The Issue The issue in this case is whether a portion of Florida Administrative Code Rule 67-48.0072 is an invalid exercise of delegated legislative authority.
Findings Of Fact The Petitioner is a limited partnership and developer of affordable housing in Florida. The Petitioner is seeking to construct a 116-unit affordable housing family apartment complex ("Elmwood Terrace") in Fort Myers, Lee County, Florida. The Petitioner has standing to initiate and participate in this proceeding. The Respondent is a public corporation organized under Chapter 420, Florida Statutes (2010), to administer state programs that provide financial support to developers seeking to construct affordable housing. Such support is provided through a variety of mechanisms, including the use of federal tax credits. The federal tax credit program was created in 1986 to promote the construction and operation of privately-developed affordable housing. The tax credits relevant to this proceeding provide a dollar-for-dollar credit against federal tax liabilities for a period of ten years. The Respondent is the designated Florida agency responsible for distribution of the federal tax credits. The tax credits are awarded pursuant to a "Qualified Allocation Plan" (QAP) that must be annually approved by the Governor and adopted as an administrative rule by the Respondent. As a matter of course, developers receiving the federal tax credits sell them through syndicators for discounted cash. The sale of the tax credits generates debt-free cash equity for developers. Developers seeking financial support to build affordable housing units submit applications to the Respondent during an annual competitive process known as the "Universal Cycle." Every three years, the Respondent commissions a study (the "Shimberg Report"), which measures, within each Florida county, the number of "cost-burden" renters earning 60 percent or less of an area's median income (AMI) who pay more than 40 percent of their income in rent. The AMI is determined by the federal government. The cost-burden households are further classified into four groups: families, the elderly, farm workers, and commercial fishermen. The Shimberg Report also assesses needs related to homeless people in the state. Developers seeking to obtain affordable housing financing are required to set aside a portion of the proposed units for income-limited residents. Access to affordable housing units is generally targeted towards persons receiving no more than 60 percent of the AMI. The Universal Cycle process allows the Respondent to target specific housing deficiencies in terms of geographic availability and population demographics and to preserve the stock of existing affordable housing. During the Universal Cycle process, the Respondent identifies areas where additional affordable housing is unnecessary, to discourage additional development in weak markets and to encourage development in those locations where there is a lack of access to affordable housing. The Respondent classifies areas where there is little need for additional affordable housing as "Location A" areas. Each application filed during the Universal Cycle is evaluated, scored, and competitively ranked against other applications filed during the same Universal Cycle. After the Respondent completes the competitive ranking of the applications submitted in the Universal Cycle, the applicants are provided with an opportunity to review and comment on the evaluation and scoring of the proposals. Applicants may also cure defects in their own proposals. After the close of the review and comment period, the Respondent publishes a revised competitive ranking of the proposals. Developers may challenge the second ranking through an administrative hearing. After the second ranking process is final, developers achieving an acceptable score receive preliminary funding commitments and proceed into a "credit underwriting" evaluation process. The credit underwriting process is governed by Florida Administrative Code Rule 67-48.0072. The Respondent selects an independent credit underwriter who reviews each proposal according to requirements set forth by administrative rule (the "Credit Underwriting Rule"). The cost of the credit underwriting review is paid by the developer. The credit underwriter considers all aspects of the proposed development, including financing sources, plans and specifications, cost analysis, zoning verification, site control, environmental reports, construction contracts, and engineering and architectural contracts. The responsibility for the market study is assigned by the credit underwriter to an independent market analyst. The credit underwriter prepares a report for each applicant invited into the process. The reports are submitted to the Respondent's nine-member, statutorily-created Board of Directors (Board). The Board approves or denies each application for financial support. The Petitioner applied for funds for the Elmwood Terrace project during the 2007 Universal Cycle. The Petitioner's application received a perfect score, maximum points, and was allocated tax credits in the amount of $1,498,680. The Petitioner thereafter entered the credit underwriting process. The credit underwriting analysis was performed by Seltzer Management Group (SMG). SMG contracted with a market analyst, Vogt, Williams & Bowen Research, Inc. (VWB), to prepare the required market study. The affordable units at Elmwood Terrace were initially intended for persons receiving incomes no more than 60 percent of the AMI. The VWB research indicated that the Elmwood Terrace project would adversely affect the existing affordable housing developments, if the Elmwood Terrace units were available to the 60 percent AMI population. The existing affordable housing developments, also serving the 60 percent AMI population, included two developments that had participated in the Respondent's "Guarantee Fund" program, addressed elsewhere herein. VWB determined that the impact of the Elmwood Terrace project on the existing developments could be ameliorated were some of the Elmwood Terrace units targeted during "lease-up" to persons at income levels of not more than 50 percent of the AMI. The lease-up period is the time required for a new development to reach anticipated occupancy levels. The issue was the subject of discussions between the Petitioner, VWB, and SMG. To resolve the anticipated negative impact on the existing affordable housing developments, the Petitioner agreed to target the 50 percent AMI population. In September 2008, the credit underwriter issued his report and recommended that the Petitioner receive the previously-allocated tax credits. On September 22, 2008, the Respondent's Board accepted the credit underwriting report and followed the recommendation. In the fall of 2008, after the Petitioner received the tax credits, the nation's economic environment deteriorated considerably. As a result, the syndicator with whom the Petitioner had been working to sell the tax credits advised that the sale would not occur. The Petitioner was unable to locate an alternate purchaser for the tax credits. The Petitioner considered altering the target population of the project in an attempt to attract a buyer for the tax credits, and there were discussions with the Respondent about the option, but there was no credible evidence presented that such an alteration would have resulted in the sale of the Petitioner's tax credits. Lacking a buyer for the tax credits, the Petitioner was unable to convert the credits to cash, and they were of little value in providing funds for the project. The Petitioner was not alone in its predicament, and many other developers who received tax credits in the 2007 and 2008 Universal Cycles found themselves unable to generate cash through the sale of their tax credits. In early 2009, Congress adopted the American Recovery and Reinvestment Act of 2009 (PL 111-5), referred to herein as ARRA, which incorporated a broad range of economic stimulus activities. Included within the ARRA was the "Tax Credit Exchange Program" that provided for the return by the appropriate state agency of a portion of the unused tax credits in exchange for a cash distribution of 85 percent of the tax credit value. The State of Florida received $578,701,964 through the Tax Credit Exchange Program. The ARRA also provided additional funds to state housing finance agencies through a "Tax Credit Assistance Program" intended to "resume funding of affordable housing projects across the nation while stimulating job creation in the hard-hat construction industry." On July 31, 2009, the Respondent issued a Request for Proposals (RFP 2009-04) to facilitate the distribution of the ARRA funds. The Respondent issued the RFP because the 2009 QAP specifically required the Respondent to allocate the relevant federal funds by means of a "competitive request for proposal or competitive application process as approved by the board." The 2009 QAP was adopted as part of the 2009 Universal Cycle rules. Projects selected for funding through the RFP would be evaluated through the routine credit underwriting process. Participation in the RFP process was limited to developers who held an "active award" of tax credits as of February 17, 2009, and who were unable to close on the sale of the credits. The RFP included restrictions against proposals for development within areas designated as "Location A." Although the location of the Elmwood Terrace project had not been within an area designated as "Location A" during the 2007 Universal Cycle process, the Respondent had subsequently designated the area as "Location A" by the time of the 2009 Universal Cycle. The RFP also established occupancy standards for projects funded under the RFP that exceeded the standards established in the Universal Cycle instructions and an evaluation process separate from the Universal Cycle requirements. Although the restrictions in the RFP would have automatically precluded the Petitioner from being awarded funds, the Petitioner submitted a response to the RFP and then filed a successful challenge to the RFP specifications (DOAH Case No. 09-4682BID). In a Recommended Order issued on November 12, 2009, the Administrative law Judge presiding over the RFP challenge determined that certain provisions of the RFP, including the automatic rejection of Location A projects, the increased occupancy standards, and the RFP evaluation criteria, were invalid. The Respondent adopted the Recommended Order by a Final Order issued on December 4, 2009, and invited the Petitioner into the credit underwriting process by a letter dated December 9, 2009. The credit underwriter assigned to analyze the Petitioner's project was SMG, the same credit underwriter that performed the original analysis of the Petitioner's project during the 2007 Universal Cycle. SMG retained Meridian Appraisal Group, Inc. (Meridian), to prepare the required market study. The Respondent was not consulted regarding the SMG decision to retain Meridian for the market analysis. The decision to retain Meridian for the market analysis was entirely that of SMG. The Respondent did not direct SMG or Meridian in any manner regarding the assessment or evaluation of any negative impact of the proposed project on existing affordable housing developments. Meridian completed the market study and forwarded it to SMG on January 26, 2010. The Meridian market analysis included a review of the relevant data as well as consideration of the actual economic conditions experienced in Lee County, Florida, including the extremely poor performance of the existing housing stock, as well as significant job losses and considerable unemployment. The Meridian market analysis determined that the Elmwood Terrace development would have a negative impact on two existing affordable housing apartment developments that were underwritten by the Respondent through a Guarantee Fund created at Section 420.5092, Florida Statutes, by the Florida Legislature in 1992. The existing Guarantee Fund properties referenced in the SMG recommendation are "Bernwood Trace" and "Westwood," both family-oriented apartment developments within five miles of the Elmwood Terrace location. The Guarantee Fund essentially obligates the Respondent to satisfy mortgage debt with the proceeds of Florida's documentary stamp taxes, if an affordable housing development is unable to generate sufficient revenue to service the debt. Because the Guarantee Fund program essentially serves to underwrite the repayment of mortgage debt for a "guaranteed" affordable housing development, the program increases the availability, and lowers the cost, of credit for developers. The Guarantee Fund program has participated in the financing of more than 100 projects, most of which closed between 1999 and 2002. Since 2005, the Respondent has not approved any additional Guarantee Fund participation in any affordable housing developments. The Respondent's total risk exposure through the Guarantee Fund is approximately 750 million dollars. Prior to October 2008, no claims were made against the Guarantee Fund. Since November 2008, there have been eight claims filed against the Guarantee Fund. Affordable housing financing includes restrictions that mandate the inclusion of a specific number of affordable housing units. Such restrictions are eliminated through foreclosure proceedings, and, accordingly, access to affordable housing units can be reduced if a development fails. Presuming that the eight claims pending against the Guarantee Fund eventually proceeded through foreclosure, as many as 2,300 residential units could be deducted from the stock of affordable housing. When there is a claim on the Guarantee Fund, the Respondent has to assume payment of the mortgage debt. The claims are paid from the Guarantee Fund capital, which is detrimental to the Respondent's risk-to-capital ratio. The risk-to-capital ratio is presently four to one. The maximum risk-to-capital ratio acceptable to rating agencies is five to one. The eight claims against the Guarantee Fund have ranged between ten and 18 million dollars each. The Respondent's bond rating has declined because of the eight claims. A continued decline in the Respondent's bond rating could result in documentary stamp tax receipts being used for payment of Guarantee Fund claims and directed away from the Respondent's programs that are intended to support the creation of affordable housing. In an effort to prevent additional claims against the Guarantee Fund, the Respondent has created the "Subordinate Mortgage Initiative" to provide assistance in the form of two- year loans to troubled Guarantee Fund properties. When preparing the 2010 market study, Meridian did not review the VWB market analysis performed as part of the 2007 application. Although the Petitioner has asserted that Meridian should have reviewed the 2007 VWB analysis, there is no evidence that Meridian's decision to conduct an independent market study without reference to the prior market review was inappropriate. On February 8, 2010, SMG issued a recommendation that the Petitioner's funding request be denied "because of the proposed development's potential financial impacts on developments in the area previously funded by Florida Housing and an anticipated negative impact to the two Guarantee Fund properties located within five miles of the proposed development." There is no evidence that the Meridian analysis was inadequate or improperly completed. There is no evidence that the SMG's reliance on the Meridian analysis was inappropriate. For purposes of this Order, the Meridian analysis and the SMG credit underwriting report have been accepted. Elmwood Terrace, a newer development with newer amenities, would compete for residents with the Bernwood Trace and Westwood developments. The financing for Bernwood Trace and Westwood was premised on projections that the affordable housing units would be leased to the 60 percent AMI population; however, the developments have been unable to maintain full occupancy levels, even though a number of units in the two properties are leased at reduced rates based on 50 percent AMI income levels. A rent reduction implemented by an existing development, whether based on economic conditions or resulting from competition, constitutes a negative impact on the development. There is no credible evidence that the occupancy rates are attributable to any difficulty in management of the two developments. It is reasonable to conclude that the leasing issues are related to economic conditions present in Lee County, Florida. In January 2010, VWB conducted an alternative market analysis. The VWB analysis was not provided to SMG or to the Respondent at any time during the credit underwriting process. Based on the 2010 VWB analysis, the Petitioner asserted that economic conditions in Lee County, Florida, have improved since the first credit underwriting report was completed in 2008 and that the improvement is expected to continue. There is no noteworthy evidence that economic conditions have improved or will significantly improve in the Lee County, Florida, market in the predictable future, and the VWB analysis is rejected. The Petitioner offered to mitigate any negative impact on the Guarantee Fund properties by committing affordable units to 50 percent AMI income levels. Given the existing economic and rental market conditions in Lee County, Florida, the evidence fails to establish that the offer would actually alleviate the negative impact on the affected Guarantee Fund developments. The 2010 VWB analysis states that there is substantial unmet demand for housing at 50 percent AMI and that there will be no impact on the Guarantee Fund units if the Elmwood Terrace units were set aside for such individuals. There is no credible evidence that there is a substantial and relevant unmet affordable housing demand in Lee County, Florida. The VWB analysis is rejected. Following the completion of each annual Universal Cycle process, the Respondent actively solicits feedback from developers and the public and then amends the Universal Cycle requirements to address the issues raised, as well as to reflect existing affordable housing needs and general concerns of the Board. The amendments are applicable for the following Universal Cycle. In 2009, the Respondent amended subsection (10) of the Credit Underwriting Rule as part of the annual revisions to the Universal Cycle process. The relevant amendment (referred to by the parties as the "Impact Rule") added this directive to the credit underwriter: The Credit Underwriter must review and determine whether there will be a negative impact to Guarantee Fund Developments within the primary market area or five miles of the proposed development, whichever is greater. The amendment was prompted by the Respondent's experience in the fall of 2008 when considering two separate applications for affordable housing financing. The potential negative impact of a proposed development on an existing Guarantee Fund property was central to the Board's consideration of one application, and the Board ultimately denied the application. In the second case, the Board granted the application, despite the potential negative impact on a competing development that was not underwritten by the Guarantee Fund. The intent of the language was to advise developers that the existence of Guarantee Fund properties within the competitive market area would be part of the credit underwriting evaluation and the Board's consideration. Notwithstanding the language added to the rule, the credit underwriter is charged with reviewing the need for additional affordable housing. Even in absence of the added language, consideration of any negative impact to competing developments based on inadequate need for additional affordable housing would be appropriate. In rendering the 2010 credit underwriting report on Elmwood Terrace, the credit underwriter complied with the directive. Prior to determining that the Petitioner's funding application should be denied, the Respondent's Board was clearly aware of the Petitioner's application, the credit underwriting report and market analysis, and the economic conditions in Lee County, Florida. There is no credible evidence of any need for additional affordable housing in Lee County, Florida. There is no credible evidence that the Lee County, Florida, market can sustain the addition of the units proposed by the Petitioner without adversely affecting the financial feasibility of the existing Guarantee Fund developments. The Board was aware that the Elmwood Terrace development could attract residents from the nearby Guarantee Fund properties and that local economic conditions threatened the financial viability of the properties. Given current economic conditions, approval of the application at issue in this proceeding would reasonably be expected to result in a negative impact to existing affordable housing developments. The protection of Guarantee Fund developments is necessary to safeguard the resources used to support the creation and availability of affordable housing in the state.
