The Issue Whether Petitioner Janice Brice was the subject of housing discrimination by Respondent based on Petitioner's race, color, and familial status, in violation of Florida's Fair Housing Act.
Findings Of Fact Petitioner is an African American female and, therefore, belongs to a class of persons subject to protection under Florida's Fair Housing Act, Sections 760.20 through 760.37, Florida Statutes (2006).1/ Petitioner is a dark-skinned African American, which she claims was a second factor underlying the alleged unlawful housing practice by Respondent. Petitioner is a single mother, which she stated in her complaint filed with the Commission, was a third factor that caused her to be discriminated against by Respondent. Respondent Concord Management, Ltd. (Concord), is a management company that operates over 100 apartment complexes around the country. It is the managing agent for Regatta Bay Apartments (Regatta Bay) located in Kissimmee, Florida. Respondent Sharon Harper Ivey is the director of compliance for Concord. She was not hired by Concord until after the events which form the basis of Petitioner's claim of housing discrimination. She communicated with the Commission during its investigation of Petitioner's complaint against Concord and was subsequently listed by the Commission as a Respondent when the case was referred to DOAH. That listing was an error. Petitioner has never claimed that Ms. Ivey had any role in the alleged unlawful housing practice. On August 4, 2005, Petitioner applied for a lease at Regatta Bay. Petitioner filled out some application forms and waited for a response. Concord conducts a financial credit and criminal background check of persons applying to become tenants at Regatta Bay. The credit check is made to determine whether the applicant has good or bad credit history and has the ability to pay the rent. Concord also conducts a separate compliance check to verify that the applicant is a qualifying tenant for purposes of the federal Low Income Housing Tax Credit Program which makes it possible for Concord to rent apartments at below-market rates. The information that Petitioner provided to the staff at Regatta Bay was sent to Concord's offices in Maitland, Florida, for review and handling. The Security Deposit and Surety Bond Concord completed its credit and criminal background check of Petitioner on August 22, 2005. Because Concord determined that Petitioner had poor credit history, based in part on being employed less than a year at her current place of employment, Petitioner was required to have someone co-sign her lease or pay a security deposit and purchase a security (surety) bond. Petitioner paid a security deposit of $873 and purchased a security bond in the amount of $175. Petitioner claims that it was an act of discrimination for Concord to have required both a security deposit and a security bond. The only basis for this claim, however, is Petitioner's interpretation of a form provided to tenants,2/ entitled "Frequently Asked Questions," which explains the security deposit and bond. Petitioner believes that the form explains that only the bond is needed, not a bond and a security deposit. However the form states that the bond "replaces (or supplements) a traditional security deposit." Sharon Ivey, Concord's director of compliance, testified that the requirement for a security deposit and security bond is applied uniformly to all tenants by Concord and produced exhibits showing that tenants at Regatta Bay who were not African Americans were required to pay a security deposit and purchase a security bond if they had poor credit histories. Petitioner produced no evidence to show that African Americans at Regatta Bay, dark-skinned African Americans, or single mothers, are treated differently by Concord with respect to security deposits and bonds. Qualification for Low Income Housing In order for Concord to qualify for the federal tax credits under the federal Low Income Housing Tax Credit Program, all of the tenants of Regatta Bay must have personal incomes that fall below 60 percent of the median annual income for persons living in the Orlando Metropolitan Statistical Area, taking into account the number of persons in the household.3/ Petitioner has two children and, therefore, in order to qualify to rent an apartment at Regatta Bay, she had to have an annual income less than the median annual income for three-person households in the Orlando area. Based on statistics used by the Florida Housing Finance Corporation, Petitioner's income had to be less than $29,760. To verify that Petitioner would qualify for tenancy at Regatta Bay, an employment verification form had to be filled out and submitted by her employer, Quest Diagnostics, Inc. The human resources representative at Quest Diagnostics filled out "Part B" of the employment verification form on August 17, 2005, indicating that Petitioner worked 20 hours per week and made $12 per hour. Jessica Reyes, a rental agent at Regatta, called Petitioner and discussed the fact that the employment verification form indicated she was only a part-time employee. Petitioner informed Ms. Reyes that she had just become a full-time employee. Ms. Reyes requested that Petitioner have the human resources representative at Quest Diagnostics send Regatta Bay another employment verification form and complete "Part A" of the form which asks for the employee's anticipated annual income and year-to-date income. A second employment verification form was sent to Regatta Bay on August 18, 2005, indicating that Petitioner's anticipated annual salary was $25,708.80. The human resources representative did not fill in the space provided for year-to- date income. Ms. Reyes was unable to get the year-to-date earnings information from Quest Diagnostics. Ms. Reyes filled-in the figure $17,144 in the space provided for Petitioner's year-to- date earnings on the employment verification form. In a written statement obtained later from her, Ms. Reyes stated that she thought the absence of this information on the form might cause the form to be "kicked back" by the compliance auditors at Concord. She stated that she calculated the year-to-date earnings of $17,144 from Petitioner's annual income. It appears that Ms. Reyes did not realize that Petitioner had only worked at Quest Diagnostics for five months, and that a year-to-date income of $17,144 would translate to an annual income that was above the limit to qualify for low income housing. Even though only a credit check had been completed on Petitioner, and not a compliance check to verify that she had qualifying income for the federal tax credit program, Petitioner was allowed to sign a lease and move into Unit 101 at Regatta Bay on or about September 20, 2005. On September 15, 2005, Robert Green, a compliance auditor with Concord, reviewed the paperwork he received from Regatta Bay concerning Petitioner, including the employment verification form. He determined that, based on the year-to- date earnings figure, Petitioner's income was too high to qualify for housing at Regatta Bay. In Ms. Reyes' written statement of December 9, 2005, she said she was asked to get pay stubs from Petitioner. Ms. Reyes stated that Petitioner brought in her last pay stub, which included her year-to-date earnings. Ms. Reyes claims to have recalculated Petitioner's year-to-date earnings using her pay stub and, although not $17,144, the recalculated number was still too high. The community director at Regatta Bay, Christine Lombardi, testified that Petitioner came in on September 20 or 21, 2005, and spoke to Ms. Reyes about her income. Ms. Lombardi said she saw Ms. Reyes with pay stubs in her hand and with a calculator tape that Ms. Reyes had used to calculate Petitioner's year-to-date income. Ms. Lombardi testified that she asked Ms. Reyes to make a copy of the pay stubs, but Petitioner would not allow them be copied. Petitioner was unaware that Ms. Reyes had altered the employment verification form to add a year-to-date income figure, but it is undisputed that Petitioner was told that her annual income had been calculated to be a figure over $31,000. Petitioner's pay stub for work through September 3, 2005, shows year-to-date earnings, including overtime, of $12,489.60.4/ Because Petitioner had worked for Quest Diagnostics for five months, the year-to-date figure from her pay stub would result in an estimated annual income of about $29,976. This amount is just over the maximum income allowed, but it includes some overtime work. It was not shown how Ms. Reyes came up with an estimate of $31,000, and her own statement on that point is unclear. However, if Ms. Reyes assumed that Petitioner had been working at Quest Diagnostics since January 1, 2005, the income shown on Petitioner's last pay stub would support an estimated annual income of about $32,000. Petitioner denies that she brought in her pay stubs to show Ms. Reyes, but she testified that Ms. Reyes "had her calculator in front of her, and she calculated it up." Petitioner asked Ms. Reyes to add her adult daughter to her household, so that she could qualify under the higher income allowed for a four-person household. On September 21, 2005, Ms. Lombardi sent Petitioner a letter informing Petitioner that she would have to move out of Regatta Bay because her income was too high. At the final hearing, Petitioner repeatedly referred to a comment in the letter that "we would like to point you in the right direction," which Petitioner took great offense to and perceived almost as a racial slur. However, the comment appeared in the following context: Whereas we are sincerely sorry for any inconvenience this may cause you, there are other communities in the area that do not have the same income guidelines. These communities might be able to accommodate you and we would like to point you in the right direction. In context, there is nothing about the comment that shows animus towards Petitioner's race, color, or familial status. On September 26, 2005, Ms. Lombardi sent Petitioner a letter stating "Per our conversation today . . . you and your daughter need to come into the office to fill out the proper paperwork." This letter indicates that Ms. Lombardi was willing to pursue Petitioner's suggestion to have Petitioner's daughter added to her household so that Petitioner would qualify to stay at Regatta Bay. However, Petitioner apparently abandoned this idea after she consulted with a lawyer. Petitioner refused to vacate the apartment. On October 13, 2005, Regatta Bay served Petitioner with a Seven Day Notice to Cure Noncompliance to satisfy the requirements of Section 83.56, Florida Statutes. On October 26, 2005, Regatta Bay served Petitioner with a Seven Day Notice of Noncompliance Without Opportunity to Cure. On November 5, 2005, Regatta Bay filed a Complaint for Tenant Eviction in the circuit court for Osceola County. Concord showed that it has filed eviction actions against non-African Americans that resided in Regatta Bay when Concord discovered that they were not qualified for low income housing at the time they began their tenancies. Before Petitioner received the first "seven day notice," she contacted a legal aide attorney to assist her regarding her dispute with Regatta Bay. She also contacted Florida Housing Finance Corporation (FHFC) for help. On November 30, 2005, Janet Peterson of FHFC made a request of Robin Robuck, senior vice president of Concord, for a written explanation of how Concord "arrived at the conclusion that [Petitioner] was ineligible." In her response, Ms. Robuck referred to the year-to- date income figure of $17,144 on the employment verification form prepared by Quest Diagnostics. Ms. Robuck made no mention of the recalculation of a $31,000 figure. The communication between Concord and FHFC soon revealed the discrepancy between the employment verification form prepared by Quest Diagnostics and the form that was altered by Ms. Reyes. Ms. Reyes was asked for an explanation of the discrepancy on December 9, 2005, which she then put in writing. On that same day, Ms. Reyes was fired by Concord for altering the employment verification form. Regatta Bay then voluntarily dismissed its eviction action against Petitioner in the circuit court. Petitioner claims that Jessica Reyes and Christine Lombardi were motivated by racial discrimination to prevent Petitioner from renting an apartment at Regatta Bay. Petitioner claims that racial discrimination was the motive for Ms. Reyes putting the figure of $17,144 on the employment verification form and the motivation for Ms. Lombardi to continue to demand that Petitioner move out despite having sufficient information to know that Petitioner qualified for housing at Regatta Bay. Petitioner raised several questions about the timing of and reason for certain events that occurred, which were never fully answered by the evidence presented by the parties. For example, why was Petitioner allowed to move in before the compliance review? Why wasn't the issue of Petitioner's income simply resolved by getting more information from the human resources representative at Quest Diagnostics? Did Ms. Reyes or Ms. Lombardi ever explain to Petitioner exactly how they determined that she made too much income? Why didn't Ms. Reyes or Ms. Lombardi tell Ms. Robuck about the recalculation of a $31,000 figure when Ms. Robuck was making her internal investigation? Unanswered questions, however, are not a sufficient basis to prove housing discrimination. Petitioner failed to establish that she was discriminated against on the basis of her race. No evidence was presented by Petitioner on her claims that Respondent discriminated against her because of her dark skin color or her familial status as a single mother. Mistreatment, even if proven, may have other motivations than discrimination. In this case, all that was proven by Petitioner was a fact never contested by Concord, that Ms. Reyes improperly altered the employment verification form. Petitioner did not prove that Ms. Reyes was motivated by discrimination. The evidence suggests that Ms. Reyes and Ms. Lombardi were inept at explaining to Petitioner how it was determined that her income was too high, but Petitioner's demeanor and testimony at the final hearing indicate that she was probably partly responsible for the poor communication between them on that subject. Petitioner remained a tenant at Regatta Bay until she voluntarily moved out in July 2007.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Sharon Harper Ivey be dismissed from the case; and The Petition for Relief be dismissed. DONE AND ORDERED this 31st day of August, 2007, in Tallahassee, Leon County, Florida. S BRAM D. E. CANTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of August, 2007.
