10-002799RX Elmwood Terrace Limited Partnership vs. Florida Housing Finance Corporation
 Status: Closed
DOAH Final Order on Wednesday, October 6, 2010.


View Dockets  
Summary: Challenged provision was not a "rule" and, if so, was not invalid.

1STATE OF FLORIDA

4DIVISION OF ADMINISTRATIVE HEARINGS

8ELMWOOD TERRACE LIMITED )

12PARTNERSHIP , )

14)

15Petitioner , )

17)

18vs. ) Case No. 10 - 2799RX

25)

26FLORIDA HOUSING FINANCE )

30CORPORATION , )

32)

33Respondent . )

36)

37FINAL ORDER

39On June 14 through 16 and 22, 2010, a formal administrative

50hearing was conducted in Tallahassee, Florida, before William F.

59Quattlebaum, Administrative Law Judge, Divisi on of

66Administrative Hearings.

68APPEARANCES

69For Petitioner: J. Stephen Menton, Esquire

75Rutledge, Ecenia, & Purnell, P.A.

80119 South Monroe Street, Suite 202

86Post Office Box 551

90Tallahassee, Florida 32302

93For Respondent: Hugh R. Brown, Esquire

99Florida Housing Finance Corporation

103227 North Bronough Street, Suite 5000

109Tallahassee, Florida 32301 - 1329

114STATEMENT OF THE ISSUE

118The issue in this case is whether a portion of Florida

129Administrative Code Rule 67 - 48.0072 is an invalid exercise of

140delegated legislative authority.

143PRELIMINARY STATEMENT

145In 2007, Elmwood Terrace Limited Partnership (Petitioner)

152first proposed to develop an affordable housing apartment

160complex in Ft. Myers, Florida. After completion of an

169evaluation and approval process, Florida Housing and Finance

177Corporation (Respondent) aw arded federal tax credits to the

186Petitioner. The Petitioner intended to sell the tax credits for

196cash, but there were no buyers, and the tax credits were of

208little value to the Petitioner. Other affordable housing

216developers found themselves in similar c ircumstances.

223In 2009, the federal government provided an alternative

231affordable housing funding mechanism that permitted the exchange

239of the unmarketable tax credits for cash at a discounted rate.

250The Respondent returned federal tax credits initially gra nted to

260Petitioner, as well as credits granted to other developers, to

270the federal government in exchange for the discounted cash.

279The Respondent subsequently issued a Request for Proposal

287to allocate the cash, and, after the resolution of related

297litigati on addressed herein, the Petitioner participated in the

306allocation process. Ultimately, the Respondent denied the

313Petitioner's funding request based on a second analysis of the

323Petitioner's development proposal.

326By Petition for Hearing dated March 29, 201 0, the

336Petitioner challenged the denial. The Respondent forwarded the

344Petition for Hearing to the Division of Administrative Hearings,

353where it was designated as DOAH Case No . 10 - 1975. The challenge

367to the denial of the funding application is addressed by a

378separate Recommended Order issued contempora neously with this

386Final Order.

388On May 21, 2010, the Petitioner filed a Petition for

398Administrative Determination of Invalidity o f Existing Rule that

407is addressed in this Final Order.

413The Petitioner asserts that a portion of text (referred to

423by the parties as the "Impact Rule") that is contained within

435Florida Administrative Code Rule 67 - 48.0072 (the "Credit

444Underwriting Rule") is an invalid exercise of de legated

454legislative authority.

456On June 10, 2010, the parties filed a Joint Pre - hearing

468Stipulation that included a statement of stipulated facts. The

477stipulated facts have been incorporated as necessary into this

486Final Order and a re otherwise adopted in their entirety.

496At the hearing, the Petitioner presented the testimony of

505two witnesses and had Exhibits 3 through 5, 7 through 13, 15 ,

51716, 18 , 19, 22 , 23, 25 through 28, 31 through 36, 39, 42

530through 44, 53 through 55, 58 , 59, 61 , 63, and 70 through 72

543admitted into evidence. The Respondent presented the testimony

551of three witnesses and had two e xhibits admitted into evidence.

562Joint E xhibits 1 , 2 and 4 through 12 wer e also admitted into

576evidence.

577The six - volume T ranscript of the hearing was filed on

589June 29, 2010. The final volume of the T ranscript (the rebuttal

601testimony of Robert Vo gt) was filed on July 8, 2010.

612All parties filed Proposed Final Orders that have been

621considered in the preparation of this Final Order.

629FINDINGS OF FACT

6321. The Petitioner is a limited partnership and developer

641of affordable housing in Florida. The Petitioner is seeking to

651construct a 116 - unit affordable housing family apartment complex

661("Elmwood Terrace") in Fort Myers, Lee County, Florida. The

672Petitioner has standing to initiate and p articipate in this

682proceeding.

6832. The Respondent is a public corporation organized under

692Chapter 420, Florida Statutes (2010) , to administer state

700programs that provide financial support to developers seeking to

709co nstruct affordable housing. Such support is provided through

718a variety of mechanisms, including t he use of federal tax

729credits.

7303. The federal tax credit program was created in 1986 to

741promote the construction and operation of privately - developed

750afforda ble housing. The tax credits relevant to this proceeding

760provide a dollar - for - dollar credit against federal tax

771liabilit ies for a period of ten years.

7794. The Respondent is the designated Florida agency

787responsible for distribution of the federal tax cre dits. The

797tax credits are awarded pursuant to a "Qualified Allocation

806Plan" (QAP) that must be annually approved by the Governor and

817adopted as an administ rative rule by the Respondent.

