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 issues to be determined are whether, with respect to each application filed, Florida Housing Finance Corporation’s (Florida Housing) review and decision-making process in response to the Request for Applications 2020-201 (RFA) was contrary to the agency’s governing statutes, the agency’s rules or policies, or the RFA.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Section 420.5099 designates Florida Housing as the housing credit agency for Florida within the meaning of section 42(h)(7)(a) of the Internal Revenue Code and has the responsibility and authority to establish procedures for allocating and distributing low-income housing tax credits. The low-income housing tax credit program (commonly referred to as “tax credits” or “housing credits”) was enacted to incentivize the private market to invest in affordable rental housing. These housing credits are awarded competitively to housing developers in Florida for rental housing projects which qualify. The effect is to reduce the amount that the developer must otherwise borrow. Because the total debt is lower, the housing credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the housing credits. The demand for housing credits provided by the federal government exceeds supply. The Competitive Application Process Section 420.507(48) authorizes Florida Housing to allocate housing credits and other funding through requests for proposals or other competitive solicitations, and Florida Housing has adopted Florida Administrative Code Chapter 67-60 to prescribe the competitive solicitation process. Chapter 67-60 provides that Florida Housing allocate its competitive funding through the bid protest provisions of section 120.57(3). Applicants for funding request, in their applications, a specific dollar amount of housing credits to be given to the applicant each year for a period of ten years. Applicants normally will sell the rights to the future stream of income housing 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 an applicant can receive depends on several factors, such as a certain percentage of the projected total development cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. These are just examples of the factors considered, and this is by no means an exhaustive list. Housing credits are made available through a competitive application process that starts with the issuance of an RFA. An RFA is considered to be a “request for proposal” as indicated in rule 67-60.009(4). The RFA in this case was issued on August 26, 2020, and responses were due November 5, 2020. The RFA was modified September 11, 2020, and October 12, 2020, but with no change with respect to the response deadline. Through the RFA, Florida Housing expects to award up to an estimated $15,275,810 of housing credits to proposed developments in medium-sized counties, and up to an estimated $1,453,730 of housing credits to proposed developments in small counties. Florida Housing received 84 applications in response to RFA 2020-201. A Review Committee was appointed to review the applications and make recommendations to the Florida Housing Board of Directors (Board). The Review Committee found 79 applications eligible and five applications ineligible for funding. Through the ranking and selection process outlined in the RFA, 10 applications were preliminarily recommended for funding. The Review Committee developed charts listing its eligibility and funding recommendations to be presented to the Board. The federal government enacted the Consolidated Appropriations Act (CCA) in December 2020, and as a result, an additional $3,367,501 in housing credits became available for affordable housing for Escambia, Santa Rosa, Okaloosa, Walton, and Bay Counties, which were impacted by Hurricane Sally. The staff at Florida Housing recommended using the CCA funding to award housing credits to additional highest-ranking eligible applications in qualified disaster areas, subject to the county award tally, regardless of the county size in RFA 2020-201 and developed a chart listing its CCA funding recommendations to be presented to the Board. On January 22, 2021, the Board met and considered the recommendations of the Review Committee and staff for RFA 2020-201. At approximately 2:50 p.m. that day, all of the applicants in RFA 2020-201 were provided notice that the Board determined whether applications were eligible or ineligible for consideration of funding, and that certain eligible applicants were preliminarily selected for funding, subject to satisfactory completion of the credit underwriting process. Notice was provided by posting on the Florida Housing website two spreadsheets: one listing the Board-approved scoring results in RFA 2020-201; and one identifying the applications which Florida Housing proposed to fund. In the January 22, 2021, posting, Florida Housing announced its intention to award funding to 24 applicants, including The Villages, Pinnacle at Hammock Springs, and Rosemary Place. Petitioners timely filed Notices of Protest and Petitions for Formal Administrative Proceedings. All Intervenors have been properly recognized as such. The terms of RFA 2020-201 were not challenged. RFA 2020-201 Ranking and Selection Process The RFA contemplates a structure in which the applicant is scored on eligibility items and obtains points for other items. A summary of the eligibility items is listed in Section 5.A.1. of the RFA, beginning at page 71. Only applications that meet all of the eligibility requirements will be eligible for funding and considered for the funding selection. This challenge does not raise any issues with respect to the point totals awarded to the applicants. The RFA has four funding goals: The Corporation has a goal to fund five Medium County Developments that qualify for the Local Government Areas of Opportunity Funding Goal outlined in Section Four A.11.a of the RFA, with a preference that three of the Applications meet the criteria outlined in Section Four, A.11.b(1) of the RFA to be considered submitted but not awarded in RFA 2019-113, and two of the Applications meet the criteria outlined in Section Four, A.11.b(2) of the RFA to be considered not submitted in RFA 2019-113. The Corporation has a goal to fund one Development that qualifies for the Local Revitalization Initiative Goal outlined in Section Four A.5.i of the RFA. The Corporation has a goal to fund two Developments with a Demographic commitment of Family that select and qualify for the geographic Areas of Opportunity/ SADDA Goal outlined in Section Four A.10.a(1)(d) of the RFA. The Corporation has a goal to fund one Development that qualifies for the SunRail Goal outlined in Section Four, A.5.e.(5) of the RFA. *Note: During the Funding Selection Process, outlined below, Developments selected for these goals will only count toward one goal with one exception: If an Application that was selected to meet the Local Government Areas of Opportunity Goal or Local Revitalization Initiative Goal also qualifies for the SunRail Goal, the SunRail Goal will also be considered met. (Jt. Exh. 1, pp.75). At page 76 of Joint Exhibit 1, the RFA also sets forth the sorting order to be used when selecting applications to meet the Local Government Areas of Opportunity Funding Goal: The highest scoring applications will be determined by first sorting together all eligible Priority I Medium County Applications from highest score to lowest score, with any scores that are tied separated in the following order. This will then be repeated for Priority II Applications: First, counties of the Applications that (i) qualified for the Local Government Areas of Opportunity Funding Goal in FRA 2019-113 and (ii) were invited to enter credit underwriting will receive lower preference than other Medium Counties competing for the Local Government Areas of Opportunity Funding Goal. This affects the following counties: Brevard, Lee, Santa Rosa, Sarasota, and Volusia. The remaining counties will receive higher preference. Next, by the Application’s eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.10.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application’s eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.10.e of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application’s Leveraging Classification, applying the multipliers outlined in Item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Application’s eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); And finally, by lottery number, resulting in the lowest lottery number receiving preference. Next, the RFA sets forth the sorting order for selecting applications to meet the Local Revitalization Initiative Goal. It then sets for the sorting order after selecting applications to meet the Local Government Areas of Opportunity Funding Goal (LGAO Designation) and Local Revitalization Initiative Goal. The RFA includes a funding test where a) small county applications will be selected for funding only if there is enough small county funding ($1,453,730) available to fully fund the Eligible Housing Credit Request Amount, and b) medium county applications will be selected for funding only if there is enough medium county funding ($15,275,810) available to fully fund the Eligible Housing Credit Request Amount. The RFA outlines a specific County Award Tally based on Priority Levels as follows: Priority I County Award Tally As each Priority I Application is selected for tentative funding, the county where the Development is located will have one Application credited towards the County Award Tally. The Corporation will prioritize eligible unfunded Priority I Applications that meet the Funding Test and are located within counties that have the lowest County Award Tally above other eligible unfunded Priority I Applications with a higher County Award Tally that also meet the Funding Test, even if the Priority I Applications with a higher County Award Tally are higher ranked. Priority II County Award Tally As each Priority II Application is selected for tentative funding, the county where the proposed Development is located will have one Application credited towards the County Award Tally. The Corporation will prioritize eligible unfunded Priority II Applications that meet the Funding Test and are located within counties that have the lowest County Award Tally above other eligible unfunded Priority II Applications with a higher County Award Tally that also meet the Funding Test, even if the Priority II Applications with a higher County Award Tally are higher ranked. (Jt. Exh. 1, pp. 78-79) The RFA outlines the selection process at pages 79-81 as follows: Five Applications that qualify for the Local Government Areas of Opportunity Funding Goal Applications that were submitted in RFA 2019- 113 but not Awarded The first three Applications that will be considered for funding will be the highest ranking eligible Medium County Priority I Applications that qualify for the Local Government Areas of Opportunity Funding Goal that were submitted in RFA 2019- 113 but not awarded, subject to the Funding Test and County Award Tally. Priority I Applications will continue to be selected until this preference is met. If there are no remaining eligible unfunded Priority I Applications that qualify for this preference, then the process will continue using Priority II Applications until this preference is met. Applications that were not submitted in RFA 2019-113 The next Applications that will be considered for funding will be the highest ranking eligible Medium County Priority I Applications that qualify for the Local Government Areas of Opportunity Funding Goal that were not submitted in 2019-113, subject to the Funding Test and the County Award Tally. Priority I Applications will continue to be selected until this Goal is met. If there are no remaining eligible unfunded Priority I Applications that qualify for this Goal, then the process will continue using Priority II Applications until this Goal is met or until it is determined that there are not eligible unfunded Applications that can meet this Goal. One Application that qualifies for the Local Revitalization Initiative Goal The next Application selected for funding will be the highest ranking eligible unfunded Priority I Application that qualifies for the Local Revitalization Initiative Goal, subject to the Funding Test and the County Award Tally. If there are no eligible unfunded Priority I Applications that qualify for this Goal, then the highest ranking eligible unfunded Priority II Application that qualifies for the Local Revitalization Initiative Goal will be selected, subject to the Funding Test and the County Award Tally. Two Family Applications that qualify for the Geographic Areas of Opportunity/ HUD-designated SADDA Goal The next two Applications select [sic] for funding will be the highest ranking eligible unfunded Priority I Family Applications that qualify for the Geographic Areas of Opportunity/ HUD-designated SADDA Goal, subject to the Funding Test and the County Award Tally. Priority I Applications will continue to be selected until this goal is met. If there are no remaining eligible unfunded Priority I Applications that qualify for this Goal, then the process will continue using Priority II Applications until this Goal is met or until it is determined that there are no eligible unfunded Applications that can meet this goal. One Application that Qualifies for the SunRail Goal If an Application that was selected to meet the Local Government Areas of Opportunity Goal described in a. above or Local Revitalization Initiative Goal described in b. above also qualifies for the SunRail Goal, this Goal will be considered met without selecting an additional Application. If none of the Applications selected to meet the Local Government Areas of Opportunity Goal or Local Revitalization also qualify for the SunRail Goal, the next Application selected for funding will be the highest ranking eligible unfunded Priority I Application that qualifies for the SunRail Goal, subject to the Funding Test and the County Award Tally. If there are no eligible unfunded Priority I Applications that qualify for this Goal, then the highest ranking eligible unfunded Priority II Application that qualifies for the SunRail Goal will be selected, subject to the Funding Test and the County Award Tally. The next Applications selected for funding will be the highest ranking eligible unfunded Priority I Small County Applications that (i) can meet the Small County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Small County Priority I Applications. If Small County funding remains and no unfunded eligible Small County Priority I Application can meet the Small County Funding Test, then the process will continue using Priority II Applications until this Goal is met or until no unfunded Small County Priority II Application can meet the Small County Funding Test. If Small County funding remains and no unfunded eligible Small County Applications can meet the Small County Funding Test, no further Small County Applications will be selected, and the remaining Small County Funding will be added to the Medium County funding amount. The next Applications selected for funding will be the highest ranking eligible unfunded Priority I Medium County Applications that (i) can meet the Medium County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Medium County Priority I Applications. If Medium County funding remains and no unfunded eligible Medium County Priority I Applications can meet the Medium County Funding Test, then the process will continue using Priority II Applications until this Goal is met or until no unfunded eligible Medium County Priority II Applications can meet the Small County Funding Test. If Medium County Funding remains and no unfunded eligible Medium County Application can meet the Medium County Funding Test, no further Applications will be selected and the remaining funding will be distributed as approved by the Board. After the description of the sorting process, the RFA specifies: Funding that becomes available after the Board takes action on the Committee’s recommendation(s), due to an Applicant withdrawing, an Applicant declining its invitation to enter credit underwriting or the Applicant’s inability to satisfy a requirement outlined in this RFA, and/or provisions outlined in Rule Chapter 67-48, F.A.C., will be distributed as approved by the Board. All 84 applications for RFA 2020-201 were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA, Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations. The Fletcher Black Application During the scoring process, Florida Housing determined that the Fletcher Black application was eligible for funding, but ineligible for the LGAO Designation. Fletcher Black was not selected for preliminary funding. If Fletcher Black’s application was eligible for the LGAO Designation, it would have been selected for funding. It would have been selected as the second of the three developments selected for the LGAO Priority I applications that qualified for the preference for those development applications submitted in RFA 2019-113, but not awarded as outlined on pages 69-70 of the RFA. Additionally, if Fletcher Black is eligible for the LGAO Designation, then The Villages and Pinnacle at Hammock Springs will be displaced from funding. In order to qualify for the LGAO Designation and Goal, applicants must “demonstrate a high level of Local Government interest in the project via an increased amount of Local Government contributions in the form of cash loans and/or cash grants.” The RFA outlines the types and amounts of contributions from Local Governments that will be accepted to meet the LGAO Designation. Fletcher Black’s proposed development is in Bay County. Therefore, Fletcher Black would be required to demonstrate a contribution of at least $340,000 to be considered for the LGAO Designation. The RFA at page 67 expressly limits the number of applications from the same government jurisdiction as follows: Limit on the number of Applications within the same jurisdiction A proposed Development may only qualify where a jurisdiction (i.e., the county or a municipality) has contributed cash loans and/or cash grants for any proposed Development applying for this RFA in an amount sufficient to qualify for the Local Government Areas of Opportunity Designation. A Local Government can only contribute to one Application that qualifies for the Local Government Area of Opportunity Designation, regardless of how the contribution is characterized. Any single jurisdiction may not contribute cash loans and/or cash grants to more than one proposed Development applying for the Local Government Areas of Opportunity Designation. If multiple Applications demonstrate Local Government Areas of Opportunity Funding from the same jurisdiction and those Applications qualify for the Local Government Areas of Opportunity Designation, then all such Applications will be deemed ineligible for the Local Government Areas of Opportunity Designation, regardless of the amount of Local Government Areas of Opportunity Funding or how the contribution is characterized. However, Local Governments may pool contributions to support one Application (i.e., the county and the city may provide contribution to the same Development and each Local Government will submit its own form as an Attachment to the Application). Page 68 of the RFA describes the requirements for demonstrating LGAO funding: In order to be eligible to be considered Local Government Areas of Opportunity Funding, the cash loans and/or cash grants must be demonstrated via one or both of the Florida Housing Local Government Verification of Contribution Forms (Form Rev. 07-2019), called “Local Government Verification of Contribution – Loan” form and/or the “Local Government Verification of Contribution -- Grant” form. The forms must meet the Non-Corporation Funding Proposal Requirements outlined in 10.b.