The Issue The issue in this case is whether Florida Housing's proposed action to deem Madison Landing eligible for an award of housing tax credit funds, as contemplated under Request for Applications 2020-202 Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach and Pinellas Counties ("the 2020 RFA"), is contrary to governing statutes, rules or policies, or the 2020 RFA specifications. The standard of proof is whether Florida Housing's proposed action is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Florida Housing is a public corporation organized pursuant to Chapter 420, Part V, Florida Statutes, whose address is 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301, and for the purposes of these proceedings, an agency of the State of Florida. Madison Landing is an Applicant requesting an allocation of $1,950,000 in competitive housing credits in in the 2020 RFA. Its application, 2021-021C, was deemed eligible, but was not selected for funding by Florida Housing. Madison Park is an Applicant requesting an allocation of $2,881,960 in competitive housing credits in the 2020 RFA. Its application, 2021-004C, was deemed eligible, but was not selected for funding by Florida Housing. WRDG is an Applicant requesting an allocation of $2,375,000 in competitive housing credits in the 2020 RFA. Its application, 2021-025C, was deemed eligible and was preliminarily selected for funding by Florida Housing. Florida Housing administers various affordable housing programs, including the Housing Credit Program, pursuant to Section 42 of the Internal Revenue Code (the "IRC" or "the Code") and section 420.5099, under which Florida Housing is designated as the Housing Credit agency for the State of Florida within the meaning of Section 42(h)(7)(A) of the IRC, and Florida Administrative Code Chapters 67-48 and 67-60. Florida Housing has established, by rule, a competitive solicitation process known as the Request for Applications ("RFA") to assess the relative merits of proposed developments, pursuant to chapters 67-48 and 67-60. An RFA sets forth the information required to be provided by an Applicant, which includes a general description of the type of projects that will be considered eligible for funding and delineates the submission requirements. While there are numerous references to Florida Housing's rules throughout the RFA, RFAs themselves are not adopted or incorporated by rule. Florida Housing issues many RFAs each year. Although an issued RFA may be similar to these issued in previous years, each RFA is unique. The RFA process begins when Florida Housing requests the Florida Housing Board of Directors ("the Board") to approve Florida Housing's plan for allocating its resources through the various RFAs. If the plan is approved by the Board, Florida Housing begins working on each individual RFA. Florida Housing posts draft documents to its website for public review, such as a draft of the RFA, and holds a workshop in which the RFA is discussed in detail, highlighting language that changed from the previous year. The public is given the opportunity to ask questions and submit written comments for further suggestions and/or additional edits prior to the RFA's issuance. Marisa Button, Director of Multifamily Programs for Florida Housing, credibly and persuasively testified that Questions and Answers are provided as guidance, but do not provide new requirements to override the terms of an RFA. In the event of an inconsistency between Questions and Answers and another form of guidance for applicants, Florida Housing has maintained the position that the least restrictive guidance controls. Rule 67-60.006 provides, in pertinent part, that "[t]he failure of an Applicant to supply required information in connection with any competitive solicitation pursuant to this rule chapter shall be grounds for a determination of non-responsiveness with respect to its Application." By applying, each Applicant certifies that: Proposed Developments funded under this RFA will be subject to the requirements of the RFA, inclusive of all Exhibits, the Application requirements outlined in Rule Chapter 67-60, F.A.C., the requirements outlined in Rule Chapter 67-48, F.A.C. and the Compliance requirements of Rule Chapter 67-53, F.A.C. On August 26, 2020, Florida Housing issued the 2020 RFA, proposing to provide an estimated $18,669,520 of Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties. Modifications to the 2020 RFA were made on September 11 and October 12, 2020. The Application Deadline for the 2020 RFA was October 20, 2020. On or about October 20, 2020, 35 applications were submitted in response to the 2020 RFA. A Review Committee was appointed to review the applications and make recommendations to the Board. The Review Committee found 34 applications eligible and one application ineligible. Through the ranking and selection process outlined in the 2020 RFA, eight applications were recommended for funding. In accordance with the funding selection process set forth in the 2020 RFA, one application was selected from each of Duval, Palm Beach, Pinellas, Hillsborough, and Orange counties; two applications were selected from Broward County; and one application (WRDG) was selected from any of these counties. On December 4, 2020, the Board approved these recommendations. On December 17, 2020, Madison Landing timely filed a Petition for Formal Administrative Proceedings, which was referred to DOAH and assigned Case No. 21-0146BID. This petition challenged the eligibility of both WRDG and MHP FL II, LLC. On January 13, 2021, Madison Landing dismissed all of its allegations against MHP FL II, LLC. On December 17, 2020, Madison Park timely filed a Petition for Formal Administrative Proceedings, which was referred to DOAH and assigned Case No. 21-0147BID. An amended petition was filed on January 13, 2021. This petition challenged the eligibility of both WRDG and Madison Landing. On January 26, 2021, all parties entered into a Stipulation for Entry of Findings of Fact in which WRDG conceded that its application should have been found ineligible. WRDG is ineligible for funding under the 2020 RFA. With WRDG ineligible for funding, Madison Landing would be selected for funding in place of WRDG. If both WRDG and Madison Landing were found to be ineligible for funding, Madison Park would be selected for funding in place of WRDG and Madison Landing. No other Applicant selected for funding will be impacted regardless of the outcome of this case. No challenges were made to the terms of the 2020 RFA. Madison Landing's application includes an executed Applicant Certification and Acknowledgment Form, which provides, "The Applicant, the Developer and all Principals are in good standing among all other state agencies and have not been prohibited from applying for funding." The phrase "good standing among all other state agencies" is not defined; and no evidence was presented as to the definitive meaning of the phrase. No evidence was presented that Madison Landing's Principals are not in good standing with any state agency or have been prohibited from applying for funding. The 2020 RFA at Section Four A.3.a. provides that Applicants must disclose the name of the Applicant entity and provide evidence that it is legally formed: (2) The Applicant must be a legally formed entity [i.e., limited partnership, limited liability company, etc.] qualified to do business in the state of Florida as of the Application Deadline. Include, as Attachment 2 to Exhibit A, evidence from the Florida Department of State, Division of Corporations, that the Applicant satisfies the foregoing requirements. Such evidence may be in the form of a certificate of status or other reasonably reliable information or documentation issued, published or made available by the Florida Department of State, Division of Corporations. Rule 67-48.002(9) (6/23/2020), defines "Applicant" as follows: (9) "Applicant" means any person or legal entity of the type and with the management and ownership structure described herein that is seeking a loan or funding from the Corporation by submitting an Application or responding to a competitive solicitation pursuant to rule Chapter 67-60, F.A.C., for one or more of the Corporation's programs. For purposes of Rules 67-48.0105, 67-48.0205 and 67- 48.031, F.A.C., Applicant also includes any assigns or successors in interest of the Applicant. Unless otherwise stated in a competitive solicitation, as used herein, a 'legal entity' means a legally formed corporation, limited partnership or limited liability company. The 2020 RFA at Section Four A.3.c. provides that Applicants must disclose Principals of both the Applicant and Developer entities. The 2020 RFA provides in pertinent part: c. Principals Disclosure for the Applicant and for each Developer (5 points) (1) Eligibility Requirements To meet the submission requirements, upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019) ("Principals Disclosure Form") as outlined in Section Three above. Prior versions of the Principal Disclosure Form will not be accepted. To meet eligibility requirements, the Principals Disclosure Form must identify, pursuant to Subsections 67-48.002(94), 67-48.0075(8) and 67- 48.0075(9), F.A.C., the Principals of the Applicant and Developer(s) as of the Application Deadline. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. For Housing Credits, the investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company must be identified on the Principal Disclosure Form. Rule 67-48.002(94) defines "Principal" as follows: (94) "Principal" means: For a corporation, each officer, director, executive director, and shareholder of the corporation. For a limited partnership, each general partner, and each limited partner of the limited partnership. For a limited liability company, each manager and each member of the limited liability company. For a trust, each trustee of the trust and all beneficiaries of majority age (i.e., 18 years of age) as of the Application Deadline. Page 10 of 22. For a Public Housing Authority, each officer, director, commissioner, and executive director of the Authority. The requirement to provide evidence that the Applicant is a legally formed entity, as well as the requirement to provide a Principals for Applicant and Developer(s) Disclosure Form, are identified as "Eligibility Items." Section Five A.1. of the 2020 RFA states that "only Applications that meet all of the following Eligibility Items will be eligible for funding and considered for funding selection." Madison Landing submitted Principals of the Applicant and Developer(s) Disclosure Form(s) with its application. Both forms were approved during the Advance Review Process. On the Principals of the Applicant form, Madison Landing II, LLC, was identified as the Applicant entity. The Principals of the Applicant entity were identified as Patrick E. Law, Manager; Madison Landing II Apartments, LLC, Non-Investor Member; and Patrick E. Law, Investor Member. Madison Landing II Apartments, LLC, filed Articles of Organization for Florida Limited Liability Company with the Florida Division of Corporations on January 5, 2021, with an effective date of December 31, 2020. The 2020 RFA requires that the Applicant demonstrate that it is a legally formed entity as of the Application Deadline; however, there is no explicit requirement in the 2020 RFA that each Principal of the Applicant demonstrate that it is a legally formed entity as of the Application Deadline. Ms. Button testified that her initial view was that the failure of Madison Landing's Principal, Madison Landing II Apartments, LLC, to incorporate by the application deadline should render the application ineligible. However, upon further research, she changed her position, believing that Florida Housing was precedentially bound by a previous final order, which found that an application was eligible under similar legal and factual circumstances. The previous case, on which Florida Housing relied, was decided before Florida Housing adopted the current RFA procedures for awarding funding. Ms. Button testified, however, that while some of the processes followed during the Universal Cycle, in place at that time, were different than the RFA process, the requirements for disclosure of Principals were essentially the same. Florida Housing allows interested parties to submit written questions to be answered by Florida Housing staff for each RFA that is issued. The Question-Answer period is referenced specifically within each RFA. The following Question and Answer are posted on Florida Housing's website for RFA 2018-111: Question 12: Do the entities listed on the Principal Disclosure Form have to be active as of the stamped "Approved" date or as of the Application Deadline? Answer: As of the Application Deadline. The Applicant may upload a Principals Disclosure Form stamped "Approved" during the Advance Review Process provided (a) it is still correct as of the Application Deadline, (b) it was approved for the type of funding being requested (i.e., Housing Credits or Non-Housing Credits) The same Question and Answer above are on Florida Housing's website for RFA 2018-110; RFA 2018-112; and RFA 2018-113. The same Question and Answer, however, do not appear in Questions and Answers for the 2020 RFA at issue in this case. Although Questions and Answers from past RFAs remain on the Florida Housing website, they are discrete to the specific RFA for which they were issued. Rule 67-48.002(9) (7/2018) defines Applicant as follows: (9) "Applicant" means any person or legal entity of the type and with the management and ownership structure described herein that is seeking a loan or funding from the Corporation by submitting an Application or responding to a competitive solicitation pursuant to rule chapter 67-60, F.A.C., for one or more of the Corporations programs. For purposes of rules 67-48.0105. 67-48.0205 and 67- 48.031, F.A.C., Applicant also includes any assigns or successors in interest of the Applicant. Unless otherwise stated in a competitive solicitation, as used herein, a legal entity means a legally formed corporation, limited partnership or limited liability company with a management and ownership structure that consists exclusively of all natural persons by the third principal disclosure level. For Applicants seeking Housing Credits, the Housing Credits Syndicator/Housing Credit investor need only be disclosed at the first principal level and no other disclosure is required. The terms "first principal disclosure level" and "third principal disclosure level" have the meanings attributed to them in the definition of "Principal." Rule 67-48.002(9) (11/2011) defines Applicant as follows: (9) "Applicant" means any person or legally formed entity that is seeking a loan or funding from the Corporation by submitting an Application or responding to a request for proposal for one or more of the Corporation's programs. For purposes of Rules 67-48.0105, 67-48.0205 and 67-48031, F.A.C., Applicants also includes any assigns or successors in interest of the Applicant. Madison Park argues that Madison Landing's Principal, Madison Landing II Apartments, LLC, did not demonstrate that it was a legally- formed entity as of the Application Deadline, and therefore, Madison Landing's Principal Disclosure Form did not satisfy the 2020 RFA's requirements. Madison Park argues that Madison Landing's application should be deemed ineligible for funding as a result. Based on the weight of the credible evidence and the language of the 2020 RFA and the governing law, the undersigned finds that Florida Housing did not contravene the 2020 RFA, or any other applicable authority, through the process by which it determined that Madison Landing's application was eligible for the award.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order: (1) finding the application of WRDG ineligible for funding; (2) finding the application of Madison Landing eligible for funding; and (3) dismissing the protest of Madison Park. DONE AND ENTERED this 29th day of March, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Christopher Dale McGuire, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC S BRITTANY O. FINKBEINER Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 2021. J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street Post Office Box 3000 (32802) Orlando, Florida 32801 Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 1400 Village Square Boulevard, Suite 3-231 Tallahassee, Florida 32312
The Issue The issue is whether Respondents discriminated against Petitioner, Christa Bartok, on the basis of her disability, in violation of the Fair Housing Act (FHA).
Findings Of Fact Based on evidence offered at hearing and testimony of witnesses, as well as the facts agreed upon in the Pre-hearing Stipulation, the following Findings of Fact are found: Bayou Breeze is a residential condominium association in Pensacola, Florida. Ms. Bartok was a prospective buyer of a condominium unit from its owner, a Bayou Breeze resident. The address of the unit was 300 Bayou Boulevard, Unit 106, Pensacola, Florida. Ms. Bartok is a person with a non-visible disability, which she described as anxiety, emotional distress disorder, and an autoimmune disease. Ms. Bartok was also the owner of a dog named Moni, weighing more than 40 pounds. She identified Moni as her emotional support dog. At all times material to this matter, Ms. Bartok was represented by Simone Sands, a real estate broker. The seller of Unit 106 was represented by Greg Thomas, also a realtor. The communication regarding all aspects of the sale of the property was through the two realtors. At the time of executing the contract, Bayou Breeze3 Bylaws provided, in pertinent part, Pets. Pets shall be kept or maintained in and about the condominium property only if unit owner is granted a conditional license to maintain one pet by the Association. Such a license will be granted subject to the following conditions and reservations: A. Acceptable Pets. The only pets to be maintained on condominium property shall be dogs under twenty (20) pounds when fully grown, cats and small birds. In addition, the Declaration of Condominium Paragraph XVI provided, in pertinent part, Approval of Purchasers, Lessees and Transferees No unit owner shall sell, lease or otherwise convey a unit, nor shall any sale, lease, conveyance or transfer of a unit other than by foreclosure or by devise or operation of law on account of the death of the unit owner, be effective unless the board of directors of the Association shall have approved the identity of the proposed purchaser, lessee or transferee in writing. Application of a proposed purchaser, lessee or transferee shall be in writing and on a form to be provided by the Association and shall be accompanied by two letters of recommendation. Any such application not rejected within 10 days after receipt by the Association or an officer thereof shall be deemed to have been approved. The costs for the submission of an application shall not exceed $100. … 3 The association name changed from Pensacola Executive House Condominium Association, Inc. to its current name. Right of First Refusal Should an Owner wish to sell or transfer his Unit, he shall deliver to the Association an Owner’s written notice containing a copy of the executed purchase agreement between buyer and seller, which agreement shall be executed subject to the Associations [sic] waiver of its right of first refusal and consent to the sale or transfer. The Owner shall also submit to the Association, within five (5) days from receipt of any request from the Association, any supplemental information as may be required by the Association. Ms. Bartok received the declarations and bylaws. However, a list of items to be submitted to the Association for sale of a property was provided to the owner, which included: letter of intent to sell, application for sale/transfer, two letters of recommendation, background check, and contract for sale. The list of items provided to the owner was not provided to Ms. Bartok. On June 20, 2020, Ms. Bartok executed a residential contract for purchase of Unit 106. A term that Ms. Bartok included in the contract provided, in pertinent part: “contingent upon buyer receiving HOA approval for her emotional support dog which is over condo weight restrictions but meets Fair Housing Act requirements for HOA waiver.”4 Ms. Bartok also provided a letter with her contract dated June 15, 2020, from her treating physician, Timothy Tuel, M.D., of Baptist Health Care. The letter stated: Dear Christa, I do believe you have several medical conditions that would benefit from a properly trained emotional support animal. Please contact me if you have other questions. 4 Ms. Bartok executed a counteroffer for the property on June 24, 2020, which did not change the term regarding approval of her ESA. Although, the letter does not specifically identify Ms. Bartok’s disability, it references her “medical conditions,” and that she could benefit from having an ESA. In addition to the contract and letter from Dr. Tuel, Ms. Bartok provided a completed application, two letters of recommendation, and a receipt for training for her dog.5 Ms. Bartok did not provide a completed background check because Mr. Thomas had advised Ms. Sands that the “HOA manager does it.” In addition, on June 30, 2020, in response to Ms. Sands’ text of, “good morning any reply from HOA,” Mr. Thomas indicated, “[n]o, not yet they’re doing background check.” Thus, Ms. Bartok had a reasonable belief that she could rely upon Mr. Thomas’ statement that the HOA was facilitating the background check and there was no need to provide the information at that time. Ms. Trimaur, the property manager for the Association, has managed Bayou Breeze condominiums for more than 11 years, and generally, receives all applications for sale or transfers of units at Bayou Breeze. She received the application materials Ms. Bartok submitted for the sale of Unit 106, which included the sales contract, letter from Dr. Tuel, reference letters, and the receipt for pet training sessions. Although Ms. Trimaur stated that it was difficult to read the digital copy of the letter from Dr. Tuel, she recalled that there was reference to Ms. Bartok’s “medical condition.” Ms. Trimaur also testified that Mr. Thomas told her that Ms. Bartok requested a waiver of the pet policy. Ms. Trimaur did not receive the financial or criminal background information with Ms. Bartok’s application packet. Ms. Trimaur submitted the application materials to Mr. Cross for review. She testified that she also had verbal discussions about the dog with Mr. Cross. 