8265. As a matter of course, developers receiving the federal

836tax credi ts sell them through syndicators for discounted cash.

846The sale of the tax credits generates debt - fr ee cash equity for

860developers.

8616. Developers seeking financial support to build

868affordable housing units submit applications to the Respondent

876during an an nual competitive process known as the "Universal

886Cycle."

8877. Every three years, the Respondent commissions a study

896(the "Shimberg Report") , which measures, within each Florida

905county, the number of "cost - burden" renters earning 60 percent

916or less of an are a's median income (AMI) who pay more

928than 40 percent of their income in rent. The AMI is determined

940by the federal government. The cost - burden households are

950further classified into four groups: families, the elderly,

958farm workers, and commercial fisher men. The Shimberg Report

967also assesses needs related to homeless people in the state.

9778. Developers seeking to obtain affordable housing

984financing are required to set aside a portion of the proposed

995units for income - limited residents. Access to affordab le

1005housing units is generally targeted towards persons receiving no

1014more than 60 percent of the AMI.

10219. The Universal Cycle process allows the Respondent to

1030target specific housing deficiencies in terms of geographic

1038availability and population demographi cs and to preserve the

1047stock o f existing affordable housing.

105310. During the Universal Cycle process, the Respondent

1061identifies areas where additional affordable housing is

1068unnecessary, to discourage additional development in weak

1075markets and to encourage development in those locations where

1084there is a lack of access to affordable housing. The Respondent

1095classifies areas where there is little need for additional

1104affordable housing as "Location A" areas .

111111. Each application filed during the Universal Cycl e is

1121evaluated, scored, and competitively ranked against other

1128applications filed du ring the same Universal Cycle.

113612. After the Respondent completes the competitive ranking

1144of the applications submitted in the Universal Cycle, the

1153applicants are provided with an opportunity to review and

1162comment on the evaluation and scoring of the proposals.

1171Applicants may also cure d efects in their own proposals.

118113. After the close of the review and comment period, the

1192Respondent publishes a revised competitive ranki ng of the

1201proposals. Developers may challenge the second ranking through

1209an administrative hearing.

121214. After the second ranking process is final, developers

1221achieving an acceptable score receive preliminary funding

1228commitments and proceed into a "credit und erwriting" evaluation

1237process.

123815. The credit underwriting process is governed by Florida

1247Administrative Code Rule 67 - 48 . 0072. The Respondent selects an

1259independent credit underwriter who reviews each proposal

1266according to requirements set forth by a dministrative rule (the

"1276Credit Underwriting R ule"). The cost of the credit

1286underwriting r eview is paid by the developer.

129416. The credit underwriter considers all aspects of the

1303proposed development, including financing sources, plans and

1310specifications, cost analysis, zoning verification, site

1316control, environmental reports, construction contracts, and

1322engineering and architectural contracts. The responsibility for

1329the market study is assigned by the credit underwriter to an

1340independent market analyst.

134317. The credit underwriter prepares a report for each

1352applicant invited into the process. The reports are submitted

1361to the Respondent's nine - member, statutorily - created Board of

1372Directors (Board). The Board approves or denies each

1380appl ication for financ ial support.

138618. The Petitioner applied for funds for the Elmwood

1395Terrace project du ring the 2007 Universal Cycle.

140319. The Petitioner's application received a perfect score ,

1411maximum points, and was allocated tax credits in the amount of

1422$1,498,680. The Petitioner thereafter entered th e credit

1432underwriting process.

143420. The credit underwriting analysis was performed by

1442Seltzer Management Group (SMG). SMG contracted with a market

1451analyst, Vogt, Williams & Bowen Research, Inc. (VWB) , to prep are

1462the require d market study.

146721. The affordable units at Elmwood Terrace were initially

1476intended for persons receiving incomes no more than 60 percent

1486of the AMI. The VWB research indicated that the Elmwood Terrace

1497project would adversely affect the existing affordab le housing

1506developments , if the Elmwood Terrace units were available to the

151660 percent AMI population.

152022. The existing affordable housing developments, also

1527serving the 60 percent AMI population, included two developments

1536that had participated in the Res pondent's "Guarantee Fund"

1545progra m, addressed elsewhere herein.

155023. VWB determined that the impact of the Elmwood Terrace

1560project on the existing developments could be ameliorated were

1569some of the Elmwood Terrace units targeted during "lease - up" to

1581person s at income levels of not more than 50 percent of the AMI.

1595The lease - up period is the time required for a new development

1608to reach anticipated occupancy levels.

161324. The issue was the subject of discussions between the

1623Petitioner, VWB , and SMG. To resolv e the anticipated negative

1633impact on the existing affordable housing developments, the

1641Petitioner agreed to target the 50 percent AMI population.

165025. In September 2008, the credit underwriter issued his

1659report and recommended that the Petitioner receive t he

1668previously - allocated tax credits. On September 22, 2008, the

1678Respondent's Board accepted the credit underwriting report an d

1687followed the recommendation.

169026. In the fall of 2008, after the Petitioner received the

1701tax credits, the nation's economic envi ronment deteriorated

1709considerably. As a result, the syndicator with whom the

1718Petitioner had been working to sell the tax credits advised that

1729the sale would not occur. The Petitioner was unable to locate

1740an alternate purchaser for the tax credits.