(2)(a) above, the qualifying funding must be reflected as a source on the Development Cost Pro Forma, and the applicable form(s) must be provided as Attachment 16 to the Application. Applications are not required to reflect the value (difference between the face amount and the net present value of the payment streams) on any Local Government Verification Forms. Similarly, Section 10.b.(2)(a) of the RFA specifies that, Note: Eligible Local Government financial commitments (i.e., grants and loans) can be considered a source of financing without meeting the requirements above if the Applicant provides a properly completed and executed Local Government Verification of Contribution – Grant Form (Form 0702019) and/or the Local Government Verification of Contribution – Loan Form (Form 07-2019). Fletcher Black submitted a Local Government Verification of Contribution – Grant Form (Grant Form) from the City of Panama City in the amount of $340,000. Fletcher Black’s Grant Form was executed by Greg Bridnicki, as the Mayor of Panama City and “Approved as to Form and Correctness” by Nevin Zimmerman, City Attorney. Fletcher Black’s request for funding from Panama City was placed on the agenda for the City of Panama City City Commission’s August 25, 2020, meeting, and approved by the City Commission, which authorized Mr. Bridnicki to sign the Grant Form. Fletcher Black had obtained a similar LGAO Form in the previous year using the same established process. Fletcher Black did not submit any documentation in the RFA Application regarding the process used to gain approval of the grant. However, no party identified any requirement in the RFA that such a description must be included in the Application. Fletcher Black cannot be faulted for not supplying something that is not required. Another Applicant, Panama Manor App. No. 2021-074C, submitted a Grant Form from the City of Panama City in the amount of $340,000 executed by Michael Johnson. Mr. Johnson’s title is listed as the Director of Community Development/CRA/CDBG/SHIP. During the scoring process, Florida Housing’s scorer found that since both Fletcher Black and Panama Manor submitted documentation for the LGAO Designation from the same jurisdiction, the City of Panama City, according to the terms of the RFA, both applications were deemed ineligible for the LGAO Designation. The Grant Form submitted by both Fletcher Black and Panama Manor contains the following instruction regarding who is authorized to sign the form on behalf of the local government: This certification must be signed by the chief appointed official (staff) responsible for such approvals, Mayor, City Manager, County Manager/ Administrator/ Coordinator, Chairperson of the City Council/Commission or Chairperson of the Board of County Commissioners. … One of the authorized persons named above may sign this form for certification of state, federal or Local Government funds initially obtained or derived from a Local Government that is directly administered by an intermediary such as a housing finance authority, a community reinvestment corporation, or a state-certified Community Housing Development Organization (CHDO). Other signatories are not acceptable. The Applicant will not receive credit for this contribution if the certification is improperly signed. To be considered for points, the amount of the contribution stated on this form must be a precise dollar amount and cannot include words such as estimated, up to, maximum, not to exceed, etc. Michael Johnson was not authorized by the City of Panama City to sign the Grant Form. Greg Bridnicki, as Mayor of Panama City, is an authorized signatory. Panama Manor’s request was not submitted to the City Commission for approval. Because the Grant Form was improperly signed, Panama Manor should not, by the terms of the RFA, receive credit for the LGAO Designation. Had Panama Manor’s application received the LGAO Designation, it would not have been selected for funding because its lottery number was too high. Michael Johnson is the Director of Community Development for the City of Panama City. While he is an employee for the City of Panama City, he also performs duties for Bay County through an interlocal agreement between the city and the county. The Grant Form submitted for Panama Manor stated on its face that it was signed on behalf of the City of Panama City, but Mr. Johnson testified that the form was supposed to reflect that it was for Bay County. Mr. Johnson testified that over the last 17 years, he has executed approximately 40 forms for applications for funding from Florida Housing. He acknowledged that there are multiple types of forms that may need signatures from city or county officials to complete a Florida Housing application, such as zoning forms and infrastructure-verification forms, as well as local government contribution forms. Since Florida Housing changed its process to use RFAs in 2013, Mr. Johnson could not recall if he signed the Grant Forms or whether the city manager did. He could not confirm signing a single Grant Form for either the city or the county since 2013. Mr. Johnson believed that he had the authority to sign Grant Forms on behalf of both the city and the county. Mark McQueen, the City of Panama City city manager and Mr. Johnson’s boss, does not share his belief. According to Mr. McQueen, whose testimony is credited, Panama City committed only to the Fletcher Black property, took no official action with respect to Panama Manor’s application, and Mr. Johnson was not authorized to sign the Grant Form committing funds on behalf of the City. When Mr. Johnson realized that the Panama Manor Grant Form stated that it was signed on behalf of Panama City as opposed to Bay County, he called the legal department for Florida Housing to explain the error. He testified that he spoke with several people at Florida Housing, including Jean Salmonson, David Weston, and someone in the multi-family development section. Mr. Johnson was not sure of the dates when these telephone calls were made, but it appears that the telephone calls were after the submission of the applications but before the posting of funding selections. Marissa Button is Florida Housing’s Director of Multifamily Programs. She testified that Florida Housing is aware of the contention that the form submitted by Panama Manor was signed in error and should have reflected that it was signed on behalf of Bay County. She was also aware that according to Mr. McQueen, Mr. Johnson did not have the authority to sign a Grant Form on behalf of the City of Panama City. She stated: Q. How does that information impact Florida Housing’s scoring decision? A. This --at this juncture it does not impact Florida Housing’s scoring determination as to the Panama Manor or Fletcher Black being designated as LGAO goal. … We take the requirement of the RFA specifically references the – the submission of what – when there’s a submission of multiple applications from the same jurisdiction, and so we, Florida Housing, consider that as of – as of the application deadline what this applicant has submitted is a form executed on behalf of the City of Panama City. To change the designation, which I understand from Mr. Johnson’s testimony it was a mistake, he intended to issue on behalf of Bay County and reflect that, we interpret that to be a – an improper amendment or modification to the application after the application submission. So we do not consider it to change the scoring designation of the – of either the Panama Manor application or the resulting consequence to the Fletcher Black application. * * * Q. Now, Fletcher Black may argue that it’s unfair to treat its application as ineligible for the LGAO designation and goals when the Fletcher Black [application] did not contain an error. What would your response be to that? A. You know, my response is, we score the application in accordance with the terms of the RFA. The applications are responsible for all parts of that – that RFA with regard to their application submission. It’s clear in this RFA that there would be a consequence if other applications were submitted from the same jurisdiction for an LGAO designation. And, unfortunately, that’s the mistake that happened, but the fairness – it is a fair process because we are – we are administering the RFA as it has been, you know – as the terms exist to the public and to the fellow applications that came in for funding. So, I – I do believe it’s unfortunate that that consequence impacts their application; however, it is – it is fair because that’s the consequence if it happens. (T-39-40, 45-46). Panama Manor’s application did not demonstrate local government funding because the Grant Form was not signed by someone with authority to do so. The RFA specifically states that “[o]ther signatories are not acceptable. The Applicant will not receive credit for this contribution if the certification is improperly signed.” Where forms signed by local government officials are challenged, Ms. Button indicated that Florida Housing has in the past relied upon or deferred to local government officials to address the propriety of the forms signed. The issue usually arises with forms related to zoning or other facets encompassed in the Ability to Proceed forms. Here, the credible testimony of local officials is that the Grant Form for Panama Manor was intended to reflect a funding commitment from Bay County and the signator on Panama Manor’s Grant Form was not authorized to sign on behalf of the City of Panama City. It would be contrary to competition if Panama Manor were allowed to amend its application to correct the Grant Form. It is appropriate to disregard Panama Manor’s Grant Form, given the inaccuracies contained therein. If Panama Manor’s application is not selected for the LGAO Designation because of its failure to demonstrate that the City of Panama City is providing local support for Panama Manor’s project, then there is only one application with a valid Grant Form from the City of Panama City, and that is Fletcher Black. Ms. Button testified that it would provide a competitive advantage to Fletcher Black if Fletcher Black were considered for the LGAO Designation. However, she stated that applicants are responsible for all parts of their application submission. Fletcher Black did not make an error in its application and is not requesting that it be amended in any way. It is asking that the application be considered as submitted, just as other applications are considered. Florida Housing’s decision to find Fletcher Black ineligible for the LGAO Designation is clearly erroneous, in light of the clear demonstration that Panama Manor did not demonstrate a local funding commitment from the City of Panama City, and Fletcher Black is the only entity that did so. The Rosemary Place Application Florida Housing deemed the Rosemary Place application to be eligible and, pursuant to the terms of the RFA, preliminarily selected Rosemary Place for funding. One of the requirements for eligibility under the RFA is that applicants demonstrate Site Control by providing a properly completed and executed Florida Housing Finance Corporation Site Control Certification form (Site Control Form). For the Site Control Form to be considered complete, the applicant must attach documentation demonstrating that it is a party to an eligible contract or lease or is the owner of the subject property. Applicants can demonstrate Site Control by providing documentation that meets the requirements in the RFA for an eligible contract, deed or certificate of title, or a lease. The RFA specifies at pages 39-40 that an eligible contract must meet the following conditions: It must have a term that does not expire before May 31, 2021 or that contains extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than May 31, 2021; It must specifically state that the buyer’s remedy for default on the part of the seller includes or is specific performance; The Applicant must be the buyer unless there is an assignment of the eligible contract, signed by the assignor and the assignee, which assigns all of the buyer’s rights, title and interests in the eligible contract to the Applicant: and The owner of the subject property must be the seller, or is a party to one or more intermediate contracts, agreements, assignments, options, or conveyances between or among the owner, the Applicant, or other parties, that have the effect of assigning the owner’s right to sell the property to the seller. Any intermediate contract must meet the criteria for an eligible contract in (a) and (b) above. The RFA notifies applicants that Florida Housing’s review of the Site Control documents is limited. At page 40, the RFA states: Note: The Corporation will not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation. During scoring, the Corporation will rely on the properly executed Site Control Certification form to determine whether an Applicant has met the requirement of this RFA to demonstrate site control. The Corporation has no authority to, and will not, evaluate the validity or enforceability of any eligible site control documentation that is attached to the Site Control Certification form during the scoring process. During credit underwriting, if it is determined that the site control documents do not meet the above requirements, the Corporation may rescind the award. The RFA also requires that, for the purpose of demonstrating Site Control, “documentation must include all relevant intermediate contracts, agreements, assignments, options, conveyances, intermediate leases and subleases. If the proposed Development consists of Scattered Sites, site control must be demonstrated for all of the Scattered Sites.” A “scattered site” is defined in Florida Administrative Code Rule 67- 48.002(106) as “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. …” Rosemary Place submitted a properly completed and executed Site Control Form which was accepted by Florida Housing during its review, scoring, and ranking process. As an attachment to its Site Control Form, Rosemary Place attached a Purchase and Sale Agreement (Rosemary Place Agreement) between Kyle McDorman as the Seller and RM FL XX Prime, LLC (the applicant entity for Rosemary Place) as the Purchaser. The Rosemary Place Agreement has a term that does not expire before May 31, 2021, and states that the buyer’s remedy for default on the part of the seller includes or is specific performance. The Rosemary Place Application identified the address of the proposed development as “690’ N of intsctn of 331-Bus & Azalea Dr on W side of 331- Bus; within city limits of Freeport, FL (Walton County).” (J-16, page 5). The Development Location Point, consisting of latitude and longitude coordinates was correctly identified, and the Rosemary Place Application stated that the proposed development did not consist of scattered sites. Exhibit A of the Rosemary Place Purchase and Sale Agreement identifies the property as follows: That Thirteen (13.0) Acres situated in the City of Freeport, FL (Distrct 2); Section 10, Township 1S, Range 19, and which is part of Walton County, FL Parcel 10-1S-19-23000-009-0020 which is further described in the land records of Walton County, FL as 210FT SQ FT IN THE SE/C OF THE W1/2 OF THE NE1/4 OF SW1/4 IN SEC 10-1S-19W, 204-184, 1204-279, 2660- 2976, 3084-4417 and which is recorded in that Warranty Deed from Grantor Aaron M and Rachel N Sloan Elkins to Grantee Kyle J. McDorman which Warranty Deed is recorded in the land records of Walton County, FL at Book 3084 and Page Number 4417. The Property is further described and identified as the shaded area denoted with an X in the image below. Based on the Walton County Property Appraiser map, the shaded area denoted with an X is contained within Parcel No. 10-1S-19-23000-009-0000, which is owned by the Seller, Kyle McDorman, as opposed to Parcel No. 10- 1S-19-23000-009-0020. Timshell contends that the shaded area denoted with an X overlaps parcels outside of Parcel No. 10-1S-19-23000-009-0000. Timshell contends that the submitted Site Control documentation submitted by Rosemary Place is not consistent with the requirements of the RFA because of the uncertainty of the property that is actually being purchased and where the proposed Development site is actually located. Timshell also contends that the Rosemary Place Purchase and Sale Agreement, as written and submitted to Florida Housing, denotes scattered sites which were not disclosed by Rosemary Place in its application. Rosemary Place contends, and Florida Housing agrees, that the shaded area denoted with an X on Exhibit A to the Rosemary Place Agreement sufficiently identifies the property being purchased through the agreement as the Development site. Moreover, the visual depiction of the property is consistent with the written description of the development location in the Rosemary Place Application at J-16, page 5. The Rosemary Place Application does not depict scattered sites. Even assuming that the parcel number included in Exhibit A were part of the purchase reflected in the Sale and Purchase Agreement, an eligible contract may involve the purchase of multiple properties or a larger parcel of property than will be developed. What is most important is that the documents show where the development will be located, which Rosemary Place’s application demonstrates, and that the applicant will have control over the location. Ms. Button testified that Florida Housing did not consider the Rosemary Place Application to be proposing a scattered sites development. Rosemary Place affirmatively stated that it was not proposing a scattered sites development; did not list coordinates for scattered sites; and did not identify the location of scattered sites on other forms required by the RFA. Exhibit A to the Purchase and Sale Agreement contains typographical errors in the written description of the property being sold. Stewart Rutledge, who prepared the Purchase and Sale Agreement, testified credibly that parcel numbers are listed on the Walton County Property Appraiser website, and that to see a particular parcel description, the user clicks on the parcel number he or she wants to see. When preparing the Purchase and Sale Agreement, Mr. Rutledge mistakenly clicked on the parcel number immediately above the parcel number he wanted, and he did not notice the error. The parcel number reflected in the Purchase and Sale Agreement references another parcel owned by the seller, Kyle McDorman. Florida Housing considered the typographical error within Exhibit A that results in the listing of the wrong parcel number and property description to be a waivable minor irregularity because the error did not result in the omission of any material information; did not create uncertainty that a term of the RFA was met; and did not adversely impact Florida Housing or the public. The same could be said for other typographical error in the Purchase and Sale Agreement, such as capitalizing the word “property” when it should not have been. Ms. Button also noted that the RFA does not require applicants to submit a land survey of the proposed development site with its application. The RFA states that Florida Housing reserves the right to waive minor irregularities. A minor irregularity is defined in rule 67-60.008 as: those irregularities in an Application, such as computation, typographical, or other errors, that do not result in the omission of any material information; do not create any uncertainty that the terms and requirements of the competitive solicitation have been met; do not provide a competitive advantage or benefit not enjoyed by other Applicants; and do not adversely impact the interests of the Corporation or the public. Minor irregularities may be waived or corrected by the Corporation. Timshell presented the testimony of Stephen Rutan, a professional land surveyor. Mr. Rutan believed that, based on the property description in the Purchase and Sale Agreement, the proposed development site overlapped with another parcel not owned by the seller. Mr. Rutan did not perform a professional land survey and admitted that the boundary lines in his informational Exhibit (Timshell Exhibit 4) were not completely accurate. Given that the measurements that Mr. Rutan provided were estimates and not the result of a survey, and the testimony by Mr. Rutledge that the parcel identification was the result of a clerical error, Mr. Rutan’s testimony is given little weight, and does not demonstrate that the error in the Purchase and Sale Agreement included in Rosemary Place’s application created any real uncertainty that the terms and requirements of the competitive solicitation have been met. Florida Housing’s determination that the error in Rosemary Place’s application was a waivable minor irregularity is not clearly erroneous. Madison Oaks East, Madison Oaks West, and Madison Grove Florida Housing determined that the Madison Oaks West, Madison Oaks East, and Madison Grove Applications were eligible for funding but ineligible for the “submitted but not awarded in RFA 2019-113 Preference.” Madison Oaks West, Madison Oaks East, and Madison Grove were not selected for preliminary funding. Within the LGAO Designation and Goal, the RFA contained preferences for funding. One of those preferences was for developments that were submitted but not awarded in RFA 2019-113 (the 2019-113 Preference). In order to qualify for the 2019-113 Preference, an Applicant must meet the following requirements: The question at 11.b.