18-002156BID Htg Village View, Llc vs. Marquis Partners, Ltd., And Florida Housing Finance Corporation Status: Closed Recommended Order on Friday, July 27, 2018.

Summary: Petitioner proved that Respondent's scoring decision regarding Respondent's application was erroneous and that Respondent's application is ineligible for funding. Funding should be awarded to Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HTG VILLAGE VIEW, LLC,

Petitioner,

vs. Case No. 18 - 2156BID

MARQUIS PARTNERS, LTD., AND

FLORIDA HOUSING FINANCE

CORPORATION,

Respondents.

_______________________________/

RECOMMEN DED ORDER

Pursuant to notice, Yolonda Y. Green, Administrative Law

Judge of the Division of Administrative Hearings (ÐDivisionÑ) ,

conducted a hearing on June 1, 2018, pursuant to section s

120.57(1) and 120.57(3) , Florida Statutes, in Tallahassee,

Florida.

APPEARANCES

For Petitioner: HTG Village View, LLC

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

Suite 304

1725 Capital Circle Northeast

Tallahassee, Florida 32308

For Respondent: Florida Housing Finance Corporatio n

Betty Zachem, Esquire

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Talla hassee, Florida 32301

For Respondent: Marquis Partners, Ltd.

Michael J. Glazer, Esquire

Anthony L. B ajoczky, Jr., Esquire

Ausley & McMullen , P.A.

123 South Calhoun Street

Post Office Box 391

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

Whether Respondent, Florida Housing Finance CorporationÓs

(ÐFlorida HousingÑ), intended action to award housing credit

funding to Marquis Partners, Ltd. (ÐMarquis P artnersÑ) , based on

the Request for Applications 2017 - 113 Housing Credit Financing

for Affordable Housing Developments Located in Broward, Duval,

Hillsborough, Orange, Palm Beach, and Pinellas C ounties (the

ÐRFAÑ) is contrary to governing statutes, Florida Housing rules,

or the RFA specifications; and, if so, whether the award is

contrary to competition, clearly erroneous, or arbitrary and

capricious.

PRELIMINARY STATEMENT

On October 6, 2017, Florida Housing issued a n RFA , which

solicited applications to co mpete for an allocation of Federal

Low - Income Housing Tax Credit funding ( Ð tax credits Ñ ) for the

construction of affo rdable housing developments. M odification s

to the RFA were issued on November 1 and November 2 9, 2017. On

or before December 28, 2017, ap plications were submitted in

response to the RFA by a number of developers, including HTG

Village View, LLC (ÐPetitionerÑ or ÐHTG Village Ñ), and

Respondent, Marqu is Partners. On March 16, 2018 , Florida

Housing posted notice of its intended decision to awa rd funding

to seven applicants, inc luding Marquis Partners . Petitioner was

found to be eligible, but was not selected for funding.

Petitioner timely filed a Formal Written Protest and Petition

for Administrative Proceeding, which was subsequently amended .

Florida Housing filed a Motion to Consolidate this matter

with Petitions fil ed in two other matters by Sailb o at Bend II,

Ltd. (ÐSailboat BendÑ) (DOAH Case No. 18 - 2157BID) , and Marqui s

Partners (DOAH Case No. 18 - 2158BID). The undersigned

consolidated t he three cases. The Petitions filed in DOAH Case

Nos. 18 - 2157BID and 18 - 2158BID were voluntarily dismissed.

Marquis Partners filed a Motion to Dismiss Petitioner, HTG

Village in this case , which the undersigned denied.

The undersigned initially scheduled this matter for May 29,

2018. However, the parties filed an unopposed Motion for

Continuance, which the undersigned granted. The undersigned

rescheduled this matter for June 1, 2018.

Prior to the final hearing, in the pre - hearing stipulation,

Florida Housing changed its position indicating that it now

agreed with PetitionerÓs allegation that Marquis PartnerÓs

application should have been found ineligible, and that

Petitioner should have been recommended for funding.

At the hearing, the parties jointly presented t he testimony

of Marisa Button, d irector of Multifamily Allocations, Florida

Housing. Joint Exhibits 1 through 7 were admitted into

evidence. Marquis Partners Exhibits 1 through 4 and 6 were

admitted into evidence. HTG Village Exhibits 1 thro ugh 5 and

7 through 10 were admitted into evidence.

T he o fficial Transcript of the hearing was filed with the

Division on June 21, 2018 . The parties filed Proposed

Recommended Orders, which have been considered in the

preparation of this Recommended Or der.

Unless otherwise stated, all references to statutes or

rules are to those in effect in 2017.