174727. T he Petitioner considered altering the target

1755population of the project in an attempt to attract a buyer for

1767the tax credits, and there were discussions with the Respondent

1777about the option, but there was no credible evidence presented

1787that such an alteration would have resulted in the sale of the

1799Petitioner's tax credits.

180228. Lacking a buyer for the tax credits, the Petitioner

1812was unable to convert the credits to cash , and they were of

1824little value in provi ding funds for the project.

183329. The Petit ioner was not alone in its predicament, and

1844many other developers who received tax credits in the 2007 and

18552008 Universal Cycles found themselves unable to generate cash

1864through the sale of their tax credits.

187130. In early 2009, Congress adopted the Americ an Recovery

1881and Reinvestment Act of 2009 (PL 111 - 5) , referred to herein as

1894ARRA , which incorporated a broad range of economic stimulus

1903activities.

190431. Included within the ARRA was the "Tax Credit E xchange

1915P rogram" that provided for the return by the appro priate state

1927agency of a portion of the unused tax credits in exchange for a

1940cash distribution of 85 pe rcent of the tax credit value.

195132. The State of Florida received $578,701,964 through the

1962T ax C redit E xchange P rogram.

197033. The ARRA also provided addit ional funds to state

1980housing finance agencies through a "Tax Credit Assistance

1988Program" intended to "resume funding of affordable housing

1996projects across the nation while stimulating job creation in the

2006hard - hat construction industry."

201134. On July 31, 200 9, the Respondent issued a Request for

2023Proposals (RFP 2009 - 04) to facilitate the d istribution of the

2035ARRA funds.

203735. The Respondent issued the RFP because the 2009 QAP

2047specifically required the Respondent to allocate the relevant

2055federal funds by means of a "competitive request for proposal or

2066competitive application process as approved by the board." The

20752009 QAP was adopted as part of t he 2009 Universal Cycle rules.

208836. Projects selected for funding through the RFP would be

2098evaluated through the routin e credit underwriting process.

210637. Participation in the RFP process was limited to

2115developers who held an "active award" of tax credits as of

2126February 17, 2009 , and who were unable to clo se on the sale of

2140the credits.

214238. The RFP included restrictions ag ainst proposals for

2151development within are as designated as "Location A."

215939. Although the location of the Elmwood Terrace project

2168had not been within an area designated as "Location A" during

2179the 2007 Universal Cycle process, the Respondent had

2187subsequent ly designated the area as "Location A" by the time of

2199the 2009 Universal Cycle.

220340. The RFP also established occupancy standards for

2211projects funded under the RFP that exceeded the standards

2220established in the Universal Cycle instructions and an

2228evaluatio n process separate from the Universal Cycle

2236requirem ents.

223841. Although the restrictions in the RFP would have

2247automatically precluded the Petitioner from being awarded funds,

2255the Petitioner submitted a response to the RFP and then filed a

2267successful chall enge to the RFP specifications (DOAH Case

2276No. 09 - 4682BID ) .

228242. In a Recommended Order issued on November 12, 2009,

2292the Administrative law Judge presiding over the RFP challenge

2301determined that certain provisions of the RFP, including the

2310automatic rejection of Location A projects, the increased

2318occupancy standards, and the RFP eval uation criteria, were

2327invalid.

232843. The Respondent adopted the Recommended Order by a

2337Final Order issued on December 4, 2009, and invited the

2347Petitioner into the credit un derwriting process by a letter

2357dated December 9, 2009.

236144. The credit underwriter assigned to analyze the

2369Petitioner's project was SMG, the same credit underwriter that

2378performed the original analysis of the Petitioner's project

2386du ring the 2007 Universal Cycle.

239245. SMG retained Meridian Appraisal Group, Inc.

2399(Meridian) , to prepar e the required market study.

240746. The Respondent was not consulted regarding the SMG

2416decision to retain Meridian for the market analysis. The

2425decision to retain Meridian for the market anal ysis was entirely

2436that of SMG.

243947. The Respondent did not direct SMG or Meridian in any

2450manner regarding the assessment or evaluation of any negative

2459impact of the proposed project on existing affordable housing

2468developments.

246948. Meridian com pleted the market study and forwarded it

2479to SMG on January 26, 2010.

248549. The Meridian market analysis included a review of the

2495relevant data as well as consideration of the actual economic

2505conditions experienced in Lee County, Florida, including the

2513extre mely poor performance of the existing housing stock, as

2523well as significant job losses and c onsiderable unemployment.

253250. The Meridian market analysis determined that the

2540Elmwood Terrace development would have a negative impact on two

2550existing affordable housing apartment developments that were

2557underwritten by the Respondent through a Guarantee Fund created

2566at Section 420.5092, Florida Statutes, by th e Florida

2575Legislature in 1992.

257851. The existing Guarantee Fund properties referenced in

2586the SMG recommenda tion are "Bernwood Trace" and "Westwood," both

2596family - oriented apartment developments within five miles of the

2606Elmwood Terrace location.

260952. The Guarantee Fund essentially obligates the

2616Respondent to satisfy mortgage debt with the proceeds of

2625Florida's d ocumentary stamp taxes , if an affordable housing

2634development is unable to generate sufficient revenue to service

2643the debt.

264553. Because the Guarantee Fund program essentially serves

2653to underwrite the repayment of mortgage debt for a "guaranteed"

2663affordable housing development, the program increases the

2670availability, and lowers the cost, of credit for developers.

267954. The Guarantee Fund program has participated in the

2688financing of more than 100 projects, most of which closed

2698between 1999 and 2002.

