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 Respondent, Florida Housing Finance Corporation’s ("Florida Housing") intended action to award housing tax credit funding to Intervenors Westside Phase, I, LLLP ("Westside"), HTG Edgewood, Ltd. ("HTG Edgewood"), Diplomat South, LLC ("Diplomat"), and Tranquility at Milton, LLC ("Tranquility"), under Request for Applications 2019-113 Housing Credit Financing for Affordable Housing Developments Located in Medium and Small Counties (the "RFA"), is contrary to governing statutes, rules, the RFA specifications, and clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Florida Housing is a public corporation created pursuant to section 420.504, Florida Statutes. Its purpose is to promote public welfare by administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the housing credit agency for Florida within the meaning of section 42(h)(7)(A) of the Internal Revenue Code, and has the responsibility and authority to establish procedures for allocating and distributing low income housing tax credits. The low income housing tax credit program (commonly referred to as "tax credits" or "housing credits") was enacted to incentivize the private market to invest in affordable rental housing. These housing tax credits are awarded competitively to housing developers in Florida for rental housing projects that qualify. These credits are then normally sold by developers for cash to raise capital for their projects. The effect is that the credits reduce the amount that the developer would otherwise have to borrow. Because the total debt is lower, a housing tax credit property can (and must) offer lower, more affordable rents. Developers also covenant to keep rents at affordable levels for periods of 30 to 50 years as consideration for receipt of the housing credits. The demand for housing tax credits provided by the federal government exceeds the supply. The Competitive Application Process Florida Housing is authorized to allocate housing tax credits and other funding by means of a request for applications or other competitive solicitation in section 420.507(48) and Florida Administrative Code Chapter 67-60, which govern the competitive solicitation process for several different programs, including the program for housing tax credits. Chapter 67-60 provides that Florida Housing allocate its competitive funding through the bid protest provisions of section 120.57(3), Florida Statutes. 1 In their applications, applicants request a specific dollar amount of housing tax credits to be given to the applicant each year for a period of ten years. Applicants normally sell the rights to that future stream of income housing tax credits (through the sale of almost all of the ownership interest in the applicant entity) to an investor to generate the amount of capital needed to build the development. The amount which can be received depends 1 A request for application is equivalent to a "request for proposal" as indicated in rule 67- 60.009(3). upon the accomplishment of several factors, such as a certain percentage of the projected total development cost; a maximum funding amount per development based on the county in which the development will be located; and whether the development is located within certain designated areas of some counties. This, however, is not an exhaustive list of the factors considered. The RFA was issued on August 20, 2019, and responses were initially due October 29, 2019. The RFA was modified on September 10, 2019, and the application deadline was extended to November 5, 2019. No challenges were made to the terms of the RFA. Through the RFA, Florida Housing expects to award up to an estimated $14,805,028 of housing tax credits to proposed developments in medium counties and up to an estimated $1,413,414 of housing credits to proposed developments in small counties. Florida Housing received 184 applications in response to the RFA. A review committee was appointed to review the applications and make recommendations to Florida Housing's Board of Directors (the "Board"). The review committee found 169 applications eligible and 15 applications ineligible. Through the ranking and selection process outlined in the RFA, 11 applications were preliminarily recommended for funding. The review committee developed charts listing its eligibility and funding recommendations to be presented to the Board. On March 6, 2020, the Board met and considered the recommendations of the review committee. Also, on March 6, 2020, at approximately 9:35 a.m., Petitioners and all other applicants received notice that the Board determined whether applications were eligible or ineligible for consideration for funding, and that certain eligible applicants were selected for award of housing credits, subject to satisfactory completion of the credit underwriting process. Such notice was provided by the posting of two spreadsheets on the Florida Housing website, www.floridahousing.org, one listing the Board approved scoring results and one identifying the applications which Florida Housing proposed to fund. In the March 6, 2020, posting, Florida Housing announced its intention to award funding to 11 applicants, including Westside, HTG Edgewood, Diplomat, and Tranquility. Petitioners timely filed notices of protest and petitions for formal administrative proceedings, and Intervenors timely intervened. The RFA Ranking and Selection Process The RFA contemplates a structure in which the applicant is scored on eligibility items and obtains points for other items. A summary of the eligibility items is available in section 5.A.1., beginning on page 64 of the RFA. Only applications that meet all the eligibility items will be eligible for funding and considered for funding selection. There were two total point items scored in this RFA. Applicants could receive five points for Submission of Principals Disclosure Form, stamped by the Corporation as "Pre-Approved," and five points for Development Experience Withdrawal Disincentive, for a total application score of up to ten points. The RFA has three funding goals: The Corporation has a goal to fund four Medium County Developments that qualify for the Local Government Areas of Opportunity Funding Goal outlined in Section Four A.11.a. of the RFA. The Corporation has a goal to fund two Developments with a Demographic commitment of Family that select and qualify for the Geographic Areas of Opportunity/SADDA Goal outlined in Section Four A.11.b. of