The Issue Whether Respondent Florida Housing Finance Corporation’s intended decision to find the application of Clearlake Village, L.P., ineligible for funding is contrary to Respondent’s governing statutes, rules, policies, or the solicitation specifications.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Statutes, Florida Housing is designated as the housing credit agency for Florida for purposes of allocating low-income housing tax credits. The low-income housing tax credit program incentivizes the private market to invest in affordable rental housing. Tax credits are competitively awarded to housing developers in Florida for qualified rental housing projects. Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. When sold to investors, the tax credits provide equity that reduces the debt associated with the project. With lower debt, the affordable housing tax credit property can (and must) offer lower, more affordable rent. As consideration for receipt of tax credits, developers covenant to keep rent at affordable levels for periods of 30 to 50 years. The demand for tax credits provided by the federal government far exceeds the supply. The Competitive Application Process Florida Housing is authorized to allocate tax credits and other funding by means of requests for proposals or other competitive solicitations allowed by section 420.507(48), Florida Statutes. Florida Housing adopted Florida Administrative Code Chapter 67-60 to govern the competitive solicitation process for several different programs, including the one for tax credits. Chapter 67-60 was adopted on August 20, 2013, replacing prior procedures used by Florida Housing for allocating tax credits, and provides that the bid protest provisions of section 120.57(3) govern its process for allocating tax credits. Applicants request in their applications a specific dollar amount of housing tax credits to be given to the applicant each year for a period of 10 years. The amount of housing tax credits an applicant may request is based on several factors, including, but not limited to, a certain percentage of the projected total development cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. On November 21, 2014, Florida Housing issued the RFA at issue in the instant dispute. According to the RFA, Florida Housing expects to award an estimated $12,914,730 of housing tax credits which are available for award to proposed developments located in medium counties, and up to an estimated $1,513,170 of housing tax credits available for award to proposed developments located in small counties. On January 21, 2015, Petitioner, in response to the RFA, submitted an application seeking $1,418,185 in housing tax credits to finance the construction of an 80-unit residential rental development in Brevard County, Florida (a medium county), to be known as Clearlake Village. Though Petitioner has submitted other applications for housing tax credits, this is the first time Petitioner has done so in Florida. Petitioner’s application was assigned lottery number 4 by Florida Housing. On January 20, 2015, Intervenor, in response to the RFA, submitted an application requesting $1,475,000 in housing tax credits to support the construction on an 80-unit affordable housing development also in Brevard County. As part of the RFA process, Florida Housing announced its intention to award funding to nine medium county developments, including Intervenor’s application number 2015-073C for Brevard County. Notice On March 20, 2015, Petitioner received notice that Florida Housing intended to designate Petitioner’s application ineligible for funding and that other applications were selected for funding, subject to satisfactory completion of the credit underwriting process. In response to Respondent’s notice of intended action, Petitioner timely filed a Notice of Protest, and Petitioner’s Formal Written Protest and Petition for Formal Administrative Proceedings. RFA 2014-114 Ranking and Selection Process Florida Housing received 82 applications seeking funding in response to the RFA, including 76 for medium county developments. Developments were proposed in 21 different medium counties throughout the State, including four in Brevard County. The process employed by Florida Housing for this RFA makes it virtually impossible for more than one application to be selected for funding in any given medium county. Because of the amount of funding available for medium counties, many medium counties will not receive an award of housing tax credit funding in this RFA, due to the typical amount of an applicant’s housing tax credit request (generally $1.0 to $1.5 million), and the number of medium counties for which developments are proposed. Florida Housing intends to award funding to nine developments in nine different medium counties. The RFA requires that applicants file an online electronic application with development cost pro forma. Each applicant is also required to submit several hard copies of its application and attachments. One of the applications is designated by the applicant as the “original,” which must contain an original signature in blue ink; and two others it designates as “copies,” which are used by Florida Housing staff to score the applications. Florida Housing scans the application attachments from the original and posts the online application with the scanned attachments on its web page. The applications were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA, Florida Administrative Code Rule Chapters 67-48 and 67-60, and applicable federal regulations. Applications are considered for funding only if they are deemed “eligible,” which means that the application complies with Florida Housing’s various content requirements. Of the 82 applications submitted to Florida Housing for the RFA, 69 were found “eligible,” and 13 were found ineligible. Petitioner’s application was found ineligible. A five-page spreadsheet created by Florida Housing, entitled “RFA 2014-114 – All Applications,” which identifies all eligible and ineligible applications, was provided to each applicant. The first consideration in sorting eligible applications for funding is application scores. Applicants can achieve a maximum score of 23 points. Eighteen of those 23 points are attributable to “proximity” scores based on the distance of the proposed development from services needed by tenants and the remaining five points are attributable to local government contributions. All 69 eligible applications received the maximum score of 23 points. Petitioner’s application was not fully scored, because it was deemed ineligible. If Petitioner’s application had been scored, rather than being found ineligible, it would have received a score of 23. Many applicants achieve tie scores, and in anticipation of that occurrence Florida Housing designed the RFA and rules to incorporate a series of “tie breakers,” the last of which is randomly assigned lottery numbers. Lottery numbers have historically played a significant role in the outcome of Florida Housing’s funding cycles, and lottery numbers were determinative of funding selections in the current RFA. Florida Housing employs a “funding test” to be used in the selection of medium county applications for funding in this RFA. The “funding test” requires that the amount of tax credits remaining (unawarded) when a particular medium county application is being considered for selection must be enough to fully fund that applicant’s request amount, and partial funding will not be given. The RFA also specifies a sorting order for funding selection, with applications first arranged from highest score to lowest. Applicants with tie scores are separated based on criteria not relevant to resolving the instant protest. Suffice to say that Petitioner’s application qualified for each funding preference and it had a better lottery number than Intervenor. County Award Tally In selecting among eligible applicants for funding, Florida Housing also applies a “County Award Tally.” The County Award Tally is designed to prevent a disproportionate concentration of funded developments in any one county. Generally, before a second application can be funded in any given county, all other counties that are represented by an eligible applicant must receive an award of funding. As there were eligible medium county applications submitted from 21 different counties for the RFA, there cannot be more than one applicant funded from any given medium county. The nine medium county applicants selected for funding had lottery numbers 1, 2, 6, 7, 9, 20, 26, 27, and 28. The applicant with lottery number 6 (Intervenor), is from Brevard County. If Petitioner is deemed eligible, it would be selected for funding because it has a lower lottery number (4) than Intervenor and would displace Intervenor as the only project funded in Brevard County. Basis for Petitioner’s Ineligibility Florida Housing reviewed Petitioner’s application and determined that it was ineligible as it failed to meet the RFA requirement that applicants must demonstrate control of the site upon which the development is to be constructed. Florida Housing rejected Petitioner’s site control documentation. Site control is an important element of an application––the “meat and potatoes of the application.” Proof that the applicant has control of the development site is a matter of “do or die if you miss a document.” The RFA has a general requirement that each application be complete, and must include all applicable documentation. Site control can be established through a deed, a long-term lease, or a contract for purchase and sale. In each case, the entity with control of the site must be the applicant entity. If the purchaser under a contract for purchase and sale is not the applicant, then the application must contain one or more assignments that give the applicant all rights and remedies of the purchaser. Section 4.A.7 of the RFA, at page 23, lists the requirements for site control. The instructions provide, in relevant part: Site Control: The Applicant must demonstrate site control by providing, as Attachment 7 to Exhibit A, the documentation required in Items a., b., and/or c., as indicated below. a. Eligible Contract - For purposes of the RFA, an eligible contract is one that[:] has a term that does not expire before a date that is six (6) months after the Application Deadline or that contains extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than six (6) months after the Application Deadline; specifically states that the buyer’s remedy for default on the part of the seller includes or is specific performance; and the buyer MUST be the Applicant unless an assignment of the eligible contract which assigns all of the buyer's rights, title and interests in the eligible contract to the Applicant, is provided. As an overall submittal requirement, the RFA requires that each application be complete and include all “applicable documentation.” The RFA process does not provide an opportunity for applicants to cure errors or omissions discovered after submission of an application to Florida Housing. Petitioner’s application sought to establish site control through attachment 13 to its application, which includes, among other things, a vacant land contract, and an assignment and assumption agreement. The vacant land contract pertains to the land that Petitioner intends to use for the site identified in its application. The vacant land contract was prepared using a Florida Association of Realtors form contract. Paragraph 12 of the vacant land contract contains boilerplate language which reads as follows: “ASSIGNABILITY; PERSONS BOUND: Buyer may not assign this Contract without Seller’s written consent.” According to Petitioner, the word “not” was struckthrough in the following manner, to wit: not. Amy Garmon, Florida Housing’s multi-family programs manager, scored the site control element of all 82 applications filed in response to the RFA. Ms. Garmon has scored site control applications for nine to ten years, and is very familiar with the Florida Association of Realtors’ form contract, having scored hundreds of contracts submitted on that form. Ms. Garmon reviewed paragraph 12 of the vacant land contract submitted by Petitioner and concluded that the language set forth therein does not allow for an assignment of the contract without written consent from the seller. Ms. Garmon reached her conclusion because in her opinion, the strikethrough of the word “not” in paragraph 12, although the word itself appears somewhat darker and not as clear as some of the other words in the paragraph, is not sufficiently obvious so as to alert a reader to the presence of the strikethrough. Upon review of paragraph 12, the undersigned agrees with Ms. Garmon, and concludes that the strikethrough of the word “not” is not sufficiently observable so as to alert a reviewer to the presence of the strikethrough. Given the findings in paragraph 31, the provision of the vacant land contract which provides that “[h]andwritten or typewritten terms inserted in or attached to th[e] contract prevail over preprinted terms” is not triggered because the purported strikethrough of the word “not” in paragraph 12 of the contract, given its ambiguity, does not rise to the level of constituting a “handwritten or typewritten” modification of a preprinted contractual term. Additionally, the finding in paragraph 31 also means that Petitioner, in order to demonstrate site control, must prove that the seller gave written consent to DPKY Development Company’s assignment of its interest in the vacant land contract to Petitioner. Petitioner also submitted with its application an assignment and assumption agreement which relates to paragraph 12 of the vacant land contract. The assignment and assumption agreement provides that DPKY Development Company, LLC, is assigning to Petitioner its interest in the vacant land contract it has with William T. Taylor. The vacant land contract provides that “William T. Taylor, in his capacity as trustee of the Hidden Creek Land Trust Agreement dated January 15, 2004,” is the “seller” of the land and “DPKY Development Company, LLC, or assigns” is the “buyer” of land. While the assignment and assumption agreement lists the name of the seller, it does not include a signature line for the seller or any other acknowledgement by the seller expressing consent to the assignment. Petitioner does not dispute that the assignment and assumption agreement is deficient in this regard. Turning to the vacant land contract, Petitioner contends that the first page of the vacant land contract identifies the buyer as “DPKY Development Company, LLC, or assigns,” and because the seller initialed the bottom of the first page of the vacant land contract this means that Respondent should have reasonably known that the presence of seller’s initials means that the seller is consenting to the assignment of DPKY Development Company’s interest in the property. The portion of page one of the vacant land contract initialed by the seller provides that “Buyer ( ) and Seller ( ) acknowledge receipt of a copy of this page, which is page 1 of 7.” Contrary to Petitioner’s assertion, the introductory provision of the vacant land contract that identifies the “buyer” as “DPKY Development Company, LLC, or assigns,” cannot be read in isolation when there is another provision in the contract which specifically addresses the issue of assignability, to wit: “[b]uyer may not assign th[e] contract without [s]ellers written approval.” The introductory provision of the vacant land contract relied upon by Petitioner may have conveyed a stronger expression of the seller’s purported intent to consent to an assignment if Petitioner removed from paragraph 12 of the vacant land contract any reference to assignability. Because Petitioner failed to do so, the fact that the seller acknowledged that it received a copy of the page of the contract identifying the buyer as “DPKY Development Company, LLC, or assigns” is not sufficient, in itself, to establish that the seller consented to DPKY Development Company’s assignment of its interest in the contract to Petitioner.2/ Ms. Garmon, after determining that the required consent of the seller to the assignment was not included in the original copy of Petitioner’s application, reviewed each of the other copies of Petitioner’s application in Respondent’s possession. Ms. Garmon’s review of the other copies of Petitioner’s application confirmed that the seller’s written consent to assignment was not a part of Petitioner’s application. The evidence supports the conclusions reached by Ms. Garmon and Florida Housing.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is recommended that Petitioner’s protest be dismissed. DONE AND ENTERED this 25th day of June, 2015, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of June, 2015.