5 The receipt for training referenced “Beginner Training-for Moni” and was scheduled to begin on July 25, 2020. Mr. Cross, the president of the association, reviewed a copy of the application materials. He testified that Ms. Trimaur bypassed normal approval process by submitting the packet without the background checks due to COVID-19. As the Association president, Mr. Cross is required to review all application materials to determine whether the Association elects to exercise its right of first refusal. Mr. Cross testified that he reviewed the contract. However, he testified that he did not recall reading Ms. Bartok’s term that the acceptance was contingent upon approval of her emotional support dog. Mr. Cross did not state that there were pages missing or that there was anything that would prevent him reviewing the contract in its entirety. Mr. Cross testified that he reviewed the recommendation letters,6 which noted the size of Petitioner’s dog. He also spoke to Ms. Trimaur about the dog. After review of the application materials that Ms. Bartok submitted, Mr. Cross sent a letter to Anai, the owner of Unit 106, on July 2, 2021. The letter stated: Dear Anai, The association is in receipt of your request to sell your condominium unit 106 Bayou Breeze Condominiums, 300 Bayou Breeze, Pensacola, Fla. As you know there are specific requirements a potential new purchaser of a condominium must meet, according to the Bayou Breeze Declaration of Condominiums, Articles of Incorporation, By-Laws and Rules and Regulations, before they will be eligible to purchase a Condominium at the said premises. Section X of the By-Laws states the following: Pets. Pets shall be kept or maintained in and about the 6 The recommendations were not offered into evidence in this case. condominium property only if a unit owner is granted a conditional license to maintain one pet by the association. Such a license will be granted subject to the following conditions and reservations: Section A clearly states that a dog weighting [sic] 20 pounds or less that was fully grown could qualify. Section D. states that the dog must be carried in the arms when taken in and out of the building. The information that you have submitted so far is primarily the request for the Association to waive its pet restrictions in accordance to the By-Laws, section X of the Condominium Governing Laws. Unfortunately, that is something that we cannot do. Don’t get me wrong, I love dogs. I, at one time lived at Bayou Breeze but had to move because I wanted a dog. I have been the president of this association for 29 years. Over the years the association has had many requests much like your potential buyer’s request to waive our rules. We are well aware of the HUD laws as well as the American Disability Act. We have, unfortunately been to court several times on this issue. We have never waived the pet requirements. Even though we have not received all of the background information and detailed documentation that is necessary for the Association to approve a purchase of this unit, I am notifying you that the Association cannot except [sic] this application, because of the current situation that you have presented. Sincerely Charles D. Cross President, Bayou Breeze Condominium Association 300 Bayou Breeze, Pensacola, Fl. 32501 Mr. Cross acknowledged in his written position statement that Ms. Bartok submitted a request for waiver for an ESA. He testified that he did not deny the request for an ESA because it was not clear to him that the request was for an ESA. Both Mr. Cross and Ms. Trimaur testified that Ms. Bartok’s request for an ESA was not accepted because the materials provided were incomplete, i.e. that the application did not include the financial and criminal background check. Both Ms. Trimaur and Mr. Cross testified that other tenants of Bayou Breeze have been approved for ESAs. The letter from Mr. Cross to Anai is inconsistent with Mr. Cross’ testimony. First, the letter signed by Mr. Cross clearly states that he is aware of the request for a “pet waiver” and stated that he is “well aware of the HUD laws as well as the American Disability Act. … We have never waived the pet requirements.” Second, the letter states that “Even though we have not received the background information, … the Association cannot except [sic] the application, because of the current situation that you have presented.” At hearing, Mr. Cross testified that he expected to receive more information. If the application packet was incomplete and Mr. Cross expected to receive additional information, it would follow that Mr. Cross would specify in writing to Anai the items that were needed to complete the application. That did not happen in this case. The letter makes no reference that additional information could be provided or what information was necessary. Last, Mr. Cross claimed the letter to Anai was not a denial letter. However, it clearly stated that the request to waive the pet restriction was something the Association could not do and has never done, even when involving the ADA. The undersigned finds that the statements in the letter together with the term in the contract seeking a waiver and Ms. Bartok’s letter from her physician demonstrates that Respondents had notice of Ms. Bartok’s request for a reasonable accommodation pursuant to the ADA. The undersigned also finds that Respondent’s letter of July 2, 2020, was a denial of Ms. Bartok’s application for purchase of Unit 106 based on her request for a reasonable accommodation, a waiver for her ESA. Ms. Bartok testified that she believed the July 2, 2020, letter was a denial of her application. Believing she could not purchase the property, she canceled the contract on the same date. After Ms. Bartok canceled the contract, believing that the Association improperly denied her request for a “pet waiver” for her ESA, she submitted a letter dated July 8, 2020, requesting a reasonable accommodation for her disability. That letter included another letter from Dr. Tuel, to the Association, which stated, in pertinent part: Dear Housing Association: Christa Bartok is my patient and has been under my care since April 7, 2020. I am intimately familiar with her history and with the functional limitations imposed by her disability. She meets the definition of disability under the Americans with Disabilities Act, the Fair Housing Act, and Rehabilitation Act of 1973. Due to [intentionally omitted] illness, Christa Bartok has certain limitations regarding performing some life activities. [Intentionally omitted] can be a direct effect of a chronic illness. In order to help alleviate these difficulties, and to enhance his/her ability to live independently and to fully use and enjoy the dwelling unit you own and/or administer, I am prescribing an emotional support animal that will assist Christa Bartok in coping with his/her disability. Her dog Monroe (Moni) qualifies as an emotional support animal under the guidelines put forth by the Fair Housing Act and The American’s [sic] with Disabilities Act. … Ms. Bartok credibly testified that she submitted the letter with attachments to Mr. Cross’ email address. She submitted a second request for reconsideration of the Association’s decision on July 10, 2021. Ms. Bartok did not receive a response to her letters. Although Mr. Cross confirmed his email at the final hearing, he denied receiving Ms. Bartok’s emailed requests for reasonable accommodation. The undersigned credits Ms. Bartok’s testimony on the issue of whether the emails were sent to Mr. Cross. Ms. Bartok testified that after she canceled the contract, she purchased another home. She asserts that she incurred costs for the difference in the amount of the mortgage she has paid since the denial letter was issued, the difference in costs for HOA dues, and the loss associated with extending her rental agreement prior to purchasing her new home. Ms. Bartok did not provide any supporting documents to demonstrate her loss that she asserts she incurred as a result of Respondent’s discriminatory actions. Ultimate Findings of Fact The evidence demonstrates that Ms. Bartok established that she suffers from anxiety, emotional distress disorder, and an autoimmune disease, and therefore, she has proved by a preponderance of the evidence that she is disabled within the meaning of the FHA. Ms. Bartok’s additional term included in her application for sale and the request for accommodation submitted following rejection of her application, was sufficient to demonstrate by a preponderance of the evidence that the Association was on notice that Ms. Bartok sought the “pet waiver” as a reasonable accommodation for her ESA. The undersigned finds the preponderance of evidence supports a finding that approving Ms. Bartok’s dog as an ESA was a reasonable accommodation that would assist Ms. Bartok by providing emotional support; and Respondents refused the requested accommodation. There is not sufficient evidence to establish that the Association has articulated a legitimate, non-discriminatory reason for withholding approval of Ms. Bartok’s ESA. Therefore, Ms. Bartok established by a preponderance of evidence that Respondents discriminated against her based on her disability, by failing to approve a request for a reasonable accommodation (approving Ms. Bartok’s ESA) in violation of the FHA.
Conclusions For Petitioner: Christa N. Bartok, pro se 203 Southeast Syrcle Drive Pensacola, Florida 32507 For Respondent: Sharon D. Regan, Esquire Post Office Box 13404 Pensacola, Florida 32591
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations issue a final order granting Christa Bartok’s Petition for Relief, in part, as follows: finding that Respondents engaged in a discriminatory housing practice based on Ms. Bartok’s disability, by failing to provide a reasonable accommodation to Ms. Bartok in the form of an ESA; and (b) ordering Respondents to prohibit the practice of denying reasonable accommodations to individuals and potential buyers who request a reasonable accommodation on the basis of their disability. Ms. Bartok, having failed to prove she suffered any quantifiable damages as a result of her purchase of a different home, she is not entitled to damages or other financial relief. DONE AND ENTERED this 8th day of October, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: S YOLONDA Y. GREEN Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of October, 2021. Tammy S. Barton, Agency Clerk Florida Commission on Human Relations Room 110 4075 Esplanade Way Tallahassee, Florida 32399-7020 Sharon D. Regan, Esquire Post Office Box 13404 Pensacola, Florida 32591 Christa N. Bartok 203 Southeast Syrcle Drive Pensacola, Florida 32507 Stanley Gorsica, General Counsel Florida Commission on Human Relations Room 110 4075 Esplanade Way Tallahassee, Florida 32399-7020
The Issue The issues in this bid protest are whether, in making the decision to award funding pursuant to Request for Applications 2017-103, Housing Credit and State Apartment Incentive Loan ("SAIL") Financing to Develop Housing in Medium and Large Counties for Homeless Households and Persons with a Disabling Condition (the "RFA"), Florida Housing Finance Corporation ("Florida Housing" or "Respondent"), acted contrary to a governing statute, rule, or solicitation specification; and, if so, whether such action was clearly erroneous, contrary to competition, arbitrary, or capricious. The question of whether the application of Northside Commons Residential, LLC ("Northside"), met the requirements of the RFA with respect to demonstrating the availability of water and sewer services as of the Application Deadline is the only question at issue in this case. No other parts of its Application are being challenged, and the parties all agree that its Application was otherwise properly scored. No parties have raised objections to any parts of Warley Park's application, and all parties agree that its Application was properly scored.
Findings Of Fact The Parties Petitioner Warley Park, Ltd., is the applicant entity of a proposed affordable housing development to be located in Seminole County, Florida. Petitioners Warley Park Developer, LLC, and Step Up Developer, LLC, are Developer entities as defined by Florida Housing in Florida Administrative Code Rule 67-48.002(28). Northside is a Florida limited liability company based in Miami-Dade County, Florida, in the business of providing affordable housing. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The Programs The low income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. These 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. The effect of this is to reduce the amount that the developer would have to borrow otherwise. 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 up 50 years as consideration for receipt of the tax credits. SAIL provides low-interest loans on a competitive basis to affordable housing developers each year. This money often serves to bridge the gap between the development's primary financing and the total cost of the development. SAIL dollars are available to individuals, public entities, not-for-profit, or for-profit organizations that propose the construction or substantial rehabilitation of multifamily units affordable to very low-income individuals and families. Florida Housing is authorized to allocate housing tax credits, SAIL funding, and other funding by means of request for proposal or other competitive solicitation in section 420.507(48) and adopted chapter 67-60 to govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing allocate its housing tax credits, which were made available to Florida Housing on an annual basis by the U.S. Treasury, through the bid protest provisions of section 120.57(3). The RFA 2017-103 Housing tax credits and SAIL funding are made available through a competitive application process commenced by the issuance of a RFA. A RFA is equivalent to a "request for proposal" as indicated in rule 67-60.009(3). The RFA at issue here is RFA 2017-103, which was issued on March 22, 2017. A modification was issued on April 11, 2017, and responses were due April 20, 2017. Through the RFA, Florida Housing seeks to award up to an estimated $6,075,000 of housing tax credits, along with $11,500,000 of SAIL financing, to qualified applicants to provide affordable housing developments. A review committee, made up of Florida Housing staff, reviews and scores each application. Florida Housing scored applicants in six areas worth a total of 145 points: General Development Experience; Management Company Experience with Permanent Supportive Housing; Tenant Selection for Intended Residents; Community-Based General Services and Amenities Accessible to Tenants; Access to Community-Based Resources and Services that Address Tenants' Needs; and Approach Toward Income and Credit Status of Homeless Households Applying for Tenancy. Florida Housing scored Northside as the highest scoring applicant, awarding it 128 points. Warley Park was the fourth highest scored applicant with 112 points. These scores are presented in a public meeting and the committee ultimately makes a recommendation as to which projects should be funded. This recommendation is presented to Florida Housing's Board of Directors ("the Board") for final agency action. On June 16, 2017, Petitioners and all other participants in RFA 2017-103 received notice that the Board had determined which applications were eligible or ineligible for consideration for funding and selected certain applications for awards of tax credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets, one listing the "eligible" and "ineligible" applications and one identifying the applications that Florida Housing proposed to fund, on Florida Housing's website, www.floridahousing.org. Florida Housing announced its intention to award funding to three developments, including Northside. Warley Park's application was deemed eligible, but it was not selected for funding. The RFA at Section Four A.5.g. requires the applicant to demonstrate its "Ability to Proceed" by including the following as attachments to its application: Availability of Water. The Applicant must demonstrate that as of the Application Deadline water is available to the entire proposed Development site by providing as Attachment 9 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16); or A letter from the water service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. Availability of Sewer. The Applicant must demonstrate that as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site by providing as Attachment 10 to Exhibit A: The properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16); or A letter from the waste treatment service provider that is Development-specific and dated within 12 months of the Application Deadline. The letter may not be signed by the Applicant, by any related parties of the Applicant, by any Principals or Financial Beneficiaries of the Applicant, or by any local elected officials. (emphasis added). Section 5.g. of Exhibit A to RFA 2017-103, the Application and Development Cost Pro Forma, requires that the applicant include the following information: Ability to Proceed: As outlined in Section Four A.5.g. of the RFA, the Applicant must provide the following information to demonstrate Ability to Proceed: Availability of Water. The Applicant must provide, as Attachment 9 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Water form (Form Rev. 08-16). Availability of Sewer. The Applicant must provide, as Attachment 10 to Exhibit A, an acceptable letter from the service provider or the properly completed and executed Florida Housing Finance Corporation Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16). The Verification of Availability of Infrastructure – Sewer Capacity, Package Treatment, or Septic Tank form requires the service provider to certify that on or before the submission deadline for the RFA, "Sewer Capacity or Package Treatment is available to the proposed Development." Similarly, the Verification of Availability of Infrastructure – Water form requires the service provider to certify that on or before the submission deadline for the RFA, "Potable water is available to the proposed Development." Each form also includes the following caveat: To access such [waste treatment] [water] service, the Applicant may be required to pay hook-up, installation and other customary fees, comply with other routine administrative procedures, and/or install or construct line extensions and other equipment, including but not limited to pumping stations, in connection with the construction of the Development. The RFA does not define the term "Development- specific," and the term is not used in Section 5.g. of Exhibit A to RFA 2017-103 where the requirement for the water and sewer letters is included. Further, the term "Development-specific" is not defined in any Florida Housing rule. Miami-Dade County has had a longstanding practice of refusing to complete Florida Housing's water and sewer verification forms. Florida Housing added the water and sewer letter as an additional method to demonstrate availability in light of the county's refusal. Thus, an applicant, such as Northside, has no alternative when proposing a Miami-Dade project other than providing a water and sewer letter as opposed to Florida Housing's Verification form. Northside's Water and Sewer Letter Accordingly, in response to this RFA requirement, Northside submitted a letter from Miami-Dade County Water and Sewer Department as Attachment 9 to its application. The letter was sought by Oscar Sol, one of the principals of the developer working with the applicant in the project at issue in this case. The WASA letter at issue in this case was dated December 12, 2016. It was addressed to "Northside Commons LTD," and referenced water and sewer availability for "Northside Commons," construction and connection of 108 apartments, located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The identical WASA letter was submitted as Attachments 10 and 11 to application 2017-155C in response to a prior RFA, RFA 2016-114. That prior application was submitted by Northside Commons, Ltd., for a 108-unit elderly development called Northside Commons, located at 8301 Northwest 27th Avenue, Miami- Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2016-114 was December 15, 2016. In the present case, Northside's application for RFA 2017-103, application 2017-254CSN, was submitted by Northside Commons Residential, LLC. It was for an 80-unit development for homeless persons and persons with disabling conditions, also to be called "Northside Commons," located at 8301 Northwest 27th Avenue, Miami-Dade County, Florida, Folio #30-3110-000-0210. The application deadline for RFA 2017-103 was April 20, 2017. The WASA letter contains several paragraphs of details about hookups to water and sewer service, and also includes the following boilerplate language: "This letter is for informational purposes only and conditions remain in effect for thirty (30) days from the date of this letter. Nothing contained in this letter provides the developer with any vested rights to receive water and/or sewer service." Warley Park raised three issues regarding the WASA letter. First, was the letter valid for more than 30 days after it was signed? Second, did the letter meet the requirement of the RFA that it be "development specific?" Third, did the letter demonstrate the availability of sewer services? Was the WASA letter valid for more than 30 days after it was signed? Florida Housing and Northside contend that there is no provision in the WASA letter stating that it becomes "invalid" after 30 days, or that water and sewer services will not be available after 30 days. Douglas Pile, the representative for Miami-Dade County, testified that the second and third paragraphs of the letter included the conditions necessary to service the availability of water and sewer, and that it was these conditions that remained in effect for 30 days. He described the purpose of the 30-day language as follows: We're not saying that availability disappears or terminates after 30 days. We're just saying this letter is good for informational purposes for 30 days. We don't want people to come back a year later and say I bought this property based upon this letter of availability saying I have water and sewer under certain conditions, and then a year later the conditions are different and maybe they have to put in a water main extension or maybe their local pump station is in moratorium. When asked specifically whether the entire letter was valid for only 30 days, he responded, "Right. Well, the conditions are – the nearby water and sewer facilities that the project would connect to." Mr. Pile explained that the letter is "a snapshot of what our facilities are at the time they make the request." He further stated that: the letter . . . has to have an expiration date either explicit or implicit. If a utility is going to give a letter saying they have water and sewer availability, that cannot be forever, you know. You assume a natural termination point . . . we just explicitly say this letter is good for 30 days. In its Pre-Hearing