270255. Since 2005, the Respondent has not approved any

2711additional Guarantee Fund participation in any affordable

2718housing devel opments.

272156. The Respondent's total risk exposure through the

2729Guarantee Fund is appr oximately 750 million dollars.

273757. Prior to October 2008 , no claims were made against the

2748Guarantee Fund. Since November 2008, there have been eight

2757claims filed against the G uarantee Fund.

276458. Affordable housing financing includes restrictions

2770that mandate the inclusion of a specific number of affordable

2780hou sing units. Such restrictions are eliminated through

2788foreclosure proceedings, and , accordingly, access to affordable

2795housing units can be r educed if a development fails.

280559. Presuming that the eight claims pending against the

2814Guarantee Fund eventually proceeded through foreclosure, as many

2822as 2,300 residential units could be deducted from th e stock of

2835affordable housing.

283760. When there is a claim on the Guarantee Fund, the

2848Respondent has to assume payment of the mortgage debt. The

2858claims are paid from the Guarantee Fund capital, which is

2868detrimental to the Respondent's risk - to - capital ratio. The

2879risk - to - capital ratio is presently four to one. The maximum

2892risk - to - capital ratio acceptable to r ating agencies is five to

2906one.

290761. The eight claims against the Guarantee Fund have

2916ranged between ten and 18 million dollars each. The

2925Respondent's bond rating has declined because of th e eight

2935claims.

293662. A continued decline in the Respondent's bond rating

2945could result in documentary stamp tax receipts being u sed for

2956payment of Guarantee Fund claims and directed away from the

2966Respondent's programs that are intended to support the creation

2975of affordable housing.

297863. In an effort to prevent additional claims against the

2988Guarantee Fund, the Respondent has create d the "Subordinate

2997Mortgage Initiative" to provide assistance in the form of two -

3008year loans to troubled Guarantee Fund properties.

301564. When preparing the 2010 market study, Meridian did not

3025review the VWB market analysis performed as part of the 2007

3036appl ication. Although the Petitioner has asserted that Meridian

3045should have reviewed the 2007 VWB analysis, there is no evidence

3056that Meridian's decision to conduct an independent market study

3065without reference to the prior ma rket review was inappropriate.

307565 . On February 8, 2010, SMG issued a recommendation that

3086the Petitioner's funding request be denied "because of the

3095proposed development's potential financial impacts on

3101developments in the area previously funded by Florida Housing

3110and an anticipated negat ive impact to the two Guarantee Fund

3121properties located within five miles of the proposed

3129development."

313066. There is no evidence that the Meridian analysis was

3140inadequate or improperly completed. There is no evidence that

3149the SMG's reliance on the Meridi an analysis was inappropriate.

3159For purposes of this O rder, the Meridian analysis and the SMG

3171credit underwrit ing report have been accepted.

317867. Elmwood T er race, a newer development with newer

3188amenities, would compete for residents with the Bernwood Tr ac e

3199and Westwood developments.

320268. The financing for Bernwood Trace and Westwood was

3211premised on projections that the affordable housing units would

3220be leased to the 60 percent AMI population; however, the

3230developments have been unable to maintain full occu pancy levels,

3240even though a number of units in the two properties are leased

3252at reduced rates based on 50 percent AMI income levels.

326269. A rent reduction implemented by an existing

3270development, whether based on economic conditions or resulting

3278from compet ition, constitutes a negat ive impact on the

3288development.

328970. There is no credible evidence that the occupancy rates

3299are attributable to any difficulty in management of the two

3309developments. It is reasonable to conclude that the leasing

3318issues are related to economic conditions p resent in Lee County,

3329Florida.

333071. In January 2010, VWB conducted an alternative market

3339analysis. The VWB analysis was not provided to SMG or to the

3351Respondent at any time during th e credit underwriting process.

336172. Based on the 2010 VWB analysis, the Petitioner

3370asserted that economic conditions in Lee County, Florida, have

3379improved since the first credit underwriting report was

3387completed in 2008 and that the improvement is expected to

3397continue.

339873. There is no noteworthy eviden ce that economic

3407conditions have improved or will significantly improve in the

3416Lee County , Florida, market in the predictable future, and the

3426VWB analysis is rejected.

343074. The Petitioner offered to mitigate any negative impact

3439on the Guarantee Fund properties by committing affordable units

3448to 50 percent AMI income levels. Given the existing economic

3458and rental market conditions in Lee County, Florida, the

3467evidence fails to establish that the offer would actually

3476alleviate the negative impact on the affecte d Guarantee Fund

3486developments.

348775. The 2010 VWB analysis states that there is substantial

3497unmet demand for housing at 50 percent AMI and that there will

3509be no impact on the Guarantee Fund units if the Elmwood Terrace

3521units were set aside for such i ndividuals. There is no credible

3533evidence that there is a substantial and relevant unmet

3542affordable housing demand in Lee County, Florida. The VWB

3551analysis is rejected.

355476. Following the completion of each annual Universal

3562Cycle process, the Respondent actively solicits feedback from

3570developers and the public and then amends the Universal Cycle

3580requirements to address the issues raised, as well as to reflect

3591existing affordable housing needs and general concerns of the

3600Board. The amendments are applicab le for the following

3609Universal Cycle.

361177. In 2009, the Respondent amended subsection (10) of the

3621Credit Underwriting R ule as part of the annual revisions t o the

3634Universal Cycle process.

