed a Petition for Formal Administrative Proceedings, which was referred to DOAH and assigned Case No. 21-0146BID. This petition challenged the eligibility of both WRDG and MHP FL II, LLC. On January 13, 2021, Madison Landing dismissed all of its allegations against MHP FL II, LLC. On December 17, 2020, Madison Park timely filed a Petition for Formal Administrative Proceedings, which was referred to DOAH and assigned Case No. 21-0147BID. An amended petition was filed on January 13, 2021. This petition challenged the eligibility of both WRDG and Madison Landing. On January 26, 2021, all parties entered into a Stipulation for Entry of Findings of Fact in which WRDG conceded that its application should have been found ineligible. WRDG is ineligible for funding under the 2020 RFA. With WRDG ineligible for funding, Madison Landing would be selected for funding in place of WRDG. If both WRDG and Madison Landing were found to be ineligible for funding, Madison Park would be selected for funding in place of WRDG and Madison Landing. No other Applicant selected for funding will be impacted regardless of the outcome of this case. No challenges were made to the terms of the 2020 RFA. Madison Landing's application includes an executed Applicant Certification and Acknowledgment Form, which provides, "The Applicant, the Developer and all Principals are in good standing among all other state agencies and have not been prohibited from applying for funding." The phrase "good standing among all other state agencies" is not defined; and no evidence was presented as to the definitive meaning of the phrase. No evidence was presented that Madison Landing's Principals are not in good standing with any state agency or have been prohibited from applying for funding. The 2020 RFA at Section Four A.3.a. provides that Applicants must disclose the name of the Applicant entity and provide evidence that it is legally formed: (2) The Applicant must be a legally formed entity [i.e., limited partnership, limited liability company, etc.] qualified to do business in the state of Florida as of the Application Deadline. Include, as Attachment 2 to Exhibit A, evidence from the Florida Department of State, Division of Corporations, that the Applicant satisfies the foregoing requirements. Such evidence may be in the form of a certificate of status or other reasonably reliable information or documentation issued, published or made available by the Florida Department of State, Division of Corporations. Rule 67-48.002(9) (6/23/2020), defines "Applicant" as follows: (9) "Applicant" means any person or legal entity of the type and with the management and ownership structure described herein that is seeking a loan or funding from the Corporation by submitting an Application or responding to a competitive solicitation pursuant to rule Chapter 67-60, F.A.C., for one or more of the Corporation's programs. For purposes of Rules 67-48.0105, 67-48.0205 and 67- 48.031, F.A.C., Applicant also includes any assigns or successors in interest of the Applicant. Unless otherwise stated in a competitive solicitation, as used herein, a 'legal entity' means a legally formed corporation, limited partnership or limited liability company. The 2020 RFA at Section Four A.3.c. provides that Applicants must disclose Principals of both the Applicant and Developer entities. The 2020 RFA provides in pertinent part: c. Principals Disclosure for the Applicant and for each Developer (5 points) (1) Eligibility Requirements To meet the submission requirements, upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019) ("Principals Disclosure Form") as outlined in Section Three above. Prior versions of the Principal Disclosure Form will not be accepted. To meet eligibility requirements, the Principals Disclosure Form must identify, pursuant to Subsections 67-48.002(94), 67-48.0075(8) and 67- 48.0075(9), F.A.C., the Principals of the Applicant and Developer(s) as of the Application Deadline. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. For Housing Credits, the investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company must be identified on the Principal Disclosure Form. Rule 67-48.002(94) defines "Principal" as follows: (94) "Principal" means: For a corporation, each officer, director, executive director, and shareholder of the corporation. For a limited partnership, each general partner, and each limited partner of the limited partnership. For a limited liability company, each manager and each member of the limited liability company. For a trust, each trustee of the trust and all beneficiaries of majority age (i.e., 18 years of age) as of the Application Deadline. Page 10 of 22. For a Public Housing Authority, each officer, director, commissioner, and executive director of the Authority. The requirement to provide evidence that the Applicant is a legally formed entity, as well as the requirement to provide a Principals for Applicant and Developer(s) Disclosure Form, are identified as "Eligibility Items." Section Five A.1. of the 2020 RFA states that "only Applications that meet all of the following Eligibility Items will be eligible for funding and considered for funding selection." Madison Landing submitted Principals of the Applicant and Developer(s) Disclosure Form(s) with its application. Both forms were approved during the Advance Review Process. On the Principals of the Applicant form, Madison Landing II, LLC, was identified as the Applicant entity. The Principals of the Applicant entity were identified as Patrick E. Law, Manager; Madison Landing II Apartments, LLC, Non-Investor Member; and Patrick E. Law, Investor Member. Madison Landing II Apartments, LLC, filed Articles of Organization for Florida Limited Liability Company with the Florida Division of Corporations on January 5, 2021, with an effective date of December 31, 2020. The 2020 RFA requires that the Applicant demonstrate that it is a legally formed entity as of the Application Deadline; however, there is no explicit requirement in the 2020 RFA that each Principal of the Applicant demonstrate that it is a legally formed entity as of the Application Deadline. Ms. Button testified that her initial view was that the failure of Madison Landing's Principal, Madison Landing II Apartments, LLC, to incorporate by the application deadline should render the application ineligible. However, upon further research, she changed her position, believing that Florida Housing was precedentially bound by a previous final order, which found that an application was eligible under similar legal and factual circumstances. The previous case, on which Florida Housing relied, was decided before Florida Housing adopted the current RFA procedures for awarding funding. Ms. Button testified, however, that while some of the processes followed during the Universal Cycle, in place at that time, were different than the RFA process, the requirements for disclosure of Principals were essentially the same. Florida Housing allows interested parties to submit written questions to be answered by Florida Housing staff for each RFA that is issued. The Question-Answer period is referenced specifically within each RFA. The following Question and Answer are posted on Florida Housing's website for RFA 2018-111: Question 12: Do the entities listed on the Principal Disclosure Form have to be active as of the stamped "Approved" date or as of the Application Deadline? Answer: As of the Application Deadline. The Applicant may upload a Principals Disclosure Form stamped "Approved" during the Advance Review Process provided (a) it is still correct as of the Application Deadline, (b) it was approved for the type of funding being requested (i.e., Housing Credits or Non-Housing Credits) The same Question and Answer above are on Florida Housing's website for RFA 2018-110; RFA 2018-112; and RFA 2018-113. The same Question and Answer, however, do not appear in Questions and Answers for the 2020 RFA at issue in this case. Although Questions and Answers from past RFAs remain on the Florida Housing website, they are discrete to the specific RFA for which they were issued. Rule 67-48.002(9) (7/2018) defines Applicant as follows: (9) "Applicant" means any person or legal entity of the type and with the management and ownership structure described herein that is seeking a loan or funding from the Corporation by submitting an Application or responding to a competitive solicitation pursuant to rule chapter 67-60, F.A.C., for one or more of the Corporations programs. For purposes of rules 67-48.0105. 67-48.0205 and 67- 48.031, F.A.C., Applicant also includes any assigns or successors in interest of the Applicant. Unless otherwise stated in a competitive solicitation, as used herein, a legal entity means a legally formed corporation, limited partnership or limited liability company with a management and ownership structure that consists exclusively of all natural persons by the third principal disclosure level. For Applicants seeking Housing Credits, the Housing Credits Syndicator/Housing Credit investor need only be disclosed at the first principal level and no other disclosure is required. The terms "first principal disclosure level" and "third principal disclosure level" have the meanings attributed to them in the definition of "Principal." Rule 67-48.002(9) (11/2011) defines Applicant as follows: (9) "Applicant" means any person or legally formed entity that is seeking a loan or funding from the Corporation by submitting an Application or responding to a request for proposal for one or more of the Corporation's programs. For purposes of Rules 67-48.0105, 67-48.0205 and 67-48031, F.A.C., Applicants also includes any assigns or successors in interest of the Applicant. Madison Park argues that Madison Landing's Principal, Madison Landing II Apartments, LLC, did not demonstrate that it was a legally- formed entity as of the Application Deadline, and therefore, Madison Landing's Principal Disclosure Form did not satisfy the 2020 RFA's requirements. Madison Park argues that Madison Landing's application should be deemed ineligible for funding as a result. Based on the weight of the credible evidence and the language of the 2020 RFA and the governing law, the undersigned finds that Florida Housing did not contravene the 2020 RFA, or any other applicable authority, through the process by which it determined that Madison Landing's application was eligible for the award.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order: (1) finding the application of WRDG ineligible for funding; (2) finding the application of Madison Landing eligible for funding; and (3) dismissing the protest of Madison Park. DONE AND ENTERED this 29th day of March, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Christopher Dale McGuire, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC S BRITTANY O. FINKBEINER Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 2021. J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street Post Office Box 3000 (32802) Orlando, Florida 32801 Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 1400 Village Square Boulevard, Suite 3-231 Tallahassee, Florida 32312
