The Issue The issue is whether Florida Housing and Finance Corporation's intended decision to award low income housing tax credits for an affordable housing development in Miami-Dade County to Rio at Flagler, LP (Rio), was contrary to solicitation specifications, and if so, whether that determination was clearly erroneous 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 a RFA. In this case, the RFA was issued on November 21, 2014, modified slightly on January 30, 2015, and required the filing of applications by February 10, 2015. According to the RFA, Florida Housing is expected to award up to an estimated $4,367,107 of housing credits for the following demographic set- aside: housing projects targeted for either the family or elderly population in Miami-Dade County. The credits will be awarded to the applicants with the highest total scores. Pinnacle submitted Application No. 2015-211C seeking $2,560,000.00 in annual allocation of housing credits to finance the construction of a 104-unit residential rental development to be known as Pinnacle Heights. Rio submitted Application No. 2015-217C seeking $1,940,000.00 in annual allocation of housing credits to finance the construction of a 76-unit residential development to be known as Rio at Flagler. The agency's Executive Director appointed a review committee comprised of Florida Housing staff to evaluate the applications for eligibility and scoring. Fifty-three 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 53 applications filed in response to the RFA, 43 were found to be eligible, and ten were found ineligible. Both Pinnacle and Rio were found eligible for the family/elderly demographic. The RFA specifies a sorting order for funding eligible applicants. All eligible applicants in the family/elderly demographic, including Pinnacle and Rio, achieved the maximum score of 23 based on criteria in the RFA. 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 six tiebreakers, 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. Both Pinnacle and Rio received the maximum 23 points and met all tiebreaker criteria. In other words, both had so- called "perfect" applications. The ultimate deciding factor for perfect applications is a randomly generated lottery number that is assigned at the time each application is filed. Rio's number is four, while Pinnacle's number is six. Because Rio had a lower lottery number than Pinnacle, Florida Housing issued its notice of intent to award tax credits to Rio and another applicant (with a lower lottery number) not relevant here. Pinnacle timely filed a formal written protest. As amended, Pinnacle's protest is narrowed to a single issue -- whether the bus stop identified in Rio's application is a Public Bus Transfer Stop, as defined in the RFA. A failure to comply with this provision would lower Rio's total proximity score and make it ineligible to receive tax credit funding. The RFA specifies two Point Items in the family/elderly demographic category. The first Point Item is "Local Government Contributions," for which a maximum of five points could be awarded. The second is "Proximity to Transit and Community Services," for which points are awarded based on the distance between the proposed development and the selected transit and community service. A maximum of six proximity points are allowed for Transit Services, while a maximum of 12 proximity points are allowed for Community Services for a total maximum of 18 proximity points. Under the terms of the RFA, if an applicant achieves a minimum of 12.25 proximity points for Community Services and Transit Services, a "point boost" up to the maximum total score of 18 proximity points is added to the applicant's score. Rio's transit score of six points is the focus of this dispute. The RFA lists five types of Transit Services that an applicant can self-select to obtain proximity points, including Public Bus Stop (maximum two points) and Public Bus Transfer Stop (maximum six points). Applicants may select only one type of transit services on which to base their transit score. Depending on the type of transit service selected, an applicant may receive up to a maximum of six points for Transit Services. To verify the information in the application, an applicant must submit a Surveyor Certification Form, which is completed and signed by a licensed surveyor. In making its preliminary decision to award tax credits, Florida Housing relies on the information provided in the form and does not second-guess the surveyor. Issues regarding the accuracy of the information in the form are presented through challenges by other applicants. Because Rio had only ten points for proximity to Community Services, it needed at least 2.25 transit points in order to obtain the minimum 12.25 proximity points necessary to achieve a point boost up to 18 points and be in the running for funding. Accordingly, Rio's application sought six points for the project site's proximity to a Public Bus Transfer Stop. A Public Bus Transfer Stop is defined on page 19 of the RFA as follows: This service may be selected by Family and Elderly Demographic Applicants. For purposes of proximity points, a Public Bus Transfer Stop means a fixed location at which passengers may access at least three routes of public transportation via buses. Each qualifying route must have a scheduled stop at the Public Bus Transfer Stop at least hourly during the times of 7 a.m. to 9 a.m. and also during the times of 4 p.m. to 6 p.m. Monday through Friday, excluding holidays, on a year-round basis. This would include both bus stations (i.e. hubs) and bus stops with multiple routes. Bus routes must be established or approved by a Local Government department that manages public transportation. Buses that travel between states will not be considered. In sum, a Public Bus Transfer Stop is a fixed location at which passengers may access "at least three routes of public transportation via buses," with each route having a scheduled stop at that location at least hourly during morning and afternoon rush hours, Monday through Friday, on a year-round basis. To comply with this requirement, and based upon oral information provided by customer service at Miami-Dade Transit Authority (Authority), Rio selected a bus stop located at West Flagler Street and Northwest 8th Avenue. Rio represented that this location was served by three qualifying routes: Route 6 (Coconut Grove), Route 11 (Florida International University- University Park Campus), and Route 208 (Little Havana Circulator). The RFA requires that a bus route be established or approved by the "local government department" that manages public transportation, in this case the Authority. Florida Housing defers to the local government in determining whether a selected bus route is a qualifying bus route within the meaning of the RFA. The head of the local government department that manages public transportation is Gerald Bryan, the chief of service planning and scheduling. By deposition, Mr. Bryan testified that the location selected by Rio has only two qualifying routes: 11 and 208. Route 6, the third route relied upon by Rio, does not run hourly during the requisite rush hour times as required by the RFA and therefore is not a qualifying route. With only two qualifying routes, the transit service selected by Rio is a Public Bus Stop for which only two points, rather than six, can be awarded. Had this information been available to Florida Housing when it reviewed Rio's application, Rio's proximity score would have been less than 12.25, making it ineligible to receive a point boost and achieve the maximum total score of 18 proximity points. Because Rio is ineligible for funding, the next applicant in line is Pinnacle, as it has the next lowest lottery number among the eligible applications that received 23 points. Rio does not dispute that Route 6 fails to make the requisite stops during rush hours to be considered a qualifying route. However, it contends that Route 11 functionally serves as two distinct routes because it has two separate destinations: the Mall of the Americas and Florida International University Park Campus. But whether Route 11 is a single route or two routes is a determination that must be made by the local government, and not the applicant. Mr. Bryan testified that the Authority established Route 11 as a single route with two separate termination points. He further explained that it is a standard practice for a single route, such as Route 11, to have more than one terminus in order to provide a higher level of customer service. Because Florida Housing does not second guess the determination of the local government, the undersigned has rejected Rio's assertion that the bus stop is a Public Bus Transfer Stop. Without the inclusion of the six proximity points for this type of transit service, Rio's application is not eligible for funding in this cycle.
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 Rio's application is ineligible for funding and that Pinnacle's application should be selected for funding under RFA 2014-116. DONE AND ENTERED this 31st day of August, 2015, 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 31st day of August, 2015. COPIES FURNISHED: Kate Fleming, Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1367 (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 32301-1367 (eServed) Betty C. Zachem, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1367 (eServed) J. Stephen Menton, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Tallahassee, Florida 32301-1591 (eServed) Gary J. Cohen, Esquire Shutts and Bowen, LLP 1500 Miami Center 201 South Biscayne Boulevard Miami, Florida 33131-4329 (eServed)
The Issue Whether Petitioner, who is employed as an occupational therapist by a local school board, is considered a “teacher” eligible for the 2015 State of Florida Best and Brightest Scholarship Program.