the RFA. The Corporation has a goal to fund one (1) Development that qualifies for the Local Community Revitalization Initiative Goal outlined in Section Four A.11.c. of the RFA. *Note: During the Funding Selection Process outlined below, Developments selected for these goals will only count toward one goal. As part of the funding selection process, the RFA starts with the application sorting order on page 68. The highest scoring applications are determined by first sorting together all eligible applications from the highest score to lowest score, with any scores that are tied separated as follows: First, by the Application's eligibility for the Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications that qualify for the preference listed above Applications that do not qualify for the preference; Next, by the Application's eligibility for the Per Unit Construction Funding Preference which is outlined in Section Four A.10.e. of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's eligibility for the Development Category Funding Preference which is outlined in Section Four A.4.b.(4) of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); Next, by the Application's Leveraging Classification, applying the multipliers outlined in item 3 of Exhibit C of the RFA (with Applications having the Classification of A listed above Applications having the Classification of B); Next, by the Application's eligibility for the Florida Job Creation Funding Preference which is outlined in Item 4 of Exhibit C of the RFA (with Applications that qualify for the preference listed above Applications that do not qualify for the preference); And finally, by lottery number, resulting in the lowest lottery number receiving preference. The RFA includes a Funding Test where small county applications will be selected for funding only if there is enough small county funding available to fully fund the eligible housing credit request amount, and medium county applications will be selected for funding only if there is enough medium county funding available to fully fund the eligible housing credit request amount. The RFA outlines a specific County’s Award Tally: As each application is selected for tentative funding, the county where the proposed Development is located will have one Application credited towards the County’s Award Tally. The Corporation will prioritize eligible unfunded Applications that meet the Funding Test and are located within counties that have the lowest County Award Tally above other eligible unfunded Applications with a higher County Award Tally that also meet the Funding Test, even if the Applications with a higher County Award Tally are higher ranked. According to the RFA, the funding selection process is as follows: The first Application selected for funding will be the highest ranking eligible Applications that qualifies for the Local Community Revitalization Initiative Goal. The next four Applications selected for funding will be the highest ranking eligible Medium County Applications that qualify for the Local Government Areas of Opportunity Funding Goal, subject to the Funding Test and the County Award Tally. The next two Applications selected for funding will be the highest ranking eligible Family Applications that qualify for the Geographic Areas of Opportunity/HUD-designated SADDA Goal, subject to the Funding Test and the County Award Tally. The next Applications selected for funding will be the highest ranking eligible unfunded Small County Applications that (i) can meet the Small County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Small County Applications. If Small County funding remains and no unfunded eligible Small County Application can meet the Small County Funding Test, no further Small County Applications will be selected and the remaining Small County funding will be added to the Medium County funding amount. The next Application(s) selected for funding will be the highest ranking eligible unfunded Medium County Applications that (i) can meet the Medium County Funding Test and (ii) have a County Award Tally that is less than or equal to any other eligible unfunded Medium County Applications. If Medium County funding remains and no unfunded eligible Medium County Application can meet the Medium County Funding Test, no further Applications will be selected and the remaining funding will be distributed as approved by the Board. According to the terms of the RFA: Funding that becomes available after the Board takes action on the [Review] Committee’s recommendation(s), due to an Applicant withdrawing its Application, an Applicant declining its invitation to enter credit underwriting, or an Applicant’s inability to satisfy a requirement outlined in this RFA, will be distributed as approved by the Board. All 184 applications for the RFA were received, processed, deemed eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA, Florida Administrative Code Chapters 67-48 and 67-60, and applicable federal regulations. HTG Edgewood’s Application (DOAH Case No. 20-1778BID) During scoring, Florida Housing determined that the HTG Edgewood application was eligible and, pursuant to the terms of the RFA, selected HTG Edgewood for funding. HTG Edgewood, Florida Housing, and Rochester now agree that HTG Edgewood’s application is ineligible for consideration for funding and the application of Rochester is eligible for funding. Accordingly, HTG Edgewood, Florida Housing, and Rochester agree that Florida Housing should deem the HTG Edgewood application ineligible for funding and Rochester’s application eligible for funding. Diplomat’s Application (DOAH Case No. 20-1779BID) During scoring, Florida Housing deemed the Diplomat application eligible and, pursuant to the terms of the RFA, preliminarily selected Diplomat for funding. Diplomat and Madison Square now agree that Diplomat is ineligible for funding. Florida Housing does not contest Diplomat’s admission of ineligibility. Madison Square, Diplomat, and Florida Housing agree that Madison Square is eligible for funding. Tranquility’s Application (DOAH Case No. 20-1780BID) Florida Housing deemed the Tranquility application eligible for funding, and pursuant to the terms of the RFA, Tranquility was selected for preliminary funding. Tranquility’s Principals Disclosure Form Madison Oaks contests Florida Housing’s preliminary selection of Tranquility for an award of housing tax credits. In its challenge, Madison Oaks argues that Tranquility failed to