The Issue The issue for determination is whether Respondent's intended decision to fund the application of Petitioner Duval Park, Ltd. (Duval Park), is contrary to its governing statutes, rules, policies, or the proposal specifications.
Findings Of Fact Florida Housing is a public corporation that administers low-income housing tax credit programs. As of July 1, 2012, Florida Housing was authorized to use up to ten percent of its annual allocation of low-income housing tax credits to fund high-priority affordable housing developments selected through a competitive solicitation process, such as the RFP. See Ch. 2012-127, § 4, Laws of Fla. (2012)(creating § 420.507(48), Fla. Stat.). Examples of "high priority" affordable housing developments include housing for veterans and their families, and housing for persons with special needs. Prior to issuing the RFP, Florida Housing conducted some demonstration RFPs for developments serving special needs households, but the RFP represents the first actual use of the competitive solicitation process to award low-income housing tax credits. Previously, low-income housing tax credits were awarded through what was known as the universal application cycle, a process described as cumbersome, lengthy, and inflexible. As part of the universal application cycle, an applicant could indicate by checking a box that it intended to provide affordable housing to special needs households. However, the general universal application process did not lend itself to a targeted proposal detailing how the unique needs of specific special-needs population groups would be addressed. The competitive solicitation process was seen as a way to allow applicants to respond to particular high-priority development needs identified by Florida Housing. In setting forth their development proposals for defined target population groups, applicants would be able to tell their story: applicants would identify and describe the unique needs and household characteristics of the specific special-needs population group that is the focus of their application; applicants could detail and demonstrate their know-how with regard to the resources available in the community where the proposed development is located, to meet the unique needs of the target population; and applicants would be able to discuss the relevant experience of the developer and management teams that make them well-suited to carry out the proposed development and meet the unique needs of the targeted population group. The RFP The RFP solicited responses or applications proposing the development of "permanent supportive housing" (as defined in the RFP) for persons with special needs. Florida Housing issued the RFP with the expectation of funding two or more proposals. The RFP provided that applicants could propose developments for persons with special needs generally, or applicants could choose to focus on serving veterans with special needs. If an applicant chose to focus on veterans with special needs, the applicant was required to pick one of two specific subcategories: either veterans with service-connected disabling conditions transitioning from a Veterans' Administration (VA) hospital or medical center; or chronically homeless/ institutionalized veterans with disabling conditions who were significant users of public resources, such as emergency care and shelter. The RFP specified that it was Florida Housing's goal to fund at least one development proposing to serve veterans with special needs. Preference would be given to proposed developments focusing on serving special-needs veterans in the first subcategory, i.e., veterans transitioning from VA hospitals and medical centers. Duval Park, Osprey, and five other applicants timely submitted applications in response to the RFP. Both Duval Park and Osprey proposed permanent supportive housing developments to serve veterans with special needs transitioning from VA hospitals and medical centers. As described in the RFP, an evaluation committee comprised of Florida Housing employees reviewed and scored the applications. Members of the evaluation committee were instructed to independently evaluate and score the application sections assigned to them. The RFP specified that at least one public meeting would be held at which the evaluators were allowed to discuss their evaluations, make any adjustments deemed necessary to best serve the interests of Florida Housing's mission, and develop recommendations for the Florida Housing Board of Directors. For most application sections, a single evaluator was assigned to review and score the seven responses. For example, Mr. Aldinger was the evaluator who reviewed and scored the two application sections addressing developer and management company experience with permanent supportive housing. Two application sections were assigned for evaluation and scoring by two evaluation committee members. The two evaluators first independently reviewed and scored all seven application responses for the two sections. Then the two evaluators met in a noticed public meeting to conduct a "reconciliation process," in which they discussed their evaluations of the responses to the two application sections and reconciled differences in their scores. The evaluation committee ultimately concluded that Duval Park's application was entitled to a total of 119 points out of 133 possible points, and that Osprey's application was entitled to 117 points. A large gap in scoring separated these two highest-scoring applicants from the other five applicants; the next highest score was 95 points. The evaluation committee presented its recommendation to the Florida Housing Board of Directors, along with a summary of the scores assigned by the evaluation committee. The committee's recommendation was that Florida Housing should award funding to Duval Park for its proposed development. Florida Housing's Board adopted the committee's recommendation. Osprey's Protest Issue Remaining for Determination Following the parties' withdrawal of most of their protest issues, the only remaining disputed issue for resolution in this proceeding is Osprey's claim that Duval Park should have received "at least three" less points than Osprey for the sections addressing developer and management company experience.2/ Mr. Aldinger's assignment as the evaluation committee member responsible for reviewing and scoring these application sections comports with his expertise. Mr. Aldinger has served as Florida Housing's supportive housing coordinator since 2006. In that role, he has been coordinating with governmental bodies and industry stakeholders to develop strategies for focusing Florida Housing's resources on the provision of supportive housing to special needs households. The RFP was developed in furtherance of this effort, and Mr. Aldinger was one of the RFP's authors. Mr. Aldinger assigned the same number of points to the Duval Park and Osprey applications in both sections. Each application received 24 out of 25 possible points for developer experience, and all ten of the points available for management company experience. Osprey's contention is that its narratives for these two application sections show its objective superiority. Osprey's "objective superiority" argument is primarily based on a quantitative comparison, in which its narrative showed experience developing and operating a larger number of permanent supportive housing units than did Duval Park's narrative. Osprey also contends that its narrative was qualitatively better in providing greater detail regarding its experience developing and operating permanent supportive housing. As part of its argument, Osprey contends that Duval Park strayed from the RFP instructions by describing experience with more than just permanent supportive housing, but that the evaluator gave Duval Park credit anyway. The RFP instructions provide the starting point to assess Osprey's contentions. First, the RFP provided the following definition of "permanent supportive housing": Rental housing that is affordable to the focus households with household incomes at or below 60 percent of area median income (AMI), that is leased to the focus households, for continued occupancy with an indefinite length of stay as long as the Permanent Supportive Housing tenant complies with the lease requirements. Permanent Supportive Housing shall facilitate and promote activities of daily living, access to community-based services and amenities, and inclusion in the general community. Permanent Supportive Housing shall strive to meet the needs and preferences of the focus households. This RFP definition was acknowledged to be somewhat broader than how that phrase might be understood by some industry models. For example, Mr. Aldinger testified that transitional housing could be permanent supportive housing within the RFP definition, as long as a lease agreement is used. Permanency is not required, only an "indefinite" length of stay. The fact that leases are for finite terms of 12 or 24 months would not be dispositive; rather, the length of stay would be considered "indefinite" if tenants are not required to leave at the end of their lease terms, if they are not ready to leave and are otherwise in compliance with the lease terms. The provision of supportive services to meet the needs of the focus population is a key part of the RFP definition. The RFP instructions for the developer experience narrative were as follows: Developer Experience with Permanent Supportive Housing (Maximum 25 points): The Applicant must describe the experience of the Developer, co-Developer, and/or Principal in developing and operating Permanent Supportive Housing, and more specifically, housing for the households the Applicant is proposing to serve. Describe the role(s) and responsibilities of any Developer, co- Developer, and/or Principal listed in the Applicant's responses to Items A.2.c. and 3.a. of Section 6 of the RFP, related to the proposed Development, and describe the experience and qualifications relevant to carrying out the roles and responsibilities for this proposed Development. (emphasis added). The RFP instructions for the first application section must also be considered because they tie into the developer/ manager experience sections. The instructions for the first application section required the applicant to provide a detailed description of the focus population group, and the instructions also explained how that description would be used, as follows: [T]he Applicant must provide a detailed description of the resident household characteristics, needs, and preferences of the focus population(s) the Applicant is proposing to serve. This description will provide a point of reference for the Corporation's evaluation and scoring of the Application, providing the foundation for the appropriateness of the experience of the Developer(s) and Management Company, proposed Construction Features and Amenities, Resident services and Access to Community Based Services and Amenities. (emphasis added). As part of this first application section, applicants focusing on special-needs veterans transitioning from VA facilities were required to designate the specific VA facilities with which the applicants expected to be working and coordinating. Osprey, whose proposed development is in Liberty City, Miami-Dade County, designated Miami VA Healthcare System (Miami VA) in Miami. Duval Park, whose proposed development is in unincorporated Pinellas County, designated Bay Pines VA Healthcare System (Bay Pines VA) in Pinellas County, as well as the James A. Haley Veterans Hospital and the Tampa Polytrauma Rehabilitation Center, both in Tampa, Hillsborough County. Osprey and Duval Park both provided extensive narratives describing their target populations and detailing the unique needs and preferences of their target populations. Osprey's narrative described the information learned from interviewing social workers in each of the programs under the umbrella of the Miami VA, with whom Carrfour would be coordinating for transitioning veterans. Osprey's narrative also described a VA grant to Carrfour of $1,000,000 per year for supportive services for veteran families, through which Carrfour provides a comprehensive case management program called Operation Sacred Trust. This program has an outreach team that works closely with social workers throughout the Miami VA. The Duval Park narrative discussed and documented the work of the St. Petersburg Housing Authority Wounded Warrior Community Advisory Group to assess housing needs for veterans. Developer-partner ServiceSource's director of housing was a participant. As part of the assessment, the advisory group conducted veterans' focus groups to hear from the veterans themselves regarding their needs and preferences, including the particular supportive services needed to allow veterans to transition to an independent living setting. The Duval Park narrative also described the information about transitioning veterans learned through ongoing projects with the VA facilities designated for the proposed development, including a Memorandum of Understanding between James A. Haley Veterans Hospital and ServiceSource's Warrior Bridge program. As called for by the RFP instructions, Mr. Aldinger used each application's detailed description of the target population in section one as the foundation for evaluating that application's developer and management experience narratives. The experience narratives were properly evaluated in accordance with the RFP instructions in the context of each applicant's specific proposal to focus on a defined population group transitioning from designated VA facilities, whose unique needs were fleshed out in the first section narratives. Mr. Aldinger reviewed and was impressed with both Osprey's and Duval Park's developer experience narratives, for good reason. As he explained, the two responses took different approaches, but both provided good detail in the limited space allotted. Osprey's narrative described Carrfour, a non-managing member of the applicant entity that will be the developer and, through a subsidiary, manager of the proposed development. Carrfour is a not-for-profit organization created in 1993 by the Greater Miami Chamber of Commerce, with the mission of developing permanent supportive housing to end homelessness. In setting forth Carrfour's experience, the Osprey narrative took a quantitative approach by enumerating Carrfour's 16 mixed-use housing development projects that included permanent supportive housing. Some details were provided for each development, such as the funding sources, the number of total units, how many of those units were permanent supportive housing units, and how many of the units were currently occupied by veterans. However, the narrative did not explain whether any supportive services provided for these developments were specifically geared to meeting the special needs of veterans. The types of supportive services were not identified for any of the 16 developments. For three developments, the description stated only that "a full array of supportive services" was provided or that "on-site supportive services" were provided. Supportive services were not mentioned in the descriptions of the other 13 developments. Other than providing the number of units then occupied by veterans, Osprey's developer experience narrative had no information to demonstrate experience providing housing specifically developed to meet the unique needs of the focus population for its proposed development: veterans with service- related disabling conditions transitioning from the Miami VA. Duval Park's developer experience narrative did not match Osprey's approach of enumerating individual permanent supportive housing developments and quantifying the units in each development. Duval Park's response chose instead to describe in general aggregate terms the permanent supportive housing experience of the developer-partners. The Duval Park narrative went into more detail to highlight the developer team experience with housing projects specifically designed to meet the unique needs of special-needs veterans transitioning from the VA facilities designated in its application, something lacking in the Osprey response. For example, Duval Park's response described developer- partner Boley's substantial experience since it was founded in 1970, in developing more than 500 units of permanent supportive housing in Pinellas County. The narrative also described the even longer-standing experience of developer-partner ServiceSource, founded in 1959 with a mission to provide services to needy people with disabilities. Initially providing employment, training, rehabilitation, and support services (relevant to the roles described for this developer-partner in operating the proposed development), ServiceSource began a housing program in 1995. ServiceSource's permanent supportive housing development experience was summarized in shorthand as including 20 separate "HUD 202/811 awards." The unrefuted testimony established that this shorthand reference was properly understood by Mr. Aldinger to signify 20 permanent supportive housing developments for persons with disabilities. Two specific supportive housing projects for veterans, developed and operated by Boley working with the Bay Pines VA, were detailed in Duval Park's developer experience narrative. In 2007, Bay Pines VA awarded Boley a contract for "Safe Haven Model Demonstration Project" services, described in the notice of contract award as "a specialty model of HCHV residential care as mandated by the . . . zero-tolerance policy to end homelessness within the Veteran population." Through this contract, Boley acquired and rehabilitated a former 20-unit skilled nursing facility to establish Morningside Safe Haven (Morningside), which provides housing and a residential treatment program with counseling for veterans. Half of the 20 veterans housed there have service-connected disabling conditions, and one-third of the veterans transitioned from VA facilities. Pinellas County and HUD provide funding support for this VA pilot program. Osprey contends that Boley's experience developing and operating Morningside should have been ignored in scoring Duval Park's developer experience, because a residential treatment program is not permanent supportive housing. However, according to Mr. Humberg, Morningside is considered permanent supportive housing under HUD guidelines. Veterans sign a 12-month lease to reside in a unit. Although the intent is that tenants will complete treatment and move on, tenants are not required to leave at the end of their 12-month lease terms; they can stay as long as they need to, if they are otherwise compliant with their leases. Even if Morningside did not technically meet the RFP definition of permanent supportive housing, the discussion of Morningside still would be appropriate for this narrative, pursuant to the RFP instructions. The Morningside experience demonstrates Boley's "experience and qualifications relevant to carrying out" its roles and responsibilities for the proposed development, identified in the same narrative to include mental health counseling, case management, and VA coordination. Also described in Duval Park's narrative was Boley's 