FINDING S OF FACT

Based on the stipulated findings of fact, the oral and

documentary evidence presented at hearing, and the entire record

in this proceeding , the Findings of Fact are as follows:

Parties

1. 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 h ousing in Florida. Pursuant

to sec tion 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.

2. HTG Village and Marquis Partners submitted applications

for funding from Florida Housing to develop affordable housing

developments. Both applications were deemed ÐeligibleÑ for

funding . Marquis Partners was preliminarily selected for

funding under the RFA. While HTG Village was determined to be

eligible for funding, it was not selected for an award of

funding.

3. The Ð tax credit Ñ program was enacted to incentivize the

private market t o invest in affordable rental housing. These

tax credits are awarded competitively to housing developers in

Flor ida for rental housing projects that qualify. These credits

are then normally sold by developers for cash to raise capital

for their projects. The effect is that it reduces the amount

that the developer would have to borrow otherwise. Because the

total debt is lower, a tax credit property can (and must) offer

lower, more affordable rents. Developers also covenant to keep

rents at afforda ble l evels for periods of 30 to 50 years as

consideration for receipt of the tax credits.

Competitive Application Process

4. Florida Housing is authorized to allocate tax credits,

SAIL funding, and other funding by means of request s for

proposal or oth er comp etitive solicitation in section

420.507(48) , and adopted Florida Administrative Code

Chapter 67 - 60, which govern the competitive solicitation process

for several different programs, including the program for tax

credits. Chapter 67 - 60 provides that Flori da Housing handle s

disputes regarding the allocation of its tax credits, which were

made available to Florida Housing on an annual basis by the U.S.

Treasury, through the bid protest provisions of s ection

120.57(3).

5. In their applications, applicants r equest a specific

dollar amount of housing credits to be given to the applicant

each year for a period of 10 years. Applicants normally sell

the rights to that future stream of income tax credits (through

the sale of almost all of the ownership interest i n the

applicant entity) to an investor to generate the amount of

capital needed to build the development. The amount , which can

be received , depends upon the accomplishment of several factors ,

such as a certain percentage of the projected Total Developmen t

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.

6. Tax credits are made available through a competitive

application process commenced by the issuance of a n RFA . A n RFA

is equivalent to a Ðrequest for proposalÑ as indicated in r ule

67 - 60.009(3). At issue here is RFA 2017 - 113: Housing Cr edit

Financing for Affordable Housing Developments Located in

Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas

C ounties.

7. The RFA was issued on October 6, 2017 , and responses

were due December 28, 2017. T he RFA was modified on November 1

and November 29, 2017.

8. Through the RFA, Florida Housing seeks to award up to

an estimated $14,601,863.00 of housing c red its to applicants

that propose d evelopments in Broward, Duval, Hillsborough,

Orange, Pa lm Beach, and Pinellas C ounties.

9. Flor ida Housing received 33 applications in response to

RFA 2017 - 113.

10. A r ev iew c ommittee was appointed to review the

applications and make recommendations to Florida HousingÓs Board

of Directors (the ÐBoardÑ). The review c ommittee found

25 applications eligible and eight applications ineligible.

Through the ranking and selection process outlined in the RFA,

seven applicatio ns were recommended for funding, including

Marquis Partners.

11. On March 16, 2018, Florida HousingÓs Board met and

considered the recommendations of the r eview c ommittee for

RFA 2017 - 113. Later, on March 16, 2018, at approximately

1:05 p.m., Petitioners and all other applicants in RFA 2017 - 113

received notice that the Board determined whether applications

were eligible or ineli gible for consideration for funding, and

that certain eligible applicants were selected for award of tax

credits, subject to satisfactory completion of the credit

underwriting process. Such notice was provided by the posting

of two spreadsheets on the Flo rida Housing website , one listing

the "eligible" applications in RFA 2017 - 113 and one identifying

the applications which Florida Housing proposed to fund .

12. In that March 16, 2018 , posting, Florida Housing

announced its intention to awa rd funding to se ven applicants ,

including Marquis Partners. HTG Village was eligible, but not

recommended for funding.

13. All of the parties in this case applied for funding to

develop a proposed development in Broward County. According to

the terms of the RFA, a ma ximum of two Broward C ounty

a pplications are to be funded. Sailboat Bend was the other

application , in addition to that of Marquis Partners that was

selected for funding in Broward County. Once Marquis Partners

dismissed its petition in DOAH Case No. 18 - 2157 BID , there we re

no remaining challenges to Sailboat Bend.

14. Petitioner timely filed a Notice of Protest and

Petition for Formal Administrative Proceedings. Marquis

Partners timely intervened.