363778. The relevant amendment (referred to by the parties as

3647the "Impac t Rule") added this directive to the credit

3658underwriter:

3659The Credit Underwriter must review and

3665determine whether there will be a negative

3672impact to Guarantee Fund Developments within

3678the primary market area or five miles of the

3687proposed deve lopment, whichever is greater.

369379. The amendment was prompted by the Respondent's

3701experience in the fall of 2008 when considering two separate

3711applications for affordable housing financing. The potential

3718negative impact of a proposed development on an existing

3727G uarantee Fund property was central to the Board's consideration

3737of one application, and the Board ultimately denied the

3746application. In the second case, the Board granted the

3755application, despite the potential negative impact on a

3763competing development th at was not under written by the Guarantee

3774Fund.

377580. The intent of the language was to advise developers

3785that the existence of Guarantee Fund properties within the

3794competitive market area would be part of the credit underwriting

3804evaluation and the Board's c onsideration.

381081. Notwithstanding the language added to the rule, the

3819credit underwriter is charged with reviewing the need for

3828additional affordable housing. Even in absence of the added

3837language, consideration of any negative impact to competing

3845develo pments based on inadequate need for additional affordable

3854housing would be appropriate.

385882. In rendering the 2010 c redit underwriting report on

3868Elmwood Terrace, the credit underwrite r complied with the

3877directive.

387883. Prior to determining that the Petitio ner's funding

3887application should be denied, the Respondent's Board was clearly

3896aware of the Petitioner's application, the credit underwriting

3904report and market analysis, and the economic conditions in Lee

3914Cou nty, Florida.

391784. There is no credible evidence of any need for

3927additional affordable h ousing in Lee County, Florida.

393585. There is no credible evidence that the Lee County ,

3945Florida, market can sustain the addition of the units proposed

3955by the Petitioner without adversely affecting the financial

3963feasib ility of the existin g Guarantee Fund developments.

397286. The Board was aware that the Elmwood T errace

3982development could attract residents from the nearby Guarantee

3990Fund properties and that local economic conditions threatened

3998the financia l viability of the properties.

400587. Given current economic conditions, approval of the

4013application at issue in this proceeding would reasonably be

4022expected to result in a negative impact to existing af fordable

4033housing developments.

403588. The protection of Guarantee Fund devel opments is

4044necessary to safeguard the resources used to support the

4053creation and availability of af fordable housing in the state.

4063CONCLUSIONS OF LAW

406689. The Division of Administrative Hearings has

4073jurisdiction over the parties to and subject matter of this

4083proceeding. §§ 120.56, 120.569 , and 120.57(1), Fl a. Stat .

4093(20 09 ).

409690. The Petitioner has asserted that a portion of text ,

4106referred to by the parties a s the "Impact Rule" and set forth

4119within Florida Administrative Code Rule 67 - 48.0072 (the "Credit

4129Underwriting Rule") , is an invalid exercise of de legated

4139legislative authority.

414191. The evidence fails to establish that the challenged

4150language meets the de finition of "rule." S ubs ection 120.52(16),

4161Florida Statutes (20 09 ) , defines a "rule" as follows:

4171(16) ÐRuleÑ means each agency statement of

4178general applicability that implements,

4182interprets, or prescribes law or policy or

4189describes the procedure or pract ice

4195requirements of an agency and includes any

4202form which imposes any requirement or

4208solicits any information not specifically

4213required by statute or by an existing rule.

4221The term also includes the amendment or

4228repeal of a rule. The term does not

4236include:

4237(a) Internal management memoranda which do

4243not affect either the private interests of

4250any person or any plan or procedure

4257important to the public and which have no

4265application outside the agency issuing the

4271memorandum.

4272(b) Legal memoranda or opinions issued to

4279an agency by the Attorney General or agency

4287legal opinions prior to their use in

4294connection with an agency action.

4299(c) The preparation or modification of:

43051. Agency budgets.

43082. Statements, memoranda, or instructions

4313to state agencies issued by the Chief

4320Financial Officer or Comptroller as chief

4326fiscal officer of the state and relating or

4334pertaining to claims for payment submitted

4340by state agencies to the Chief Financial

4347Officer or Comptroller.

43503. Contractual provisions reached as a

4356result of collective bargaining.

43604. Memoranda issued by the Executive Office

4367of the Governor relating to information

4373resources management.

437592. The fact that the parties refer to the challenged

4385language as the "Impact Rule" does not make it a rule. The fact

4398that the Respondent adopted the language through the rulemaking

4407process set forth in Chapter 120, Florida Statutes (2009) , does

4417not make it a "rule. "

442293. The challenged language does not "implement, interpret

4430or prescribe law or policy or describe the pr ocedure or practice

4442requirements of the agency." The challenged language does no

4451more than direct the credit underwriter to review specific

4460information and make a determination as to whether a proposed

4470development will have a negative impact on existing d evelopments

4480in which the Respondent has funds at risk.

448894. The challenged language does not require that the

4497credit underwriter recommend against granting an application for

4505funding where the proposed development would negatively impact a

4514Guarantee Fund d evelopment.

451895. The challenged language does not require that the

4527Respondent deny an application for funding if the credit

4536underwriter determines that proposed development would

4542negatively impact a Guarantee Fund development.

454896. The Petitioner has failed to establish that it was

"4558substantially affected" by the requirement that the credit

4566underwriter include the relevant analysis within his report.