correctly complete its Principals Disclosure Form by not identifying the multiple roles of its disclosed principal. Specifically, Madison Oaks argues that Tranquility failed to list Tranquility Milton Manager, LLC, which is disclosed as a manager, as a non- investor member as well. Accordingly, Madison Oaks contends Tranquility is not eligible or should lose five points. The purpose of the Principals Disclosure Form is to allow Florida Housing to track an entity’s past and future dealings with Florida Housing so that Florida Housing is aware of the entity with which it is dealing. In regard to principal disclosure, the RFA states, in relevant part: c. Principals Disclosure for the Applicant and for each Developer (5 points) Eligibility Requirements To meet the submission requirements, the Applicant must upload the Principals of the Applicant and Developer(s) Disclosure Form (Form Rev. 05-2019)("Principals Disclosure Form") with the Application and Development Cost Pro Forma, as outlined in Section Three above. Prior versions of the Principal Disclosure Form will not be accepted. The Principals Disclosure Form must identify, pursuant to subsections 67-48.002(94), 67- 48.0075(8) and 67-48.0075(9), the Principals of the Applicant and Developer(s) as of the Application Deadline. The investor limited partner of an Applicant limited partnership or the investor member of an Applicant limited liability company investor must be identified. A Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals. Point Item Applicants will receive 5 points if the uploaded Principal Disclosure Form was stamped "Approved" during the Advance Review Process. The Advance Review Process for Disclosure of Applicant and Developer Principals is available on the RFA Website and also includes samples which may assist the Applicant in completing the required Principals Disclosure Form. Note: It is the sole responsibility of the Applicant to review the Advance Review Process procedures and to submit any Principals Disclosure Form for review in a timely manner in order to meet the Application Deadline. The RFA website provides guidance and instructions to assist applicants in completing the principal disclosure. The instructions state: "List the name of each Member of the Applicant Limited Liability Company and label each as either non-investor Member or investor Member (i.e., equity provider and/or placeholder), as applicable." The RFA website guidance and instructions further provides Frequently Asked Questions ("FAQ’s") concerning principal disclosures. FAQ number 4 states: Q: If the Applicant entity is a member managed limited liability company, how should it be reflected on the form since there is no "member-manager" choice at the First Principal Disclosure Level? A: Each member-manager entity/person should be listed twice—once as a non-investor member and once as a manger. If Housing Credits are being requested, the investor-member(s) must also be listed in order for the form to be approved for a Housing Credit Application. On its Principals Disclosure Form, Tranquility listed two entities at the first principal disclosure level: Tranquility Milton Manager, LLC, identified as a manager of the applicant and Timshel Partners, LLC, identified as an investor member of the applicant. However, Tranquility failed to identify the dual role of Tranquility Milton Manager, LLC, as a non- investor member in addition to its disclosed role as a manger. Nevertheless, Tranquility’s equity proposal letter submitted as part of its application identified Tranquility Milton Manager, LLC, as a member of the LLC because according to the equity proposal, Tranquility Milton Manager, LLC, would retain a .01% ownership interest in the company. Thus, the role of Tranquility Milton Manager, LLC, as a member is available within Tranquility’s application. Tranquility participated in Florida Housing’s Advance Review Process, and on October 17, 2019, Florida Housing approved the Principals Disclosure Form submitted by Tranquility during the Advance Review Process for an award of housing credits. During scoring, Tranquility received five points for having its Principals Disclosure Form stamped "Approved" by Florida Housing. Tranquility’s Principals Disclosure Form met the eligibility requirements of the RFA and Tranquility is entitled to the five points. In addition, Ms. Button persuasively and credibly testified that even if Tranquility’s failure to list the dual role of its disclosed principal on the Principals Disclosure Form is an error, it is so minor as to constitute a waivable, minor irregularity. As detailed above, Tranquility Milton Manager, LLC, was specifically designated as a manager on the form and information identifying Tranquility Milton Manager, LLC’s, additional role as a member is included in the equity proposal letter submitted with the application. Madison Oak’s Application (DOAH Case No. 20-1779BID) Madison Oaks’ application was deemed eligible for funding, but pursuant to the terms of the RFA, Madison Oaks was not selected for preliminary funding. Madison Oaks Site Control Certification Florida Housing and Tranquility now argue that Madison Oaks failed to demonstrate site control. As an eligibility item, the RFA requires applicants to demonstrate site control by providing a properly completed and executed Florida Housing Finance Corporation Site Control Certification form ("Site Control Form"). For the Site Control Form to be considered complete, the applicant must attach documentation demonstrating that it is a party to an eligible contract or lease or is the owner of the subject property. Applicants can demonstrate site control by providing documentation that meets the requirements in the RFA for an eligible contract, deed or certificate of title, or a lease. An eligible contract must meet all of the following conditions: It must have a term that does not expire before April 30, 2020 or that contains extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than April 30, 2020; It must specifically state that the buyer’s remedy for default on the part of the seller includes or is specific performance; The Applicant must be the buyer unless there is an assignment of the eligible contract, signed by the assignor and the assignee, which assigns all of the buyer’s rights, title and interests in the eligible contract to the Applicant; and The owner of the subject property must be the seller, or is a party to one or more intermediate