Findings Of Fact The 2015 Florida Legislature Appropriations Act created the Best and Brightest Teacher Scholarship Program, chapter 2015- 232, p. 27, Item 99A. The eligibility pre-requisites for applying to and being awarded the Scholarship (up to $10,000) were established in the Scholarship. The Scholarship provides as follows: Funds in Specific Appropriation 99A are provided to implement Florida's Best and Brightest Teacher Scholarship Program. The funds shall be used to award a maximum of 4,402 teachers with a $10,000 scholarship based on high academic achievement on the SAT or ACT. To be eligible for a scholarship, a teacher must have scored at or above the 80th percentile on either the SAT or the ACT based upon the percentile ranks in effect when the teacher took the assessment and have been evaluated as highly effective pursuant to section 1012.34, Florida Statutes, or if the teacher is a first-year teacher who has not been evaluated pursuant to section 1012.34, Florida Statutes, must have scored at or above the 80th percentile on either the SAT or the ACT based upon the percentile ranks in effect when the teacher took the assessment. In order to demonstrate eligibility for an award, an eligible teacher must submit to the school district, no later than October 1, 2015, an official record of his or her SAT or ACT score demonstrating that the teacher scored at or above the 80th percentile based upon the percentile ranks in effect when the teacher took the assessment. By December 1, 2015, each school district, charter school governing board, and the Florida School for the Deaf and the Blind shall submit to the department the number of eligible teachers who qualify for the scholarship. By February 1, 2016, the department shall disburse scholarship funds to each school district for each eligible teacher to receive a scholarship. By April 1, 2016, each school district, charter school governing board, and the Florida School for the Deaf and the Blind shall provide payment of the scholarship to each eligible teacher. If the number of eligible teachers exceeds the total the department shall prorate the per teacher scholarship amount. The Scholarship does not define the word “teacher.” Petitioner, who timely filed an application for the Scholarship, contends that she is a “teacher” and is therefore eligible for the award. Respondent and Intervenor contend that Petitioner is an occupational therapist, and, as such, she is not considered a “classroom teacher,” which is the target group that the Legislature intended for the teacher scholarship program to cover. Petitioner contends that even if the Scholarship is limited to “classroom teachers,” she meets the statutory definition of a “classroom teacher” and is therefore eligible to receive the Scholarship. It is undisputed that the 2015 Scholarship language is vague as to whether the Scholarship is limited to classroom teachers. In 2016, the Legislature made it clear that the award is intended to only cover “classroom teachers.” Legislation enacted in subsequent legislative sessions may be examined to ascertain legislative intent. See Crews v. Fla. Pub. Emp’rs Council 79, AFSCME, 113 So. 3d 1063, 1073 (Fla. 1st DCA 2013)(citing Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 945 So. 2d 1216, 1230 (Fla. 2006)). Recently, the Governor signed chapter 2016-62, Laws of Florida. Section 25 of chapter 2016-62 enacts section 1012.731, Florida Statutes, the Florida Best and Brightest Teacher Scholarship Program.1/ Section 1012.731(2) provides that the “scholarship program shall provide categorical funding for scholarships to be awarded to classroom teachers, as defined in s. 1012.01(2)(a), who have demonstrated a high level of academic success.” The Legislature's amendment of the language, just a year after the first appropriation, confirms that the Legislature intended the award to go to "classroom teachers," as defined in chapter 1012. Petitioner was hired by Respondent as an occupational therapist. She has worked as an occupational therapist for Respondent for approximately 17 years. Petitioner does not hold a Florida teaching certificate and her position as an occupational therapist does not require a Florida teaching certificate. Instead, Petitioner is licensed by the Florida Department of Health, which has jurisdiction over ethical violations committed by occupational therapists licensed in Florida. In her position as an occupational therapist, Petitioner reports to Respondent’s director of Pupil Support Services, who supervises all therapists within Sarasota County Public Schools. Petitioner’s stated job goal is “[t]o facilitate the handicapped student’s independent functioning in the school setting.” Petitioner’s performance responsibilities, as set forth in her job description, are to: Conduct appropriate evaluation of students referred for possible exceptional student education needs and prepare reports of the evaluation and findings. Plan intervention and service delivery programs to meet student’s individual needs. Implement and direct interventions essential to meeting targeted students’ needs. Provide information and consultative services to appropriate personnel in support of students with disabilities. * * * Establish schedules for meeting with students, conferencing with parents and assisting in rehabilitation techniques. Provide resources to all stakeholders involved in the evaluation, identification of student needs and rehabilitation of students. Petitioner delivers therapeutic services individually or in a small group setting, in a room assigned to her, or in a classroom, usually at the same time a teacher is delivering instruction to the entire class. Petitioner completes “lesson plans,” which are referred to in the therapy setting as “plans of care.” Plans of care differ in substance from lesson plans prepared by teachers because lesson plans set out a teaching plan for the entire class, whereas plans of care set out therapeutic goals and activities directed to one student that complies with the goals set forth in a student's Individualized Education Plan (IEP). As an occupational therapist, Petitioner is responsible for maintaining a “class roster,” which is referred to in the therapy setting as a “caseload.” Occupational therapists maintain a caseload for student accountability purposes and for Medicaid billing purposes. Petitioner’s therapy sessions are assigned a “700” course code, which correlates in the Florida Department of Education's course directory to “related services.” Joint Exhibit O is an example of courses offered to students by Respondent. The course list includes math, language arts, physical education, science, social studies, art, Chinese, music, and occupational therapy. Petitioner is listed as the “teacher” for the occupational therapy course. Unlike the other listed “teachers,” Petitioner is not instructing students in a subject area; she is delivering a service. See § 468.203(4)(b), Fla. Stat. (2015). Succinctly stated, the difference, in this context, between “occupational therapy” and the other listed “courses,” is that occupational therapy is not a subject area that a student learns about; it is a service that a student receives to help them to achieve independent functioning. Although listed as “course” by Respondent, occupational therapy, as compared to the other listed “courses,” is not a “course” within the meaning of section 1012.01(2)(a).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board of Sarasota County enter a final order finding Petitioner ineligible for the Best and Brightest Teacher Scholarship Program. DONE AND ENTERED this 8th day of April, 2016, 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 8th day of April, 2016.