15. No challenges were made to the terms of RFA 201 7 - 113.

RFA 2017 - 11 3 Ranking and Selection Process

16. The RFA contemplates a s tructure in which the

a pplicant is scored on eligibility items and obtains points for

other items. A list of the eli gibility items is available in

s ection 5.A.1, beginning on page 63 of the RFA. Only

a pplications that meet all the eligibility items will be

eligible for funding and considered for funding selection. The

eligibility items also include Submission Requirements,

Financial Arrearage Requirements, and the Total Deve lopment Cost

Per Unit Limitation requirement.

17. Applicants can earn points for each of the followin g

items (for a maximum of 20) : Submission of Principal Disclosure

Form stamped by C orporation as ÐPre - ApprovedÑ ( maximum

5 points); Development Experi en ce Withdrawal Disincentive

( maximum 5 points); and either Local Government Contribution

Points ( maximum 5 points) or Local Government Area of

Opportunity Points (10 points).

18. The RFAÓs stated goal is to fund one application

wherein the applicant appl ied and qualified as a non - p rofit

a pplicant.

19. As part of the funding selection p rocess, the R FA

start s with the a pplication sorting o rder. All eligible

a pplications are ranked by first sorting all eligible

Applications from the highest score to lowes t score, with any

scores that are tied separated in the following order:

a. First, by the ApplicationÓs eligibility

for the Proximity Funding Preference (which

is outlined in Section Four A.5.e. of the

RFA) with Applications that qualify for the

preferenc e listed above Applications that do

not qualify for the preference;

b. Next, by the ApplicationÓs eligibility

for the Per Unit Construction Funding

Preference which is outlined in Section Four

A.11.e. of the RFA (with Applications that

qualify for the p reference listed above

Applications that do not qualify for the

preference);

c. Next, by the ApplicationÓs 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);

d. Next, by the ApplicationÓs Leveraging

Classification, applying the multipliers

outlined in Item 3 of Exhibit C of the RFA

(with Applications having the Classificat ion

of A listed above Applications having the

Classification of B);

e. Next, by the ApplicationÓs 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 pref erence listed above

Applications that do not qualify for the

preference); and

f. And finally, by lottery number,

resulting in the lowest lottery number

receiving preference .

20. T he RFA also outline s the funding selection process as

follows:

a. The highest ranking eligible Application

will be selected for funding for proposed

Developments located in each of the

following counties for which an eligible

Application was received: Broward, Duval,

Hillsborough, Orange, Palm Beach, and

Pinellas.

b. If funding remains after funding the

highest ranking eligible Applications as

outlined in a. above, and if none of the

Applications selected for funding in a.

above qualify for the Non - Profit goal, the

next Application selected for funding will

be the highes t ranking eligible unfunded

Application wherein the Applicant applied

and qualified as a Non - Profit Applicant,

regardless of county. If the selected

Application cannot be fully funded, it will

be entitled to receive a Binding Commitment

for the unfunded b alance.

c. If funding remains after funding t he

highest ranking eligible Applications as

outlined in a. above and at least one (1) of

the selected Applications qualified for the

Non - Profit goal, the next Application

selected for funding will be the high est

ranking eligible unfunded Application in

Broward County. If the selected Application

cannot be fully funded, it will be entitled

to receive a Binding Commitment for the

unfunded balance. If funding remains after

selecting the highest ranking eligible

unfunded Broward County Application, or if

there is no eligible unfunded Application

located in Broward County, no additional

Applications from any county will be

selected for funding and any remaining

funding will be distributed as approved by

the Board.

HTG Village Standing

21 . One of the eligibility r equirements in the RFA is that

a pplicants are required to demonstrate site control by providing

certain documentation as Exhibit 8 to the application. The RFA

provides three ways to demonstrate site co ntrol: 1) eligible

contract, 2) de ed or certificate of title, or 3) lease.

22 . In order to demonstrate site control as an eligible

contract, the following must be demonstrated :

Eligible Contract - For purposes of this

RFA, an eligible contract is one th at has a

term that does not expire before June 30,

2018 or that contains extension options

exercisable by the purchaser and conditioned

solely upon payment of additional monies

which, if exercised, would extend the term

to a date that is not earlier than J une 30,

2018; specifically states that the buyerÓs

remedy for default on the part of the seller

includes or is specific performance; and the

buyer MUST be the Applicant unless an

assignment of the eligible contract which

assigns all of the buyer's rights, title and

interests in the eligible contract to the

Applicant, is provided. Any assignment must

be signed by the assignor and the assignee.