Position Statement, Florida Housing argued that it did not interpret this language to mean that the letter became invalid after 30 days. However, according to Mr. Reecy,1/ there was no "interpretation" done by Florida Housing. Specifically, when asked how Florida Housing interpreted the phrase, he stated: We have basically ignored that phrase. We actually do not know what--given the context of this situation, how, within 30 days, the--that information is only good for 30 days. So we have not considered that to be a relevant factor in our consideration of the information provided in the letter. A plain and common reading of the quoted language indicates Miami-Dade limited the validity of the information in the letters to 30 days. Florida Housing provided no explanation for its decision to ignore the language and made no attempt to inquire of Miami-Dade County as to what it intended by including the language. This 30-day limitation is generally known by the applicants and nearly every previously funded application included a letter from Miami-Dade County dated within 30 days of the application deadline. Only one Miami-Dade WASA letter submitted by applicants within the last two RFAs was dated outside of the 30-day window. That letter was deemed ineligible for other reasons. Had Petitioner wanted to demonstrate availability as of the application deadline, it only needed to request a letter from Miami-Dade County within the 30 days prior to the application deadline, giving Miami-Dade sufficient time to respond. In fact, the letter was initially submitted as part of a response to RFA 2016-114, with a due date of December 15, 2016. Because the letter was issued on December 12, 2016, it remained valid through the application deadline for RFA 2016-114. There is no limit to the number of times a developer can obtain a letter of availability from Miami-Dade County. The requirements of the RFA are clear that water and sewer availability must be shown "as of the Application Deadline." Because the WASA letter submitted with Petitioner's Application only provided a snapshot of availability for a 30-day window after the issuance of the letter (or until January 11, 2017), the letter failed to address the availability of water or sewer services as of April 20, 2017. As a practical matter, the WASA letter provides that water hook-up is readily available to existing infrastructure and sewer availability is dependent upon a developer building a pumping station. It could be inferred that these conditions would remain available at this location for 12 months. However, the testimony of Mr. Pile makes clear that Miami-Dade County is not willing to make that assumption for a period beyond 30 days due to the possibility of intervening events.2/ Presumably, this is why the vast majority of applicants for this type of RFA secures and provides a Miami-Dade WASA letter dated within 30 days of the RFA application deadline. Because the WASA letter was not valid beyond January 11, 2017, Petitioner cannot demonstrate availability of water and sewer as of the Application Deadline. The fact that the WASA letter was no longer valid is fatal to Petitioner's application in that it failed to satisfy a mandatory requirement of RFA 2017-103, i.e., the availability of water and sewer services. Was the WASA letter "development specific?" The RFA requires that the Applicant demonstrate water and sewer service availability for "the entire proposed Development site," and it also requires that the letter from the service provider be "Development-specific." The application in this matter was filed by Northside Commons Residential, LLC, for an 80-unit development for the homeless and persons with disabling conditions. However, the WASA letter was issued to, and discussed the availability of water and sewer service for, a different entity, Northside Commons, Ltd., the applicant for a 108-unit elderly development. According to Mr. Reecy, the reuse of a letter that was previously submitted in a different application does not follow the "letter" of the criteria in the RFA. Florida Housing and Northside even agree that the letter does not reference the specific proposed development that is at issue and instead focuses on the location of the proposed development. Mr. Sol, Northside's representative, suggested that it is "irrelevant" to which entity the letter is issued because what is relevant is whether water and sewer availability exists. However, as stated by Mr. Reecy, what Florida Housing considers when determining whether a letter of availability is "Development-specific" is the location, the number of units, and the applicant. Because the WASA letter was issued to a entirely different applicant, based upon Mr. Reecy's testimony, it is not "Development-specific." However, Mr. Reecy noted that such a letter could be considered a Minor Irregularity if there is some commonality between the applicant entities. Northside argues that the failure of the letter to be "Development-specific" should be waived as a Minor Irregularity. This issue was not considered during scoring, nor was it a determination made by the Board of Florida Housing prior to awarding funding to Northside. Mr. Reecy acknowledged that it is a judgment call when determining whether a letter addressed to a different entity with different principals is a Minor Irregularity. That call depends upon the number of common principals. While the number of principals that must be the same is discretionary, there must be at least some commonality of principals for it to be considered a Minor Irregularity. The principals of Northside Commons, Ltd., the entity to which the letter was actually issued and the applicant that originally submitted the WASA letter, are completely different from the principals of Northside Commons Residential, LLC. Despite a full understanding of all the similarities between the two applications and the differences in the requirements of the RFA and being given a number of opportunities to change his position, Mr. Reecy repeatedly declined to do so. Mr. Sol suggested that it is common practice for Florida Housing to accept letters issued to entities other than the applicant and with different principals. After hearing Mr. Sol's opinion and discussing the issue further with Northside, Mr. Reecy remained steadfast in his position that the error in the Letter could not be waived as a Minor Irregularity. At the request of Northside, Mr. Reecy agreed to review past practices of the agency during a break in the hearing. As stated by counsel for Florida Housing, if it is established that Florida Housing has a long-standing practice of accepting similar letters, then the question is whether Northside Commons may rely upon that practice. The review during the break was limited to the issue of whether Florida Housing had previously accepted Miami-Dade letters addressed to an entity who was not the applicant and who shared no principals in common with the applicant. No such long- standing practice was demonstrated. Mr. Reecy directed staff to pull all of the Miami-Dade letters of availability from the last two RFAs, to determine, first, whether or not there were sewer letters addressed to someone other than the applicant entity. Second, for those so identified, staff was to compare the principals of the applicant entity and the entity that was the addressee for commonality. Mr. Reecy was provided a list of approximately a dozen letters from the past several RFAs that compared the applicant entity and the addressee entity. This list did not identify whether or not the letters were submitted by successful credit applicants. Based upon this list, Mr. Reecy then reviewed each letter to determine whether or not it was issued to the applicant. He then reviewed the principals list for the applicant as identified in the application and compared that to data from the state of Florida's Sunbiz.org website for the addressee of the letter. Mr. Reecy compared this information to determine if the two had any principals in common. After reviewing this information, Mr. Reecy recanted his earlier testimony and stated that he felt that Florida Housing historically accepted letters with addressees that were not the applicant entity and did not have common principals. Mr. Reecy further testified that based upon this understanding of Florida Housing's past practice, the Northside's letter should be accepted. The information Mr. Reecy reviewed, specifically that obtained from the state of Florida's Sunbiz.org website, did not demonstrate, as Mr. Reecy believes, that Florida Housing previously accepted Miami-Dade WASA letters from applicants in a similar position to that of Northside. Notably, Florida Housing does not accept documentation from the Sunbiz.org website to demonstrate the principals of the Application as required by this and other RFAs. The Sunbiz.org website does not identify the level of detail of principals which Florida Housing requests in its "Principals of the Applicant and Developer(s) Disclosure Form". Further, even if Sunbiz.org did identify all of the principals Florida Housing requires to be disclosed, in this case, the Sunbiz.org information reviewed was dated 2017.3/ As this information was filed after the application deadlines for the respective RFAs, it fails to identify any of the principals related to the entities in the "comparable" letters for the 2015 and 2016 RFAs. No information was provided as to any of the principals in either 2015 or 2016. Accordingly, Mr. Reecy and Mr. Sol's belief that Florida Housing had previously accepted letters in a similar position to that of Northside Commons' letter has not been demonstrated. Because Mr. Reecy's new position, that Northside Commons' letter should be accepted, is based upon this incorrect understanding, and the alleged prior agency action was not demonstrated, Mr. Reecy's initial testimony is found to be more credible. Therefore, the record demonstrates that the WASA letter was not "Development-specific" and, therefore, contrary to the solicitation specifications. Did the letter demonstrate availability of sewer services? The RFA requires each applicant to provide a form or letter demonstrating that "as of the Application Deadline sewer capacity, package treatment or septic tank service is available to the entire proposed Development site." Petitioner presented the testimony of Jon Dinges, P.E., an environmental engineer with expertise in designing wastewater systems who was accepted as an expert in civil engineering, specifically in the area of sewer infrastructure and design. Mr. Dinges' testimony was simply that the problem with the WASA letter in this case is that it does not actually say that capacity is available. In a prior RFA, Florida Housing rejected an application that included a Miami-Dade WASA letter because it specifically stated that no gravity sewer capacity analysis had been conducted. According to Mr. Dinges, without conducting a gravity sewer capacity analysis, it is not possible to determine whether capacity, if any, exists. However, the RFA makes no mention of requiring a gravity sewer capacity analysis to demonstrate availability. Mr. Reecy testified that Florida Housing has been accepting WASA letters without mention of gravity analysis from Miami-Dade County for many years. He stated that the detailed description of how a proposed project could connect to an existing sewer service met the requirement of the RFA that the Applicant demonstrate the availability of sewer service. He also testified that if Florida Housing were to change its position and determine that the form of the letter was not adequate to demonstrate capacity, it would do so in a public process. The testimony was clear that Florida Housing does not do any independent analysis of whether water and sewer service is actually available to a proposed development, but instead relies on the expertise of the local government to do this analysis. Applicants are not required to include or demonstrate the specific requirements or technical specifications of how a connection to water or sewer services will be made. This interpretation is consistent with the specifications of the RFA.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order amending its preliminary decision awarding funding to Warley Park by: finding Northside ineligible for funding; and awarding funding to Warley Park as the next highest scoring eligible applicant. DONE AND ENTERED this 19th day of October, 2017, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 October, 2017.
The Issue The issue in this bid protest matter is whether Respondent, Florida Housing Finance Corporation's, intended award of funding under Request for Applications 2020-203 was contrary to its governing statutes, rules, 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 provide and promote public welfare by administering the governmental function of financing affordable housing in the state of Florida. For purposes of this administrative proceeding, Florida Housing is considered an agency of the state of Florida. Arthur Mays is a properly registered business entity in Florida and engaged in the business of providing affordable housing. Arthur Mays 2 On February 15, 2021, Florida Housing referred two other protests to RFA 2020-203 to DOAH, including DOAH Case Nos. 21-0611 and 21-0612. Florida Housing moved to consolidate all cases pursuant to Florida Administrative Code Rule 28-106.108, which was granted. As part of the Order of Consolidation, MHP, who was Petitioner in Case No. 21-0612, was joined as a Respondent in Case No. 21-0610. MHP subsequently moved to dismiss its separate, independent action in Case No. 21-0612, and continue as a party in Case No. 21-0610. Thereafter, Petitioner in Case No. 21-0611 (Hibiscus Grove, LP) voluntarily moved to dismiss its case, and the motion was granted. submitted an application to RFA 2020-203 seeking funding to help finance its housing redevelopment project in Miami-Dade County known as Arthur Mays Senior Villas. Arthur Mays' application was deemed eligible for, but was not selected for an award of, housing credits under RFA 2020-203. Florida Housing has been designated as the housing credit agency for the state of Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code. As such, Florida Housing is authorized to establish procedures to distribute low-income housing tax credits and to exercise all powers necessary to administer the allocation of those credits. § 420.5099, Fla. Stat. Florida Housing's low-income housing tax credit program (commonly referred to as "housing credits" or "tax credits") was enacted to incentivize the private market to invest in affordable rental housing. The affordable housing industry relies heavily on public funding, subsidies, and tax credits to support projects that may not be financially sustainable in light of the sub- market rents they charge. Because tax credits allow developers to reduce the amount necessary to fund a housing project, they can (and must) offer the tax credit property at lower, more affordable rents. As background, Florida Housing uses a competitive solicitation process to award low-income housing credits. Florida Housing initiates the solicitation process by issuing a request for applications ("RFA"). §§ 420.507(48) and 420.5093, Fla. Stat.; and Fla. Admin. Code Chapters 67- 48 and 67-60. The RFA competitive solicitation process begins when Florida Housing requests its Board of Directors (the "Board") to approve Florida Housing's plan for allocating resources through various RFAs. If the Board approves the plan, Florida Housing begins work on each individual RFA. The RFA at issue in this matter is RFA 2020-203, entitled "Housing Credit Financing for Affordable Housing Developments Located in Miami- Dade County." The purpose of RFA 2020-203 is to distribute funding to create affordable housing developments in Miami-Dade County, Florida. Through RFA 2020-203, Florida Housing intends to provide an estimated $7,420,440.00 of housing tax financing. Florida Housing's goal under RFA 2020-203 is to fund developments that qualified for the demographic commitment of Family, Elderly, and Urban Center Designation, selecting one Applicant per category. Florida Housing issued RFA 2020-203 on August 26, 2020.3 The RFA set forth the information each Applicant was required to provide. This information included a number of submission requirements, as well as a general description of the type of project that would be considered for funding. Applications were due to Florida Housing by November 17, 2020. Arthur Mays and MHP both timely applied for funding. Florida Housing appointed a Review Committee from amongst its staff to evaluate and score the applications. Florida Housing received 50 applications for housing credits under RFA 2020-203. The Review Committee reviewed, deemed eligible or ineligible, scored, and ranked applications pursuant to the terms of RFA 2020-203, as well as Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations.4 The Review Committee found 46 applications eligible for funding. Thereafter, through the ranking and selection process outlined in RFA 2020- 203, the Review Committee recommended three applications to the Board for funding for the Family, Elderly, and Urban Center Designation categories. On January 22, 2021, the Board formally approved the Review Committee recommendations. As part of its determinations, the Board selected MHP's development known as Southpointe Vista for the Urban 3 Florida Housing subsequently modified RFA 2020-203 on September 11, October 12, and November 9, 2020. 4 No protests were made to the specifications or terms of RFA 2020-203. Center Designation funding. The Board awarded $2,882,000 in tax credits to MHP to help finance Southpointe Vista. Arthur Mays protests the Board's selection of MHP's development instead of its own. Arthur Mays, the second ranked Applicant for the Urban Center Designation, challenges Florida Housing's determination of the eligibility of, and award to, MHP. If Arthur Mays successfully demonstrates that Florida Housing erred in accepting, then scoring, MHP's application, or the evidence demonstrates that MHP's application was ineligible or nonresponsive, then Arthur Mays will be entitled to an award of housing credits instead of MHP.5 Lewis Swezy testified on behalf of Arthur Mays. Mr. Swezy is a developer in South Florida and has vast experience developing major real estate developments in Miami-Dade County. Mr. Swezy also represented that he has significant experience with housing credit procurements having submitted well over 100 applications in response to Florida Housing RFAs. Mr. Swezy stated that Florida Housing has awarded him tax credits on approximately 20 occasions. Mr. Swezy raised two objections to MHP's application. Mr. Swezy argued that these two alleged deficiencies render MHP's application ineligible for funding. Therefore, Florida Housing should have disqualified MHP from an award of housing credits under RFA 2020-203. One of MHP's Principal Entities is not Registered to Transact Business in Florida as of the Application Deadline: First, Arthur Mays claims that information MHP included on its Principals of the Applicant and Developer(s) Disclosures Form causes MHP's application to be ineligible for consideration for housing credits. Arthur Mays specifically complains that one of the Second Level Principals that MHP identifies on its Principal Disclosures for the Applicant form (the "Principal 5 No party alleged that Arthur Mays' application failed to satisfy all eligibility requirements or was otherwise ineligible for funding under RFA 2020-203. Disclosures Form") is a foreign entity not authorized to do business in Florida. Arthur Mays argues that Florida law prohibits a corporate entity who has not obtained a certificate of authority from the Florida Department of State to transact business in Florida from serving as a principal of an Applicant for housing credits. Consequently, Florida Housing acted contrary to Florida statutes by considering MHP's application for housing credits under RFA 2020-203. To set the stage, RFA 2020-203 requires an Applicant for housing credits to produce evidence that it is legally formed in the State of Florida. Specifically, RFA 2020-203 Section Four, A.3.a(2), directs that: The Applicant must be a legally formed entity [i.e., limited partnership, limited liability company, etc.] qualified to do business in the state of Florida as of the Application Deadline. Include, as Attachment 2 to Exhibit A, evidence from the Florida Department of State, Division of Corporations, that the Applicant satisfies the foregoing requirements. Such evidence may be in the form of a certificate of status or other reasonably reliable information or documentation issued, published or made available by the Florida Department of State, Division of Corporations. Thereafter, RFA 2020-203 Section Four, A.3.c, entitled "Principals Disclosure for the Applicant and for each Developer," provides: (1) Eligibility Requirements To meet the submission requirements, upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019) ("Principals Disclosure Form") as outlined in Section Three above. * * * To meet eligibility requirements, the Principals Disclosure Form must identify, pursuant to Subsections 67-48.002(94), 67-48.0075(8) and 67- 48.0075(9), F.A.C., the Principals of the Applicant and Developer(s) as of the Application Deadline. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. For Housing Credits, the investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company must be identified on the Principal Disclosure Form. Rule 67-48.0075(8) further instructs that: Unless otherwise stated in a competitive solicitation, disclosure of the Principals of the Applicant must comply with the following: The Applicant must disclose all of the Principals of the Applicant (first principal disclosure level). * * * The Applicant must disclose all of the Principals of all the entities identified in paragraph (a) above (second principal disclosure level); The Applicant must disclose all of the Principals of all of the entities identified in paragraph (b) above (third principal disclosure level). Unless the entity is a trust, all of the Principals must be natural persons; With its application, MHP submitted a Principals Disclosure Form per RFA 2020-203 Section Four, A.3.c. In the Principal Disclosures for the Applicant portion, in accordance with rule 67-48.0075(8), MHP disclosed three levels of principals. In the First Principal Disclosure Level, MHP listed "MHP FL I Manager, LLC" as both a "Manager" and "Non-Investor Member" of MHP. On the Second Principal Disclosure Level, MHP identified the principals associated with MHP FL I Manager, LLC, to include Archipelago Housing, LLC ("Archipelago"), W. Patrick McDowell 2001 Trust, and Shear Holdings, LLC. On the Third Principal Disclosure Level, MHP named the "natural person" principals of Archipelago as Kenneth P. Lee and Michael C. Lee. Arthur Mays, through Mr. Swezy, argues that Florida law requires all principals, i.e., Archipelago, to be legally formed entities authorized to do business in the State of Florida. At the final hearing, Mr. Swezy represented that Archipelago is legally registered in the State of Delaware. However, as of the application deadline for RFP 2020-203, Archipelago did not have a certificate of authority from the Florida Department of State to operate as a foreign limited liability company in Florida. Consequently, Florida Housing should have disqualified and rejected MHP's application. As legal authority for its position, Arthur Mays asserts that the provisions of chapter 605, Florida Statutes, apply to this procurement. Section 605.0902(1) states: A foreign limited liability company may not transact business in this state until it obtains a certificate of authority from the [Department of State]. From a philosophical standpoint, Mr. Swezy urged that obtaining authority to transact business in Florida is more than a mere ministerial act. A foreign entity that secures the appropriate certification from the Department of State must disclose the identities of all of its directors and officers to the State of Florida. In addition, Mr. Swezy explained that Florida Housing maintains a "bad actors" list of those persons who are disqualified from an award of housing credits, such as: individuals in arrears to Florida Housing, individuals with certain felony convictions, and members of the Florida Housing Board, among others. Because Archipelago did not register with the Department of State, however, Florida Housing has no effective avenue to confirm whether Archipelago's management team (and hence MHP's Third Level Principals) is eligible for an award of housing credits. Consequently, Florida Housing cannot know for certain whether MHP's Principal Disclosures Form is accurate. Florida Housing is also ignorant regarding what persons are actually making business decisions for MHP and/or its principals. Mr. Swezy further asserted that, because MHP was not required to ensure that all its principals (i.e., Archipelago) obtained the necessary certification to transact business in Florida, MHP gained a competitive advantage over other Applicants who fully disclosed all their management team members. MHP garnered an unfair advantage because Florida Housing could more easily verify corporate information on other Applicants' principals who were registered with the State of Florida. MHP's Site Control Documentation Contains a Material Misrepresentation: Second, Mr. Swezy questioned whether MHP's site control documentation complies with RFA 2020-203 requirements. Specifically, Mr. Swezy asserted that MHP made a "material misrepresentation" in its application by artificially increasing the cost of the land it purchased for its development. This maneuver allegedly allowed MHP to request a higher amount of housing credits. Therefore, Mr. Swezy insisted that MHP's improper distortion of the price of its property should render its application ineligible for tax credit funding. See § 420.518(1)(a), Fla. Stat. For the legal authority behind his argument, Mr. Swezy pointed to RFA 2020-203 Section Four, A.7, which required an Applicant to establish control over its development site. Under RFA 2020-203 Section Four, A.7.a, an Applicant demonstrated site control by submitting documentation showing "that it is a party to an eligible contract or lease, or is the owner of the subject property." MHP, to demonstrate evidence of its site control, included in its application an Agreement, dated November 15, 2020, wherein MHP agreed to buy certain real property from McDowell Acquisitions, LLC ("McDowell"), for a purchase price of $7,000,000. As revealed in an "Underlying Contract" dated October 22, 2020, McDowell acquired the property from Cutler Ridge Investment Group, LLC ("Cutler Ridge"), also for the amount of $7,000,000. The property McDowell bought from Cutler Ridge consists of a two- acre parcel of land that was divided into two separate lots. However, the subsequent sale between MHP and McDowell, only involved one of the two lots.6 Consequently, Mr. Swezy decried the fact that MHP agreed to pay $7,000,000 for a piece of property that was worth half that amount one month earlier. Compounding this turn of events, MHP, in its application, reported the "Total Land Cost" of its one-acre development (Southpointe Vista) as $7,000,000. Mr. Swezy argued that the two "eligible contracts" evince that MHP misrepresented the value for the land on which it intends to construct Southpointe Vista ($7,000,000 versus $3,500,000). Furthermore, based on this manipulation of the purchase price, Mr. Swezy asserts that MHP will be unjustly enriched by an additional $300,000 in housing credits annually (or over three million dollars in the aggregate) in excess of what it should receive from Florida Housing had MHP reported the true value of the land on which it will locate its development. Mr. Swezy stated that Arthur Mays computed the alleged housing credit overpayment using what he referred to as the "gap calculation" formula. Mr. Swezy explained that MHP sought $2,882,000 in housing credits, which was the maximum amount available under RFA 2020-203. See RFP 2020-203 Section Four, A.10(1)(a). Mr. Swezy contended that the "gap calculation" formula indicates that if MHP recorded the "true" cost of its 6 Mr. Swezy remarked that the other one-acre lot was attached to another application for RFA 2020-203 from MHP MD Senior I, LLLP ("MHP Senior"), which shares some of the same principals with MHP. MHP Senior submitted an application for a project called Southpointe Senior. (The Southpointe Senior application was not selected for funding by Florida Housing.) MHP Senior also reported the total value of its one-acre piece of property as $7,000,000. property ($3,500,000), then MHP would have been awarded only $2,517,380 in housing credits for Southpointe Vista.7 Based on MHP's material misrepresentation, Mr. Swezy argues that Florida Housing should have deemed MHP's application ineligible for funding under RFA 2020-203. Instead, Florida Housing should have awarded housing credits to Arthur Mays as the next eligible Applicant. Otherwise, Florida Housing will be allowing MHP to receive an undeserved financial windfall. Florida Housing, in support of its intended award to MHP, presented the testimony of Marisa Button. Ms. Button is Florida Housing's Director of Multifamily Allocations. In her job, Ms. Button oversees Florida Housing's RFA process. At the final hearing, Ms. Button testified that Florida Housing appropriately deemed MHP's application for Southpointe Vista eligible for funding. Ms. Button agreed with Mr. Swezy that RFA 2020-203 required the Applicant (MHP) to demonstrate that it is a legally formed entity qualified to do business in the State of Florida. (Which MHP did.8) However, she advised that no language in chapter 420, chapter 67-48, or the RFA explicitly requires the Applicant to establish that its principals were also qualified to do business in Florida. Ms. Button specifically pointed to the language of RFA 2020-203 Section Four, A.3.a(2), which only directs the "Applicant" (and the "Developer entity") to be "a legally formed entity … qualified to do business in the state of Florida as of the Application Deadline." See also RFP 2020-203 Section Five, A.1. Conversely, Ms. Button testified that Florida Housing has never enacted or imposed a requirement that principals, other than the Applicant 7 As described in his testimony, the gap calculation determines the "gap need" between the total cost of the housing project and the housing credit financing actually needed to make the housing project feasible. 8 MHP filed to operate as a limited liability company with the Florida Department of State on October 9, 2020. itself, must register to transact business in Florida. The only related provision of RFA 2020-203 that applies to principals required that: [t]he Applicant, the Developer and all Principals are in good standing among all other state agencies and have not been prohibited from applying for funding.[9] Since the information in MHP's application reported that Archipelago was legally formed to operate in the State of Delaware, Ms. Button relayed that Florida Housing was satisfied that MHP met this condition at the time of the application deadline. Although, Ms. Button conceded that Florida Housing did not independently verify the veracity of MHP's Principal Disclosures Form. Instead, Florida Housing accepted MHP's application as valid on its face (as it did for all Applicants). As Mr. Swezy commented, Ms. Button articulated that the purpose behind the Principal Disclosures Form is to allow Florida Housing the means to survey all names associated with an application to ensure that no principal (or Applicant or Developer) is included on Florida Housing's "bad actors" list. Such entities, which would include companies or individuals who owe arrearages to Florida Housing or have taken part in certain criminal activities, are prohibited from participating in a competitive solicitation for housing credits. See Fla. Admin. Code R. 67-48.004(2). Consequently, an Applicant that does not fully disclose or misrepresents its principals may be rendered ineligible for an award through an RFA. Regarding MHP's application, Ms. Button was not aware of any principal identified on MHP's Principal Disclosures Form (particularly Archipelago) who was precluded from participating in RFA 2020-203. To further support her position, Ms. Button relayed that Florida Housing faced a similar situation in the case of Heritage Village Commons, Ltd v. Florida Housing Finance Corporation, FHFC Case No. 2012-013-UC (Fla. FHFC RO May 23, 2012; FO June 8, 2012). In Heritage Village, following an informal hearing under section 120.57(2), Florida Housing ultimately determined that neither the administrative rules (at that time) nor the relevant solicitation specifications required the Developer of an Applicant to be a legally formed entity in the State of Florida. Florida Housing reasoned that, because the governing law did not require the Developer to be a legally formed entity, Florida Housing could not penalize the applicant "for failure to comply with a nonexistent rule." Ms. Button advanced that Heritage Village offers an instructive analysis to apply to the present matter. Ms. Button further commented that Florida Housing believes that Heritage Village creates a precedent that it should follow regarding the legal status of a principal of an RFA Applicant. Regarding the applicability of chapter 605, Ms. Button asserted that chapter 605 does not control Florida Housing's competitive solicitation process. Instead, procurements involving housing credits are governed by the provisions of chapter 420, which do not contain any requirement that an Applicant's principals must be registered to transact business in the state of Florida. Ms. Button maintained that the specific language of section 605.0902(1) does not dictate who may receive housing credits under chapter 420 or chapters 67-48 and 67-60. Neither has Florida Housing incorporated section 605.0902 into the RFA competitive solicitation process. Similarly, Ms. Button stated that the terms of RFA 2020-203 only required MHP as the Applicant, as well as Southpointe Vista's Developer, to be legally formed entities qualified to do business in the state of Florida, not Archipelago, as one of MHP's Second Level Principals. Finally, Ms. Button testified that whether MHP's principals were officially registered to transact business in Florida was not considered during the scoring of RFA 2020-203. Therefore, the fact that Archipelago was 9 See RFA 2020-203, Applicant Certification and Acknowledgement Form ("Certification and Acknowledgement Form"), para. 13. registered in the State of Delaware, not Florida, did not have any impact on Florida Housing's selection of MHP's application for housing credits. Neither did it somehow give MHP's application a competitive advantage. Accordingly, because Florida Housing's governing statutes, administrative rules, and the RFA 2020-203 specifications did not independently require an Applicant's principals to be registered to transact business in the State of Florida, Ms. Button took the position that MHP's application is eligible for funding, despite Archipelago's legal status in Florida as of the application deadline. Therefore, since MHP disclosed the required information regarding its principals in its application, Ms. Button declared that Florida Housing's decision to award housing credits to MHP did not contravene applicable law. Regarding Arthur Mays' claim that MHP's application should be disqualified for misrepresenting the cost of the land MHP intends to use for its housing site, Ms. Button relayed that the property cost of a development's location has no relation to an Applicant's eligibility for housing credits. Therefore, the fact that MHP allegedly represented that its development property cost twice its actual value is not a "material" representation that would affect Florida Housing's award of tax credits. Ms. Button explained that Florida Housing only reviews the land cost during the credit underwriting phase, which occurs after the competitive solicitation process is completed.10 Consequently, the cost for MHP to obtain the Southpointe Vista property had no bearing on the Review Committee's evaluation of its application for tax credits under RFA 2020-203. Expanding on her testimony, Ms. Button initially expressed that the cost of purchasing land is not an "eligible cost" that Florida Housing considers in determining whether an Applicant qualifies for housing credits. In practice, an Applicant is required to submit with their application information regarding its "Total Land Cost" on a Development Cost Pro Forma form (the "Development Cost Form"). See RFA 2020-203 Section Four, A.10.c, and Fla. Admin. Code R. 67-48.0075(3). The Development Cost Form reports an Applicant's funding "sources/uses." In layman's terms, to provide Florida Housing a better understanding of the financial viability of its housing development, the Applicant completes the Development Cost Form to identify its funding "sources," as well as the anticipated expenses (i.e., "uses") of bringing its development to fruition. If an Applicant shows that its "sources" equal or exceed its "uses," then the Development Cost Form demonstrates to Florida Housing that an Applicant's development is financially feasible. MHP, on its Development Costs Form, wrote that its Total Land Cost was $7,000,000 (as attested by Mr. Swezy). MHP included this figure in calculating its Total Development Cost, which MHP anticipated would reach 10 See RFA 2020-203 Section Four, A.7.a, which states that Florida Housing: [W]ill not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation. During scoring the Corporation will rely on the properly executed Site Control Certification form to determine whether an Applicant has met the requirement of this RFA to demonstrate site control. … During credit underwriting, if it is determined that the site control documents do not meet the above requirements, [Florida Housing] may rescind the award. a combined amount of $41,747,241. On the other side of the ledger, MHP reported that its anticipated funding sources equaled $45,704,400. Based on these numbers, Ms. Button relayed that MHP showed that its development carries a funding surplus of $3,957,159. Therefore, MHP demonstrated that its housing development, Southpointe Vista, is financially feasible. (Conversely, if MHP's Development Cost Form revealed a funding shortfall, i.e., that the costs ("uses") to develop Southpointe Vista exceeded the funding "sources," then Florida Housing would have had serious concerns regarding the development's financial health, which would have led to Florida Housing finding MHP ineligible for funding.) Regarding Arthur Mays' allegation that MHP doubled the actual cost of its land from $3,500,000 to $7,000,000, Ms. Button was not alarmed that MHP may have overstated the value of the property on which it intends to locate Southpointe Vista. Because MHP reported a funding surplus, Ms. Button stated that even if the actual cost of the land was half of what MHP reported ($3,500,000), MHP still would have reported a funding surplus for its project. (In fact, the surplus would have been $3,500,000 larger.) Consequently, Ms. Button contended that the fact that MHP may have overvalued the cost of its property on its Development Cost Form did not affect MHP's eligibility for housing credits under the terms of RFA 2020-203. Further, Ms. Button rejected Arthur Mays' charge that by increasing its land cost, MHP was able to improperly request a larger tax credit. Ms. Button relayed that after Florida Housing selects an application for award of housing credits, the Applicant is invited to enter the credit underwriting process. During this stage, Florida Housing underwriters will evaluate the application to ensure that it complies with all RFA eligibility requirements.11 As part of this review, a property appraisal report will typically be ordered to calculate the impact of the land cost on the Applicant's development. The credit underwriters also specifically assess the "gap calculation result" in recommending the actual housing credit allocation. See Fla. Admin. Code R. 67-48.0072(28)(e), (f), and (g) and 67-48.0075(3). Ms. Button reemphasized that the property cost for MHP's development is only considered during the credit underwriting phase, not during the scoring of its application. Ms. Button expressed that based on the results of the credit underwriting review, the total tax credits that MHP requested for Southpointe Vista are not necessarily the amount that it will receive. Ms. Button relayed that if credit underwriting determines that an award of housing credits to MHP would be inappropriate based on the circumstances, or that MHP materially misrepresented information in its application, then Florida Housing would likely reduce, if not completely reject, the award of housing credits for MHP's development. Finally, Ms. Button reiterated that the development property cost that MHP associated with Southpointe Vista had no bearing on the Review 11 Florida Housing's credit underwriting procedures are described in rule 67-48.0072, which provides: 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 … 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 credit underwriting review shall include a comprehensive analysis of the Applicant, the real estate, the economics of the Development, the ability of the Applicant and the Development team to proceed, the evidence of need for affordable housing in order to determine that the Development meets the program requirements and determine a recommended … Housing Credit allocation amount … , if any. (emphasis added) Committee's evaluation of its application. The Review Committee did not consider land acquisition cost when it scored MHP's application. Therefore, Ms. Button maintained that the fact that MHP listed its Total Land Cost as $7,000,000 did not give MHP a competitive advantage. Neither did the fact that MHP may have overstated its Total Land Cost by $3,500,000 increase its chance of winning the housing credits. Consequently, the numbers MHP listed on its Development Costs Form did not adversely prejudice other Applicants. Neither did they provide MHP a scoring benefit during the competitive solicitation process. Ms. Button asserted that MHP's Total Land Cost did not have any impact on Florida Housing's decision to select MHP's development for award of tax credits under RFA 2020-203. Ms. Button also testified that RFA 2020-203 did not require applicants to provide a property appraisal to substantiate the land cost recorded on the Development Cost Form. She further added that no evidence shows that MHP's agreement to purchase the property from McDowell was an invalid contract, or that $7,000,000 was not a reasonable price for the one-acre lot for Southpointe Vista. Consequently, Ms. Button contended that the fact that MHP may have inflated the cost of its development site to twice its actual value is not a "material" representation that affected Florida Housing's award of tax credits to MHP. Ms. Button's explanation detailing why MHP's application was eligible for consideration for housing credits under RFA 2020-203 is credible and is credited. Ms. Button persuasively testified that the information MHP included in its application legally complied with RFA requirements and allowed Florida Housing to effectively evaluate its request for funding for its housing development. Ms. Button further capably refuted Arthur Mays' allegation that MHP somehow received a competitive advantage during the solicitation process. Accordingly, based on the evidence in the record, Arthur Mays did not demonstrate, by a preponderance of the evidence, that Florida Housing's award of housing credits to MHP was clearly erroneous, contrary to competition, arbitrary, or capricious. Therefore, Arthur Mays did not meet its burden of proving that Florida Housing's intended award of housing credit funding to MHP under RFA 2020-203 was contrary to its governing statutes, rules or policies, or the solicitation specifications.
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 dismissing the protest of Arthur Mays. It is further recommended that the Florida Housing Finance Corporation select MHP's application as the recipient of housing credit funding for the Urban Center Designation under RFA 2020-203. DONE AND ENTERED this 26th day of May, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Lawrence E. Sellers, Jr., Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301 Christopher Dale McGuire, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 S J. BRUCE CULPEPPER Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of May, 2021. Tiffany A. Roddenberry, Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301 Jeffrey Stephen Woodburn, Esquire Woodburn & Maine 204 South Monroe Street Suite 201 Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire 215 South Monroe Street Suite, 750 Tallahassee, Florida 32301 Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Jason L. Maine, General Counsel Woodburn & Maine, Attorneys at Law 204 South Monroe St Suite 201 Tallahassee, Florida 32301 Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329
The Issue The issue is whether Petitioner, Boynton Associates, Ltd., is entitled to receive additional points for Form 5 of its application, related to local government contributions, for the Florida Housing Finance Corporation's 2001 Combined Rental Cycle and, if so, whether Petitioner qualifies for an allocation of federal low-income housing tax credits.