The Issue Whether Respondent Florida Housing Finance Corporation’s intended decision to find the application of Clearlake Village, L.P., ineligible for funding is contrary to Respondent’s governing statutes, rules, policies, or the solicitation specifications.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Statutes, Florida Housing is designated as the housing credit agency for Florida for purposes of allocating low-income housing tax credits. The low-income housing tax credit program incentivizes the private market to invest in affordable rental housing. Tax credits are competitively awarded to housing developers in Florida for qualified rental housing projects. Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. When sold to investors, the tax credits provide equity that reduces the debt associated with the project. With lower debt, the affordable housing tax credit property can (and must) offer lower, more affordable rent. As consideration for receipt of tax credits, developers covenant to keep rent at affordable levels for periods of 30 to 50 years. The demand for tax credits provided by the federal government far exceeds the supply. The Competitive Application Process Florida Housing is authorized to allocate tax credits and other funding by means of requests for proposals or other competitive solicitations allowed by section 420.507(48), Florida Statutes. Florida Housing adopted Florida Administrative Code Chapter 67-60 to govern the competitive solicitation process for several different programs, including the one for tax credits. Chapter 67-60 was adopted on August 20, 2013, replacing prior procedures used by Florida Housing for allocating tax credits, and provides that the bid protest provisions of section 120.57(3) govern its process for allocating tax credits. Applicants request in their applications a specific dollar amount of housing tax credits to be given to the applicant each year for a period of 10 years. The amount of housing tax credits an applicant may request is based on several factors, including, but not limited to, a certain percentage of the projected total development cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. On November 21, 2014, Florida Housing issued the RFA at issue in the instant dispute. According to the RFA, Florida Housing expects to award an estimated $12,914,730 of housing tax credits which are available for award to proposed developments located in medium counties, and up to an estimated $1,513,170 of housing tax credits available for award to proposed developments located in small counties. On January 21, 2015, Petitioner, in response to the RFA, submitted an application seeking $1,418,185 in housing tax credits to finance the construction of an 80-unit residential rental development in Brevard County, Florida (a medium county), to be known as Clearlake Village. Though Petitioner has submitted other applications for housing tax credits, this is the first time Petitioner has done so in Florida. Petitioner’s application was assigned lottery number 4 by Florida Housing. On January 20, 2015, Intervenor, in response to the RFA, submitted an application requesting $1,475,000 in housing tax credits to support the construction on an 80-unit affordable housing development also in Brevard County. As part of the RFA process, Florida Housing announced its intention to award funding to nine medium county developments, including Intervenor’s application number 2015-073C for Brevard County. Notice On March 20, 2015, Petitioner received notice that Florida Housing intended to designate Petitioner’s application ineligible for funding and that other applications were selected for funding, subject to satisfactory completion of the credit underwriting process. In response to Respondent’s notice of intended action, Petitioner timely filed a Notice of Protest, and Petitioner’s Formal Written Protest and Petition for Formal Administrative Proceedings. RFA 2014-114 Ranking and Selection Process Florida Housing received 82 applications seeking funding in response to the RFA, including 76 for medium county developments. Developments were proposed in 21 different medium counties throughout the State, including four in Brevard County. The process employed by Florida Housing for this RFA makes it virtually impossible for more than one application to be selected for funding in any given medium county. Because of the amount of funding available for medium counties, many medium counties will not receive an award of housing tax credit funding in this RFA, due to the typical amount of an applicant’s housing tax credit request (generally $1.0 to $1.5 million), and the number of medium counties for which developments are proposed. Florida Housing intends to award funding to nine developments in nine different medium counties. The RFA requires that applicants file an online electronic application with development cost pro forma. Each applicant is also required to submit several hard copies of its application and attachments. One of the applications is designated by the applicant as the “original,” which must contain an original signature in blue ink; and two others it designates as “copies,” which are used by Florida Housing staff to score the applications. Florida Housing scans the application attachments from the original and posts the online application with the scanned attachments on its web page. The applications were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA, Florida Administrative Code Rule Chapters 67-48 and 67-60, and applicable federal regulations. Applications are considered for funding only if they are deemed “eligible,” which means that the application complies with Florida Housing’s various content requirements. Of the 82 applications submitted to Florida Housing for the RFA, 69 were found “eligible,” and 13 were found ineligible. Petitioner’s application was found ineligible. A five-page spreadsheet created by Florida Housing, entitled “RFA 2014-114 – All Applications,” which identifies all eligible and ineligible applications, was provided to each applicant. The first consideration in sorting eligible applications for funding is application scores. Applicants can achieve a maximum score of 23 points. Eighteen of those 23 points are attributable to “proximity” scores based on the distance of the proposed development from services needed by tenants and the remaining five points are attributable to local government contributions. All 69 eligible applications received the maximum score of 23 points. Petitioner’s application was not fully scored, because it was deemed ineligible. If Petitioner’s application had been scored, rather than being found ineligible, it would have received a score of 23. Many applicants achieve tie scores, and in anticipation of that occurrence Florida Housing designed the RFA and rules to incorporate a series of “tie breakers,” the last of which is randomly assigned lottery numbers. Lottery numbers have historically played a significant role in the outcome of Florida Housing’s funding cycles, and lottery numbers were determinative of funding selections in the current RFA. Florida Housing employs a “funding test” to be used in the selection of medium county applications for funding in this RFA. The “funding test” requires that the amount of tax credits remaining (unawarded) when a particular medium county application is being considered for selection must be enough to fully fund that applicant’s request amount, and partial funding will not be given. The RFA also specifies a sorting order for funding selection, with applications first arranged from highest score to lowest. Applicants with tie scores are separated based on criteria not relevant to resolving the instant protest. Suffice to say that Petitioner’s application qualified for each funding preference and it had a better lottery number than Intervenor. County Award Tally In selecting among eligible applicants for funding, Florida Housing also applies a “County Award Tally.” The County Award Tally is designed to prevent a disproportionate concentration of funded developments in any one county. Generally, before a second application can be funded in any given county, all other counties that are represented by an eligible applicant must receive an award of funding. As there were eligible medium county applications submitted from 21 different counties for the RFA, there cannot be more than one applicant funded from any given medium county. The nine medium county applicants selected for funding had lottery numbers 1, 2, 6, 7, 9, 20, 26, 27, and 28. The applicant with lottery number 6 (Intervenor), is from Brevard County. If Petitioner is deemed eligible, it would be selected for funding because it has a lower lottery number (4) than Intervenor and would displace Intervenor as the only project funded in Brevard County. Basis for Petitioner’s Ineligibility Florida Housing reviewed Petitioner’s application and determined that it was ineligible as it failed to meet the RFA requirement that applicants must demonstrate control of the site upon which the development is to be constructed. Florida Housing rejected Petitioner’s site control documentation. Site control is an important element of an application––the “meat and potatoes of the application.” Proof that the applicant has control of the development site is a matter of “do or die if you miss a document.” The RFA has a general requirement that each application be complete, and must include all applicable documentation. Site control can be established through a deed, a long-term lease, or a contract for purchase and sale. In each case, the entity with control of the site must be the applicant entity. If the purchaser under a contract for purchase and sale is not the applicant, then the application must contain one or more assignments that give the applicant all rights and remedies of the purchaser. Section 4.A.7 of the RFA, at page 23, lists the requirements for site control. The instructions provide, in relevant part: Site Control: The Applicant must demonstrate site control by providing, as Attachment 7 to Exhibit A, the documentation required in Items a., b., and/or c., as indicated below. a. Eligible Contract - For purposes of the RFA, an eligible contract is one that[:] has a term that does not expire before a date that is six (6) months after the Application Deadline or that contains extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than six (6) months after the Application Deadline; specifically states that the buyer’s remedy for default on the part of the seller includes or is specific performance; and the buyer MUST be the Applicant unless an assignment of the eligible contract which assigns all of the buyer's rights, title and interests in the eligible contract to the Applicant, is provided. As an overall submittal requirement, the RFA requires that each application be complete and include all “applicable documentation.” The RFA process does not provide an opportunity for applicants to cure errors or omissions discovered after submission of an application to Florida Housing. Petitioner’s application sought to establish site control through attachment 13 to its application, which includes, among other things, a vacant land contract, and an assignment and assumption agreement. The vacant land contract pertains to the land that Petitioner intends to use for the site identified in its application. The vacant land contract was prepared using a Florida Association of Realtors form contract. Paragraph 12 of the vacant land contract contains boilerplate language which reads as follows: “ASSIGNABILITY; PERSONS BOUND: Buyer may not assign this Contract without Seller’s written consent.” According to Petitioner, the word “not” was struckthrough in the following manner, to wit: not. Amy Garmon, Florida Housing’s multi-family programs manager, scored the site control element of all 82 applications filed in response to the RFA. Ms. Garmon has scored site control applications for nine to ten years, and is very familiar with the Florida Association of Realtors’ form contract, having scored hundreds of contracts submitted on that form. Ms. Garmon reviewed paragraph 12 of the vacant land contract submitted by Petitioner and concluded that the language set forth therein does not allow for an assignment of the contract without written consent from the seller. Ms. Garmon reached her conclusion because in her opinion, the strikethrough of the word “not” in paragraph 12, although the word itself appears somewhat darker and not as clear as some of the other words in the paragraph, is not sufficiently obvious so as to alert a reader to the presence of the strikethrough. Upon review of paragraph 12, the undersigned agrees with Ms. Garmon, and concludes that the strikethrough of the word “not” is not sufficiently observable so as to alert a reviewer to the presence of the strikethrough. Given the findings in paragraph 31, the provision of the vacant land contract which provides that “[h]andwritten or typewritten terms inserted in or attached to th[e] contract prevail over preprinted terms” is not triggered because the purported strikethrough of the word “not” in paragraph 12 of the contract, given its ambiguity, does not rise to the level of constituting a “handwritten or typewritten” modification of a preprinted contractual term. Additionally, the finding in paragraph 31 also means that Petitioner, in order to demonstrate site control, must prove that the seller gave written consent to DPKY Development Company’s assignment of its interest in the vacant land contract to Petitioner. Petitioner also submitted with its application an assignment and assumption agreement which relates to paragraph 12 of the vacant land contract. The assignment and assumption agreement provides that DPKY Development Company, LLC, is assigning to Petitioner its interest in the vacant land contract it has with William T. Taylor. The vacant land contract provides that “William T. Taylor, in his capacity as trustee of the Hidden Creek Land Trust Agreement dated January 15, 2004,” is the “seller” of the land and “DPKY Development Company, LLC, or