2010 development of Jerry Howe Apartments, with 13 units developed specifically for formerly homeless veterans, many of whom have service-connected disabling conditions. Funding for this development was provided by the VA and the City of Clearwater. Boley coordinates with Bay Pines VA in operating this development, with Bay Pines VA providing screening and referral services to identify veterans who are candidates to lease apartment units. Boley's staff members work closely with the veteran tenants to provide supportive services, preparing them for more independent living. Osprey quibbles with whether Jerry Howe Apartments technically qualifies as permanent supportive housing, noting that while the veteran tenants do sign a lease, the intent of the project is to serve as transitional housing for up to 24 months. However, Mr. Aldinger explained that transitional housing would meet the RFP's broad definition of permanent supportive housing if tenants are not required to leave after a finite period of 12 or 24 months. Mr. Humberg confirmed that veterans residing at Jerry Howe Apartments are not required to leave after 24 months, if they are not ready to move on. Mr. Humberg also clarified that Boley owned the apartments before they were redeveloped in 2010, specifically to meet the needs of veterans. Before the 2010 redevelopment, Boley operated the property as permanent supportive housing, just not specifically for veterans. In fact, two of the units remain occupied by prior non-veteran permanent supportive housing tenants, who did not want to move out in 2010 when the property was redeveloped. It is not necessary to debate whether Jerry Howe Apartments technically is permanent supportive housing, although the evidence demonstrated that the development is and has been permanent supportive housing, as defined in the RFP. Certainly, this project demonstrates Boley's experience and qualifications relevant to carrying out its roles and responsibilities for the proposed development and, therefore, is worthy of consideration as part of the developer experience narrative. Duval Park's developer experience narrative also detailed specific veterans' supportive service programs developed by both Boley and ServiceSource. The descriptions of these programs demonstrate experience and qualifications directly relevant to the described roles and responsibilities for Boley and ServiceSource with respect to the proposed development. Duval Park's experience narrative details the many accomplishments of ServiceSource's nationally-recognized Warrior Bridge program, which provides a wide variety of supportive services to veterans. Noteworthy is a 2012 award of over $1,000,000 from the City of St. Petersburg to ServiceSource to expand housing options for wounded veterans. Under this program, in the past year, ServiceSource partnered with Home Depot to modify 16 homes and facilities serving wounded veterans in the Tampa Bay area to increase accessibility, safety, and energy efficiency. This experience translates directly to the role ServiceSource will serve as a participant in designing the proposed housing development specifically to accommodate the unique accessibility and other needs of special-needs veterans with disabling conditions. ServiceSource's Warrior Bridge program also operates the "Veterans' Mall" in the vicinity of the proposed development. At the Veterans' Mall, household appliances, cookware, business attire, and necessities are made available to wounded veterans transitioning to more independent housing settings. According to Duval Park's narrative, the Veterans' Mall has served more than 325 veterans since opening in October 2011, through partnerships with Bay Pines VA and local community organizations serving veterans. ServiceSource's representative testified that ServiceSource recently secured a five-year commitment from T.J. Maxx to stock the Veterans' Mall with new suits for veterans going on job interviews. The Duval Park developer experience narrative regarding the Warrior Bridge program portrays ServiceSource's experience and qualifications to carry out its described roles and responsibilities for the proposed development, which include community outreach, physical disability counseling, employment assistance, job training, and VA coordination. Another program described in Duval Park's developer experience narrative is Boley's Homeless Veterans Reintegration Program. This is a case management, training, and employment program specifically for veterans, conducted by Boley case managers and employment specialists, demonstrating that they are well-suited to carry out the described roles and responsibilities for Boley with respect to the proposed development, which includes the lead case management role. A reasonable person attempting to compare the two developer experience narratives might say that Osprey's narrative demonstrated greater quantitative experience in developing more units of permanent supportive housing generally, but that Duval Park's narrative demonstrated better qualitative experience among the developer-partners in developing supportive housing specifically for veterans with special needs. Duval Park's narrative was more directly focused on specific experience developing supportive housing that addresses the unique needs of those special-needs veterans who are transitioning from VA facilities. In addition, Duval Park's narrative better demonstrated experience and qualifications among the developer- partners that are directly relevant to their described roles and responsibilities in carrying out the proposed development. Both narratives were very good and responsive to the RFP instructions, while taking very different approaches. Mr. Aldinger reasonably applied the RFP instructions, reasonably evaluated the two narratives, and reasonably judged them both to be deserving of the same very high score. The credible evidence does not support Osprey's contention that its developer experience narrative was superior, or that Duval Park's narrative strayed beyond the RFP instructions, or that Duval Park's narrative was judged by different standards than Osprey's narrative.3/ Osprey also takes issue with the scoring of the two applications' narratives describing management company experience with permanent supportive housing. As noted, Mr. Aldinger evaluated these narratives and awarded each application the maximum ten points for this application section. Osprey's narrative identified Carrfour's not-for-profit subsidiary, Crossroads Management, LLC (Crossroads), as the manager for its proposed Liberty Village development. Although Carrfour was established in 1993, Crossroads was not created until 2007. Before Crossroads was created, Carrfour did not manage the housing projects it developed; instead, it turned the developments over to traditional property management companies. As Osprey's narrative acknowledges, this created problems, as the traditional management companies lacked the sensitivity and training to address special needs of permanent supportive housing tenants. Since 2007, Crossroads has been taking over management functions for Carrfour developments and is now managing most of the 16 developments listed in the developer experience narrative. Osprey's application was given credit for proposing management with ideal experience. For Duval Park's application, Boley is identified as the management company. In addition, Boley will engage Carteret Management Company (Carteret), which is owned and operated by James Chadwick, a principal of developer-partner Blue Sky, to assist with tax-credit compliance and other matters within Carteret's expertise during the initial phases of the project. Boley's specific experience managing supportive housing for veterans with special needs, previously detailed in the developer experience discussion above, could not reasonably be questioned. As described in the manager experience narrative, Boley manages 561 units of its own permanent supportive housing. Boley also manages 112 additional permanent supportive housing units owned by other not-for-profit companies (including an 88-unit development owned by ServiceSource). The management narrative describes the profile of the typical Boley-managed housing unit tenant as having mental illness, including post-traumatic stress disorder and/or substance abuse problems, requiring supportive services provided by Boley staff. These supportive services include mental health counseling, case management intervention, and transportation assistance--functions for which Boley will assume responsibility operating the proposed development. The narrative also describes Boley's property management personnel: seven housing staff who handle leasing, income certifications, and other leasing matters; eight maintenance staff to handle property repairs; three drivers who provide transportation; and four accounting staff for property management functions. Osprey does not articulate a specific reason why Duval Park's management company experience narrative should not be entitled to ten points, or why Osprey believes its narrative was qualitatively or quantitatively better than Duval Park's, except to the extent of Osprey's criticisms of the developer experience narratives. Yet Osprey's narrative for manager experience arguably should not fare as well as its narrative for developer experience, given the many more years of management experience demonstrated by Boley and the comparatively few years of management experience by the Crossroads management entity created by Carrfour in 2007. Nonetheless, Mr. Aldinger credited the Osprey application with the maximum points based on Crossroads' management experience since 2007. No credible evidence was presented to support the contention that Duval Park's management experience narrative was not entitled to at least the same number of points as Osprey's management experience narrative. As repeatedly acknowledged by all parties throughout the hearing, Florida Housing was fortunate to have received two excellent proposals by Osprey and Duval Park that were head and shoulders above the other responses. Florida Housing then was faced with the difficult task of deciding which, between two excellent choices, should receive the funding nod, if only one of the two could be funded. Based on the evidence and the findings above, Mr. Aldinger's assignment of the same number of points for developer experience (24 points out of a possible 25 points) and for management company experience (the maximum of 10 points) to the two excellent proposals was not clearly erroneous, arbitrary, capricious, or contrary to competition. His conclusion that both applicants demonstrated nearly ideal development experience and ideal management company experience for their proposals was reasonable. The evidence established that Mr. Aldinger made the points assignments he did after evaluating all of the relevant information he was allowed to consider pursuant to the RFP instructions. His scoring of these two application sections was shown to be an honest, good faith exercise of his expert judgment applied to sort out the various pros and cons of the responses. Osprey did not identify any statute or rule that it contends was violated by the scoring of the Osprey and Duval Park developer and management experience narratives. Osprey argued, but did not prove, that the scoring of these two applications was contrary to the RFP specifications. Osprey argued that Mr. Aldinger's evaluation was contrary to the RFP because he considered differences between the two projects in assessing developer experience. Osprey characterized this as double- counting, because the same aspects of the projects were scored in other sections. Osprey also contended that considering the differences between the two proposed developments and the different approaches by the two applicants was tantamount to applying different standards in evaluating the two applications. Osprey's criticism was not borne out by the evidence. Instead, Mr. Aldinger described a reasonable process, consistent with the RFP terms explaining that developer experience would be assessed in the context of the attributes of the target population described in the first section of the application, and also in context with the roles and responsibilities described for the developer team members in carrying out the proposed development. The same RFP instructions and the same standards were applied to the evaluation of the two applications; it was the applications that were different, not the standards.4/ Although not actually raised as a distinct challenge, Osprey suggested an additional argument in its PRO, not articulated in its written protest or in the Joint Pre-hearing Stipulation. Osprey argued in its PRO that Florida Housing should have used two evaluators to score the developer and manager experience narratives, as a "check and balance" against arbitrary scoring. Osprey's new argument stands in stark contrast to the only challenge to the evaluation process articulated in Osprey's written protest and in the Joint Pre-hearing Stipulation. Before the hearing, Osprey challenged the evaluation procedure used for two application sections that were scored by two evaluators. Rather than providing any check-and-balance comfort, the two- evaluator process was viewed as defective by Osprey because the initial scores independently assigned by each evaluator were reconciled in a public discussion meeting at which differences in scores were harmonized, meaning that when the initial scores differed, the evaluators agreed to adjust their initial scores. Osprey has established only that for some application sections, a single evaluator was used, while for other application sections, two evaluators were used and their separate scores were reconciled. No credible evidence was offered to prove that use of two evaluators was better than using one evaluator (or vice versa, as Osprey initially argued).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Florida Housing Finance Corporation, enter a final order consistent with its initial decision to award funding for the Duval Park, Ltd., proposed development, and dismissing the formal written protests of Osprey Apartments, LLC, and Duval Park, Ltd. DONE AND ENTERED this 25th day of November, 2013, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR 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 November, 2013.
The Issue The issue is whether the actions of Florida Housing concerning the review and scoring of the responses to Request for Applications 2019-102 (“RFA”), titled “Community Development Block Grant--Disaster Recovery (‘CDBG- DR’) to be Used in Conjunction with Tax-Exempt MMRB and Non- Competitive Housing Credits in Counties Deemed Hurricane Recovery Priorities,” were contrary to the agency’s governing statutes, rules, policies, or the RFA specifications.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: THE PARTIES Berkeley is an applicant in the RFA that requested an allocation of $6,500,000 in CDBG Development funding; $2,500,000 in CDBG Land Acquisition funding; and $844,699 in non-competitive housing credits. The Berkeley Application, assigned number 2020-017D, was preliminarily deemed ineligible for consideration for funding. Brisas is an applicant in the RFA that requested an allocation of $5,000,000 in CDBG Development funding and $1,674,839 in non-competitive housing credits. The Brisas Application, assigned number 2020-056D, was preliminarily deemed eligible but was not selected for funding under the terms of the RFA. Northside is an applicant in the RFA that requested an allocation of $7,300,000 in CDBG Development funding; $1,588,014 in non-competitive housing credits; and $24,000,000 in Multifamily Mortgage Revenue Bonds (“MMRB”). The Northside Application, assigned number 2020-024D, was preliminarily deemed eligible but was not selected for funding under the terms of the RFA. Beacon Place is an applicant in the RFA that requested an allocation of $6,925,500 in CDBG Development funding; $4,320,000 in CDBG Land Acquisition funding; $1,764,203 in non-competitive housing credits; and $24,000,000 in MMRB. The Beacon Place Application, assigned number 2020-045DB, was preliminarily deemed eligible but was not selected for funding under the terms of the RFA. Bella Vista is an applicant in the RFA that requested an allocation of $8,000,000 in CDBG Development funding; $1,450,000 in CDBG Land Acquisition funding; $609,629 in non-competitive housing credits; and $13,000,000 in MMRB. The Bella Vista Application, assigned number 2020-038DB, was preliminarily deemed eligible but was not selected for funding under the terms of the RFA. Solaris is an applicant in the RFA that requested an allocation of $3,420,000 in CDBG Development funding; $4,500,000 in CDBG Land Acquisition funding; and $937,232 in non-competitive housing credits. The Solaris Application, assigned number 2020-039D, was deemed eligible and preliminarily selected for funding under the terms of the RFA. Metro Grande is an applicant in the RFA that requested an allocation of $3,175,000 in CDBG Development funding and $1,041,930 in non-competitive housing credits. The Metro Grande Application, assigned number 2020-041D, was deemed eligible and preliminarily selected for funding under the terms of the RFA. Sierra Bay is an applicant in the RFA that requested an allocation of $3,650,000 in CDBG Development funding; $3,300,000 in CDBG Land Acquisition funding; $1,074,173 in non-competitive housing credits; and $16,000,000 in MMRB. The Sierra Bay Application, assigned number 2020-040DB, was deemed eligible and preliminarily selected for funding under the terms of the RFA. Bembridge is an applicant in the RFA that requested an allocation of $7,800,000 in CDBG Development funding; $564,122 in non-competitive housing credits; and $10,100,000 in MMRB. The Bembridge Application, assigned number 2020-046DB, was deemed eligible and preliminarily selected for funding under the terms of the RFA. East Pointe is an applicant in the RFA that requested an allocation of $4,680,000 in CDBG Development funding and $690,979 in non-competitive housing credits. The East Pointe Application, assigned number 2020-053D, was deemed eligible and preliminarily selected for funding under the terms of the RFA. Florida Housing is a public corporation organized pursuant to Chapter 420, Part V, Florida Statutes, and, for purposes of these consolidated cases, is an agency of the State of Florida. Florida Housing is tasked with distributing a portion of the CDBG-DR funding allocated by the U.S. Department of Housing and Urban Development (“HUD”), pursuant to the State of Florida Action Plan for Disaster Recovery. THE COMPETITIVE APPLICATION PROCESS AND RFA 2019-102 Florida Housing is authorized to allocate low-income housing tax credits and other named funding by section 420.507(48). Florida Housing has adopted Florida Administrative Code Chapter 67-60 to govern the competitive solicitation process. Rule 67-60.009(1) provides that parties wishing to protest any aspect of a Florida Housing competitive solicitation must do so pursuant to section 120.57(3), Florida Statutes. Funding is made available through a competitive application process commenced by the