Findings Of Fact Petitioner, Boynton Associates Ltd., a Florida Limited Partnership, is the Applicant and owner of property know as Boynton Terrace Apartments located in Boynton Beach, Palm Beach County, Florida ("City" or "City of Boynton Beach"). To encourage the development of low-income housing for families, in 1987, Congress created the federal Low-Income Housing Tax Credit Program that is allotted to each state, including Florida Tax Credits, each year. The low-income housing credits equate to a dollar-for-dollar reduction of the holder's federal tax liability. This reduction can be taken for up to ten years if the project satisfies the Internal Revenue Code's requirements each year. Each state receives an annual allotment of housing credits, primarily on a per capita basis. For the year 2001, Florida's allotment of low-income housing credits is $23,973,567, of which $20,695,689 is available for allocation. The Florida Housing Finance Corporation is the "housing credit agency" responsible for the allocation and distribution of Florida's low-income housing tax housing credits to applicants for the development and/or substantial rehabilitation of low-income housing. See Subsection 420.5099(1), Florida Statutes. Pursuant to state and federal mandates, the Florida Housing Finance Corporation has established a competitive application process for the award of low-income housing credits. Rule 67-48.004, Florida Administrative Code, as adopted on February 22, 2001, established the process by which the Florida Housing Finance Corporation evaluates, scores, and competitively ranks the applicants for the award of funds and the allocation of housing credits. Under the review and application process, staff of the Florida Housing Finance Corporation first conducts a preliminary review of the applications. Based on that review, a preliminary score is assigned to each application. After the Florida Housing Finance Corporation's preliminary review and scoring, all applicants may review the applications and challenge what they believe to be scoring errors made by the Florida Housing Finance Corporation. Any applicant alleging scoring errors must make such challenges, in writing, on a Notice of Possible Scoring Error Form (NOPSE) within ten days of the applicant's receiving the preliminary score. This form is an official form developed and provided by the Florida Housing Finance Corporation. The Florida Housing Finance Corporation then reviews each timely filed NOPSE, adjusts scores where applicable, and issues a position paper to the affected applicants informing them of the decision relative to the NOPSE. Affected applicants are then given an opportunity to submit supplemental information, documentation, or revised documents that might address challenges made in any NOPSE. Any such submission by an applicant whose scores have been challenged is called a "Cure." The Florida Housing Finance Corporation provides a Cure Form on which the challenged applicant may submit its statement of explanation addressing the issues raised in the NOPSEs. Following the submission of a Cure by an applicant whose application has been challenged, competitors are allowed to review the supplemental or corrective information which comprises the Cure. After reviewing the Cure, competitors may point out what they perceive to be errors or deficiencies on the challenged applicant's Cure. These perceived errors or deficiencies are then submitted to the Florida Housing Finance Corporation, in writing, on a form entitled, Notice of Alleged Deficiency (NOAD), that was developed and provided by the Florida Housing Finance Corporation. The Florida Housing Finance Corporation reviews the Cure submitted by the applicant whose application has been challenged and the NOADs submitted by competing applicants. Following this review, the Florida Housing Finance Corporation assigns each application a pre-appeal score. Boynton submitted an application to Florida Housing Finance Corporation for the 2001 Combined Rental Cycle ("2001 Combined Cycle") to receive annually $559,025.14 in tax credits for the rehabilitation of Boynton Terrace, a multifamily housing property. The application was submitted on February 26, 2001, the deadline for submitting applications for the 2001 Combined Cycle. Pursuant to the review and scoring procedures set forth in the 2001 Combined Cycle Application Form and Rule 67- 48.004, Florida Administrative Code, as adopted February 22, 2001, described in paragraphs 7 through 12 above, the Florida Housing Finance Corporation scored the application of Boynton. The application for the allocation of housing credits consists of several forms. However, the only form at issue in this case is Form 5, entitled "Local Government Contributions." Form 5 indicates a local government's support of the affordable housing project for which tax credits are being sought. In scoring Form 5, Florida Housing Finance Corporation awards points based on the amount of "tangible, economic benefit that results in a quantifiable cost reduction and are development specific." The maximum number of points that can be awarded on Form 5 is 20 points. To obtain the maximum number of points for Form 5, the applicant must provide evidence of a local government contribution for which the dollar amount is equal to or greater than one of the following: (1) a specified amount according to the county in which the proposed project is located, or (2) ten percent (10%) of the total development costs of the project listed in Form 4 of the application. In this case, Boynton's application indicated that the local government contribution was 10 percent of its total development costs of $5,096,789, or $509,678.90. At or near the time Boynton's application was submitted, the Florida Housing Finance Corporation determined that the application was complete and, thereafter, conducted a preliminary review of the application. Based on its preliminary review of Boynton's application, the Florida Housing Finance Corporation awarded a total of 618 points to Boynton. Of this preliminary score, the Florida Housing Finance Corporation awarded Boynton 20 points, the maximum allowed, for Form 5. The Florida Housing Finance Corporation's preliminary award of 20 points to Boynton for its Form 5 was based on local government contributions listed on the application as follows: donation of landscaping materials valued at $50,000 and donation of dumpsters during the rehabilitation of Boynton Terrace valued at $19,845; (2) waiver of tipping fees at the local landfill of $25,500 and waiver of building permit fees of $61,609; and (3) $353,196 for waiver of the requirement to construct 58 parking spaces at $6,089.60 per space. Form 5 provides that a local government contribution for a waiver of parking space requirements will not be recognized except in certain circumstances. Among the circumstances in which a waiver of parking space requirements is expressly recognized as a local government contribution are rehabilitation developments located in areas targeted for neighborhood revitalization by local governments. Once this threshold requirement is established, the local government must also verify that the existing local government code would require the additional parking, and that the parking requirements are waived specifically for the subject development. As part of the information required by Form 5, Boynton provided a letter from Mr. Michael Rumph, the Director of Planning and Zoning for the City of Boynton Beach, verifying that Boynton Terrace is a rehabilitation development located in an area targeted for revitalization by the local government. Additionally, the letter stated in part the following: In support of the [Boynton Terrace Apartments] housing development, the City of Boynton Beach has accepted and processed an application for a variance to provide relief from the City of Boynton Beach Land Development Regulations, Chapter 2, Zoning, Section 11 Supplemental Regulations, H. 16. a.(2)., requiring a minimum parking space ratio of 2 spaces per unit, to allow a reduction of 58 spaces or a 1.3 space per unit variance. The Boynton Terrace Apartments rehabilitation development is located in an area targeted for neighborhood revitalization by the local government. As such, if parking requirements are waived for the project, such waiver or variance is recognized as a local contribution. Boynton Terrace is comprised of 84 multi-family residential units. For each unit in the development, the City of Boynton Beach Land Development Regulations requires two parking spaces. Accordingly, based on the City's regulations, 168 parking spaces would be required for the Boynton Terrace development. Boynton applied for a variance to be able to construct fewer parking spaces than the 168 spaces, since much of the area currently occupied by existing parking would be encroached upon by the construction of the new clubhouse/community center, the new landscaping, and other amenities. The City Commission for the City of Boynton Beach, after a full hearing on Boynton's request, granted the variance, which obligated Boynton to provide 1.3 parking spaces for every multi-family residential unit at the property rather than two parking spaces for every such unit. As a result of the City Commission's decision, the Boynton Terrace development was required to have 110 parking spaces instead of the 168 spaces required by the City of Boynton Beach Land Development Regulations. On Form 5 of its application, Boynton indicated that the City reduced the required number parking spaces from 168 to 110. Form 5 of the application also indicated that by the City's reducing the required number of parking spaces by 58 spaces, the local government contribution with regard to parking spaces was the cost of constructing 58 parking spaces at a cost of $6,089.60 per space, or $353,196.80. An attachment to the City's "contribution letter" referred to in paragraph 21, and part of Boynton's application, indicated that as a result of the City's reducing the number of parking spaces required at Boynton Terrace, the City's contribution to the Boynton Terrace development was $353,196.80. According to the aforementioned attachment, this amount represented the cost of constructing 58 parking spaces at a cost of $6,089.60 per space. After the Florida Housing Finance Corporation issued it preliminary scores, three competing applicants submitted NOPSEs, challenging Boynton's Form 5 score of 20. According to the NOPSEs, the competing applicants believed that Boynton was not entitled to be awarded points based on a local contribution of $353,196 for a waiver or variance of the number of parking spaces required for the development. According to the NOPSEs, Boynton was only receiving a cost savings from not having to construct 11 parking spaces because 157 parking spaces already existed at Boynton Terrace. Based on these challenges, the competing applicants indicated that the local government contribution for a waiver of the City's parking space requirement should be reduced from $353,196 to $66,985.60, the cost of Boynton's constructing 11 parking spaces at $6,089.60 per space. The Florida Housing Finance Corporation reviewed and considered the NOPSEs filed by competing applicants that challenged the local government contribution of $353,196 listed on Form 5 of Boynton's application. Following its review, the Florida Housing Finance Corporation reduced Boynton's preliminary score on Form 5 from 20 points to 8.79 points. This reduction in points represented a pro rata reduction based on the Florida Housing Finance Corporation's decision that the local government contribution, with regard to parking spaces, was $66,985.60 instead of $353,196, the amount stated on Form 5 of Boynton's application. As previously noted in paragraph 10, applicants whose applications have been challenged are permitted to submit a Cure in response to NOPSES filed by competing applicants. The Florida Housing Finance Corporation's Cure Form consists, in part, of a page entitled "Brief Statement of Explanation for Revision/Addition for Application 2001- ." In addition to submitting a Cure Form, pursuant to Rule 67.48.004 (11), Florida Administrative Code, as adopted February 22, 2001, Boynton was allowed to submit additional documentation, revised forms, and other information that it deemed appropriate to address the issues raised in the NOPSEs and to any score reductions imposed by the Florida Housing Finance Corporation. In response to the NOPSEs filed by the competing applicants and the Florida Housing Finance Corporation's reduction in Boynton's Form 5 score, Boynton submitted an explanation on a Cure Form, which stated in relevant part the following: [T]he application involves substantial rehabilitation with new amenity areas, a clubhouse/community center and dumpsters. To meet the demands called for under the proposed renovation, many of the parking spaces are lost to provide for the rehabilitation and other features called for within the application. As such, because of these significant changes, the applicant would have had have [sic] new parking areas and the incurred costs in providing for the new parking. In cooperation and conjunction with the City, the applicant was able to obtain specific cost savings for the parking and has evidenced same within the application as called for. The applicant is saving the stated number of spaces and the costs associated with otherwise having to build them. According to the Cure submitted by Boynton, the application "involves substantial rehabilitation with new amenity areas, a clubhouse/community center and dumpsters." Boynton also stated that "to meet the demands called for under the proposed renovation, many of the parking spaces are lost to provide for the rehabilitation and other features called for within the application." While the Cure submitted by Boynton referred generally to "amenity areas" and a "clubhouse/community and dumpsters," Form 7 of Boynton's application noted the specific features that would be included in the Boynton Terrace rehabilitation project. Form 7 of the application listed several features that could be included in the rehabilitation project. From this list, applicants were to mark the boxes, indicating the particular features that would be included in their respective developments. Form 7 including the category, "Quality of Design," includes Sections A, B, and C. Each section lists features which the applicant may provide as part of the rehabilitation project. At the end of the "Quality of Design" category" is the following pre-printed language: IMPORTANT! CHECKING ITEMS IN SECTIONS A, B, AND C OF QUALITY DESIGN COMMITS THE APPLICANT TO PROVIDE THEM. . . . On Form 7, Section B of the "Quality of Design" category, Boynton indicated that it would provide eight of the listed features. These features included the following: an exercise room, a community center or clubhouse, a playground/tot lot, a covered picnic area, an outside recreation facility for older children, and a library. After Boynton submitted its Cure Form, competing applicants filed (NOADs) with the Florida Housing Finance Corporation pursuant to Rule 67-48.004(12), Florida Administrative Code, as adopted on February 22, 2001. One NOAD indicated that no documents were submitted by Boynton to show the number of spaces that would have to be eliminated or demolished as part of the rehabilitation or how many spaces would have to be constructed as part of the rehabilitation process. Another NOAD stated that the Cure submitted by Boynton amounted to a "de facto appeal," because the initial application did not indicate that the renovation would involve the loss of parking spaces. The NOADs relied on a 1980 as-built survey to argue that Boynton Terrace already contained a parking lot with 157 spaces. Based on its review of Boynton's Cure Form and the NOADs submitted in response thereto, the Florida Housing Finance Corporation determined that Boynton should be awarded 8.79 points for Form 5. The Florida Housing Finance Corporation believes that the 8.79 points awarded to Boynton for Form 5 are appropriate based on its determination of the local government contribution listed on and substantiated by the application and the information provided on Boynton's Cure Form. In reducing Boynton's preliminary award for Form 5 from 20 points to 8.79, the Florida Housing Finance Corporation accepted and concurred with the statements expressed in the NOPSEs. According to those statements, described in paragraph 28, Boynton should receive credit for a local contribution of $66,985, the cost of building 11 parking spaces. The Florida Housing Finance Corporation does not accept that the proposed cost of constructing each new parking space is $6,089, as noted in Boynton's application, is the actual cost. Rather, it considers the proposed cost of $6,089 to be questionable. The reason the Housing Corporation questioned the proposed cost of $6,089 to construct each new parking space was that documentation reflected that during a period of less than three months, the projected cost went from $4,017.19 per space as of December 6, 2000, to $5,821 as of February 12, 2001, and finally to $6,089 as of February 23, 2001. During the time Boynton's application was being reviewed, Mr. Christopher Bushwell, a former construction manager with the Corps of Engineers and an auditor with the Florida Housing Finance Corporation, questioned the increased cost of the construction of each parking space from $4000 to $6000. Despite Mr. Bushwell's concern about the accuracy of the projected cost of construction of each parking space, no staff member of the Florida Housing Finance Corporation called to verify the figure with the City of Boynton Beach. The Florida Housing Finance Corporation produced no evidence to support its contention that the projected or estimated cost for construction of each parking space was not accurate. Yet it persisted in its belief that Boynton "back[ed] into" the parking space estimates solely for the purpose of presenting to the Florida Housing Finance Corporation a local government contribution equal to or near $353,196, a figure that would result in Boynton's being awarded the maximum of 20 points for Form 5. The projected cost of $4,017 for construction of a parking space was included on the City's Variance Review Report dated December 6, 2000. That report analyzed Boynton's request that a variance be granted that allowed one parking space per unit, or a total of only 84 parking spaces. It is unknown who arrived at this figure or how it was derived. On January 16, 2001, the City agreed to grant Boynton a variance to reduce the number of parking space by 58, thereby reducing the number of required parking spaces from two spaces per unit to 1.3 spaces per unit. After the variance was granted on January 16, 2001, on February 12, 2001, the City of Boynton Beach submitted a letter to the Florida Housing Finance Corporation stating that the variance had been granted reducing the required number of parking spaces from two spaces per unit to 1.3 spaces per unit. The letter stated that the cost for each parking space was $5,821, which would result in a local government contribution of $337,630. On February 23, 2001, the City of Boynton Beach submitted another letter to the Florida Housing Finance Corporation identical to the February 12, 2001, letter except that the attachment to the former letter indicated that the construction cost for each parking space was $6.089.60. This projected cost would result in the local government contribution of $353,196.80 for the reduction in required parking spaces. The estimates for the cost of constructing each parking space stated in the February 12 and February 23, 2001, letters were made by Jeffrey Kammerude and approved by the City's Engineering Department. Mr. Kammerude is a licensed contractor and the construction manager of Heritage Construction Company, the company that would be responsible for the renovation of Boynton Terrace. Mr. Kammerude changed the estimated cost of each parking space from $5,821 to $6,089 because at the time of the former estimate, it was his belief that the local building code required a 20-foot minimum driveway or aisle-way. However, after meeting with City officials, Mr. Kammerude was told that the 20-foot aisle-way that he had used in making the February 12, 2001, estimate was incorrect and that with the back-to-back parking that existed at Boynton Terrace, the aisle-way had to be 27 feet wide. The increased size of the aisle-way would require a corresponding increase in the required pavement and, thus, an increase in the cost of constructing each parking space. The reason given by Mr. Kammerude for increasing the estimated cost of each parking space was uncontroverted. Moreover, the greater weight of the evidence established that the estimated cost of $6,089 per parking space was not only reasonable, but was likely lower than the actual per space construction cost because it did not include the cost of curbing. In view of the credible testimony of Mr. Kammerude, the cost estimate of $6,089.60 for constructing a parking space at Boynton Terrace is reasonable. In February 2001, at or near the time Boynton submitted its application to the Florida Housing Finance Corporation, the parking lot at Boynton Terrace was in poor condition and had many potholes and cracks in the pavement. Given the condition of the parking lot, the rehabilitation of Boynton Terrace would require repaving of at least part of the parking lot. On October 31, 2001, about eight months after Boynton submitted its application, Mr. Bushnell went to Boynton Terrace to count the parking spaces and look at the parking lot. From his cursory observation, it appeared that the parking lot had been recently resurfaced and was in "excellent shape. However, Mr. Bushnell did not conduct a comprehensive inspection of the parking lot and was unable to determine the quality of the work done on the parking lot or whether the work complied with the requirements of the applicable provisions of the City of Boynton Beach Land Development Code. The City of Boynton Beach requires a permit for the repaving and/or repair of parking lots at developments such as Boynton Terrace. However, no permit was issued for the repaving and/or repair of the parking lot at Boynton Terrace referenced in the preceding paragraph. Consequently, the City never conducted an inspection of the parking lot to determine if the parking lot repairs and/or repaving at Boynton Terrace met the applicable City Code requirements. Based on the number of parking spaces that he counted while at Boynton Terrace, Mr. Bushnell questioned the cost reduction of eliminating spaces. Moreover, because Mr. Bushnell saw concrete pads in place for dumpsters, he did not believe that parking spaces needed to be eliminated in order to place dumpsters on the property. Finally, in reaching the conclusion that there would be no reduction in parking spaces, Mr. Bushnell did not consider the number of spaces that would be eliminated as a result of the addition of any of the new amenities to the property such as the clubhouse/community center, picnic areas, and mailbox kiosks, and the landscaping required under the City Code. Boynton had a site plan prepared on or near December 2000, which showed the placement of many of the new amenities to be included as a part of the rehabilitation of the Boynton Terrace development. The site plan was used as part of Boynton's submission and presentation to the City when it was seeking a parking space variance. According to the site plan, the clubhouse/community center would consume 25 to 30 parking spaces, the landscaping of the development would consume about 15 parking spaces, and the picnic area would consume about two to four parking spaces. The Florida Housing Finance Corporation did not consider that the addition of the new amenities would reduce the number of parking spaces at the property and result in the need to construct new parking spaces unless the City of Boynton Beach granted a variance to Boynton. Boynton did not include the December 2000 site plan as part of its application or Cure submitted to the Florida Housing Corporation. Moreover, Boynton did not provide information in its application or Cure regarding how many spaces would be eliminated as a result of construction of a clubhouse community center. At hearing, Boynton presented credible evidence that the clubhouse/community center would be constructed over existing parking spaces and that without a variance from the City of Boynton Beach, it would have to construct new spaces to replace those spaces lost to construction as well as to other features related to the rehabilitation of the development. Boynton also presented credible evidence that additional parking spaces at Boynton Terrace would be eliminated due to the City's landscaping requirements, the construction of a picnic area, a tot lot, and mail box kiosks. The City's Code requires 20 feet of landscaping for each parking space. However, this information was not included in the Cure submitted by Boynton to the Florida Housing Finance Corporation. The variance granted by the City of Boynton Beach amounted to a waiver of the parking space requirements applicable to the Boynton Terrace rehabilitation project which provided a tangible economic benefit that resulted in a quantifiable cost reduction that is specific to the development.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation award to Petitioner, Boynton Associates, Ltd., the maximum number of 20 points for Form 5 of the 2001 Combined Cycle, and enter a Final Order awarding Boynton Associates, Ltd., a total of 622 points for it Combined Cycle Application. DONE AND ENTERED this 17th day of April, 2002, in Tallahassee, Leon County, Florida, CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of April, 2002. COPIES FURNISHED: Mark Kaplan, Executive Director Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Elizabeth G. Arthur, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 Jon C. Moyle, Jr., Esquire Moyle, Flanigan, Katz, Kollins, Raymond & Sheehan, P.A. 118 North Gadsden Street Tallahassee, Florida 32301
The Issue The issues for determination are: (1) whether Riverside Village Partners, LTD. (Riverside or Petitioner), has, or had at the time of application, a present plan to convert its proposed development to any use other than affordable residential rental property; (2) whether Provincetown Village Partners, LTD. (Provincetown or Petitioner), has, or had at the time of application, a present plan to convert its proposed development to any use other than affordable residential rental property; (3) whether Riverside irrevocably committed to set aside units in its proposed development for a total of 50 years; and (4) whether Provincetown irrevocably committed to set aside units in its proposed development for a total of 50 years.