contracts, agreements, assignments, options, or conveyances between or among the owner, the Applicant, or other parties, that have the effect of assigning the owner’s right to sell the property to the seller. Any intermediate contract must meet the criteria for an eligible contract in (a) and (b) above. In demonstrating site control, the RFA states: Note: The Corporation will not review the site control documentation that is submitted with the Site Control Certification form during the scoring process unless there is a reason to believe that the form has been improperly executed, nor will it in any case evaluate the validity or enforceability of any such documentation. During scoring, the Corporation will rely on the properly executed Site Control Certification form to determine whether an Applicant has met the requirements of this RFA to demonstrate site control. The Corporation has no authority to, and will not, evaluate the validity or enforceability of any eligible site control documentation that is attached to the Site Control Certification form during the scoring process. During credit underwriting, if is determined that the site control documents do not meet the above requirements, the Corporation may rescind the award. Additionally, the RFA requires that the site control "documentation include all relevant intermediate contracts, agreements, assignments, options, conveyances, intermediate leases, and subleases." In the instant case, Madison Oaks attached a Purchase and Sale Agreement ("Madison Oaks Agreement") to its Site Control Form. The Madison Oaks Agreement lists West Oak Developers, LLC, as the "Seller" and Madison Oaks East, LLC, as the "Purchaser." However, the City of Ocala owns the property in question. The Madison Oaks Agreement in section 12 states that: "Seller has a valid and binding agreement with the City of Ocala, Florida pursuant to which Seller has the right to acquire fee simple title to the Property …." Tranquility and Florida Housing contend that Madison Oaks failed to demonstrate site control because Madison Oaks failed to include the City of Ocala Redevelopment Agreement for Pine Oaks ("Redevelopment Agreement") in its site control documentation. Madison Oaks maintains that the City of Ocala is a seller, pursuant to the Joinder and Section 28 of the Madison Oaks Agreement, and therefore, the Redevelopment Agreement did not need to be included. However, the Madison Oaks Agreement clearly identifies West Oak as the "Seller" and the City of Ocala as the "City." At hearing, Ms. Button persuasively and credibly testified that the Madison Oaks application is ineligible because it did not include the Redevelopment Agreement, which is a relevant agreement for purposes of demonstrating site control. The Redevelopment Agreement was a relevant intermediate contract, which was required to be included in Madison Oak’s application. Madison Oak’s failure to include the Redevelopment Agreement renders its application ineligible. Madison Oaks contends that including the Redevelopment Agreement in its application was unnecessary because of a joinder provision within the Madison Oaks Agreement. The Madison Oaks Agreement contains a Joinder and Consent of the City of Ocala approved by the City Council ("the Joinder"), whereby the City of Ocala joined and consented to the Madison Oaks Agreement "solely for the purposes set forth in, and subject to, Section 28 herein." The Madison Oaks Agreement in Section 28 states that: "Seller hereby acknowledges and agrees that in the event of Seller’s default hereunder, that is not timely cured, or Seller's refusal to close hereunder, Purchaser shall be entitled to close on the property subject to this Agreement … directly with the City on the terms and conditions set forth in this Section 28." However, Section 28 only applies in the event of a default by West Oaks that is not timely cured or West Oak’s refusal to close. There is no information within the Madison Oaks application to determine whether a default or termination of the Redevelopment Agreement occurred as of the application deadline. Westside’s Application (DOAH Case No. 20-1770BID) Florida Housing deemed Westside’s application eligible and, pursuant to the terms of the RFA, Westside was preliminary selected for funding to meet the goal to fund one development that qualifies for the Local Community Revitalization Initiative Goal. Westside’s Election to Compete for the Local Community Revitalization Initiative Goal In order to qualify for the Local Community Revitalization Initiative Goal, the RFA states: Applicants for proposed Developments that are part of a local revitalization plan may elect to compete for this goal. To qualify for this goal, the Applicant must submit the properly completed Florida Housing Finance Corporation Local Government/Community Redevelopment Agency Verification That Development Is Part Of A Local Community Revitalization Plan form (Form Rev. 08-2019) as Attachment 18. The form is available on the RFA Website. Included with the form must be either (1) a link to the local community revitalization plan or (2) a copy of the local community revitalization plan. The plan must have been adopted on or before January 1, 2019. Florida Housing, pursuant to the terms of the RFA, also has a goal to fund four medium county developments that qualify for the Local Government Areas of Opportunity Funding Goal. Westside included an executed Florida Housing Finance Corporation Local Government/Community Redevelopment Agency Verification that Development is Part of a Local Community Revitalization Plan form (the "Local Community Revitalization Plan Form") and a link to the local government revitalization plan at Attachment 18 of its application. At question 11.c. in the application, applicants are asked to select "Yes" or "No" from a drop-down menu in response to the question: "Is the proposed Development eligible for the Local Community Revitalization Initiative Goal?" Westside selected "No" from the Yes/No drop-down menu in answering question 11.c. regarding the Local Community Revitalization Initiative Goal. At question 11.a. in the application, applicants are asked to select "Yes" or "No" from a drop-down menu in response to the question: "Is the proposed Development eligible for the Local Government Areas of Opportunity Funding Goal?" Westside selected "Yes" from the Yes/No drop-down menu in answering questions 11.a. regarding the Local Government Areas of Opportunity Funding