issuance of a request for applications. Rule 67-60.009(4) provides that a request for application is considered a “request for proposal” for purposes of section 120.57(3)(f). The RFA was issued on July 30, 2019, with responses due on August 27, 2019. The RFA was modified four times and the application deadline was extended to September 24, 2019. No challenges were made to the terms and specifications of the RFA. Section Five of the RFA included a list of 48 “eligibility items” that an applicant was required to satisfy to be eligible for funding and considered for funding selection. Applications that met the eligibility standards would then be awarded points for satisfying RFA criteria, with the highest scoring applications being selected for funding. No total point items are in dispute. Proximity Point items are contested as to the Beacon Place, East Pointe, and Bembridge Applications. Applicants could select whether they would be evaluated as Priority I, II, or III applications. All of the parties to these consolidated cases identified themselves as Priority I applications. Through the RFA, Florida Housing seeks to award an estimated $76,000,000 of CDBG Land Acquisition Program funding to areas impacted by Hurricane Irma, and in areas that experienced a population influx because of migration from Puerto Rico and the U.S. Virgin Islands due to Hurricane Irma. Florida Housing will award up to $66,000,000 for CDBG Development funding and an additional $10,000,000 for CDBG Land Acquisition Program funding. Applicants were not required to request CDBG Land Acquisition Program funding. Forty-four applications were submitted in response to the RFA. A Review Committee was appointed to review the applications and make recommendations to Florida Housing’s Board of Directors (the “Board”). The Review Committee found 34 applications eligible for funding. The Review Committee found 8 applications ineligible, including that of Berkeley. Two applications were withdrawn. The Review Committee developed charts listing its eligibility and funding recommendations to be presented to the Board. On December 13, 2019, the Board met and accepted the recommendations of the Review Committee. The Board preliminarily awarded funding to 12 applications, including those of Sierra Bay, Solaris, Metro Grande, East Pointe, and Bembridge. Petitioners Berkeley, Brisas, Northside, Beacon Place, and Bella Vista timely filed Notices of Protest and Petitions for Formal Administrative Hearing. THE BERKELEY APPLICATION As an eligibility item, the RFA required applicants to identify an Authorized Principal Representative. According to the RFA, the Authorized Principal Representative: must be a natural person Principal of the Applicant listed on the Principal Disclosure Form; must have signature authority to bind the Applicant entity; (c) must sign the Applicant Certification and Acknowledgement form submitted in this Application; (d) must sign the Site Control Certification form submitted in this Application; and (e) if funded, will be the recipient of all future documentation that requires a signature. As an eligibility item, the RFA required applicants to submit an Applicant Certification and Acknowledgment form executed by the Authorized Principal Representative. As an eligibility item, the RFA also required applicants to submit a Site Control Certification form executed by the Authorized Principal Representative. In section 3.e.(1) of Exhibit A of the RFA, the applicant is directed to enter the contact information of its Authorized Principal Representative. Berkeley entered the name, organization, and contact information for Jennie D. Lagmay as its Authorized Principal Representative, in response to section 3.e.(1). The name of Jennie D. Lagmay was not disclosed on the Principal Disclosure form required by the RFA. The Applicant Certification and Acknowledgment form and the Site Control Certification form were executed by Jonathan L. Wolf, not Jennie D. Lagmay, the designated Authorized Principal Representative. On both forms, Mr. Wolf is identified as “Manager of Berkeley Landing GP, LLC; General Partner of Berkeley Landing, Ltd.” Jonathan L. Wolf is listed on the Principal Disclosure Form. Aside from section 3.e.(1) of Exhibit A, Jennie D. Lagmay’s name is not found in the Berkeley Application. Florida Housing determined that the Berkeley Application was ineligible for an award of funding for three reasons: 1) the Authorized Principal Representative listed was not disclosed on the Principal Disclosure form; 2) the Applicant Certification and Acknowledgement form was not signed by the Authorized Principal Representative; and 3) the Site Control Certification was not signed by the Authorized Principal Representative. Two other applications for this RFA were found ineligible for identical reasons: Thornton Place, Application No. 2020-020D; and Berkshire Square, Application No. 2020-034D. In these, as in the Berkeley Application, Jennie D. Lagmay was named as the Authorized Principal Representative in section 3.e.(1) of Exhibit A, but Jonathan L. Wolf executed the Applicant Certification and Acknowledgement form and the Site Control Certification form as the Authorized Principal Representative. Berkeley concedes it made an error in placing the name of Ms. Lagmay in section 3.e.(1), but argues that this constituted a minor irregularity that should have been waived by Florida Housing. Berkeley contends that the entirety of its Application makes plain that Jonathan D. Wolf is in fact its Authorized Principal Representative. Berkeley argues that Florida Housing should waive the minor irregularity and determine that the Berkeley Application is eligible for funding. Berkeley points out that only two members of the Review Committee, Rachel Grice and Heather Strickland, scored the portions of the Berkeley Application that led to the ineligibility recommendation. Ms. Grice determined that the Authorized Principal Representative listed in the Berkeley Application was not disclosed on the Principal Disclosure form. Ms. Strickland determined that neither the Applicant Certification and Acknowledgement form nor the Site Control Certification form was executed by the Authorized Principal Representative. Neither Ms. Grice nor Ms. Strickland conducted a minor irregularity analysis for the Berkeley Application. Rule 67-60.008, titled “Right to Waive Minor Irregularities,” provides as follows: Minor irregularities are those irregularities in an Application, such as computation, typographical, or other errors, that do not result in the omission of any material information; do not create any uncertainty that the terms and requirements of the competitive solicitation have been met; do not provide a competitive advantage or benefit not enjoyed by other Applicants; and do not adversely impact the interests of the Corporation or the public. Minor irregularities may be waived or corrected by the Corporation. Berkeley contends that because a minor irregularity analysis was not conducted by the Review Committee members, the Board was deprived of a necessary explanation for the preliminary recommendations of Ms. Grice and Ms. Strickland. Marisa Button, Florida Housing’s Director of Multifamily Allocations, agreed that the Review Committee members did not perform a minor irregularity analysis but testified that none was required given the nature of the discrepancy in the Berkeley Application. Ms. Button performed a minor irregularity analysis as Florida Housing’s corporate representative in this proceeding and concluded that the error could not be waived or corrected without providing an unfair competitive advantage to Berkeley. Ms. Button testified that the fact that the person identified as the Authorized Principal Representative was not the same person who signed the certification forms could not be considered a minor irregularity because the application demonstrated conflicting and contradictory information, creating uncertainty as to the applicant’s intentions. She stated that Florida Housing is required to limit its inquiry to the four corners of the application. Ms. Button stated that Florida Housing cannot take it upon itself to decide what the applicant intended when the information provided in the application is contradictory. Berkeley points to the fact that the Application Certification and Acknowledgement form, signed by Mr. Wolf, includes the following language: “The undersigned is authorized to bind the Applicant entity to this certification and warranty of truthfulness and completeness of the Application.” Berkeley argues that it should have been clear to Florida Housing that Mr. Wolf is the person authorized to bind the company and that the inclusion of Ms. Lagmay’s name in section 3.e.(1) was in the nature of a typographical error. Florida Housing points out that the Application Certification and Acknowledgement form also includes the following language below the signature line: “NOTE: Provide this form as Attachment 1 to the RFA. The Applicant Certification and Acknowledgement form must be signed by the Authorized Principal Representative stated in Exhibit A.” Florida Housing notes that the Site Control Certification form includes similar language: “This form must be signed by the Authorized Principal Representative stated in Exhibit A.” Berkeley contends that Florida Housing was well aware that Jonathan L. Wolf has been the named Authorized Principal Representative on multiple applications filed under the umbrella of Wendover Housing Partners, the general developer behind Berkeley. In at least one of those previous applications, Ms. Lagmay, an employee of Wendover Housing Partners, was identified as the “contact person.” Ms. Button responded that Review Committee members are specifically prohibited from using personal knowledge of a general development entity in a specific application submitted by a single purpose entity. She further testified that if Florida Housing employees were to use their personal knowledge of an experienced developer to waive errors in a specific application, applicants who had not previously submitted applications would be at a competitive disadvantage. Ms. Button testified that Berkeley was established as a single purpose entity in accordance with the RFA’s requirements. She testified that she has known general developers to structure these single purpose entities in different ways, depending on the requirements of an RFA. An applicant might designate an employee, such as Ms. Lagmay, as a principal to give her experience as a developer. Again, Ms. Button emphasized that Florida Housing is not in a position to decide what the applicant “really meant” when there is a discrepancy in the information provided. Ms. Button testified that Florida Housing has determined in prior RFAs that an applicant was ineligible because the person identified as the Authorized Principal Representative was not the same person who signed the certification forms. Florida Housing rightly concluded that there are only two possible ways to interpret the Berkeley Application. If Ms. Lagmay was the Authorized Principal Representative, then the application is nonresponsive because she was not listed on the Principal Disclosure form and she did not sign the required certification forms. If Ms. Lagmay was not the Authorized Principal Representative, the application is nonresponsive because no Authorized Principal Representative was identified. There is no way to tell from the four corners of the application which of these alternatives is the correct one. Florida Housing cannot step in and cure the defect in the application by making its own educated guess as to the intended identity of the Authorized Principal Representative. Berkeley has failed to demonstrate that Florida Housing’s preliminary determination of ineligibility was contrary to the applicable rules, statutes, policies, or specifications of the RFA, or was clearly erroneous, contrary to competition, arbitrary, or capricious. THE SIERRA BAY APPLICATION The parties stipulated to the facts regarding the Sierra Bay Application, which are incorporated into this Recommended Order. Florida Housing deemed the Sierra Bay Application eligible and, pursuant to the terms of the RFA, preliminarily selected Sierra Bay for funding. In order to demonstrate site control, the RFA required execution of the Site Control Certification form. Site control documentation had to be included in the application. One way to demonstrate site control was to include an “eligible contract.” The RFA required that certain conditions be met in order to be considered an “eligible contract.” One of those requirements was that the contract “must specifically state that the buyer’s remedy for default on the part of the seller includes or is specific performance.” Sierra Bay acknowledged that the site control documentation included within its application did not meet the “eligible contract” requirement because it failed to include language regarding specific performance as a remedy for the seller’s default. Sierra Bay agreed that the omission of the specific performance language was not a minor irregularity and that Sierra Bay’s Application is ineligible for funding under the terms of the RFA. THE SOLARIS APPLICATION The RFA specified that a Local Government, Public Housing Authority, Land Authority, or Community Land Trust must hold 100 percent ownership in the land of any qualifying Priority I application. The RFA defined “Community Land Trust” as: A 501(c)(3) which acquires or develops parcels of land for the primary purpose of providing or preserving affordable housing in perpetuity through conveyance of the structural improvement subject to a long term ground lease which retains a preemptive option to purchase any such structural improvement at a price determined by a formula designed to ensure the improvement remains affordable in perpetuity. The RFA provided that if a Community Land Trust is the Land Owner, the Community Land Trust must provide the following documentation as Attachment 2 to the application to demonstrate that it qualifies as a Community Land Trust: The Community Land Trust must provide its Articles of Incorporation or Bylaws demonstrating it has existed since June 28, 2018 or earlier and that a purpose of the Community Land Trust is to provide or preserve affordable housing; and The Community Land Trust must provide a list that meets one of the following criteria to demonstrate experience of the Community Land Trust with owning property: (i) at least two parcels of land that the Community Land Trust currently owns; or (ii) one parcel of land that the Community Land Trust owns, consisting of a number of units that equals or exceeds at least 25 percent of the units in the proposed Development. The RFA required that the proposed development must be affordable in perpetuity. For purposes of the RFA, “perpetuity” means 99 years or more. Solaris identified Residential Options of Florida, Inc. (“Residential Options”), as the Community Land Trust owner in its Priority 1 Application. Attachment 2 of the Solaris Application included the Articles of Incorporation of Residential Options (“Original Articles”), filed with the Division of Corporations on July 30, 2014. The purpose of the corporation as stated in the Original Articles was as follows: Said corporation is organized exclusively for charitable, religious, educational, and scientific purposes, including for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code. Attachment 2 of the Solaris Application also included Amended and Restated Articles of Incorporation of Residential Options (“Amended Articles”), filed with the Division of Corporations on September 20, 2019. The Amended Articles retained the boilerplate statement of purpose of the Original Articles, but added the following paragraph: This shall include the purpose of empowering individuals with intellectual and developmental disabilities to successfully obtain and maintain affordable and inclusive housing of their choice and to provide affordable housing and preserve the affordability of housing for low- income or moderate income people, including people with disabilities, in perpetuity. Attachment 2 of the Solaris Application also included the Articles of Incorporation of ROOF Housing Trust, Inc. (“ROOF Housing Trust”) filed with the Division of Corporations on July 17, 2017. The purpose of the corporation as stated in these Articles includes the following: “to acquire land to be held in perpetuity for the primary purpose of providing affordable housing for people with developmental disabilities.” Finally, Attachment 2 of the Solaris Application included Articles of Merger, which were filed with the Division of Corporations on September 10, 2019. The Articles of Merger indicated that the Residential Options and ROOF Housing Trust had merged, with Residential Options standing as the surviving corporation. The petitioners contesting the Solaris Application raise several issues. The first issue is whether the RFA requires only that the entity named as the Community Land Trust have been in existence in some form as of June 28, 2018, or whether the entity had to exist as a Community Land Trust as of that date. The Community Land Trust named in the Solaris Application, Residential Options, existed prior to June 28, 2018, but not as a Community Land Trust. The second issue is whether the June 28, 2018, date applies only to the existence of the Community Land Trust or whether the RFA requires that the Community Land Trust have been in existence and have had a stated purpose to provide or preserve affordable housing and have met the ownership experience criteria as of June 28, 2018. It is questionable whether Solaris would be eligible for funding if the RFA required the latter, because Residential Options did not have a stated purpose of providing or preserving affordable housing prior to its merger with ROOF Housing Trust, at least no such purpose as could be gleaned from the four corners of the Solaris Application. The third issue is whether the RFA’s definition of “Community Land Trust” requires the qualifying entity to have existing ground leases at the time of the application. Florida Housing and Solaris concede that Residential Options did not have operative ground leases at the time Solaris submitted its application. Hurricane Irma struck Puerto Rico and Florida in September 2017. Ms. Button testified that in creating this RFA, Florida Housing wanted to weed out opportunistic community land trusts created only for the purpose of obtaining this funding. Florida Housing initially proposed an RFA requirement that the community land trust have existed as of September 2017, but discovered through workshops with interested parties that the early date would exclude legitimate Community Land Trusts that had been established in response to the storm. Ms. Button testified that Florida Housing’s intent was to make this RFA as inclusive as practicable. Florida Housing therefore selected June 28, 2018, as a date that would exclude opportunists without penalizing the genuine responders to the natural disaster. Both Florida Housing and Solaris point to the text of the RFA requirement to demonstrate that the date of June 28, 2018, should be read to apply only to