Findings Of Fact The Tax-Credit Allocation Program Section 42(h)(3) of the Internal Revenue Code of 1986, as amended, provides for federal income tax credits for the development of low income housing. The tax credits are allocated among the states based on state population. Respondent allocates the low income housing federal income tax credits available in Florida. The present case involves the 1992 tax credit- allocation cycle, which was unusual in one respect. The relevant provisions of Section 42 of the Internal Revenue Code are due to expire on June 30, 1992. Respondent expedited the application and evaluation process for the 1992 cycle because of uncertainty concerning whether credits not allocated by June 30 can be allocated after the expiration of Section 42. As in past cycles, applicants in the 1992 cycle sought more tax credits than Respondent had to allocate. In some categories, the sum of tax credits sought by applicants is four times greater than the total available tax credits. Since 1990, as a result of changes in the Internal Revenue Code, Respondent has implemented a competitive process to determine which applicants should be awarded tax credits. In general, the selection process consists of an application and evaluation process followed by an underwriting process involving only those applicants and projects that were determined to be in the funding range after completion of the application and evaluation process. The objective of both stages is to identify proposed projects that offer the best opportunities for the development of affordable housing in Florida. This case involves only the first stage in which Respondent evaluates the application. The Subject Applications General Each Petitioner is a limited partnership formed to develop a low income rental housing project in Osceola County. The Ravenwood project is in the unincorporated county, and the Oakcrest project is in St. Cloud. Ronnie C. Davis is the general partner of both partnerships and controls the activities of these entities. His accountant, Steven Scott, has worked closely with Mr. Davis in connection with these and numerous other similar projects. As it had done successfully in past cycles, Petitioners applied to obtain federal income tax credits and sell the limited partnership interests (with tax credits) to a third party. The third party would combine Petitioners' projects with others like them and syndicate limited partnership interests to individual investors seeking, among other things, the available tax credits in order to lower their federal income tax liability. This indirect federal subsidy of development costs is intended to encourage the development of affordable housing. The application completed by Petitioners and other applicants in the 1992 cycle consists of numerous questions divided into 16 Forms. Each applicant receives a maximum of 1285 points based on the answers to the questions. Varying amounts of points are available for 12 of the 16 Forms. (Four Forms seek background information or constitute request forms.) The Ravenwood Application Form 1 of the Ravenwood application, which is dated January 30, 1992, consists of summarized information, which, where important, is requested elsewhere in the application. Due to its background nature, Form 1 involves no points. Form 1 of the Ravenwood application describes the proposed project as consisting of 181 units with eight units each in 23 different buildings. (Three units are reserved for on- site workers.) The project is situated on 11 acres and is projected to cost $9,537,049. Petitioner Ravenwood seeks $858,334 in federal income tax credits. Form 1 states that there is federal, state, or local financing "committed or to be committed to this Project." The financing is SAIL financing in the amount of $1.3 million representing 13.6% of the total project cost. Form 1 also states that the present owner acquired the property by gift on November 18, 1991. Form 4 addresses project feasibility and ability to proceed. Form 4 offers a maximum of 225 points. With Form 5, which concerns project funding, Form 4 is worth the most points of all the Forms. Form 4 of the Ravenwood application states, among other things, that the developer controls the site by County deed, which is intended to serve the purpose of a warranty deed. Attached as an exhibit to Form 4 is a letter dated November 20, 1991, from the Osceola County Administrator to Mr. Davis accompanying the delivery of a deed to the property from Osceola County to Ravenwood of Kissimmee, Ltd. The deed, which is dated November 18, 1991, recites as consideration "general benefit of the public." The deed conveys title to 11 acres "conditioned upon the grantee being awarded a state apartment incentive loan and tax credits no later than December 31, 1992. If this condition is not met by December 31, 1992, the property described herein shall revert to the grantor." The manner by which the limited partnership acquired the property is also covered in Form 6, which addresses local government contributions and planning efforts. Form 6 is worth 155 points, which is more than any other Form except Forms 4 and 5. The first part of Form 6 is directed to local government contributions. The first portion of the first part states: Attach evidence of any contribution or recommendation. Maximum points shall be awarded only when evidence of a contribution includes a signed statement from a chief elected official or his designee detailing the contribution from the appropriate local government. The value of the contribution must be stated in terms of a percentage of cost savings to the project. . . . Form 6 of the Ravenwood application answers affirmatively the question, "Has this project received any contributions from a local government?" In response to the request, "Describe the type of contribution," the application states: "Land as well as other government support and assistance." Form 6 states that the value of the contribution is $1,089,000. In response to a question as to how the value was calculated, the application reports that the value was calculated by a "local realtor." The application notes that the total project cost is $9,537,049. Form 6 contains a scoring sheet that awards points based on the ratio of the value of the local government contribution to the total project cost. If the local government contribution amounts to at least 10% of the total project cost, then the maximum of 75 points are earned for the first part of Form 6. Lower percentages earn fewer points, as follows: 9%-- 67.5 points, 8% 60 points, 7%--52.5 points, 6%--45 points, 5%-- 37.5 points, 4%--30 points, 3%-- 22.5 points, 2%--15 points, and 1%--7.5 points. As support for the information provided in the first part of Form 6, the application contains various attachments in the back of Form 6. One attachment is a letter dated November 18, 1991, from Barney Veal, Broker/President of ERA--Osceola Brokerage Co., Realtor. The Veal letter, which is addressed to Mr. Davis, states in its entirety: Per your request, and after careful consideration, I have reviewed the value of the land donated to you by the Osceola County Board of County Commissioners. Weighted consideration was given for the following: *Development Improvements to the municipal water system *Development Improvements to the municipal sewer system *Development Improvements to the transportation system *Superior site use through off-site drainage *Ease of access via the John Young Parkway Extension to the "high tech" corridor of neighboring Orange County *Property aesthetics This property contains 11 acres, and has a current density of 18 units per acre, thus allowing construction of 198 multi-family units. Therefore, the estimated valuation is approximately $5500 per residential unit, which equals a total amount of 1,089,000 [sic]. Another attachment to Form 6 is a letter from Ron Howse, P.A., an engineering and land planning firm. Mr. Howse, whose office is in St. Cloud, incorporates Mr. Veal's letter and provides the above-described responses to the questions contained in the first part of Form 6. The remaining attachments to Form 6 address the second part, which involves local government planning efforts with respect to affordable housing. This part of Form 6 is not relevant to the subject case. The Oakcrest Application The Oakcrest application, which is also dated January 30, 1992, is similar to the Ravenwood application. Form 1 of the Oakcrest application describes the proposed project as consisting of 189 units with eight units each in 24 different buildings. (Three units are reserved for on-site workers.) The project is situated on 19.4 acres and is projected to cost $10,164,207. Petitioner Oakcrest seeks $914,778 in federal income tax credits. Form 1 states that there is federal, state, or local financing "committed or to be committed to this Project." The financing is SAIL financing in the amount of $1.4 million representing 13.8% of the total project cost. Form 1 also states that the present owner acquired the property by gift on November 21, 1991. Form 4 of the Oakcrest application states, among other things, that the developer controls the site by warranty deed. Attached as an exhibit to Form 4 is a letter dated November 21, 1991, from Larry F. Hopper, Executive Director of the St. Cloud Area Chamber of Commerce. The letter is to Mr. Davis and accompanies the delivery of a deed to the property from the St. Cloud Housing & Revitalization Agency, Inc. to Oakcrest of St. Cloud, Ltd. The deed, which is dated November 21, 1991, conveys title to 19.4 acres conditioned upon the grantee being awarded a state apartment incentive loan and tax credits to construct no less than 193 units, with construction thereon to commence no later than December 31, 1992. If the above cited incentive loan and tax credits are not received and construction not begun by December 31, 1992, the property described herein shall revert to the grantor. Form 6 of the Oakcrest application answers affirmatively the question, "Has this project received any contributions from a local government?" In response to the request, "Describe the type of contribution," the application states: "Land Contribution, as well as other government support and assistance." Form 6 states that the value of the contribution is $1,018,000. In response to a question as to how the value was calculated, the application reports that the value was calculated by a "local realtor." The application notes that the total project cost is $10,164,207. As support for the information provided in the first part of Form 6, the application contains various attachments in the back of Form 6. One attachment is a letter dated November 18, 1991, from Barney Veal, Broker/President of ERA--Osceola Brokerage Co., Realtor. The Veal letter, which is addressed to Mr. Davis, states in its entirety: Per your request, and after careful consideration, I have reviewed the value of the land donated to you by the St. Cloud Housing and Revitalization Agency, Inc. Weighted consideration was given for the following: *Development Improvements to the municipal water system *Development Improvements to the municipal sewer system *Development Improvements to the transportation system *Location Proximity to a new growth area *Property Aesthetics This property contains 19.4 acres, and has a current density of 10 units per acre, thus allowing construction of 194 multi-family units. Therefore, the estimated valuation is approximately $5250 per residential unit, which equals a total amount of $1,018,500. Another attachment to Form 6 is a letter from Ron Howse, P.A., an engineering and land planning firm. Mr. Howse, whose office is in St. Cloud, incorporates Mr. Veal's letter and provides the above-described responses to the questions contained in the first part of Form 6. Another attachment to Form 6 of the Oakcrest application is a copy of the first two pages of the Articles of Incorporation of the St. Cloud Housing & Revitalization Agency, Inc., a not-for-profit corporation. According to the articles, the not-for-profit corporation was incorporated by the St. Cloud Area Chamber of Commerce, Inc. Relevant Practices of Respondent The head of Respondent is its Board of Directors. Each review cycle, the Board appoints a Review Committee, which normally consists of five or six persons. Different employees of Respondent serve on the Review Committee each year. The Review Committee assigns scores for each Form of each application. These determinations are then submitted to the Board of Directors for further action. Certain practices have evolved in connection with the scoring of applications. To the extent that any of these practices may constitute nonrule policy, Respondent has amply explicated the practices, which appear to be necessary and proper to the discharge of its responsibilities in the allocation of low income housing federal tax credits. First, the Review Committee generally limits its review of an application to the material contained within the four corners of the application. The reason for this practice is that the Review Committee is typically operating under time pressures. However, there are two circumstances in which the Review Committee may refer to information not contained within the application. The first and more frequent exception to the general rule is if something is unclear in the application. In this case, a member of the Review Committee or staff of Respondent may contact the applicant to obtain a clarification. Sometimes, the contact may be with a third party, such as a third-party lender to whom questions concerning the scope of a commitment letter may be directed. By limiting these inquiries to clarifications, Respondent avoids the possibility of the eliciting information that constitutes post-deadline amendments of material aspects of the application. The second exception to the general rule is when a third party informs the Review Committee that certain information contained in an application is inaccurate. To a great extent, the accuracy of the contents of the application is checked in the underwriting stage of the allocation process. But, if time permits, the Review Committee or other representatives of Respondent may, if they so choose, undertake a necessarily limited investigation of statements in an application. In the couple of years that the allocation process has been competitive, the only application rejected as "untrue," aside from Ravenwood and Oakcrest, was an application for a project known as Woodside. Ironically, this application appears to have been challenged by Mr. Davis and Mr. Ginsburg, 1/ who alerted Respondent to the fact that, contrary to representations contained in the application, the Resolution Trust Corporation, not the developer, owned the site. 2/ It appears that, due to timing, the Board itself rejected the Woodside application because the true facts were uncovered during the underwriting stage, rather than the application and evaluation stage. It appears that, also during underwriting, another application was rejected due to ineligibility, if not actual untruthfulness. In that case, an application for a project known as Golden Acres was rejected when representatives of the Board checked the project site and confirmed that the buildings had already been placed in service and thus would not be eligible for any or a full tax credit. Except for one case in which the wrong application form was used, the record does not disclose if other applications have been summarily rejected for reasons other than satisfying a scoring threshold described in the application form and irrelevant to this case. Rather than reject an application, at least prior to the underwriting process, the Review Committee and Board will often rescore an application. Not infrequently, a developer submits an application containing information that may be described, in the words of one witness, as optimistic in nature. If the application contains sufficient material for the Review Committee or Board to rescore a Form, possibly with the assistance of a clarification from the applicant or a third party, the application will be rescored so that a lower score results. It is not always easy to describe what renders an application "untrue." One example of an untrue application would be if an applicant fabricated a loan commitment letter when no such commitment had been made. On the other hand, if the applicant claimed more points than the letter, on its face, justified due to its numerous contingencies and conditions, the application would clearly be rescored. Although it may contain inaccuracies, a true application must disclose all material facts so that each Form may be scored reasonably accurately. The materiality of an omitted fact depends largely on the importance and purpose of the requested information. The decisions as to what information is important, material, or untrue and when to reject and when to rescore an application must be based on a balancing of at least two considerations. The first is that the purpose of the application and evaluation and underwriting processes is to ensure that the available tax credits go to the best projects, in terms of meeting the critical needs of low income persons for affordable housing. Superior applications should not be rejected too readily. The second is that the integrity of the evaluation process would be compromised if the "untrue application" language is interpreted so that all instances of applicant untruthfulness are reduced to over-optimism, thus meaning that untrue applications would be always rescored and never rejected. Without the potential penalty of rejection, the process by which applications are evaluated and projects underwritten would become increasingly burdened by the chore of detecting growing numbers of misrepresentations. At some point, the resources of Respondent would become overtaxed, misrepresentations would probably escape detection, and the overall objective of the entire program--facilitating the availability of affordable housing--would eventually be defeated. V. Preliminary Scoring of the Applications in the 1992 Cycle In the present case, on or about February 27, 1992, the Review Committee tentatively scored all