(1) of Exhibit A must reflect confirmation that the Development was submitted but not awarded in RFA 2019-113; The Application in RFA 2019-113 must have provided a Local Government Verification of Contribution – Loan or Grant form demonstrating the minimum Local Government Areas of Opportunity Funding Amount outlined in RFA 2019-113; The Development Location Point and latitude and longitude coordinates for all scattered sites stated at question 5. of Exhibit A for the proposed Development must be located on the same site(s) as the Application submitted in RFA 2019-113. These coordinates do not need to be identical to the Application submitted in RFA 2019-113. All entities that are Principals for the Applicant and Developer(s) disclosed on the Principal Disclosure Form submitted for the proposed Development and the Application submitted in RFA 2019-113 must be identical; and The Application submitted in RFA 2019-113 was not invited to enter credit underwriting. Florida Housing scored Madison Oaks East, Madison Oaks West, and Madison Grove as qualifying for all requirements of the 2019-113 Preference except for the requirement that “[a]ll entities that are Principals for the Applicant and Developer(s) disclosed on the Principal Disclosure Form submitted for the proposed Development and the Application submitted in RFA 2019-113 must be identical.” (Identical Principals Requirement). The Principals disclosed on the Principals Disclosure Form for Madison Oaks West, Madison Oaks East, and Madison Grove in RFA 2019- 113 were identical to the Principals disclosed in the applications submitted for RFA 2020-201. The plain language of the RFA only requires that the “entities that are Principals for the Applicant and Developer(s) be identical.” The plain language of the RFA does not require that the Applicant and Developer entities be identical to those listed in the 2019-113 application. Madison Oaks West, Madison Oaks East, and Madison Grove met the requirements for the 2019-113 preference. However, even though Madison Oaks East, Madison Oaks West, and Madison Grove are eligible for the 2019-113 Preference, they would not be selected for funding under the terms of the RFA. The Villages Florida Housing determined that The Villages Application is eligible and, pursuant to the terms of the RFA, The Villages has been preliminarily selected for funding. During scoring, Florida Housing reviewed the Villages’ Zoning Form and determined that it met the requirements of the RFA to demonstrate appropriate zoning. Madison Oaks East, Madison Oaks West, and Madison Grove alleged in their Petitions that The Villages failed to demonstrate Ability to Proceed and appropriate zoning as required by the terms of the RFA. Prior to hearing, Madison Oaks West, Madison Oaks East, and Madison Grove withdrew their challenge to The Villages’ eligibility for funding. However, should Florida Housing determine, as recommended, that Panama Manor’s Grant Form did not demonstrate a funding commitment from Panama City, then Fletcher Black would receive funding as opposed to The Villages and Pinnacle at Hammock Springs.
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 as to Case No. 21-0515BID, finding that Fletcher Black is eligible for the LGAO Designation, and awarding funding to Fletcher Black, subject to the successful completion of credit underwriting; that with respect to Case Nos. 21-0516BID, 21-0517BID, and 21-0518BID, finding that Madison Oaks East, Madison Oaks West, and Madison Grove are eligible for the 2019-113 Preference, but are not selected for funding; and with respect to Case No. 21-0520BID, finding that the decision to award funding to Rosemary Place was not clearly erroneous, and the error in its application was a minor waivable irregularity. DONE AND ENTERED this 14th day of April, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street Post Office Box 3000 (32802) Orlando, Florida 32801 Lawrence E. Sellers, Jr., Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301 Michael P. Donaldson, Esquire Carlton Fields, P.A. Suite 500 215 South Monroe Street Tallahassee, Florida 32302 Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 S LISA SHEARER NELSON 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 14th day of April, 2021. M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 Hugh R. Brown, General Counsel Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 Betty Zachem, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 Tiffany A. Roddenberry, Esquire Holland & Knight, LLP Suite 600 315 South Calhoun Street Tallahassee, Florida 32301
The Issue Whether Florida Housing Finance Corporation’s (Florida Housing) intended decision to award Respondent, Brixton Landing, Ltd., low-income housing tax credits is contrary to Florida Housing’s governing statutes, rules, or the solicitation specifications.
Findings Of Fact Respondent, Florida Housing, is a public corporation created pursuant to section 420.504, Florida Statutes (2015). Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Petitioners, Madison Hollow, LLC, and American Residential Development, LLC (Madison Hollow or Petitioners), are Florida limited liability corporations engaged in the business of affordable housing development. Brixton Landing, is a Florida limited liability corporation also engaged in the business of affordable housing development. Florida Housing is the housing credit agency for the State of 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, which are made available to the states annually by the United States Department of the Treasury. The State Housing Tax Credit Program is established in Florida under the authority of section 420.5093, Florida Statutes. Florida Housing is the designated entity in Florida responsible for allocating federal tax credits to assist in financing the construction or substantial rehabilitation of affordable housing. Because the demand for tax credits provided by the federal government far exceeds the supply available under the State Housing Tax Credit Program, qualified affordable housing developments must compete for this funding. On November 21, 2015, Florida Housing issued Request for Applications 2014-115, Housing Credit Financing for Affordable Housing Developments in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties (the RFA). No challenge was filed to the terms, conditions, or requirements of the RFA. According to the RFA, Florida Housing expected to award up to approximately $15,553,993 in tax credits for qualified affordable housing projects in those six large counties. Florida Housing received approximately 58 applications in response to the RFA. Madison Hollow, Brixton Landing, Sheeler Club Apartments, Sheeler Club Apartments-Phase II, Banyan Station, Lauderdale Place, and Lake Sherwood timely submitted applications in response to the RFA requesting financing of their affordable housing projects from the funding proposed to be allocated through the RFA. Petitioners requested an allocation of $2,110,000 in annual tax credits for their development, Madison Hollow, located in Orange County. Brixton Landing requested an allocation of $1,330,000 in annual tax credits for Brixton Landing’s proposed development in Orange County. On May 8, 2015, the Board of Directors of Florida Housing approved the preliminary rankings and allocations, and issued its Approved Preliminary Awards/Notice of Intended Decision (Notice of Intended Decision), in which Florida Housing scored both Madison Hollow’s and Brixton Landing’s projects as eligible for funding and awarded each application 23 points. In addition, Sheeler Club Apartments, Sheeler Club Apartments- Phase II, Banyan Station, Lauderdale Place, and Lake Sherwood were all found to be eligible applications. On that same date, Florida Housing published on its website the Notice of Intended Decision, which included a three- page spreadsheet listing all applications made in response to the RFA and identifying those which were eligible and ineligible. Ranking and Selection Process Applications were evaluated for eligibility and scoring by a Review Committee appointed by Florida Housing’s executive director. Applications were considered for funding only if they were deemed “eligible,” based on the terms of the RFA. Of the 58 timely-submitted applications, 52 were deemed eligible and six were deemed ineligible. The highest scoring applications were determined by first sorting all eligible applications from highest score to lowest score. Pursuant to the RFA, applicants could achieve a maximum score of 23 points. Eighteen (18) of those 23 points were attributable to “proximity” scores based on the distance of the proposed development from services needed by tenants. The remaining five points were attributable to Local Government Contributions. In scoring housing tax credit applications, many applicants achieved tie scores. In anticipation of that occurrence, Florida Housing designed the RFA and rules to incorporate a series of “tie breakers” to separate any scores that tied as follows: First by the Application’s eligibility for the “SAIL RFA 2014-111 Unfunded Preference”, which is outlined in Section One 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.5.c.(1)(a)(iii) 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.12.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 Leveraging Classification (applying the multipliers outlined in Exhibit C below and having the Classification of A be the top priority); Next by the Application’s eligibility for the Florida Job Creation Preference which is outlined in Exhibit C below (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and Finally by lottery number, resulting in the lowest lottery number receiving preference. The Leveraging Classification is essentially a ranking of eligible applications based upon the cost per unit (referred to in the RFA as Total Corporation Funding Per Set-Aside Unit), with the most cost-effective project at the top of the list and the least cost-effective at the bottom. The top 90 percent of applications on the list were classified as Group A and the bottom 10 percent of applications classified as Group B. Applicants in Group B are not eligible for funding until all applicants in Group A are funded. Pursuant to Item 9 of Exhibit C to the RFA, Florida Housing classified Brixton Landing and Madison Hollow in the Group A Leveraging Classification, and classified Sheeler Club Apartments, Sheeler Club Apartments-Phase II, Banyan Station, and Lauderdale Place in the Group B Leveraging Classification. Both Brixton Landing and Madison Hollow were scored identically by Florida Housing, and both developments are located in Orange County. Because the RFA provided that only one project will be funded in each county, and because Brixton Landing had a lower lottery number than Madison Hollow, Brixton Landing was selected for funding. A total of 52 applications were found to be eligible for funding. According to the leveraging calculations, the Group B applications were removed from consideration for funding. Brixton Landing was number 45 on the list, thus classified in Group A. Brixton Landing will be moved to Group B classification, if at least two of the five applications in Group B are found to be ineligible. If Brixton Landing is moved into Group B, Madison Hollow will be eligible for funding. The Challenged Applications Madison Hollow alleges that the applications for Sheeler Club Apartments and Sheeler Club Apartments-Phase II should have each been found ineligible for failure to demonstrate the “ability to proceed” required in the RFA. Madison Hollow also alleges that the applications for Banyan Station and Lauderdale Place should have each been found ineligible for failure to fully disclose the principals of the applicant and developer.1/ Madison Hollow is thus in the unusual position of challenging four applicants who were not selected for funding and are not parties to this case. Brixton Landing is in the equally unusual position of defending the applications of those four unfunded applicants. Sheeler Club Atlantic Housing Partners (Atlantic) submitted two applications in response to the RFA. Sheeler Club Apartments was an application for development of affordable multifamily units to serve a family demographic. Sheeler Club Apartments- Phase II was an application for development of multi-family garden homes to serve an elderly demographic. The projects were proposed to be located adjacent to each other. The RFA sets forth the following specific requirements for applicants to demonstrate the ability to proceed: 5.f. Ability to Proceed: The Applicant must demonstrate the following Ability to Proceed elements as of Application Deadline, as outlined below. * * * Status of Site Plan Approval. The Applicant must demonstrate the status of site plan approval as of the Application Deadline by providing, as Attachment 7 to Exhibit A, the properly completed and executed Florida Housing Finance Corporation Local Government Verification of Status of Site Plan Approval for Multifamily Developments form (Form Rev. 11-14). Appropriate Zoning. The Applicant must demonstrate that as of the Application Deadline the proposed Development site is appropriately zoned and consistent with local land use regulations regarding density and intended use or that the proposed Development site is legally non-conforming by providing, as Attachment 8 to Exhibit A, the applicable properly completed and executed verification form: The Florida Housing Finance Corporation Local Government Verification that Development is Consistent with Zoning and Land Use Regulations form (Form Rev. 11-14); or The Florida Housing Finance Corporation Local Government Verification that Permits are not Required for this Development form (Form Rev. 11-14). Similarly, the RFA requires applicants to submit forms to demonstrate availability of electricity, water, sewer, and roads to serve the proposed development. The Verification of Status of Site Plan Approval form (Site Plan form) must be completed by the local government official responsible for determination of issues related to site plan approval within the applicable jurisdiction. The official must choose between two optional paragraphs related to proposals for new construction: (1) the proposed development “requires additional site plan approval or similar process” and the “final site plan . . . was approved on or before the submission deadline for the” RFA; or (2) the proposed development “requires additional site plan approval or similar process” and either the jurisdiction requires preliminary or conceptual site plan approval, “which has been issued,” or (b) the jurisdiction provides neither preliminary nor conceptual site plan approval, “nor is any other similar process provided prior to issuing final site plan approval,” but the site plan, in the applicable zoning designation, has been reviewed. Orange County provides neither preliminary nor conceptual site plan approval. Thus, the local government official must certify that the site plan for the proposed project has been reviewed. The Local Government Verification that Development is Consistent with Zoning and Land Use Regulations form (Zoning form), requires that the local government official responsible for issues related to comprehensive planning and zoning certify the following: (1) the zoning designation applicable to the property; (2) that the proposed number of units and intended use are consistent with current land use regulations and the zoning designation; (3) that there are no additional land use regulation hearings or approvals required to obtain the zoning classification or density proposed; and (4) that there are no known conditions that would preclude construction of the proposed development on the site. It is undisputed that Atlantic submitted both verification forms with its application. Olan Hill, Chief Planner for Orange County, reviewed, completed, and signed each of these forms, attesting that in his opinion both of the proposed projects would be in compliance with local zoning and land use regulations. Mr. Hill was fully authorized to sign the forms on behalf of Orange County. The two Atlantic projects are proposed adjacent to one another on a site which has a Planned Development (PD) zoning approval for development of 152 single-family townhome units in the Medium Density Residential Future Land Use category (MDR), which allows a maximum density of 20 units per acre. The County’s PD zoning approval was based on review of Atlantic’s Land Use Plan (LUP) for the site. According to Mr. Hill, the LUP is a “bubble plan” outlining the general entitlements and development program for the site. In the case at hand, the Atlantic site also has an approved preliminary subdivision plan (PSP), which is the first step to subdivide the property. Under the PSP, the property is proposed to be subdivided into 152 lots for development of single-family townhomes. For purposes of certifying the Site Plan and Zoning forms, Mr. Hill reviewed the PD LUP, not the PSP. Regarding the Site Plan form, Mr. Hill certified that, although the County requires no preliminary or conceptual site plan approval process and the final site plan approval has not yet been issued, the site plan for the project in the applicable zoning classification, the PD LUP, had been reviewed. With respect to the Zoning form, Mr. Hill first certified that the proposed number of units and intended use are consistent with current land use regulations and the PD zoning designation. The PD LUP limits the total number of units to 152, which would accommodate either of the Sheeler Club applications (Sheeler Club Apartments proposes 88 units, while Sheeler Club-Phase II proposes 64 units). The MDR land use category allows the multi-family uses proposed for the development up to 20 units per acre. Under the MDR category, the 21.4-acre site could be approved for well over 152 units. Mr. Hill next certified that there are no additional land use regulation hearings or approvals required to obtain the zoning classification or density described in that zoning classification. The PD zoning is final and is not dependent upon whether Atlantic goes forward with subdivision of the property as proposed in the existing PSP. Atlantic could