whether the Community Land Trust existed as of that date. Solaris argues that the RFA states three independent criteria for eligibility: 1) that the Community Land Trust “has existed since June 28, 2018 or earlier”; 2) that a purpose of the Community Land Trust is1 to provide or preserve affordable housing; and 3) the Community Land Trust must demonstrate its property ownership experience, one means of doing which is to name at least two parcels of land that the Community Land Trust currently owns. Florida Housing argues that Solaris met the first criterion by providing its Articles of Incorporation showing it has existed since July 30, 2014. Florida Housing argues that Solaris met the second criterion by providing its Amended and Restated Articles of Incorporation, which stated the purpose of providing or preserving affordable housing in perpetuity. Florida Housing argues that Solaris met the third criterion by identifying two properties in Immokalee, Independence Place, and Liberty Place as parcels that it currently owns. Florida Housing thus reached the conclusion that Residential Options met the definition of a Community Land Trust in the RFA as of June 28, 2018. Florida Housing argues that, according to the definition in the RFA, a Community Land Trust must be a 501(c)(3) corporation, which Residential Options clearly is. It must acquire or develop parcels of land, which it has done. Finally, it must have the “primary purpose of providing or preserving affordable housing in perpetuity through conveyance of the structural improvement subject to a long term ground lease.” Ms. Button testified that Florida Housing’s interpretation of the RFA’s Community Land Trust definition was that if Residential Options had the primary purpose of providing affordable housing in perpetuity through the use of long term ground leases, the definition has been met even if Residential Options had not actually entered into any ground leases at the 1 Both Florida Housing and Solaris emphasize that the second criterion is stated in the present tense, which suggests that it does not intend a backward look to June 28, 2018. time it submitted its application. This is not the only way to read the RFA’s definition, but it is not an unreasonable reading, particularly in light of Florida Housing’s stated intent to make the RFA as inclusive as possible in terms of the participation of legitimate community land trusts. Sheryl Soukup, the Executive Director of Residential Options, testified via deposition. Ms. Soukup testified that in 2017, Residential Options realized there was a need for housing for people with disabilities and decided to become a nonprofit housing developer of properties that would be kept affordable in perpetuity. To that end, ROOF Housing Trust was created to act as the community land trust for the properties developed by Residential Options. The two companies had identical Boards of Directors and Ms. Soukup served as Executive Director of both entities. In its application to the IRS for 501(c)(3) status, ROOF Housing Trust included the following: The organization does not own any property yet. ROOF Housing Trust intends to own vacant land, single family homes, and multi-family units. Some of the units will be provided as rental units. ROOF Housing Trust will sell some of the houses for homeownership, while retaining the land on which they are located. The land will be leased to homeowners at a nominal fee to make the purchase price affordable, using the community land trust model. Ground leases and warranty deeds not been developed yet [sic], but will be based on the sample documents provided by the Florida Community Land Trust Institute.[2] Ms. Soukup described ROOF Housing Trust as “a vehicle by which Residential Options of Florida could act as a community land trust…. [I]t was always the intention of Residential Options of Florida to develop and put into 2 The ROOF Housing Trust 501(c)(3) application was not a part of the Solaris Application. It was included as an exhibit to Ms. Soukup’s deposition. a community land trust property so that it would remain affordable in perpetuity for use by people of intellectual and development [sic] disabilities.” Residential Options acquired the aforementioned Independence Place and Liberty Place properties but never conveyed ownership to ROOF Housing Trust. Residential Options acted as a de facto community land trust. No ground leases have yet been entered into because the properties are at present rented directly by Residential Options to persons with developmental disabilities. Ms. Soukup testified that at the time ROOF Housing Trust was created, the Board of Residential Options was undecided whether to create a separate entity to act as a community land trust or to incorporate that function into the existing entity. The decision to incorporate ROOF Housing Trust was based on the Board’s intuition that a separate corporation would “allow us the most flexibility in the future.” In any event, Residential Options and ROOF Housing Trust were functionally the same entity. Ms. Soukup testified that plans to merge the two companies emerged from a situation in which Collier County refused to allow Residential Options to convey its two properties to ROOF Housing Trust. The Board that controlled both companies decided that there was no point in maintaining separate legal entities if ROOF Housing Trust could not perform its main function. As noted above, Articles of Merger were filed on September 10, 2019. Northside points to minutes from Residential Options’s Board meetings in August and September 2019, as indicating that the Board itself did not believe that Residential Options was a community land trust prior to the merger with ROOF Housing Trust. Northside contends that the September 2019 merger was initiated and completed mainly because Residential Options had been approached about serving as the Community Land Trust for the applications of Solaris and Sierra Bay in this RFA. Northside points to the “frenzied activity” by Residential Options to create an entity meeting the definition of Community Land Trust in the days just before the September 24, 2019, application deadline. Northside argues that Residential Options is the very kind of opportunistic community land trust that the June 28, 2018, date of creation was intended to weed out. Northside’s argument is not persuasive of itself, but it does point the way to an ultimate finding as to the Solaris Application. Both Florida Housing and Solaris gave great emphasis to Ms. Soukup’s testimony to refute the suggestion that Residential Options acted opportunistically. Ms. Soukup was a credible witness. Her explanation of the process by which Residential Options first created then merged with ROOF Housing Trust dispelled any suggestion that Residential Options was a community land trust created solely to cash in on this RFA. The problem is that Ms. Soukup’s explanation was not before the Review Committee when it evaluated the Solaris Application. The only information about Residential Options that the Review Committee possessed was Attachment 2 of the Solaris Application. The dates of the merger documents and Amended Articles certainly give some credence to the suspicions voiced by Northside. However, the undersigned is less persuaded by the implications as to the intentions of Residential Options than by the contradictions between Florida Housing’s statements of intent and its reading of the RFA in relation to the Solaris Application. The decision to find the Solaris Application eligible for funding founders on the first issue stated above: whether the RFA requires only that the Community Land Trust have been in existence in some form as of June 28, 2018, or whether it had to exist as a Community Land Trust as of that date. Ms. Button testified that the June 28, 2018, date was settled upon as a way of including community land trusts created in the wake of Hurricane Irma, while excluding those created to cash in on this RFA. During cross- examination by counsel for Northside, Ms. Button broadened her statement to say that Florida Housing’s intention was to exclude entities that had not been involved in affordable housing at all prior to June 28, 2018. Nonetheless, the RFA language is limited to Community Land Trusts. The RFA states: “The Community Land Trust must provide its Articles of Incorporation or Bylaws demonstrating that it has existed since June 28, 2018 or earlier…” The Solaris Application shows that Residential Options existed prior to June 28, 2018, but not as a Community Land Trust. Residential Options did not become a Community Land Trust until it completed its merger with ROOF Housing Trust and filed the Amended Articles on September 20, 2019. Ms. Button’s statement of intent is accepted as consistent with the plain language of the RFA: the date of June 28, 2018, excludes Community Land Trusts created subsequently. It is inconsistent for Florida Housing to also read the RFA language to say that the qualifying entity need not have existed as a Community Land Trust prior to June 28, 2018. It would be arbitrary for Florida Housing to set a date for the creation of Community Land Trusts then turn around and find that the date does not apply to this particular Community Land Trust. Ms. Soukup’s testimony was that Residential Options and ROOF Housing Trust were effectively a single entity and that Residential Options was in fact operating as a community land trust prior to the September 10, 2019, merger. However, Ms. Soukup’s explanation was not before the Review Committee, which was limited to one means of ascertaining whether an entity was a Community Land Trust prior to June 28, 2018: the Articles of Incorporation or Bylaws. Residential Options’s Original Articles included no language demonstrating that it was a Community Land Trust prior to the September 10, 2019, merger with ROOF Housing Trust and the filing of the Amended Articles on September 20, 2019.3 As set forth in the discussion of the Berkley Application above, Florida Housing is required to limit its inquiry to the four corners of an application. It was contrary to the provisions of the RFA for Florida Housing to find that Residential Options’s mere existence as a legal entity prior to June 28, 2018, satisfied the requirement that the Community Land Trust must demonstrate that it existed prior to June 28, 2018. Ms. Button’s own testimony demonstrated that Florida Housing intended to exclude Community Land Trusts created after June 28, 2018. ROOF Housing Trust existed as a Community Land Trust in 2017, but ROOF Housing Trust was not the Community Land Trust named in the Solaris Application. Ms. Soukup’s explanation of the circumstances showed that Residential Options was well intentioned in its actions, but her explanation was not a part of the Solaris Application that was before Florida Housing’s Review Committee. THE METRO GRANDE APPLICATION Florida Housing deemed the Metro Grande Application eligible. Pursuant to the terms of the RFA, the Metro Grande Application was preliminarily selected for funding. Petitioner Brisas contends that the Metro Grande Application should have been found ineligible for failure to include mandatory site control documentation. Metro Grande submitted a Priority I application that was not seeking Land Acquisition Program funding. The site control requirements for such applicants are as follows: 3 This finding also disposes of Solaris’s arguments regarding the legal effect of corporate mergers. The RFA provided one simple way of demonstrating whether an entity was a Community Land Trust as of June 28, 2018. Florida Housing’s Review Committee could not be expected to delve into the complexities of corporate mergers to answer this uncomplicated question. The Local Government, Public Housing Authority, Land Authority, or Community Land Trust must already own the land as the sole grantee and, if funded, the land must be affordable into Perpetuity.[4] Applicants must demonstrate site control as of Application Deadline by providing the properly executed Site Control Certification form (Form Rev. 08-18). Attached to the form must be the following documents: A Deed or Certificate of Title. The deed or certificate of title (in the event the property was acquired through foreclosure) must be recorded in the applicable county and show the Land Owner as the sole Grantee. There are no restrictions on when the land was acquired; and A lease between the Land Owner and the Applicant entity. The lease must have an unexpired term of at least 50 years after the Application Deadline. Metro Grande did not include a deed or certificate of title in its application. In fact, no deed or certificate of title for the Metro Grande site exists. Miami-Dade County owns the Metro Grande site. Miami-Dade County acquired ownership of the Metro Grande site by eminent domain. The eminent domain process culminated in the entry of four Final Judgments for individual parcels which collectively compose the Metro Grande site. The Final Judgments were not attached to Metro Grande’s Application. There was no requirement in the RFA that Metro Grande include these Final Judgments in its application. The Final Judgments were produced during discovery in this proceeding. In its application, Metro Grande included a Land Owner Certification and Acknowledgement Form executed by Maurice L. Kemp, as the Deputy Mayor of Miami-Dade County, stating that the county holds or will hold 100 percent ownership of the land where Metro Grande’s proposed 4 The RFA defined “Perpetuity” as “at least 99 years from the loan closing.” development is located. Additionally, in its application, Metro Grande stated that Miami-Dade County owned the property. The RFA expressly states that Florida Housing “will not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation.” Florida Housing reserves the right to rescind an award to any applicant whose site control documents are shown to be insufficient during the credit underwriting process. Thus, the fact that no deed or certificate of title was included with Metro Grande’s site control documents was not considered by Florida Housing during the scoring process. Ms. Button testified that while this was an error in the application, it should be waived as a minor irregularity. The purpose of the documentation requirements was to demonstrate ownership and control of the applicant’s proposed site. There was no question or ambiguity as to the fact that Miami- Dade County owned the Metro Grande site. Florida Housing was not required to resort to information extraneous to the Metro Grande Application to confirm ownership of the site. The Land Owner Certification and Acknowledgement form, executed by the Deputy Mayor as the Authorized Land Owner Representative, confirmed ownership of the parcels. Metro Grande’s failure to include a deed or certificate of title, therefore, created no confusion as to who owned the property or whether Miami-Dade County had the authority to lease the property to the applicant. There was no evidence presented that the failure to include a deed or certificate of title resulted in the omission of any material information or provided a competitive advantage over other applicants. Brisas contends that the RFA was clear as to the documents that must be included to satisfy the site control requirements. Metro Grande failed to provide those documents or even an explanation why those documents were not provided. Florida Housing ignored the fact that no deed or certificate of title was provided, instead relying on information found elsewhere in the application. It is found that Metro Grande failed to comply with an eligibility item of the RFA, but that Florida Housing was correct to waive that failure as a minor irregularity that provided Metro Grande no competitive advantage, created no uncertainty as to whether the requirements of the RFA were met, and did not adversely affect the interests of Florida Housing or the public. Brisas has failed to demonstrate that Florida Housing’s preliminary determination of eligibility and selection for funding was contrary to the applicable rules, statutes, policies, or specifications of the RFA or was clearly erroneous, contrary to competition, arbitrary, or capricious. THE BEACON PLACE APPLICATION Florida Housing deemed the Beacon Place Application eligible. Pursuant to the terms of the RFA, Beacon Place was not preliminarily selected for funding. The RFA provides that an application may earn proximity points based on the distance between its Development Location Point and the selected Transit or Community Service. Proximity points are used to determine whether the Applicant meets the required minimum proximity eligibility requirements and the Proximity Funding Preference. Beacon Place is a Large County Application that is not eligible for the “Public Housing Authority Proximity Point Boost.” As such, the Beacon Place Application was required to achieve a minimum Transit Point score of 2 to be eligible for funding. Beacon Place must also achieve a total Proximity Point score of 10.5 in order to be eligible for funding. Beacon Place must achieve a total Proximity Point score of 12.5 or more in order to receive the RFA’s Proximity Funding Preference. Based on the information in its Application, Beacon Place received a Total Proximity Point score of 18 and was deemed eligible for funding and for the Proximity Point Funding Preference. The Beacon Place Application listed a Public Bus Rapid Transit Stop as its Transit Service. Applying the Transit Service Scoring Charts in Exhibit C of the RFA, Florida Housing awarded Beacon Place 6 Proximity Points for its Transit Service. The Beacon Place Application listed a Grocery Store, a Pharmacy, and a Public School in its Community Services Chart in order to obtain Proximity Points for Community Services. Using the Community Services Scoring Charts in Exhibit C of the RFA, Florida Housing awarded Beacon Place 4 Proximity Points for each service listed, for a total of 12 Proximity Points for Community Services. Beacon Place has stipulated, however, that the Public School listed in its application does not meet the definition of “Public School” in the RFA and Beacon Place should not receive the 4 Proximity Points for listing a public school. The RFA defines a “Public Bus Rapid Transit Stop” as: [a] fixed location at which passengers may access public transportation via bus. The Public Bus Rapid Transit Stop must service at least one bus that travels at some point during the route in either a lane or corridor that is exclusively used by buses, and the Public Bus Rapid Transit Stop must service at least one route that has scheduled stops at the Public Bus Rapid Transit Stop at least every 20 minutes during the times of 7am to 9am and also during the times of 4pm to 6pm Monday through Friday, excluding holidays, on a year- round basis. Additionally, it must have been in existence and available for use by the general public as of the Application Deadline. The Beacon Place Application included Metrobus Route 38 (“Route 38”) as a Public Bus Rapid Transit Stop. Route 38 has scheduled stops at the location identified in the Beacon Place Application at the following times during the period of 7 a.m. and 9 a.m. Monday through