of the applications. For medium counties, 3/ eight applications fell within the funding range, one application fell partly in the funding range, 16 applications meeting the scoring threshold fell outside the funding range, and one application failed to meet the scoring threshold. The tentative scoring assigned Ravenwood 1190 points and Oakcrest 1153.87 points for the two highest scores among the nine projects tentatively allocated, in whole or in part, the tax credits requested. On March 6, 1992, the Board of Directors reviewed the tentative scoring determined by the Review Committee. By this time, representatives of Respondent had determined that the contribution of the land from the local governments, as asserted in both applications, was not as represented. The Board decided to reject both applications. If the Ravenwood and Oakcrest applications had been merely rescored so as to lose all 75 points for the first part of Form 6, they would have remained in the funding range. In fact, Ravenwood would have remained first, and Oakcrest would have been third, tied with another project. Respondent has implemented an appeal process by which scores set by the Board, following review of the tentative scoring of the Review Committee, may be re-evaluated by the Board. In the 1992 cycle, 36 applicants took advantage of this process. The appeals hearing, which took place on May 1, 1992, resulted in the issuance of the final scoring tabulation, which is Petitioner Exhibit 14. However, no material changes took place with respect to medium counties, and the Ravenwood and Oakcrest applications remained rejected. Facts Not Disclosed on Applications Ravenwood The basic problem with the Ravenwood application is that it states that the local government, Osceola County, contributed the raw land to the applicant. In substance, the County has conveyed nothing to the Ravenwood limited partnership. Through a series of step transactions, Mr. Davis, using an agent, obtained title to the land from a genuine third party, conveyed the land to the County, and caused the County to convey the land to the Ravenwood limited partnership. The few details of the transactions that are relevant begin with the fact that, by contract dated April 9, 1991, Mr. Davis agreed to pay the original owners $300,000 for 12.5 acres. On October 30, 1991, Mr. Davis assigned the contract to his accountant's brother, Jimmy Alan Scott. By quitclaim deed acknowledged November 9, 1991, Mr. Scott quitclaimed any interest he had in the land to Osceola County. On November 18, 1991, Mr. Davis, Mr. Scott, and Osceola County entered into a trilateral agreement. The parties agreed that Mr. Scott would convey the property to the County, which would convey the property to the Ravenwood limited partnership. Also, the County agreed that if the property reverted to it under the condition to be contained in its deed to the partnership, then it would reconvey the property to Mr. Scott. Another significant aspect of the trilateral agreement is that the deeds from Mr. Scott to the County and the County to the Ravenwood limited partnership are to be "held in escrow pending the County's negotiations with [other parties including the original owners of the subject land] to acquire additional property for the recreational complex." By letter dated March 2, 1991, the attorney for the Ravenwood limited partnership discloses that the escrow had not been broken, inferentially because escrow conditions remained unsatisfied, and the deeds had not been recorded. On November 16, 1991, Mr. Davis lent Mr. Scott the funds necessary to purchase the land from the original owners. A note for the amount was to be forgiven if Mr. Scott donated the land to Osceola County. By warranty deed dated January 6, 1992, the original owners conveyed the land to Mr. Scott, who, on the same date, conveyed the land to the County. The two deeds were identical except that deed into the County contains a reverter clause covering all but a small part of the property. The condition is that the majority of the land reverts to Mr. Scott if construction of no less than 184 units of affordable housing does not begin by December 31, 1991. The only deed from the County to the Ravenwood limited partnership is dated November 14, 1991. Copies of the deed were produced at the hearing and attached to the Ravenwood application in Form 4. In the instrument, the County "has granted, bargained and sold" the subject land to the Ravenwood limited partnership conditioned upon the partnership "being awarded a state apartment incentive loan and tax credits no later than December 31, 1992. If this condition is not met by December 31, 1992, the property described herein shall revert to the grantor." There are no warranties, such as a warranty of title, contained in this deed. The underlying problem with the Ravenwood application is as basic as the problem in the Woodside application, where Mr. Davis objected that the RTC, not the applicant, owned the land, contrary to the assertions contained in the application. The County has not contributed anything to the Ravenwood limited partnership because the partnership does not own the land. First, unspecified escrow conditions have left uncompleted the conveyances to the County and the Ravenwood limited partnership. Tied up in escrow, the deeds have not been delivered, which is as basic an aspect to the conveyance of property as is their execution. Second, the application shows that the limited partnership owns the land as a result of a deed from Osceola County. The deed predates the date on which the original owners conveyed the land to Mr. Scott and he purportedly, using an escrow arrangement, conveyed the land to Osceola County. In a deed without any warranties, it is questionable whether the doctrine of after- acquired interest or estoppel by deed would operate here. In light of the problems identified in the preceding two paragraphs, the overstatement problem is less substantial. Although the County has contributed something in the way of services, there is no evidence that the contribution of such services anywhere approaches the claimed amount of $1,089,000, which is more than three times the value of the land as of April, 1991. However, in view of the failure of the Ravenwood limited partnership to obtain any title to the land, the value of the contribution is not $1,089,000, but zero. Oakcrest The basic problem with the Oakcrest application also involves the contribution of raw land to the partnership. The land has not yet been conveyed to the partnership. The relevant details of the Oakcrest transactions are similar to those of the Ravenwood transactions. On November 18, 1991, Mr. Scott and a genuine third party entered into an agreement for deed for 19.4 acres for payment of $300,000. The condition of a closing, which is set for no later than January 5, 1993, is that the Oakcrest limited partnership be awarded tax credits no later than December 31, 1992. Notwithstanding its title as an agreement for deed, the subject instrument operates like a purchase and sales contract, in part because Mr. Scott has not placed any money unconditionally at risk and a closing is set at a point in the future once certain contingencies have been satisfied. On November 19, 1991, Mr. Scott conveyed by warranty deed to the St. Cloud Housing and Revitalization Agency, Inc. the same 19.4 acres subject to the condition that the "grantee [i.e., the Agency] being awarded a state apartment incentive loan and tax credits to construct no less than 193 units with construction thereon to commence no later than December 31, 1992." If the condition is unsatisfied, it provides for the property to revert to Mr. Scott. On November 21, 1991, the St. Cloud Housing and Revitalization Agency, Inc. conveyed by warranty deed to the Oakcrest limited partnership the same 19.4 acres subject to the same condition concerning 193 units. The Oakcrest transfers are ineffective and leave the Oakcrest limited partnership with no interest in the land and thus in receipt of no contribution from a local government. The application, which adequately discloses the nature of the St. Cloud Housing and Revitalization Agency, Inc. as other than a local governmental entity, contains only the warranty deed from the Agency to the Oakcrest limited partnership. The omission of the sales contract (i.e., Agreement for Deed) leaves the incorrect impression that the Agency had an interest to convey to the Oakcrest limited partnership. The Agency had no such interest because Mr. Scott had no such interest. 4/ But the valuation problem is greater in the Oakcrest case. Unlike the Ravenwood case, in which months passed between the contract and the date on which the applicant asserted the value of the land, the Oakcrest sales contract calling for a $300,000 purchase price was signed just three days before the deed purportedly conveying the land from the Agency to the Oakcrest limited partnership. Unlike the Ravenwood case, the Agency was making no other contributions to the partnership. Even assuming an effective conveyance, the application thus grossly overstates the value of the contribution at $1,018,500, when the original sellers only three days earlier agreed to sell the property, under substantial conditions favorable to the buyer, for only $300,000. Whether the Applications are Untrue For the reasons set forth above, the Ravenwood and Oakcrest applications were untrue at the time that they were submitted and were properly rejected by Respondent. The materiality of the omissions is indisputable. Contrary to the assertions in both applications, the applicant in each case not only had not received a contribution of the land from a local government, but the applicant had not even obtained an interest in the land.
Recommendation Based on the foregoing, it is hereby recommended that the Florida Housing Finance Agency enter a final order rejecting the Ravenwood and Oakcrest applications as untrue. RECOMMENDED this 9th day of June, 1992, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1992.
The Issue The issue for determination is whether Respondent's intended decision to award low-income housing tax credits in Miami-Dade County through Request for Applications 2013-003 to HTG Miami-Dade 5, LLC, and Allapattah Trace Apartments, Ltd., is contrary to governing statutes, the corporation’s rules or policies, or the solicitation specifications.
Findings Of Fact Overview FHFC is a public corporation created pursuant to section 420.504, Florida Statutes (2013).1/ Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, FHFC is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low-income housing tax credits. The low-income housing tax credit program was enacted by Congress in 1986 to incentivize the private market to invest in affordable rental housing. Tax credits are competitively awarded to housing developers in Florida for qualified rental housing projects. Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. Because the debt is lower, a tax credit property can offer lower, more affordable rents. Provided the property maintains compliance with the program requirements, investors receive a dollar-for-dollar credit against their federal tax liability each year over a period of 10 years. The amount of the annual credit is based on the amount invested in the affordable housing. These are tax credits and not tax deductions. For example, a $1,000 deduction in a 15 percent tax bracket reduces taxable income by $1,000 and reduces tax liability by $150. However, a $1,000 tax credit reduces tax liability by $1,000. Developers that are awarded tax credits can use them directly. However, most sell them to raise equity capital for their projects.2/ Developers sell these credits for up-front cash. A developer typically sets up a limited partnership or limited liability company to own the apartment complex. The developer maintains a small interest but is responsible for building the project and managing (or arranging for the management) of the project. The investors have the largest ownership interest but are typically passive investors with regard to development and management.3/ Because the tax credits can be used by the investors that provide the equity for 10 years, they are very valuable. When sold to the investors, they provide equity which reduces the debt associated with the project. With lower debt, the affordable housing tax credit property can (and must) offer lower, more affordable rent. The demand for tax credits provided by the federal government far exceeds the supply. FHFC has adopted Florida Administrative Code Rule chapter 67-60, to govern the competitive solicitation process for several different programs, including the one for tax credits. Chapter 67-60 was newly enacted on August 20, 2013. It replaced prior procedures used by FHFC for the competitive process for allocating tax credits. FHFC has now adopted the bid protest provisions of section 120.57(3), Florida Statutes, as its process for allocating tax credits.4/ The Competitive Application Process Tax credits are made available annually. FHFC begins the competitive application process through the issuance of a Request for Applications.5/ In this case, that document is Request for Applications 2013-003. A copy of the RFA, including its Questions & Answers, is Joint Exhibit 1. The RFA was issued September 19, 2013 and responses were due November 12, 2013. According to the RFA, FHFC expected to award up to approximately $10,052,825 in tax credits for qualified affordable housing projects in Miami-Dade, Broward, and Palm Beach Counties. Knowing that there would be far more applications than available credits, FHFC established an order for funding in the three counties: The Applications will be considered for funding in the following funding order: first the highest scoring eligible Application located in Miami-Dade County that can meet the Funding Test, then the highest scoring eligible Application located in Broward County that can meet the Funding Test, then the highest scoring eligible Application located in Palm Beach County that can meet the Funding Test, then the highest scoring eligible unfunded Application located in Miami-Dade County that can meet the Funding Test and then the highest scoring eligible unfunded Application located in Broward County regardless of the Funding Test. If there is not enough funding available to fully fund this last Broward County Application, the Application will be entitled to receive a Binding Commitment for the unfunded balance. No further Applications will be considered for funding and any remaining funding will be distributed as approved by the Board. RFA at page 36. Applications were scored using a 27-point scale based on criteria in the RFA. RFA at page 37. This process was described in the RFA as follows: The highest scoring Applications will be determined by first sorting all eligible Applications from highest score to lowest score, with any scores that are tied separated first by the Application’s eligibility for the Development Category Funding Preference which is outlined in Section Four A.4.c.(1)(a) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference), then by the Application’s eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.9.e. of the RFA, (with Applications that qualify for the preference listed above Applications to [sic] do not qualify for the preference), then by the Application’s Leveraging Classification (applying the multipliers outlined in Exhibit C below and having the Classification of A be the top priority), then by the Application’s eligibility for the Florida Job Creation Preference which is outlined in Exhibit C below (with Applications that qualify for the preference listed above Applications that do not qualify for the preference), and then by lottery number, resulting in the lowest lottery number receiving preference. RFA at page 36 (emphasis added). The way this process works in reality is that the developers know that they must first submit a project that meets all the eligibility criteria and does not have any significant omissions or errors.6/ Developers also strive to submit projects structured to receive all 27 points. The tiebreaker is then the luck-of-the-draw. At the time each application is filed, it is randomly assigned a lottery number7/ used to break the ties. The role of the lottery numbers is demonstrated by the following facts. One hundred and nineteen applications were filed in response to the RFA. All but six received the maximum score of 27 points. Seventy of the 119 were deemed eligible. Of those 70, 69 received the maximum score of 27 points. A copy of the RFA Sorting Order is Joint Exhibit 2.8/ As such, the lottery numbers are a big factor in deciding the winners and, concomitantly, the challengers are (1) the projects with high lottery numbers that were deemed ineligible; and (2) those with lottery numbers outside the funding range that are trying to displace those with lower lottery numbers. A copy of the final Review Committee Recommendations is Joint Exhibit 3. This document shows the developers selected, the county and the lottery number. The two Miami-Dade projects selected for funding are: HTG Miami-Dade 5, LLC d/b/a Wagner Creek - lottery number 3 Allapattah Trace Apartments, Ltd. - lottery number 6 The Petitioners/Intervenors in these consolidated proceedings are: Town Center Phase Two, LLC - lottery number 7 Pinnacle Rio, LLC - lottery number 9 APC Four Forty Four, Ltd. - deemed ineligible and with a lottery number of 10 The protests here center upon whether various applicants were correctly deemed eligible or ineligible. Applications are competitively reviewed, and so determinations as to one applicant affect other applicants’ positions. Each application, and the allegations against it, will be considered in turn. HTG’s Application APC argues that HTG should be found ineligible for allocation of tax credits because HTG failed to disclose its principals and those of its developer, as required by the RFA. The RFA at Section Four A.2.d. provides, in part, that each applicant will submit an application that identifies: d. Principals for the Applicant and for each Developer. All Applicants must provide a list, as