If the owner of the subject property is not

a party to the eligible contract, all

documents evidencing intermediate contracts,

agreements, assignments, options, or

conveyances of any kind between or among the

owner, the Applicant, or other parties, must

be provided, and, if a contract, must

contain the following elements of an

eligible contract: a) have a term that do es

not expire before June 30, 2018 or contain

extension options exercisable by the

purchaser and conditioned solely upon

payment of additional monies which, if

exercised, would extend the term to a date

that is not e arlier than June 30, 2018, and

b) specif ically state that the buyerÓs

remedy for default on the part of the seller

includes or is specific performance.

23. In response t o RFA 2017 - 113, HTG Village timely

submitted application number 2018 - 303C (ÐHTG Village

ApplicationÑ) requesting an allocati on of $2,561,000 in housing

c redits. HTG Village proposed to develop a 96 - unit affordable,

multifamily housing development in Broward County.

24 . The a ddress of the development s ite provided within

the application of HTG Village is Ð N Andrews Ave and N E 6th St.,

Fort Lauderdale.Ñ (Ð HTG Village Development SiteÑ).

25 . H TG Village had a contractual ri ght to purchase the

HTG Village Development Site as of the a pplication d eadline and

satisfied the site c ontrol require ment of RFA 2017 - 113 as of the

appl ication d eadline.

26 . HTG Village terminated its contrac t to purchase the

HTG Village Development Site in a letter dated January 16, 2018 ,

and delivered on January 17, 2018.

27 . HTG Village entered a First Amendment and

Reinstatement to the original Pur chase and Sale Agreement on

May 8, 2018 (ÐAmende d Purchase and Sale AgreementÑ) , with a

retroactive effective date of January 17, 2018.

28. Although HTG Village terminated its purchase agreement

after the application deadline, Ms. Button credibly test ified

that the determination of whether the applicant is ready to

proceed with the development is at the time of the application

deadline (through submission of the completed application) and

again at the time of underwriting.

29. Of the applicants tha t submitted applications in

response to the RFA, four applicants submitted applications for

development in Broward County. Two applicants received a score

of 20 points , S ailbo oat Bend and Marquis Partners. Of the two

applicants that received 20 points, M arquis Partners was

assigned a lottery number of nine. HTG Village and another

applic ant, Casa St. Angelo, received score s of 15 points.

HTG V illage was assigned a lottery number 1.

30. In the solicitation process, i f Marquis Partners is

deemed ineligi b le , HTG V illage would be the next highest - ranked

application for funding for development in Broward.

31. If Marquis Partners remains eligible, but its score is

reduced to 15 , HTG Village would replace Marquis Partners in the

line for funding because HTG Village has the lowest lottery

number (1) .

Marquis Partners Application

32 . In response to RFA 2017 - 113, Marquis Partners timely

submitted application number 2018 - 279C (ÐMarquis Partners

ApplicationÑ) requesting an allocation of $1,727,000 in housing

c r edits. Marquis Partners proposed to develop a 100 - unit

affordable, multifamily housing development in Broward County.

33 . Flo rida Housing determined that the Marquis Partners

A pplicatio n was eligible for an award of housing c redits and

preliminarily sel ected the Marquis Partners A pplication for an

award of housing c redits. The Marquis Partners A pplication was

selected as the second Broward County applic ation under

subpart (c) of the funding s election p rocess.

34 . As another eligibility item, RFA 2017 - 113 required

that applicants identify their ÐPrincipalsÑ by completing and

submitting with their appli cations a Principal Disclosure F orm

as follows:

Eligibility Requirements t o meet the

submission requirements, the Applicant must

upload the Principals of the Applicant and

Develope r(s) Disclosure Form (Form Rev. 08 -

16) (ÐPrincipals Disclosure FormÑ) with the

Application and Development Cost Pro Forma,

as outlined in Section Three above.

The Principals Disclosure Form must identify

the Principals of t he Applicant and

Developer(s) as of the Application Deadline

and should include, for each applicable

organizational structure, only the types of

Principa ls required by Subsection 67 -

48.002(93), F.A.C. A Principals Disclosure

Form should not include, for a ny

organizational structure, any type of entity

that is not specifically included in the

Rule definition of Principals.

35 . RFA 2017 - 113 also enabled an applicant to obtain

ÐpointsÑ by part icipating in Florida HousingÓs advance review

p rocess as follow s:

Point Item: Applicants will receive 5

points if the uploaded Principal Disclosure

Form was stamped ÐApprovedÑ during the

Advance Review Process provided (a) it is

still correct as of Application Deadline,

and (b) it was approved for the type of

fundin g being requested (i.e., Housing

Credits or Non - Housing Credits). The

Advance Review Process for Disclosure of

Applicant and Developer Principals is

available on the CorporationÓs Website

http://www.floridahousing.org/programs/

developers - m ultifamilyprogr ams/competitive/

2017/2017 - 113 (also accessible by clicking

here) and also includes samples which may

assist the Applicant in completing the

required Principals Disclosure Form.