assigns” is the “buyer” of land. While the assignment and assumption agreement lists the name of the seller, it does not include a signature line for the seller or any other acknowledgement by the seller expressing consent to the assignment. Petitioner does not dispute that the assignment and assumption agreement is deficient in this regard. Turning to the vacant land contract, Petitioner contends that the first page of the vacant land contract identifies the buyer as “DPKY Development Company, LLC, or assigns,” and because the seller initialed the bottom of the first page of the vacant land contract this means that Respondent should have reasonably known that the presence of seller’s initials means that the seller is consenting to the assignment of DPKY Development Company’s interest in the property. The portion of page one of the vacant land contract initialed by the seller provides that “Buyer ( ) and Seller ( ) acknowledge receipt of a copy of this page, which is page 1 of 7.” Contrary to Petitioner’s assertion, the introductory provision of the vacant land contract that identifies the “buyer” as “DPKY Development Company, LLC, or assigns,” cannot be read in isolation when there is another provision in the contract which specifically addresses the issue of assignability, to wit: “[b]uyer may not assign th[e] contract without [s]ellers written approval.” The introductory provision of the vacant land contract relied upon by Petitioner may have conveyed a stronger expression of the seller’s purported intent to consent to an assignment if Petitioner removed from paragraph 12 of the vacant land contract any reference to assignability. Because Petitioner failed to do so, the fact that the seller acknowledged that it received a copy of the page of the contract identifying the buyer as “DPKY Development Company, LLC, or assigns” is not sufficient, in itself, to establish that the seller consented to DPKY Development Company’s assignment of its interest in the contract to Petitioner.2/ Ms. Garmon, after determining that the required consent of the seller to the assignment was not included in the original copy of Petitioner’s application, reviewed each of the other copies of Petitioner’s application in Respondent’s possession. Ms. Garmon’s review of the other copies of Petitioner’s application confirmed that the seller’s written consent to assignment was not a part of Petitioner’s application. The evidence supports the conclusions reached by Ms. Garmon and Florida Housing.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is recommended that Petitioner’s protest be dismissed. DONE AND ENTERED this 25th day of June, 2015, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN 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 25th day of June, 2015.
The Issue Whether or not Petitioner was subject to a discriminatory housing practice based on her race, age, and gender, or any of the foregoing, when her application for a loan was denied by Respondents.
Findings Of Fact Based on the testimony and demeanor of the witnesses and documentary evidence presented, the following Findings of Fact are made: Petitioner, Janice Buchanan, is an African-American female who was 44 years old at the time she applied for the home loan which is the subject of this claim. She had served on active duty in the United States Air Force and, as a result of her service, was eligible for a home loan guarantee by the federal Department of Veterans Affairs ("VA") if she met other financial criteria established by the VA. At all times material to the claim herein, Town & Country Mortgage Company ("Town & Country") was a correspondent mortgage lender. A correspondent mortgage lender originates a loan application for an individual seeking a loan, locates an investor, and, if the investor approves the applicant, assigns the file to the investor. As a correspondent mortgage lender, Town & Country did not make loans or make the decision whether or not to approve a loan application. The decision whether to approve the loan is made by an underwriter employed by the investor. The investor's underwriter, not Town & Country, decides whether an application for a VA home loan guarantee meets the criteria established by the VA. A Town & Country loan application commences with the "pre-qualification" interview. During this interview, the loan officer will obtain the applicant's income information, asset information, and look at a quick "snapshot" of the applicant's credit history, which is obtained from a credit reporting agency. Once the loan officer believes sufficient information has been obtained during the pre-qualification interview, the loan application is actually filled out by the applicant and the loan officer, and the applicant provides the loan officer with documents such as bank statements and income verification documents. While processing the loan application, the loan officer attempts verification of the information provided by the applicant during the initial interview. Once the loan application is completed, a loan processor with Town & Country will begin a more detailed verification of financial information which includes calling the applicant's employer, ordering a "full factual credit report," and verifying all financial information the applicant has provided. If the loan applicant has a complex financial history, the verification process may take a considerable amount of time. In the instant case, the "full factual credit report" was obtained from Stateswide Credit Bureau Services, Inc. ("Stateswide"). Stateswide assembles credit information on the loan applicant from the three main credit information repositories in the United States (Equifax, TransUnion, and TRW). The "full factual credit report" is known as a "tri- merge," i.e., credit information from all three credit information repositories is combined into one document. A "tri- merge" report is used because one credit information repository may not have all of the information another repository has. As a result, even if an applicant produced a satisfactory credit report from one credit information repository, it would be insufficient to overcome an unsatisfactory report on a "tri- merge." Petitioner's "full factual credit report" included at least nine negative credit references. A negative credit reference may be a delinquent account, a past due account, late payments or other activities considered inappropriate by a credit provider and reported to a credit information repository. The Stateswide "full factual credit report" was prepared by Laura Aguayo on November 2, 1999. In compiling the report, Ms. Aguayo telephoned each creditor which had provided negative credit information. Each creditor verified the negative information by social security number, in addition to name. If a creditor did not accept Ms. Aguayo's telephone call, she wrote the creditor. Petitioner was advised of the negative credit information; she provided Town & Country with additional information in an effort to explain the negative information on her credit report. After the verification process is completed, Town & Country's loan processor forwards the information obtained during the loan application and verification process to the investor. This information includes the loan application completed by the applicant and a credit package consisting of the applicant's credit report, income, assets, property, collateral, and additional information, e.g., the loan applicant's explanation of negative credit information, which was forwarded in the instant case. The investor's underwriter reviews the loan application and related information and makes a decision as to whether or not the investor will provide the loan. Town & Country would not forward a loan package to an investor if Town & Country did not want the application to be approved by the investor. There is an economic incentive for Town & Country to want a loan application to be approved by an investor; if an investor approves a loan, Town & Country receives a commission; if an investor does not approve a loan, Town & Country receives no income from the investor. The investor in the instant case was Irwin Mortgage Corporation ("Irwin"); the underwriter at Irwin who reviewed Petitioner's application was Ms. Christine Ross who, like her employer, has no affiliation with Town & Country. Ms. Ross has 15 or 16 years of underwriting experience. Ms. Ross reviewed Petitioner's income and assets and assessed whether she has the ability to make the payments and reviewed her credit history to determine if Petitioner had, in the past, made payments in a timely fashion. Ms. Ross determined that Petitioner was not credit worthy because of a poor credit history and insufficient funds to close the loan. In addition, Ms. Ross considered that Petitioner had several checks returned because of insufficient funds. She reviewed all of the information provided and opined that the application would not meet VA guidelines. If the loan is not approved by an investor, Town & Country's loan officer will work with the applicant to determine what can be done to have the loan approved. When dealing with a VA loan, as in this case, the loan application and related information can be forwarded to the VA for review even though it has not been approved by an investor. The benefit of having the package forwarded to the VA is that the VA might see something the investor missed, and provides the applicant with a second chance to have the loan approved. Town & Country would not request that the investor forward the loan file to the VA if it did not want the loan application to be approved. If the VA denies the loan, there is no purpose in trying to find another investor for the loan because by denying the loan application, the VA is indicating it will not accept the loan application from any investor. When Irwin advised Town & Country that Petitioner's loan application had been denied, Town & Country requested that Irwin forward the application directly to the VA. Upon Town & Country's request, Ms. Ross sent the loan package to the VA. If the VA had decided to guarantee the loan, Irwin would have no risk and would approve the loan. The VA also denied Petitioner's loan application. The reason the VA denied the loan was because "[t]he present income of the borrower(s) was not shown to be sufficient." Ultimately, Ms. Aguayo of Stateswide was able to remove one negative entry from Petitioner's credit report, but she was unable to remove any others. This deletion of one negative entry is evidenced by a December 17, 1999, Stateswide "full factual credit report." Had Ms. Ross been in possession of the December 17, 1999, credit report from Stateswide, this would not have affected her decision to deny Petitioner's loan application, because the report still showed a credit history that did not meet VA guidelines. Additionally, the VA denied the loan because of insufficient income, not poor credit. No credible evidence was presented that Town & Country caused a delay in seeking financing or provided false information as alleged in Petitioner's Petition For Relief. Steve Pilchick, President of Town & Country, had no direct involvement with Petitioner's loan application and did not discriminate against her. No evidence was offered regarding any discrimination against Petitioner based on her age. No evidence was presented that Town & Country was responsible for the denial of Petitioner's loan application. Nor was any evidence presented that Town & Country had approved loans for any particular person or persons of any race or gender who had loan qualifications similar to Petitioner.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations dismiss Petitioner's Petition for Relief with prejudice finding that neither Town & Country Mortgage Company nor Steve Pilchick unlawfully discriminated against Petitioner. DONE AND ENTERED this 4th day of April, 2002, in Tallahassee, Leon County, Florida. JEFF B. CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 2002. COPIES FURNISHED: Janice Buchanan 4266 Cloverleaf Place Casselberry, Florida 32707 Janice Buchanan Teamesha Leyva 14901 Newland Street, Apartment C Midway City, California 92655 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Daniel P. O'Gorman, Esquire Ford & Harrison LLP 300 South Orange Avenue, Suite 1300 Orlando, Florida 32801 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue The issue is whether the Florida Housing Finance Corporation ("Florida Housing") properly rescinded the preliminary funding awarded to RST Fruitland Housing, L.P. ("RST"), pursuant to applicable rules, prior agency practice, and the existing case law.