Findings Of Fact Petitioner is a Florida corporation located in Leon County, Florida. It prepares applications for CDBG funding for cities and counties. If those cities and counties are awarded grant funds, Petitioner administers the projects for the cities and counties. Having investigated the possibility for obtaining a grant to revitalize a water/sewer system in a neighborhood in Okaloosa County, and having rejected that project as infeasible, Petitioner made application for Okaloosa County for the project which is at issue here. The application was submitted to the Respondent on November 29, 1990, for grant award in the small cities CDBG housing category. The application stated that Okaloosa County had adopted a fair housing ordinance prior to the submission deadline date for applications that was consistent with state and federal housing laws. That feature in the application allowed Okaloosa County to receive 35 points in the scoring system in competition with other grant applicants. That 35 point score for the fair housing ordinance was crucial to the applicant's success in obtaining the grant funds. The record does not reveal that the Petitioner had any responsibility to assure itself that Okaloosa County had enacted a fair housing ordinance prior to the application submission deadline, although Petitioner does render advice to local governments concerning adoption of ordinances and other necessary policies in support of CDBG programs. Petitioner also estimates costs of projects, participates in public hearings to get comments from the public concerning the projects that Petitioner is involved with in connection with CDBG grants. The support role by Petitioner includes preparing needed documentation and advising local governments about associated activities within the grant programs. Those grants are in association with the United States Housing and Urban Development Agency and are known as Block Grants. The grants are to provide funding for the housing category at issue here, as well as neighborhood revitalization, commercial revitalization and economic development program categories. Here use of the term "CDBG" refers to the Florida Small Cities Community Development Block Grant Program. Respondent administers that program consistent with federal guidelines. In addition Respondent establishes applicant eligibility, application criteria, application procedures, a competitive scoring system for comparing applicants and specific program requirements for the various categories within the CDBG program, together with grant administration requirements for the various CDBG grant categories. On the same day that Okaloosa County, through Petitioner, submitted its application for CDBG funding in the housing category, it established procurement policies and procedures for CDBG programs and projects. That document pertains to the purchase or procurement of personal property, supplies, equipment and services, to be accomplished in accordance with applicable state and federal law. That document established a requirement for records keeping that basically indicated that appropriate arrangements would be made for generation and maintenance of all files, records and documentation that would be needed to evidence compliance with requirements delineated in the document itself. The document set forth procurement standards, procurement administration, procurement classification, solicitation and contract awards pursuant to invitations to bid and requests for proposals. The document spoke to the need for compliance with affirmative action/equal opportunity goals, contracts related to the provision of housing and the means to resolve protests over contracting procedures. The document was not designed to address the arrangements between Petitioner and Okaloosa County for administrative services provided to the county associated with the CDBG grant at issue. The agreement between Okaloosa County and the Petitioner by which Petitioner would provide administrative services was as set forth in a November 19, 1990 contract between those parties. Its effective date was contingent upon Okaloosa County receiving the applied for CDBG funding under an award agreement with Respondent. Subject to that award Petitioner agreed to provide services consistent with Section III to the contract with Okaloosa County which stated: III. Scope of Services Intent of the Contract CRA agrees, under the terms and conditions of this Contract and the applicable federal, state and local laws and regulations, to undertake, perform, and complete the necessary Administration Services required to implement and complete the County's CDBG project in compliance with applicable laws and regulations. Scope of Services The scope of services relevant to the CDBG project is included as Attachment "C" to this agreement. If the Agreement between the County and the Agency is amended, the scope of work for the project shall be amended to be consistent with the Agreement. The amount of consideration and the method of payment was as described in Section IV which stated: Consideration and Method of Payment Amount of Consideration CRA shall be paid by the County for Administrative Services the sum specified in the Scope of Work and Payment, attachment "C". Method of Payment CRA will submit a monthly (or other appropriate periodic) invoice specifying accomplishments toward meeting the Administration Services as specified in the Work Order. The invoice shall be submitted to the County for the County's review and approval. Payment will be issued within two days of approval of the invoice, subject to availability of project funds. Any intent to modify the terms of the contract between Okaloosa County and Petitioner had to comply with Section VII which stated: Modification of Contract Modifications of the provisions of this Contract shall only be valid when they have been reduced to writing, duly signed by the parties hereto, and attached top the original of this Contract. CRA hereby agrees to amend the Work Order pertaining to each project to remain consistent with the County/Agency Agreement if said Agreement is amended. The amount of compensation to be paid to CRA will not be amended without mutual agreement of the County and CRA, formally executed in writing, subject to availability of funds from the Agency. The fee and payment schedule between Okaloosa County and Petitioner was set forth in attachment "C". It stated: Fee and Payment Schedule For Administrative Services, the County will pay CRA the sum of 15 percent of the grant award. No more than $5,000 shall be obligated by the County for CRA's services under Phase I. Upon the Department's Release of Funds, Phase II shall be initiated by CRA and the County. The fee amount shall be issued by the County to CRA in 24 equal monthly payments. If the project is completed before the 24 month grant period expires, the balance of the administrative fee will be paid to Clark, Roumelis and Associates, Inc., by the tenth calendar day of the month after completion and submission of the close-out report to DCA. Okaloosa County obtained the CDBG grant funding which it applied for and entered into an award agreement with Respondent as executed on June 28, 1991. The grant was subject to Sections 290.041 through 290.049, Florida Statutes, as amended; Public Law 93-383, as amended; 24 C.F.R. Part 570; Chapter 9B-43, Florida Administrative Code; OMB Circulars and 25 C.F.R., Part 85. The agreement between Okaloosa County and Respondent was for a period of 24 months after signature unless terminated earlier in accordance with Clause (14). Clause (14) dealt with suspension or termination and it stated: SUSPENSION OR TERMINATION. The Department reserves the right to suspend payments to a Recipient when the reports required in Section (9) of this Agreement are delinquent. The Department may terminate this Agreement for cause upon such written notice as is reasonable under the circumstances. Cause shall include, but not be limited to, misuse of funds; fraud; lack of compliance with applicable rules, laws and regulations; failure to perform in a timely manner; and refusal by the Recipient to permit public access to any document, paper, letter, or other material subject to disclosure under Chapter 119, Fla. Stat. as amended. Suspension or termination is an appealable action under Chapter 120, Fla. Stat. as amended. Notification of suspension or termination shall include notice of appeal rights and time frames. The Department reserves the right to exercise corrective remedial actions including, but not limited to, requesting additional information from the Recipient to determine the reasons for, or extent of non-compliance or lack of performance; issuing a written warning advising that the Agreement may be suspended or terminated if the situation is not remedied; advising the Recipient to suspend, discontinue or not incur costs for activities in question; or requiring the Recipient to reimburse the Department for the amount of costs. The Recipient shall return grant funds to the Department if found in noncompliance with laws, rules, regulations governing the use of CDBG funds or this Agreement. If at any time after the effective date of this Agreement, the Department determines that an activity to be funded is not eligible pursuant to 24 C.F.R. Part 570 or any subsequent federal regulation which supersedes it, the Department may unilaterally amend this Agreement to delete the ineligible activity and deobligate any unencumbered funds attributable to the ineligible activity. The funding for the grant was in an amount not to exceed $650,000 for Respondent's share subject to the availability of federal funds to support that amount. Requests for disbursement of funds were to be made in accordance with Clause (4)(d) to the agreement which stated: Each request for funds shall be for an amount of not less than $5,000 unless it is the final request for funds and shall be on a form approved by the Department and shall be certified by an agent of the Department and shall be certified by an agent of the Recipient who has been identified as having signatory power on the signature form received by the Department. The Recipient shall immediately notify the Department in writing of any change in agents. The reporting requirements of Okaloosa County under the terms of the agreement were as set forth in Clause (10) which stated in pertinent part: (a) At a minimum, the Recipient shall provide the Department with quarterly reports, and with a close-out report, on forms provided by the Department. If program income is produced, a semi-annual program income report shall be provided. * * * (c) The close-out report is due 45 days after termination of this Agreement or upon completion of the activities contained in this Agreement. Under the terms of the agreement Respondent was required to make periodic review of the performance of Okaloosa County in completing the program contemplated by the CDBG grant. Clause (13) to the agreement sets forth Okaloosa County's liability in its dealings with other