17-001543BID Joe Moretti Phase Three, Llc vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Friday, June 9, 2017.

Summary: Petitioners failed to demonstrate that Florida Housing's actions regarding their requests to amend Extended Use Agreements were arbitrary, capricious, or contrary to competition.

FINAL ORDER

This cause came before the Board of Directors of the Florida Housing Finance

Corporation ("Board") for consideration and final agency action on July 28, 2017.

Joe Moretti Phase III, LLC ("Moretti"), Stirrup Plaza Phase III, LLC ("Stirrup")

("Petitioners"), GM Silver Creek, LTD ("Silver Creek") and Verbena, LLC

("Verbena") ("Intervenors") were Applicants under Request for Applications 2016-

114: Housing Credit Financing for Affordable Housing Developments Located in

Miami-Dade County (the "RF A"). The matter for consideration before this Board

is a Recommended Order issued pursuant to §§120.57(2) and (3)(e), Fla . Stat.

(2016), and Fla. Admin. Code R. 67-60.009(3)(b), and the Exceptions to the

Recommended Order, and Responses thereto.

On October 28, 2016, Florida Housing issued the RF A, which solicited

applications to compete for an allocation of low income housing credit funding.

Responses to the RFA were due on December 15, 2016. On December 15, 2016,

Applications were submitted in response to the RF A by several Developers

including Petitioners and Intervenors. On February 3, 2017, Florida Housing posted

notice of its intended decision to award funding to three Applicants. Through the

ranking and selection process outlined in the RF A, Intervenors Verbena and Silver

Creek were deemed eligible for funding and Verbena was recommended for funding,

as well as third-party Applicants Ambar Key, LLC, and Northside Property IV, Ltd.

Through a separate case regarding this RF A, which was settled with a consent

agreement presented to and approved by the Board, third-party Applicant Ambar

Key agreed it was ineligible for funding. Petitioners Moretti and Stirrup were

determined to be ineligible for funding due to their proposed developments being

subject to existing Extended Low-Income Housing Agreements ("EUAs").

Petitioners timely filed their notices of intent to protest followed by formal written

protests. Motions to Intervene were filed by Verbena as well as Silver Creek; those

motions were subsequently granted.

Page 7 of the RF A, Section 3 .A states: "Applicants should review subsection

67-48.023(1), F.A.C., to determine eligibility to apply for the Housing Credits

offered in this RFA." Additionally, in Section 3.F.3, the RFA requires that

Applicants funded under RF A 2016-114 must comply with Florida Administrative

Code, Chapters 67-60 (Application requirements), 67-48 (credit underwriting and

program requirements for Housing Credits), and 67-53 (Compliance requirements).

In relevant part, Rule 67-48.023(1) of the Florida Administrative Code states:

Unless otherwise permitted in a competitive solicitation

process, an Applicant is not eligible to apply for

Competitive Housing Credits if any of the following

pertain to the proposed Development:

(c) The proposed Development site or any part thereof is

subject to any Land Use Restriction Agreement or

Extended Use Agreement, or both, in conjunction with any

Corporation affordable housing financing intended to

foster the development or maintenance of affordable

housing ...

The RF A also required that Applicants demonstrate that "as of the Application

Deadline sewer capacity, package treatment or septic tank service is available to the

entire proposed Development site ... " The RF A instructed Applicants to provide, as

Attachment 11, either the Verification of Availability of Infrastructure - Sewer

Capacity, Package Treatment, or Septic Tank form (Form Rev. 08-16) or a "letter

from the waste treatment service provider that is Development-specific and dated

within 12 months of the Application Deadline."

Petitioners timely filed notices of intent to protest and formal written protests

challenging the Board's finding that they were ineligible for funding. Specifically,

they alleged that they timely submitted a request to amend the EUAs on their

proposed development sites to remove the proposed development sites from the

EUAs prior to the Application deadline. In response to the protests, Verbena filed a

Motion to Intervene, alleging that it could be displaced from funding if Moretti's

challenge was successful, and further alleging that Moretti's Application was

ineligible for funding not only due to the existence of an EUA on the proposed

development site, but also because the Application contained a sewer letter that did

not comply with the terms of the RF A. Moretti filed a Motion in Limine to preclude

Verbena from bringing up any challenge to its sewer letter.

The matters were referred to the Division of Administrative Hearings

(DOAH) and consolidated. A formal hearing took place on April 12, 2017, in

Tallahassee, Florida before the Honorable Administrative Law Judge Garnett W.

Chisenhall ("Hearing Officer"). The parties filed timely Proposed Recommended

Orders.