subdivide the property for a different number of lots, or in a different configuration, without changing the zoning of the property. Finally, Mr. Hill certified that there are no known conditions that would preclude construction of the referenced Development on the proposed site, assuming compliance with the applicable land use regulations. There are numerous county approvals needed throughout the development approval process. The Zoning form does not require the local government official to certify that no additional approvals are needed following site plan review, or that the proposed project is ready to begin construction. Petitioners contend that neither of the Sheeler Club applications should have been deemed eligible because, despite Mr. Hill’s authorized certifications to the contrary, the projects do not have the ability to proceed. Petitioners do not contend that Mr. Hill was not authorized to execute the forms, or that the certifications were obtained through fraud or other illegality. As to the Site Plan form, Petitioners contend first that Mr. Hill did not review a site plan for either project proposed by Atlantic: Sheeler Club Apartments, 88 multi-family units; or Sheeler Club Apartments-Phase II, 64 garden apartments. Instead, Mr. Hill reviewed and certified the site plan for Sheeler Avenue Townhomes PD, which provides for development of single-family townhomes in a single phase over the entire site. Petitioners argue that the PD is conditioned upon development of townhomes in single ownership complying with section 38-79(20) of the Orange County Code of Ordinances, which is unrelated to construction of the “garden apartments” proposed by Atlantic in its application to Florida Housing for financing. Thus, Petitioners conclude, Mr. Hill has not reviewed a site plan for either Sheeler Club Apartments or Sheeler Club Apartments-Phase II. Mr. Hill testified that his certification did not depend on whether either or both of the proposed projects was eventually developed, but that the overall site has a PD zoning approval for a total of 152 units. Ken Reecy is the Director of Multi-family Programs for Florida Housing. He testified the purpose of the Site Plan form, and, for that matter, the Zoning form, is to verify “high- level” approval of the site. For example, if the applicant proposes a 64-unit project, Florida Housing wants verification that the developer will be able to deliver 64 units. As to the Zoning form, Petitioners present a parade of objections. Petitioners argue that the proposed use of the property for multi-family apartments and garden apartments is inconsistent with the zoning approval for single-family townhomes; thus, additional land use regulation approvals are required, contrary to the certified Zoning form. Petitioners point to the PSP approved for the subdivision of the property and argue that neither Sheeler Club project could be built in conformity with the PSP, which proposes to subdivide the property into 152 townhome lots. Relying on the PSP, Petitioners also argue that Sheeler Club Apartments-Phase II has no public road access without the Sheeler Club Apartments development, thus, Mr. Hill’s certification as to Phase II was incorrect and the project is not ready to proceed. Moreover, Petitioners argue that Atlantic “gerrymandered” the boundaries of the two projects in order to secure the most advantageous location for the “development location point”; therefore, the lot layout proposed in the PSP cannot be achieved on either of the two projects. Likewise, Petitioners argue the boundary is a change from the approved PSP, which requires additional land use approvals from the Board of County Commissioners. It is Florida Housing’s practice to accept the zoning and land use certifications by local officials, which it followed in this case. Florida Housing does not have the expertise, resources, or authority to evaluate local zoning and land use decisions. Petitioners would have the undersigned perform the analysis that Florida Housing did not and make a determination whether the Atlantic projects, as proposed, meet the requirements for zoning and land use approvals set forth in the certifications signed by Mr. Hill. Petitioners would have this tribunal interpret the Orange County Code of Ordinances and make findings regarding: whether the LUP PD would have to be amended for Atlantic to build the projects proposed in its funding application to Florida Housing; whether said amendments would constitute “substantial changes” to the approved PD, thus requiring additional public hearings; and, ultimately, whether the Site Plan and Zoning forms were executed in error. The undersigned declines to do so, as set forth more fully in the Conclusions of Law. In this particular case, Mr. Reecy testified that Orange County was aware of the issues raised by Madison Hollow and that he relied on Mr. Hill’s knowledge to make the right call on these forms. While there was certainly an abundance of testimony attempting to call into question the decisions of the Orange County authorities, the evidence does not support a finding that Florida Housing’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the solicitation specifications, or that it was clearly erroneous, contrary to competition, arbitrary, or capricious. In light of that finding, the audio recordings of Orange County Commission Meetings proffered by both Petitioners and Brixton Landing are not admitted. The recordings are irrelevant in this proceeding and have not been relied upon by the undersigned. Banyan Station and Lauderdale Place Madison Hollow alleges that two other applications, Banyan Station and Lauderdale Place, should have been found ineligible for failure to disclose the principals of the applicant and the developers, as required by RFA section Four.A.3. Both the applicants for, and developers of, Banyan Station and Lauderdale Place are limited liability companies (LLCs). Section Four.A.3.d.(2) requires applicants that are LLCs to provide a list identifying the principals of the applicant and the principals of each developer as of the application deadline. The RFA also directs applicants to Section 3 of Exhibit C “to assist the [a]pplicant in compiling the listing.” Exhibit C provides, “[t]he Corporation is providing the following charts and examples to assist the Applicant in providing the required list[.] The term Principal is defined in Section 67-48.002, F.A.C.” Florida Administrative Code Rule 67-48.002(93) reads, in relevant part, as follows: (93) ‘Principal’ means: With respect to an Applicant or Developer that is a limited liability company, any manager or member of the Applicant or Developer limited liability company, and, with respect to any manager or member of the Applicant or Developer limited liability company that is: 3. A limited liability company, any manager or member of the limited liability company. Exhibit C provides the following chart applicable to disclosures by LLC applicants: Identify All Managers And Identify all Members and For each Manager that is a Limited Partership: For each Manager that is a Limited Liability Company: For each Manager that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder and For each Member that is a Limited Partnership: For each Member that is a Limited Liability Company: For each Member that is a Corporation: Identify each General Partner Identify each Manager Identify each Officer and and and Identify each Limited Partner Identify each Member Identify each Director and Identify each Shareholder For any Manager and/or Member that is a natural person (i.e., Samuel S. Smith), no further disclosure is required. Exhibit C further provides examples of fictitious applicants and developers followed by disclosure listings of managers, members, general and limited partners, officers, directors, and shareholders, as applicable. Banyan Station, applicant, HTG Banyan is a limited liability company. HTG Banyan listed its managers as Matthew and Randy Rieger, and its members as Camillus-Banyan, LLC, and Housing Trust Group, LLC. It then listed Camillus House, Inc., and RER Family Partnership, Ltd., as sole members of those LLCs, respectively. Applicant’s developer is also a limited liability company, HTG Banyan Developer, LLC. HTG Banyan Developer listed Matthew and Randy Rieger as the developer’s managers, and Camillus-Banyan, LLC, HTG Affordable, LLC, and Reiger Holdings, LLC, as its members. It listed Camillus House, Inc., RER Family Partnership, Ltd., and Balogh Family Investments Limited Partnership, as members of those LLCs. HTG Banyan Developer disclosed Matthew Reiger as the sole member of Rieger Holdings. Likewise, Lauderdale Place applicant, HTG Anderson, LLC, identified its managers and members, although some members were identified as LLCs. In each case, the applicant identified the principals of the applicant and the developer down “two levels” of organizational structure, even though in some cases this did not result in the disclosure of natural persons. Petitioners urge an interpretation of the disclosure requirement that would require an LLC to continue to identify members and managers until natural persons are identified. Respondents maintain that the rule and the RFA require disclosure of only “two levels” of organizational structure, as shown on the charts in Exhibit C. Petitioners did not make a showing that Florida Housing’s interpretation of the rule and the RFA is unreasonable. The definition of “principal” of an LLC includes members which are likewise LLCs. The assistive chart includes disclosures at only two levels of organizational structure. Furthermore, in Exhibit C, example 3, the disclosure for ABC, LLC, includes XYZ, LLC, as a member without further disclosure. In support of its argument, Petitioners rely upon the language below the chart which states, “[f]or any Manager and/or Member that is a natural person (i.e., Samuel S. Smith), no further disclosure is required.” The plain language of the chart states that when disclosing managers and members of an LLC, for any manager or member who is a natural person, no further disclosure is required. The language does not state, as Petitioners would prefer, when disclosing managers and members of an LLC, disclosure must be made until all natural persons are disclosed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order affirming Brixton Landing for funding under RFA 2014-115. DONE AND ENTERED this 29th day of October, 2015, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK 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 October, 2015.
The Issue Whether Petitioner was properly denied mortgage assistance through Florida Housing Finance Corporation's ("Florida Housing") Hardest-Hit Fund Elderly Mortgage Assistance ("ELMORE") program based on a conviction for fraud allegedly in connection with a real estate transaction.
Findings Of Fact The Parties Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes, to promote the public welfare by administering the governmental function of financing or refinancing housing. For purposes of this proceeding, Florida Housing is an agency of the State of Florida. Florida Housing is also considered the state's housing finance agency which means Florida Housing, at times, conducts business as if it were a financial institution. Florida Housing administers the Hardest-Hit Fund, using funds appropriated by the United States Congress through the Emergency Economic Stabilization Act to help stabilize housing markets and prevent foreclosures. The Hardest-Hit Fund comes directly to Florida Housing from the United States Treasury through a Housing Finance Agency ("HFA") Participation Agreement. The ELMORE program is one of the programs created under the umbrella of the Hardest-Hit Fund. The ELMORE program is designed to assist senior homeowners in Florida who are facing foreclosure due to the inability to pay property charges such as property taxes, homeowners insurance, and homeowners or condo association dues after the homeowner was paid all of the equity under a reverse mortgage. The HFA agreement is a summary guideline for the ELMORE program and its general requirements. The stated goal of the program is to help senior homeowners remain in their homes. The Summary Guidelines include certain borrower eligibility criteria, property/loan eligibility criteria, and program exclusions, among other guidelines. The program exclusions reference the "Dodd-Frank exclusion for having been convicted of a mortgage-related felony in the past ten years." The Dodd-Frank Act exclusion for criminal applicants is codified 12 U.S.C. § 5220b, and states in part: (d) Prevention of qualification for criminal applicants (1) In general No person shall be eligible to begin receiving assistance from the Making Home Affordable Program authorized under the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et seq.), or any other mortgage assistance program authorized or funded by that Act, on or after 60 days after July 21, 2010, if such person, in connection with a mortgage or real estate transaction, has been convicted, within the last 10 years, of any one of the following: Felony larceny, theft, fraud, or forgery. Money laundering. Tax evasion. On or about February 27, 2017, Betty Baldwin, Power of Attorney for Tolz, submitted an application for mortgage assistance through Florida Housing's Hardest-Hit Fund for ELMORE benefits. On or about May 11, 2017, the application was denied. On or about November 8, 2018, Tolz submitted another application for mortgage assistance from the ELMORE program. On December 5, 2018, Florida Housing's Director of Homeownership Programs, David Westcott, issued a letter with an ineligibility determination to Tolz, which included a Notice of Rights.1/ Mr. Westcott is ultimately responsible for the final eligibility determinations on Hardest-Hit Fund mortgage assistance applications. The Denial of ELMORE Program Benefits Mr. Westcott denied Tolz's application for ELMORE program funds because she had, what Mr. Westcott determined to be, a disqualifying felony conviction in connection with a real estate transaction in violation of the Dodd-Frank Act provision. Mr. Westcott testified that pursuant to the HFA agreement with the United States Treasury, Florida Housing is prohibited from using ELMORE funds to assist applicants that have a disqualifying Dodd-Frank Act conviction. During the period of 2003 through 2010, Tolz used her position as a fiduciary in the role of bankruptcy trustee, receiver, and personal representative to misappropriate millions of dollars from bankruptcy estates, receiverships, and other matters, by writing or causing the writing of unauthorized checks from a variety of fiduciary accounts which contained funds she was appointed to safeguard. Tolz then used the misappropriated money for her own benefit and to conceal her previous misappropriations by restoring the balances of other fiduciary accounts from which she had previously taken funds in a Ponzi scheme framework. To conceal this theft, Tolz falsified documents and used a fictitious bank account. On or about December 12, 2011, Tolz was convicted in Broward County Circuit Court of grand theft in the first degree. Tolz was convicted on or about July 27, 2011, in the United States District Court for the Southern District of Florida of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349. To secure a plea deal and in order to bolster her claim that her sentence should be reduced from the federal guidelines, prior to sentencing, Tolz surrendered five real estate properties, which she owned, to the United States government. The value of these properties was then used to offset and lessen Tolz's restitution obligation to her victims. Tolz understood that these properties would not be accepted to satisfy her restitution obligation unless they were purchased, mortgaged, or improved with the assets of her victims. In the federal criminal case, Tolz executed a Factual Basis Supporting Change of Plea ("Factual Basis") on or about April 15, 2011. Tolz agreed not to contest the information in the Factual Basis. Further, Tolz agreed that it provided a sufficient factual basis for her plea of guilty in the case, and had the case proceeded to trial, that the United States would have proven the facts beyond a reasonable doubt. Paragraph 11 of the Factual basis states: MARIKA TOLZ, directly or indirectly, utilized funds obtained through the fraudulent scheme to purchase, maintain and improve real properties, including, but not limited to the following real properties: 2344 North Federal Highway, Hollywood, Florida; 1804 Sherman Street, Hollywood, Florida; 704 SE 3rd Avenue, Hallandale, Florida; 815 SW 30th Street, Ft. Lauderdale, Florida; and 3031 North Ocean Blvd, Apartment 403, Fort Lauderdale, Florida 33308. In making the ineligibility determination on Tolz's application for ELMORE program funds, Mr. Westcott determined that Tolz's conviction was in connection with a real estate transaction because Tolz agreed in the Factual Basis that she used funds obtained through the fraud to "purchase, maintain and improve real properties." Florida Housing determined that Tolz's conviction disqualified her from receiving mortgage assistance from the ELMORE program because: As part of the Hardest-Hit Fund, the ELMORE program funds are authorized by the Emergency Economic Stabilization Act of 2008; Tolz was convicted of the enumerated offense of a "fraud;" The conviction occurred on or about July 21, 2011, which is within the last ten years; and The conviction was in connection with a real estate transaction because Tolz used funds obtained through the fraud to "purchase, maintain and improve real properties." "In Connection With" A Mortgage or Real Estate Transaction Tolz contends that her crimes were not "in connection with a mortgage or real estate transaction." At both her sentencing hearing in federal court and at the final hearing in this proceeding, Tolz stated that she owned these surrendered properties for 30 or 40 years. Tolz now argues that because she owned these properties well before the fraud of which she was convicted occurred, no mortgage or real estate transaction was involved in the crime and, therefore, she should not be disqualified from ELMORE benefits. Tolz now claims she surrendered these properties to facilitate the forfeiture on the advice of counsel, that she was heavily medicated at the time of sentencing, and that the prosecutor and the court knew that these properties were not associated with her underlying crimes. Tolz admitted at final hearing that she surrendered these properties to do an end-run around the system to reduce the more than two million dollars she owed in restitution. However, in that same sentencing hearing, the prosecutor representing the United States stated "I'll also indicate, although it's clear from the record, that notwithstanding the picture that she's somehow a pauper, or was a pauper, the fact of the matter is the forfeiture properties indicated in the forfeiture which she agreed to were her properties, at least partially paid for by the offense."2/ An impartial reading of the sentencing transcript demonstrates that during sentencing the United States believed that the properties involved in the criminal forfeiture were, in part, paid for by the crime for which Petitioner was convicted. The undersigned finds the facts, as offered by Tolz in her 2011 "Factual Basis" offered in support of a sentence reduction and reduction of her restitution obligation, to be more credible than her denial at final hearing that these properties were not purchased, improved, or maintained with the funds from her crimes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing enter a final order dismissing Petitioner's Amended Petition. DONE AND ENTERED this 30th day of April, 2019, 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 30th day of April, 2019.