entities, to include Petitioner and holds Respondent harmless against claims by those third parties that arise from performance of the work under the terms of the agreement. The validity of the agreement between Okaloosa County and Respondent was contingent upon the truth and accuracy of information in the application, as required by Clause (18) (b) to the agreement. In the event that the application was not found to be truthful and accurate, Respondent upon 30 days written notice to Okaloosa County could cause the termination of the agreement and the release of the Respondent from obligations to Okaloosa County. Should Okaloosa County fail to honor its agreement with Respondent, Petitioner in its obligation to Okaloosa County could suspend or terminate services which were affected by the breach of the agreement between Okaloosa County and Respondent. This was in accordance Section VIII (D) to the contract between Okaloosa County and Petitioner. Section VIII (D) stated: If the County shall fail to fulfill in a timely manner its obligations under this Contract or its Agreement with the Agency, CRA may, at its option and without liability, suspend afforded services until such time the County remedies the breach. CRA may also, without liability, terminate the affected portion of this Contract for breach within 10 days of giving written notice to the County of such termination and the reason(s) therefore. Neither of these options shall operate to deprive CRA of entitlement to remuneration for services rendered in accordance with this Contract. As Grant Administrator Petitioner was entitled to $97,500 should the full $650,000 grant funding be disbursed. If the full amount was disbursed over the 24-month life of the grant then Petitioner would receive $4,062.50 for each monthly installment. Commencing September 12, 1991, and ending on May 5, 1992, Petitioner submitted monthly invoices for reimbursement of costs associated with administrative services. Those invoices in the total amount of $40,625.00 were honored by Respondent. This approximated the monthly disbursement contemplated by the agreement between Petitioner and Okaloosa County. The arrangement was one in which the invoices had been approved by Okaloosa County and provided to the Respondent for reimbursement through Requests for Funds. The invoices described were for administrative services provided through April, 1992. The overall reimbursement in the project through Requests for Funds, to include the January 7, 1992 period, was $208,816.00. Those cost reimbursements pertain to housing rehabilitation, temporary relocation and administration. That overall amount also reflected the circumstance on May 13, 1992. On April 23, 1992, Judith J. Foxworth, a grants administrator for Petitioner and Robert J. Rase, an employee for the Respondent, were performing a monitoring visit concerning the grant program at issue. At that time Ms. Foxworth had been assigned as administrator to the Okaloosa County grant program. The purpose of the monitoring visit was to insure program compliance with requirements of state and federal law. Janice A. Mack attended the monitoring visit as representative for Okaloosa County. During the monitoring visit Mr. Rase raised the question of whether the fair housing ordinance that has been referred to before had been passed on November 20, 1990, which would have indicated that the fair housing ordinance was in effect at the time the application was made for grant funding. To assure himself concerning this topic Mr. Rase asked Okaloosa County to provide the minutes of the meeting at which the fair housing ordinance is said to have been passed. While the passage of a fair housing ordinance had been discussed, as noted in the November 20, 1990 minutes, the ordinance was not shown to have been passed on that date. With this revelation through the minutes of the meeting, Ms. Foxworth became aware of this fact as did Mr. Rase. Someone in this conversation between the representatives of the Petitioner, Respondent and Okaloosa County suggested the possibility that tapes of the November 20, 1990 meeting might reveal the passage of the fair housing ordinance and the possibility that it was an oversight that the passage of the fair housing ordinance had not been noted in the minutes, given the busy agenda being considered by the Okaloosa County Board of County Commissioners on that date. Ms. Mack also referred Foxworth and Rase to Bob McQuire, a deputy clerk for Okaloosa County, to see if McQuire had some recollection of the passage of the fair housing ordinance on November 20, 1990. Mr. McQuire was unable to assist in the inquiry. Some other discussion was held with the clerk to the Board of County Commissioners about the possible transcription of tapes associated with the November 20, 1990 meeting. Ms. Mack indicated that they could possibly transcribe the tapes and listen to them; however, it was indicated that the county had some priority items to attend to and it probably would be several days or even a week before these arrangements could be made. No indication was given in the present record that tapes of the meeting of November 20, 1990 were prepared for consideration by the Petitioner or Respondent beyond April 23, 1992 or what the tapes of the meeting of November 20, 1990 may have revealed concerning the passage of the fair housing ordinance. However, based upon the record in this case, it has been established that the fair housing ordinance was passed upon a date subsequent to the time of the application for grant funding. This caused Respondent to revise the scores received by Okaloosa County. As a consequence Okaloosa County's application dropped below the fundable range in that inadequate points were received to allow the project to be funded. After April 23, 1993, neither Ms. Foxworth nor any other person affiliated with Petitioner took action to confirm that the fair housing ordinance had been passed on November 20, 1990. By contrast Respondent wrote to the Okaloosa County chairperson on May 20, 1992. The correspondence mentioned that Respondent had reviewed information received from the Deputy Clerk of Okaloosa County in response to a request to verify information in the application for funding. That review by Respondent's staff revealed that the fair housing ordinance had not been adopted until January 15, 1991, in a setting in which the deadline for submission of applications was November 29, 1990. As a consequence the 35 points were deducted from the application reducing the score from 824.18 to 789.18, hence the Okaloosa County application was outside the fundable range. The May 20, 1992 correspondence to the chairperson in Okaloosa County reminded the county that the Respondent believed that there had been a violation of Section 290.0475(7), Florida Statutes, which would allow rejection of the application based upon a misrepresentation in the application. Respondent was persuaded that the failure to pass a fair housing ordinance until January 15, 1991, in a setting in which Okaloosa County had reported the date of passage as November 20, 1990, specifically on March 1, 1991, in response to a completeness letter requested by Respondent on February 22, 1991, evidenced the misrepresentation by Okaloosa County. As a consequence, through the May 20, 1992 correspondence, Okaloosa County was given the following instructions by Respondent concerning the future of the CDBG award agreement: Based upon these findings, the Department is hereby providing the County with notice, pursuant to Section (18)(b) of your grant agreement, that the award agreement will be terminated in thirty (30) days from receipt of this letter. The validity of the award agreement was subject to the truth and accuracy of all the information, representations, and materials submitted or provided by the County in the application, in any subsequent submission, or response to a Department request. The lack of accuracy thereof or any material change shall, at the option of the Department and with thirty (30) days written notice to the County, cause the termination of the agreement and release of the Department from all its obligations to the County under the agreement. The County should incur no additional costs from the date of receipt of this letter. While the Department has the ability to recover any costs incurred under this grant contract, due to the fact that the grant funds were spent on eligible activities to assist low and moderate income persons, the Department will not seek to recover monies already expended. However, no additional funds shall be disbursed from the contract. The correspondence offered Okaloosa County the right to contest the preliminary agency action concerning termination of the grant agreement by resort to a formal hearing in accordance with Section 120.57(1), Florida Statutes, or an informal hearing in accordance with Section 120.57(2), Florida Statutes. In the end Okaloosa County accepted the termination upon the grounds stated in the May 20, 1992 correspondence. Okaloosa County received the notification of termination on May 26, 1992. Petitioner received a copy of the May 20, 1992 correspondence directed to Okaloosa County. The May 20, 1992 correspondence constituted notice to the county not to incur additional costs as well as notification of termination. Between April 23, 1992 and May 26, 1992, the dates when Petitioner first was made aware that there was a problem with passage of the fair housing ordinance and project fundability and the date upon which Respondent officially confirmed the significance of those problems, housing improvements contracts were entered into between home owners and contractors. A significant number of those contracts were entered into commencing April 28, 1992 and ending May 12, 1992. As project administrator Petitioner had been acting in the interest of the home owners in soliciting competitive bids from contractors who would do the home improvement work associated with the grant activities. Following the correspondence of May 20, 1992, Petitioner and Okaloosa County directed a number of inquiries to Respondent concerning proper use of remaining grant funds. As of May 20, 1992, when Respondent gave the termination notice, it had effectively informed Petitioner and Okaloosa County concerning Respondent's intention not to recover the $208,816.00 already disbursed, but had withheld details about the amount of money it might disburse in the future from what remained of the $650,000.00 award. Associated with the balance of the funds, what was known was that Respondent considered the agreement between itself and Okaloosa County terminated effective June 25, 1992. Respondent did not immediately honor a May 21, 1992 Request for Funds, which it mistakenly believed had been submitted subsequent to the May 20, 1992 notification to Okaloosa County that the agreement was terminated effective 30 days from receipt of notice of termination. Again the County did not receive that notice of termination until May 26, 1992, subsequent to its submission of the