4574S ubs ection 120.56(3)(a), Florida Statutes (20 09 ) , provides as

4585follows:

4586A substantially affected person may seek an

4593administrative determination of the

4597invalidity of an existing rule at any time

4605during the existence of the rule. The

4612petitioner has a burden of proving by a

4620preponderance of the evidence that the

4626existing rule is an invalid exercise of

4633delega ted legislative authority as to the

4640objections raised.

464297. The evidence establishes that, prior to the inclusion

4651of the challenged language within the Credit Underwriting Rule,

4660such information had previously been considered by the Board

4669during its revie w of pen ding applications for funding.

467998. The Respondent could reasonably have required the

4687credit underwriter to "review and determine" the potential

4695negative impact of a proposed development on a Guarantee Fund

4705development, regardless of the insertion of the challenged

4713language into the Credit Underwriting Rule. The credit

4721underwriter could have included the analysis within his report,

4730as part of the project analysis, without the specific directiv e

4741to do so from the Respondent.

474799. Assuming that the c hallenged language was a "rule" and

4758that the Petitioner had been "substantially affected," the

4766Petitioner has the burden in a challenge to an existing rule of

4778establishing , by a preponderance of the evidence , that the cited

4788rule is an invalid exercise of d elegated legislative authority

4798as to the objections raised. § 120.56(3)(a), Fla . Stat . (2009) .

4811See also Florida Department of Transportation v. J.W.C. Company ,

4820396 So. 2d 778, (Fla. 1st DCA 1981); Dravo Basic Materials Co.,

4832Inc., v. Department of Transpo rtation , 602 So. 2d 632 (Fla. 2d

4844DCA 1992). In this case , the burden has not been met.

4855100. S ubs ection 120.52(8), Florida Statutes (20 09 ) ,

4865provides, in relevant part, as follows:

4871ÐInvalid exercise of delegated legislative

4876authorityÑ means action that goes beyond the

4883powers, functions, and duties delegated by

4889the Legislature. A proposed or existing

4895rule is an invalid exercise of delegated

4902legislative authority if any one of the

4909following applies:

4911(a) The agency has materially failed to

4918follow the app licable rulemaking procedures

4924or requirements set forth in this chapter;

4931(b) The agency has exceeded its grant of

4939rulemaking authority, citation to which is

4945required by s. 120.54(3)(a)1.;

4949(c) The rule enlarges, modifies, or

4955contravenes the specific pro visions of law

4962implemented, citation to which is required

4968by s. 120.54(3)(a)1.;

4971(d) The rule is vague, fails to establish

4979adequate standards for agency decisions, or

4985vests unbridled discretion in the agency;

4991(e) The rule is arbitrary or capricious. A

4999r ule is arbitrary if it is not supported by

5009logic or the necessary facts; a rule is

5017capricious if it is adopted without thought

5024or reason or is irrational; or

5030(f) The rule imposes regulatory costs on

5037the regulated person, county, or city which

5044could be re duced by the adoption of less

5053costly alternatives that substantially

5057accomplish the statutory objectives.

5061A grant of rulemaking authority is necessary

5068but not sufficient to allow an agency to

5076adopt a rule; a specific law to be

5084implemented is also required . An agency may

5092adopt only rules that implement or interpret

5099the specific powers and duties granted by

5106the enabling statute. No agency shall have

5113authority to adopt a rule only because it is

5122reasonably related to the purpose of the

5129enabling legislation a nd is not arbitrary

5136and capricious or is within the agencyÓs

5143class of powers and duties, nor shall an

5151agency have the authority to implement

5157statutory provisions setting forth general

5162legislative intent or policy. Statutory

5167language granting rulemaking authority or

5172generally describing the powers and

5177functions of an agency shall be construed to

5185extend no further than implementing or

5191interpreting the specific powers and duties

5197conferred by the enabling statute.

5202101 . In the Petition for Administrative Determination of

5211Invalidity of Existing Rule, the Petitioner twice cites to the

5221definition set forth at S ubs ection 120.52(8), Florida Statutes

5231(20 09 ) , of an "invalid exercise of delegated legislative

5241authority," but fa ils to identify the specific subsections under

5251which the challenge is brought; accordingly, all subsections are

5260addressed herein .

5263102. There is no allegation or evidence that the

5272Respondent failed to follow applicable rulemaking procedures or

5280requirements in inserting the challenged language into the

5288Credit Underwriting Rule .

5292103. The evidence fails to establish that the Respondent

5301has exceeded its grant of rulemaking authority in adopting the

5311challenged language. The Respondent clearly has sufficient

5318au thority to adopt appropriate rules. The Respondent also has

5328clear authority to contract with private consultants, to target

5337funding based on geographic and demographic factors, and to

5346administer the Guarantee Fund. Section 420.507, Florida

5353Statutes (20 09 ) , provides, in relevant part, as follows

5363Powers of the corporation.

5367The corporation shall have all the powers

5374necessary or convenient to carry out and

5381effectuate the purposes and provisions of

5387this part, including the following powers

5393which are in additi on to all other powers

5402granted by other provisions of this part:

5409* * *

5412(12) To make rules necessary to carry out

5420the purposes of this part and to exercise

5428any power granted in this part pursuant to

5436the provisions of chapter 120.

5441(13) To engage the services of private

5448consultants on a contract basis for

5454rendering professional and technical

5458assistance and advice.

5461* * *

5464(22) To develop and administer the State

5471Apartment Incentive Loan Program. In

5476developing and administering that progr am,

5482the corporation may:

5485* * *

5488(d) Geographically and demographically

5492target the utilization of loans.