The Issue Whether Respondent, Florida Housing Finance Corporation’s ("Florida Housing") intended action to award housing tax credit funding to Intervenors Westside Phase, I, LLLP ("Westside"), HTG Edgewood, Ltd. ("HTG Edgewood"), Diplomat South, LLC ("Diplomat"), and Tranquility at Milton, LLC ("Tranquility"), under Request for Applications 2019-113 Housing Credit Financing for Affordable Housing Developments Located in Medium and Small Counties (the "RFA"), is contrary to governing statutes, rules, the RFA specifications, and clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code, and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The low income housing tax credit program (commonly referred to as "tax credits" or "housing credits") was enacted to incentivize the private market to invest in affordable rental housing. These housing tax credits are awarded competitively to housing developers in Florida for rental housing projects that qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect is that the credits reduce the amount that the developer would otherwise have to borrow. Because the total debt is lower, a housing tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the housing credits. The demand for housing tax credits provided by the federal government exceeds the supply. The Competitive Application Process Florida Housing is authorized to allocate housing tax credits and other funding by means of a request for applications or other competitive solicitation in section 420.507(48) and Florida Administrative Code Chapter 67-60, which govern the competitive solicitation process for several different programs, including the program for housing tax credits. Chapter 67-60 provides that Florida Housing allocate its competitive funding through the bid protest provisions of section 120.57(3), Florida Statutes. 1 In their applications, applicants request a specific dollar amount of housing tax credits to be given to the applicant each year for a period of ten years. Applicants normally sell the rights to that future stream of income housing tax credits (through the sale of almost all of the ownership interest in the applicant entity) to an investor to generate the amount of capital needed to build the development. The amount which can be received depends 1 A request for application is equivalent to a "request for proposal" as indicated in rule 67- 60.009(3). upon the accomplishment of several factors, such as a certain percentage of the projected total development cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. This, however, is not an exhaustive list of the factors considered. The RFA was issued on August 20, 2019, and responses were initially due October 29, 2019. The RFA was modified on September 10, 2019, and the application deadline was extended to November 5, 2019. No challenges were made to the terms of the RFA. Through the RFA, Florida Housing expects to award up to an estimated $14,805,028 of housing tax credits to proposed developments in medium counties and up to an estimated $1,413,414 of housing credits to proposed developments in small counties. Florida Housing received 184 applications in response to the RFA. A review committee was appointed to review the applications and make recommendations to Florida Housing's Board of Directors (the "Board"). The review committee found 169 applications eligible and 15 applications ineligible. Through the ranking and selection process outlined in the RFA, 11 applications were preliminarily recommended for funding. The review committee developed charts listing its eligibility and funding recommendations to be presented to the Board. On March 6, 2020, the Board met and considered the recommendations of the review committee. Also, on March 6, 2020, at approximately 9:35 a.m., Petitioners and all other applicants received notice that the Board determined whether applications were eligible or ineligible for consideration for funding, and that certain eligible applicants were selected for award of housing credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets on the Florida Housing website, www.floridahousing.org, one listing the Board approved scoring results and one identifying the applications which Florida Housing proposed to fund. In the March 6, 2020, posting, Florida Housing announced its intention to award funding to 11 applicants, including Westside, HTG Edgewood, Diplomat, and Tranquility. Petitioners timely filed notices of protest and petitions for formal administrative proceedings, and Intervenors timely intervened. The RFA Ranking and Selection Process The RFA contemplates a structure in which the applicant is scored on eligibility items and obtains points for other items. A summary of the eligibility items is available in section 5.A.1., beginning on page 64 of the RFA. Only applications that meet all the eligibility items will be eligible for funding and considered for funding selection. There were two total point items scored in this RFA. Applicants could receive five points for Submission of Principals Disclosure Form, stamped by the Corporation as "Pre-Approved," and five points for Development Experience Withdrawal Disincentive, for a total application score of up to ten points. The RFA has three funding goals: The Corporation has a goal to fund four Medium County Developments that qualify for the Local Government Areas of Opportunity Funding Goal outlined in Section Four A.11.a. of the RFA. The Corporation has a goal to fund two Developments with a Demographic commitment of Family that select and qualify for the Geographic Areas of Opportunity/SADDA Goal outlined in Section Four A.11.b. of the RFA. The Corporation has a goal to fund one (1) Development that qualifies for the Local Community Revitalization Initiative Goal outlined in Section Four A.11.c. of the RFA. *Note: During the Funding Selection Process outlined below, Developments selected for these goals will only count toward one goal. As part of the funding selection process, the RFA starts with the application sorting order on page 68. The highest scoring applications are determined by first sorting together all eligible applications from the highest score to lowest score, with any scores that are tied separated as follows: First, by the Application's eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application's eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.10.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's eligibility for the Development Category Funding Preference which is outlined in Section Four A.4.b.(4) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's Leveraging Classification, applying the multipliers outlined in item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Application's eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); And finally, by lottery number, resulting in the lowest lottery number receiving preference. The RFA includes a Funding Test where small county applications will be selected for funding only if there is enough small county funding available to fully fund the eligible housing credit request amount, and medium county applications will be selected for funding only if there is enough medium county funding available to fully fund the eligible housing credit request amount. The RFA outlines a specific County’s Award Tally: As each application is selected for tentative funding, the county where the proposed Development is located will have one Application credited towards the County’s Award Tally. The Corporation will prioritize eligible unfunded Applications that meet the Funding Test and are located within counties that have the lowest County Award Tally above other eligible unfunded Applications with a higher County Award Tally that also meet the Funding Test, even if the Applications with a higher County Award Tally are higher ranked. According to the RFA, the funding selection process is as follows: The first Application selected for funding will be the highest ranking eligible Applications that qualifies for the Local Community Revitalization Initiative Goal. The next four Applications selected for funding will be the highest ranking eligible Medium County Applications that qualify for the Local Government Areas of Opportunity Funding Goal, subject to the Funding Test and the County Award Tally. The next two Applications selected for funding will be the highest ranking eligible Family Applications that qualify for the Geographic Areas of Opportunity/HUD-designated SADDA Goal, subject to the Funding Test and the County Award Tally. The next Applications selected for funding will be the highest ranking eligible unfunded Small County Applications that (i) can meet the Small County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Small County Applications. If Small County funding remains and no unfunded eligible Small County Application can meet the Small County Funding Test, no further Small County Applications will be selected and the remaining Small County funding will be added to the Medium County funding amount. The next Application(s) selected for funding will be the highest ranking eligible unfunded Medium County Applications that (i) can meet the Medium County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Medium County Applications. If Medium County funding remains and no unfunded eligible Medium County Application can meet the Medium County Funding Test, no further Applications will be selected and the remaining funding will be distributed as approved by the Board. According to the terms of the RFA: Funding that becomes available after the Board takes action on the [Review] Committee’s recommendation(s), due to an Applicant withdrawing its Application, an Applicant declining its invitation to enter credit underwriting, or an Applicant’s inability to satisfy a requirement outlined in this RFA, will be distributed as approved by the Board. All 184 applications for the RFA were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA, Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations. HTG Edgewood’s Application (DOAH Case No. 20-1778BID) During scoring, Florida Housing determined that the HTG Edgewood application was eligible and, pursuant to the terms of the RFA, selected HTG Edgewood for funding. HTG Edgewood, Florida Housing, and Rochester now agree that HTG Edgewood’s application is ineligible for consideration for funding and the application of Rochester is eligible for funding. Accordingly, HTG Edgewood, Florida Housing, and Rochester agree that Florida Housing should deem the HTG Edgewood application ineligible for funding and Rochester’s application eligible for funding. Diplomat’s Application (DOAH Case No. 20-1779BID) During scoring, Florida Housing deemed the Diplomat application eligible and, pursuant to the terms of the RFA, preliminarily selected Diplomat for funding. Diplomat and Madison Square now agree that Diplomat is ineligible for funding. Florida Housing does not contest Diplomat’s admission of ineligibility. Madison Square, Diplomat, and Florida Housing agree that Madison Square is eligible for funding. Tranquility’s Application (DOAH Case No. 20-1780BID) Florida Housing deemed the Tranquility application eligible for funding, and pursuant to the terms of the RFA, Tranquility was selected for preliminary funding. Tranquility’s Principals Disclosure Form Madison Oaks contests Florida Housing’s preliminary selection of Tranquility for an award of housing tax credits. In its challenge, Madison Oaks argues that Tranquility failed to correctly complete its Principals Disclosure Form by not identifying the multiple roles of its disclosed principal. Specifically, Madison Oaks argues that Tranquility failed to list Tranquility Milton Manager, LLC, which is disclosed as a manager, as a non- investor member as well. Accordingly, Madison Oaks contends Tranquility is not eligible or should lose five points. The purpose of the Principals Disclosure Form is to allow Florida Housing to track an entity’s past and future dealings with Florida Housing so that Florida Housing is aware of the entity with which it is dealing. In regard to principal disclosure, the RFA states, in relevant part: c. Principals Disclosure for the Applicant and for each Developer (5 points) Eligibility Requirements To meet the submission requirements, the Applicant must upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019)("Principals Disclosure Form") with the Application and Development Cost Pro Forma, as outlined in Section Three above. Prior versions of the Principal Disclosure Form will not be accepted. The Principals Disclosure Form must identify, pursuant to subsections 67-48.002(94), 67- 48.0075(8) and 67-48.0075(9), the Principals of the Applicant and Developer(s) as of the Application Deadline. The investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company investor must be identified. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. Point Item Applicants will receive 5 points if the uploaded Principal Disclosure Form was stamped "Approved" during the Advance Review Process. The Advance Review Process for Disclosure of Applicant and Developer Principals is available on the RFA Website and also includes samples which may assist the Applicant in completing the required Principals Disclosure Form. Note: It is the sole responsibility of the Applicant to review the Advance Review Process procedures and to submit any Principals Disclosure Form for review in a timely manner in order to meet the Application Deadline. The RFA website provides guidance and instructions to assist applicants in completing the principal disclosure. The instructions state: "List the name of each Member of the Applicant Limited Liability Company and label each as either non-investor Member or investor Member (i.e., equity provider and/or placeholder), as applicable." The RFA website guidance and instructions further provides Frequently Asked Questions ("FAQ’s") concerning principal disclosures. FAQ number 4 states: Q: If the Applicant entity is a member managed limited liability company, how should it be reflected on the form since there is no "member-manager" choice at the First Principal Disclosure Level? A: Each member-manager entity/person should be listed twice—once as a non-investor member and once as a manger. If Housing Credits are being requested, the investor-member(s) must also be listed in order for the form to be approved for a Housing Credit Application. On its Principals Disclosure Form, Tranquility listed two entities at the first principal disclosure level: Tranquility Milton Manager, LLC, identified as a manager of the applicant and Timshel Partners, LLC, identified as an investor member of the applicant. However, Tranquility failed to identify the dual role of Tranquility Milton Manager, LLC, as a non- investor member in addition to its disclosed role as a manger. Nevertheless, Tranquility’s equity proposal letter submitted as part of its application identified Tranquility Milton Manager, LLC, as a member of the LLC because according to the equity proposal, Tranquility Milton Manager, LLC, would retain a .01% ownership interest in the company. Thus, the role of Tranquility Milton Manager, LLC, as a member is available within Tranquility’s application. Tranquility participated in Florida Housing’s Advance Review Process, and on October 17, 2019, Florida Housing approved the Principals Disclosure Form submitted by Tranquility during the Advance Review Process for an award of housing credits. During scoring, Tranquility received five points for having its Principals Disclosure Form stamped "Approved" by Florida Housing. Tranquility’s Principals Disclosure Form met the eligibility requirements of the RFA and Tranquility is entitled to the five points. In addition, Ms. Button persuasively and credibly testified that even if Tranquility’s failure to list the dual role of its disclosed principal on the Principals Disclosure Form is an error, it is so minor as to constitute a waivable, minor irregularity. As detailed above, Tranquility Milton Manager, LLC, was specifically designated as a manager on the form and information identifying Tranquility Milton Manager, LLC’s, additional role as a member is included in the equity proposal letter submitted with the application. Madison Oak’s Application (DOAH Case No. 20-1779BID) Madison Oaks’ application was deemed eligible for funding, but pursuant to the terms of the RFA, Madison Oaks was not selected for preliminary funding. Madison Oaks Site Control Certification Florida Housing and Tranquility now argue that Madison Oaks failed to demonstrate site control. As an eligibility item, the RFA requires applicants to demonstrate site control by providing a properly completed and executed Florida Housing Finance Corporation Site Control Certification form ("Site Control Form"). For the Site Control Form to be considered complete, the applicant must attach documentation demonstrating that it is a party to an eligible contract or lease or is the owner of the subject property. Applicants can demonstrate site control by providing documentation that meets the requirements in the RFA for an eligible contract, deed or certificate of title, or a lease. An eligible contract must meet all of the following conditions: It must have a term that does not expire before April 30, 2020 or that contains extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than April 30, 2020; It must specifically state that the buyer’s remedy for default on the part of the seller includes or is specific performance; The Applicant must be the buyer unless there is an assignment of the eligible contract, signed by the assignor and the assignee, which assigns all of the buyer’s rights, title and interests in the eligible contract to the Applicant; and The owner of the subject property must be the seller, or is a party to one or more intermediate contracts, agreements, assignments, options, or conveyances between or among the owner, the Applicant, or other parties, that have the effect of assigning the owner’s right to sell the property to the seller. Any intermediate contract must meet the criteria for an eligible contract in (a) and (b) above. In demonstrating site control, the RFA states: Note: The Corporation will not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation. During scoring, the Corporation will rely on the properly executed Site Control Certification form to determine whether an Applicant has met the requirements of this RFA to demonstrate site control. The Corporation has no authority to, and will not, evaluate the validity or enforceability of any eligible site control documentation that is attached to the Site Control Certification form during the scoring process. During credit underwriting, if is determined that the site control documents do not meet the above requirements, the Corporation may rescind the award. Additionally, the RFA requires that the site control "documentation include all relevant intermediate contracts, agreements, assignments, options, conveyances, intermediate leases, and subleases." In the instant case, Madison Oaks attached a Purchase and Sale Agreement ("Madison Oaks Agreement") to its Site Control Form. The Madison Oaks Agreement lists West Oak Developers, LLC, as the "Seller" and Madison Oaks East, LLC, as the "Purchaser." However, the City of Ocala owns the property in question. The Madison Oaks Agreement in section 12 states that: "Seller has a valid and binding agreement with the City of Ocala, Florida pursuant to which Seller has the right to acquire fee simple title to the Property …." Tranquility and Florida Housing contend that Madison Oaks failed to demonstrate site control because Madison Oaks failed to include the City of Ocala Redevelopment Agreement for Pine Oaks ("Redevelopment Agreement") in its site control documentation. Madison Oaks maintains that the City of Ocala is a seller, pursuant to the Joinder and Section 28 of the Madison Oaks Agreement, and therefore, the Redevelopment Agreement did not need to be included. However, the Madison Oaks Agreement clearly identifies West Oak as the "Seller" and the City of Ocala as the "City." At hearing, Ms. Button persuasively and credibly testified that the Madison Oaks application is ineligible because it did not include the Redevelopment Agreement, which is a relevant agreement for purposes of demonstrating site control. The Redevelopment Agreement was a relevant intermediate contract, which was required to be included in Madison Oak’s application. Madison Oak’s failure to include the Redevelopment Agreement renders its application ineligible. Madison Oaks contends that including the Redevelopment Agreement in its application was unnecessary because of a joinder provision within the Madison Oaks Agreement. The Madison Oaks Agreement contains a Joinder and Consent of the City of Ocala approved by the City Council ("the Joinder"), whereby the City of Ocala joined and consented to the Madison Oaks Agreement "solely for the purposes set forth in, and subject to, Section 28 herein." The Madison Oaks Agreement in Section 28 states that: "Seller hereby acknowledges and agrees that in the event of Seller’s default hereunder, that is not timely cured, or Seller's refusal to close hereunder, Purchaser shall be entitled to close on the property subject to this Agreement … directly with the City on the terms and conditions set forth in this Section 28." However, Section 28 only applies in the event of a default by West Oaks that is not timely cured or West Oak’s refusal to close. There is no information within the Madison Oaks application to determine whether a default or termination of the Redevelopment Agreement occurred as of the application deadline. Westside’s Application (DOAH Case No. 20-1770BID) Florida Housing deemed Westside’s application eligible and, pursuant to the terms of the RFA, Westside was preliminary selected for funding to meet the goal to fund one development that qualifies for the Local Community Revitalization Initiative Goal. Westside’s Election to Compete for the Local Community Revitalization Initiative Goal In order to qualify for the Local Community Revitalization Initiative Goal, the RFA states: Applicants for proposed Developments that are part of a local revitalization plan may elect to compete for this goal. To qualify for this goal, the Applicant must submit the properly completed Florida Housing Finance Corporation Local Government/Community Redevelopment Agency Verification That Development Is Part Of A Local Community Revitalization Plan form (Form Rev. 08-2019) as Attachment 18. The form is available on the RFA Website. Included with the form must be either (1) a link to the local community revitalization plan or (2) a copy of the local community revitalization plan. The plan must have been adopted on or before January 1, 2019. Florida Housing, pursuant to the terms of the RFA, also has a goal to fund four medium county developments that qualify for the Local Government Areas of Opportunity Funding Goal. Westside included an executed Florida Housing Finance Corporation Local Government/Community Redevelopment Agency Verification that Development is Part of a Local Community Revitalization Plan form (the "Local Community Revitalization Plan Form") and a link to the local government revitalization plan at Attachment 18 of its application. At question 11.c. in the application, applicants are asked to select "Yes" or "No" from a drop-down menu in response to the question: "Is the proposed Development eligible for the Local Community Revitalization Initiative Goal?" Westside selected "No" from the Yes/No drop-down menu in answering question 11.c. regarding the Local Community Revitalization Initiative Goal. At question 11.a. in the application, applicants are asked to select "Yes" or "No" from a drop-down menu in response to the question: "Is the proposed Development eligible for the Local Government Areas of Opportunity Funding Goal?" Westside selected "Yes" from the Yes/No drop-down menu in answering questions 11.a. regarding the Local Government Areas of Opportunity Funding Goal. During scoring, Westside was deemed to have qualified for the Local Government Areas of Opportunity Funding Goal and the Local Community Revitalization Initiative Goal. During the funding selection process, Westside was selected for funding to meet the Local Government Community Revitalization Initiative Goal. HTG Addison selected "Yes" from the Yes/No drop-down menu in answering question 11.c. regarding the Local Community Revitalization Initiative Goal. HTG Addison included an executed Local Community Revitalization Plan Form at Attachment 18 of its application. HTG Addison selected "No" from the Yes/No drop-down menu in answering question 11.a. regarding the Local Government Areas of Opportunity Funding Goal. HTG Addison is the next highest ranked eligible applicant qualified for the Local Community Revitalization Initiative Goal after Westside. If Westside is deemed not to have qualified for the revitalization goal, then HTG Addison, as the next highest ranked eligible applicant, would qualify for that goal. HTG Addison alleges that Westside should not be selected to meet the Local Community Revitalization Initiative Goal because Westside selected "No" from the drop-down menu in response Question 11.c. Ms. Button persuasively and credibly testified that Florida Housing does not rely on the drop-down responses to questions 11a., b., or c. in determining whether an applicant "elects to be eligible for a certain goal" because answering "Yes" or "No" to these requirements is not a requirement of the RFA. Rather, Ms. Button persuasively and credibly testified that in determining whether an applicant qualifies for a funding goal, Florida Housing relies on the documentation submitted with the application that is required for the funding goal. In the instant case, Westside included the executed Florida Housing Finance Corporation Local Government Revitalization Plan form and a link to the local community revitalization plan at Attachment 18 of its application.2 In addition, Ms. Button persuasively and credibly testified that even if Westside erred in selecting "Yes" in response to question 11.c., it is so minor as to constitute a waivable, minor irregularity because Florida Housing has the required information within the application (the executed form and a link to the local community revitalization plan at Attachment 18). 2 Notably, another applicant responding to the RFA, Tranquility at Ferry Pass, selected "Yes" in response to question 11.c., but failed to include at Attachment 18 either a copy of or a link to the local community revitalization plan. During scoring, Florida Housing determined that Tranquility at Ferry Pass did not qualify for the revitalization goal. Florida Housing’s scoring of the Westside application is consistent with its scoring of the Tranquility at Ferry Pass application because in both cases, Florida Housing scored the application based on the requirements of the RFA for the revitalization goal and the documentation submitted in response to those requirements. Florida Housing did not rely on the applicant’s response to question 11.c. regarding the applicant’s expressions of its own eligibility.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order: dismissing the protests of HTG Addison and Madison Oaks; (2) finding the HTG Edgewood, Diplomat, and Madison Oaks applications ineligible for funding; and (3) finding the Rochester, Madison Square, Tranquility, and Westside applications eligible for funding. DONE AND ENTERED this 19th day of June, 2020, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us COPIES FURNISHED: Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 2020. Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC 1400 Village Square Boulevard, Suite 3-231 Tallahassee, Florida 32312 (eServed) Amy Wells Brennan, Esquire Manson Bolves Donaldson Varn, P.A. 109 North Brush Street, Suite 300 Tampa, Florida 33602 (eServed) Michael P. Donaldson, Esquire Carlton Fields 215 South Monroe Street, Suite 500 Tallahassee, Florida 32302 (eServed) Sarah Pape, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street, Suite 600 Post Office Box 3000 (32802) Orlando, Florida 32801 (eServed) J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street Post Office Box 3000 (32802) Orlando, Florida 32801 (eServed) Craig D. Varn, Esquire Manson Bolves Donaldson Varn, P.A. 106 East College Avenue, Suite 820 Tallahassee, Florida 32301 (eServed) Donna Elizabeth Blanton, Esquire Radey Law Firm, P.A. 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed)
The Issue 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 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 Whether Respondent, Florida Housing Finance Corporation’s (“Florida Housing”), intended action to award housing credit funding to Marquis Partners, Ltd. (“Marquis Partners”), based on the Request for Applications 2017-113 Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties (the “RFA”) is contrary to governing statutes, Florida Housing rules, or the RFA specifications; and, if so, whether the award is contrary to competition, clearly erroneous, or arbitrary and capricious.