Findings Of Fact RST is a limited partnership authorized to do business in Florida and is controlled by Roundstone Development, LLC ("Roundstone"). Roundstone is in the business of providing affordable rental housing. In addition to Florida, Roundstone operates in Texas, Arkansas, Mississippi, and South Carolina. Michael Hartman, the consultant for Roundstone, has been involved in the development of over 70 affordable housing developments, including many in Florida. Florida Housing is a public corporation created by Section 420.504, Florida Statutes, to administer the governmental function of financing or refinancing of affordable housing and related facilities in Florida. Florida Housing's statutory authority and mandates appear in Part V of Chapter 420, Florida Statutes. Florida Housing is governed by a Board of Directors consisting of nine individuals appointed by the Governor and confirmed by the Senate. On July 31, 2009, Florida Housing issued RFP 2009-04 (the "RFP") setting forth criteria and qualifications for developers to seek funding for affordable housing projects from funds that Florida received through the American Recovery and Reinvestment Act of 2009, PL 111-5 ("ARRA"). ARRA was enacted in 2009 by Congress as part of federal economic stimulus efforts. RST received notice of the RFP through e-mail notification on July 31, 2009. The RFP required applicants to submit proposals to Florida Housing no later than 2:00 p.m. on August 14, 2009. RST submitted an application and intended to seek financing for its affordable housing project by applying for funding from the sources that are proposed to be allocated through the RFP. Florida Housing's Programs Florida Housing administers numerous programs aimed at assisting developers to build affordable housing. These programs include: the Multi-Family Mortgage Revenue Bond Program ("MMRB") established under Section 420.509, Florida Statutes; the State Apartment Incentive Loan Program ("SAIL") created pursuant to Section 420.5087, Florida Statutes; and the Low Income Housing Tax Credit Program (the "Tax Credit program") established under the authority of Section 420.5093, Florida Statutes. These funding sources are allocated by Florida Housing to finance the construction or substantial rehabilitation of affordable housing. A portion of the units constructed based upon funding from these programs must be set aside for residents earning a certain percentage of area median income ("AMI"). For purposes of these proceedings, the primary program of interest is the Tax Credit program. Tax Credits The Tax Credit program was created in 1986 by the federal government. Tax Credits come in two varieties: competitively awarded nine percent tax credits, and non- competitively awarded four percent tax credits. For the nine percent credits, the federal government annually allocates to each state a specific amount of tax credits using a population- based formula. Tax Credits are a dollar for dollar offset to federal income tax liability over a 10-year period. A developer awarded Tax Credits will often sell the future stream of Tax Credits to a syndicator who in turn sells them to investors seeking to shelter income from federal income taxes. The developer receives cash equity with no debt associated with it. Thus, Tax Credits provide an attractive subsidy and, consequently, are a highly sought after funding source. Florida Housing is the designated agency in Florida to allocate Tax Credits to developers of affordable housing. Every year since 1986, Florida Housing has received an allocation of Tax Credits to be used to fund the construction of affordable housing. Universal Application Florida Housing has historically allocated funds from the MMRB, SAIL, and Tax Credit programs through a single annual application process. Since 2002, Florida Housing has administered the three programs through a combined competitive process known as the "Universal Cycle." The Universal Cycle operates much the same as an annual competitive bidding process in which applicants compete against other applicants to be selected for limited funding. Florida Housing has adopted rules which incorporate by reference the application forms and instructions for the Universal Cycle as well as general policies governing the allocation of funds from the various programs it administers. Typically, Florida Housing amends its Universal Cycle rules, forms, and instructions every year. The typical process used by Florida Housing to review and approve the Universal Cycle applications operates as set forth in Florida Administrative Code Rule 67-48.004, and is summarized as follows: Interested developers submit applications by a specified date. Florida Housing reviews all applications to determine if certain threshold requirements are met. A score is assigned to each application. Applications receive points towards a numerical score, based upon such features as programs for tenants, amenities of the development as a whole and of tenants' units, local government contributions to the specific development, and local government ordinances and planning efforts that support affordable housing in general. Florida Housing has built into its scoring and ranking process a series of "tiebreakers" to bring certainty to the selection process. The tiebreakers are written into the application instructions which, as indicated above, are incorporated by reference into Florida Housing's rules. After the initial review and scoring, a list of all applications, along with their scores, is published by Florida Housing on its website. The applicants are then given a specific period of time to alert Florida Housing of any errors they believe Florida Housing made in its initial review of the applications. An appeal procedure for challenging the scores assigned by Florida Housing is set forth in Florida Administrative Code Rule 67-48.005. Following the completion of the appeal proceedings, Florida Housing publishes final rankings which delineate the applications that are within the "funding range" for the various programs. In other words, the final rankings determine which applications are preliminarily selected for funding. The applicants ranked in the funding range are then invited into a "credit underwriting" process. Credit underwriting review of a development selected for funding is governed by Florida Administrative Code Rule 67-48.0072. In the credit underwriting process, third party financial consultants (selected by Respondent, but paid for by the individual applicants) determine whether the project proposed in the application is financially sound. The independent third party examines every aspect of the proposed development, including the financing sources, plans and specifications, cost analysis, zoning verification, site control, environmental reports, construction contracts, and engineering and architectural contracts. Subsection (10) of Florida Administrative Code Rule 67- 48.0072 expressly requires that an appraisal (as defined by the Uniform Standards of Professional Appraisal Practice), and a market study be ordered by the Credit Underwriter, at the applicant's expense. The Credit Underwriter is required to consider the market study, as well as the development's financial impact on other developments in the area previously funded by Florida Housing, and make a recommendation to approve or disapprove a funding allocation. RST's Application in the 2008 Universal Cycle RST timely submitted an application in the 2008 Universal Cycle seeking an award of Tax Credits and a supplemental loan to construct a 100-unit garden style apartment complex ("Plata Lago") in Fruitland Park, Lake County, Florida. RST complied with all of the requirements of the 2008 Universal Cycle Application and Instructions, and achieved a perfect score for its application. RST also achieved maximum tie-breaker points. As a result, RST was allocated by Florida Housing $1,334,333 in Tax Credits from the Universal Cycle allocation. Based on the final ranking of its application, RST was invited into the credit underwriting process on October 6, 2008. RST timely accepted the invitation and paid the necessary underwriting fees. Credit Underwriting Under the credit underwriting process, a professional credit underwriter is appointed by Florida Housing to review the proposed project that qualified for funding as a result of the Universal Cycle. The credit underwriter reviews and assesses numerous financial, demographic, and market factors concerning the proposed project. The credit underwriter selected by Florida Housing to review the RST application was Seltzer Management Group, Inc. ("Seltzer"). As required by the applicable 2008 Universal Cycle Application requirements and rule, the credit underwriting process required the preparation of a Market Study by an independent appraiser. Seltzer engaged Meridian Appraisal Group ("Meridian") to perform an independent appraisal and market study as required by the RFP. This initial Market Study was issued with the identified purpose defined as follows: Provide a site analysis for the subject property. Provide regional and neighborhood analyses for the subject property. Provide an Apartment Market Overview for the subject market area. Provide an evaluation of market demand within the competitive area for affordable rental apartment products. Identify and evaluate the relevant competitive supply of affordable apartments. Perform an income band analysis for the subject property based on achievable restricted rents. Perform a Capture Rate analysis for the subject property as a restricted property, and estimate an absorption rate. Establish rental estimates for the subject, both as a market rate project and as restricted by the Housing Credit program. Illustrate the difference between our estimate of the market rental rates and restricted rental rates. Estimate the impact of the subject project on the existing rental inventory. Economic Downturn By the fall of 2008, significant changes were taking place in the economic environment and the affordable housing market in particular. Many of the projects that had been awarded funding through Florida Housing allocation process were encountering difficulties and in many instances were unable to close. By the latter part of 2008, it became evident that the market for Tax Credits had precipitously dropped as a result of the changed economic environment. Shortly before RST was to complete the credit underwriting process, the syndicator who had originally expressed its intent to purchase the Tax Credits awarded to RST announced that it would not go forward with the syndication. This withdrawal was a direct result of the nationwide downturn in economic conditions. Many other projects that were awarded Tax Credits during the 2007 and 2008 (and later the 2009) Universal Cycles similarly experienced difficulty in finding syndicators to purchase the awarded Tax Credits and were also unable to proceed to closing. In early 2009, in recognition of the collapse of the housing market and the difficulty in marketing Tax Credits, the federal government, as part of its economic stimulus efforts, established mechanisms to assist in the development of affordable housing and offset some of the economic devastation to developers. ARRA The ARRA enacted by Congress and signed by the President on February 17, 2009, included specific provisions intended to address the collapse of the Tax Credit market. ARRA gives states the ability to return to the federal government previously