Note: It is the sole responsibility of the

Applicant to review the Advance Review

Process procedures and to submit any

Principals Disclosure Form for review in a

timely manner in order to meet the

Application Deadline.

36. Marquis Partners participated in the advance review

p rocess, and on or about December 21, 2017 , Florida H ousing

approved the P rincipal Disclosure F orm submitted by Marquis

Partners for an award of housing c redits.

37. The Principal Disclosure F orm approved by Florida

Housing during the advance review p rocess did not properly

identify Marquis PartnersÓ Princi pal s for the corresponding

types of entities as provided in Florida Administrative Code

R ule 67 - 48.002(93) . Rule 67 - 48.002(93) defined the term

Ð Principal Ñ based on the applicant or d eveloper entity, and then

by the organizational structure of those speci fic entities.

38. The term Ð PrincipalÑ was capitalized in the RFA. The

RFA provided that unless otherwise defined , capitalized terms

within the RFA have the meaning as set forth in Exhibit B, in

c hapters 67 - 48 and 67 - 60, or in applicable federal regul ations.

39 . Within the d isclosure form, the applicant was required

to disclose the type of Principal , name of the Principal and

organization structure of that Principal at each disclosure

level. There wer e three disclosure levels provided on the

disclos ure form. The Principal D isclosure F orm submitted with

the Marquis Partners Application included errors at the second

Principal disclosure level.

40 . The second Principal disclosure level required Marquis

Partners to provide the type of Principal being a ssociated with

the corresponding first - level Principal entity and the name of

the Principal . Marquis Pa rtners failed to disclose one

Principal at the second level as further outlined below.

41 . As of the a pplication d eadline and at al l times

pertinent to this case, amongst other partners, Cornerstone

Marquis, LLC (ÐCornerstone MarquisÑ) , was identified as a

g eneral partner of Marquis Partners.

42 . As of the a pplication d eadline and at all times

pertinent to this case, the members of Cornerstone Marquis w ere

as follows: a ) Jorge Lopez; b) Awilda Lopez; c) Mara Mades; and

d) M3 Acquisitions, LLC. The members were properly disclosed at

the second Principal disclosure level.

43 . As of the a pplication d eadline and at all times

pertinent to this case, the m anagers of Cornerstone Marquis,

LLC, were as follows: a) Jorge Lopez; b) Mara Mades; and

c) Leon Wolfe.

44. At the second Principal disclosure level , Awilda Lopez

and M3 Acquisitions were incorrectly identified as managers of

Cornerstone Marquis, LLC , when they were in fact only members .

More importantly, Leon Wolfe was not identified at the second

Principal disclosure level as a man ager of Cornerstone Marquis .

45. Since Leon Wolfe was a manager of Cornerstone Marquis ,

he should have been identified a s a manager of Cornerstone

Marquis, LLC , at the second Principal disclosure level .

46 . Florida HousingÓs approval of Marquis PartnersÓ

Principal Disclosure F orm during the advance review p rocess did

not verify the accuracy of the information contained wi thin the

Principal Disclosure F orm.

47 . The information in the Principal D isclosure F orm was

incorrect at the time it was submitted for approval and remained

incorrect when it was submitted with the Marquis Partner s Ó

A pplication.

48 . Florida Housing eva luates omissions from the Principal

D isclosur e F orm based on whether the inclusion of the incorrect

information negatively impacts other applicants.

49 . M arisa Button, director of multi family allocation,

testified that the misidentification of Awilda Lo pez and

M3 Acquisitions, LLC, as managers of Cornerstone Marquis is a

minor irregularity. On the other hand, Florida Housing

considered the failure to properly disclose Leon Wolfe as a

manager of Cornerstone Marquis to be a material deviation.

50. Leon W olfe was disclosed on the Principal Disclosure

F orm at the third disclosure level as a member and man ager of

M3 Acquisitions, LLC. However, Mr. Wolfe was not properly

disclosed at the second level of disclosure as required. The

RFA required that applican ts disclose Principal s in the

Principal Disclosure F orm for each type of entity.

51 . Ms. Button testified that the purpo se of proper

disclosure of all Principal s of the entitie s that are associated

with the applicant is so that Florida Housing is aware of who it

is doing business with. Florida Housing screens the Principal s

to determine whether a Principal has been deficient to the

c orporation on prior affordable housing deals, identify bad

actors, or to limit the amount of funding received by any

relat ed applicants. Flor ida Housing uses the disclosed

Principal s to determine if applications are related.