Request for Funds. One member of the Respondent's staff considered the submission of the May 21, 1992 Request for Funds to be a blatant attempt to obligate the balance of the grant monies with the "suspension pending". That was not the intention by Okaloosa County when submitting the May 21, 1992 Request for Funds. Suspension of funding is a consequence of the termination. By correspondence of June 17, 1992, directed to the chairperson of the Okaloosa County Commission, with a copy to Petitioner, Respondent replied to the inquiries from Petitioner and Okaloosa County concerning whether any additional costs could and would be reimbursed subsequent to the notice of suspension of funds and termination dated May 20, 1992. On June 17, 1992, Respondent informed Okaloosa County, and indirectly informed Petitioner, concerning the basis for determining cost reimbursement above the cost amounts already drawn and paid. Again, this is taken to mean that Okaloosa County and Petitioner were being told that $208,816.00 would not be reclaimed by Respondent and that the basis for deciding the issue of payment of other funds sought by Okaloosa County would be in accordance with guidelines set forth in 24 C.F.R., Part 85. In particular, Respondent had this to say concerning the basis for reimbursing any other costs: To aid the County, the Department offers the following guidelines which will be followed in determining which costs shall be reimbursed from the CDBG contract, beyond those already drawn and paid. The federal regulations in 24 CFR Part 85, Administrative Requirements for Grant to Sates and Local Governments, outlines the guidelines in the event of suspension and termination. Specifically, Section 85.43(c) states the following standards. Costs resulting from obligations incurred during a suspension or after termination of an award are not allowable without express authorization from the awarding agency, which in this case is the Department. Other costs during suspension or after termination which are necessary and not reasonably avoidable are allowable, provided the following tests are met. The costs result from obligations which were (1) properly incurred before the effective date of suspension or termination, (2) are not in anticipation of the suspension or termination, and (3) in the case of termination, whether the obligations are noncancellable; and The costs would have been allowable if the award had not be suspended or the contract had expired normally at the end of the funding period. Okaloosa County was further instructed in the June 17, 1992 correspondence as follows: The County should evaluate each cost that it seeks to have reimbursed from the grant and certify to the Department that the costs meet the above outlined standards. In addition, you should provide copies of all contracts obligating the costs, notices to proceed, and invoices for costs incurred to support each cost item requested for reimbursement. The Department will evaluate all costs on a case-by-case basis and make its determination applying the standards contained in 24 CFR Part 85.43(c). Once the determination is made, you will be notified in writing of the Department's final action. Consistent with the instructions set forth in the June 17, 1992 correspondence Okaloosa County through Petitioner submitted detailed documentation of costs incurred over and above the $208,816.00. The amounts claimed are discussed in Respondent's September 22, 1992 interoffice memorandum from Thomas Pierce, Planning CDBG Program to Pat Pepper, Director of the Division of Housing and Community Development. The memorandum describes the following costs claimed: Temporary relocation $ 1,600.00 Housing rehabilitation 214,967.36 Permanent relocation 88,063.00 Demolition 3,000.00 Administration 43,274.92 The memorandum sets out the position of the Respondent concerning payment of those costs where it says: Based on the review of the contracts submitted, the notices to proceed, and invoices, it appears that the direct assistance activity costs under temporary relocation, housing rehab, permanent relocation and demolition are justified for reimbursement. These costs were clearly obligated prior to our termination, and the contracts do not provide for costs avoidance in the event of grant cancellation. Therefore, the $307,630.36 for these direct assistance costs are recommended to be reimbursed by the grant to avoid undue hardship on the low and moderate income clients assisted. With regard to the payment of administrative costs, the review did not find adequate documentation to support reimbursement. The invoice submitted sought payment for preparation of the June 30, 1992 quarterly status report, attending a June 12, 1992 County Commission meeting and preparing request for funds and closeout reports. All of these are activities performed after the May 20 termination date, and therefore are not eligible for reimbursement, even though there was a contract executed for administrative services prior to the termination date. Therefore, we recommend that the administrative costs of $43,274.92 not be reimbursed by the CDBG Program. These costs are an obligation of County and would have to be paid by non-CDBG funds. Prior to this memorandum Respondent had received a July 8, 1992 Request for Funds and a July 23, 1992 status report which addressed the $43,279.92 claim for administrative costs. In addition, on July 1, 1992, Petitioner had prepared an Amended Administrative Services Invoice #15. On September 30, 1992, Okaloosa County wrote to Petitioner to inform Petitioner that the invoice was approved by Okaloosa County contingent upon receipt of funds from Respondent. On October 8, 1992, Petitioner transmitted this invoice to Respondent. Amended Administrative Services Invoice #15 gave the following account concerning claims for payment: DUE UPON RECEIPT Please issue payment to Clark, Roumelis and Associates, Inc., for services performed from May, 1992 through June 24, 1992, in accordance with out contract. Prepared and coordinated the signing of the final two rehab contracts. Prepared Notices to Proceed on the 3 demo/ relos and the final 12 rehabs. Monitored construction progress with inspections at least weekly on all the final units (3 demo/relos and 17 rehabs). Change Orders were prepared on three rehab units. Prepared and coordinated the necessary paperwork for pay request for the contractors, homeowners, rental unit and recording fees. Provided County Commission with project status report. Liaisoned with local financial record keeper to update and verify monthly financial transactions. Prepared Quarterly Status Report by compiling data on accomplishments and beneficiaries and thorough update of financial records on June 22, 1992. Discussed final Request for Funds and financial reimbursements by County for CDBG expenditure with Mike Arciola, Jan Mack and CRA housing Specialist. Prepared final Request for Funds on June 22, 1992, for signature by the County. Attended County Commission meeting June 16, 1992, to discuss alternatives associated with timely closeout of the grant contract. Presented an issue paper and pros/cons of various actions Attorney. Administrative Services discussed the with the County Contract amount $97,500.00 Previously Billed 40,625.00 Total billed to date including this invoice 83,899.92 Total Received to date 40,625.00 Total Due Upon Receipt 43,274.92 Later, when Respondent arrived at its proposed agency action concerning cost reimbursement it wrote to the chairman of the Okaloosa County Commission, with a copy to Petitioner. This correspondence was dated January 28, 1993. In its operative terms it stated: The Department of Community Affairs has reviewed the documentation submitted on the costs incurred under the above referenced Community Development Block Grant (CDBG) which was terminated by the Department in June 1992. Based on the provisions of 24 CFR 85.43 and our review of the documentation submitted, the Department finds that the following direct assistance costs were properly incurred before the effective date of the termination, were not incurred in anticipation of the termination, and were not cancellable. Further, the costs would otherwise have been eligible for grant reimbursement. These costs will be reimbursed by the Department immediately upon receipt of a Request for Funds form, signed by the County. Line Item Amount Temporary Relocation $ 1,600.00 Housing Rehabilitation 214,967.36 Permanent Relocation 88,063.00 Demolition 3,000.00 TOTAL $307,630.36 With regard to invoice #15 for administrative costs, the Department does not find adequate contract authority in your agreement with the grant consultant to make a payment for $43,274.92. As your contract was a lump sum contract, payable in equal monthly installments, the Department finds that the only authorized payments would be the monthly payment for May, given receipt by the County on May 26, 1992 of the Department's notice of termination of your grant and notice to incur no additional costs from that date. Further, the Department reads Section IV (B) of the contract for administrative services to condition payments upon the availability of grant funds by the County. Given the notice of termination, the Department finds that the County did not have funding available beyond May 26, 1992 upon which to make payments. Therefore, the Department finds that the administrative costs were cancellable and as such would not be allowable under the federal guidelines contained in 24 CFR Part 85.43 (c) (1). The Department will, however, process a revised invoice that covers the monthly fee for May, as that cost was allowable and eligible prior to the notice of termination and notice to incur no additional costs. On May 5, 1992, $4,062.50 in administrative services costs was approved by Okaloosa County through invoice #1501. This amount was in addition to the $40,625 already paid for administrative services. It is included within the $43,274.92 in dispute. As described in the January 28, 1993 proposed agency action it is an amount that Respondent would pay, notwithstanding that the invoice was not submitted to it. However, the $4,062.50 from May 1992 has not been paid to Petitioner. Okaloosa County did not proceed to contest the determination concerning disbursement of funds as described in the January 28, 1993 correspondence. While Petitioner was not specifically noticed of its rights to administrative relief it sought and was granted the opportunity to contest the refusal to pay $43,274.92 in administrative costs set forth in Amended Administrative Services Invoice #15. Under the circumstances wherein Respondent terminated its agreement with Okaloosa County prior to the normally anticipated concluding date, Petitioner did not prepare a close-out report. Petitioner did provide a status report dated July 23, 1992, which sets out its administrative claim of $43,274.92. Petitioner believes that it has performed its obligations pursuant to the agreement with Okaloosa County and is entitled to receive the disputed $43,274.92.