awarded Tax Credits that had not been utilized. These Tax Credits are exchanged for a cash distribution of 85 cents for each tax credit dollar returned. The money that is awarded to the states for the return Tax Credits (the "Exchange Funds") is to be used by Florida Housing to fund developers who were unable to syndicate their Tax Credits due to the economic downturn. In other words, the Tax Credits that had not been utilized as a result of the declining economic conditions were allowed to be converted into cash from the federal government to be allocated to developers who were ready to proceed with their affordable housing projects but for the inability to syndicate their Tax Credits. ARRA also included a direct allocation of funds to state housing finance agencies under the Tax Credit Assistance Program ("TCAP"). These funds were allocated to the states to "resume funding of affordable rental housing projects across the nation while stimulating job creation in the hard-hat construction industry." TCAP is a separate program included as part of ARRA to provide gap financing for affordable housing projects that have been affected by the economic downturn. The RFP In response to ARRA, on July 31, 2009, Florida Housing issued RFP 2009-04 (the "RFP"), setting forth criteria and qualifications for developers to seek funding for affordable housing projects from money that had been allotted by the federal government as part of economic stimulus efforts. RST received notice of the RFP through e-mail notification on July 31, 2009. The RFP required applicants to submit proposals to Florida Housing by no later than 2:00 p.m. on August 14, 2009. The RFP solicits proposals from applicants with an "Active Award" of Tax Credits who were unable to close and are seeking alternate funding to construct affordable housing utilizing Exchange Funds from the Tax Credit Exchange Program authorized under Section 1602 of ARRA. The RFP provides a general description of the type of projects that will be considered eligible for this alternate funding. The RFP also sets forth eligibility criteria that are a precondition to award of an allocation of Exchange Funds, and also specifies that projects allocated Exchange Funds and also specifies that projects allocated Exchange Funds will be required to meet new credit underwriting standards. Occupancy Standards Section 5B.1b. of the RFP states that a tentative funding award under the RFP will be rescinded "if the submarket of the Proposed Development does not have an average occupancy rate of 92% or greater for the same Demographic population, as determined by a market study ordered by the Credit Underwriter, and analyzed by the Credit Underwriter and Florida Housing staff, as well as approved by the Board." The RFP does not define "submarket." Likewise, there was no definition of "submarket" in the rules which governed the 2008 or 2009 Universal Cycle. The word "submarket" is included in the 2009 Universal Cycle Rule, but it is not defined. RST timely submitted a response to the RFP on August 14, 2009, which sought additional funding for the Plata Lago project. On August 20, 2009, Florida Housing issued a Notice of Awards for RFP #2009-04. Based on the Notice, RST was one of the responders awarded funds subject to successfully completing the underwriting criteria listed in the RFP. Accordingly, RST was once again invited into credit underwriting. By accepting the invitation, RST was required by the credit underwriter to update its Market Study ("2009 Study"). This Second Market Study, which was completed approximately eight months after the 2008 study, was also prepared by Meridian on July 14, 2009. Likewise, Seltzer was the assigned underwriter. On September 9, 2009, Seltzer issued a letter to Florida Housing concerning the Plata Lago project. In essence, Seltzer in the letter considered the 2009 Market Study and concluded that "the submarket average occupancy rate for the subject does not meet the minimum requirement of 92%." On October 23, 2009, Florida Housing's Board of Directors considered Seltzer's letter and a staff recommendation and voted to rescind funding to RST because of the alleged failure to satisfy the 92 percent occupancy requirement. This action effectively stopped the underwriting process. While RST timely filed its petition with the Division, it also intervened in a challenge to the provisions of the RFP. The challenge specifically involved a review of the 92 percent occupancy standard. In that matter, Elmwood Terrace Ltd. P'ship v. Fla. Hous. Fin. Corp., Case No. 09-4682BID, 2009 Fla. Div. Adm. Hear. Lexis 816 (Final Order entered December 7, 2009), the administrative law judge entered a Recommended Order on November 12, 2009, holding that the provision of the RFP which required a 92 percent occupancy rate is contrary to Florida Housing's governing statutes and rules. The administrative law judge concluded that Florida Housing is limited to using the 90 percent occupancy test established at Florida Administrative Code Rule 67-48.0072(10). Florida Housing issued its Final Order in the Elmwood case on December 7, 2009, adopting the administrative law judge's Recommended Order. Based upon the Final Order in Elmwood, Florida Housing has reevaluated the RST Market Study under the provisions of the 2009 Universal Cycle Rule which established a 90 percent occupancy test. Florida Housing has now concluded that RST's Market Study indicates an 87 percent occupancy rate. Accordingly, Florida Housing has not changed its previous position and refuses to allow Petitioner to move forward in the underwriting process. Unstipulated Findings of Fact Two market studies were commissioned by Florida Housing and Seltzer regarding the proposed Plata Lago development, the first in November 2008 and the second in July 2009. Both the First and Second Market Studies were performed by Meridian Appraisal Group and Robert Von, a state- certified general appraiser. While purported to be a new stand-alone study, the Second Market Study is identical in many respects to the First Market Study. However, the First Market Study predated the requirement of the occupancy test in Florida Administrative Code Rule 67-48.0072(10), while the Second Market Study included the 90 percent occupancy test analysis. In each of the two studies, a circle is drawn extending out 10 miles from the proposed location of the Plata Lago development. That circle represents the primary market area ("PMA") which includes Fruitland Park, Lady Lake, and Leesburg. The PMA is where generally two-thirds to three-quarters of the demand for a facility originates. In the Second Market Study, when the occupancy rate of the three existing senior apartment developments within the PMA is considered, the threshold requirement of 90 percent is met. If the PMA alone were considered, Florida Housing would not have rescinded the Tax Credits, and Petitioner would be entitled to move forward with its project. The Second Market Study, performed in 2009, added an additional factor to the analysis. The concept of a Competitive Market Area ("CMA") was introduced. A CMA was not designated in the 2008 Market Study. CMA is neither defined in the 2009 Universal Cycle Rule or RFP 2009-04. The delineation of a CMA was not a requirement of the RFP, nor was it otherwise requested by Florida Housing. CMA is not a term defined in either the development or market analysis industries. The term appears to have been created or borrowed by Florida Housing's designated market analyst based upon his experience as a certified appraiser. Unlike the PMA, the CMA was not mapped or otherwise designated in the Second Market Study. However, both the First and Second Market Studies included information regarding a development known as Lake Point Senior Village ("Lake Point"). Both Plata Lago and Lake Point are affordable housing developments targeted at the elderly demographic category. Lake Point is not in the PMA of the proposed Plata Lago development as PMA is defined in the Second Market Study. The PMA as defined in the Second Market Study is a predetermined geographic area used for purposes of demographic analysis, but not for competitive analysis. A set unmovable circle on a map could lead to skewed or absurd results if the nature and character of the developments within and without the circle are not considered by the appraiser. Lake Point is an elderly affordable housing development located 13 miles from the proposed location of Plata Lago. It is located in Tavares which is outside the 10-mile radius from the proposed development and is past two lakes that separate Tavares from those developments contained within the PMA. The analysis by Florida Housing's expert was that an individual moving into the Lake County area would look for elderly housing developments in close proximity to his or her work, shopping, health care, and other amenities they deemed important. The tenant does not necessarily look to see if other elderly housing developments are nearby. This is especially true when only four elderly developments are located in the county. Plata Lago and Lake Point are similar to each other, both serve the elderly demographic category, and each would compete with the other for residents if the Plata Lago development were built. It was appropriate for the Second Market Study to include Lake Point in its analysis of occupancy data for the purpose of determining whether Plata Lago passed the test set forth in the rule requiring a 90 percent occupancy rate in its applicable submarket. To address the requirement of the rule regarding occupancy rates for the submarket of the Plata Lago development, it was necessary for Florida Housing's consultant to determine what developments would compete with the proposed project. To do a competitive analysis, it is necessary for the consultant to move beyond the fixed PMA to a study of the market as real people in the real world look at it. In the Second Market Study, the term CMA is used to describe the "submarket" as it applies to the occupancy test of the rule, as well as to distinguish this area from the PMA and from other incidental uses of the term "submarket." Florida Housing's consultant investigated all the comparable properties and interviewed the manager of Lake Point about where the competition lay. The manager mentioned a property around the corner from the proposed Plata Lago (Silver Pointe) as a competitor which led the consultant to expand the CMA to include Lake Point. The manager at Silver Pointe named Lake Point as part of its competition. Florida Housing's appraiser considers the submarket to be where a project's competitive property is located. In this case, the submarket or competitive market is larger than the PMA. Lake Point suffered a drop in its occupancy between the First and Second Market Studies. This was most likely attributable to the nature of elderly developments. Elderly residents tend to expire or suffer health issues that cause them to move to facilities providing health care or assisted living services. On October 23, 2009, Florida Housing's Board of Directors met and considered the market study letter prepared by Seltzer along with its finding that the Plata Lago development did not pass the required occupancy test of 90 percent set forth in the rule. Based upon the occupancy rate being only 87 percent, as well as the results of the market study and credit underwriter recommendations, the Board voted to rescind Florida Housing's commitment to fund the Plata Lago development.