Goal. During scoring, Westside was deemed to have qualified for the Local Government Areas of Opportunity Funding Goal and the Local Community Revitalization Initiative Goal. During the funding selection process, Westside was selected for funding to meet the Local Government Community Revitalization Initiative Goal. HTG Addison selected "Yes" from the Yes/No drop-down menu in answering question 11.c. regarding the Local Community Revitalization Initiative Goal. HTG Addison included an executed Local Community Revitalization Plan Form at Attachment 18 of its application. HTG Addison selected "No" from the Yes/No drop-down menu in answering question 11.a. regarding the Local Government Areas of Opportunity Funding Goal. HTG Addison is the next highest ranked eligible applicant qualified for the Local Community Revitalization Initiative Goal after Westside. If Westside is deemed not to have qualified for the revitalization goal, then HTG Addison, as the next highest ranked eligible applicant, would qualify for that goal. HTG Addison alleges that Westside should not be selected to meet the Local Community Revitalization Initiative Goal because Westside selected "No" from the drop-down menu in response Question 11.c. Ms. Button persuasively and credibly testified that Florida Housing does not rely on the drop-down responses to questions 11a., b., or c. in determining whether an applicant "elects to be eligible for a certain goal" because answering "Yes" or "No" to these requirements is not a requirement of the RFA. Rather, Ms. Button persuasively and credibly testified that in determining whether an applicant qualifies for a funding goal, Florida Housing relies on the documentation submitted with the application that is required for the funding goal. In the instant case, Westside included the executed Florida Housing Finance Corporation Local Government Revitalization Plan form and a link to the local community revitalization plan at Attachment 18 of its application.2 In addition, Ms. Button persuasively and credibly testified that even if Westside erred in selecting "Yes" in response to question 11.c., it is so minor as to constitute a waivable, minor irregularity because Florida Housing has the required information within the application (the executed form and a link to the local community revitalization plan at Attachment 18). 2 Notably, another applicant responding to the RFA, Tranquility at Ferry Pass, selected "Yes" in response to question 11.c., but failed to include at Attachment 18 either a copy of or a link to the local community revitalization plan. During scoring, Florida Housing determined that Tranquility at Ferry Pass did not qualify for the revitalization goal. Florida Housing’s scoring of the Westside application is consistent with its scoring of the Tranquility at Ferry Pass application because in both cases, Florida Housing scored the application based on the requirements of the RFA for the revitalization goal and the documentation submitted in response to those requirements. Florida Housing did not rely on the applicant’s response to question 11.c. regarding the applicant’s expressions of its own eligibility.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Florida Housing Finance Corporation enter a final order: dismissing the protests of HTG Addison and Madison Oaks; (2) finding the HTG Edgewood, Diplomat, and Madison Oaks applications ineligible for funding; and (3) finding the Rochester, Madison Square, Tranquility, and Westside applications eligible for funding. DONE AND ENTERED this 19th day of June, 2020, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us COPIES FURNISHED: Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 2020. Hugh R. Brown, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed) Maureen McCarthy Daughton, Esquire Maureen McCarthy Daughton, LLC 1400 Village Square Boulevard, Suite 3-231 Tallahassee, Florida 32312 (eServed) Amy Wells Brennan, Esquire Manson Bolves Donaldson Varn, P.A. 109 North Brush Street, Suite 300 Tampa, Florida 33602 (eServed) Michael P. Donaldson, Esquire Carlton Fields 215 South Monroe Street, Suite 500 Tallahassee, Florida 32302 (eServed) Sarah Pape, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street, Suite 600 Post Office Box 3000 (32802) Orlando, Florida 32801 (eServed) J. Timothy Schulte, Esquire Zimmerman, Kiser & Sutcliffe, P.A. 315 East Robinson Street Post Office Box 3000 (32802) Orlando, Florida 32801 (eServed) Craig D. Varn, Esquire Manson Bolves Donaldson Varn, P.A. 106 East College Avenue, Suite 820 Tallahassee, Florida 32301 (eServed) Donna Elizabeth Blanton, Esquire Radey Law Firm, P.A. 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) M. Christopher Bryant, Esquire Oertel, Fernandez, Bryant & Atkinson, P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 (eServed) Betty Zachem, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 (eServed) Corporation Clerk Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 (eServed)
The Issue The issues for determination are: (1) whether Riverside Village Partners, LTD. (Riverside or Petitioner), has, or had at the time of application, a present plan to convert its proposed development to any use other than affordable residential rental property; (2) whether Provincetown Village Partners, LTD. (Provincetown or Petitioner), has, or had at the time of application, a present plan to convert its proposed development to any use other than affordable residential rental property; (3) whether Riverside irrevocably committed to set aside units in its proposed development for a total of 50 years; and (4) whether Provincetown irrevocably committed to set aside units in its proposed development for a total of 50 years.