Recommendation Based upon consideration of the findings of facts found and the conclusions of law reached, it is, RECOMMENDED: That the final order be entered directing the payment of administrative costs in the amount of $43,274.92. DONE and ENTERED this 29th day of September, 1993, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-1306 The following discussion is given concerning the proposed findings of fact submitted by the parties: Petitioner's Facts: Paragraphs 1 through 6 are subordinate to facts found. Paragraph 7 is contrary to facts found. Paragraphs 8 through 14 are subordinate to facts found. Paragraph 15 is not necessary to the resolution of the dispute. Paragraph 16 is subordinate to facts found. Paragraphs 17 and 18 are not necessary to the resolution of the dispute. Paragraph 19 is subordinate to facts found. Paragraphs 20 through 22 are not necessary to the resolution of the dispute. Paragraph 23 is subordinate to facts found. Paragraph 24 is not necessary to the resolution of the dispute. Paragraph 25 is subordinate to facts found. Paragraphs 26 through 28 are not necessary to the resolution of the dispute. Paragraphs 29 through 31 are subordinate to facts found. Paragraphs 32 and 33 are not necessary to the resolution of the dispute. Paragraphs 34 through 37 are subordinate to facts found. Paragraph 38 is not necessary to the resolution of the dispute. Paragraph 39 is subordinate to facts found. Paragraph 40 is not necessary to the resolution of the dispute. Paragraphs 41 and 42 are subordinate to facts found. Paragraphs 43 through 46 are not necessary to the resolution of the dispute. Paragraph 47 is subordinate to facts found. Paragraph 48 is not necessary to the resolution of the dispute. Paragraphs 49 and 50 are subordinate to facts found. Paragraphs 51 and 52 are not necessary to the resolution of the dispute. Paragraph 53 is subordinate to facts found. Paragraph 54 constitutes a conclusion of law. Paragraph 55 is subordinate to facts found. Paragraphs 56 through 59 are not necessary to the resolution of the dispute. Paragraph 60 is subordinate to facts found. Paragraph 61 is not necessary to the resolution of the dispute. Respondent's Facts: Paragraphs 1 through 7 are subordinate to facts found. Paragraph 8 with the exception of the second sentence is subordinate to facts found. The second sentence is contrary to facts found. Paragraphs 9 and 10 are subordinate to facts found. The Second Paragraph 10 is not necessary to the resolution of the dispute. Paragraphs 12 through 15 are subordinate to facts found. Paragraph 16 is not accepted in its suggestion that Petitioner as opposed to Respondent had some obligation to decide the point at which the agreement between Respondent and Okaloosa County would be terminated and the consequences that would pertain upon that termination. Paragraph 17 is subordinate to facts found. Paragraph 18 see discussion concerning Paragraph 16. Paragraph 19 is subordinate to facts found. The first two sentences to Paragraph 20 are subordinate to facts found. The remaining sentences within that paragraph are not necessary to the resolution of the dispute. Paragraphs 22 and 23 are subordinate to facts found with the exception that the date set forth in Paragraph 23 as September 19, 1992 should be September 20, 1992. Paragraphs 24 through 27 are subordinate to facts found. Paragraph 28 see discussion as to Paragraph 16. Paragraph 29 is not necessary to the resolution of the dispute. COPIES FURNISHED: Stephen Marc Slepin, Esquire 1114 East Park Avenue Tallahassee, Florida 32301 Alfred O. Bragg, Esquire Department of Community Affairs 2740 Centerview Drive Tallahassee, Florida 32399-2100 Linda Loomis Shelley, Secretary Department of Community Affairs 2740 Centerview Drive Tallahassee, Florida 32399-2100
The Issue Whether Petitioner has defaulted on student loans and, if so, the principal amounts of the loans, any accrued interest, and any collection costs. Whether Petitioner's employer should be required to withhold payments from Petitioner's pay pursuant to Section 112.175, Florida Statutes.
Findings Of Fact As will be set forth in more detail, there are three loans at issue in this proceeding. For ease of reference, these loans will be referred to as Loans One, Two, and Three.2 Loans One and Three were issued as Florida Guarantee Student Loans, which are popularly known as Stafford Loans. Loans Two and Four were supplemental loans issued by the Student Loan Services program, which are referred to SLS loans. Loans One, Two, and Three were funded and are at issue in this proceeding. THE STAFFORD LOANS, LOANS ONE AND THREE On September 22, 1986, Petitioner executed an Application and Promissory Note for a Guaranteed Student Loan, number 545967. This Stafford Loan, referred to as Loan One, was in the amount of $5,000. Loan One was disbursed in two equal installments of $2,500 (less appropriate fees). The first installment was disbursed on or about December 4, 1986, and the second installment was disbursed on or about December 11, 1986. On June 1, 1987, Petitioner executed an Application and Promissory Note for a Guaranteed Student Loan, number 586917. This Stafford Loan, referred to as Loan Three, was in the amount of $2,261.00. Loan Three was disbursed in one installment of $2,261.00 (less appropriate fees) on June 25, 1987. The promissory notes and other paper work documenting Loan One and Loan Three provided that interest at the rate of 8% per annum would begin to accrue on these loans six months after Petitioner ceased to attend school on at least a half-time basis. Because a Stafford Loan is guaranteed by the federal government, the obligor may be eligible to receive periods of deferment and periods of forbearance during which the federal government may or may not make interest payments. If the federal government made interest payments during a particular period, Petitioner is not obligated for interest during that period. If the federal government did not pay interest during a particular period, Petitioner is obligated to pay interest for that period. Respondent is not claiming any interest on Loans One and Three for any period while interest was paid by the federal government. While Petitioner was attending school on at least a half-time basis and for six months thereafter (the grace period), Loans One and Three were in periods of forbearance, and the federal government paid the interest for both loans. Petitioner ceased attending school on at least a half-time basis on March 18, 1988. The six month grace period on Loans One and Three ended on September 18, 1988, which is the date interest began to accrue on Loans One and Three. As of that date, the principal balance due on Loan One ($5,000.00) and on Loan Three ($2,261.00) totaled $7,261.00. Between September 18, 1988, and January 23, 1997, interest accrued on Loans One and Three in the total amount of $4,744.75, as follows: Between September 18, 1988, and June 15, 1993, interest accrued on these two loans in the total amount of $2,754.80. Between June 16, 1993, and October 6, 1993, interest accrued on these two loans in the total amount of $245.87. Both loans were in a period of administrative forbearance, but the federal government did not pay the interest. Between October 7, 1993, and January 7, 1994, both loans were in a period of deferment due to Petitioner's unemployment, and the interest was paid by the federal government. Between January 8, 1994 and January 31, 1994, interest accrued on these two loans in the total amount of $51.73. Both loans were in a period of administrative forbearance, but the federal government did not pay the interest. Between February 1, 1994, and April 30, 1994, both loans were in a period of deferment due to Petitioner's unemployment, and the interest was paid by the federal government. Between May 1, 1994, and July 24, 1994, interest accrued on these two loans in the total amount of $189.88. Both loans were in a period of administrative forbearance, but the federal government did not pay the interest. Between July 25, 1994, and April 30, 1995, both loans were in a period of deferment due to Petitioner's unemployment, and the interest was paid by the federal government. Between May 1, 1995, and December 1, 1995, interest accrued on these two loans in the total amount of $492.65. Both loans were in a period of forbearance, but the federal government did not pay the interest. Between December 2, 1995, and January 23, 1997, interest accrued on these two loans in the total amount of $1,009.82. Petitioner defaulted on the repayment of Loan One. Petitioner has not made any principal or interest payment since the loan was disbursed. Petitioner defaulted on the repayment of Loan Three. Petitioner has not made any principal or interest payment since the loan was disbursed. On January 23, 1997, Respondent purchased Loan One and Loan Three.3 As January 23, 1997, the principal and the accrued interest for Loan One, plus the principal and the accrued interest for Loan Three, totaled $12,005.75. THE SLS LOAN: LOAN TWO On January 31, 1987, Petitioner executed Auxiliary Loan Application and Promissory Note number 8914 for a supplemental student loan through the Student Loan Services program (Loan Two). This type loan, generally referred to as an SLS loan, was in the principal amount of $4,000.00. Loan Two was disbursed in one installment of $4,000.00 (less appropriate fees) on or about April 9, 1987. The promissory notes and other paper work documenting Loan Two provided that interest at the rate of 12% per annum would begin to accrue upon disbursement. SLS loans also provide for periods of deferment and forbearance during which no payment is due. The federal government does not make interest payments