Findings Of Fact Parties Petitioner, Provincetown Village Partners, LTD., is a Florida limited partnership with its business address at 1551 Sandspur Road, Maitland, Florida 32751, and is in the business of providing affordable housing units. Petitioner, Riverside Village Partners, LTD., is a Florida limited partnership with its business address at 1551 Sandspur Road, Maitland, Florida 32751, and is in the business of providing affordable housing units. Respondent, Florida Housing Finance Corporation (Florida Housing), is a public corporation that administers governmental programs relating to the financing and refinancing of affordable housing and related facilities in Florida pursuant to Section 420.504, Florida Statutes (2003). Florida Housing's Financing Mechanisms To encourage the development of affordable rental housing for low-income families, Florida Housing provides low-interest mortgage loans to developers of qualified multi-family housing projects. In exchange for an interest rate lower than conventional market rates, the developer agrees to "set-aside" a specific percentage of the rental units for low-income tenants. Through its Multi-Family Mortgage Revenue Bond (MMRB) program, Florida Housing funds these mortgage loans through the sale of tax-exempt and taxable bonds. Applicants then repay the loans from the revenues generated by their respective projects. Applicants who receive MMRB proceeds are required to execute a Land Use Restriction Agreement (LURA or Land Use Restriction Agreement), which is recorded in the official records of the county in which the applicant’s development is located. Through the State Apartment Incentive Loan (SAIL) program, Florida Housing funds low-interest mortgage loans to developers from various sources of state revenue, which are generally secured by second mortgages on the property. Applicants who receive SAIL proceeds are required to execute and record a LURA in the county records as with MMRB's Land Use Restriction Agreements. Florida Housing also distributes federal income tax credits for the development of affordable rental housing for low-income tenants; those tax credits are referred to as "housing credits." Generally, applicants who utilize tax-exempt bond financing for at least 50 percent of the cost of their development are entitled to receive an award of housing credits on a non-competitive basis. These non-competitive housing credits are received by the qualified applicant each year for ten consecutive years. Typically, applicants sell this future stream of housing credits at the initiation of the development process in order to generate a portion of the funds necessary for the construction of the development. The Application, Scoring, and Ranking Process Because Florida Housing’s available pool of tax-exempt bond financing and SAIL funds is limited, qualified projects must compete for this funding. To determine which proposed projects will put the available funds to best use, Florida Housing has established a competitive application process to assess the relative merits of proposed projects. Florida Housing’s competitive application process for MMRB and SAIL financing is included with other financing programs within a single application process (the 2003 Universal Application) governed by Florida Administrative Code Rule Chapters 67-21 and 67-48. The 2003 Universal Application form and accompanying instructions are incorporated as Form "UA1016" by reference into Florida Administrative Code Chapters 67-21 and 67-48 and by Florida Administrative Code Rules 67-21.002(97), and 67-48.002(111), respectively. For the 2003 Universal Application cycle, each applicant who completed and submitted Form UA1016 with attachments was given a preliminary score by Florida Housing. Following the issuance of preliminary scores, applicants are provided an opportunity to challenge the scoring of any competing application through the filing of a Notice of Possible Scoring Error (NOPSE). Florida Housing considers each NOPSE filed and provides each applicant with notice of any resulting change in their preliminary scores (the NOPSE scores). Following the issuance of NOPSE scores, Florida Housing provides an opportunity for applicants to submit additional materials to "cure" any items for which the applicant received less than the maximum score or for which the application may have been rejected for failure to achieve "threshold." There are certain portions of the application which cannot be cured; the list of noncurable items appears in Florida Administrative Code Rules 67-21.003(14) (for MMRB applicants) and 67-48.004(14) (for SAIL applicants). Following the cure period, applicants may again contest the scoring of a competing application by filing a Notice of Alleged Deficiencies (NOAD), identifying deficiencies arising from the submitted cure materials. After considering the submitted NOADs, Florida Housing provides notice to applicants of any resulting scoring changes. The resulting scores are known as "pre-appeal" scores. Applicants may appeal and challenge, via formal or informal hearings, Florida Housing’s scoring of any item for which the applicant received less than the maximum score or for any item that resulted in the rejection of the application for failure to meet "threshold." Upon the conclusion of the informal hearings, and of formal hearings where appropriate, Florida Housing issues the final scores and ranking of applicants. Applicants are then awarded tentative MMRB and/or SAIL funding in order of rank; Florida Housing issues final orders allocating the tentative funding and inviting successful applicants in the credit underwriting process. If an applicant who requests a formal hearing ultimately obtains a final order that modifies its score and threshold determinations so that its application would have been in the funding range had the final order been entered prior to the date the final rankings were presented to the Florida Housing Board of Directors (Board), that applicant’s requested funding will be provided from the next available funding or allocation. The 2003 Application Process On or about April 8, 2003, Riverside, Provincetown, and others submitted applications for MMRB and SAIL financing in the 2003 Universal Application cycle. Riverside requested $3,205,000 in tax-exempt MMRB funding and $1.6 million in SAIL funding to help finance its proposed development, a 34-unit development in Pinellas County, Florida. In its application, Riverside committed to lease all or most of these units to house families earning 60 percent or less of the area median income (AMI). However, depending on which Florida Housing funding source(s) Riverside’s application was deemed eligible to receive, it would commit to lease at least 17 percent of the units to families earning 50 percent or less of AMI, or would commit to lease only a total of 85 percent of the units to families earning 60 percent or less of AMI. Provincetown requested $4.5 million in tax-exempt MMRB funding and $2.0 million in SAIL funding to help finance its proposed development, a 50-unit development in Gadsden County, Florida. In its application, Provincetown committed to lease all or most of the units to families earning 60 percent or less of AMI. However, depending on which Florida Housing program(s) Provincetown’s application was deemed eligible to receive, it would commit to lease at least 11 percent of the units to families earning 50 percent or less of AMI, or would commit to lease only a total of 85 percent of the units to families earning 60 percent or less of AMI. Florida Housing evaluated all applications and notified applicants of their preliminary scores on or before May 12, 2003. Applicants were then given an opportunity to file NOPSEs on or before May 20, 2003. After considering all NOPSEs, Florida Housing notified applicants by overnight mail on or about June 9, 2003, of any resulting changes in the scoring of their applications. Applicants were then allowed to submit, on or before June 19, 2003, cure materials to correct any alleged deficiencies in their applications previously identified by Florida Housing. Applicants were also allowed to file NOADs on competing applications on or before June 27, 2003. After considering the submitted NOADs, Florida Housing issued notice to Provincetown, Riverside, and others of their adjusted scores on or about July 21, 2003. Commitment to Affordability Period Florida Administrative Code Rule 67-21.006, entitled "Development Requirements," lists certain minimum requirements that a development shall meet or that an applicant shall be able to certify that such requirements shall be met. One of these requirements is "The Applicant shall have no present plan to convert the Development to any use other than the use as affordable residential rental property." Part III.E.3 of the Application provides a line for an applicant to commit to an "affordability period" for its application. This subsection of the application form reads in its entirety: 3. Affordability Period for MMRB, SAIL, HOME, and HC Application: Applicant irrevocably commits to set aside units in the proposed Development for a total of years. Both Provincetown and Riverside filled in the number "50" on the blank line in this subsection of their respective applications. An applicant’s score on its application is determined in part by the length of its affordability period commitment. An applicant who commits to an affordability period commitment of 50 or more years received 5 points; 45 to 49 years, 4 points; 40 to 44 years, 3 points; 35 to 39 years, 2 points; 31 to 34 years, 1 point; and 30 years or less, 0 points. Scoring of Provincetown and Riverside Applications In its preliminary scoring of the Provincetown and Riverside applications, Florida Housing awarded each applicant the full 5 points on Part III.E.3 of his or her application for the 50-year affordability period commitment. Also, in the preliminary scoring of the Provincetown and Riverside applications, Florida Housing did not find any threshold failure regarding an alleged present plan to convert the development to a use other than affordable residential rental property. In its preliminary scoring of the Provincetown application, Florida Housing identified an alleged threshold failure related to the validity of the contract for purchase of the site of the proposed development. A subsequent cure submitted by Provincetown regarding the contract for purchase of the site has resolved this issue, and Florida Housing no longer takes the position that the Provincetown application fails threshold for any reason related to site control. In its preliminary scoring of the Riverside application, Florida Housing identified a threshold failure related to documentation of the status of site plan approval, or plat approval, for the proposed development. A subsequent cure submitted by Riverside regarding the status of site plan approval has resolved this issue, and Florida Housing no longer takes the position that the Riverside application fails threshold for any reason related to site plan approval, or plat approval. During the scoring process, Florida Housing received NOPSEs on both the Provincetown and Riverside applications, which asserted that these applicants were proposing transactions that were not financially feasible and would not pass subsequent credit underwriting requirements. The NOPSEs also alleged that the Riverside and Provincetown applications were for townhouses designed with an intent to eventually convert to home ownership in violation of Florida Administrative Code Rule 67-21.006(6). According to that rule, the applicant shall have no present plan to convert the development to any use other than the use as affordable residential rental property. After reviewing these NOPSEs, but before issuing revised NOPSE scores, Florida Housing determined that it was inappropriate to apply subsequent credit underwriting requirements during the scoring of these applications, and therefore, disagreed with the allegations of the NOPSEs on those grounds. Accordingly, Florida Housing's scoring summaries for Riverside and Provincetown issued, after receipt of the NOPSEs, raised no issues concerning financial feasibility, and it was not placed at issue in this proceeding. Following the filing of NOPSEs, Florida Housing released NOPSE scores for all applicants, including Riverside and Provincetown. The NOPSE scores are reflected on a NOPSE Scoring Summary dated June 9, 2003. For both Provincetown and Riverside, the NOPSE Scoring Summary contained the following statement regarding alleged threshold failure, identifying two separate reasons for the alleged threshold failure: The proposed Development does not satisfy the minimum Development requirements stated in Rule 67-21.006, F.A.C. The Development is not a multifamily residential rental property comprised of buildings or structures each containing four or more dwelling units. Further, the Applicant has a present plan to convert the Development to a use other than as an affordable residential rental property. The first threshold failure noted in the preceding paragraph relates to Florida Administrative Code Rule 67-21.006(2), which requires that there be four or more residential units per building for projects financed with MMRB. A subsequent cure regarding the design of the proposed developments has resolved this issue, and Florida Housing no longer contends that these applications, as cured, exhibit a threshold failure related to the number of residential units per building. The second threshold failure noted in the NOPSE Scoring Summary and quoted in paragraph 30 above, relates to Florida Administrative Code Rule 67-21.006(6), which requires that applicants "shall have no present plan to convert the Development to any use other than the use as affordable residential rental property." In response to the NOPSE Scoring Summaries, both Provincetown and Riverside submitted cures to their respective applications. In the cures, Provincetown and Riverside presented their explanations of how they believed their applications, as submitted, demonstrated a 50-year affordability period commitment and included these applicants’ contentions that they had no present plan to convert the developments to a use other than affordable residential rental property. For Provincetown, an issue had also been raised by a NOPSE concerning whether the Provincetown application was entitled to certain "tie-breaker" points for the distance from the proposed development to a public transportation stop. The points awardable to Provincetown for tie-breaker purposes are not in dispute, and Provincetown, if its application is otherwise deemed to meet threshold requirements, would be entitled to 5.0 of a possible 7.5 tie-breaker points. If Riverside's application were deemed to meet threshold requirements and if the 5 points for the affordability period commitment were restored, Riverside would have been within the funding range for applicants within the 2003 Universal Application cycle at the time the Board took final action on the ranking of applications on October 9, 2003. If Provincetown's application were deemed to meet threshold requirements and if the five points for the affordability period commitment were restored, Provincetown would have been within the funding range for applicants within the 2003 Universal Application cycle at the time the Board took final action on the ranking of applications on October 9, 2003. The Sciarrino Letter and Cures After reviewing the NOPSEs filed against the Provincetown and Riverside applications, Florida Housing received a letter dated June 2, 2003 (Sciarrino letter or letter), from Michael Sciarrino, president of the CED Companies, addressed to Orlando Cabrera, executive director of Florida Housing, with a copy to Kerey Carpenter, deputy development officer of Florida Housing. Michael Sciarrino is a manager of the sole general partner (CED Capital Holdings 2003 Y, LLC., a Florida limited liability company) of Provincetown. Mr. Sciarrino is also a Class B limited partner of the sole member of the general partner (CED Capital Holdings XVI, LTD., a Florida limited partnership). Michael Sciarrino is a manager of the sole general partner (CED Capital Holdings 2003 K, LLC., a Florida limited liability company) of Riverside. Mr. Sciarrino is also a Class B limited partner of the sole member of the general partner (CED Capital Holdings 2003 XVI, LTD., a Florida limited partnership). As manager of the sole general partner of Provincetown and Riverside, Mr. Sciarrino had supervisory authority and editorial control over the processing and preparation of the Provincetown and Riverside applications. The Sciarrino letter was drafted, in part, to respond to the allegations of the NOPSEs filed against Provincetown and Riverside applications and specifically addressed those issues pertaining to Provincetown and Riverside applications. Also, while the letter does not mention Petitioners by name, the description and location of the properties, as detailed in the letter, clearly refer to these applicants. The Sciarrino letter evinces a present plan on the part of Petitioners to convert the proposed developments to a use other than that of affordable residential rental housing. First, the letter describes in detail the economic motivations for the subsequent sale of the units of the proposed development within the 50-year extended affordability period stating that the "residual value potential" of such an arrangement "is the single biggest economic reason for our desire to develop these communities." Next, the letter describes in detail the means by which Petitioners would be relieved of the commitment to a 50-year affordability period as stated in their applications, that is, by seeking a waiver from Board after the 15-year period of tax credit recapture exposure had expired. Third, the letter plainly states that Petitioners had intended to request such relief from the 50-year affordability period in the future. Petitioners' present plan to convert the proposed developments for sale to homeowners during the 50-year extended affordability period is further evident by the fact that the concept of such a conversion existed prior to and at the time the applications were filed. Moreover, the Provincetown and Riverside developments were specially selected to test the concept. On or about June 19, 2003, Petitioners filed cures with Florida Housing addressing the issues raised in the NOPSEs. While the cures presented argument in favor of their respective applications and reiterated Petitioners' commitment to the 50-year extended affordability period for each proposed development, they did not deny that it was their intention to seek relief from this period in the future. Following review of the Sciarrino letter and the cures submitted by Petitioners, Florida Housing rejected both the Provincetown and Riverside applications for failing to meet the mandatory development requirement set forth in Florida Administrative Code Rule 67-21.006(6). The applications also had five points deducted from their scores on the grounds that, under the circumstances, their commitment to an affordability period could not be determined.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order that upholds the scoring of the applications of Riverside Village Partners, LTD., and Provincetown Village Partners, LTD.; that rejects the applications of Riverside Village Partners, LTD., and Provincetown Village Partners, LTD.; and that denies the relief requested in the Petitions. DONE AND ENTERED this 27th day of February, 2004, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of February, 2004. COPIES FURNISHED: Hugh R. Brown, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 M. Christopher Bryant, Esquire Oertel, Fernandez & Cole, P.A. 301 South Bronough Street, Fifth Floor Post Office Box 1110 Tallahassee, Florida 32302-1110 Orlando J. Cabrera, Executive Director Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 Wellington H. Meffert, II, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301
The Issue At issue in this proceeding is whether the actions of the Florida Housing Finance Corporation (“Florida Housing”) concerning the review and scoring of the responses to Request for Applications 2016-110, Housing Credit Financing for Affordable Housing Developments Located in Medium and Small Counties (the “RFA”), was clearly erroneous, contrary to competition, arbitrary or capricious. Specifically, the issue is whether Florida Housing acted contrary to the agency’s governing statutes, rules, policies, or the RFA specifications in finding that the applications of Petitioners JPM Outlook One Limited Partnership (“JPM Outlook”) and Grande Park Limited Partnership (“Grande Park”) were ineligible for funding.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: JPM Outlook is a Florida limited partnership based in Jacksonville, Florida, that is in the business of providing affordable housing. Grande Park is a Florida limited partnership based in Jacksonville, Florida, that is in the business of providing affordable housing. Hammock Ridge is a Florida limited liability company based in Coconut Grove, Florida, that is in the business of providing affordable housing. Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. For the purposes of this proceeding, Florida Housing is an agency of the State of Florida. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low-income housing tax credits. The low income housing tax credit program was enacted to incentivize the private market to invest in affordable rental housing. These tax credits are awarded competitively to housing developers in Florida for rental housing projects that qualify. The credits are then normally sold by developers for cash to raise capital for their projects. The effect of this sale is to reduce the amount that the developer would have to borrow otherwise. 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. Housing tax credits are not tax deductions. For example, a $1,000 deduction in a 15-percent tax bracket reduces taxable income by $1,000 and reduces tax liability by $150, 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. Florida Housing is authorized to allocate housing tax credits and other funding by means of a request for proposal or other competitive solicitation in section 420.507(48). Florida Housing has adopted chapter 67-60 to govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing allocate its housing 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). In their applications, applicants request a specific dollar amount of housing tax credits to be given to the applicant each year for a period of 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. The amount which can be received depends upon the accomplishment of several factors, such as a certain percentage of the projected Total Development Cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated area of some counties. This, however, is not an exhaustive list of the factors considered. Housing tax credits are made available through a competitive application process commenced by the issuance of a Request for Applications. A Request for Applications is equivalent to a “request for proposal,” as indicated in rule 67-60.009(3). The RFA in this case was issued on October 7, 2016. A modification to the RFA was issued on November 10, 2016, and responses were due December 2, 2016. A challenge was filed to the terms, conditions, or requirements of the RFA by parties not associated with the instant case, but that challenge was dismissed prior to hearing. Through the RFA, Florida Housing seeks to award up to an estimated $12,312,632 of housing tax credits to qualified applicants to provide affordable housing developments in Medium Counties, as well as up to an estimated $477,091 of housing tax credits to qualified applicants to provide affordable housing developments in Small Counties other than Monroe County. By the terms of the RFA, a review committee made up of Florida Housing staff reviewed and scored each application. These scores were presented in a public meeting and the committee ultimately made a recommendation as to which projects should be funded. This recommendation was presented to Florida Housing’s Board of Directors (“the Board”) for final agency action. On March 24, 2017, all applicants received notice that the Board had approved the recommendation of the review committee concerning which applications were eligible or ineligible for funding and which applications were selected for awards of housing tax credits, subject to satisfactory completion of the credit underwriting process. The notice was provided by the posting on Florida Housing’s website (www.floridahousing.org) of two spreadsheets, one listing the “eligible” and “ineligible” applications and one identifying the applications which Florida Housing proposed to fund. Florida Housing announced its intention to award funding to 10 developments, including Intervenor Hammock Ridge. Petitioners JPM Outlook and Grande Park were deemed ineligible. If JPM Outlook and Grande Park had been deemed eligible, each would have been in the funding range based on its assigned lottery number and the RFA selection criteria. If Grande Park had been deemed eligible, Hammock Ridge would not have been recommended for funding. Petitioners JPM Outlook and Grande Park timely filed notices of protest and petitions for administrative proceedings. The scoring decision at issue in this proceeding is based on Florida Housing’s decision that Petitioners failed to submit as Attachment 1 to Exhibit A the correct and properly signed version of the Applicant Certification and Acknowledgment Form. Petitioners’ admitted failure to submit the correct Applicant Certification and Acknowledgement Form was the sole reason that Florida Housing found Petitioners’ applications to be ineligible for funding. Section Four of the RFA was titled, “INFORMATION TO BE PROVIDED IN APPLICATION.” Listed there among the Exhibit A submission requirements was the Applicant Certification and Acknowledgement Form, described as follows: The Applicant must include a signed Applicant Certification and Acknowledgement form as Attachment 1 to Exhibit A to indicate the Applicant’s certification and acknowledgement of the provisions and requirements of the RFA. The form included in the copy of the Application labeled “Original Hard Copy” must reflect an original signature (blue ink is preferred). The Applicant Certification and Acknowledgement form is provided in Exhibit B of this RFA and on the Corporation’s Website http://www.floridahousing.org/Developers/ MultiFamilyPrograms/Competitive/2016- 110/RelatedForms/ (also accessible by clicking here). Note: If the Applicant provides any version of the Applicant Certification and Acknowledgement form other than the version included in this RFA, the form will not be considered. The final sentence of the quoted language is referred to by Florida Housing as the “effects clause.” The November 10, 2016, modifications to the RFA were communicated to applicants in three ways. First, Florida Housing provided a Web Board notice. The Florida Housing Web Board is a communication tool that allows interested parties and development partners to stay apprised of modifications to procurement documents. Second, each RFA issued by Florida Housing, including the one at issue in this proceeding, has its own specific page on Florida Housing's website with hyperlinks to all documents related to that RFA. Third, Florida Housing released an Official Modification Notice that delineated every modification, including a “blackline” version showing the changes with underscoring for emphasis. Brian Parent is a principal for both JPM Outlook and Grande Park. Mr. Parent received the Web Board notification of the RFA modifications via email. Upon receiving the email, Mr. Parent reviewed the modifications on the Florida Housing website. The modification to the RFA, posted on Florida Housing’s website on November 10, 2016, included the following modification of the Applicant Certification and Acknowledgement Form, with textual underscoring indicating new language: Pursuant to Rule 67-60.005, F.A.C., Modification of Terms of Competitive Solicitations, Florida Housing hereby modifies Item 2.b.(4) of the Applicant Certification and Acknowledgement Form to read as follows: (4) Confirmation that, if the proposed Development meets the definition of Scattered Sites, all Scattered Sites requirements that were not required to be met in the Application will be met, including that all features and amenities committed to and proposed by the Applicant that are not unit- specific shall be located on each of the Scattered Sites, or no more than 1/16 mile from the Scattered Site with the most units, or a combination of both. If the Surveyor Certification form in the Application indicates that the proposed Development does not consist of Scattered Sites, but it is determined during credit underwriting that the proposed Development does meet the definition of Scattered Sites, all of the Scattered Sites requirements must have been met as of Application Deadline and, if all Scattered Sites requirements were not in place as of the Application Deadline, the Applicant’s funding award will be rescinded; Note: For the Application to be eligible for funding, the version of the Applicant Certification and Acknowledgement Form reflecting the Modification posted 11-10-16 must be submitted to the Corporation by the Application Deadline, as outlined in the RFA. Rule 67-48.002(105) defines “Scattered Sites” as follows: “Scattered Sites,” as applied to a single Development, means a Development site that, when taken as a whole, is comprised of real property that is not contiguous (each such non-contiguous site within a Scattered Site Development, is considered to be a “Scattered Site”). For purposes of this definition “contiguous” means touching at a point or along a boundary. Real property is contiguous if the only intervening real property interest is an easement, provided the easement is not a roadway or street. All of the Scattered Sites must be located in the same county. The RFA modification included other changes concerning Scattered Sites. Those changes either modified the Surveyor Certification Form itself or required applicants to correctly provide information concerning Scattered Sites in the Surveyor Certification Form. Each Petitioner included in its application a Surveyor Certification Form indicating that its proposed development sites did not consist of Scattered Sites. The Surveyor Certification Forms submitted were the forms required by the modified RFA. There was no allegation that Petitioners incorrectly filled out the Surveyor Certification Forms. However, the Applicant Certification and Acknowledgement Form submitted by each of the Petitioners was the original form, not the form as modified to include the underscored language set forth in Finding of Fact 20 regarding the effect of mislabeling Scattered Sites on the Surveyor Certification Form. The failure of JPM Outlook and Grande Park to submit the correct Applicant Certification and Acknowledgement Form was the sole reason that Florida Housing found them ineligible for funding. In deposition testimony, Ken Reecy, Florida Housing’s Director of Multifamily Programs, explained the purpose of the Applicant Certification and Acknowledgement Form: There’s a number of things that we want to be sure that the applicants are absolutely aware of in regard to future actions or requirements by the Corporation. If they win the award, there are certain things that they need to know that they must do or that they are under certain obligations, that there’s certain obligations and commitments associated with the application to make it clear what the requirements--what certain requirements are, not only now in the application, but also perhaps in the future if they won awards. At the conclusion of a lengthy exposition on the significance of the modified language relating to Scattered Sites, Mr. Reecy concluded as follows: [W]e wanted to make sure that if somebody answered the question or did not indicate that they were a scattered site, but then we found out that they were, in fact, a scattered site, we wanted to make it absolutely clear to everyone involved that in the event that your scattered sites did not meet all of those requirements as of the application deadline, that the funding would be rescinded. Petitioners argue that the failure to submit the modified Applicant Certification and Acknowledgement Form should be waived as a minor irregularity. Their simplest argument on that point is that their applications did not in fact include Scattered Sites and therefore the cautionary language added to the Applicant Certification and Acknowledgement Form by the November 10, 2016, modifications did not apply to them and could have no substantive effect on their applications. Petitioners note that their applications included the substantive changes required by the November 10, 2016, modifications, including those related to Scattered Sites. Petitioners submitted the unmodified Applicant Certification and Acknowledgement Form as Attachment 1 to their modified Exhibit A. Petitioners further note that the “Ability to Proceed Forms” they submitted with their applications on December 2, 2016, were the forms as modified on November 10, 2016. They assert that this submission indicates their clear intent to acknowledge and certify the modified RFA and forms, regardless of their error in submitting the unmodified Applicant Certification and Acknowledgement Form. Petitioners assert that the Scattered Sites language added to the Applicant Certification and Acknowledgement Form by the November 10, 2016, modifications was essentially redundant. Mr. Reecy conceded that the warning regarding Scattered Sites was not tied to any specific substantive modification of the RFA. The language was added to make it “more clear” to the applicant that funding would be rescinded if the Scattered sites requirements were not met as of the application deadline. Petitioners point out that this warning is the same as that applying to underwriting failures generally. Petitioners assert that the new language had no substantive effect on either the Applicant Certification and Acknowledgement Form or on the certifications and acknowledgements required of the applicants. Even in the absence of the modified language, Petitioners would be required to satisfy all applicable requirements for Scattered Sites if it were determined during underwriting that their applications included Scattered Sites. Petitioners conclude that, even though the modified Applicant Certification and Acknowledgement Form was not included with either of their applications, the deviation should be waived as a minor irregularity. Florida Housing could not have been confused as to what Petitioners were acknowledging and certifying. The unmodified Applicant Certification and Acknowledgement Form was submitted with a modified Attachment 1 that included all substantive changes made by the November 10, 2016, modifications to the RFA. Petitioners gained no advantage by mistakenly submitting an unmodified version of the Applicant Certification and Acknowledgement Form. The submittal of the unmodified version of the form was an obvious mistake and waiving the mistake does not adversely impact Florida Housing or the public. Mr. Reecy testified that he could recall no instance in which Florida Housing had waived the submittal of the wrong form as a minor irregularity. He also observed that the credibility of Florida Housing could be negatively affected if it waived the submission of the correct form in light of the “effects clause” contained in Section Four: Due to the fact that we did have an effects clause in this RFA and we felt that, in accordance with the rule requirements regarding minor irregularities, that it would be contrary to competition because we wanted everybody to sign and acknowledge the same criteria in the certification; so we felt that if some did--some certified some things and some certified to others, that that would be problematic. And the fact that we had very specifically instructed that if we did not get the modified version, that we would not consider it, and then if we backed up and considered it, that that would erode the credibility of the Corporation and the scoring process. Mr. Reecy testified that the modification to the Applicant Certification and Acknowledgement Form was intended not merely to clarify the Scattered Sites requirement but to strengthen Florida Housing’s legal position in any litigation that might ensue from a decision to rescind the funding of an applicant that did not comply with the Scattered Sites requirements as of the application deadline. He believed that waiving the “effects clause” would tend to weaken Florida Housing’s legal position in such a case. Petitioners had clear notice that they were required to submit the modified Applicant Certification and Acknowledgement Form. They did not avail themselves of the opportunity to protest the RFA modifications. There is no allegation that they were misled by Florida Housing or that they had no way of knowing they were submitting the wrong form. The relative importance of the new acknowledgement in the modified form may be a matter of argument, but the consequences for failure to submit the proper form were plainly set forth in the effects clause. Florida Housing simply applied the terms of the modified RFA to Petitioners’ applications and correctly deemed them ineligible for funding.