Friday: 7:01, 7:36, 7:56, 8:11, 8:26, 8:41, and 8:56. Brisas and Northside contend that Route 38 does not meet the definition of a Public Bus Rapid Transit Stop because there is a gap of more than 20 minutes between the 7:01 a.m. bus and the 7:36 a.m. bus. Applicants are not required to include bus schedules in the application. Florida Housing does not attempt to determine whether an identified stop meets the RFA definitions during the scoring process. During discovery in this litigation, Florida Housing changed its position and now agrees that Route 38 does not satisfy the definition. Nonetheless, the standard of review set forth in section 120.57(3) is applicable to Florida Housing’s initial eligibility determination, not its revised position. All parties stipulated that Route 38 meets the definition of a Public Bus Rapid Transit Stop as to scheduled stops during the hours of 4 p.m. to 6 p.m. Monday through Friday. If the bus stop listed by Beacon Place does not also meet the definition of a Public Bus Rapid Transit Stop as to scheduled stops during the hours of 7 a.m. to 9 a.m., Beacon Place would not be entitled to any Transit Service Proximity Points and would be ineligible for funding. Beacon Place cannot contest the fact that there is a 35 minute gap between the 7:01 and the 7:36 buses. Beacon Place has attempted to salvage its situation by comparing the language used in the RFA definition of a Public Bus Stop with that used in the definition of a Public Bus Rapid Transit Stop. The RFA defines Public Bus Stop in relevant part as [a] fixed location at which passengers may access one or two routes of public transportation via buses. The Public Bus Stop must service at least one bus route with scheduled stops at least hourly during the times of 7am to 9am and also during the times of 4pm and 6pm Monday through Friday, excluding holidays, on a year round basis…. Florida Housing has interpreted the “hourly” requirement of the Public Bus Stop definition to mean that a bus must stop at least once between 7:00 a.m. and 8:00 a.m., and at least once between 8:00 a.m. and 9:00 a.m. Beacon Place suggests that Florida Housing should interpret the “every 20 minutes” requirement for a Public Bus Rapid Transit Stop similarly, so that a bus must stop at least once between 7:00 a.m. and 7:20 a.m., once between 7:20 a.m. and 7:40 a.m., and once between 7:40 a.m. and 8:00 a.m. Florida Housing has rejected this interpretation, however, noting that the language in the two definitions is explicitly different. Ms. Button testified that if Florida Housing had intended these two distinct definitions to be interpreted similarly, it could easily have worded them differently. It could have required a Public Bus Stop to have stops “at least every 60 minutes,” rather than “hourly.” It could have required a Public Bus Rapid Transit Stop to have “three stops per hour” rather than “every 20 minutes.” Ms. Button observed that the purpose of the Public Bus Rapid Transit Stop definition is to award points for serving the potential residents with frequent and regular stops. The idea was to be sure residents had access to the bus during the hours when most people are going to and from work. Florida Housing’s interpretation of “every 20 minutes” is consonant with the plain language of the phrase and reasonably serves the purpose of the definition. Florida Housing also rejected the idea that the failure of the identified stop to meet the definition of a Public Bus Rapid Transit Stop in the RFA should be waived as a minor irregularity. Ms. Button testified that allowing one applicant to get points for a stop that did not meet the definition would give it a competitive advantage over other applicants, including some potential applicants who did not apply because they could not satisfy the terms of the definition. Because the bus stop listed by Beacon Place does not meet the definition of a Public Bus Rapid Transit Stop, Beacon Place is not entitled to any Transit Service Proximity Points and is thus ineligible for funding. Brisas and Northside have demonstrated that Florida Housing’s preliminary determination of eligibility for Beacon Place was contrary to the specifications of the RFA. Florida Housing’s original recommendation would have been contrary to the terms of the RFA. THE EAST POINTE APPLICATION Florida Housing deemed the East Pointe Application eligible. Pursuant to the terms of the RFA, East Pointe was preliminarily selected for funding. Bella Vista challenged Florida Housing’s action alleging that the Medical Facility selected by East Pointe did not meet the definition found in the RFA. East Pointe proposed a Development in Lee County, a Medium County according to the terms of the RFA. Applicants from Medium Counties are not required to attain a minimum number of Transit Service Points to be considered eligible for funding. However, such applicants must achieve at least 7 total Proximity Points to be eligible for funding and at least 9 Proximity Points to receive the Proximity Funding Preference. The East Pointe Application identified three Public Bus Stops and was awarded 5.5 Proximity Points based on the Transit Service Scoring Chart in Exhibit C to the RFA. However, East Pointe has stipulated that Public Bus Stop 1 listed in its application does not meet the definition of a Public Bus Stop because it does not have the required scheduled stops. Based on the Transit Service Scoring Chart, East Pointe should receive a total of 3.0 Proximity Points for Transit Services for Public Bus Stops 2 and 3. East Pointe listed a Grocery Store, a Medical Facility, and a Public School in its Community Services Chart. Based on the Community Services Scoring Charts in Exhibit C to the RFA, East Pointe received 1 Proximity Point for its Grocery Store, 4 Proximity Points for its Medical Facility, and 3 Proximity Points for its Public School, for a total of 8 Proximity Points for Community Services. East Pointe listed Lee Memorial Health System at 3511 Dr. Martin Luther King Jr. Boulevard, Ft. Myers, Florida, as its Medical Facility. The RFA defines “Medical Facility” as follows: A medically licensed facility that (i) employs or has under contractual obligation at least one physician licensed under Chapter 458 or 459, F.S. available to treat patients by walk-in or by appointment; and (ii) provides general medical treatment to any physically sick or injured person. Facilities that specialize in treating specific classes of medical conditions or specific classes of patients, including emergency rooms affiliated with specialty or Class II hospitals and clinics affiliated with specialty or Class II hospitals, will not be accepted. Additionally, it must have been in existence and available for use by the general public as of the Application Deadline. If East Pointe’s selected Medical Facility does not meet the definition of “Medical Facility” in the RFA, East Pointe will lose 4 Proximity Points, reducing its total Proximity Points to 7. The East Pointe Application would still be eligible but would not receive the Proximity Funding Preference and, therefore, would fall out of the funding range of the RFA. Bella Vista alleged that East Pointe should not have received Proximity Points for a Medical Facility because the Lee Community Healthcare location specified in its application “only serves adults and therefore only treats a specific group of patients.” Lee Community HealthCare operates nine locations in Lee County, including the “Dunbar” location that East Pointe named in its application. Lee Community Healthcare’s own promotional materials label the Dunbar location as “adults only.” Robert Johns, Executive Director for Lee Community Healthcare, testified by deposition. Mr. Johns testified that as of the RFA application date of September 24, 2019, the Dunbar office provided services primarily to adults 19 years of age or over, by walk-in or by appointment. A parent who walked into the Dunbar office with a sick or injured child could obtain treatment for that child. A parent seeking medical services for his or her child by appointment would be referred to a Lee Community HealthCare office that provided pediatric services. Mr. Johns testified that the Dunbar office would provide general medical treatment to any physically sick or injured person who presented at the facility, including children. Children would not be seen by appointment at the Dunbar facility, but they would be treated on a walk-in basis. The RFA requires a Medical Facility to treat patients “by walk-in or by appointment.” Ms. Button testified that Florida Housing reads this requirement in the disjunctive. A Medical Facility is not required to see any and all patients by walk-in and to see any and all patients by appointment. Florida Housing finds it sufficient for the Medical Facility to see some or all patients by walk-in or by appointment. Ms. Button opined that the Dunbar office met the definition of a Medical Facility because it treated adults by walk-in or appointment and treated children on a walk-in basis. Florida Housing’s reading is consistent with the literal language of the RFA definition. While it would obviously be preferable for the Dunbar facility to see pediatric patients by appointment, the fact that it sees them on a walk-in basis satisfies the letter of the RFA provision. Bella Vista has failed to demonstrate that Florida Housing’s preliminary determination of eligibility and selection for funding was contrary to the applicable rules, statutes, policies, or specifications of the RFA or was clearly erroneous, contrary to competition, arbitrary, or capricious. THE BEMBRIDGE APPLICATION Florida Housing deemed the Bembridge Application eligible. Pursuant to the terms of the RFA, Bembridge was preliminarily selected for funding. Bembridge proposed a development in Collier County, a Medium County in RFA terms. As an applicant from a Medium County, Bembridge was required to achieve at least 7 total Proximity Points to be eligible for funding and at least 9 Proximity Points to receive the Proximity Funding Preference. Medium County applicants are allowed, but not required, to claim both Transit Service points and Community Service points. As to Community Services, the RFA provides that an applicant may receive a “maximum 4 Points for each service, up to 3 services.” The RFA goes on to state: Applicants may provide the location information and distances for three of the following four Community Services on which to base the Application’s Community Services Score.[5] The Community Service Scoring Charts, which reflect the methodology for calculating the points awarded based on the distances, are outlined in Exhibit C. In its Application, Bembridge listed four, not three, Community Services. Bembridge was one of six Applicants that mistakenly submitted four Community Services instead of three. The Review Committee scorer reviewing Community Services in the applications stated on her scoring sheet: “After removing points for the service with the least amount of points, all still met the eligibility requirement.” 5 The four listed Community Services were Grocery Store, Public School, Medical Facility, and Pharmacy. Florida Housing interpreted the RFA as not specifically prohibiting an applicant from listing four Community Services, but as providing that the applicant could receive points for no more than three of them. As to the six applicants who submitted four Community Services, Florida Housing awarded points only for the three Community Services that were nearest the proposed development.6 Bembridge received 3 Proximity points for its Grocery Store, 3.5 Proximity Points for its Pharmacy, and 4 Proximity Points for its Public School, for a total of 10.5 Proximity Points for Community Services. Thus, as originally scored, Bembridge met the Proximity Funding Preference. Florida Housing did not score the Medical Facility listed by Bembridge, which was the farthest Community Service from the proposed development. Ms. Button testified that this fourth Community Service was treated as surplus information, and because it did not conflict with any other information in the application or cause uncertainty about any other information, it was simply not considered. Ms. Button likened this situation to prior RFAs in which applicants included pharmacies as Community Services even though they were not eligible in proposed family developments. Florida Housing disregarded the information as to pharmacies as surplus information. It did not consider disqualifying the applicants for providing extraneous information. Ms. Button also made it clear that if one of the three Community Services nearest the proposed development was found ineligible for some reason, the fourth Community Service submitted by the applicant would not be considered. The fourth Community Service was in all instances to be disregarded as surplusage in evaluating the application. 6 When queried as to whether the fourth Community Service was removed because it was worth the fewest points, as the reviewer’s notes stated, or because it was farthest away from the proposed development, Ms. Button replied that the distinction made no difference because the service that is farthest away is invariably the one that receives the fewest points. Florida Housing did not consider disqualifying Bembridge and the other five Applicants that mistakenly listed an extra Community Service in their applications. Ms. Button stated, “They provided in all of them, Bembridge and the others that were listed in this, they did provide three Community Services. And so I don’t think it is reasonable to throw out those applications for providing a fourth that we would just not consider nor give benefit to for those point values.” Bella Vista contends that Florida Housing should have rejected the Bembridge application rather than award points for the three nearest Community Services. Ms. Button testified that this was not a reasonable approach if only because there was nothing in the RFA stating that an application would be rejected if it identified more Community Services than were required. Ms. Button also noted that this was one of the first RFAs to allow applicants to select among four Community Services. She believed the novelty of this three-out-of-four selection process led to six applications incorrectly listing four Community Services. She implied that the Community Services language would have to be tweaked in future RFAs to prevent a recurrence of this situation, but she did not believe it fair to disqualify these six applicants for their harmless error. The Review Committee scorer did not perform a minor irregularity analysis relating to the fourth Community Service provided by Bembridge and the other applicants. Ms. Button opined that the addition of an extra Community Service amounts to no more than a minor irregularity because it provided no competitive advantage to the applicant and created no uncertainty that the terms and requirements of the RFA have been met. The RFA allows up to six proximity points for Transit Services. It specifically provides: Up to three Public Bus Stops may be selected with a maximum of 2 points awarded for each one. Each Public Bus Stop must meet the definition of Public Bus Stop as defined in Exhibit B, using at least one unique bus route. Up to two of the selected Public Bus Stops may be Sister Stops that serves the same route, as defined in Exhibit B. The RFA defines “Sister Stop” as: two bus stops that (i) individually, each meet the definition of Public Bus Stop, (ii) are separated by a street or intersection from each other, (iii) are within 0.2 miles of each other, (iv) serve at least one of the same bus routes, and (v) the buses travel in different directions. The Bembridge Application listed two Public Bus Stops, the definition of which is set forth at Finding of Fact 107 above. Based on the Transit Service Scoring Chart, Bembridge received a total of 1.0 Proximity Point for Transit Services for its two Public Bus Stops. Numerous questions were asked at the hearing about whether Bembridge’s identified bus stops were “Sister Stops” as defined in the RFA, and the evidence on that point was not definitive. However, whether they are Sister Stops is irrelevant because each stop identified by Bembridge independently met the definition of “Public Bus Stop” in the RFA and was therefore eligible for Transit Proximity Points. Bella Vista has failed to demonstrate that Florida Housing’s preliminary determination of eligibility and selection for funding was contrary to the applicable rules, statutes, policies, or specifications of the RFA or was clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order as to RFA 2019-102 finding that: The Berkeley Application is ineligible for funding; The Sierra Bay Application is ineligible for funding; The Solaris Application is ineligible for funding; The Metro Grande Application is eligible for funding; The Beacon Place Application is ineligible for funding; The East Pointe Application is eligible for funding and entitled to the Proximity Funding Preference; and The Bembridge Application is eligible for funding. DONE AND ENTERED this 6th day of April, 2020, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of April, 2020. COPIES FURNISHED: Christopher Dale McGuire, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed) Craig D. Varn, Esquire Manson Bolves Donaldson & Varn, P.A. Suite 820 106 East College Avenue Tallahassee, Florida 32301 (eServed) Amy Wells Brennan, Esquire Manson Bolves Donaldson & Varn, P.A. Suite 300 109 North Brush Street Tampa, Florida 33602 (eServed) Hugh R. Brown, General Counsel Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) Michael P. Donaldson, Esquire Carlton Fields, P.A. 215 South Monroe Street, Suite 500 Post Office Drawer 190 Tallahassee, Florida 32302-0190 (eServed) Donna Elizabeth Blanton, Esquire Radey Law Firm, P.A. Suite 200 301 South Bronough Street Tallahassee, Florida 32301 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Anthony L. Bajoczky, Jr., Esquire Ausley & McMullen, P.A. Post Office Box 391 Tallahassee, Florida 32301 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC Suite 3-231 1400 Village Square Boulevard Tallahassee, Florida 32312 (eServed) Michael J. Glazer, Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 (eServed) Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
The Issue The threshold issue in this case is whether the decisions giving rise to the dispute, which concern the allocation and disbursement of funds appropriated to Respondent by the legislature and thus involve the preparation or modification of the agency's budget, are subject to quasi-judicial adjudication under the Administrative Procedure Act. If the Division of Administrative Hearings were possessed of subject matter jurisdiction, then the issues would be whether Respondent is estopped from implementing its intended decisions to "de- obligate" itself from preliminary commitments to provide low- interest loans to several projects approved for funding under the Community Workforce Housing Innovation Pilot Program; and whether such intended decisions would constitute breaches of contract or otherwise be erroneous, arbitrary, capricious, or abuses of the agency's discretion.