After consideration of the evidence and arguments presented at hearing , and

the Proposed Recommended Orders, the Hearing Officer issued a Recommended

Order on June 9, 2017. A true and correct copy of the Recommended Order is

attached hereto as "Exhibit A." The Hearing Officer determined Florida Housing's

actions or inactions pertaining to the Moretti and Stirrup EUA amendment requests

were not arbitrary, capricious, or contr ary to competition, resulting in Moretti and

Stirrup remaining ineligible for funding under RF A 2016-114. The Recommended

Order recommended that Florida Housing:

[I]ssue a final order awarding funding to Ambar Key,

Ltd.; Verbena, LLC; and Northside Property IV, Ltd.

The Parties filed various Exceptions to the Recommended Order and

Responses to Exceptions, which are addressed as follows:

RULING ON INTERVENOR SILVER CREEK AND FLORIDA

HOUSING'S JOINT EXCEPTION TO RECOMMENDATION

1. Silver Creek and Florida Housing filed a Joint Exception to the

recommendation set forth in the Recommended Order to the extent the

Recommended Order recommended Florida Housing award funding to third-party

Applicant Am bar Key.

2. The basis for the exception is the consent agreement between Silver

Creek and Ambar Key, wherein Ambar Key conceded its application was ineligible

for funding.

3. Florida Housing and Silver Creek request a Final Order be entered

which: a) dismisses the formal written protests filed by Moretti and Stirrup; and b)

distributes funding under RF A 2016-114 through the ranking and selection process

conducted pursuant to the RF A and the outcome of pending litigation under the same

RFA.

4. No parties filed a response to the Joint Exception.

5. After a review of the record, the Board finds that the Exception to and

requested modification to the Recommendation set forth in the Recommended Order

are reasonable and accepts the Joint Exception.

RULING ON PETITIONERS' EXCEPTIONS

Petitioners' Exceptions to Findings of Fact

6. Petitioner takes exception to the Findings of Fact set forth Paragraphs

85, 86, 87, and 88 of the Recommended Order.

7. After a review of the record, the Board finds that the Findings of Fact

set forth in Paragraphs 85, 86, 87, and 88 of the Recommended Order are supported

by competent, substantial evidence, and the Board rejects Petitioners' Exceptions to

the Findings of Fact set forth in Paragraphs 85, 96, 87, 88 of the Recommended

Order.

Petitioners' Exceptions to Conclusions of Law

8. Petitioner takes exception to the Conclusions of Law set forth m

Paragraphs 108, 109, 110, 112, 120, 121 Recommended Order.

9. The Board finds that it has substantive jurisdiction over the issues

presented in Paragraphs 108, 109, 110, 112, 120, 121 ofthe Recommended Order.

10. After a review of the record, the Board finds that the Conclusions of

LawsetforthinParagraphs 108,109,110,112,120,121 oftheRecommendedOrder

are reasonable and supported by competent, substantial evidence, and rejects

Petitioner's Exceptions to the Conclusions of Law presented in Paragraphs 108, 109,

110, 112, 120, 121 ofthe Recommended Order.

RULING ON INTERVENOR VERBENA'S EXCEPTIONS

Verbena's Exception to Conclusion of Law Footnote 8 of Paragraph 121

11. Verbena seeks an Exception to Footnote 8 to Conclusion of Law

Paragraph 121, where the Hearing Officer ALJ denied Moretti's Motion in Limine

as being moot because the ALJ determined that Florida Housing did not act in an

arbitrary or capricious manner. Verbena's exception seeks clarification in the Final

Order that the merits of its argument against Moretti's sewer letter have not been

addressed or resolved.

12. The Board finds that it does not have substantive jurisdiction over the

issue presented in Footnote 8 to Paragraph 121 of the Recommended Order, because

the ruling is a procedural determination by the Hearing Officer. Accordingly, The

Board rejects Petitioners' Exception to Footnote 8 to Conclusion of Law Paragraph

121.

Verbena's Exception to Conclusion of Law Paragraph 121

13. Verbena's Exception to Conclusion of Law Paragraph 121 seeks a

modification to the Final Order, clarifying that Florida Housing's determination that

the Petitioners' Applications were ineligible for funding because the existing EUA

covering the development sites for each Application was consistent with the

requirements of Rule 67-48.023(1), F.A.C., consistent with the terms ofthe RFA,

and that Florida Housing's actions were not contrary to its governing statutes,

agency rules or policies, or the terms of the RF A.