Recommendation Based on the foregoing, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order confirming its initial decision finding JPM Outlook One Limited Partnership and Grande Park Limited Partnership ineligible for funding, and dismissing each Formal Written Protest and Petition for Administrative Hearing filed by JPM Outlook One Limited Partnership and Grande Park Limited Partnership. DONE AND ENTERED this 29th day of June, 2017, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of June, 2017.
The Issue The issue is whether the Florida Housing Finance Corporation (“Florida Housing” or “FHFC”) properly rescinded the preliminary funding awarded to SAS Fountains of Pershing Park, Ltd. (“Pershing Park”), pursuant to applicable rules, prior agency practice, and the existing case law.
Findings Of Fact Pershing Park is a Florida limited partnership whose business address is 655 West Morse Boulevard, Suite 212, Winter Park, Florida 32789. Pershing Park is engaged in the development of affordable housing in this state. Pershing Park is an "Applicant," as defined in Florida Administrative Code 67-8, and RFP 2010-04. Florida Housing is a public corporation created by Section 420.504, Florida Statutes, to administer the governmental function of financing or refinancing of affordable housing and related facilities in Florida. Florida Housing’s statutory authority and mandates appear in Part V of Chapter 420, Florida Statutes. Florida Housing is governed by a Board of Directors consisting of nine individuals, representing various affordable housing stakeholder interests1/ and two consumer members appointed by the Governor and confirmed by the Senate. The Secretary of the Department of Community Affairs sits as a voting ex officio member of the board. On February 26, 2010, Florida Housing issued RFP 2010- 04 (the “RFP”) setting forth criteria and qualifications for applicants to seek funding for affordable housing projects from funds that Florida received through the American Recovery and Reinvestment Act of 2009, PL 111-5 (“ARRA”). ARRA was enacted in 2009 by Congress as part of federal economic stimulus efforts. The RFP was issued on February 26, 2010, and required applicants to submit proposals to Florida Housing no later than 2:00 p.m. on March 12, 2010. Pershing Park submitted an application and intends to seek financing for its affordable housing project by applying for funding from the sources that are proposed to be allocated through the RFP. Florida Housing’s Programs Florida Housing administers several programs aimed at assisting developers to provide affordable multifamily rental housing for low-income Floridians. These programs include: the Multi-Family Mortgage Revenue Bond Program (“MMRB”) established under Section 420.509, Florida Statutes; the State Apartment Incentive Loan Program (“SAIL”) created pursuant to Section 420.5087, Florida Statutes; and the federal Low Income Housing Tax Credit Program (the “Tax Credit program”) established in Florida under the authority of Section 420.5093, Florida Statutes. Most relevant to this case is the Tax Credit Program, the allocation of which is governed by Section 420.5099, Florida Statutes. These funding sources are allocated by Florida Housing to finance the construction or substantial rehabilitation of affordable housing. A portion of the units constructed based upon funding from these programs must be set aside for residents earning a certain percentage of area median income (“AMI”). Historically, the units have typically been targeted to tenants earning 60 percent of AMI or below. Tax Credits The Tax Credit program was created in 1986 by the federal government. Tax Credits come in two varieties: competitively awarded 9 percent tax credits, and non- competitively awarded 4 percent tax credits. For the 9 percent credits, the federal government annually allocates to each state a specific amount of tax credits using a population-based formula. Tax Credits are a dollar-for-dollar offset to federal income tax liability over a ten-year period. A developer awarded Tax Credits will often sell the future stream of Tax Credits to a syndicator who in turn sells them to investors seeking to shelter income from federal income taxes. The developer receives cash equity with no debt associated with it. Thus, Tax Credits provide an attractive subsidy and, consequently, are a highly sought-after funding source. Florida Housing is the designated agency in Florida to allocate Tax Credits to developers of affordable housing. Every year since 1986, Florida Housing has received an allocation of Tax Credits to be used to fund the construction of affordable housing. As required by Section 42 of the Internal Revenue Code, each year Florida Housing adopts a Qualified Allocation Plan ("QAP"), which sets forth the allocation methodology for the competitive (9 percent) tax credits. The QAP must be approved by the Governor each year. The QAP is also adopted and incorporated by reference in Florida Housing's rules. See Fla. Admin. Code R. 67-48.002(88). The 2009 QAP includes the following provision: "In order for the Corporation to implement the provisions of The Recovery and Reinvestment Act of 2009 (the "2009 Stimulus Act"), any funds received pursuant to the 2009 Stimulus Act may be allocated by a competitive request for proposal or competitive application process as approved by the Board. Any such process will be governed by Section 42, IRC, and Chapter 67-48, F.A.C., as applicable, or, an emergency rule authorized by the Florida Legislature specifically for the 2009 Stimulus Act, if any." The 2009 QAP was adopted as part of the 2009 Universal Cycle rules by Florida Housing's Board of Directors on March 13, 2009. Universal Application Florida Housing has historically allocated funds from the MMRB, SAIL, and Tax Credit programs through a single annual application process. Since 2002, Florida Housing has administered the three programs through a combined competitive process known as the “Universal Cycle.” The Universal Cycle operates much the same as an annual competitive bidding process in which applicants compete against other applicants to be selected for limited funding. The Universal Cycle and the attendant application review process are intended to equitably and reasonably distribute affordable housing throughout the state. Florida Housing has adopted rules which incorporate by reference the application forms and instructions for the Universal Cycle as well as general policies governing the allocation of funds from the various programs it administers. Typically, Florida Housing amends its Universal Cycle rules, forms, and instructions every year. Each year, the Universal Cycle provides a mechanism for selecting applications to meet statutory geographic requirements, specific targeting goals that address housing needs of particular demographic groups (such as farm workers, commercial fishery workers, the homeless, or the elderly), as well as specific set asides or targeting goals aimed at addressing identified needs (such as the Florida Keys, inner city areas, or rural development), and for preservation of existing affordable housing complexes. Each set-aside group essentially has its own separate funding from its share of the funds distributed by Florida Housing. The typical process used by Florida Housing to review and approve the Universal Cycle applications operates as set forth in Florida Administrative Code Rule 67-48.004, and is summarized as follows: Interested developers submit applications by a specified date. Florida Housing reviews all applications to determine if certain threshold requirements are met. A score is assigned to each application. Applications receive points towards a numerical score, based upon such features as programs for tenants, amenities of the development as a whole and of tenants’ units, local government contributions to the specific development, and local government ordinances and planning efforts that support affordable housing in general. Florida Housing has built into its scoring and ranking process a series of “tiebreakers” to bring certainty to the selection process. The tiebreakers are written into the Application Instructions which, as indicated above, are incorporated by reference into Florida Housing’s rules. After the initial review and scoring, a list of all applications, along with their preliminary scores, is published by Florida Housing on its website. The applicants are then given a specific period of time to alert Florida Housing of any errors they believe Respondent made in its initial review of competitors' applications. These potential scoring errors are submitted through a Notice of Possible Scoring Error, or "NOPSE". After Florida Housing staff has reviewed the NOPSEs, a revised scoring summary (the "NOPSE Scores") is published. Applicants can then attempt to "cure" certain items within their applications by supplementing, correcting or amending the application or its supporting documentation. Following the timely submittal of "cures", an applicant's competitors have an opportunity to comment on the attempted cures by filing a Notice of Alleged Deficiency, or "NOAD." Florida Housing staff reviews all of the submitted cures and NOADs and prepares its "final" scoring summary for all applications. An appeal procedure for challenging the final scores is set forth in Florida Administrative Code Rule 67-48.005. Following the completion of any appeal proceedings, Florida Housing publishes final rankings which delineate the applications that are within the “funding range” for the various programs. In other words, the final rankings determine which applications are preliminarily selected for funding. The applicants ranked in the funding range are then invited into a “credit underwriting” process. Credit underwriting review of a development selected for funding is governed by Florida Administrative Code Rule 67-48.0072. In the Credit Underwriting Process, third party financial consultants (selected by Respondent, but paid for by the individual applicants) determine whether the project proposed in the application is financially sound. The independent third party looks at every aspect of the proposed development, including the financing sources, plans and specifications, cost analysis, zoning verification, site control, environmental reports, construction contracts, and engineering and architectural contracts. Pershing Park’s Application in the 2009 Universal Cycle Pershing Park timely submitted an application in the 2009 Universal Cycle seeking an award of Tax Credits and a supplemental loan to construct a 92-unit affordable rental housing development in Orlando, Orange County, Florida. The application proposed total development costs of $16,321,711 of which $14,429,558 were considered "allowable" costs on which an allocation of Housing Credits could be based. Pershing Park projected that approximately $8.8 million in construction financing and approximately $9.77 million in permanent financing would be generated from the sale of housing credits. The 2009 Universal Cycle also permitted applicants to project that a portion of their construction and permanent financing would be sought from funding made available through the ARRA. Pershing Park proposed in its application that $3.38 million in construction and permanent financing would result from an anticipated award of ARRA funding. The Pershing Park application was the subject of multiple NOPSEs, which questioned whether it was part of a pool of related applications (which would have relegated it to Priority II status under the 2009 rules); whether the required developer experience was demonstrated; whether the density on site allowed construction of 92 units; and whether the development site had a valid address. None of these NOPSEs was adopted by Florida Housing. Pershing Park complied with all of the requirements of the 2009 Universal Cycle Application and Instructions, and achieved a perfect score for its application. Pershing Park also achieved maximum tie-breaker points. As a result, Pershing Park was allocated $1,502,550 in annual Tax Credits. Economic Downturn and ARRA By the fall of 2008, significant changes were taking place in the economic environment and the affordable housing market in particular, and it became evident that the market for Tax Credits had dropped precipitously. Many projects that were awarded Tax Credits during the 2007 and 2008 Universal Cycles experienced difficulty in finding syndicators to purchase the awarded Tax Credits, or to purchase them at previously available rates, and, thus, were unable to proceed to closing. In February, 2009, in recognition of the collapse of the housing market and the difficulty in marketing and syndicating Tax Credits, Congress, as part of its economic stimulus efforts, enacted the ARRA, which established mechanisms to assist in the development of affordable housing and offset some of the economic devastation to developers. Congress included specific provisions in the ARRA intended to address the condition of the Tax Credit market. Section 1602 of the ARRA authorized the state Tax Credit allocating agencies to return up to 40 percent of the state's 2009 annual Tax Credit allocation, as well as Tax Credits awarded in 2007 and 2008 to the federal government, to be exchanged for a cash distribution of 85 cents for each tax credit dollar returned. The exchange of 2007 and 2008 Tax Credits generated a pool of $578,701,964 for the State of Florida. The RFP In response to ARRA, on February 26, 2010, Florida Housing issued RFP 2010-04 (the “RFP”), setting forth criteria and qualifications for developers to seek funding for affordable housing projects from money that had been allotted by the federal government as part of economic stimulus efforts. Except as specified otherwise in the RFP, the provisions of (Fla. Admin. Code) R. 67-48 (2009), governed the allocation of Exchange funds. The RFP solicited proposals from applicants with an “Active Award” of 9 percent (competitively awarded) Tax Credits. Pershing Park and 29 other applicants submitted proposals in response to the RFP, seeking awards ranging from $1.8 million to $5.0 million. Pershing Park and 28 of the 29 other applicants met the threshold requirements of the RFP. Pershing Park was preliminarily awarded $4.1 million in Exchange funding, and was invited into the credit underwriting process for both its 2009 award of tax credits and its 2010 award of Exchange funding. Credit Underwriting The representations contained in the applications for funding through FHFC are essentially taken at "face value" during the application scoring process. However, if invited to enter the underwriting process, the applicant's information is examined with an elevated level of scrutiny. Indeed, RFP 2010- 04 expressly advised applicants of this additional layer of review: An analysis of the Sponsor shall be completed with more in-depth consideration to key topics than typically completed by Florida Housing, including liquidity, net worth, unrestricted assets, and contingent liabilities. An analysis of the credit worthiness of the Developer shall be completed with more in-depth review than typically considered, including areas of past performance, default history, failed conversions, guarantor performance, and outstanding contingencies. (RFP 2010-04, Section Five, C.1.f, g.) Under the Credit Underwriting process, a professional credit underwriter is appointed by Florida Housing to review the proposed project that qualified for funding as a result of the Universal Cycle. Pursuant to the procedures set forth in Florida Administrative Code Rule 67-48.0072, Fla. Admin. Code, the credit underwriter reviews and assesses numerous financial, demographic, and market factors concerning the proposed project. The credit underwriter selected by Florida Housing to review the Pershing Park application was First Housing Development Corporation (“First Housing”). The credit underwriting process resulted in a negative recommendation from First Housing, based primarily on the "Developer Experience," contained at Exhibit 11 of Pershing Park's application. On June 18, 2010, Florida Housing’s Board of Directors considered First Housing's recommendation and voted to rescind funding to Pershing Park. This action effectively stopped the underwriting process. At hearing, Douglas McCree, CEO of underwriter First Housing, elaborated on his concerns regarding the Developer which formed the basis for his recommendation to deny funding to Pershing Park: The experience provided by the Developer's Principal (Mr. White) is more than 25 years old and involved a project completed before the Low Income Housing Tax Credit Program existed; One of the two projects identified as developer experience was foreclosed upon shortly after being placed in service; The Developer was not forthcoming with requested information, and in particular, did not reveal an action brought by the Securities and Exchange Commission against one of Mr. White's former companies (Whitemark Homes, Inc.); Mr. White apparently took no part in any activity as Principal of the Developer, and that all work normally done by or at the instance of the Principal was done by others without input from the Developer's Principal; The Pershing Park application was prepared and delivered to Florida Housing by employees of the GC, not the Developer. The Applicant, Developer, and General Contractor Southern Affordable Services, Inc. ("SAS") was formed in 2009 when more opportunities opened up for the development of affordable housing by non-profit entities. SAS is the sole member of the general partner and of the limited partner in SAS Fountains at Pershing Park, Ltd., the limited partnership which is the applicant. In Florida Housing's application process, the applicant is the owner. The owner directly contracts with the architect, the engineer, the developer, the general contractor ("GC"), and the management company. The applicant signs the notes for the financing and signs the loans. The applicant entity will become the owner of the project upon its completion. Applicants for Tax Credit financing are single asset, single purpose entities, usually established as limited partnerships, often with the same entity initially serving in the capacity of both a fractional (0.01%) general partner and a majority (99.99%) limited partner. A Housing Credit Syndicator purchases the limited partnership interest and either sells the credits to investors or uses the credits itself to offset tax liability. SAS is also the sole member of the developer, Southern Affordable Development, LLC. If SAS makes a profit from the Pershing Park development, such profit would be held and used to further the mission of the 50l(c)(3) corporation that is SAS. That mission is to help those who are disadvantaged, poor, and distressed, particularly in the area of housing. SAS also anticipates engaging in some wellness services and wellness care within its affordable housing developments. Scott Culp is a Principal with CPG Construction, LLLP ("CPG") and a licensed GC in the State of Florida. CPG is a multi-family residential builder almost exclusively of affordable rental housing. CPG is a general contracting company, but the services it provides to its clients include anything that relates in any manner to the construction of multi-family communities. CPG would be the GC on the Pershing Park project if the FHFC funding is restored. Mr. Culp has been involved in the development of approximately 75 affordable rental housing developments from 1995-2010, containing over 20,000 units. Over 50 of those 75 developments are in Florida. He has been involved in preparing and submitting between 400 and 500 applications to FHFC for financing. SAS relied on CPG and its Principal, Mr. Culp, to do the mechanical preparation of the forms, and particularly to give SAS guidance on how to prepare them correctly, and avoid errors. SAS's President, Scott Clark, understood the process to be very complicated and exacting, and one that was beyond his expertise. Thus, he leaned on the expertise of Mr. Culp and CPG to see that it was done correctly. Mr. Clark has known Mr. Culp for over 20 years. Generally, the primary role of the GC is to build the project. The GC's role is different from the Developer, in that the GC's obligation in a construction contract is for the construction in accordance with the plans and specifications, the contract documents, and whatever the owner has chosen to include in those documents. Typically, the Developer is involved with the owner making sure all those contract documents accurately reflect what the owner wants. The contractor is ultimately responsible for the actual construction in accordance with those contract documents. Pershing Park did not use a paid consultant to prepare its application. CPG assisted SAS with most parts of the application, but did not charge SAS a consulting fee for its services. CPG did the work because it was trying to maintain construction volume, and will likely be the GC on the project and earn a GC fee if the funding is approved. There is no requirement in Florida Housing's rules that a Principal of the owner or applicant must personally fill in the dots and check the boxes in the application submission process. However, there is a certification page included in the application that the owner must sign, indicating what he is proposing and what he is committing to. In this instance, the certification was appropriately signed by Scott Clark as President of SAS, the sole member of the general partner and of the limited partner in the applicant, SAS Fountains at Pershing Park, Ltd. In the development of affordable housing, as with any real estate development, a team approach is taken to development. The owner/applicant is ultimately responsible for the project, but the development team must be identified in the application. FHFC defines the development team to include the Developer, Management Agent, General Contractor, Architect/Engineer, Attorney, and Accountant. Florida Housing's rules define "Developer" as "any individual, association, corporation, joint venturer, or partnership which possesses the requisite skill, experience, and credit worthiness to successfully