Findings Of Fact Petitioners Pasco CWHIP Partners, LLC ("Pasco Partners"); Legacy Pointe, Inc. ("Legacy"); Villa Capri, Inc. ("Villa Capri"); Prime Homebuilders ("Prime"); and MDG Capital Corporation ("MDG") (collectively, "Petitioners"), are Florida corporations authorized to do business in Florida. Each is a developer whose business activities include building affordable housing. The Florida Housing Finance Corporation ("FHFC") is a public corporation organized under Chapter 420, Florida Statutes, to implement and administer various affordable housing programs, including the Community Workforce Housing Innovation Pilot Program ("CWHIP"). The Florida Legislature created CWHIP in 2006 to subsidize the cost of housing for lower income workers performing "essential services." Under CWHIP, FHFC is authorized to lend up to $5 million to a developer for the construction or rehabilitation of housing in an eligible area for essential services personnel. Because construction costs for workforce housing developments typically exceed $5 million, developers usually must obtain additional funding from sources other than CWHIP to cover their remaining development costs. In 2007, the legislature appropriated $62.4 million for CWHIP and authorized FHFC to allocate these funds on a competitive basis to "public-private" partnerships seeking to build affordable housing for essential services personnel.1 On December 31, 2007, FHFC began soliciting applications for participation in CWHIP. Petitioners submitted their respective applications to FHFC on or around January 29, 2008. FHFC reviewed the applications and graded each of them on a point scale under which a maximum of 200 points per application were available; preliminary scores and comments were released on March 4, 2008. FHFC thereafter provided applicants the opportunity to cure any deficiencies in their applications and thereby improve their scores. Petitioners submitted revised applications on or around April 18, 2008. FHFC evaluated the revised applications and determined each applicant's final score. The applications were then ranked, from highest to lowest score. The top-ranked applicant was first in line to be offered the chance to take out a CWHIP loan, followed by the others in descending order to the extent of available funds. Applicants who ranked below the cut-off for potential funding were placed on a wait list. If, as sometimes happens, an applicant in line for funding were to withdraw from CWHIP or fail for some other reason to complete the process leading to the disbursement of loan proceeds, the highest-ranked applicant on the wait list would "move up" to the "funded list." FHFC issued the final scores and ranking of applicants in early May 2006. Petitioners each had a project that made the cut for potential CWHIP funding.2 Some developers challenged the scoring of applications, and the ensuing administrative proceedings slowed the award process. This administrative litigation ended on or around November 6, 2008, after the parties agreed upon a settlement of the dispute. On or about November 12, 2008, FHFC issued preliminary commitment letters offering low-interest CWHIP loans to Pasco Partners, Legacy, Villa Capri, Prime (for its Village at Portofino Meadows project), and MDG. Each preliminary commitment was contingent upon: Borrower and Development meeting all requirements of Rule Chapter 67-58, FAC, and all other applicable state and FHFC requirements; and A positive credit underwriting recommendation; and Final approval of the credit underwriting report by the Florida Housing Board of Directors. These commitment letters constituted the necessary approval for each of the Petitioners to move forward in credit underwriting, which is the process whereby underwriters whom FHFC retains under contract verify the accuracy of the information contained in an applicant's application and examine such materials as market studies, engineering reports, business records, and pro forma financial statements to determine the project's likelihood of success. Once a credit underwriter completes his analysis of an applicant's project, the underwriter submits a draft report and recommendation to FHFC, which, in turn, forwards a copy of the draft report and recommendation to the applicant. Both the applicant and FHFC then have an opportunity to submit comments regarding the draft report and recommendation to the credit underwriter. After that, the credit underwriter revises the draft if he is so inclined and issues a final report and recommendation to FHFC. Upon receipt of the credit underwriter's final report and recommendation, FHFC forwards the document to its Board of Directors for approval. Of the approximately 1,200 projects that have undergone credit underwriting for the purpose of receiving funding through FHFC, all but a few have received a favorable recommendation from the underwriter and ultimately been approved for funding. Occasionally a developer will withdraw its application if problems arise during underwriting, but even this is, historically speaking, a relatively uncommon outcome. Thus, upon receiving their respective preliminary commitment letters, Petitioners could reasonably anticipate, based on FHFC's past performance, that their projects, in the end, would receive CWHIP financing, notwithstanding the contingencies that remained to be satisfied. There is no persuasive evidence, however, that FHFC promised Petitioners, as they allege, either that the credit underwriting process would never be interrupted, or that CWHIP financing would necessarily be available for those developers whose projects successfully completed underwriting. While Petitioners, respectively, expended money and time as credit underwriting proceeded, the reasonable inference, which the undersigned draws, is that they incurred such costs, not in reliance upon any false promises or material misrepresentations allegedly made by FHFC, but rather because a favorable credit underwriting recommendation was a necessary (though not sufficient) condition of being awarded a firm loan commitment. On January 15, 2009, the Florida Legislature, meeting in Special Session, enacted legislation designed to close a revenue shortfall in the budget for the 2008-2009 fiscal year. Among the cuts that the legislature made to balance the budget was the following: The unexpended balance of funds appropriated by the Legislature to the Florida Housing Finance Corporation in the amount of $190,000,000 shall be returned to the State treasury for deposit into the General Revenue Fund before June 1, 2009. In order to implement this section, and to the maximum extent feasible, the Florida Housing Finance Corporation shall first reduce unexpended funds allocated by the corporation that increase new housing construction. 2009 Fla. Laws ch. 2009-1 § 47. Because the legislature chose not to make targeted cuts affecting specific programs, it fell to FHFC would to decide which individual projects would lose funding, and which would not. The legislative mandate created a constant-sum situation concerning FHFC's budget, meaning that, regardless of how FHFC decided to reallocate the funds which remained at its disposal, all of the cuts to individual programs needed to total $190 million in the aggregate. Thus, deeper cuts to Program A would leave more money for other programs, while sparing Program B would require greater losses for other programs. In light of this situation, FHFC could not make a decision regarding one program, such as CWHIP, without considering the effect of that decision on all the other programs in FHFC's portfolio: a cut (or not) here affected what could be done there. The legislative de-appropriation of funds then in FHFC's hands required, in short, that FHFC modify its entire budget to account for the loss. To enable FHFC to return $190 million to the state treasury, the legislature directed that FHFC adopt emergency rules pursuant to the following grant of authority: In order to ensure that the funds transferred by [special appropriations legislation] are available, the Florida Housing Finance Corporation shall adopt emergency rules pursuant to s. 120.54, Florida Statutes. The Legislature finds that emergency rules adopted pursuant to this section meet the health, safety, and welfare requirements of s. 120.54(4), Florida Statutes. The Legislature finds that such emergency rulemaking power is necessitated by the immediate danger to the preservation of the rights and welfare of the people and is immediately necessary in order to implement the action of the Legislature to address the revenue shortfall of the 2008-2009 fiscal year. Therefore, in adopting such emergency rules, the corporation need not publish the facts, reasons, and findings required by s. 120.54(4)(a)3., Florida Statutes. Emergency rules adopted under this section are exempt from s. 120.54(4)(c), Florida Statutes, and shall remain in effect for 180 days. 2009 Fla. Laws ch. 2009-2 § 12. The governor signed the special appropriations bills into law on January 27, 2009. At that time, FHFC began the process of promulgating emergency rules. FHFC also informed its underwriters that FHFC's board would not consider any credit underwriting reports at its March 2009 board meeting. Although FHFC did not instruct the underwriters to stop evaluating Petitioners' projects, the looming reductions in allocations, coupled with the board's decision to suspend the review of credit reports, effectively (and not surprisingly) brought credit underwriting to a standstill. Petitioners contend that FHFC deliberately intervened in the credit underwriting process for the purpose of preventing Petitioners from satisfying the conditions of their preliminary commitment letters, so that their projects, lacking firm loan commitments, would be low-hanging fruit when the time came for picking the deals that would not receive funding due to FHFC's obligation to return $190 million to the state treasury. The evidence, however, does not support a finding to this effect. The decision of FHFC's board to postpone the review of new credit underwriting reports while emergency rules for drastically reducing allocations were being drafted was not intended, the undersigned infers, to prejudice Petitioners, but to preserve the status quo ante pending the modification of FHFC's budget in accordance with the legislative mandate. Indeed, given that FHFC faced the imminent prospect of involuntarily relinquishing approximately 40 percent of the funds then available for allocation to the various programs under FHFC's jurisdiction, it would have been imprudent to proceed at full speed with credit underwriting for projects in the pipeline, as if nothing had changed. At its March 13, 2009, meeting, FHFC's board adopted Emergency Rules 67ER09-1 through 67ER09-5, Florida Administrative Code (the "Emergency Rules"), whose stated purpose was "to establish procedures by which [FHFC would] de- obligate the unexpended balance of funds [previously] appropriated by the Legislature " As used in the Emergency Rules, the term "unexpended" referred, among other things, to funds previously awarded that, "as of January 27, 2009, [had] not been previously withdrawn or de-obligated . . . and [for which] the Applicant [did] not have a Valid Firm Commitment and loan closing [had] not yet occurred." See Fla. Admin. Code R. 67ER09-2(29). The term "Valid Firm Commitment" was defined in the Emergency Rules to mean: a commitment issued by the [FHFC] to an Applicant following the Board's approval of the credit underwriting report for the Applicant's proposed Development which has been accepted by the Applicant and subsequent to such acceptance there have been no material, adverse changes in the financing, condition, structure or ownership of the Applicant or the proposed Development, or in any information provided to the [FHFC] or its Credit Underwriter with respect to the Applicant or the proposed Development. See Fla. Admin. Code R. 67ER09-2(33). There is no dispute concerning that fact that, as of January 27, 2009, none of the Petitioners had received a valid firm commitment or closed a loan transaction. There is, accordingly, no dispute regarding the fact that the funds which FHFC had committed preliminarily to lend Petitioners in connection with their respective developments constituted "unexpended" funds under the pertinent (and undisputed) provisions of the Emergency Rules, which were quoted above. In the Emergency Rules, FHFC set forth its decisions regarding the reallocation of funds at its disposal. Pertinent to this case are the following provisions: To facilitate the transfer and return of the appropriated funding, as required by [the special appropriations bills], the [FHFC] shall: * * * Return $190,000,000 to the Treasury of the State of Florida, as required by [law]. . . . The [FHFC] shall de-obligate Unexpended Funding from the following Corporation programs, in the following order, until such dollar amount is reached: All Developments awarded CWHIP Program funding, except for [a few projects not at issue here.] * * * See Fla. Admin. Code R. 67ER09-3. On April 24, 2009, FHFC gave written notice to each of the Petitioners that FHFC was "de-obligating" itself from the preliminary commitments that had been made concerning their respective CWHIP developments. On or about June 1, 2009, FHFC returned the de- appropriated funds, a sum of $190 million, to the state treasury. As a result of the required modification of FHFC's budget, 47 deals lost funding, including 16 CWHIP developments to which $83.6 million had been preliminarily committed for new housing construction.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that FHFC enter a Final Order dismissing these consolidated cases for lack of jurisdiction. DONE AND ENTERED this 18th day of February, 2010, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 18th day of February, 2010.
The Issue Whether Respondent, Florida Housing Finance Corporation’s ("Florida Housing") intended action to award housing tax credit funding to Intervenors Westside Phase, I, LLLP ("Westside"), HTG Edgewood, Ltd. ("HTG Edgewood"), Diplomat South, LLC ("Diplomat"), and Tranquility at Milton, LLC ("Tranquility"), under Request for Applications 2019-113 Housing Credit Financing for Affordable Housing Developments Located in Medium and Small Counties (the "RFA"), is contrary to governing statutes, rules, the RFA specifications, and clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code, and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The low income housing tax credit program (commonly referred to as "tax credits" or "housing credits") was enacted to incentivize the private market to invest in affordable rental housing. These housing tax credits are awarded competitively to housing developers in Florida for rental housing projects that qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect is that the credits reduce the amount that the developer would otherwise have to borrow. Because the total debt is lower, a housing tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the housing credits. The demand for housing tax credits provided by the federal government exceeds the supply. The Competitive Application Process Florida Housing is authorized to allocate housing tax credits and other funding by means of a request for applications or other competitive solicitation in section 420.507(48) and Florida Administrative Code Chapter 67-60, which govern the competitive solicitation process for several different programs, including the program for housing tax credits. Chapter 67-60 provides that Florida Housing allocate its competitive funding through the bid protest provisions of section 120.57(3), Florida Statutes. 1 In their applications, applicants request a specific dollar amount of housing tax credits to be given to the applicant each year for a period of ten years. Applicants normally sell the rights to that future stream of income housing tax credits (through the sale of almost all of the ownership interest in the applicant entity) to an investor to generate the amount of capital needed to build the development. The amount which can be received depends 1 A request for application is equivalent to a "request for proposal" as indicated in rule 67- 60.009(3). upon the accomplishment of several factors, such as a certain percentage of the projected total development cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. This, however, is not an exhaustive list of the factors considered. The RFA was issued on August 20, 2019, and responses were initially due October 29, 2019. The RFA was modified on September 10, 2019, and the application deadline was extended to November 5, 2019. No challenges were made to the terms of the RFA. Through the RFA, Florida Housing expects to award up to an estimated $14,805,028 of housing tax credits to proposed developments in medium counties and up to an estimated $1,413,414 of housing credits to proposed developments in small counties. Florida Housing received 184 applications in response to the RFA. A review committee was appointed to review the applications and make recommendations to Florida Housing's Board of Directors (the "Board"). The review committee found 169 applications eligible and 15 applications ineligible. Through the ranking and selection process outlined in the RFA, 11 applications were preliminarily recommended for funding. The review committee developed charts listing its eligibility and funding recommendations to be presented to the Board. On March 6, 2020, the Board met and considered the recommendations of the review committee. Also, on March 6, 2020, at approximately 9:35 a.m., Petitioners and all other applicants received notice that the Board determined whether applications were eligible or ineligible for consideration for funding, and that certain eligible applicants were selected for award of housing credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets on the Florida Housing website, www.floridahousing.org, one listing the Board approved scoring results and one identifying the applications which Florida Housing proposed to fund. In the March 6, 2020, posting, Florida Housing announced its intention to award funding to 11 applicants, including Westside, HTG Edgewood, Diplomat, and Tranquility. Petitioners timely filed notices of protest and petitions for formal administrative proceedings, and Intervenors timely intervened. The RFA Ranking and Selection Process The RFA contemplates a structure in which the applicant is scored on eligibility items and obtains points for other items. A summary of the eligibility items is available in section 5.A.1., beginning on page 64 of the RFA. Only applications that meet all the eligibility items will be eligible for funding and considered for funding selection. There were two total point items scored in this RFA. Applicants could receive five points for Submission of Principals Disclosure Form, stamped by the Corporation as "Pre-Approved," and five points for Development Experience Withdrawal Disincentive, for a total application score of up to ten points. The RFA has three funding goals: The Corporation has a goal to fund four Medium County Developments that qualify for the Local Government Areas of Opportunity Funding Goal outlined in Section Four A.11.a. of the RFA. The Corporation has a goal to fund two Developments with a Demographic commitment of Family that select and qualify for the Geographic Areas of Opportunity/SADDA Goal outlined in Section Four A.11.b. of the RFA. The Corporation has a goal to fund one (1) Development that qualifies for the Local Community Revitalization Initiative Goal outlined in Section Four A.11.c. of the RFA. *Note: During the Funding Selection Process outlined below, Developments selected for these goals will only count toward one goal. As part of the funding selection process, the RFA starts with the application sorting order on page 68. The highest scoring applications are determined by first sorting together all eligible applications from the highest score to lowest score, with any scores that are tied separated as follows: First, 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.10.