Recommendation it is Based upon the Findings of Fact and Conclusions of Law, RECOMMENDED that the Florida Housing Finance Corporation enter a final order rescinding funding to the Plata Lago development for failing to pass the occupancy standard set forth in Florida Administrative Code Chapter 67-48. DONE AND ENTERED this 9th day of June, 2010, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 9th day of June, 2010. COPIES FURNISHED: Wellington H. Meffert, II, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Michael P. Donaldson, Esquire Carlton Fields, P.A. 215 South Monroe Street, Suite 500 Post Office Drawer 190 Tallahassee, Florida 32302-0190 Hugh R. Brown, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Della Harrell, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
The Issue The issues for determination are: (1) whether Riverside Village Partners, LTD. (Riverside or Petitioner), has, or had at the time of application, a present plan to convert its proposed development to any use other than affordable residential rental property; (2) whether Provincetown Village Partners, LTD. (Provincetown or Petitioner), has, or had at the time of application, a present plan to convert its proposed development to any use other than affordable residential rental property; (3) whether Riverside irrevocably committed to set aside units in its proposed development for a total of 50 years; and (4) whether Provincetown irrevocably committed to set aside units in its proposed development for a total of 50 years.
Findings Of Fact Parties Petitioner, Provincetown Village Partners, LTD., is a Florida limited partnership with its business address at 1551 Sandspur Road, Maitland, Florida 32751, and is in the business of providing affordable housing units. Petitioner, Riverside Village Partners, LTD., is a Florida limited partnership with its business address at 1551 Sandspur Road, Maitland, Florida 32751, and is in the business of providing affordable housing units. Respondent, Florida Housing Finance Corporation (Florida Housing), is a public corporation that administers governmental programs relating to the financing and refinancing of affordable housing and related facilities in Florida pursuant to Section 420.504, Florida Statutes (2003). Florida Housing's Financing Mechanisms To encourage the development of affordable rental housing for low-income families, Florida Housing provides low-interest mortgage loans to developers of qualified multi-family housing projects. In exchange for an interest rate lower than conventional market rates, the developer agrees to "set-aside" a specific percentage of the rental units for low-income tenants. Through its Multi-Family Mortgage Revenue Bond (MMRB) program, Florida Housing funds these mortgage loans through the sale of tax-exempt and taxable bonds. Applicants then repay the loans from the revenues generated by their respective projects. Applicants who receive MMRB proceeds are required to execute a Land Use Restriction Agreement (LURA or Land Use Restriction Agreement), which is recorded in the official records of the county in which the applicant’s development is located. Through the State Apartment Incentive Loan (SAIL) program, Florida Housing funds low-interest mortgage loans to developers from various sources of state revenue, which are generally secured by second mortgages on the property. Applicants who receive SAIL proceeds are required to execute and record a LURA in the county records as with MMRB's Land Use Restriction Agreements. Florida Housing also distributes federal income tax credits for the development of affordable rental housing for low-income tenants; those tax credits are referred to as "housing credits." Generally, applicants who utilize tax-exempt bond financing for at least 50 percent of the cost of their development are entitled to receive an award of housing credits on a non-competitive basis. These non-competitive housing credits are received by the qualified applicant each year for ten consecutive years. Typically, applicants sell this future stream of housing credits at the initiation of the development process in order to generate a portion of the funds necessary for the construction of the development. The Application, Scoring, and Ranking Process Because Florida Housing’s available pool of tax-exempt bond financing and SAIL funds is limited, qualified projects must compete for this funding. To determine which proposed projects will put the available funds to best use, Florida Housing has established a competitive application process to assess the relative merits of proposed projects. Florida Housing’s competitive application process for MMRB and SAIL financing is included with other financing programs within a single application process (the 2003 Universal Application) governed by Florida Administrative Code Rule Chapters 67-21 and 67-48. The 2003 Universal Application form and accompanying instructions are incorporated as Form "UA1016" by reference into Florida Administrative Code Chapters 67-21 and 67-48 and by Florida Administrative Code Rules 67-21.002(97), and 67-48.002(111), respectively. For the 2003 Universal Application cycle, each applicant who completed and submitted Form UA1016 with attachments was given a preliminary score by Florida Housing. Following the issuance of preliminary scores, applicants are provided an opportunity to challenge the scoring of any competing application through the filing of a Notice of Possible Scoring Error (NOPSE). Florida Housing considers each NOPSE filed and provides each applicant with notice of any resulting change in their preliminary scores (the NOPSE scores). Following the issuance of NOPSE scores, Florida Housing provides an opportunity for applicants to submit additional materials to "cure" any items for which the applicant received less than the maximum score or for which the application may have been rejected for failure to achieve "threshold." There are certain portions of the application which cannot be cured; the list of noncurable items appears in Florida Administrative Code Rules 67-21.003(14) (for MMRB applicants) and 67-48.004(14) (for SAIL applicants). Following the cure period, applicants may again contest the scoring of a competing application by filing a Notice of Alleged Deficiencies (NOAD), identifying deficiencies arising from the submitted cure materials. After considering the submitted NOADs, Florida Housing provides notice to applicants of any resulting scoring changes. The resulting scores are known as "pre-appeal" scores. Applicants may appeal and challenge, via formal or informal hearings, Florida Housing’s scoring of any item for which the applicant received less than the maximum score or for any item that resulted in the rejection of the application for failure to meet "threshold." Upon the conclusion of the informal hearings, and of formal hearings where appropriate, Florida Housing issues the final scores and ranking of applicants. Applicants are then awarded tentative MMRB and/or SAIL funding in order of rank; Florida Housing issues final orders allocating the tentative funding and inviting successful applicants in the credit underwriting process. If an applicant who requests a formal hearing ultimately obtains a final order that modifies its score and threshold determinations so that its application would have been in the funding range had the final order been entered prior to the date the final rankings were presented to the Florida Housing Board of Directors (Board), that applicant’s requested funding will be provided from the next available funding or allocation. The 2003 Application Process On or about April 8, 2003, Riverside, Provincetown, and others submitted applications for MMRB and SAIL financing in the 2003 Universal Application cycle. Riverside requested $3,205,000 in tax-exempt MMRB funding and $1.6 million in SAIL funding to help finance its proposed development, a 34-unit development in Pinellas County, Florida. In its application, Riverside committed to lease all or most of these units to house families earning 60 percent or less of the area median income (AMI). However, depending on which Florida Housing funding source(s) Riverside’s application was deemed eligible to receive, it would commit to lease at least 17 percent of the units to families earning 50 percent or less of AMI, or would commit to lease only a total of 85 percent of the units to families earning 60 percent or less of AMI. Provincetown requested $4.5 million in tax-exempt MMRB funding and $2.0 million in SAIL funding to help finance its proposed development, a 50-unit development in Gadsden County, Florida. In its application, Provincetown committed to lease all or most of the units to families earning 60 percent or less of AMI. However, depending on which Florida Housing program(s) Provincetown’s application was deemed eligible to receive, it would commit to lease at least 11 percent of the units to families earning 50 percent or less of AMI, or would commit to lease only a total of 85 percent of the units to families earning 60 percent or less of AMI. Florida Housing evaluated all applications and notified applicants of their preliminary scores on or before May 12, 2003. Applicants were then given an opportunity to file NOPSEs on or before May 20, 2003. After considering all NOPSEs, Florida Housing notified applicants by overnight mail on or about June 9, 2003, of any resulting changes in the scoring of their applications. Applicants were then allowed to submit, on or before June 19, 2003, cure materials to correct any alleged deficiencies in their applications previously identified by Florida Housing. Applicants were also allowed to file NOADs on competing applications on or before June 27, 2003. After considering the submitted NOADs, Florida Housing issued notice to Provincetown, Riverside, and others of their adjusted scores on or about July 21, 2003. Commitment to Affordability Period Florida Administrative Code Rule 67-21.006, entitled "Development Requirements," lists certain minimum requirements that a development shall meet or that an applicant shall be able to certify that such requirements shall be met. One of these requirements is "The Applicant shall have no present plan to convert the Development to any use other than the use as affordable residential rental property." Part III.E.3 of the Application provides a line for an applicant to commit to an "affordability period" for its application. This subsection of the application form reads in its entirety: 3. Affordability Period for MMRB, SAIL, HOME, and HC Application: Applicant irrevocably commits to set aside units in the proposed Development for a total of years. Both Provincetown and Riverside filled in the number "50" on the blank line in this subsection of their respective applications. An applicant’s score on its application is determined in part by the length of its