produce affordable housing as required in the Application." Fla. Admin. Code R. 67- 48.002(29). The developer routinely relies on the work of other professionals to perform their part of the job. For example, the developer relies on the architect to review plans for compliance with code, and if deemed necessary, the developer or contractor may even hire a third party architect to do peer review to ensure the project architect got it right. However, despite the developer’s hiring an architect to do code review, the developer is still responsible to the owner to perform his tasks with regard to ensuring those things are done. The developer does not have a contract with the architect; rather, the developer is coordinating that professional's work on behalf of the owner. While the developer may be responsible for seeing that necessary steps for the construction of the development have been done, there are many tasks which the developer does not and cannot personally do. For example, the developer may be responsible for assuring that the project is appropriately engineered to accommodate site conditions and utilities, but it is the project's licensed engineer that directly performs that work. And the developer may be ultimately responsible for the design and location of the buildings on the site to comply with site planning requirements, but the developer would rely on a licensed architect to design the buildings, and possibly a licensed engineer as to their configurations on the site. Similarly, the developer may be responsible for the design and location of landscaping features, but would rely on the landscape architect to perform those functions. And again, the developer may be responsible for compliance within environmental constraints on the site, and for ensuring that soil and other site conditions are conducive to the site development plan, but would rely on soil scientists and environmental consultants to actually perform those tasks. Although the developer is responsible for delivery of the finished product, FHFC's own rules specify that it is the GC who bears the responsibility for managing and controlling the construction of the development. Fla. Admin. Code R. 67- 48.0072(17)(e). By contrast, FHFC's rules do not specifically identify any task of the developer which is not delegable. Developer Experience The 2009 Universal Cycle Application Instructions set forth the experience that a Developer must demonstrate in order to be a candidate for funding in that cycle: Each experienced Developer or Principal of Developer must demonstrate experience in the completion; i.e., the certificate of occupancy has been issued for at least one building, of at least two affordable rental housing developments, at least one of which consists of a total number of units no less than 50 percent of the total number of units in the proposed Development, by providing a prior experience chart behind a tab labeled “Exhibit 11”. If providing experience acquired from a previous affordable housing Developer entity, the person signing the Developer or Principal of Developer Certification form must have been a Principal or Financial Beneficiary of that Developer entity. (Instructions, Part II B.1.C.) (Emphasis in original.) As noted, the Developer entity for Pershing Park, Southern Affordable Development, LLC, is a newly formed company with no development experience in its own right. Pursuant to FHFC rules, the developer identified as its manager Kenneth L. (Larry) White as bringing development experience to the organization.2/ It was necessary to have an experienced developer like Mr. White involved in this project. Otherwise, Mr. Clark, as president of the sole member of Southern Affordable Development, would have to run the development. But Mr. Clark is not a developer, and recognized he was in no position to run the development. Rather, he needed someone who had been in the development arena before, and knew that Mr. White was an experienced developer. Mr. White was retained as manager by the Developer entity through an Independent Services Agreement. As such, he is not part of the ownership structure, nor is he an employee. Rather, he is an independent contractor, engaged with particular duties as the manager of that business. Mr. White's scope of services is set out in Article 3 of the Agreement, and requires him to serve as an officer or manager of the Developer entity. Specifically, Mr. White is to provide the Developer entity with his expertise and advice relating to the development of affordable housing as the Developer entity deems necessary. The Agreement also states that Mr. White has no authority to bind the Developer entity, and cannot make any discretionary decisions on behalf of the Company. Mr. White reasonably understands this latter restriction to mean he may not exceed his scope of services. Mr. White's specific direction from SAS's President was to see that the construction of the project is done in a timely and appropriate manner. Consistent with the 2009 Universal Cycle Instructions, the Pershing Park application identified two affordable housing developments that Mr. White had been involved in developing: the 180-unit Holly Creek Apartments in Texas; and the 168-unit Woodbridge Apartments in Orlando, Florida. Both of these developments were developed as affordable housing, and Mr. White played a key role in their development. Holly Creek was completed in 1984, and Woodbridge was developed from 1985 to 1986. Notably, FHFC rules impose no standard for how recently a development must have been constructed in order for it to serve as proof of developer experience. Florida Housing does not dispute that Pershing Park's developer experience as set forth in Exhibit 11 of Petitioner's application facially satisfies the threshold requirements of the 2009 Universal Cycle. FHFC Concern over the Woodbridge Development Respondent's (and First Housing's) concerns regarding reliance on the Woodbridge development as a source of developer experience is that shortly after its completion in 1985 a foreclosure action was initiated. However, the unrebutted evidence established that the foreclosure was unrelated to any deficiency in the development of the project, or in Mr. White's services as the developer of the project. Rather, the foreclosure was apparently the result of the owner, Goldenrod Partnership, not making required payments on the debt incurred to construct the project. Although Mr. White was a general partner of the owner entity, he was not personally involved in the decisions not to service the debt. The evidence established that those decisions were made by the two financial partners in Goldenrod, Robert Brunson and Barry Ellis. Respondent does not contend that Mr. White failed to satisfactorily exercise his duties relating to the design, permitting, construction, and lease-up of the project. The fact that subsequent to the completion of the Woodbridge project a summary judgment of foreclosure was entered against Goldenrod Partnership and its general partners, does not negatively reflect on Mr. White's abilities as a developer. And given the circumstances of the foreclosure as established in this record, nor should it tarnish Mr. White's credit worthiness. The unrebutted evidence established that, following the foreclosure on Woodbridge, Mr. White has had a successful career in residential real estate development, and has had no trouble accessing credit to do so. Mr. White has constructed roughly ten multi-family developments containing approximately 2,000 units, and more than 40 single-family developments, containing over 3,000 units. FHFC Concern over Whitemark and the SEC Respondent’s other primary concern over Mr. White's development experience centers on his service as CEO of Whitemark Homes, Inc., a publicly traded company, at the time that the Securities and Exchange Commission ("SEC") investigated some financial reporting issues regarding Whitemark. Those reporting issues concerned how Whitemark prepared consolidated financial statements after its acquisition of another company in north Florida. Specifically, the acquired company had certain contracts and options to purchase valuable beachfront property for condominium development. Whitemark's chief financial officer (not Mr. White) and the company's certified public accounting firm agreed on the approach to valuing and reporting these assets on financial disclosures filed with the SEC. At hearing, unrebutted testimony established that the CFO and the accounting firm took additional due diligence steps to verify that the manner of reporting these assets was appropriate. The SEC disagreed with that conclusion and initiated an enforcement action. Ultimately, after spending a significant amount of money, energy, and attention on the SEC matter, Mr. White and Whitemark elected to settle the matter with the SEC. According to the terms of the settlement, Mr. White was ordered to disgorge the proceeds of certain sales of stock he had engaged in as part of a regular, structured stock sale. He also was required to pay interest connected with those stock sales. No fines or penalties were imposed, and no restrictions regarding Mr. White's service to the company were imposed.3/ Neither the SEC order, nor the underlying factual basis for it, related to Mr. White's skills or abilities as a developer. They were not the result of any failed or incomplete developments, nor of any misappropriation of company funds or shareholder money. Rather, the matter appears to have resulted from a difference of professional opinion on a complex accounting matter. More importantly, the entry of the cease and desist order did not affect Mr. White's credit worthiness. It has not impaired his ability to access credit for development activities. Although the company with which Mr. White is now associated, Lifeway Homes, is not currently developing home sites due to economic conditions and the poor market for new construction, Mr. White has successfully engaged in development activities after the entry of the cease and desist order, developing five projects totaling around 700 units. At hearing, First Housing's representative criticized the Applicant for not providing complete information during the credit underwriting process. However, there is no competent substantial evidence of record that the Applicant or its representatives or Development team members withheld or concealed any information from the credit underwriter, or failed to provide information in response to a request from the underwriter.4/
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a Final Order directing SAS Fountains at Pershing Park, LTD; proceed to closing on its requested tax credit and Exchange Program financing. DONE AND ENTERED this 30th day of September, 2010, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 30th day of September, 2010.
The Issue Whether the Petitions filed by Ambar Trail, Ltd.; Sierra Meadows Apartments, Ltd.; and Quail Roost Transit Village IV, Ltd., should be dismissed for lack of standing.
Findings Of Fact Florida Housing is a public corporation created under Florida law to administer the governmental function of financing or refinancing affordable housing and related facilities in Florida. Florida Housing administers a competitive solicitation process to implement the provisions of the housing credit program, under which developers apply and compete for funding for projects in response to RFAs developed by Florida Housing. The RFA in this case was specifically targeted to provide affordable housing in Miami-Dade County, Florida. The RFA introduction provides: 2 As this Recommended Order of Dismissal is based upon a motion to dismiss, the factual allegations of the three Petitions filed by the Petitioners in this consolidate case are accepted as true, and the Findings of Fact are derived from the four corners of those Petitions, see Madison Highlands. LLC v. Florida Housing Finance Corp., 220 So. 3d 467, 473 (Fla. 5th DCA 2017), and facts that are not otherwise in dispute. This Request for Applications (RFA) is open to Applicants proposing the development of affordable, multifamily housing located in Miami- Dade County. Under this RFA, Florida Housing Finance Corporation (the Corporation) expects to have up to an estimated $7,195,917 of Housing Credits available for award to proposed Developments located in Miami-Dade County. After Florida Housing announced its preliminary funding award decisions for RFA 2019-112 for Housing Credit Financing for Affordable Housing Developments Located in Miami-Dade County, each of the Petitioners filed Petitions challenging the decisions. Petitioners do not allege that Florida Housing improperly scored or evaluated the applications selected for funding, nor do they contend that Petitioners' applications should be funded. Instead, Petitioners allege that the evaluation was fundamentally unfair and seeks to have the entire RFA rescinded based on alleged improprieties of one responding entity and its affiliates. Petitioners claim that the evaluation process was fundamentally unfair is based entirely on allegations that several entities associated with Housing Trust Group, LLC (HTG), combined to submit 15 Priority I applications in contravention of the limitation in the RFA on the number of Priority I applications that could be submitted. Even assuming Petitioners' assertions are correct, there is no scenario in which Petitioners can reach the funding range for this RFA. In order to break ties for those applicants that achieve the maximum number of points and meet the mandatory eligibility requirements, the RFA sets forth a series of tie-breakers to determine which applications will be awarded funding. The instant RFA included specific goals to fund certain types of developments and sets forth sorting order tie-breakers to distinguish between applicants. The relevant RFA provisions are as follows: Goals The Corporation has a goal to fund one (1) proposed Development that (a) selected the Demographic Commitment of Family at questions 2.a. of Exhibit A and (b) qualifies for the Geographic Areas of Opportunity/SADDA Goal as outlined in Section Four A. 11. a. The Corporation has a goal to fund one (1) proposed Development that selected the Demographic Commitment of Elderly (Non-ALF) at question 2.a. of Exhibit A. *Note: During the Funding Selection Process outlined below, Developments selected for these goals will only count toward one goal. Applicant Sorting Order All eligible Priority I Applications will be ranked by sorting the Applications as follows, followed by Priority II Applications. First, from highest score to lowest score; Next, by the Application's eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application's eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.lO.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's eligibility for the Development Category Funding Preference which is outlined in Section Four A.4.(b)(4) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Applicant's Leveraging Classification, applying the multipliers outlined in Item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Applicant's eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and And finally, by lotterv number, resulting in the lowest lottery number receiving preference. This RFA was similar to previous RFAs issued by Florida Housing, but included some new provisions limiting the number of Priority I applications that could be submitted. Specifically, the RFA provided: Priority Designation of Applications Applicants may submit no more than three (3) Priority I Applications. There is no limit to the number of Priority II Applications that can be submitted; however, no Principal can be a Principal, as defined in Rule Chapter 67- 48.002(94), F.A.C., of more than three ( 3) Priority 1 Applications. For purposes of scoring, Florida Housing will rely on the Principals of the Applicant and Developer(s) Disclosure Form (Rev. 05-2019) outlined below in order to determine if a Principal is a Principal on more than three (3) Priority 1 Applications. If during scoring it is determined that a Principal is disclosed as a Principal on more than three (3) Priority I Applications, all such Priority I Applications will be deemed Priority II. If it is later determined that a Principal, as defined in Rule Chapter 67-48.002(94), F.A.C., was not disclosed as a Principal and the undisclosed Principal causes the maximum set forth above to be exceeded, the award(s) for the affected Application(s) will be rescinded and all Principals of the affected Applications may be subject to material misrepresentation, even if Applications were not selected for funding, were deemed ineligible, or were withdrawn. The Petitioners all timely submitted applications in response to the RFA. Lottery numbers were assigned by Florida Housing, at random, to all applications shortly after the applications were received and before any scoring began. Lottery numbers were assigned to the applications without regard to whether the application was a Priority I or Priority II. The RFA did not limit the number of Priority II Applications that could be submitted. Review of the applications to determine if a principal was a principal on more than three Priority 1 Applications occurred during the scoring process, well after lottery numbers were assigned. The leveraging line, which would have divided the Priority I Applications into Group A and Group B, was established after the eligibility determinations were made. All applications were included in Group A. There were no Group B applications. Thus, all applications were treated equally with respect to this preference. The applications were ultimately ranked according to lottery number and funding goal. . If Florida Housing had determined that an entity or entities submitted more than three Priority I Applications with related principals, the relief set forth in the RFA was to move those applications to Priority II. Florida Housing did not affirmatively conclude that any of the 15 challenged applications included undisclosed principals so as to cause a violation of the maximum number of Priority I Applications that could be submitted. All of the applications that were deemed eligible for funding, including the Priority II Applications, scored equally, and met all of the funding preferences. After the applications were evaluated by the Review Committee appointed by Florida Housing, the scores were finalized and preliminary award recommendations were presented and approved by Florida Housing's Board. Consistent with the procedures set forth in the RFA, Florida Housing staff reviewed the Principal Disclosure Forms to determine the number of Priority I Applications that had been filed by each applicant. This review did not result in a determination that any applicant had exceeded the allowable number of Priority I Applications that included the same principal. One of the HTG Applications (Orchid Pointe, App. No. 2020-148C) was initially selected to satisfy the Elderly Development goal. Subsequently, three applications, including Slate Miami, that had initially been deemed ineligible due to financial arrearages were later determined to be in full compliance and, thus, eligible as of the close of business on January 8, 2020. The Review Committee reconvened on January 21, 2020, to reinstate those three applications. Slate Miami was then recommended for funding. The Review Committee ultimately recommended to the Board the following applications for funding: Harbour Springs (App. No. 2020-101C), which met the Geographic Areas of Opportunity/SADDA Goal; Slate Miami (App. No. 2020-122C), which met the Elderly (non-ALF) Goal; and Naranja Lakes (App. No. 2020-117C), which was the next highest-ranked eligible Priority I Application. The Board approved the Committee's recommendations at its meeting on January 23, 2020, and approved the preliminary selection of Harbour Springs, Slate Miami, and Naranja Lakes for funding. The applications selected for funding held Lottery numbers 1 (Harbour Springs), 2 (Naranja Lakes), and 4 (Slate Miami). Petitioners' lottery numbers were 16 (Quail Roost), 59 (Sierra Meadows) and 24 (Ambar Trail). The three applications selected for funding have no affiliation or association with HTG, or any of the entities that may have filed applications in contravention of the limitation in the RFA for Priority I applications. The applications alleged in the Petitions as being affiliated with HTG received a wide range of lottery numbers in the random selection, including numbers: 3, 6, 14, 19, 30, 38, 40, 42, 44, 45, 49, 52 through 54, and 58. If Petitioners prevailed in demonstrating an improper principal relationship between the HTG applications, the relief specified in the RFA (the specifications of which were not challenged) would have been the conversion of the offending HTG applications to Priority II applications. The relief would not have been the removal of those applications from the pool of applications, nor would it have affected the assignment of lottery numbers to any of the applicants, including HTG. The Petitions do not allege any error in scoring or ineligibility with respect to the three applications preliminarily approved for funding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Petitioners lack standing and dismissing the Petitions with prejudice. DONE AND ENTERED this 3rd day of April, 2020, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 2020. COPIES FURNISHED: Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC Suite 3-231 1400 Village Square Boulevard Tallahassee, Florida 32312 (eServed) Michael P. Donaldson, Esquire Carlton Fields Jorden Burt, P.A. 215 South Monroe Street, Suite 500 Post Office Drawer 190 Tallahassee, Florida 32302-0190 (eServed) Donna Elizabeth Blanton, Esquire Brittany Adams Long, Esquire Radey Law Firm, P.A. Suite 200 301 South Bronough Street Tallahassee, Florida 32301 (eServed) Hugh R. Brown, General Counsel Betty Zachem, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) J. Stephen Menton, Esquire Tana D. Storey, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 (32302) Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
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)