52 . Flo rida Housing made the advance r eview p rocess

available to assist applicants with completing the Principal

Disclosure F orm. During the process, there were sample charts

provided to assist the applicant s with completing the form.

Marquis Partners participated in the review process and Florida

Housing approved the form.

53 . The greater weight of the evidence demonstrates that

Marquis Partner s did not properly disclos e Mr. Wolfe on its

Principal Disclosure F orm and , as a result , it should not have

been awarded the additional five points for the advance review

approval . Moreover, the omission of Mr. Wolfe as a manager of

Cornerstone Marquis is a material deviation that cannot be

waived. Thus, the evidence shows that Marquis Partners is not

eligible for funding.

CONCLUSIONS OF LAW

54 . The Division has jurisdiction over the parties and

subjec t matter of this proceeding. § 120.57(1) and (3),

F la. Stat.

Standing

55 . Prior to addressing the merits of the case, the

question of HTG Village Ós standing to bring this action must be

decided.

56 . Standing is a jurisdictional threshold issue in a

chapter 120 proceeding that is not dependent on the merits of a

partyÓs case. See , e.g. , Abbott Labs. v. Mylan Pharmaceuticals ,

Inc. , 15 So. 3d 642, 651 n.2 (Fla. 1st DCA 2009); Palm Beach

Cty. Envtl. Coal. v. Fla. DepÓt of Envtl. Prot. , 14 So. 3d 1076,

1078 (Fla. 4th DCA 2009) (explaining the question of whether a

party has standing is different from the question of whether a

party will be able to prove its case). Petitioner mus t

establish standing before the Division has jurisdiction to

decide the merits of a case. See, e.g. , § 120.569(1), Fla.

Stat. ( 2016); Westinghouse Elec. Corp. v. Jacksonville Transp.

Auth. , 491 So. 2d 1238, 1240 Î 41 (Fla. 1st DCA 1986). ÐTo have

standing to challenge the proposed award of a public contract,

an applicant must have a substantial interest to be determined

in the case .Ñ Prest on Carroll Co. v. Fla. Keys Aqueduct Auth. ,

400 So. 2d 524, 525 (Fla. 3d DCA 1981); see § 120.57(3)(b), Fla.

Stat. (2016) (Petitioner, as the third lowest bidder, was unable

to demonstrate that it was substantially affected; it ,

therefore , lacked standing to protest the award). The second

lowest bid establishes that substantial interest because if the

lowest bid is disqualified, the second lowest bid may receive

the award. Madison Highlands, LLC v. Fla. Hous. Fin. Corp. , 220

So. 3d 467, 473 (Fla . 5th DCA 2017) .

57 . In this case, HTG Village was ranked next in line

after Marquis Partners, a winning applicant. If Marquis

Partners is ineligible , or remains eligible but loses five

points, then according to the terms of the competitiv e

solicitatio n, HTG Village would be selected for funding.

58 . Marquis Partners, however, asserts that while HTG

Village met the site control req uirements in the RFA as of the

a pplic ation d eadline, HTG Village lacks standing because it

terminated its site control co ntract around January 17, 2018.

59 . However, the determination of whether the applicant is

ready to proceed with the development is first at the time of

the application deadline (through submission of the completed

application) and then at the time of un derwriting.

60 . Under the traditional standing test in Agrico Chemical

Co. v. Department of Environmental Regulation , 406 So. 2d 478,

479 (Fla . 2d DCA 1981), HTG Village i s the next eligible

applicant in lin e for funding and , thus , has a substantial

int erest that the bid protest procedures are intended to

protect.

61 . Based on the foregoing, HTG Village has standing to

contest the prelim inary award to Marquis Partners.

62 . Marquis Partners has standing to participate in this

proceeding as the intend ed recip ient of funding pursuant to

the RFA .

Bid Protest

63 . This is a competitive procurement protest proceeding

and as such is governed by section 120.57(3)(f), which provides

as follows , in pertinent part :

Unless otherwise provided by statute, the

burd en of proof shall rest with the party

protesting the proposed agency action. In a

competitive - procurement protest, other than

a rejection of all bids, proposals, or

replies, the administrative law judge shall

conduct a de novo proceeding to determine

whet her the agencyÓs proposed action is

contrary to the agencyÓs governing statutes,

the agencyÓs rules or policies, or the

solicitation specifications. The standard

of proof for such proceedings shall be

whether the proposed agency action was

clearly erroneo us, contrary to competition,

arbitrary, or capricious.