5497* * *

5500(h) Establish, by rule, the procedure for

5507evaluating, scoring, and competitively

5511ranking all applications based on the

5517criter ia set forth in s. 420.5087(6)(c);

5524determining actual loan amounts; making and

5530servicing loans; and exercising the powers

5536authorized in this subsection.

5540* * *

5543(24) To do any and all things necessary or

5552convenient to carry out the purposes of, and

5560exercise the powers given and granted in,

5567this part.

5569(25) To develop and administer the Florida

5576Affordable Housing Guarantee Program. In

5581developing and administering the program,

5586the corporation may:

5589(a) Develop criteria for determining the

5595priority for expending the moneys in the

5602State Housing Trust Fund.

5606(b) Select affordable housing debt to be

5613guaranteed or additionally secured by

5618amounts on deposit in the Affordab le Housing

5626Guarantee Fund.

5628(c) Adopt rules for the program and

5635exercise the powers authorized in this

5641subsection.

5642104. The evidence fails to establish that the challenged

5651language enlarges, modifies, or contravenes the specific

5658provisions of law implem ented. Section 420.5099, Florida

5666Statutes (20 09 ), cited as the specific provision of law

5677implemented, provides, in relevant part, as follows :

5685Allocation of the low - income housing tax

5693credit. Ï -

5696(1) The Florida Housing Finance Corporation

5702is designated th e housing credit agency

5709for the state within the meaning of

5716s. 42(h)(7)(A) of the Internal Revenue Code

5723of 1986 and shall have the responsibility

5730and authority to establish procedures

5735necessary for proper allocation and

5740distribution of low - income housing tax

5747credits and shall exercise all powers

5753necessary to administer the allocation of

5759such credits.

5761(2) The corporation shall adopt allocation

5767procedures that will ensure the maximum use

5774of available tax credits in order to

5781encourage development of low - inc ome housing

5789in the state, taking into consideration the

5796timeliness of the application, the location

5802of the proposed housing project, the

5808relative need in the area for low - income

5817housing and the availability of such

5823housing, the economic feasibility of the

5829project , and the ability of the applicant to

5837proceed to completion of the project in the

5845calendar year for which the credit is

5852sought.

5853(3) The corporation may request such

5859information from applicants as will enable

5865it to make the allocations according to the

5873guidelines set forth in subsection (2),

5879including, but not limited to, the

5885information required to be provided the

5891corporation by chapter 67, Florida

5896Administrative Code.

5898(4) The executive director of the

5904corporation shall administer the allocation

5909procedures and determine allocations on

5914behalf of the corporation. Any applicant

5920disputing the amount of an allocation or the

5928denial of a request for an allocation may

5936request an appeal to the board of directors

5944of the corporation. (Emphasis supplied )

59501 05. There is no evidence that the challenged language is

5961vague, fails to establish adequate standards for agency

5969decisions, or vests unbridled discretion in the agency. The

5978challenged language clearly, and only, directs the credit

5986underwriter to evaluate the circumstances. The challenged

5993language does not require the Board to render any specific

6003decision based on such circumstances .

6009106. There is no evidence that the rule is arbitrary or

6020capricious. Again, the challenged language does nothing more

6028than direct the credit underwriter to review the information and

6038make a related determination within his report to the

6047Respondent. The facts clearly establish the rationale for the

6056Respondent's interest in evaluating the potential negative

6063impact of a propose d development on the existing developments in

6074which the Respondent has a financial risk. It is little more

6085than common sense for the Board to consider the potential

6095financial consequences, and prospective loss of affordable

6102housing units, presented by an application to fund a proposed

6112development in an area where there is no need for additional

6123afford able housing.

6126107. There is no evidence or allegation that any

6135regulatory costs are imposed by the rule.

6142FINAL ORDER

6144Based on the foregoing Findings of Fact and Conclusions of

6154Law, the Petition for Administrative Determination of Invalidity

6162of Existing Rule is DISMISSED.

6167DONE AND ORDERED this 6th day of October , 2010 , in

6177Tallahassee, Leon County, Florida.

6181S

6182WILLIAM F. QUATTLEBAUM

6185Administrative Law Judge

6188Division of Administrative Hearings

6192The DeSoto Building

61951230 Apalachee Parkway

6198Tallahassee, Florida 32399 - 3060

6203(850) 488 - 9675

6207Fax Filing (850) 921 - 6847

6213www.doah.state.fl.us

6214Filed with the Clerk of the

6220Division of Administrative Hearings

6224this 6th day of O ctober , 2010 .

6232COPIES FURNISHED :

6235Hugh R. Brown, Esquire

6239Florida Housing Finance Corporation

6243227 North Bronough Street, Suite 5000

6249Tallahassee, Florida 32301 - 1329

6254J. Stephen Menton, Esquire

6258Rutledge, Ecenia, & Purnell, P.A.