Findings Of Fact Parties Petitioner, Provincetown Village Partners, LTD., is a Florida limited partnership with its business address at 1551 Sandspur Road, Maitland, Florida 32751, and is in the business of providing affordable housing units. Petitioner, Riverside Village Partners, LTD., is a Florida limited partnership with its business address at 1551 Sandspur Road, Maitland, Florida 32751, and is in the business of providing affordable housing units. Respondent, Florida Housing Finance Corporation (Florida Housing), is a public corporation that administers governmental programs relating to the financing and refinancing of affordable housing and related facilities in Florida pursuant to Section 420.504, Florida Statutes (2003). Florida Housing's Financing Mechanisms To encourage the development of affordable rental housing for low-income families, Florida Housing provides low-interest mortgage loans to developers of qualified multi-family housing projects. In exchange for an interest rate lower than conventional market rates, the developer agrees to "set-aside" a specific percentage of the rental units for low-income tenants. Through its Multi-Family Mortgage Revenue Bond (MMRB) program, Florida Housing funds these mortgage loans through the sale of tax-exempt and taxable bonds. Applicants then repay the loans from the revenues generated by their respective projects. Applicants who receive MMRB proceeds are required to execute a Land Use Restriction Agreement (LURA or Land Use Restriction Agreement), which is recorded in the official records of the county in which the applicant’s development is located. Through the State Apartment Incentive Loan (SAIL) program, Florida Housing funds low-interest mortgage loans to developers from various sources of state revenue, which are generally secured by second mortgages on the property. Applicants who receive SAIL proceeds are required to execute and record a LURA in the county records as with MMRB's Land Use Restriction Agreements. Florida Housing also distributes federal income tax credits for the development of affordable rental housing for low-income tenants; those tax credits are referred to as "housing credits." Generally, applicants who utilize tax-exempt bond financing for at least 50 percent of the cost of their development are entitled to receive an award of housing credits on a non-competitive basis. These non-competitive housing credits are received by the qualified applicant each year for ten consecutive years. Typically, applicants sell this future stream of housing credits at the initiation of the development process in order to generate a portion of the funds necessary for the construction of the development. The Application, Scoring, and Ranking Process Because Florida Housing’s available pool of tax-exempt bond financing and SAIL funds is limited, qualified projects must compete for this funding. To determine which proposed projects will put the available funds to best use, Florida Housing has established a competitive application process to assess the relative merits of proposed projects. Florida Housing’s competitive application process for MMRB and SAIL financing is included with other financing programs within a single application process (the 2003 Universal Application) governed by Florida Administrative Code Rule Chapters 67-21 and 67-48. The 2003 Universal Application form and accompanying instructions are incorporated as Form "UA1016" by reference into Florida Administrative Code Chapters 67-21 and 67-48 and by Florida Administrative Code Rules 67-21.002(97), and 67-48.002(111), respectively. For the 2003 Universal Application cycle, each applicant who completed and submitted Form UA1016 with attachments was given a preliminary score by Florida Housing. Following the issuance of preliminary scores, applicants are provided an opportunity to challenge the scoring of any competing application through the filing of a Notice of Possible Scoring Error (NOPSE). Florida Housing considers each NOPSE filed and provides each applicant with notice of any resulting change in their preliminary scores (the NOPSE scores). Following the issuance of NOPSE scores, Florida Housing provides an opportunity for applicants to submit additional materials to "cure" any items for which the applicant received less than the maximum score or for which the application may have been rejected for failure to achieve "threshold." There are certain portions of the application which cannot be cured; the list of noncurable items appears in Florida Administrative Code Rules 67-21.003(14) (for MMRB applicants) and 67-48.004(14) (for SAIL applicants). Following the cure period, applicants may again contest the scoring of a competing application by filing a Notice of Alleged Deficiencies (NOAD), identifying deficiencies arising from the submitted cure materials. After considering the submitted NOADs, Florida Housing provides notice to applicants of any resulting scoring changes. The resulting scores are known as "pre-appeal" scores. Applicants may appeal and challenge, via formal or informal hearings, Florida Housing’s scoring of any item for which the applicant received less than the maximum score or for any item that resulted in the rejection of the application for failure to meet "threshold." Upon the conclusion of the informal hearings, and of formal hearings where appropriate, Florida Housing issues the final scores and ranking of applicants. Applicants are then awarded tentative MMRB and/or SAIL funding in order of rank; Florida Housing issues final orders allocating the tentative funding and inviting successful applicants in the credit underwriting process. If an applicant who requests a formal hearing ultimately obtains a final order that modifies its score and threshold determinations so that its application would have been in the funding range had the final order been entered prior to the date the final rankings were presented to the Florida Housing Board of Directors (Board), that applicant’s requested funding will be provided from the next available funding or allocation. The 2003 Application Process On or about April 8, 2003, Riverside, Provincetown, and others submitted applications for MMRB and SAIL financing in the 2003 Universal Application cycle. Riverside requested $3,205,000 in tax-exempt MMRB funding and $1.6 million in SAIL funding to help finance its proposed development, a 34-unit development in Pinellas County, Florida. In its application, Riverside committed to lease all or most of these units to house families earning 60 percent or less of the area median income (AMI). However, depending on which Florida Housing funding source(s) Riverside’s application was deemed eligible to receive, it would commit to lease at least 17 percent of the units to families earning 50 percent or less of AMI, or would commit to lease only a total of 85 percent of the units to families earning 60 percent or less of AMI. Provincetown requested $4.5 million in tax-exempt MMRB funding and $2.0 million in SAIL funding to help finance its proposed development, a 50-unit development in Gadsden County, Florida. In its application, Provincetown committed to lease all or most of the units to families earning 60 percent or less of