Attachment 3 to Exhibit A, identifying the Principals for the Applicant and for each Developer, as follows: * * * (2) For a Limited Liability Company, provide a list identifying the following: (i) the Principals of the Applicant as of the Application Deadline and (ii) the Principals for each Developer as of the Application Deadline. This list must include warrant holders and/or option holders of the proposed Development. * * * This eligibility requirement may be met by providing a copy of the list of Principals that was reviewed and approved by the Corporation during the advance-review process. To assist the Applicant in compiling the listing, the Corporation has included additional information at Item 3 of Exhibit C. RFA at page 5. The RFA goes on to provide in Exhibit C 3.: 3. Principal Disclosures for Applicants and Each Developer The Corporation is providing the following charts and examples to assist the Applicant in providing the required list identifying the Principals for the Applicant and for each Developer. The term Principals is defined in Section 67-48.002, F.A.C. a. Charts: (1) For the Applicant: * * * (b) If the Applicant is a Limited Liability Company: Identify All Managers and Identify All Members and For each Manager that is a Limited Partnership: For each Manager that is a Limited Liability Company: For each Manager that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder and For each Member that is a Limited Partnership: For each Member that is a Limited Liability Company: For each Member that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder For any Manager and/or Member that is a natural person (i.e., Samuel S. Smith), no further disclosure is required. RFA at page 61. The RFA at Section Three F.3. Provides: 3. Requirements. Proposed Developments funded with Housing Credits will be subject to the requirements of the RFA, the Application requirements outlined in Rule Chapter 67-60, F.A.C., the credit underwriting and HC Program requirements outlined in Rule Chapter 67-48, F.A.C., and the Compliance requirements of Rule Chapter 67-53, F.A.C. RFA at page 3. The term “principal” is defined by rule 67-48.002(89)9/, as follows: (89) “Principal” means: (a) Any general partner of an Applicant or Developer, any limited partner of an Applicant or Developer, any manager or member of an Applicant or Developer, any officer, director or shareholder of an Applicant or Developer, * * * (c) Any officer, director, shareholder, manager, member, general partner or limited partner of any manager or member of an Applicant or Developer, and . . . . HTG received an “advance review” approval of its designation of principals on October 8, 2013. HTG submitted this stamped and approved list of principals with its application. Applicant HTG is a limited liability company, as is its developer, HTG Miami-Dade 5 Developer, LLC. In its submission of principals, HTG disclosed the names of the manager and member of the applicant and the manager and member of the developer, all of which were also LLCs. HTG also disclosed the names of the managers and members of these component LLCs. HTG did not disclose any officers of the applicant, the developer, or any of the component LLCs. Other documents submitted as part of the application indicate that Mr. Matthew Rieger is a Vice President of the applicant, HTG Miami-Dade 5, LLC, and that the component LLCs also have officers. APC contends that the rule’s definition of principal requires HTG to disclose not only the managers and members of the applicant and developer, and those of their component LLCs, but also the officers of any of these entities, if they also have officers. FHFC asserts that such disclosure is not required, arguing that the term “officer” as found in the rule’s definition of “principal” only applies to corporations. FHFC argues that there is no inconsistency between the rule and the charts of the RFA with respect to disclosure of principals. FHFC contends that the charts in the RFA, read in conjunction with the rule, indicate that officers must be disclosed only when the entity is a corporation, and that members and managers must be disclosed when the entity is a LLC. FHFC interprets rule 67-48.002(89) in a manner consistent with the charts. It does not interpret the rule to require that an LLC disclose its officers, even if it has them, but only that an LLC disclose its managers and members. Both Ms. O’Neill and Ms. Thorp testified to that effect. The examples provided in the RFA are also consistent with this interpretation. The rule certainly might have been drafted with more precision to expressly indicate that a principal is any officer, director, or shareholder if the entity is a corporation; any manager or member if the entity is an LLC; and any general partner or limited partner if the entity is a Limited Partnership. It cannot be said, however, that the Corporation’s interpretation of the RFA and its rule is impermissible. ATA’s Application Mr. Kenneth Reecy, Director of Multifamily Programs, testified that FHFC revised the “Universal Application Cycle” process that had been conducted in the past. Under the old universal cycle, most of the criteria were incorporated into the rule, and then there was a “cure” process that provided an opportunity to correct errors that didn’t necessarily have a bearing on whether a project was good enough to be funded. Under the newer process, several issues were moved out of the eligibility and scoring phase and into the credit underwriting phase.10/ Specifically relevant here, site plan issues and the availability of infrastructure, such as sewer service, were no longer examined as part of the eligibility and scoring phase set forth in the RFA. Mr. Reecy testified that these issues were complex and had been intentionally pushed to the “rigorous review” that takes place during the credit underwriting phase. In signing and submitting Exhibit A of the RFA, each applicant acknowledges and certifies that certain information will be provided to FHFC by various dates in the future. RFA at page 46. Section Four 10.b.(2)(b) provides in part that the following will be provided: Within 21 Calendar Days of the date of the invitation to enter credit underwriting: Certification of the status of site plan approval as of Application Deadline and certification that as of Application Deadline the site is appropriately zoned for the proposed Development, as outlined in Item 13 of Exhibit C of the RFA; Certification confirming the availability of the following for the entire Development site, including confirmation that these items were in place as of the Application Deadline: electricity, water, sewer service, and roads for the proposed Development, as outlined in Item 13 of Exhibit C of the RFA; Item 13 of Exhibit C goes on to provide: 13. Certification of Ability to Proceed: Within 21 Calendar Days of the date of the invitation to enter credit underwriting, the following information must be provided to the Corporation: a. Submission of the completed and executed 2013 Florida Housing Finance Corporation Local Government Verification of Status of Site Plan approval for Multifamily Developments form. * * * c. Evidence from the Local Government or service provider, as applicable, of the availability of infrastructure as of Application Deadline, as follows: * * * Sewer: Submission of the completed and executed 2013 Florida Housing Finance Corporation Verification of Availability of Infrastructure — Sewer Capacity, Package Treatment, or Septic Tank form or a letter from the service provider which is dated within 12 months of the Application Deadline, is Development specific, and specifically states that sewer service is available to the proposed Development as of the Application Deadline. The 2013 Florida Housing Finance Corporation Local Government Verification of Status of Site Plan Approval for Multifamily Developments Form (Site Plan Approval Form) and the 2013 Florida Housing Finance Corporation Verification of Availability of Infrastructure — Sewer Capacity, Package Treatment, or Septic Tank Form (Certification of Sewer Capacity Form) are incorporated by reference in the RFA. The Site Plan Approval Form requires (in the case of Miami-Dade County which does not have a preliminary or conceptual site plan approval process) that the local government confirm that the site plan was reviewed as of the application deadline. Pinnacle and APC assert that the site plan that ATA submitted to the City of Miami for review included a strip of land that is not legally owned by the current owner and will not be conveyed to ATA under the Purchase and Sale Agreement. As a result, they contend, the site plan review which was required on or before the application deadline did not occur. Pinnacle argues that ATA’s certification in its application was incorrect, that this was a mandatory requirement that was not met, and that it will be impossible for ATA to provide the Site Plan Approval Form in credit underwriting. TC similarly maintains that ATA could not “acknowledge and certify” as part of its application that it would later certify that it had “ability to proceed” because the RFA (at Section Four 10.b.(2)(b) quoted above) requires that “sewer service” be “in place” for ATA’s proposed development as of the application deadline. TC also asserts that the Certification of Sewer Capacity Form explicitly states (and that any service provider letter must, too) that no moratorium is applicable to a proposed development. ATA did not submit a Certification of Sewer Capacity Form. Miami-Dade County will not complete such forms. The “letter of availability” option was created to accommodate Miami-Dade County. The November 12, 2013, letter from Miami-Dade Water and Sewer regarding ATA’s development does not state that there is no applicable moratorium in effect. In fact, the letter affirmatively acknowledges that flow to the gravity system already connected to the property cannot be increased because there is a moratorium in effect as to the pumping station serving the abutting gravity sewer basin. The letter from the County states that, if the pumping station is still in Moratorium Status “at the time this project is ready for construction,” that a private pump station is acceptable. It is logical to conclude that this means sewer service would be available at that time and that sewer service was similarly available at the time of application deadline. The letter, therefore, implies, but does not specifically state, that “sewer service is available to the proposed development as of the application deadline.” The moratorium in effect at the application deadline was not a “general” moratorium. It applied only to the pump station serving the abutting gravity sewer basin, but it was applicable to the proposed development and precluded any increase in the flow to the gravity system connected to the property. A moratorium pertaining to sewer service applicable to ATA’s proposed development was in effect at the time that ATA’s application was submitted. Sewer capacity was otherwise available for the proposed development through use of a private pump station. ATA asserts, first, that ATA has not yet filed certification of ability to proceed or the required forms or letter, that it is not to do so until after it is invited to enter credit underwriting, that FHFC has consequently yet to make a determination as to ATA’s ability to proceed, and that therefore any issues as to site plan or sewer service are not yet ripe for consideration. As to the site plan, ATA further maintains that even if it had been required to provide evidence of ability to proceed as part of its application, the site plan submitted to the City of Miami did not represent that the alley was part of the ATA site. ATA, therefore, asserts that the site plan that was reviewed was the correct one, and that its application certification was correct. The plan of the site of ATA’s development project indicates that the site is bifurcated by a private alley, which is not dedicated as a street, avenue, or boulevard. The legal description of the development project, as submitted to the Department of Planning and Zoning of the City of Miami, included lots 2 through 7 and lots 19 and 20. It did not include the strip of land that lies between these lots (lots 2 through 7 lie to the West of the alley and lots 19 and 20 lie to the East of it.) As to sewer availability, ATA asserts that the 2011 Universal Cycle and the RFA are significantly different. ATA maintains that while the former provided that the existence of a moratorium pertaining to sewer service meant that infrastructure was unavailable, this language was removed from the RFA. ATA contends that a letter of availability need not “mimic” the Certification of Sewer Capacity Form and that the RFA allows a development to certify sewer availability by other means when a moratorium is in effect. Mr. Reecy testified that FHFC takes the certified application at face value, regardless of what other information the Corporation might have at hand. As to the site plan, he testified that even had site plan approval been a part of the scoring process, FHFC would not have found ATA’s application ineligible on that ground. He testified that the alley would not be a problem unless it was a “road” or something similar. He testified that it also could have been a problem if the measurement point to measure the distance to nearby amenities was not on the property, but he was not aware that that was the case in ATA’s application. As for sewer service, Mr. Reecy testified that a letter from the service provider does not have to say “exactly” what is on the form, but stated that it does have to give “the relevant information” to let FHFC know if sewer is “possible.” He testified that the only guidance as to what constituted sewer “availability” was contained in the criteria found on the Certification of Sewer Capacity Form. One of the four numbered requirements on the Certification of Sewer Capacity Form is that there are no moratoriums pertaining to sewer service that are applicable to the proposed development. Under the RFA, the Certification of Sewer Capacity Form could not be completed for a proposed development for which a moratorium pertaining to sewer service was in effect at the time the application was submitted. The form could not be certified by the service provider even if it was possible for such a development to obtain sewer service by other means. The text on the 2013 form is substantively identical to that on the form used during the 2011 Universal Cycle, that wording was specifically drafted to require that any moratorium on sewer infrastructure would be a disqualifying criterion, and the 2013 Certification of Sewer Capacity Form still has that effect. No challenge to the use of the form in the RFA was filed. Even though the language of the 2011 Universal Cycle which paralleled the text on the form does not appear in the RFA, that criterion remains as part of the RFA because of the incorporated Certification of Sewer Capacity Form. In any event, the site plan and sewer availability issues must await at least initial resolution by FHFC during the credit underwriting phase. The testimony of Mr. Reecy clearly indicated that FHFC interprets the RFA specifications and its rules to move consideration of site plan issues and infrastructure availability to the credit underwriting phase. It has not been shown that this is an impermissible interpretation. Town Center’s Application Pinnacle alleges that TC’s application fails to demonstrate site control, because the applicant, Town Center Phase Two, LLC, is not the buyer of the site it intends to develop. The RFA requires at Section Four A.7. that an applicant must provide a copy of a contract, deed, or lease to demonstrate site control: 7. Site Control: The Applicant must demonstrate site control by providing, as Attachment 7 to Exhibit A, the documentation required in Items a., b., and/or c., as indicated below. If the proposed Development consists of Scattered Sites, site control must be demonstrated for all of the Scattered Sites. a. Eligible Contract - For purposes of the RFA . . . the buyer MUST be the Applicant unless an assignment of the eligible contract which assigns all of the buyer's rights, title and interests in the eligible contract to the Applicant, is provided. If the owner of the subject property is not a party to the eligible contract, all documents evidencing intermediate contracts, agreements, assignments, options, or conveyances of any kind between or among the owner, the Applicant, or other parties, must be provided . . . . RFA at page 23. The Contract for Purchase and Sale of Real Property submitted as Attachment 7 to TC’s application is signed by Mr. Milo, who is identified as Vice President. The Buyer on the signature page is incorrectly listed as RUDG, LLC. No other assignment, intermediate contract, agreement, option, or conveyance was included with TC’s application to indicate that TC otherwise had site control of the property. The applicant entity, Town Center Phase Two, LLC, is correctly listed in the opening paragraph of the Contract for Purchase and Sale of Real Property as the “Buyer.” RUDG, LLC, is the 99.99 percent Member of Town Center Phase Two, LLC, and is also the sole Member and Manager of Town Center Phase Two Manager, LLC, which is the .01 percent Managing Member of Town Center Phase Two, LLC. Mr. Milo is a Vice President of RUDG, LLC, a Vice President of Town Center Phase Two Manager, LLC, and a Vice President of the applicant, Town Center Phase Two, LLC. Florida Administrative Code Rule 67-60.008, provides that the Corporation may waive minor irregularities in an otherwise valid application. The term “Minor Irregularity” is defined by rule 67- 60.002(6), as follows: (6) “Minor Irregularity” means a variation in a term or condition of an Application pursuant to this rule chapter that does not provide a competitive advantage or benefit not enjoyed by other Applicants, and does not adversely impact the interests of the Corporation or the public. Mr. Reecy testified that FHFC interpreted the rule to mean that if information requested by the RFA is reasonably available within the Application, even