during a period of deferment or forbearance. The borrower is obligated to pay all of the interest from date of disbursement.4 Petitioner defaulted on the repayment of Loan Two. Petitioner has not made any principal or interest payment since the loan was disbursed. Respondent purchased Loan Two from the holder on September 11, 1997.5 Interest in the amount of $7,348.91 accrued on Loan Two between April 9, 1987, the date the loan was disbursed, and September 11, 1997. The total principal balance and accrued interest for Loan Two as of September 11, 1997, was $11,348.91. COLLECTION COSTS Section 682.410(b)(2) of Title 34, C.F.R., provides that Respondent shall impose collection costs, as follows: (2) Collection charges. Whether or not provided for in the borrower's promissory note and subject to any limitation on the amount of those costs in that note, the guaranty agency shall charge a borrower an amount equal to reasonable costs incurred by the agency in collecting a loan on which the agency has paid a default or bankruptcy claim. These costs may include, but are not limited to, all attorney's fees, collection agency charges, and court costs. Except as provided in §§ 682.401(b)(27) and 682.405(b)(1)(iv), the amount charged a borrower must equal the lesser of-- The amount the same borrower would be charged for the cost of collection under the formula in 34 CFR 30.60; or The amount the same borrower would be charged for the cost of collection if the loan was held by the U.S. Department of Education. Respondent established that the amount of the annual collection cost mandated by 34 C.F.R. 682.410(b)(2) for each defaulted loan at issue in this proceeding should be calculated at the rate of 25% of the outstanding principal and accrued interest. PRINCIPAL, INTEREST, AND COLLECTION COSTS AS OF JUNE 1, 1998 Respondent calculated the principal, interest, and collection costs for each loan as of June 1, 1998. For Loan One the amount of the collection costs assessed by the Respondent was $2,231.60. Interest that accrued between January 23, 1997, and June 1, 1998, totaled $895.13. As of June 1, 1998, the total principal, interest, and collection costs for Loan One totaled $11,394.01. For Loan Two the amount of the collection costs assessed by the Respondent was $2,961.20. Interest that accrued between September 11, 1997, and June 1, 1998, totaled $981.29. As of June 1, 1998, the total principal, interest, and collection costs for Loan One totaled $15,291.39. For Loan Three the amount of the collection costs assessed by the Respondent was $1,009.13. Interest that accrued between January 23, 1997, and June 1, 1998, totaled $404.78. As of June 1, 1998, the total principal, interest, and collection costs for Loan One totaled $5,152.39. The total amount due from Petitioner as of June 1, 1998, for Loans One, Two, and Three for principal, interest, and collection costs is $31,837.79. WAGE WITHHOLDING Petitioner is a social worker employed by Dade County, a political subdivision of the State of Florida. As an employee of a political subdivision of the State of Florida, Petitioner is subject to the provisions of Section 112.175, Florida Statutes, and Chapter 28-40, Florida Administrative Code. These provisions pertain to employees of the State of Florida or its subdivisions who have defaulted on an education loan made or guaranteed by the State of Florida. Respondent notified Petitioner in writing by letter dated October 1, 1997, that Loans One, Two, and Three were in default and offered him the opportunity to make voluntary payments on these loans. The letter also advised Petitioner that the Respondent would seek to make involuntary withholdings if he did not make voluntary payments. Petitioner thereafter elected to request the formal hearing that triggered this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order that adopts the findings of fact and conclusions of law contained herein, finds that Petitioner, as of June 1, 1998, owes the sum of $31,837.79, and orders the involuntary wage withholding of Petitioner's pay through his employer, Dade County, Florida, pursuant to Section 112.175, Florida Statutes, and Chapter 28-40, Florida Administrative Code. DONE AND ENTERED this 7th day of August, 1998, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 Filed with the Clerk of the Division of Administrative Hearings this 7th day of August, 1998
The Issue Whether Petitioner has defaulted on student loans and, if so, the principal amounts due on the loans, as well as accrued interest, and collection costs. Whether Petitioner's employer should be required to withhold payments from Petitioner's pay pursuant to Section 112.175, Florida Statutes.
Findings Of Fact Petitioner is Johnny Martin. Petitioner's mailing address is 11431 Quailhollow Drive, Jacksonville, Florida. Respondent is the Florida Department of Education. The Department's business address is 325 West Gaines Street, Tallahassee, Florida. The Department is a guarantee agency which holds the loan account in question after paying the claim of the lender on July 28, 1994. All loans in this proceeding are Supplemental Loan(s) for Students (SLS), also known as Florida Auxiliary Loans. SLS loans are not subsidized by the federal government. Therefore, the federal government has no responsibility for payment of interest during periods of deferment or forbearance and there is no grace period for SLS loans. During any period of deferment or forbearance, such as when a borrower is unemployed, the borrower's repayment obligation may be suspended; however, interest accrues to the account for which the borrower is responsible. When the deferment or forbearance ends, the outstanding interest is capitalized on the loan. SLS loans accrue interest at the rate of 12 percent per year from the date of disbursement. Persons eligible to receive SLS loans include parents of dependent undergraduate students. As set forth below, Petitioner, as parent of an eligible dependent undergraduate student, received four SLS loans. Loan 1: Petitioner applied for and received Loan A000000442 in 1983. This loan, in the amount of $3,000.00, will be referred to as Loan 1. Although the Department is the guarantor of Loan 1, the lender never declared the loan in default or sold it to the Department. Therefore, Loan 1 is not at issue in this proceeding. Loan 2: Petitioner applied for and received Loan A000001064 in 1984. This loan, in the amount of $3,000.00, will be referred to as Loan 2. The lender declared Petitioner in default and sold Loan 2 to the Department as guarantor. Because Loan 2 was in repayment status for more than seven years, exclusive of suspensions of the repayment period, Loan 2 was discharged in bankruptcy. Therefore, Loan 2 is not at issue in this proceeding. Loan 3: Petitioner applied for and received Loan A000003767 in 1985. This loan, in the amount of $3,000.00, will be referred to as Loan 3. The lender declared Petitioner in default and transferred Loan 3 to the Department as guarantor. Because Loan 3 was in repayment status for more than seven years, exclusive of suspensions of the repayment period, Loan 3 was discharged in bankruptcy. Therefore, Loan 3 is not at issue in this proceeding. Loan 4: On or about August 5, 1986, Petitioner executed an Auxiliary (SLS) Loan application on behalf of his daughter, Kelly Aleta Martin, an eligible dependent undergraduate student. On or about September 8, 1986, Petitioner executed the promissory note for this loan. This SLS Loan was in the amount of $3,000.00. This loan was disbursed on or about October 9, 1986. The Department guaranteed this loan. Throughout exhibits presented by the Department, the loan number for this SLS Loan is A000007005; however, for convenience, herein this loan will be referred to as Loan 4. Loan 4 is the only loan at issue in this proceeding. Petitioner's first payment for Loan 4 was due October 25, 1986. The payment due date later changed to the 20th of each month. Petitioner's last payment to the lender was made on July 17, 1990. However, as Petitioner was behind in his payments, this payment was applied to the payment due May 20, 1990. The Petitioner is considered in repayment status for 44 months, from October 1986 through May 1990. A borrower is not considered in repayment status during any suspension of the repayment period, including any period of forbearance or deferment. Petitioner applied for and received an unemployment deferment on September 18, 1990. This deferment was for the period from July 21, 1990 through December 28, 1990. Because Petitioner was not current in his payments, he requested and received a forbearance from the lender for the payments due on June 20 and July 20, 1990, in order to qualify for the unemployment deferment. The forbearance together with the unemployment deferment brought Petitioner current in his payments; however, they suspended the repayment period for Loan 4 for seven months (two months for the forbearance and five months for the deferment). Petitioner failed to make any payments following the deferment period ending December 28, 1990. Petitioner applied for and received an unemployment deferment on April 23, 1991. This deferment was for the period from February 24 through July 23, 1991. Because Petitioner failed to make any payments following the deferment ending December 28, 1990, he again requested and received a forbearance for the payments due January 20 and February 20, 1991. The forbearance and unemployment deferment brought Petitioner current in his payments; however, they again suspended the repayment period for Loan 4 by another seven months (two months for the forbearance and five months for the deferment). Following Petitioner's unemployment deferment ending July 1991, he failed