AMI. However, depending on which Florida Housing program(s) Provincetown’s application was deemed eligible to receive, it would commit to lease at least 11 percent of the units to families earning 50 percent or less of AMI, or would commit to lease only a total of 85 percent of the units to families earning 60 percent or less of AMI. Florida Housing evaluated all applications and notified applicants of their preliminary scores on or before May 12, 2003. Applicants were then given an opportunity to file NOPSEs on or before May 20, 2003. After considering all NOPSEs, Florida Housing notified applicants by overnight mail on or about June 9, 2003, of any resulting changes in the scoring of their applications. Applicants were then allowed to submit, on or before June 19, 2003, cure materials to correct any alleged deficiencies in their applications previously identified by Florida Housing. Applicants were also allowed to file NOADs on competing applications on or before June 27, 2003. After considering the submitted NOADs, Florida Housing issued notice to Provincetown, Riverside, and others of their adjusted scores on or about July 21, 2003. Commitment to Affordability Period Florida Administrative Code Rule 67-21.006, entitled "Development Requirements," lists certain minimum requirements that a development shall meet or that an applicant shall be able to certify that such requirements shall be met. One of these requirements is "The Applicant shall have no present plan to convert the Development to any use other than the use as affordable residential rental property." Part III.E.3 of the Application provides a line for an applicant to commit to an "affordability period" for its application. This subsection of the application form reads in its entirety: 3. Affordability Period for MMRB, SAIL, HOME, and HC Application: Applicant irrevocably commits to set aside units in the proposed Development for a total of years. Both Provincetown and Riverside filled in the number "50" on the blank line in this subsection of their respective applications. An applicant’s score on its application is determined in part by the length of its affordability period commitment. An applicant who commits to an affordability period commitment of 50 or more years received 5 points; 45 to 49 years, 4 points; 40 to 44 years, 3 points; 35 to 39 years, 2 points; 31 to 34 years, 1 point; and 30 years or less, 0 points. Scoring of Provincetown and Riverside Applications In its preliminary scoring of the Provincetown and Riverside applications, Florida Housing awarded each applicant the full 5 points on Part III.E.3 of his or her application for the 50-year affordability period commitment. Also, in the preliminary scoring of the Provincetown and Riverside applications, Florida Housing did not find any threshold failure regarding an alleged present plan to convert the development to a use other than affordable residential rental property. In its preliminary scoring of the Provincetown application, Florida Housing identified an alleged threshold failure related to the validity of the contract for purchase of the site of the proposed development. A subsequent cure submitted by Provincetown regarding the contract for purchase of the site has resolved this issue, and Florida Housing no longer takes the position that the Provincetown application fails threshold for any reason related to site control. In its preliminary scoring of the Riverside application, Florida Housing identified a threshold failure related to documentation of the status of site plan approval, or plat approval, for the proposed development. A subsequent cure submitted by Riverside regarding the status of site plan approval has resolved this issue, and Florida Housing no longer takes the position that the Riverside application fails threshold for any reason related to site plan approval, or plat approval. During the scoring process, Florida Housing received NOPSEs on both the Provincetown and Riverside applications, which asserted that these applicants were proposing transactions that were not financially feasible and would not pass subsequent credit underwriting requirements. The NOPSEs also alleged that the Riverside and Provincetown applications were for townhouses designed with an intent to eventually convert to home ownership in violation of Florida Administrative Code Rule 67-21.006(6). According to that rule, the applicant shall have no present plan to convert the development to any use other than the use as affordable residential rental property. After reviewing these NOPSEs, but before issuing revised NOPSE scores, Florida Housing determined that it was inappropriate to apply subsequent credit underwriting requirements during the scoring of these applications, and therefore, disagreed with the allegations of the NOPSEs on those grounds. Accordingly, Florida Housing's scoring summaries for Riverside and Provincetown issued, after receipt of the NOPSEs, raised no issues concerning financial feasibility, and it was not placed at issue in this proceeding. Following the filing of NOPSEs, Florida Housing released NOPSE scores for all applicants, including Riverside and Provincetown. The NOPSE scores are reflected on a NOPSE Scoring Summary dated June 9, 2003. For both Provincetown and Riverside, the NOPSE Scoring Summary contained the following statement regarding alleged threshold failure, identifying two separate reasons for the alleged threshold failure: The proposed Development does not satisfy the minimum Development requirements stated in Rule 67-21.006, F.A.C. The Development is not a multifamily residential rental property comprised of buildings or structures each containing four or more dwelling units. Further, the Applicant has a present plan to convert the Development to a use other than as an affordable residential rental property. The first threshold failure noted in the preceding paragraph relates to Florida Administrative Code Rule 67-21.006(2), which requires that there be four or more residential units per building for projects financed with MMRB. A subsequent cure regarding the design of the proposed developments has resolved this issue, and Florida Housing no longer contends that these applications, as cured, exhibit a threshold failure related to the number of residential units per building. The second threshold failure noted in the NOPSE Scoring Summary and quoted in paragraph 30 above, relates to Florida Administrative Code Rule 67-21.006(6), which