if it was not provided exactly in the place where it was requested, the failure to have it in the particular place it was requested is a minor irregularity. Although the information on the signature page of the Contract for Purchase and Sale of Real Property identifying the Buyer as RUDG, LLC, was a discrepancy in the application, the contract elsewhere identified Town Center Phase Two, LLC, as the Buyer, and Mr. Milo was, in fact, authorized to sign for the true Buyer. Ms. Amy Garmon’s deposition testimony indicated that because she was able to determine from other places in the application that the Buyer was the applicant, and that Mr. Milo was authorized to sign for the Buyer, she found this portion of TC’s application to be compliant, and she didn’t see that there was a “minor irregularity” that needed to be waived. However, it is determined that FHFC actually did finally determine that the error in identification constituted a minor irregularity that was waived, in accordance with Mr. Reecy’s testimony. Although it was Ms. Garmon who called attention to the irregularity, Mr. Reecy is in a position of higher authority within the FHFC and is better able to address the Corporation’s actions with respect to TC’s application. Pinnacle also asserts that TC’s finance documents fail, based upon the same signature issue. TC submitted equity proposals detailing its construction funding sources that were addressed to Mr. Milo and endorsed by him as “Vice President.” FHFC similarly concluded that Mr. Milo had authority to endorse the finance letters on behalf of TC. There is evidence to support FHFC’s findings that TC was the actual Buyer, that Mr. Milo had authority to sign the contract and the equity documents, and that the discrepancies in the documents were minor irregularities. Pinnacle’s Application The equity commitment letter from Wells Fargo Bank regarding Pinnacle’s development, as submitted to FHFC, contained only pages numbered one, two, and four of a four-page letter. It is clear that page three is actually missing and the letter was not simply incorrectly numbered, because of discontinuity in the text and in the numbering of portions of the letter. APC contends that Pinnacle’s application should have been deemed ineligible for award because of the missing page. Mr. Reecy testified that even though a page of Pinnacle’s equity commitment letter was missing, all of the RFA requirements were set forth in the remaining pages. He acknowledged that the missing page might have included unacceptable conditions for closing or information that was inconsistent with the other things in the application, but stated that FHFC determined that the missing page from Pinnacle’s equity letter was a minor irregularity. There is evidence to support FHFC’s finding that the missing page was a minor irregularity. APC’s Application The RFA provides at Section Four, A.3.c., at page 5: c. Experienced Developer(s) At least one Principal of the Developer entity, or if more than one Developer entity, at least one Principal of at least one of the Developer entities, must meet the General Developer Experience requirements in (1) and (2) below. (1) General Developer Experience: A Principal of each experienced Developer entity must have, since January 1, 1991, completed at least three (3) affordable rental housing developments, at least one (1) of which was a Housing Credit development completed since January 1, 2001. At least one (1) of the three (3) completed developments must consist of a total number of units no less than 50 percent of the total number of units in the proposed Development. For purposes of this provision, completed for each of the three (3) developments means (i) that the temporary or final certificate of occupancy has been issued for at least one (1) unit in one of the residential apartment buildings within the development, or (ii) that at least one (1) IRS Form 8609 has been issued for one of the residential apartment buildings within the development. As used in this section, an affordable rental housing development, including a Housing Credit development that contains multiple buildings, is a single development regardless of the number of buildings within the development for which an IRS Form 8609 has been issued. If the experience of a Principal for a Developer entity listed in this Application was acquired from a previous affordable housing Developer entity, the Principal must have also been a Principal of that previous Developer entity. (2) Prior General Development Experience Chart: The Applicant must provide, as Attachment 4 to Exhibit A, a prior experience chart for each Principal intending to meet the minimum general development experience reflecting the required information for the three (3) completed affordable rental housing developments, one (1) of which must be a Housing Credit development. Each prior experience chart must include the following information: Prior General Development Experience Chart Name of Principal with the Required Experience Name of Developer Entity (for the proposed Development) for which the above Party is a Principal: ___ ___________ ___ Name of Development Location (City & State) Affordable Housing Program that Provided Financing Total Number Of Units Year Completed RFA at pages 5, 6. Exhibit A to the RFA, at 3.c., further provides: General Developer Experience For each experienced Developer entity, the Applicant must provide, as Attachment 4, a prior experience chart for at least one (1) experienced Principal of that entity. The prior experience chart for the Principal must reflect the required information for the three (3) completed affordable rental housing developments, one (1) of which must be a Housing Credit development. RFA at page 41. Ms. O’Neill, a Senior Policy Analyst at FHFC and member of the Review Committee responsible for scoring the applications’ developer information section, testified at hearing. When FHFC first started scoring applications, Ms. O’Neill was not taking any action to confirm principal developer experience, but rather was taking the information provided by applicants at face value, as it had been submitted on the chart. A colleague of Ms. O’Neill’s, not serving on the Review Committee, called her attention to the fact that a development that was then going through credit underwriting (following an award during the 2011 funding cycle) had recently requested that FHFC approve a change to the developer entity. Ms. O’Neill testified that this request raised a question at FHFC as to whether Ms. Wong, listed by APC as the principal with the required experience, met the requirements. FHFC decided to confirm that Ms. Wong had the required experience for the developments listed in the RFA. Ms. O’Neill stated that she did not make any inquiry to Ms. Wong or to Atlantic Pacific Communities as to whether Ms. Wong was, in fact, a principal of St. Luke’s Development, LLC, developer of St. Luke’s Life Center, because “we’re not really supposed to do that.” Ms. O’Neill instead looked at portions of a credit underwriting report on the St. Luke’s Life Center project that were researched and shown to her by a colleague. Ms. O’Neill did not see Ms. Wong listed in that report as a principal. She did find information in FHFC files that Ms. Wong was a principal on the other two listed developments. Ms. Thorp testified that she researched several documents in FHFC’s possession and found no information indicating that Ms. Wong was a principal for the St. Luke’s development. She testified that Ms. Wong or another representative of APC was not contacted about the issue because that would have given them an unfair advantage over other applicants. Based upon the information in its files, FHFC determined that Ms. Wong did not meet the requirements for principal developer experience. FHFC then similarly reviewed the files of other applicants who had listed in-state developments as their experience, but was unable to review out-of-state experience, so out-of-state experience continued to be accepted at face value. Ms. Wong was not originally a principal in the St. Luke’s development. However, it was demonstrated at hearing through documentary evidence that Ms. Wong was later appointed an officer of St. Luke’s Development, LLC, effective March 2007. That change was submitted to the credit underwriter, and Ms. Wong was a principal for the developer entity before it completed credit underwriting. Both Ms. O’Neill and Ms. Thorp testified that if the documents provided at hearing by APC had been in FHFC’s possession at the time APC’s application was scored, FHFC would have found that Ms. Wong was a principal of the St. Luke’s development and that her experience met principal developer experience requirements. In light of the evidence presented at hearing, it is clear that FHFC’s conclusion was wrong. The prior experience chart submitted by APC as part of its application provided all of the information requested by the RFA, and all of that information was accurate. The information available to FHFC in the application correctly indicated that Ms. Wong was a principle for the developer of the St. Luke’s Life Center development. APC’s application met all requirements of the RFA with respect to prior developer experience. The Corporation’s preliminary determinations that Ms. Wong was not a principal in the St. Luke’s development, and that the APC application did not, therefore, meet principal experience requirements to the contrary, made in good faith based upon incomplete information contained in its files, was clearly erroneous. FHFC’s contention that APC should have submitted explanations or further documentation of Ms. Wong’s developer experience at the time it submitted its application is untenable. APC submitted all of information requested of it. FHFC asked for a chart to be completed, which APC did, completely and accurately. An applicant cannot be found ineligible for failing to do more than was required by the RFA. Credit Underwriting A comparison of the RFA and rules with the 2011 Universal Cycle process shows that the Corporation has moved many requirements formerly required as part of the eligibility and scoring phase into a second review in the credit underwriting phase, as noted earlier. Rule 67-48.0072 provides in part: Credit underwriting is a de novo review of all information supplied, received or discovered during or after any competitive solicitation scoring and funding preference process, prior to the closing on funding, including the issuance of IRS Forms 8609 for Housing Credits. The success of an Applicant in being selected for funding is not an indication that the Applicant will receive a positive recommendation from the Credit Underwriter or that the Development team’s experience, past performance or financial capacity is satisfactory. The rule goes on to provide that this de novo review in the credit underwriting phase includes not only economic feasibility, but other factors statutorily required for allocation of tax credits, such as evidence of need for affordable housing and ability to proceed. These factors might cause an application to fail and never receive funding, even though it was nominally “awarded” the credits earlier. In that event, the RFA provides: Funding that becomes available after the Board takes action on the Committee’s recommendation(s), due to an Applicant declining its invitation to enter credit underwriting or the Applicant’s inability to satisfy a requirement outlined in this RFA, and/or Rule Chapter 67-48, F.A.C., will be distributed to the highest scoring eligible unfunded Application located in the same county as the Development that returned the funding regardless of the Funding Test. If there is not enough funding available to fully fund this Application, it will be entitled to receive a Binding Commitment for the unfunded balance. If an applicant nominally “awarded” funding in the eligibility and scoring phase fails credit underwriting, the next applicant in the queue of eligible applicants may still be granted funding, and so, is substantially affected by FHFC’s decisions in the credit underwriting phase.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order finding that APC Four Forty Four, Ltd., is eligible for funding, adjusting the Sorting Order accordingly, and otherwise dismissing the formal written protests of all Petitioners. DONE AND ENTERED this 4th day of June, 2014, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD 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 4th day of June, 2014.
The Issue The issue for determination in this consolidated bid protest proceeding is whether the Florida Housing Finance Corporation (“Florida Housing”) acted arbitrarily, capriciously, or contrary to competition by deeming the applications of Joe Moretti Phase Three, LLC. (“Moretti Phase Three”) and Stirrup Plaza Phase Three, LLC. (“Stirrup Plaza Phase Three”) ineligible for Request for Applications 2016-114, Housing Credit Financing for Affordable Housing Developments Located in Miami-Dade County (“RFA 2016-114”).
Findings Of Fact Facts Regarding Florida Housing and Affordable Housing Tax Credits Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes.1/ 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. Accordingly, Florida Housing has the responsibility and authority to establish procedures for allocating and distributing low-income housing tax credits. The low-income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. Tax credits are awarded competitively to housing developers in Florida for rental housing projects which qualify. These credits are then normally sold by developers for cash to raise capital for their projects. This reduces the amount of capital that developers have to borrow. Because the total debt is lower, a tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the tax credits. Tax credits are not tax deductions. For example, a $1,000 deduction in a 15 percent tax bracket reduces taxable income by $1,000 and reduces tax liability by $150, while a $1,000 tax credit reduces tax liability by $1,000. The demand for tax credits provided by the federal government exceeds the supply. Accordingly, Florida Administrative Code Chapter 67-60 provides that Florida Housing allocates its tax credits, which are made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3), Florida Statutes. In their applications for tax credits, applicants request a specific dollar amount of housing credits to be supplied each year for a period of 10 years. Applicants will normally sell the rights to that future stream of income tax credits (through the sale of almost all of the ownership interest in the applicant entity) to an investor to generate the amount of capital needed to build the development. Tax credits are made available through a competitive application process commenced by the issuance of a Request for Applications (“RFA”). An RFA is equivalent to a “request for proposal.” See Fla. Admin. Code R. 67-60.009(4)(providing that “[f]or purposes of Section 120.57(3), F.S., any competitive solicitation issued under this rule chapter shall be considered a ‘request for proposal.’”). “Applicants not selected for funding under any competitive solicitation issued pursuant to [Chapter 67-60, F.A.C.] may only protest the results of the competitive solicitation process pursuant to the procedures set forth in Section 120.57(3), F.S., and Chapter 28-110, F.A.C.” Fla. Admin. Code R. 67-60.009(2). Facts Specific to RFA 2016-114 RFA 2016-114 describes its purpose as follows: This Request for Applications (RFA) is open to Applicants proposing the development of affordable, multifamily housing located in Miami-Dade County. Under this RFA, Florida Housing Financing Corporation (the Corporation) expects to have up to an estimated $5,682,725 of Housing Credits available for award to proposed Developments located in Miami-Dade County. The Corporation is soliciting applications from qualified Applicants that commit to provide housing in accordance with the terms and conditions of this RFA, inclusive of Exhibits A, B, C, an D, applicable laws, rules and regulations, and the Corporation’s generally applicable construction and financial standards. Florida Housing’s Board of Directors approved the issuance of RFA 2016-114 on June 24, 2016. Prior to the issuance of RFA 2016-114, Florida Housing conducted a public workshop on August 25, 2016. A draft version of RFA 2016-114 was posted on Florida Housing’s website on September 15, 2016. The final version of RFA 2016-114 was issued on October 28, 2016, and applications were due by 11:00 a.m., Eastern Time on December 15, 2016. There were no challenges to the terms of RFA 2016- 114 after it was issued. A provision within RFA 2016-114 stated that “[a]pplicants should review subsection 67-48.023(1), F.A.C., to determine eligibility to apply for the Housing Credits offered in this RFA.” The aforementioned rule provides in pertinent part that an applicant is ineligible to apply for competitive housing credits if [t]he proposed Development site or any part thereof is subject to any Land Use Restriction Agreement or Extended Use Agreement, or both, in conjunction with any Corporation affordable housing finance intended to foster the development or maintenance of affordable housing ” (emphasis added). An Extended Use Agreement (“EUA”) is an agreement between an applicant seeking tax credits and Florida Housing. An EUA runs with a particular piece of property and is meant to assure that the property is devoted to affordable housing. In addition, Florida Administrative Code Rule 67- 48.002(44) defines an “EUA” in the context of this tax credit program as “an agreement which sets forth the set aside requirements and other Development requirements under the housing credit program.” Set aside requirements reflect how much of the development is set aside for low-income tenants. An applicant can seek to have an EUA amended by filing a request with Florida Housing. The request would begin with a staff member of Florida Housing, move to Florida Housing’s assistant director of multifamily programs, and then to the director of multifamily programs for an ultimate decision. The process by which an EUA is amended is not set forth