6263119 South Monroe Street, Suit e 202

6270Post Office Box 551

6274Tallahassee, Florida 32302

6277Wellington Meffert, General Counsel

6281Florida Housing Finance Corporation

6285227 North Bronough Street, Suite 5000

6291Tallahassee, Florida 32301 - 1329

6296Della Harrell, Corporation Clerk

6300Florida Housing Finance Corporation

6304227 North Bronough Street, Suite 5000

6310Tallahassee, Florida 32301 - 1329

6315F. Scott Boyd, Executive Director

6320and General Counsel

6323Joint Administrative Procedures Committee

6327120 Holland Building

6330Tallahassee, Florida 32399 - 1300

6335NOTICE OF RIGHT TO JUDICIAL REVIEW

6341A party who is adversely affected by this Final Order is

6352entitled to judicial review pursuant to Section 120.68, Florida

6361Statutes. Review proceedings are governed by the Florida Rules

6370of Appellate Procedure. Such proceedings are comme nced by

6379filing one copy of a Notice of Administrative Appeal with the

6390agency clerk of the Division of Administrative Hearings and a

6400second copy, accompanied by filing fees prescribed by law, with

6410the District Court of Appeal, First District, or with the

6420Di strict Court of Appeal in the appellate district where the

6431party resides. The Notice of Administrative Appeal must be

6440filed within 30 days of rendition of the order to be reviewed.

Select the PDF icon to view the document.
PDF
Date
Proceedings
PDF:
Date: 02/03/2012
Proceedings: Transmittal letter from Claudia Llado forwarding the six-volume Transcript, along with the Telehonic Testimony Under Oath of Robert Vogt, and the three-volume binder of Joint Exhibits numbered 1-66, and one-volume Binder of Respondent's Exhibits numbered 1-2, to the agency.
PDF:
Date: 11/28/2011
Proceedings: Mandate filed.
PDF:
Date: 11/08/2011
Proceedings: Opinion filed.
PDF:
Date: 11/07/2011
Proceedings: Opinion
PDF:
Date: 11/07/2011
Proceedings: Mandate
PDF:
Date: 04/21/2011
Proceedings: BY ORDER OF THE COURT: Appellant's unopposed motion for extension of time filed on April 19, 2011, is granted filed.
PDF:
Date: 03/11/2011
Proceedings: BY ORDER OF THE COURT: Appellants' unopposed motion to consolidate and for extension of time filed on March 7, 2011, is granted filed.
PDF:
Date: 02/22/2011
Proceedings: Index, Record, and Certificate of Record sent to the First District Court of Appeal.
PDF:
Date: 12/03/2010
Proceedings: Index (of the Record) sent to the parties of record.
PDF:
Date: 12/03/2010
Proceedings: Invoice for the record on appeal mailed.
PDF:
Date: 11/09/2010
Proceedings: Acknowledgment of New Case, 1st DCA Case No. 1D10-5930 filed.
PDF:
Date: 11/05/2010
Proceedings: Notice of Appeal filed and Certified copy sent to the District Court of Appeal this date.
PDF:
Date: 10/06/2010
Proceedings: DOAH Final Order
PDF:
Date: 10/06/2010
Proceedings: Final Order (hearing held June 14-16 and June 22, 2010). CASE CLOSED.
Date: 08/27/2010
Proceedings: CASE STATUS: Pre-Hearing Conference Held.
PDF:
Date: 07/29/2010
Proceedings: Proposed Recommended Order filed.
PDF:
Date: 07/29/2010
Proceedings: Proposed Final Order filed.
PDF:
Date: 07/29/2010
Proceedings: Notice of Filing .
PDF:
Date: 07/29/2010
Proceedings: Respondent`s Proposed Final Order filed.
PDF:
Date: 07/29/2010
Proceedings: Respondent`s Proposed Recommended Order filed.
PDF:
Date: 07/08/2010
Proceedings: Telephonic Testimony Under Oath of Robert Vogt filed.
PDF:
Date: 07/08/2010
Proceedings: Notice of Filing (Transcript of Telephonic Testimony Under Oath of Robert Vogt).
PDF:
Date: 06/29/2010
Proceedings: Petitioner's Exhibit A (exhibit not available for viewing) filed.
Date: 06/29/2010
Proceedings: Transcript (volume I- VI) filed.
Date: 06/22/2010
Proceedings: CASE STATUS: Hearing Held.
PDF:
Date: 06/17/2010
Proceedings: Notice of Telephonic Final Hearing (hearing set for June 22, 2010; 1:30 p.m.).
Date: 06/14/2010
Proceedings: CASE STATUS: Hearing Partially Held; continued to June 22, 2010; 1:30 p.m.; Tallahassee, FL).
PDF:
Date: 06/10/2010
Proceedings: Joint Pre-hearing Stipulation filed.
PDF:
Date: 05/27/2010
Proceedings: Petitioner's Notice of Taking Deposition (Wanda Greggo, Ben Johnson) filed.
PDF:
Date: 05/27/2010
Proceedings: Petitioner's Notice of Deposition Duces Tecum filed.
PDF:
Date: 05/25/2010
Proceedings: Order of Consolidation (DOAH Case Nos. 10-1975, 10-2799RX).
PDF:
Date: 05/24/2010
Proceedings: Order of Assignment.
PDF:
Date: 05/24/2010
Proceedings: Rule Challenge transmittal letter to Liz Cloud from Claudia Llado copying Scott Boyd and the Agency General Counsel.
PDF:
Date: 05/21/2010
Proceedings: Petition for Administrative Determination of Invalidity of Existing Rule filed.

Case Information

Judge:
WILLIAM F. QUATTLEBAUM
Date Filed:
05/21/2010
Date Assignment:
05/24/2010
Last Docket Entry:
02/03/2012
Location:
Tallahassee, Florida
District:
Northern
Agency:
Florida Housing Finance Corporation
Suffix:
RX
 

Counsels

Related Florida Statute(s) (8):

Related Florida Rule(s) (1):