requires that applicants "shall have no present plan to convert the Development to any use other than the use as affordable residential rental property." In response to the NOPSE Scoring Summaries, both Provincetown and Riverside submitted cures to their respective applications. In the cures, Provincetown and Riverside presented their explanations of how they believed their applications, as submitted, demonstrated a 50-year affordability period commitment and included these applicants’ contentions that they had no present plan to convert the developments to a use other than affordable residential rental property. For Provincetown, an issue had also been raised by a NOPSE concerning whether the Provincetown application was entitled to certain "tie-breaker" points for the distance from the proposed development to a public transportation stop. The points awardable to Provincetown for tie-breaker purposes are not in dispute, and Provincetown, if its application is otherwise deemed to meet threshold requirements, would be entitled to 5.0 of a possible 7.5 tie-breaker points. If Riverside's application were deemed to meet threshold requirements and if the 5 points for the affordability period commitment were restored, Riverside would have been within the funding range for applicants within the 2003 Universal Application cycle at the time the Board took final action on the ranking of applications on October 9, 2003. If Provincetown's application were deemed to meet threshold requirements and if the five points for the affordability period commitment were restored, Provincetown would have been within the funding range for applicants within the 2003 Universal Application cycle at the time the Board took final action on the ranking of applications on October 9, 2003. The Sciarrino Letter and Cures After reviewing the NOPSEs filed against the Provincetown and Riverside applications, Florida Housing received a letter dated June 2, 2003 (Sciarrino letter or letter), from Michael Sciarrino, president of the CED Companies, addressed to Orlando Cabrera, executive director of Florida Housing, with a copy to Kerey Carpenter, deputy development officer of Florida Housing. Michael Sciarrino is a manager of the sole general partner (CED Capital Holdings 2003 Y, LLC., a Florida limited liability company) of Provincetown. Mr. Sciarrino is also a Class B limited partner of the sole member of the general partner (CED Capital Holdings XVI, LTD., a Florida limited partnership). Michael Sciarrino is a manager of the sole general partner (CED Capital Holdings 2003 K, LLC., a Florida limited liability company) of Riverside. Mr. Sciarrino is also a Class B limited partner of the sole member of the general partner (CED Capital Holdings 2003 XVI, LTD., a Florida limited partnership). As manager of the sole general partner of Provincetown and Riverside, Mr. Sciarrino had supervisory authority and editorial control over the processing and preparation of the Provincetown and Riverside applications. The Sciarrino letter was drafted, in part, to respond to the allegations of the NOPSEs filed against Provincetown and Riverside applications and specifically addressed those issues pertaining to Provincetown and Riverside applications. Also, while the letter does not mention Petitioners by name, the description and location of the properties, as detailed in the letter, clearly refer to these applicants. The Sciarrino letter evinces a present plan on the part of Petitioners to convert the proposed developments to a use other than that of affordable residential rental housing. First, the letter describes in detail the economic motivations for the subsequent sale of the units of the proposed development within the 50-year extended affordability period stating that the "residual value potential" of such an arrangement "is the single biggest economic reason for our desire to develop these communities." Next, the letter describes in detail the means by which Petitioners would be relieved of the commitment to a 50-year affordability period as stated in their applications, that is, by seeking a waiver from Board after the 15-year period of tax credit recapture exposure had expired. Third, the letter plainly states that Petitioners had intended to request such relief from the 50-year affordability period in the future. Petitioners' present plan to convert the proposed developments for sale to homeowners during the 50-year extended affordability period is further evident by the fact that the concept of such a conversion existed prior to and at the time the applications were filed. Moreover, the Provincetown and Riverside developments were specially selected to test the concept. On or about June 19, 2003, Petitioners filed cures with Florida Housing addressing the issues raised in the NOPSEs. While the cures presented argument in favor of their respective applications and reiterated Petitioners' commitment to the 50-year extended affordability period for each proposed development, they did not deny that it was their intention to seek relief from this period in the future. Following review of the Sciarrino letter and the cures submitted by Petitioners, Florida Housing rejected both the Provincetown and Riverside applications for failing to meet the mandatory development requirement set forth in Florida Administrative Code Rule 67-21.006(6). The applications also had five points deducted from their scores on the grounds that, under the circumstances, their commitment to an affordability period could not be determined.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order that upholds the scoring of the applications of Riverside Village Partners, LTD., and Provincetown Village Partners, LTD.; that rejects the applications of Riverside Village Partners, LTD., and Provincetown Village Partners, LTD.; and that denies the relief requested in the Petitions. DONE AND ENTERED this 27th day of February, 2004, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of February, 2004. COPIES FURNISHED: Hugh R. Brown, Esquire Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301-1329 M. Christopher Bryant, Esquire Oertel, Fernandez & Cole, P.A. 301 South Bronough Street, Fifth Floor Post Office Box 1110 Tallahassee, Florida 32302-1110 Orlando J. Cabrera, Executive Director Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 Wellington H. Meffert, II, General Counsel Florida Housing Finance Corporation 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301