affordability period commitment. An applicant who commits to an affordability period commitment of 50 or more years received 5 points; 45 to 49 years, 4 points; 40 to 44 years, 3 points; 35 to 39 years, 2 points; 31 to 34 years, 1 point; and 30 years or less, 0 points. Scoring of Provincetown and Riverside Applications In its preliminary scoring of the Provincetown and Riverside applications, Florida Housing awarded each applicant the full 5 points on Part III.E.3 of his or her application for the 50-year affordability period commitment. Also, in the preliminary scoring of the Provincetown and Riverside applications, Florida Housing did not find any threshold failure regarding an alleged present plan to convert the development to a use other than affordable residential rental property. In its preliminary scoring of the Provincetown application, Florida Housing identified an alleged threshold failure related to the validity of the contract for purchase of the site of the proposed development. A subsequent cure submitted by Provincetown regarding the contract for purchase of the site has resolved this issue, and Florida Housing no longer takes the position that the Provincetown application fails threshold for any reason related to site control. In its preliminary scoring of the Riverside application, Florida Housing identified a threshold failure related to documentation of the status of site plan approval, or plat approval, for the proposed development. A subsequent cure submitted by Riverside regarding the status of site plan approval has resolved this issue, and Florida Housing no longer takes the position that the Riverside application fails threshold for any reason related to site plan approval, or plat approval. During the scoring process, Florida Housing received NOPSEs on both the Provincetown and Riverside applications, which asserted that these applicants were proposing transactions that were not financially feasible and would not pass subsequent credit underwriting requirements. The NOPSEs also alleged that the Riverside and Provincetown applications were for townhouses designed with an intent to eventually convert to home ownership in violation of Florida Administrative Code Rule 67-21.006(6). According to that rule, the applicant shall have no present plan to convert the development to any use other than the use as affordable residential rental property. After reviewing these NOPSEs, but before issuing revised NOPSE scores, Florida Housing determined that it was inappropriate to apply subsequent credit underwriting requirements during the scoring of these applications, and therefore, disagreed with the allegations of the NOPSEs on those grounds. Accordingly, Florida Housing's scoring summaries for Riverside and Provincetown issued, after receipt of the NOPSEs, raised no issues concerning financial feasibility, and it was not placed at issue in this proceeding. Following the filing of NOPSEs, Florida Housing released NOPSE scores for all applicants, including Riverside and Provincetown. The NOPSE scores are reflected on a NOPSE Scoring Summary dated June 9, 2003. For both Provincetown and Riverside, the NOPSE Scoring Summary contained the following statement regarding alleged threshold failure, identifying two separate reasons for the alleged threshold failure: The proposed Development does not satisfy the minimum Development requirements stated in Rule 67-21.006, F.A.C. The Development is not a multifamily residential rental property comprised of buildings or structures each containing four or more dwelling units. Further, the Applicant has a present plan to convert the Development to a use other than as an affordable residential rental property. The first threshold failure noted in the preceding paragraph relates to Florida Administrative Code Rule 67-21.006(2), which requires that there be four or more residential units per building for projects financed with MMRB. A subsequent cure regarding the design of the proposed developments has resolved this issue, and Florida Housing no longer contends that these applications, as cured, exhibit a threshold failure related to the number of residential units per building. The second threshold failure noted in the NOPSE Scoring Summary and quoted in paragraph 30 above, relates to Florida Administrative Code Rule 67-21.006(6), which requires that applicants "shall have no present plan to convert the Development to any use other than the use as affordable residential rental property." In response to the NOPSE Scoring Summaries, both Provincetown and Riverside submitted cures to their respective applications. In the cures, Provincetown and Riverside presented their explanations of how they believed their applications, as submitted, demonstrated a 50-year affordability period commitment and included these applicants’ contentions that they had no present plan to convert the developments to a use other than affordable residential rental property. For Provincetown, an issue had also been raised by a NOPSE concerning whether the Provincetown application was entitled to certain "tie-breaker" points for the distance from the proposed development to a public transportation stop. The points awardable to Provincetown for tie-breaker purposes are not in dispute, and Provincetown, if its application is otherwise deemed to meet threshold requirements, would be entitled to 5.0 of a possible 7.5 tie-breaker points. If Riverside's application were deemed to meet threshold requirements and if the 5 points for the affordability period commitment were restored, Riverside would have been within the funding range for applicants within the 2003 Universal Application cycle at the time the Board took final action on the ranking of applications on October 9, 2003. If Provincetown's application were deemed to meet threshold requirements and if the five points for the affordability period commitment were restored, Provincetown would have been within the funding range for applicants within the 2003 Universal Application cycle at the time the Board took final action on the ranking of applications on October 9, 2003. The Sciarrino Letter and Cures After reviewing the NOPSEs filed against the Provincetown and Riverside applications, Florida Housing received a letter dated June 2, 2003 (Sciarrino letter or letter), from Michael Sciarrino, president of the CED Companies, addressed to Orlando Cabrera, executive director of Florida Housing, with a copy to Kerey Carpenter, deputy development officer of Florida Housing. Michael Sciarrino is a manager of the sole general partner (CED Capital Holdings 2003 Y, LLC., a Florida limited liability company) of Provincetown. Mr. Sciarrino is also a Class B limited partner of the sole member of the general partner (CED Capital Holdings XVI, LTD., a Florida limited partnership). Michael Sciarrino is a manager of the sole general partner (CED Capital Holdings 2003 K, LLC., a Florida limited liability company) of Riverside. Mr. Sciarrino is also a Class B limited partner of the sole member of the general partner (CED Capital Holdings 2003 XVI, LTD., a Florida limited partnership). As manager of the sole general partner of Provincetown and Riverside, Mr. Sciarrino had supervisory authority and editorial control over the processing and preparation of the Provincetown and Riverside applications. The Sciarrino letter was drafted, in part, to respond to the allegations of the NOPSEs filed against Provincetown and Riverside applications and specifically addressed those issues pertaining to Provincetown and Riverside applications. Also, while the letter does not mention Petitioners by name, the description and location of the properties, as detailed in the letter, clearly refer to these applicants. The Sciarrino letter evinces a present plan on the part of Petitioners to convert the proposed developments to a use other than that of affordable residential rental housing. First, the letter describes in detail the economic motivations for the subsequent sale of the units of the proposed development within the 50-year extended affordability period stating that the "residual value potential" of such an arrangement "is the single biggest economic reason for our desire to develop these communities." Next, the letter describes in detail the means by which Petitioners would be relieved of the commitment to a 50-year affordability period as stated in their applications, that is, by seeking a waiver from Board after the 15-year period of tax credit recapture exposure had expired. Third, the letter plainly states that Petitioners had intended to request such relief from the 50-year affordability period in the future. Petitioners' present plan to convert the proposed developments for sale to homeowners during the 50-year extended affordability period is further evident by the fact that the concept of such a conversion existed prior to and at the time the applications were filed. Moreover, the Provincetown and Riverside developments were specially selected to test the concept. On or about June 19, 2003, Petitioners filed cures with Florida Housing addressing the issues raised in the NOPSEs. While the cures presented argument in favor of their respective applications and reiterated Petitioners' commitment to the 50-year extended affordability period for each proposed development, they did not deny that it was their intention to seek relief from this period in the future. Following review of the Sciarrino letter and the cures submitted by Petitioners, Florida Housing rejected both the Provincetown and Riverside applications for failing to meet the mandatory development requirement set forth in Florida Administrative Code Rule 67-21.006(6). The applications also had five points deducted from their scores on the grounds that, under the circumstances, their commitment to an affordability period could not be determined.
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 that upholds the scoring of the applications of Riverside Village Partners, LTD., and Provincetown Village Partners, LTD.; that rejects the applications of Riverside Village Partners, LTD., and Provincetown Village Partners, LTD.; and that denies the relief requested in the Petitions. DONE AND ENTERED this 27th day of February, 2004, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of February, 2004. COPIES FURNISHED: Hugh R. Brown, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 M. Christopher Bryant, Esquire Oertel, Fernandez & Cole, P.A. 301 South Bronough Street, Fifth Floor Post Office Box 1110 Tallahassee, Florida 32302-1110 Orlando J. Cabrera, Executive Director Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 Wellington H. Meffert, II, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301
The Issue Whether the Petitions filed by Ambar Trail, Ltd.; Sierra Meadows Apartments, Ltd.; and Quail Roost Transit Village IV, Ltd., should be dismissed for lack of standing.