64 . Although competitive solicitation protest proceedings

are described in section 120.57(3)(f) as de novo, courts

acknowledge that a different kind of de novo is contemplated

than for other substan tial interest proceedings under section

120.57. Hearings under section 120.57(3)(f) have been described

as a Ðform of intra - agency review.Ñ The judge may receive

evidence, as with any formal hearing under section 120.57(1),

but the object of the proceedi ng is to evaluate the action taken

by the agency. State Contracting and EngÓg Corp. v. DepÓt of

Transp. , 709 So. 2d 607, 609 (Fla. 1st DCA 1998). Thus,

competitive protest proceedings such as this one remain de novo

in the sense that they are not confine d to record review of the

information before the agency. Instead, a new evidentiary

record is developed in the administrative proceeding for the

purpose of evaluating the proposed action taken by the agency.

See , e.g. , Asphalt Pavers, Inc. v. DepÓt of Tr ansp. , 602 So. 2d

558 (Fla. 1st DCA 1992); Intercontinental Props., Inc. v. DepÓt

of HRS , 606 So. 2d 380 (Fla. 3d DCA 1992); cf. J.D. v. DepÓt of

Child. & Fams. , 114 So. 3d 1127 (Fla. 1st DCA 2013)(describing

administrative hearings to review agency action on applications

for exemption from disqualification as akin to bid protest

proceedings under section 120.57(3)).

65 . New evidence cannot be offered to amend or supplement

a partyÓs response/application. See § 120.57(3)(f), Fla. Stat.

However, new evid ence may be offered in a competitive protest

proceeding to prove that there was an error in another partyÓs

application. Intercontinental Props. , 606 So. 2d at 386.

Furthermore, a related reason for new evidence is to prove that

an error in a partyÓs appl ication is a minor irregularity that

should be waived. Id .

66 . Pursuant to section 120.57(3), the burden of proof

rests with Petitioner as the party challenging and opposing

RespondentÓs proposed agency action finding the Marquis Partners

A pplication e ligible. See State Contracting and EngÓg Corp. ,

709 So. 2d at 609. Petitioner must prove by a preponderance of

the evidence that RespondentÓs proposed scoring actions are

arbitrary, capricious, or beyond the scope of RespondentÓs

discretion as a state ag ency. DepÓt of Transp. v. Groves -

Watkins Constructors , 530 So. 2d 912, 9 13 - 914 (Fla. 1988); DepÓt

of Transp. v . J.W.C. Co., Inc. , 396 So. 2d 778, 787 (Fla. 1st

DCA 1981). See also § 120.57(1)(j), Fla. Stat.

67 . After determining the relevant facts, th e role of the

Division is to evaluate RespondentÓs intended action in light of

the facts. RespondentÓs determination must remain undisturbed

unless clearly erroneous, contrary to competition, arbitrary, or

capricious. P roposed action will be upheld unles s it is

contrary to governing statutes, the agencyÓs rules, or the RFA

specifications.

68 . Agency action will be found to be clearly erroneous if

it is without rational support. The court in Colbert v.

Department of Health , 890 So. 2d 1165, 1166 (Fla. 1st DCA 2004),

defined the clearly erroneous standard to mean that Ðthe

interpretation will be upheld if the agencyÓs construction falls

within the permissible range of interpretations. If, however,

the agencyÓs interpretation conflicts with the plain and

ordinary intent of the law, judicial deference need not be given

to it.Ñ (citations omitted).

69 . A capricious action has been defined as an action,

Ðwhich is without thought or reason or irrationally.Ñ Agrico

Chem. v. State DepÓt of Envtl. Reg. , 365 So. 2d 759, 763 (Fla.

1st DCA 1978). ÐAn arbitrary decision is one that is not

supported by facts or logic, or is despotic.Ñ Id . The inquiry

to be made in determining whether an agency has acted in an

arbitrary or capricious manner involves considerati on of

Ðwhether the agency: (1) has considered all relevant factors;

(2) has given actual, good faith consideration to those factors;

and (3) has used reason rather than whim to progress from

consideration of these factors to its final decision.Ñ Adam

Smi th Enter. v. DepÓt of Envtl. Reg. , 553 So. 2d 1260, 1273

(Fla. 1st DCA 1989). The standard has also been formulated by

the court in Dravo Basic Materials Company v. Department of

Transportation , 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992), as

follows: ÐIf an administrative decision is justifiable under

any analysis that a reasonable person would use to reach a

decision of similar importance, it would seem that the decision

is neither arbitrary nor capricious.Ñ

70 . An agency action is Ðcontrary to compet itionÑ if it

unreasonably interferes with the purposes of com petitive

procurement, which has been described in Wester v. Belote ,

138 So. 721, 723 - 724 (Fla. 1931), as protecting the public

against collusive contracts and securing fair competition upon

equal terms to all bidders.