in a rule or policy manual. There is no established time by which Florida Housing must act on a request to amend an EUA. There is no typical time by which Florida Housing grants or denies a request to amend an EUA. Also, there is nothing requiring Florida Housing to expedite a decision on whether to grant or deny a request to amend an EUA. Florida Housing received 25 applications in response to RFA 2016-114. Florida Housing received, processed, evaluated, scored, and ranked each of the applications pursuant to the terms of RFA 2016-114, Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations. The Executive Director of Florida Housing, Ken Reecy, appointed a Review Committee of Florida Housing staff to conduct the aforementioned evaluation, scoring, and ranking. Florida Housing only considered an application for funding if it was deemed “eligible” based on whether that application complied with Florida Housing’s various content requirements. Of the 25 applications submitted, Florida Housing deemed 19 to be “eligible,” and six were deemed “ineligible.” Florida Housing proposed to award funding to three developments: Ambar Key, Verbena, and Northside Property IV, Ltd. As discussed below, Florida Housing deemed the Moretti Phase Three and Stirrup Plaza Phase Three applications to be ineligible because the properties associated with those applications were still subject to EUAs at the December 15, 2016, deadline for RFA 2016-114. Facts Regarding Moretti Phase Three’s and Stirrup Plaza Phase Three’s Applications Moretti Phase Three submitted an application seeking $2,400,000 in annual allocation of housing credits to finance the construction of a 103-unit development. Stirrup Plaza Phase Three submitted an application seeking $1,950,000 in annual allocation of housing credits to finance the construction of an 85-unit development. The Moretti Phase Three and Stirrup Plaza Phase Three applications represent subsequent phases of existing developments, and both of those developments are devoted to affordable housing. All of the land associated with both developments had been subject to EUAs since 2015. Because Moretti Phase Three and Stirrup Plaza Phase Three wanted to obtain tax credit financing, they needed to have those EUAs amended.2/ Anthony Del Pozzo is the vice president for Moretti Phase Three and Stirrup Plaza Phase Three. Mr. Del Pozzo focuses much of his attention on affordable housing and has assisted with the preparation of 30 to 50 tax credit applications to Florida Housing. After RFA 2016-114 was issued, Mr. Del Pozzo contacted Florida Housing via telephone calls and e-mails in order to ascertain the process by which the EUAs could be amended. Mr. Del Pozzo’s initial e-mail to Florida Housing regarding amending the EUAs was transmitted on November 1, 2016, and stated the following: Libby, I will be sending this request to you, Amy and Lisa to modify the EUA’s for our Joe Moretti (first phase) and Stirrup Plaza (first phase) properties, both of which are 9% deals. I will also have to modify the EUA for our Seville Place deal, which was financed with bonds and 4% credits. Will that one also go to the same people or should I reach out to Bill Cobb or someone else?? Thanks!! Mr. Del Pozzo’s initial e-mail was acknowledged by an Florida Housing employee (Libby O’Neil) later that day. On November 2, 2016, Mr. Del Pozzo transmitted an e-mail to Amy Garmon, Libby O’Neil, and Lisa Nickerson of Florida Housing formally requesting to amend the Moretti Phase Three EUA: Please accept this e-mail as our formal request to modify the legal description of the EUA for Joe Moretti Preservation Phase One, LLC. Attached please find a copy of the recorded EUA, a sketch with Phase I modified legal description and a site plan showing the entire site and the portion where the Phase One building is located (cross-hatched). As you can see from the sketch we are modifying the legal description to include only the portion of the property where the building is located. We will be submitting a portion of the remainder of the property for 9% tax credits in the 2016 RFA.[3/] (emphasis added). Lisa Nickerson is a multifamily programs manager at Florida Housing, and one of her duties involves working with developers seeking EUA amendments. Ms. Nickerson completed the initial processing of all EUA Amendment requests at all times relevant to the instant case. However, Ms. Nickerson was not responsible for approving EUA amendments. On November 3, 2016, Ms. Nickerson responded to Mr. Del Pozzo’s November 2, 2016, e-mail with the following e- mail: We are happy to assist. Because this is a change to the legal description, we will treat it as a site change. Before we can amend the EUA we need the following, as outlined in the carryover agreement: $500 processing fee Affidavit from a Florida licensed surveyor certifying that the tie-breaker measurement point has not moved and that the change in the development site has not affected any zoning requirements. If the tie-breaker measurement point has moved from the location provided in the application, the change in location cannot affect the score and a new surveyor certification form is required. Upon receipt of the above items, we will process [an] amendment to the EUA. On November 8, 2016, Mr. Del Pozzo sent Ms. Nickerson an e-mail stating that he has a “PDF copy of the Survey Affidavit.” Mr. Del Pozzo then asked if he needed the surveyor to send him “an original for my package to FHFC??” Ms. Nickerson responded three minutes later by stating that Florida Housing “can use the PDF to start drafting the amendment, but we will need the original for the file.” On November 9, 2015, Ms. Nickerson sent an e-mail to Mr. Del Pozzo stating that she had reviewed the affidavit and found that application number was incorrect. She gave Mr. Del Pozzo the correct application number, asked him to make that change, and resend the affidavit. In another e-mail transmitted to Mr. Del Pozzo on November 9, 2016, Ms. Nickerson also asked him to send an updated legal description. At 6:52 p.m. on November 9, 2016, Mr. Del Pozzo transmitted an e-mail asking Ms. Nickerson to confirm “if this revised affidavit is acceptable. As requested, I’ve also attached a copy of the legal description. Thanks again for all your help.” At 10:04 a.m. on November 10, 2016, Mr. Nickerson responded with an e-mail stating, “This looks good. As soon as I receive the originals and the $500 fee I will send the amended EUA for you to sign.” On November 10, 2016, Mr. Del Pozzo transmitted an e-mail notifying Ms. Nickerson that he “will be submitting a similar modification request for Stirrup Plaza Preservation Phase One, LLC.” Accordingly, Ms. Nickerson received later that day a draft affidavit, a copy of the legal description of the property associated with the Stirrup Plaza Phase Three property, and a survey identifying the two parcels that were being carved out. However, on November 14, 2016, Mr. Del Pozzo sent Ms. Nickerson an e-mail stating that “[w]e will be making some additional revisions to the legal description for Stirrup Plaza. Please hold off on the request to modify the EUA on that one until I confirm the correct legal description. I apologize for the inconvenience.” By November 14, 2016, Florida Housing had received an explanation letter, a $500 fee, an affidavit, and a new legal description for the Moretti Phase Three EUA amendment. Florida Housing cashed a $500 check pertaining to the Moretti Phase Three application on approximately November 14, 2016. As a result, the request to amend the Moretti Phase Three EUA was transferred to Ken Reecy on November 29, 2016, for final approval. Ken Reecy is Florida Housing’s Director of Multifamily Programs and is generally responsible for the program that allocates tax credits in order to finance affordable housing. In addition, Mr. Reecy is the person ultimately responsible for determining whether a request to amend an EUA will be approved. Upon receiving the paperwork associated with the request to amend the Moretti Phase Three EUA, Mr. Reecy noticed that it was seeking to release an unusually large amount of land. That was a concern for Mr. Reecy because releasing that land from the EUA’s restrictions would enable it to become a “market rate development that could be worth . . . millions of dollars.” In contrast, Florida Housing wants land to remain affordable in the future and thus takes a very conservative approach toward releasing land under restrictions. Due to his concern regarding the amount of land in question and because he was very busy with other work, Mr. Reecy put the Moretti Phase Three EUA amendment aside. At this point in time, Mr. Reecy was unaware that the Moretti Phase Three EUA had to be amended prior to the December 15, 2016, deadline for RFA 2016-114. On December 1, 2016, Ms. Nickerson transmitted an e-mail to Mr. Del Pozzo regarding the Moretti Phase Three amendment stating that, “I received your voicemail. I am waiting for the site change approval to come back to me. Once I have it, I will email a copy of the EUA amendment with instructions. I am hopeful you will have it early next week, if not before.” While all of the required documentation for the Moretti Phase Three EUA amendment was received by November 14, 2016, Florida Housing did not receive the explanation letter or the affidavit pertaining to the Stirrup Plaza Phase Three EUA until December 5, 2016. After receiving the affidavit pertaining to the Stirrup Plaza Phase Three EUA, Ms. Nickerson sent Mr. Del Pozzo an e-mail on December 5, 2016, stating, “Thank you, Tony. I will get this underway, this week.” Mr. Reecy received the paperwork for the Stirrup Plaza Phase Three EUA amendment on approximately December 7, 2016. However, he was unaware that this amendment was necessary in order for Stirrup Plaza Phase Three to apply for RFA 2016-114. As the December 15, 2016, deadline for the RFA 2016- 114 applications drew near, Florida Housing had yet to approve Moretti Phase Three’s and Stirrup Plaza Plaza Phase Three’s requests to amend their EUAs. Accordingly, Mr. Del Pozzo wrote the following e-mail to Ms. Nickerson on Monday, December 12, 2016, at 1:54 p.m.: I left a voicemail message for Ken [Reecy] this morning, asking him to follow up with me if he had any questions or needed any additional information to sign-off on the modifications to the EUAs. I also wanted to make sure he was aware that we are modifying the EUA’s so that we can submit new phases to the projects in this year’s 9% LIHTC RFA for Miami-Dade County. Applications are due on 12/15. So, we would greatly appreciate it if he could sign off on the modifications in advance of the application deadline. I will take scanned copies whenever they are ready. This was the first time that Mr. Del Pozzo had communicated to Florida Housing staff that there was any sort of time constraint associated with the requests to amend the Moretti Phase Three and Stirrup Plaza Phase Three EUAs. On Tuesday, December 13, 2016, at 11:50 a.m., Mr. Del Pozzo sent the following e-mail to Mr. Reecy and Ms. Nickerson: I know that you are both extremely busy, so I’m sorry for being so persistent. As I mentioned to Lisa over the phone and indicated in my e-mail below, we will be submitting new phases of the Joe Moretti and Stirrup Plaza projects for funding in RFA #2016-114 for Miami-Dade County. As such, we have been working with Lisa for the past several weeks to ensure that we have submitted all of the information necessary to modify the Extended Use Agreements for the initial phases of these properties. We are removing the portion of the land that will be part of the new phases from the legal descriptions in the EUAs. Based on our latest discussions, I believe everything is in order and we are only awaiting final sign-off. If you could please sign off on these modifications in advance of the RFA due date (12/15/16), we would greatly appreciate it. Please call me if you have any questions or need any additional information. Thanks for all of your help. Four minutes later, Ms. Nickerson responded to the above e-mail by stating, “We are aware and your requests are currently under review. Thank you for your patience.” December 13, 2016, is the first day that Ms. Nickerson was aware that Moretti Phase Three and Stirrup Plaza Phase Three were planning to file applications in response to RFA 2016-114. On Thursday, December 15, 2016, at 8:30 a.m., Albert Milo4/ sent the following e-mail to Ms. Nickerson and Mr. Reecy: Good morning, Lisa I hope you are doing well. Just wanted to follow up again on the EUA modifications for our two projects since today is the Application Deadline. Can you please let me know if FHFC has finalized it? Thanks for your assistance. Have a great day. Mr. Reecy responded at 9:01 a.m. with an e-mail asking Mr. Milo “what is the best number to call you right now?” Mr. Reecy wanted to confer with Mr. Milo because Florida Housing had no verification that the land associated with the Stirrup Plaza Phase Three project was under a declaration of trust (“DOT”). Without a DOT, Mr. Reecy was concerned that the land would not be used for affordable housing. In contrast, Florida Housing already had verification that the land associated with Moretti Phase Three was under a DOT. On December 15, 2016, prior to 11:00 a.m., Mr. Reecy advised a representative from Moretti Phase Three and Stirrup Plaza Phase Three via a telephone call that he would approve Stirrup Plaza Phase Three’s EUA Amendment request if he could be provided with verification that the Stirrup Plaza Phase Three development site was subject to a DOT. During the same phone call, Mr. Reecy advised the representative that he did not believe that Moretti Phase Three and Stirrup Plaza Phase Three would be eligible for funding under RFA 2016-114 because their proposed development locations would still be subject to EUAs at the application deadline. On December 15, 2016, at 9:55 a.m., Mr. Milo sent an e-mail to Mr. Reecy providing him with the copy of the Stirrup Plaza Phase Three DOT: Hi Ken as per our conversation here is a copy of the actual DOT for Stirrup Plaza Preservation Phase one. I have also requested a letter from PHCD confirming the same. As I mentioned this was a Preservation deal that consisted of the rehabilitation of 100 Public Housing units. Please let me know if you need anything else from us. Thanks for your assistance getting this finalized. We really appreciate it. Exactly one hour later, Mr. Milo sent the following e-mail to Mr. Reecy: Hi Ken just want to confirm our conversation this morning where you informed me that you had approved and signed off on the EUA modification for Joe Moretti Preservation Phase One. As it relates to Stirrup Plaza Preservation Phase One, we have sent you a copy of the DOT and a letter from PHCD confirming the DOT. Please let me know if you require any additional information from us to finalize your approval as you mentioned in our phone conversation. Thanks for your assistance in this matter. Moretti Phase Three and Stirrup Plaza Phase Three filed applications for funding under RFA 2016-114 by the application deadline. As of the 11:00 a.m. application deadline, the Moretti Phase Three and Stirrup Plaza Phase Three proposed developments were subject to existing EUAs. At 1:05 p.m. on December 15, 2016, Ms. Nickerson e-mailed the following information to Mr. Milo: Attached, please find the First Amendment to the EUAs for Joe Moretti Preservation Phase One and for Stirrup Plaza Preservation Phase One. The amendments reflect the changes to the legal descriptions found at Exhibit A. Please review and execute the amendments, and return to me with a check made payable to the appropriate county in which the agreements will be recorded. Standard recording fees are $10 for the first page and $8.50 for every page thereafter. However, please contact the appropriate county for confirmation of their fees and any form of payment restrictions. On December 15, 2016, at 2:37 p.m., Moretti Phase Three and Stirrup Plaza Phase Three e-mailed Florida Housing PDF copies of the executed Amended EUAs and indicated the originals and recording fee checks were being sent via FEDEX the same day. Mr. Reecy received the signed amendments and then signed them himself on December 20, 2016. Mr. Reecy’s signature was the final step in the EUA amendment process other than the actual recording of the amended EUAs. The amended EUAs for Moretti Phase Three and Stirrup Plaza Phase Three were recorded on February 6, 2017. Florida Housing scored the applications for RFA 2016- 114 on January 25, 2017. On February 3, 2017, Florida Housing announced its intention to award funding to three applicants, two of which were Ambar Key and Verbena. Florida Housing did not select the applications of Moretti Phase Three and Stirrup Plaza Phase Three for funding because those applications were deemed ineligible given that the proposed development sites were subject to EUAs at the time their applications were filed. Findings Regarding Florida Housing’s Treatment of the EUA Amendment Applications The greater weight of the evidence demonstrates that no relevant personnel at Florida Housing knew about the time- sensitive nature of the requests to amend the EUAs before December 12, 2016. If Ms. Nickerson and/or Mr. Reecy had been advised of the time-sensitive nature within a reasonable time prior to December 15, 2016, the greater weight of the evidence indicates they would have made good faith efforts to expedite the process and that the EUAs would have likely been amended prior to the deadline. The greater weight of the evidence demonstrates that no one at Florida Housing did anything to delay the applications, to amend the EUAs, or anything to undermine Moretti Phase Three’s or Stirrup Plaza Phase Three’s applications for RFA 2016-114. In sum, the greater weight of the evidence demonstrates that Florida Housing did not act arbitrarily, capriciously, or contrary to competition.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation issue a final order awarding funding to Ambar Key, Ltd.; Verbena, LLC; and Northside Property IV, Ltd. DONE AND ENTERED this 9th day of June, 2017, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 2017.