Findings Of Fact Florida Housing is a public corporation created under Florida law to administer the governmental function of financing or refinancing affordable housing and related facilities in Florida. Florida Housing administers a competitive solicitation process to implement the provisions of the housing credit program, under which developers apply and compete for funding for projects in response to RFAs developed by Florida Housing. The RFA in this case was specifically targeted to provide affordable housing in Miami-Dade County, Florida. The RFA introduction provides: 2 As this Recommended Order of Dismissal is based upon a motion to dismiss, the factual allegations of the three Petitions filed by the Petitioners in this consolidate case are accepted as true, and the Findings of Fact are derived from the four corners of those Petitions, see Madison Highlands. LLC v. Florida Housing Finance Corp., 220 So. 3d 467, 473 (Fla. 5th DCA 2017), and facts that are not otherwise in dispute. This Request for Applications (RFA) is open to Applicants proposing the development of affordable, multifamily housing located in Miami- Dade County. Under this RFA, Florida Housing Finance Corporation (the Corporation) expects to have up to an estimated $7,195,917 of Housing Credits available for award to proposed Developments located in Miami-Dade County. After Florida Housing announced its preliminary funding award decisions for RFA 2019-112 for Housing Credit Financing for Affordable Housing Developments Located in Miami-Dade County, each of the Petitioners filed Petitions challenging the decisions. Petitioners do not allege that Florida Housing improperly scored or evaluated the applications selected for funding, nor do they contend that Petitioners' applications should be funded. Instead, Petitioners allege that the evaluation was fundamentally unfair and seeks to have the entire RFA rescinded based on alleged improprieties of one responding entity and its affiliates. Petitioners claim that the evaluation process was fundamentally unfair is based entirely on allegations that several entities associated with Housing Trust Group, LLC (HTG), combined to submit 15 Priority I applications in contravention of the limitation in the RFA on the number of Priority I applications that could be submitted. Even assuming Petitioners' assertions are correct, there is no scenario in which Petitioners can reach the funding range for this RFA. In order to break ties for those applicants that achieve the maximum number of points and meet the mandatory eligibility requirements, the RFA sets forth a series of tie-breakers to determine which applications will be awarded funding. The instant RFA included specific goals to fund certain types of developments and sets forth sorting order tie-breakers to distinguish between applicants. The relevant RFA provisions are as follows: Goals The Corporation has a goal to fund one (1) proposed Development that (a) selected the Demographic Commitment of Family at questions 2.a. of Exhibit A and (b) qualifies for the Geographic Areas of Opportunity/SADDA Goal as outlined in Section Four A. 11. a. The Corporation has a goal to fund one (1) proposed Development that selected the Demographic Commitment of Elderly (Non-ALF) at question 2.a. of Exhibit A. *Note: During the Funding Selection Process outlined below, Developments selected for these goals will only count toward one goal. Applicant Sorting Order All eligible Priority I Applications will be ranked by sorting the Applications as follows, followed by Priority II Applications. First, from highest score to lowest score; Next, by the Application's eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application's eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.lO.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's eligibility for the Development Category Funding Preference which is outlined in Section Four A.4.(b)(4) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Applicant's Leveraging Classification, applying the multipliers outlined in Item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Applicant's eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and And finally, by lotterv number, resulting in the lowest lottery number receiving preference. This RFA was similar to previous RFAs issued by Florida Housing, but included some new provisions limiting the number of Priority I applications that could be submitted. Specifically, the RFA provided: Priority Designation of Applications Applicants may submit no more than three (3) Priority I Applications. There is no limit to the number of Priority II Applications that can be submitted; however, no Principal can be a Principal, as defined in Rule Chapter 67- 48.002(94), F.A.C., of more than three ( 3) Priority 1 Applications. For purposes of scoring, Florida Housing will rely on the Principals of the Applicant and Developer(s) Disclosure Form (Rev. 05-2019) outlined below in order to determine if a Principal is a Principal on more than three (3) Priority 1 Applications. If during scoring it is determined that a Principal is disclosed as a Principal on more than three (3) Priority I Applications, all such Priority I Applications will be deemed Priority II. If it is later determined that a Principal, as defined in Rule Chapter 67-48.002(94), F.A.C., was not disclosed as a Principal and the undisclosed Principal causes the maximum set forth above to be exceeded, the award(s) for the affected Application(s) will be rescinded and all Principals of the affected Applications may be subject to material misrepresentation, even if Applications were not selected for funding, were deemed ineligible, or were withdrawn. The Petitioners all timely submitted applications in response to the RFA. Lottery numbers were assigned by Florida Housing, at random, to all applications shortly after the applications were received and before any scoring began. Lottery numbers were assigned to the applications without regard to whether the application was a Priority I or Priority II. The RFA did not limit the number of Priority II Applications that could be submitted. Review of the applications to determine if a principal was a principal on more than three Priority 1 Applications occurred during the scoring process, well after lottery numbers were assigned. The leveraging line, which would have divided the Priority I Applications into Group A and Group B, was established after the eligibility determinations were made. All applications were included in Group A. There were no Group B applications. Thus, all applications were treated equally with respect to this preference. The applications were ultimately ranked according to lottery number and funding goal. . If Florida Housing had determined that an entity or entities submitted more than three Priority I Applications with related principals, the relief set forth in the RFA was to move those applications to Priority II. Florida Housing did not affirmatively conclude that any of the 15 challenged applications included undisclosed principals so as to cause a violation of the maximum number of Priority I Applications that could be submitted. All of the applications that were deemed eligible for funding, including the Priority II Applications, scored equally, and met all of the funding preferences. After the applications were evaluated by the Review Committee appointed by Florida Housing, the scores were finalized and preliminary award recommendations were presented and approved by Florida Housing's Board. Consistent with the procedures set forth in the RFA, Florida Housing staff reviewed the Principal Disclosure Forms to determine the number of Priority I Applications that had been filed by each applicant. This review did not result in a determination that any applicant had exceeded the allowable number of Priority I Applications that included the same principal. One of the HTG Applications (Orchid Pointe, App. No. 2020-148C) was initially selected to satisfy the Elderly Development goal. Subsequently, three applications, including Slate Miami, that had initially been deemed ineligible due to financial arrearages were later determined to be in full compliance and, thus, eligible as of the close of business on January 8, 2020. The Review Committee reconvened on January 21, 2020, to reinstate those three applications. Slate Miami was then recommended for funding. The Review Committee ultimately recommended to the Board the following applications for funding: Harbour Springs (App. No. 2020-101C), which met the Geographic Areas of Opportunity/SADDA Goal; Slate Miami (App. No. 2020-122C), which met the Elderly (non-ALF) Goal; and Naranja Lakes (App. No. 2020-117C), which was the next highest-ranked eligible Priority I Application. The Board approved the Committee's recommendations at its meeting on January 23, 2020, and approved the preliminary selection of Harbour Springs, Slate Miami, and Naranja Lakes for funding. The applications selected for funding held Lottery numbers 1 (Harbour Springs), 2 (Naranja Lakes), and 4 (Slate Miami). Petitioners' lottery numbers were 16 (Quail Roost), 59 (Sierra Meadows) and 24 (Ambar Trail). The three applications selected for funding have no affiliation or association with HTG, or any of the entities that may have filed applications in contravention of the limitation in the RFA for Priority I applications. The applications alleged in the Petitions as being affiliated with HTG received a wide range of lottery numbers in the random selection, including numbers: 3, 6, 14, 19, 30, 38, 40, 42, 44, 45, 49, 52 through 54, and 58. If Petitioners prevailed in demonstrating an improper principal relationship between the HTG applications, the relief specified in the RFA (the specifications of which were not challenged) would have been the conversion of the offending HTG applications to Priority II applications. The relief would not have been the removal of those applications from the pool of applications, nor would it have affected the assignment of lottery numbers to any of the applicants, including HTG. The Petitions do not allege any error in scoring or ineligibility with respect to the three applications preliminarily approved for funding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Petitioners lack standing and dismissing the Petitions with prejudice. DONE AND ENTERED this 3rd day of April, 2020, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 2020. COPIES FURNISHED: Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC Suite 3-231 1400 Village Square Boulevard Tallahassee, Florida 32312 (eServed) Michael P. Donaldson, Esquire Carlton Fields Jorden Burt, P.A. 215 South Monroe Street, Suite 500 Post Office Drawer 190 Tallahassee, Florida 32302-0190 (eServed) Donna Elizabeth Blanton, Esquire Brittany Adams Long, Esquire Radey Law Firm, P.A. Suite 200 301 South Bronough Street Tallahassee, Florida 32301 (eServed) Hugh R. Brown, General Counsel Betty Zachem, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) J. Stephen Menton, Esquire Tana D. Storey, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 (32302) Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