Findings Of Fact Based on the stipulated findings of fact, the oral and documentary evidence presented at hearing, and the entire record in this proceeding, the Findings of Fact are as follows: Parties 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. HTG Village and Marquis Partners submitted applications for funding from Florida Housing to develop affordable housing developments. Both applications were deemed “eligible” for funding. Marquis Partners was preliminarily selected for funding under the RFA. While HTG Village was determined to be eligible for funding, it was not selected for an award of funding. The “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. These credits are then normally sold by developers for cash to raise capital for their projects. The effect is that it reduces 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. Competitive Application Process Florida Housing is authorized to allocate tax credits, SAIL funding, and other funding by means of requests for proposal or other competitive solicitation in section 420.507(48), and adopted Florida Administrative Code Chapter 67-60, which govern the competitive solicitation process for several different programs, including the program for tax credits. Chapter 67-60 provides that Florida Housing handles disputes regarding the allocation of its 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). In their applications, applicants request a specific dollar amount of housing credits to be given to the applicant each year for a period of 10 years. Applicants 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 areas of some counties. This, however, is not an exhaustive list of the factors considered. Tax credits are made available through a competitive application process commenced by the issuance of an RFA. An RFA is equivalent to a “request for proposal” as indicated in rule 67-60.009(3). At issue here is RFA 2017-113: Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties. The RFA was issued on October 6, 2017, and responses were due December 28, 2017. The RFA was modified on November 1 and November 29, 2017. Through the RFA, Florida Housing seeks to award up to an estimated $14,601,863.00 of housing credits to applicants that propose developments in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties. Florida Housing received 33 applications in response to RFA 2017-113. A review committee was appointed to review the applications and make recommendations to Florida Housing’s Board of Directors (the “Board”). The review committee found 25 applications eligible and eight applications ineligible. Through the ranking and selection process outlined in the RFA, seven applications were recommended for funding, including Marquis Partners. On March 16, 2018, Florida Housing’s Board met and considered the recommendations of the review committee for RFA 2017-113. Later, on March 16, 2018, at approximately 1:05 p.m., Petitioners and all other applicants in RFA 2017-113 received notice that the Board determined whether applications were eligible or ineligible for consideration for funding, and that certain eligible applicants were selected for award of tax credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets on the Florida Housing website, one listing the "eligible" applications in RFA 2017-113 and one identifying the applications which Florida Housing proposed to fund. In that March 16, 2018, posting, Florida Housing announced its intention to award funding to seven applicants, including Marquis Partners. HTG Village was eligible, but not recommended for funding. All of the parties in this case applied for funding to develop a proposed development in Broward County. According to the terms of the RFA, a maximum of two Broward County applications are to be funded. Sailboat Bend was the other application, in addition to that of Marquis Partners that was selected for funding in Broward County. Once Marquis Partners dismissed its petition in DOAH Case No. 18-2157BID, there were no remaining challenges to Sailboat Bend. Petitioner timely filed a Notice of Protest and Petition for Formal Administrative Proceedings. Marquis Partners timely intervened. No challenges were made to the terms of RFA 2017-113. RFA 2017-113 Ranking and Selection Process The RFA contemplates a structure in which the applicant is scored on eligibility items and obtains points for other items. A list of the eligibility items is available in section 5.A.1, beginning on page 63 of the RFA. Only applications that meet all the eligibility items will be eligible for funding and considered for funding selection. The eligibility items also include Submission Requirements, Financial Arrearage Requirements, and the Total Development Cost Per Unit Limitation requirement. Applicants can earn points for each of the following items (for a maximum of 20): Submission of Principal Disclosure Form stamped by Corporation as “Pre-Approved” (maximum 5 points); Development Experience Withdrawal Disincentive (maximum 5 points); and either Local Government Contribution Points (maximum 5 points) or Local Government Area of Opportunity Points (10 points). The RFA’s stated goal is to fund one application wherein the applicant applied and qualified as a non-profit applicant. As part of the funding selection process, the RFA starts with the application sorting order. All eligible applications are ranked by first sorting all eligible Applications from the highest score to lowest score, with any scores that are tied separated in the following order: First, by the Application’s eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application’s eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.11.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application’s eligibility for the Development Category Funding Preference which is outlined in Section Four A.4.b.(4) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application’s Leveraging Classification, applying the multipliers outlined in Item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Application’s eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); and And finally, by lottery number, resulting in the lowest lottery number receiving preference. The RFA also outlines the funding selection process as follows: The highest ranking eligible Application will be selected for funding for proposed Developments located in each of the following counties for which an eligible Application was received: Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas. If funding remains after funding the highest ranking eligible Applications as outlined in a. above, and if none of the Applications selected for funding in a. above qualify for the Non-Profit goal, the next Application selected for funding will be the highest ranking eligible unfunded Application wherein the Applicant applied and qualified as a Non-Profit Applicant, regardless of county. If the selected Application cannot be fully funded, it will be entitled to receive a Binding Commitment for the unfunded balance. If funding remains after funding the highest ranking eligible Applications as outlined in a. above and at least one (1) of the selected Applications qualified for the Non-Profit goal, the next Application selected for funding will be the highest ranking eligible unfunded Application in Broward County. If the selected Application cannot be fully funded, it will be entitled to receive a Binding Commitment for the unfunded balance. If funding remains after selecting the highest ranking eligible unfunded Broward County Application, or if there is no eligible unfunded Application located in Broward County, no additional Applications from any county will be selected for funding and any remaining funding will be distributed as approved by the Board. HTG Village Standing One of the eligibility requirements in the RFA is that applicants are required to demonstrate site control by providing certain documentation as Exhibit 8 to the application. The RFA provides three ways to demonstrate site control: 1) eligible contract, 2) deed or certificate of title, or 3) lease. In order to demonstrate site control as an eligible contract, the following must be demonstrated: Eligible Contract - For purposes of this RFA, an eligible contract is one that has a term that does not expire before June 30, 2018 or that contains extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than June 30, 2018; specifically states that the buyer’s remedy for default on the part of the seller includes or is specific performance; and the buyer MUST be the Applicant unless an assignment of the eligible contract which assigns all of the buyer's rights, title and interests in the eligible contract to the Applicant, is provided. Any assignment must be signed by the assignor and the assignee. If the owner of the subject property is not a party to the eligible contract, all documents evidencing intermediate contracts, agreements, assignments, options, or conveyances of any kind between or among the owner, the Applicant, or other parties, must be provided, and, if a contract, must contain the following elements of an eligible contract: a) have a term that does not expire before June 30, 2018 or contain extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than June 30, 2018, and b) specifically state that the buyer’s remedy for default on the part of the seller includes or is specific performance. In response to RFA 2017-113, HTG Village timely submitted application number 2018-303C (“HTG Village Application”) requesting an allocation of $2,561,000 in housing credits. HTG Village proposed to develop a 96-unit affordable, multifamily housing development in Broward County. The address of the development site provided within the application of HTG Village is “N Andrews Ave and NE 6th St., Fort Lauderdale.” (“HTG Village Development Site”). HTG Village had a contractual right to purchase the HTG Village Development Site as of the application deadline and satisfied the site control requirement of RFA 2017-113 as of the application deadline. HTG Village terminated its contract to purchase the HTG Village Development Site in a letter dated January 16, 2018, and delivered on January 17, 2018. HTG Village entered a First Amendment and Reinstatement to the original Purchase and Sale Agreement on May 8, 2018 (“Amended Purchase and Sale Agreement”), with a retroactive effective date of January 17, 2018. Although HTG Village terminated its purchase agreement after the application deadline, Ms. Button credibly testified that the determination of whether the applicant is ready to proceed with the development is at the time of the application deadline (through submission of the completed application) and again at the time of underwriting. Of the applicants that submitted applications in response to the RFA, four applicants submitted applications for development in Broward County. Two applicants received a score of 20 points, Sailbooat Bend and Marquis Partners. Of the two applicants that received 20 points, Marquis Partners was assigned a lottery number of nine. HTG Village and another applicant, Casa St. Angelo, received scores of 15 points. HTG Village was assigned a lottery number 1. In the solicitation process, if Marquis Partners is deemed ineligible, HTG Village would be the next highest-ranked application for funding for development in Broward. If Marquis Partners remains eligible, but its score is reduced to 15, HTG Village would replace Marquis Partners in the line for funding because HTG Village has the lowest lottery number (1). Marquis Partners Application In response to RFA 2017-113, Marquis Partners timely submitted application number 2018-279C (“Marquis Partners Application”) requesting an allocation of $1,727,000 in housing credits. Marquis Partners proposed to develop a 100-unit affordable, multifamily housing development in Broward County. Florida Housing determined that the Marquis Partners Application was eligible for an award of housing credits and preliminarily selected the Marquis Partners Application for an award of housing credits. The Marquis Partners Application was selected as the second Broward County application under subpart (c) of the funding selection process. As another eligibility item, RFA 2017-113 required that applicants identify their “Principals” by completing and submitting with their applications a Principal Disclosure Form as follows: Eligibility Requirements to meet the submission requirements, the Applicant must upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 08- 16) (“Principals Disclosure Form”) with the Application and Development Cost Pro Forma, as outlined in Section Three above. The Principals Disclosure Form must identify the Principals of the Applicant and Developer(s) as of the Application Deadline and should include, for each applicable organizational structure, only the types of Principals required by Subsection 67- 48.002(93), F.A.C. 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. RFA 2017-113 also enabled an applicant to obtain “points” by participating in Florida Housing’s advance review process as follows: Point Item: Applicants will receive 5 points if the uploaded Principal Disclosure Form was stamped “Approved” during the Advance Review Process provided (a) it is still correct as of Application Deadline, and (b) it was approved for the type of funding being requested (i.e., Housing Credits or Non-Housing Credits). The Advance Review Process for Disclosure of Applicant and Developer Principals is available on the Corporation’s Website http://www.floridahousing.org/programs/ developers-multifamilyprograms/competitive/ 2017/2017-113 (also accessible by clicking here) and also includes samples which may assist the Applicant in completing the required Principals Disclosure Form. Note: It is the sole responsibility of the Applicant to review the Advance Review Process procedures and to submit any Principals Disclosure Form for review in a timely manner in order to meet the Application Deadline. Marquis Partners participated in the advance review process, and on or about December 21, 2017, Florida Housing approved the Principal Disclosure Form submitted by Marquis Partners for an award of housing credits. The Principal Disclosure Form approved by Florida Housing during the advance review process did not properly identify Marquis Partners’ Principals for the corresponding types of entities as provided in Florida Administrative Code Rule 67-48.002(93). Rule 67-48.002(93) defined the term “Principal” based on the applicant or developer entity, and then by the organizational structure of those specific entities. The term “Principal” was capitalized in the RFA. The RFA provided that unless otherwise defined, capitalized terms within the RFA have the meaning as set forth in Exhibit B, in chapters 67-48 and 67-60, or in applicable federal regulations. Within the disclosure form, the applicant was required to disclose the type of Principal, name of the Principal and organization structure of that Principal at each disclosure level. There were three disclosure levels provided on the disclosure form. The Principal Disclosure Form submitted with the Marquis Partners Application included errors at the second Principal disclosure level. The second Principal disclosure level required Marquis Partners to provide the type of Principal being associated with the corresponding first-level Principal entity and the name of the Principal. Marquis Partners failed to disclose one Principal at the second level as further outlined below. As of the application deadline and at all times pertinent to this case, amongst other partners, Cornerstone Marquis, LLC (“Cornerstone Marquis”), was identified as a general partner of Marquis Partners. As of the application deadline and at all times pertinent to this case, the members of Cornerstone Marquis were as follows: a) Jorge Lopez; b) Awilda Lopez; c) Mara Mades; and d) M3 Acquisitions, LLC. The members were properly disclosed at the second Principal disclosure level. As of the application deadline and at all times pertinent to this case, the managers of Cornerstone Marquis, LLC, were as follows: a) Jorge Lopez; b) Mara Mades; and c) Leon Wolfe. At the second Principal disclosure level, Awilda Lopez and M3 Acquisitions were incorrectly identified as managers of Cornerstone Marquis, LLC, when they were in fact only members. More importantly, Leon Wolfe was not identified at the second Principal disclosure level as a manager of Cornerstone Marquis. Since Leon Wolfe was a manager of Cornerstone Marquis, he should have been identified as a manager of Cornerstone Marquis, LLC, at the second Principal disclosure level. Florida Housing’s approval of Marquis Partners’ Principal Disclosure Form during the advance review process did not verify the accuracy of the information contained within the Principal Disclosure Form. The information in the Principal Disclosure Form was incorrect at the time it was submitted for approval and remained incorrect when it was submitted with the Marquis Partners’ Application. Florida Housing evaluates omissions from the Principal Disclosure Form based on whether the inclusion of the incorrect information negatively impacts other applicants. Marisa Button, director of multifamily allocation, testified that the misidentification of Awilda Lopez and M3 Acquisitions, LLC, as managers of Cornerstone Marquis is a minor irregularity. On the other hand, Florida Housing considered the failure to properly disclose Leon Wolfe as a manager of Cornerstone Marquis to be a material deviation. Leon Wolfe was disclosed on the Principal Disclosure Form at the third disclosure level as a member and manager of M3 Acquisitions, LLC. However, Mr. Wolfe was not properly disclosed at the second level of disclosure as required. The RFA required that applicants disclose Principals in the Principal Disclosure Form for each type of entity. Ms. Button testified that the purpose of proper disclosure of all Principals of the entities that are associated with the applicant is so that Florida Housing is aware of who it is doing business with. Florida Housing screens the Principals to determine whether a Principal has been deficient to the corporation on prior affordable housing deals, identify bad actors, or to limit the amount of funding received by any related applicants. Florida Housing uses the disclosed Principals to determine if applications are related. Florida Housing made the advance review process available to assist applicants with completing the Principal Disclosure Form. During the process, there were sample charts provided to assist the applicants with completing the form. Marquis Partners participated in the review process and Florida Housing approved the form. The greater weight of the evidence demonstrates that Marquis Partners did not properly disclose Mr. Wolfe on its Principal Disclosure Form and, as a result, it should not have been awarded the additional five points for the advance review approval. Moreover, the omission of Mr. Wolfe as a manager of Cornerstone Marquis is a material deviation that cannot be waived. Thus, the evidence shows that Marquis Partners is not eligible for funding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be issued finding that Florida Housing’s initial scoring decision regarding the Marquis Partners Application was erroneous, concluding that Marquis Partners was ineligible for funding and not eligible for five additional points, and awarding funding to HTG Village. DONE AND ENTERED this 27th day of July, 2018, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN 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 27th day of July, 2018. COPIES FURNISHED: Hugh R. Brown, General Counsel Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC Suite 304 1725 Capital Circle Northeast Tallahassee, Florida 32308 (eServed) Michael J. Glazer, Esquire Anthony L. Bajoczky, Jr., Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation Suite 5000 227 North Bronough Street Tallahassee, Florida 32301-1329 (eServed)