The Issue The issues are (1) whether Florida Housing Finance Corporation's (Florida Housing) intended decision to award low- income housing tax credits for an affordable housing development in medium-size counties to Grove Manor Phase I, LTD (Grove Manor), JIC Grand Palms, LLC (Grand Palms), Madison Palms, Ltd. (Madison Palms), and RST The Pines, LP (The Pines), was contrary to solicitation specifications, and if so, whether that determination was clearly erroneous, arbitrary, capricious, or contrary to competition; and (2) whether Florida Housing's determination that Brownsville Manor, LP (Brownsville), achieved the maximum available score of 28 points was contrary to solicitation specifications, and if so, whether that determination was clearly erroneous, arbitrary, capricious, or contrary to competition.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504. One of its responsibilities is to award low-income housing tax credits, which developers use to finance the construction of affordable housing. Tax credits are made available to states annually by the United States Treasury Department and are then awarded pursuant to a competitive cycle that starts with Florida Housing's issuance of an RFA. On September 3, 2015, Florida Housing issued an RFA in which it expected to award up to an estimated $10,763,426.00 of tax credits for affordable housing developments in medium counties. The RFA also requested proposals for housing developments in small counties, but that portion of the RFA is not at issue. All applicants in this proceeding proposed developments in medium counties. They include Redding (Seminole County), HTG (Hernando County), Brownsville (Escambia), Grove Manor (Polk County), Grand Palms (Manatee County), Madison Palms (Brevard County), and The Pines (Volusia County). Florida Housing retained the right to "waive Minor Irregularities in an otherwise valid Application" filed pursuant to the RFA. Fla. Admin. Code R. 67-60.008. A "minor irregularity" is defined as "a variation or condition of the Application pursuant to this rule chapter that does not provide a competitive advantage or benefit not enjoyed by other Applicants, and does not adversely impact the interests of the Corporation or the public." Fla. Admin. Code R. 67-60.002(6). These rules are particularly relevant in this case, as during the scoring process Florida Housing waived minor irregularities for several applicants. Florida Housing's Executive Director appointed a review committee comprised of Florida Housing staff to evaluate the applications for eligibility and scoring. Ninety-eight applications were received, processed, deemed eligible or ineligible, scored, and ranked pursuant to the terms of the RFA, administrative rules, and applicable federal regulations. Applications are considered for funding only if they are deemed "eligible," based on whether the application complies with various content requirements. Of the 98 applications filed in response to the RFA, 88 were found to be eligible, and ten were found ineligible. All applicants in this case were preliminarily deemed to have eligible applications and received a maximum score of 28 points. The RFA specifies a sorting order for funding eligible applicants. Recognizing that there would be more applications than available credits, Florida Housing established an order for funding for applicants with tied scores using a sequence of five tie breakers, with the last being a lottery number assigned by the luck of the draw. Applications with lower lottery numbers (closer to zero) are selected before those with higher lottery numbers. On January 29, 2016, Florida Housing posted a notice informing the participants that it intended to award funding to eight developments in medium counties, including those of Grove Manor, Grand Palms, Madison Palms, and The Pines. While the applications of HTG, Brownsville, and Redding were deemed to be eligible, they were not entitled to a preliminary award of funding because of their lottery number ranking. The randomly assigned lottery numbers of those applicants are as follows: HTG (14), Brownsville (16), and Redding (17). HTG and Redding timely filed formal written protests. HTG's protest is directed only at Grove Manor's application. Because Grove Manor agreed that its score should be adjusted downward, HTG is the next applicant in the funding range and should be awarded tax credits, assuming it successfully emerges from the credit underwriting process. No party has challenged the scoring of HTG's application. Redding's protest is directed at the applications of The Pines, Madison Palms, Grand Palms, and Grove Manor, who were selected for funding. Redding also contends that Brownsville, which has a lower lottery number, should have been deemed ineligible or assigned a lower score so that it would no longer be in the funding range. In an unusual twist of events that occurred after the posting of the notice on January 29, 2016, Madison Palms and Grove Manor agreed that they are either ineligible or out of the funding range. Therefore, assuming that adequate funds are available, in order for Redding to be awarded credits, it must establish that at least one of its remaining targets (Grand Palms, Brownsville, and The Pines) is ineligible or should be assigned fewer points. No party has challenged the scoring of Redding's application. Under the RFA, applicants are awarded points in three categories: general development experience, local government contributions, and proximity to services. Depending on whether family or elderly units are being proposed, to obtain proximity to service points, an applicant may select among several types of community services, including transit, a grocery store, a medical facility, a pharmacy, or a public school. Redding has challenged the number of proximity points awarded to The Pines for proximity to a medical facility and public school, Grand Palms for proximity to a pharmacy, and Brownsville for proximity to a public bus transfer stop. Based on Florida Housing's preliminary review of the applications, all three achieved a total proximity score of 18 points. The RFA requires that an applicant submit a Surveyor Certification Form with its application. The form identifies a Development Location Point (DLP), which is representative of where the development is located and must be on or within 100 feet of an existing residential building or a building to be constructed. The DLP is represented by a latitude and longitude coordinate. The distance from the DLP to the selected service is how the proximity points are awarded. The services on which an applicant intends to rely must also be identified on the form, along with the location of the service, as well as the latitude and longitude coordinates for each service. The RFA requires that the coordinates "represent a point that is on the doorway threshold of an exterior entrance that provides direct public access to the building where the service is located." Jt. Ex. 1, p. 25. Redding contends that the coordinates for certain services selected by The Pines, Grand Palms, and Brownsville are not on the "doorway threshold of an exterior entrance that provides direct public access to the building where the service is located." Accordingly, it argues that the number of proximity points awarded to each applicant must be lowered. The Pines selected a public school that has no doors allowing direct public access to the facility. Instead, the school is a series of buildings and classrooms connected by sidewalks and covered breezeways, making a primary "doorway threshold" problematic. The office is interior to the school. Given this unusual configuration, The Pines placed the coordinates at a student drop-off area in front of the school, where students then walk under the covered breezeways to their classrooms, and members of the public walk to offices and/or classrooms. Even if Redding's desired point for the coordinates was used, there would be no difference in the awarded proximity points, as the change in distance would be minimal. The coordinates for The Pines' medical facility are approximately 90 feet from the door that provides direct public access. This was due to an error by the surveyor, who used the back of the facility, rather than the front doorway threshold. Even if the front door had been used for the threshold, The Pines would still be entitled to the same amount of proximity points, as the change in distance would be minimal and not change the scoring. The slight error in the form is a waivable minor irregularity. Brownsville selected a public bus transfer stop for its transit service. Due more than likely to a digital error in one of the satellites used to pinpoint the spot, the coordinates were approximately 150 feet from the canopy where passengers load and unload. Even if the correct point had been used, it would not change the amount of proximity points awarded to Brownsville. The slight error in the form is a waivable minor irregularity. Finally, Grand Palms selected a pharmacy for one of its services. During the process of locating the doorway threshold at the pharmacy, a traverse point was established 70 feet east of the doorway threshold. This was necessary because of an overhang above the doorway threshold. A measurement was then made from the traverse point to the doorway threshold. By mistake, the coordinates on the form represented the location of the traverse point, instead of the doorway threshold of the pharmacy. However, this 70-foot error did not affect the distance from the pharmacy to the DLP or the points awarded to Grand Palms for proximity to a pharmacy. The slight error in the form is a waivable minor irregularity. Florida Housing determined that the coordinates used by The Pines, Brownsville, and Grand Palms yielded the same proximity point score had they been located at the "doorway threshold" and/or "embark/disembark location" as defined in the RFA. Because there is no language in the RFA that provides direction on how to treat these types of minor errors, or mandates that Florida Housing treat them as a non-waivable item, Florida Housing considers them to be a minor irregularity that can be waived. In sum, the deviations were immaterial, no competitive advantage was realized by the applicants, and they were entitled to the proximity points awarded during the preliminary review. Redding also contends that Brownsville is ineligible for funding because it failed to comply with a material requirement in the RFA. In its application, Brownsville stated that it intends to place an 87-unit development on a "scattered site" consisting of two parcels (Site I and Site II) with an intervening roadway (North X Street) between them. The RFA defines a development which consists of a scattered site "to mean a single point on the site with the most units that is located within 100 feet of a residential building existing or to be constructed as part of the required Development." Jt. Ex. 1, p. 25. Stated another way, if multiple parcels are used for the development, the DLP must be located on the site which contains the majority of the residential units. Florida Housing considers this to be a material, non-waivable requirement of the RFA. In Brownsville's Surveyor Certification Form, the DLP is located on Site I, a 1.49-acre parcel that is zoned Commercial and lies west of Site II. In making its preliminary decision to award funding to Brownsville, Florida Housing relied upon the validity of the DLP as of the application deadline and assumed that Site I would have the majority of the units. It had no way to verify the accuracy of that information during the initial scoring process. The RFA requires an applicant to attach to its application a form entitled, "Local Government Verification that Development is Consistent with Zoning and Land Use Regulations." Brownsville's verification form was signed by Horace L. Jones, Director of Development Services for Escambia County, who confirmed that the intended use of the property was consistent with local zoning regulations. The verification forms do not include any information regarding the number of units on each parcel of the site. Florida Housing defers to the local government in determining whether local zoning requirements will be met. Mr. Jones later testified by deposition that Escambia County zoning regulations allow only "25 dwelling units per acre" on Site I. Therefore, on a 1.49-acre parcel, the maximum number of units allowed is 36, or less than a majority of the 87 units. Because Brownsville did not comply with a material requirement of the RFA for a scattered site, Florida Housing now considers the DLP for proximity purposes to be invalid. Had it concluded otherwise, Brownsville would be given a competitive advantage over the other applicants. Brownsville contends, however, that during the County site review process, it will utilize a procedure by which the County can consider the two parcels as a "Single Unified Development" and "cluster" the dwelling units. Although the County has a process to allow the transfer of density from one parcel to another, Brownsville had not started this process as of October 15, 2015, the due date for all applications and the cutoff date for any changes. Also, this process would entail a public hearing before the Board of County Commissioners (Board), and there is no guarantee that the Board would approve the density transfer. In fact, Mr. Jones testified that he was not sure if the density transfer was even a viable option. Therefore, the application of Brownsville contains a material deviation from the RFA and is not eligible for funding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order rescinding the preliminary award to Grove Manor Phase I, Ltd. and Madison Palms, Ltd.; determining that Brownsville Manor, LP, is ineligible for funding; and designating HTG Hammock Ridge, LLC, and Redding Development Partners, LLC, as the recipients of tax credits being made available for developments in RFA 1015-106. DONE AND ENTERED this 19th day of April, 2016, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of April, 2016. COPIES FURNISHED: Kate Fleming, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Michael P. Donaldson, Esquire Carlton Fields Jorden Burt, P.A. Post Office Box 190 Tallahassee, Florida 32302-0190 (eServed) Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Betty C. Zachem, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC Suite 340 1725 Capital Circle Northeast Tallahassee, Florida 32308-1591 (eServed) Donna Elizabeth Blanton, Esquire Radey Law Firm, P.A. Suite 200 301 South Bronough Street Tallahassee, Florida 32301-1706 (eServed) Douglas P. Manson, Esquire Manson Bolves Donaldson, P.A. 1101 West Swann Avenue Tampa, Florida 33606-2637 (eServed)