71 . The Ðcontrary to competitionÑ standard, unique to bid

protests, is a test that applies to agency actions that do not

turn on the interpretation of a statute or rule, do not involve

the exercise of discretion, and do not depend upon (or amount

to) a determination of ultimate fact. This standard is not

defined in statute or rule; however, the legislative intent

found in section 287.001, Florida Statutes, is instructive.

72 . Actions that are contrary to competition include tho se

which: (a) create the appearance of an opportunity for

favoritism; (b) erode public confidence that contracts are

awarded equitably and economically; (c) cause the procurement

process to be genuinely unfair or unreasonably exclusive; or

(d) are unethic al, dishonest, illegal, or fraudulent. Sunshine

Towing at Broward, Inc. v. DepÓt of Transp. , Case No. 10 - 0134BID

(Fla. DOAH Apr. 6, 2010; Fla. DOT May 7, 2010). See R.N.

Expertise, Inc. v. Miami - Dade Cnty. Sch. Bd. , Case

No. 01 - 2663BID (Fla. DOAH Feb. 4, 2002; Sch. Bd. of Miami - Dade

Cnty . Mar. 14, 2002); E - Builder v. Miami - Dade Cnty. Sch. Bd. ,

Case No. 03 - 1581BID (Fla. DOAH Oct. 10, 2003; Sch. Bd. of Miami -

Dade Cnty. Nov. 26, 2003).

73 . The RFA requires a complete application which consists

of t he ÐApplication with Development Cost Pro Forma found at

Exhibit A of the RFA, the Applicant Certification and

Acknowledgment Form and other applicable Verification Forms

found at Exhibit B of the RFA, as well as all other applicable

documentationÑ to be p rovided by the applicant, as outlined in

section four of the RFA.

74 . Additionally, rule 67 - 60.006(1) pr ovides that Ðthe

failure of an a pplicant to supply required information in

connection with any c ompetitive s olicitation pursuant to this

rule chapter shall be grounds for a determination of non -

responsiveness.Ñ This language is consistent with section

287.012(26) , which indicates a responsive bid must Ðconform in

all material respects to the solicitation.Ñ The burden is ,

thus , on the applicant to pro vide a complete and responsive

response to the RFA.

75 . Petitioner has challenged the eligibility of Marquis

Partners on the basis that it did not disclose Mr. Wolfe at the

second disclosure level. Florida Housing asserted at hearing

that it changed it s position and determined that Marquis

Partners was not eligible for funding for that reason .

76 . In this proceeding, the undersigned continues to

review the correctnes s of RespondentÓs application. Ms. Button

testified that there were several reasons why the incorrect

disclosure would not be considered a minor irregularity that can

be waived. For instance, it would not be clear on the face of

the application, specifically the Principal Disclosure F orm ,

that Mr. Wolfe was a manager for Cornerstone Mar quis. Moreover,

the RFA r equired that the Principal Disclosure F orm should

include, for each applicable organizational structure, the types

of Principal s required by rule 67 - 48.002(93 ).

77. The evidence establishes that all Principal s wer e not

disclosed by Marquis Partners in the correct manner as required

by the RFA. As such, the evidence demonstrates that Marquis

Partners Ó failure to disclose Mr. Wolfe as the manager for

Cornerstone Marquis rendered it ineligible for funding under the

RFA. Thus, the Marquis Partners A pplication is ineligible and

not entitled to funding or for five scoring points .

78. Here, Petitioner has met its burden and demonstrated

by a preponderance of evidence that RespondentÓs initial

decision to find the Marquis Partners A pplication eligible was

erroneous and not consistent with the requirements of the RFA.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a final order be issued finding that

Florida HousingÓs in i tial sco ring decision regarding the Marquis

Partners A pplication was erroneous, concluding that Marquis

Partners was ineligible for funding and not eligible for five

additional points, and awarding funding to HTG Village.

DON E AND ENTERED this 27th day of Jul y , 2018 , in

Tallahassee, Leon County, Florida.

S

YOLONDA Y. GREEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.st ate.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 27th day of July , 2018 .

COPIES FURNISHED :

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301 - 1329

(eServed)

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

Suite 304

1725 Capital Circle Northeast

Tallahassee, Florida 32308

(eServed)

Michael J. Glazer, Esquire

Anthony L. Bajoczky, Jr., Esquire

Ausley & McMullen, P.A.

123 South Calhoun Street

Post Office Box 391

Tallahassee, Florida 32302

(eServed)

Betty Zachem, Esquire

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301

(eServed)

Corporation Clerk

Florida Housing Finance Cor poration

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301 - 1329

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.