to resume payment to the lender beginning August 20, 1990. Thereafter, the lender declared Petitioner in default and made application to the Department for claim payment based on the guarantee. However, the Department refused to pay the lender's claim citing due diligence violations, and as a result, Petitioner is considered in repayment status from August 20, 1991 through April 20, 1992, or nine months, even though no payments were actually received by virtue of his Fresh Start Application. Petitioner submitted a Fresh Start Application to the lender dated May 13, 1992. This document reaffirmed the student loan obligation and, when received by the lender on May 19, 1992, reinstated the Department's guarantee of Loan 4. In an application dated May 24, 1992, Petitioner requested another unemployment deferment. The lender refused Petitioner's request for an unemployment deferment due to the fact that Petitioner was working at the time. However, the lender granted Petitioner a forbearance. This forbearance covered payments due from May 20 through December 20, 1992. Thereafter, Petitioner again requested and was granted forbearance of payments due through June 20, 1993. These forbearances, from May 20, 1992 through June 20, 1993, suspended the period Loan 4 is in repayment status by 14 months. Petitioner failed to resume payments beginning July 20, 1993, the final due date at default. In 1994, the lender declared Petitioner in default on Loan 4 and made application to the Department for claim payment based on the guarantee. The Department paid the default claim on Loan 4 on July 28, 1994. Although no payments were received from July 20, 1993 through July 20, 1994, or 13 months, Petitioner is considered in repayment status for that time because there was no forbearance or deferment in place. When the Department acquired Loan 4, Petitioner owed $2,195.68 in principal and $290.19 in accrued (claim) interest. These figures were capitalized by the Department and yield the figure of $2,484.18 in capitalized principal which is subject to interest at the rate of 12 percent per year. Beginning in 1995, Petitioner entered into a voluntary wage garnishment agreement with the Department. Under this agreement and through the period Petitioner was under the bankruptcy court's jurisdiction, a total of $383.95 was received by the Department and applied to Petitioner's account in accordance with Title 34, Code of Federal Regulations Section 682.404(f), relating to how borrower payments will be applied. The entire amount received was applied to outstanding interest. Prior to filing bankruptcy, Petitioner's Loan 4 was considered in repayment status from July 29, 1994 through January 5, 1995, during the time it was held by the Department. The Petitioner was credited for being in repayment status for five months, even though he made no payments. Additionally, Petitioner was credited for being in repayment status for 12 months in 1995, whether or not regular payments were received under Petitioner's voluntary wage garnishment agreement. Because Petitioner filed for bankruptcy prior to the January 20, 1996, the payment due date, the month of January 1996 cannot be counted as being in repayment status. Petitioner filed for Chapter 13 bankruptcy protection on January 11, 1996. The Department filed a proof of claim with the bankruptcy court for Loans 2, 3, and 4 in the principal amount of $5,571.91, the amount of capitalized principal due on the accounts. The Department filed with the court the claim of $5,647.02 due on the accounts through date of filing the case. See item 5 on page 2 of Department's Exhibit 5. This amount was the capitalized principal and interest due. On February 4, 1999, the United States Bankruptcy Court for the Middle District of Florida, Jacksonville Division, issued an "Order Discharging Debtor After Completion of Chapter 13 Plan" in Petitioner's case, number 96-00175-3F3. That order provides in pertinent part, "The debtor is discharged for all debts provided for by the plan or disallowed under 11 U.S.C. [Section] 502, except any debt . . . for a student loan or educational benefit overpayment as specified in 11 U.S.C.[Section]523(a)(8)." In 1996, Title 11 United States Code Section 523(a) provided in pertinent part: A discharge under . . . this title does not discharge an individual debtor from any debt-- for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an education benefit, scholarship or stipend, unless-- such loan, benefit, scholarship, or stipend overpayment first became due more than 7 years (exclusive of an applicable suspension of the repayment period) before the date of the filing of the petition . . . Pursuant to this order, Petitioner's debt to the Department for Loans 2 and 3 was discharged. The first payment for Loan 4 was due October 25, 1986. Petitioner filed for bankruptcy on January 11, 1996, nine days prior to the payment due date of January 20, 1996. There were 111 months from the month the first payment of Loan 4 was due through the month prior to the filing of bankruptcy (the month that bankruptcy was filed cannot be counted if the payment due date was after the date Petitioner filed for bankruptcy). Petitioner was in forbearance or deferment status for 28 months which suspends the period Loan 4 is considered in repayment status. Petitioner was in repayment status on Loan 4 for 83 months regardless of whether he actually made payments on the account. Therefore, Loan 4 was not discharged. Section 682.410(b)(2) of Title 34, Code of Federal Regulations, provides that the Department shall impose collection costs as follows: Collection charges. Whether or not provided for in the borrower's promissory note and subject to any limitation on the amount of those costs in that note, the guarantee agency shall charge a borrower an amount equal to reasonable costs incurred by the agency in collecting a loan on which the agency has paid a default or bankruptcy claim. These cost may include, but are not limited to, all attorneys fees, collection agency charges, and court costs. Except as provided in [Sections] 682.401(b)(27) and 682.405(b)(1)(iv), the amount charged borrower must equal the lesser of -- The amount the same borrower would be charged for the cost of collection under the formula in 34 CRF 30.60; or The amount the same borrower would be charged for the cost of collection in the loan was held by the U.S. Department of Education. The Department established that the amount of the annual collection cost mandated by Title 34 Code of Federal Regulations Section 682.410(b)(2) for the loan at issue in this proceeding should be calculated at least annually at the rate of 25 percent of the outstanding principal and accrued interest. Petitioner agreed to pay these costs in the application and promissory note he executed. Petitioner is employed by the Duval County School Board, a political subdivision of the State of Florida. As an employee of a political subdivision of the State of Florida, Petitioner is subject to the provisions of Section 112.175, Florida Statutes, and Chapter 28-40, Florida Administrative Code. These provisions pertain to employees of the State of Florida or its political subdivisions who have defaulted on an education loan made or guaranteed by the State of Florida. The Department notified Petitioner by letter dated August 13, 1999, that he had one or more student loans in default and offered him the opportunity to make voluntary payments on the loans. The letter also advised Petitioner that the Department would seek to make involuntary withholdings if he did not make voluntary payments. Petitioner elected to request the formal hearing which triggered this proceeding. As stated above, the capitalized principal due the Department for Loan 4 is $2,485.87. This amount reflects the principal due and the outstanding interest accrued on the account at the time the Department acquired the loan from the lender. All payments received by the Department were applied to outstanding interest which accrued on the account after the loan was bought by the Department, and no payment was applied to the capitalized principal. The capitalized principal accrues interest at the rate of 12 percent per year of $.82 per day. As of February 4, 1999, after taking into consideration the $383.95 received by the Department, the unpaid accrued interest for Loan 4 was $881.74. Pursuant to federal regulations collection costs assessed at the rate of 25 percent of principal and interest due as of February 4, 1999, were $867.08. Therefore, as of February 4, 1999, the total principal, interest, and collection costs due for Loan 4 totaled $4,234.69. Interest continues to accrue to the account as provided by law and collection costs may be reassessed as provided by law.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order that adopts the findings of fact and conclusions of law contained herein, finds that Petitioner, as of February 4, 1999, owes the sum of $4,234.69, and orders the involuntary wage withholding of Petitioner's pay through his employer, Duval County School Board, pursuant to Section 112.175, Florida Statutes, and Chapter 28-40, Florida Administrative Code. DONE AND ENTERED this 22nd day of December, 2000, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 22nd day of December, 2000. COPIES FURNISHED: Johnny Martin 11431 Quailhollow Drive Jacksonville, Florida 32218-3621 Ronald G. Stowers Assistant General Counsel Department of Education The Capitol, Suite 1701 Tallahassee, Florida 32399-0400 Honorable Tom Gallagher Commissioner of Education The Capitol, Plaza Level 08 Tallahassee, Florida 32399-0400 Michael H. Olenick, General Counsel Department of Education The Capitol, Suite 1701 Tallahassee, Florida 32399-0400