The Issue Whether Florida Housing Finance Corporation’s (Florida Housing, Corporation, or Respondent) rejection of the funding for the application submitted by Capital Grove Limited Partnership (Capital Grove) was contrary to Florida Housing’s governing statutes, rules, policies, or the specifications of Request for Applications 2014-114 (the RFA). If so, whether Florida Housing’s decision to fund the application submitted by HTG Wellington Family, LLC (HTG Wellington), is contrary to governing statutes, rules, policies, or the RFA specifications.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote the public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida 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 by Congress in 1986 to incentivize the private market to invest in affordable rental housing. Tax credits are competitively awarded to applicants in Florida for qualified rental housing projects. Applicants then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the owner would otherwise have to borrow. Because the debt is lower, a tax-credit property can offer lower, more affordable rents. Provided the property maintains compliance with the program requirements, investors receive a dollar-for-dollar credit against their federal tax liability each year over a period of ten years. The amount of the annual credit is based on the amount invested in the affordable housing. Tax credits are made available by the U.S. Treasury to the states annually. Florida Housing is authorized to allocate tax credits and other funding by means of request for proposal or other competitive solicitation in section 420.507(48), and adopted Florida Administrative Code chapter 67-60 to govern the competitive solicitation process for several different programs, including the one for tax credits. Rule 67-60.002(1) defines “Applicant” as “any person or legally-formed entity that is seeking a loan or funding from the Corporation by submitting an application or responding to a competitive solicitation pursuant to this rule chapter for one or more of the Corporation’s programs.” Applicants request in their applications a specific dollar amount of housing credits to be given to the applicant each year for a period of 10 years. Applicants typically 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 majority of the capital necessary to construct the Development. The amount of housing credits an Applicant may request is based on several factors, including but not limited to a certain percentage of the projected Total Development Cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. Florida Housing’s competitive application process for the allocation of tax credits is commenced by the issuance of a Request for Applications. In this case, that document is Request for Applications 2014-114 (the RFA). The RFA was issued November 20, 2014, and responses were due January 22, 2015. Capital Grove submitted Application No. 2015-045C in RFA 2014-114 seeking $1,509,500 in annual allocation of housing credits to finance the construction of a 94-unit residential rental development in Pasco County (a Medium County), to be known as Highland Grove Senior Apartments. HTG Wellington submitted Application No. 2015-101C seeking $1,510,000 in annual allocation of housing credits to finance the construction of a 110-unit multifamily residential development in Pasco County, Florida, to be known as Park at Wellington Apartments. Florida Housing has announced its intention to award funding to nine Medium County Developments, including Park at Wellington in Pasco County (Application No. 2015-101C), but not Highland Grove Senior Apartments. Florida Housing received 82 applications seeking funding in RFA 2014-114, including 76 for Medium County Developments. The process employed by Florida Housing for this RFA makes it virtually impossible for more than one application to be selected for funding in any given medium county. Because of the amount of funding available for medium counties, the typical amount of an applicant’s housing credit request (generally $1.0 to $1.5 million), and the number of medium counties for which developments are proposed, many medium counties will not receive an award of housing credit funding in this RFA. Florida Housing intends to award funding to nine developments in nine different medium counties. The applications were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of RFA 2014-114; Florida Administrative Code chapters 67- 48 and 67-60; and applicable federal regulations. Florida Housing’s executive director appointed a Review Committee of Florida Housing staff to evaluate the applications for eligibility and scoring. Applications are considered for funding only if they are deemed “eligible,” based on whether the application complies with Florida Housing’s various content requirements. Of the 82 applications submitted to Florida Housing in RFA 2014-114, 69 were found “eligible,” and 13 were found ineligible, including Capital Grove. Florida Housing determined that Capital Grove was ineligible on the ground that its Letter of Credit was deficient under the terms of the RFA. A five-page spreadsheet created by Florida Housing, entitled “RFA 2014-114 – All Applications,” identifying all eligible and ineligible applications was provided to all Applicants. In addition to scoring, Applicants received a lottery number to be applied in tie situations, with the lower number given preference. Capital Grove received lottery number 12. HTG Wellington received lottery number 9. On March 11, 2015, the Review Committee met and considered the applications submitted in response to the RFA, and made recommendations regarding the scoring and ranking of the applications to Florida Housing’s Board of Directors (the Board). Capital Grove’s Letter of Credit The RFA provides for a Withdrawal Disincentive in which an applicant could either provide a $25,000 check or a $25,000 Letter of Credit that would be forfeited if the application was withdrawn by the applicant before a certain period of time. Applicants so withdrawing would also suffer a deduction from the full developer-experience point total in certain future Requests for Applications issued by Florida Housing. According to specifications in the RFA, any Letter of Credit submitted must be in compliance with all the requirements of subsection 4.a. of Section Three, Procedures and Provisions of the RFA, which provides in pertinent part: 4. $25,000 Letter of Credit. Each Applicant not submitting a $25,000 Application Withdrawal Cash Deposit (as outlined in 3 above) must submit to the Corporation a letter of Credit that meets the following requirements with its Application: a. The Letter of Credit must: Be issued by a bank, the deposits of which are insured by the FDIC, and which has a banking office located in the state of Florida available for presentation of the Letter of Credit. Be on the issuing bank’s letterhead, and identify the bank’s Florida office as the office for presentation of the Letter of Credit. Be, in form, content and amount, the same as the Sample Letter of Credit set out in Item 14 of Exhibit C of the RFA, and completed with the following: Issue Date of the Letter of Credit (LOC) which must be no later than January 22, 2015. LOC number. Expiration Date of the LOC which must be no earlier than January 22, 2016. Issuing Bank’s legal name. Issuing Bank’s Florida Presentation Office for Presentation of the LOC. Florida Housing’s RFA number RFA 2014- 114. Applicant’s name as it appears on the Application for which the LOC is issued. Development name as it appears on the Application for which the LOC is issued. Signature of the Issuing Bank’s authorized signatory. Printed Name and Title of the Authorized Signatory. The Sample Letter of Credit included in Exhibit C, Item 14 of the RFA reads: (Issuing Bank’s Letterhead) Irrevocable Unconditional Letter of Credit To/Beneficiary: Florida Housing Finance Corporation Issue Date: [a date that is no later than January 22, 2015] Attention: Director of Multifamily Programs 227 N. Bronough Street, Suite 5000 Tallahassee, Florida 32301 Letter of Credit No.: Expiration Date: [a date that is no earlier than January 22, 2016] Issuing Bank: Florida Presentation Office: FHFC RFA # 2014-114 Applicant: Development: Gentlemen: For the account of the Applicant, we, the Issuing Bank, hereby authorize Florida Housing Finance Corporation to draw on us at sight up to an aggregate amount of Twenty- Five Thousand and No/100 Dollars ($25,000.00). This letter of credit is irrevocable, unconditional, and nontransferable. Drafts drawn under this letter of credit must specify the letter of credit number and be presented at our Florida Presentation Office identified above not later than the Expiration Date. Any sight draft may be presented to us by electronic, reprographic, computerized or automated system, or by carbon copy, but in any event must visibly bear the word “original.” If the document is signed, the signature may consist of (or may appear to us as) an original handwritten signature, a facsimile signature or any other mechanical or electronic method of authentication. Payment against this letter of credit may be made by wire transfer of immediately available funds to the account specified by you, or by deposit of same day funds in a designated account you maintain with us. Unless we notify you in writing at least thirty (30) days prior to the Expiration Date, the Expiration Date of this letter of credit must be extended automatically for successive one-month periods. This letter of credit sets forth in full the terms of our obligations to you, and such undertaking shall not in any way be modified or amplified by any agreement in which this letter is referred to or to which this letter of credit relates, and any such reference shall not be deemed to incorporate herein by reference any agreement. We engage with you that sight drafts drawn under, and in compliance with, the terms of this letter of credit will be duly honored at the Presentation Office. We are an FDIC insured bank, and our Florida Presentation Office is located in Florida as identified above. Yours very truly, [Issuing Bank] By Print Name Print Title Despite these requirements, Capital Grove submitted an “Irrevocable Standby Letter of Credit” issued by PNC Bank National Association (PNC). Capital Grove’s Letter of Credit provides, in pertinent part: Beneficiary: Applicant: Florida Housing Finance Westbrook Housing Corp. Corp. Development, LLC 4110 Southpoint Blvd., 227 North Bronough Street Ste 206 Suite 5000 Jacksonville, Fl 32216 Tallahassee, Fl 32301 ATTENTION: DIR. OF MULTI- FBO CAPITAL GROVE FAMILY PROGRAMS LIMITED PARTNERSHIP IRREVOCABLE STANDBY LETTER OF CREDIT OUR REFERENCE: 18123166-00-00 AMOUNT: USD $25,000.00 ISSUE DATE: JANUARY 20, 2015 EXPIRY DATE: JANUARY 22, 2016 EPIRY PLACE: OUR COUNTER RE: FHFC RFA #2014-114 DEVELOPMENT: HIGHLAND GROVE SENIOR APARTMENTS GENTLEMEN: WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. 18123166-00-000 IN FAVOR OF FLORIDA HOUSING FINANCE CORPORATION FOR THE ACCOUNT OF WESTBROOK HOUSING DEVELOPMENT LLC AVAILABLE FOR PAYMENT AT OUR COUNTERS IN AN AMOUNT OF USD $25,000.00 (TWENTY FIVE THOUSAND AND 00/100 UNITED STATES DOLLARS) AGAINST BENEFICIARY'S PURPORTEDLY SIGNED STATEMENT AS FOLLOWS: "I (INSERT NAME AND TITLE) CERTIFY THAT I AM AN AUTHORIZED REPRESENTATIVE OF FLORIDA HOUSING FINANCE CORPORATION AND HEREBY DEMAND PAYMENT OF USD (INSERT AMOUNT) UNDER PNC BANK, NATIONAL ASSOCIATION LETTER OF CREDIT NO. 18123166-00-000. I FURTHER CERTIFY THAT WESTBROOK HOUSING DEVELOPMENT, LLC HAS FAILED TO COMPLY UNDER THE PROJECT NAME: HIGHLAND GROVE SENIOR APARTMENTS BETWEEN FLORIDA HOUSING FINANCE CORPORATION AND WESTBROOK HOUSING DEVELOPMENT, LLC." Ken Reecy, Director of Multifamily Programs for Florida Housing, personally reviewed all Letters of Credit submitted by RFA applicants, and reported his findings to the Review Committee. The Review Committee recommended finding Capital Grove’s application nonresponsive and ineligible for funding because Capital Grove failed to include a responsive Letter of Credit. The Review Committee also found four other applications ineligible for failing to meet the Letter of Credit requirements, all of which used PNC Bank and involved entities related to Capital Grove, including Westbrook Housing Development, LLC, appearing as Co-Developer. All such PNC Letters of Credit failed for the same reasons. Mr. Reecy and the Review Committee found that the Letters of Credit from PNC Bank (including that submitted by Capital Grove) did not meet the facial requirements of the RFA, in that the Letters of Credit were not in the name of the applicant. The General Partner of the applicant, Capital Grove Limited Partnership, is Capital Grove GP, LLC. The Co-Developer entities are JPM Development, LLC, and Westbrook Housing Development, LLC. Co-Developer Westbrook Housing Development, LLC, a Michigan Company authorized to conduct business within the State of Florida, is a different legal entity from Co-Developer JPM Development, LLC. Mr. Reecy and the Review Committee also found the PNC Letters of Credit (including that submitted by Capital Grove) nonresponsive to the specification of the RFA because the Letters included a condition requiring Florida Housing, in order to draw on the Letter of Credit, to certify that the Co- Developer (and not the applicant) had “failed to comply under the project name: Highland Grove Senior Apartments.” However, under the RFA specifications, the action that is the basis for the presentment of the Letter of Credit is a withdrawal of the application by the applicant, not the developer. Only an applicant may withdraw an application. If the Letter of Credit cannot be drawn upon, the RFA provides that the applicant, “shall be responsible for the payment of the $25,000 to the Corporation; payment shall be due from the applicant to the Corporation within 10 calendar days following written notice from the Corporation.” Applicant Capital Grove is a single-purpose entity that has no assets. In order to collect on the Letter of Credit submitted by Capital Grove, Florida Housing would have to submit a different certification than that called for under the RFA sample letter of credit. According to Kathleen Spiers, Vice President of PNC Bank, to draw down the Letter of Credit, Florida Housing would have to copy the statement outlined in paragraph 2 of the Capital Grove Letter of Credit, sign it, and submit it to PNC to draw upon the letter of credit. At the final hearing, Mr. Reecy testified, “I am not prepared to certify to something that isn’t true. I am not going to certify that the developer didn’t comply by the Applicant withdrawing.” All other Letters of Credit submitted by applicants under this RFA were accepted as responsive. HTG Wellington’s Unit Count HTG Wellington indicated in its application to Florida Housing that its proposed Park at Wellington Development would be 110 multifamily units. In its application for Local Government Support, HTG Wellington described the Development as a 120-unit, multifamily development in five three-story buildings. The RFA requires a minimum $50,000 Local Government Contribution in Pasco County for an applicant to receive the maximum of five points. In order to obtain a Local Government Contribution, tax credit developers must submit an application to Pasco County at least six weeks before the matter is presented to the Board of County Commissioners for approval. Pasco County, in turn, has their underwriter, Neighborhood Lending Partners ("NLP"), organize the applications and create an underwriting package. NLP does not make a recommendation to the Board of County Commissioners for funding. Rather, NLP alerts Pasco County if there is a red flag concerning the Development and scores the applications based upon financial stability of the organization, financing of the project, and the development pro forma. HTG Wellington submitted an application for Local Government Contribution to Pasco County in November 2014. The application contemplated a 120-unit development. Impact fees schedules are adopted by the Pasco County Board of Commissioners. Pasco County has established an impact fee rate for affordable and non-affordable development and the difference between the two is multiplied by the number of units to determine the impact fee amount. The impact fee waiver amount approved for Park at Wellington Apartments was $219,600. This amount was calculated based upon 120 units contemplated in November 2014, multiplied by $1830.00, which is the difference between the normal impact fee rate, minus the rate for affordable housing development. The $219,600 figure was used in HTG Wellington’s application. At 110 units (as opposed to 120 units), the total Local Government Contribution available to HTG Wellington is $201,300. Either amount ($219,600 or $201,300) meets the minimum for HTG Wellington to receive five points for its Local Government Contribution. The change in the contribution amount would have no effect on the scoring of the HTG Wellington application. Pasco County’s Manager of Community Development and Officer of Community Development, George Romagnoli, testified that for approximately 15 years, Pasco County has employed a strategy to approve all applications for Local Government Contribution and then let Florida Housing choose which Development will receive tax credits. Pasco County is not concerned about the ultimate accuracy of the number of units submitted for a Contribution –- as stated by Mr. Romagnoli: "We funded 84, 120, whatever. It's really not material to the approval one way or the other." Although Florida Housing approved HTG Wellington’s application before discovering the discrepancy, had Florida Housing discovered the discrepancy in the number of units during the scoring process, the discrepancy would have been deemed a minor irregularity unless the discrepancy resulted in a change in scoring or otherwise rendered the application nonresponsive as to some material requirement and the discrepancy would generally be handled with a simple adjustment to the amount presented on the application Pro Forma, if necessary. Additionally, changes to the number of units in a development may be increased (but not decreased) under certain circumstances during the credit underwriting process which follows the competitive solicitation process. The discrepancy in the number of units does not provide any competitive advantage to HTG Wellington. The discrepancy in the number of units does not provide a benefit to HTG Wellington not enjoyed by others. Florida Housing’s waiver of the discrepancy in the number of units does not adversely impact the interests of the public. HTG Wellington’s Bus Stop The RFA allows an applicant to obtain 18 proximity points, including six points for a Public Bus Transfer Stop. Florida Housing awarded HTG Wellington 4.5 proximity points for its purported Public Bus Transfer Stop. The RFA defines a Public Bus Transfer Stop as: This service may be selected by all Applicants, regardless of the Demographic Commitment selected at question 2 of Exhibit For purposes of proximity points, a Public Bus Transfer Stop means fixed location at which passengers may access at least three routes of public transportation via buses. Each qualifying route must have a scheduled stop at the Public Bus Transfer Stop at least hourly during the times of 7 am to 9 am and also during the times of 4 pm to 6 pm Monday through Friday, excluding holidays on a year-round basis. This would include both bus stations (i.e. hub) and bus stop with multiple routes. Bus routes must be established or approved by a Local Government department that manages public transportation. Buses that travel between states will not be considered. In response to this requirement HTG Wellington submitted a Surveyor Certification Form which lists coordinates submitted to qualify for a Public Bus Transfer Stop. The site identified by HTG Wellington as a Public Bus Transfer Stop, however, is not a fixed location where passengers may access at least three routes of public transportation. While another bus stop which serves an additional two routes is within 700 feet, stops cannot be combined for purposes of the RFA. Therefore, the site designated as a Public Bus Transfer Stop by HTG Wellington is not a “fixed location” for purposes of the RFA and HTG Wellington is not entitled to obtain proximity points for a Public Bus Transfer Stop. Not including the 4.5 proximity points for a Public Bus Transfer Stop, HTG was awarded 11.5 total proximity points for selected Community Services. The required minimum total of proximity points for developments located in a medium county that must be achieved in order to be eligible to receive the maximum amount of 18 points as set forth in the RFA is 9. HTG had more than the required minimum total of proximity points to receive the maximum award of 18 proximity points based on its Community Services score alone. The disqualification of HTG’s submitted Public Bus Transfer Stop would have no effect on the scoring or ranking of the HTG Wellington application, nor affect its ranking relative to any other application, nor affect the ultimate funding selection. The RFA requires each applicant to read and sign at Attachment A, an Applicant Certification and Acknowledgement Form (the Form). The signing of the Form is mandatory. Page 5, Paragraph 8 of the Form provides: In eliciting information from third parties required by and/or included in this Application, the Applicant has provided such parties information that accurately describes the Development as proposed in this Application. The Applicant has reviewed the third party information included in this Application and/or provided during the credit underwriting process and the information provided by any such party is based upon, and accurate with respect to, the Development as proposed in this Application. Even though there was a discrepancy in the unit numbers submitted to Pasco County for a Local Government Contribution and its application submitted in response to the RFA, HTG signed the Form. No evidence was submitted indicating that HTG signed the Form with knowledge of the discrepancy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order: Rejecting Capital Grove’s application as nonresponsive and denying the relief requested in its Petition; Concluding that Capital Grove lacks standing to bring allegations against HTG Wellington; and, Upholding Florida Housing’s scoring and ranking of the HTG Wellington application. DONE AND ENTERED this 3rd day of August, 2015, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida32399-3060 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 2015.