14. The Board finds that Verbena's Exception to Conclusion of Law

Paragraph 121 with requested modification is reasonable, and supported by

competent substantial evidence because the Hearing Officer found that Florida

Housing's actions or inactions pertaining to the Moretti and Stirrup EUA

amendment requests were not arbitrary, capricious, or contrary to competition, and

that the Petitioners' development sites were subject to existing EUAs which

rendered then ineligible for funding pursuant to Rule 67-48.023(1), F.A.C.

Accordingly, the Board accepts Verbena's Exception with requested modification to

Conclusion of Law Paragraph 121.

RULING ON THE RECOMMENDED ORDER

15. The Findings ofFact set out in the Recommended Order are supported

by competent substantial evidence.

16. The Conclusions of Law of the Recommended Order are reasonable

and supported by competent, substantial evidence with the exception of Paragraph

121 of the Conclusions of Law, which should be modified to reflect that Florida

Housing's determination was consistent with the requirements ofRule 67-48.023(1),

F.A.C., consistent with the terms of the RFA, and that Florida Housing's actions

were not contrary to its governing statutes, agency rules or policies, or the terms of

theRFA.

1 7. The Recommendation of the Recommended Order should be modified

to:

a. dismiss the formal written protests filed by Joe Moretti Phase Three,

LLC and Stirrup Plaza Phase Three, LLC, and

b. distribute funding under RF A 2016-114 through the ranking and

selection process conducted pursuant to the RF A and the outcome

of pending litigation under the same RF A.

ORDER

In accordance with the foregoing, it is hereby ORDERED:

18. The Findings ofF act of the Recommended Order are adopted as Florida

Housing's Findings of Fact and incorporated by reference as though fully set forth

in this Order.

19. The Conclusions of Law in the Recommended Order are adopted with

the exception of Conclusion of Law Paragraph 121, which is modified to state:

121. Therefore, Florida Housing's actions or inactions

pertaining to the Moretti Phase Three and Stirrup Plaza

Phase Three requests were not arbitrary, capricious, or

contrary to competition. 1 Florida Housing's determination

that the Petitioners' Applications were ineligible for

funding was consistent with the requirements of Rule 67-

48.023(1), F.A.C., and consistent with the terms of the

RF A. Florida Housing's actions were not contrary to its

governing statutes, agency rules or policies, or the terms

ofthe RFA.

IT IS HEREBY ORDERED that the relief requested in the Petitions is

DENIED, the Petitions are DISMISSED, and Florida Housing's scoring and

ranking of RF A 2016-114 is AFFIRMED, and funding under RF A 2017-114 shall

me distributed through the ranking and selection process conducted pursuant to the

RFA.

1 In light of this ruling, there is no need to address Moretti Phase Three's Motion in Limine. Accordingly, it is

denied as being moot.

DONE and ORDERED this 28th day of July 2017.

FLORIDA HOUSING FINANCE

CORPORATION

q ftrr

Copies to:

Michael Donaldson

Florida Bar No. 0802761

Carlton Fields, P.A.

P.O. Drawer 190

Tallahassee, Florida 32302

Telephone: [phone]

Facsimile: [phone]

[e-mail]

J. Stephen Menton, Esq.,

Tana D. Storey, Esq.,

Rutledge Ecenia, P .A.

119 South Monroe Street, Suite 202,

Tallahassee, Florida 32301,

[e-mail],

[e-mail]

Derek Bruce, Esq.,

Sarah K. Vespa, Esq.,

Gunster, Y oakley & Stewart, P .A.,

200 South Orange Avenue, Suite 1400,

Orlando, Florida 3 280 1,

dbruce@gunster .com,

[e-mail]

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

227 North Bronaugh Street, Suite 5000

Tallahassee, Florida 32301

KenReecy

Director of Multifamily Programs

Florida Housing Finance Corporation

227 North Bronaugh Street, Suite 5000

Tallahassee, Florida 32301

Trey Price

Interim Executive Director

Florida Housing Finance Corporation

227 North Bronaugh Street, Suite 5000

Tallahassee, Florida 32301

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS

ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68,

FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY

THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH

PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A

NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE FLORIDA

HOUSING FINANCE CORPORATION, 227 NORTH BRONOUGH

STREET, SUITE 5000, TALLAHASSEE, FLORIDA 32301-1329, AND A

SECOND COPY, ACCOMPANIED BY THE FILING FEES PRESCRIBED

BYLAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT,

2000 DRAYTON DRIVE, TALLAHASSEE, FLORIDA 32399-1850, OR IN

THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT

WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE

FILED WITHIN THIRTY (30) DAYS OF RENDITION OF THE ORDER TO

BE REVIEWED.