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 Application'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 Application'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 finally, by lottery number, resulting in the lowest lottery number receiving preference. The RFA includes a Funding Test where small county applications will be selected for funding only if there is enough small county funding available to fully fund the eligible housing credit request amount, and medium county applications will be selected for funding only if there is enough medium county funding available to fully fund the eligible housing credit request amount. The RFA outlines a specific County’s Award Tally: As each application is selected for tentative funding, the county where the proposed Development is located will have one Application credited towards the County’s Award Tally. The Corporation will prioritize eligible unfunded Applications that meet the Funding Test and are located within counties that have the lowest County Award Tally above other eligible unfunded Applications with a higher County Award Tally that also meet the Funding Test, even if the Applications with a higher County Award Tally are higher ranked. According to the RFA, the funding selection process is as follows: The first Application selected for funding will be the highest ranking eligible Applications that qualifies for the Local Community Revitalization Initiative Goal. The next four Applications selected for funding will be the highest ranking eligible Medium County Applications that qualify for the Local Government Areas of Opportunity Funding Goal, subject to the Funding Test and the County Award Tally. The next two Applications selected for funding will be the highest ranking eligible Family Applications that qualify for the Geographic Areas of Opportunity/HUD-designated SADDA Goal, subject to the Funding Test and the County Award Tally. The next Applications selected for funding will be the highest ranking eligible unfunded Small County Applications that (i) can meet the Small County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Small County Applications. If Small County funding remains and no unfunded eligible Small County Application can meet the Small County Funding Test, no further Small County Applications will be selected and the remaining Small County funding will be added to the Medium County funding amount. The next Application(s) selected for funding will be the highest ranking eligible unfunded Medium County Applications that (i) can meet the Medium County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Medium County Applications. If Medium County funding remains and no unfunded eligible Medium County Application can meet the Medium County Funding Test, no further Applications will be selected and the remaining funding will be distributed as approved by the Board. According to the terms of the RFA: Funding that becomes available after the Board takes action on the [Review] Committee’s recommendation(s), due to an Applicant withdrawing its Application, an Applicant declining its invitation to enter credit underwriting, or an Applicant’s inability to satisfy a requirement outlined in this RFA, will be distributed as approved by the Board. All 184 applications for the RFA were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA, Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations. HTG Edgewood’s Application (DOAH Case No. 20-1778BID) During scoring, Florida Housing determined that the HTG Edgewood application was eligible and, pursuant to the terms of the RFA, selected HTG Edgewood for funding. HTG Edgewood, Florida Housing, and Rochester now agree that HTG Edgewood’s application is ineligible for consideration for funding and the application of Rochester is eligible for funding. Accordingly, HTG Edgewood, Florida Housing, and Rochester agree that Florida Housing should deem the HTG Edgewood application ineligible for funding and Rochester’s application eligible for funding. Diplomat’s Application (DOAH Case No. 20-1779BID) During scoring, Florida Housing deemed the Diplomat application eligible and, pursuant to the terms of the RFA, preliminarily selected Diplomat for funding. Diplomat and Madison Square now agree that Diplomat is ineligible for funding. Florida Housing does not contest Diplomat’s admission of ineligibility. Madison Square, Diplomat, and Florida Housing agree that Madison Square is eligible for funding. Tranquility’s Application (DOAH Case No. 20-1780BID) Florida Housing deemed the Tranquility application eligible for funding, and pursuant to the terms of the RFA, Tranquility was selected for preliminary funding. Tranquility’s Principals Disclosure Form Madison Oaks contests Florida Housing’s preliminary selection of Tranquility for an award of housing tax credits. In its challenge, Madison Oaks argues that Tranquility failed to correctly complete its Principals Disclosure Form by not identifying the multiple roles of its disclosed principal. Specifically, Madison Oaks argues that Tranquility failed to list Tranquility Milton Manager, LLC, which is disclosed as a manager, as a non- investor member as well. Accordingly, Madison Oaks contends Tranquility is not eligible or should lose five points. The purpose of the Principals Disclosure Form is to allow Florida Housing to track an entity’s past and future dealings with Florida Housing so that Florida Housing is aware of the entity with which it is dealing. In regard to principal disclosure, the RFA states, in relevant part: c. Principals Disclosure for the Applicant and for each Developer (5 points) Eligibility Requirements To meet the submission requirements, the Applicant must upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019)("Principals Disclosure Form") with the Application and Development Cost Pro Forma, as outlined in Section Three above. Prior versions of the Principal Disclosure Form will not be accepted. The Principals Disclosure Form must identify, pursuant to subsections 67-48.002(94), 67- 48.0075(8) and 67-48.0075(9), the Principals of the Applicant and Developer(s) as of the Application Deadline. The investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company investor must be identified. 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. Point Item Applicants will receive 5 points if the uploaded Principal Disclosure Form was stamped "Approved" during the Advance Review Process. The Advance Review Process for Disclosure of Applicant and Developer Principals is available on the RFA Website and also includes samples which may assist the Applicant in completing the required Principals Disclosure Form. Note: It is the sole responsibility of the Applicant to review the Advance Review Process procedures and to submit any Principals Disclosure Form for review in a timely manner in order to meet the Application Deadline. The RFA website provides guidance and instructions to assist applicants in completing the principal disclosure. The instructions state: "List the name of each Member of the Applicant Limited Liability Company and label each as either non-investor Member or investor Member (i.e., equity provider and/or placeholder), as applicable." The RFA website guidance and instructions further provides Frequently Asked Questions ("FAQ’s") concerning principal disclosures. FAQ number 4 states: Q: If the Applicant entity is a member managed limited liability company, how should it be reflected on the form since there is no "member-manager" choice at the First Principal Disclosure Level? A: Each member-manager entity/person should be listed twice—once as a non-investor member and once as a manger. If Housing Credits are being requested, the investor-member(s) must also be listed in order for the form to be approved for a Housing Credit Application. On its Principals Disclosure Form, Tranquility listed two entities at the first principal disclosure level: Tranquility Milton Manager, LLC, identified as a manager of the applicant and Timshel Partners, LLC, identified as an investor member of the applicant. However, Tranquility failed to identify the dual role of Tranquility Milton Manager, LLC, as a non- investor member in addition to its disclosed role as a manger. Nevertheless, Tranquility’s equity proposal letter submitted as part of its application identified Tranquility Milton Manager, LLC, as a member of the LLC because according to the equity proposal, Tranquility Milton Manager, LLC, would retain a .01% ownership interest in the company. Thus, the role of Tranquility Milton Manager, LLC, as a member is available within Tranquility’s application. Tranquility participated in Florida Housing’s Advance Review Process, and on October 17, 2019, Florida Housing approved the Principals Disclosure Form submitted by Tranquility during the Advance Review Process for an award of housing credits. During scoring, Tranquility received five points for having its Principals Disclosure Form stamped "Approved" by Florida Housing. Tranquility’s Principals Disclosure Form met the eligibility requirements of the RFA and Tranquility is entitled to the five points. In addition, Ms. Button persuasively and credibly testified that even if Tranquility’s failure to list the dual role of its disclosed principal on the Principals Disclosure Form is an error, it is so minor as to constitute a waivable, minor irregularity. As detailed above, Tranquility Milton Manager, LLC, was specifically designated as a manager on the form and information identifying Tranquility Milton Manager, LLC’s, additional role as a member is included in the equity proposal letter submitted with the application. Madison Oak’s Application (DOAH Case No. 20-1779BID) Madison Oaks’ application was deemed eligible for funding, but pursuant to the terms of the RFA, Madison Oaks was not selected for preliminary funding. Madison Oaks Site Control Certification Florida Housing and Tranquility now argue that Madison Oaks failed to demonstrate site control. As an eligibility item, the RFA requires applicants to demonstrate site control by providing a properly completed and executed Florida Housing Finance Corporation Site Control Certification form ("Site Control Form"). For the Site Control Form to be considered complete, the applicant must attach documentation demonstrating that it is a party to an eligible contract or lease or is the owner of the subject property. Applicants can demonstrate site control by providing documentation that meets the requirements in the RFA for an eligible contract, deed or certificate of title, or a lease. An eligible contract must meet all of the following conditions: It must have a term that does not expire before April 30, 2020 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 April 30, 2020; It must specifically state that the buyer’s remedy for default on the part of the seller includes or is specific performance; The Applicant must be the buyer unless there is an assignment of the eligible contract, signed by the assignor and the assignee, which assigns all of the buyer’s rights, title and interests in the eligible contract to the Applicant; and The owner of the subject property must be the seller, or is a party to one or more intermediate contracts, agreements, assignments, options, or conveyances between or among the owner, the Applicant, or other parties, that have the effect of assigning the owner’s right to sell the property to the seller. Any intermediate contract must meet the criteria for an eligible contract in (a) and (b) above. In demonstrating site control, the RFA states: Note: The Corporation will not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation. During scoring, the Corporation will rely on the properly executed Site Control Certification form to determine whether an Applicant has met the requirements of this RFA to demonstrate site control. The Corporation has no authority to, and will not, evaluate the validity or enforceability of any eligible site control documentation that is attached to the Site Control Certification form during the scoring process. During credit underwriting, if is determined that the site control documents do not meet the above requirements, the Corporation may rescind the award. Additionally, the RFA requires that the site control "documentation include all relevant intermediate contracts, agreements, assignments, options, conveyances, intermediate leases, and subleases." In the instant case, Madison Oaks attached a Purchase and Sale Agreement ("Madison Oaks Agreement") to its Site Control Form. The Madison Oaks Agreement lists West Oak Developers, LLC, as the "Seller" and Madison Oaks East, LLC, as the "Purchaser." However, the City of Ocala owns the property in question. The Madison Oaks Agreement in section 12 states that: "Seller has a valid and binding agreement with the City of Ocala, Florida pursuant to which Seller has the right to acquire fee simple title to the Property …." Tranquility and Florida Housing contend that Madison Oaks failed to demonstrate site control because Madison Oaks failed to include the City of Ocala Redevelopment Agreement for Pine Oaks ("Redevelopment Agreement") in its site control documentation. Madison Oaks maintains that the City of Ocala is a seller, pursuant to the Joinder and Section 28 of the Madison Oaks Agreement, and therefore, the Redevelopment Agreement did not need to be included. However, the Madison Oaks Agreement clearly identifies West Oak as the "Seller" and the City of Ocala as the "City." At hearing, Ms. Button persuasively and credibly testified that the Madison Oaks application is ineligible because it did not include the Redevelopment Agreement, which is a relevant agreement for purposes of demonstrating site control. The Redevelopment Agreement was a relevant intermediate contract, which was required to be included in Madison Oak’s application. Madison Oak’s failure to include the Redevelopment Agreement renders its application ineligible. Madison Oaks contends that including the Redevelopment Agreement in its application was unnecessary because of a joinder provision within the Madison Oaks Agreement. The Madison Oaks Agreement contains a Joinder and Consent of the City of Ocala approved by the City Council ("the Joinder"), whereby the City of Ocala joined and consented to the Madison Oaks Agreement "solely for the purposes set forth in, and subject to, Section 28 herein." The Madison Oaks Agreement in Section 28 states that: "Seller hereby acknowledges and agrees that in the event of Seller’s default hereunder, that is not timely cured, or Seller's refusal to close hereunder, Purchaser shall be entitled to close on the property subject to this Agreement … directly with the City on the terms and conditions set forth in this Section 28." However, Section 28 only applies in the event of a default by West Oaks that is not timely cured or West Oak’s refusal to close. There is no information within the Madison Oaks application to determine whether a default or termination of the Redevelopment Agreement occurred as of the application deadline. Westside’s Application (DOAH Case No. 20-1770BID) Florida Housing deemed Westside’s application eligible and, pursuant to the terms of the RFA, Westside was preliminary selected for funding to meet the goal to fund one development that qualifies for the Local Community Revitalization Initiative Goal. Westside’s Election to Compete for the Local Community Revitalization Initiative Goal In order to qualify for the Local Community Revitalization Initiative Goal, the RFA states: Applicants for proposed Developments that are part of a local revitalization plan may elect to compete for this goal. To qualify for this goal, the Applicant must submit the properly completed Florida Housing Finance Corporation Local Government/Community Redevelopment Agency Verification That Development Is Part Of A Local Community Revitalization Plan form (Form Rev. 08-2019) as Attachment 18. The form is available on the RFA Website. Included with the form must be either (1) a link to the local community revitalization plan or (2) a copy of the local community revitalization plan. The plan must have been adopted on or before January 1, 2019. Florida Housing, pursuant to the terms of the RFA, also has a goal to fund four medium county developments that qualify for the Local Government Areas of Opportunity Funding Goal. Westside included an executed Florida Housing Finance Corporation Local Government/Community Redevelopment Agency Verification that Development is Part of a Local Community Revitalization Plan form (the "Local Community Revitalization Plan Form") and a link to the local government revitalization plan at Attachment 18 of its application. At question 11.c. in the application, applicants are asked to select "Yes" or "No" from a drop-down menu in response to the question: "Is the proposed Development eligible for the Local Community Revitalization Initiative Goal?" Westside selected "No" from the Yes/No drop-down menu in answering question 11.c. regarding the Local Community Revitalization Initiative Goal. At question 11.a. in the application, applicants are asked to select "Yes" or "No" from a drop-down menu in response to the question: "Is the proposed Development eligible for the Local Government Areas of Opportunity Funding Goal?" Westside selected "Yes" from the Yes/No drop-down menu in answering questions 11.a. regarding the Local Government Areas of Opportunity Funding Goal. During scoring, Westside was deemed to have qualified for the Local Government Areas of Opportunity Funding Goal and the Local Community Revitalization Initiative Goal. During the funding selection process, Westside was selected for funding to meet the Local Government Community Revitalization Initiative Goal. HTG Addison selected "Yes" from the Yes/No drop-down menu in answering question 11.c. regarding the Local Community Revitalization Initiative Goal. HTG Addison included an executed Local Community Revitalization Plan Form at Attachment 18 of its application. HTG Addison selected "No" from the Yes/No drop-down menu in answering question 11.a. regarding the Local Government Areas of Opportunity Funding Goal. HTG Addison is the next highest ranked eligible applicant qualified for the Local Community Revitalization Initiative Goal after Westside. If Westside is deemed not to have qualified for the revitalization goal, then HTG Addison, as the next highest ranked eligible applicant, would qualify for that goal. HTG Addison alleges that Westside should not be selected to meet the Local Community Revitalization Initiative Goal because Westside selected "No" from the drop-down menu in response Question 11.c. Ms. Button persuasively and credibly testified that Florida Housing does not rely on the drop-down responses to questions 11a., b., or c. in determining whether an applicant "elects to be eligible for a certain goal" because answering "Yes" or "No" to these requirements is not a requirement of the RFA. Rather, Ms. Button persuasively and credibly testified that in determining whether an applicant qualifies for a funding goal, Florida Housing relies on the documentation submitted with the application that is required for the funding goal. In the instant case, Westside included the executed Florida Housing Finance Corporation Local Government Revitalization Plan form and a link to the local community revitalization plan at Attachment 18 of its application.2 In addition, Ms. Button persuasively and credibly testified that even if Westside erred in selecting "Yes" in response to question 11.c., it is so minor as to constitute a waivable, minor irregularity because Florida Housing has the required information within the application (the executed form and a link to the local community revitalization plan at Attachment 18). 2 Notably, another applicant responding to the RFA, Tranquility at Ferry Pass, selected "Yes" in response to question 11.c., but failed to include at Attachment 18 either a copy of or a link to the local community revitalization plan. During scoring, Florida Housing determined that Tranquility at Ferry Pass did not qualify for the revitalization goal. Florida Housing’s scoring of the Westside application is consistent with its scoring of the Tranquility at Ferry Pass application because in both cases, Florida Housing scored the application based on the requirements of the RFA for the revitalization goal and the documentation submitted in response to those requirements. Florida Housing did not rely on the applicant’s response to question 11.c. regarding the applicant’s expressions of its own eligibility.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order: dismissing the protests of HTG Addison and Madison Oaks; (2) finding the HTG Edgewood, Diplomat, and Madison Oaks applications ineligible for funding; and (3) finding the Rochester, Madison Square, Tranquility, and Westside applications eligible for funding. DONE AND ENTERED this 19th day of June, 2020, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ 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 COPIES FURNISHED: Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 2020. Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC 1400 Village Square Boulevard, Suite 3-231 Tallahassee, Florida 32312 (eServed) Amy Wells Brennan, Esquire Manson Bolves Donaldson Varn, P.A. 109 North Brush Street, Suite 300 Tampa, Florida 33602 (eServed) Michael P. Donaldson, Esquire Carlton Fields 215 South Monroe Street, Suite 500 Tallahassee, Florida 32302 (eServed) Sarah Pape, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street, Suite 600 Post Office Box 3000 (32802) Orlando, Florida 32801 (eServed) J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street Post Office Box 3000 (32802) Orlando, Florida 32801 (eServed) Craig D. Varn, Esquire Manson Bolves Donaldson Varn, P.A. 106 East College Avenue, Suite 820 Tallahassee, Florida 32301 (eServed) Donna Elizabeth Blanton, Esquire Radey Law Firm, P.A. 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed)
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 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
