06-002032 Pinnacle Plaza, Ltd. vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Friday, October 27, 2006.

Summary: Respondent properly refused to award tie-breaker points for proximity to a grocery store when part of the store was closed for repairs as of the deadline for filing applications, and the remaining store space was less than the minimum area required.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PINNACLE PLAZA, LTD., )

)

Petitioner, )

)

vs. ) Case No. 06 - 2032

)

FLORIDA HOUSING FINANCE )

CORPORATION, )

)

Respondent. )

______________________________)

RECOMMENDED ORDE R

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Tallahassee, Florida, on September 29, 2006.

APPEARANCES

For Petitioner: Stephen T. Maher

Gary Cohen

Shutts & Bowen LLP

201 South Biscayne Boulevard, Suite 1500

Miami, Florida 33131

For Respondent: Wellington Meffert, II, General Counsel

Hugh R. Brown, Deputy General Counsel

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1329

STATEMENT OF THE ISSUE

The issue is whether Respondent improperly withheld points ,

in scoring Petitioner's application, for proximity to a grocery

store, so as to improperly deny Petitioner an opportunity to

enter the credit underwriting phase of the process by which

Respondent allocated federal income tax credits for low - income

housin g projects in the 2006 funding cycle. (Pursuant to

Florida Administrative Code Rule 67 - 48.005(4), Respondent would

send Petitioner's proposal to credit underwriting for the 2007

funding cycle, if Petitioner proves that Respondent improperly

scored Petitio ner's application in the 2006 funding cycle, which

is now closed by operation of federal law.)

PRELIMINARY STATEMENT

By Petition Requesting Informal Hearing and Grant of the

Relief Requested filed May 26, 2006, Petitioner challenged the

decision of Resp ondent not to award any points for the tie -

breaker item concerning proximity to a grocery store. By letter

dated June 12, 2006, Respondent transmitted the case to the

Division of Administrative Hearings on the ground that the

petition raises disputed issu es of material fact.

At the hearing, each party called two witnesses. The

parties offered nine joint exhibits: Joint Exhibits 1 - 9. All

exhibits were admitted.

The court reporter filed the transcript on October 16,

2006. The parties filed their Propos ed Recommended Orders on

October 26, 2006.

FINDINGS OF FACT

1. This case involves the 2006 funding cycle of

Respondent's Housing Credit program. In this program,

Respondent allocates nine percent low - income housing, federal

income tax credits to various dev elopers and investors based on

their proposals to construct qualified affordable rental housing

units in Florida. Because the demand for federal income tax

credits allocated to Florida exceeds the supply of such credits,

Respondent has adopted an elaborat e scoring program,

supplemented with tie - breaker points and lottery numbers, to

evaluate competitively the various proposals.

2. On February 1, 2006, Petitioner timely filed its

application for an allocation of federal income tax credits

under the Housing C redit program (Application). The Application

seeks an allocation of federal income tax credits in the Large

County set - aside for the construction of a 132 - unit apartment

complex in Miami.

3. Sufficient applications routinely receive maximum

scores that Res pondent has had to adopt tie - breaking criteria to

differentiate between those proposals that may enter credit

underwriting and those proposals that may not, due to the lack

of available federal income tax credits. These criteria involve

the proximity of t he proposed project to certain services or

facilities, such as public transit, medical clinics, and grocery

stores. Sufficient applications routinely receive all of the

tie - breaker points that Respondent has had to assign lottery

numbers to further differ entiate between those proposals that

may enter credit underwriting and those proposals that may not.

4. The sole issue in this case is the proximity of the

project proposed by Petitioner to a grocery store. Petitioner's

proposal received the maximum score, exclusive of the tie -

breaker score. Petitioner's proposal received a lottery number

that, if its proposal earned the grocery - store tie breaker

points, it would enter credit underwriting.

5. Page 14 of the application instructions defines a

"grocery store" as:

a retail establishment, open to the public,

. . . consisting of 4,500 square feet or

more of air conditioned space, which as its

major retail function sells groceries,

including foodstuffs, fresh and packaged

meats, produce and dairy products, which ar e

intended for consumption off - premises, and

household supplies . . ..

6. Page 15 of the application instructions requires that

the grocery store "must be in existence and available for use by

the general public as of the [a]pplication [d]eadline." The

appl ication deadline for the 2006 funding cycle was February 1,

2006, so the characteristics of the grocery store identified by

Petitioner are fixed as of February 1.

7. By letter dated March 2, 2006, Respondent informed

Petitioner that it was withholding 1.25 po ints from its tie -

breaker score due to Petitioner's failure to provide the

required information as to the proximity of its proposed project

to a grocery store.

8. Pursuant to its procedures, Respondent gave Petitioner

an opportunity to submit "cure" documen tation to demonstrate

Petitioner's entitlement to the 1.25 points for proximity to a

grocery store. The submittal of "cure" documentation may

address issues raised in Respondent's preliminary review of an

application but does not extend the date on which the grocery

store must be in existence. On April 10, 2006, Petitioner timely

filed "cure" documentation identifying the subject grocery store

as the Mas Unidos Market at 832 Southeast 8th Street.

Accompanying materials indicated that the air - conditioned s pace

was 4547 square feet.

9. By letter dated May 4, 2006, Respondent advised

Petitioner that it would receive no points for the proximity of

the proposed project to a grocery store because the grocery

store identified by Petitioner had less than 4500 squar e feet of

air - conditioned space available to the public. In its final

scoring summary, Respondent found that the subject market had

less than 4500 square feet of air - conditioned space available to

the public.

10. There is no issue as to the proximity of the subject

grocery store to the proposed project. The question is whether

the subject grocery store meets the definition of a grocery

store, as of the application deadline.

11. A sketch that Petitioner submitted to Respondent

assists in the analysis. The ske tch depicts a 3891 square foot

area (Primary Space), which meets all criteria. The Primary

Space contains groceries and was air - conditioned and available

to the public as of the application deadline.

12. A 656 - square - foot area (Additional Space) is

separat ed from the Primary Space by a storage area. If the

Additional Space counts toward the area of the grocery store,

the subject grocery store would meet Respondent's definition

because the Primary Space and Additional Space total 4547 square

feet.

13. The owne r of the subject grocery store operates a

single business from the Primary Space and Additional Space. In

doing so, he employs a single set of employees, maintains a

single set of financial books, and operates under a single

occupational license.

14. On the other hand, the Additional Space is not

accessible from the Primary Space, due to the storage area that

divides the two areas. The owner of the subject grocery store

intends to convert the storage area into a cafeteria, so as to

permit interior access bet ween the two spaces, but no such

renovation had taken place as of the application deadline. At

present, a customer seeking to purchase goods from both spaces

must pay for his goods at the one space, leave through the front

door, walk a short distance alon g a sidewalk immediately in

front of the two spaces (which occupy a small strip mall), enter

the front door of the other space, and pay for his purchases in

the other space. Also, the Primary Space contains typical

grocery items, but the Additional Space contains items more

typically associated with hardware stores. However, these

factors, according to an employee of Respondent who testified at

the hearing, do not preclude a determination that the Additional

Space is part of a grocery store.

15. But the prob lem with the Additional Space is that it

was not available to the public as of the application deadline.

The owner of the subject grocery store commenced retail

operations in the Additional Space in the fall of 2005, which

was prior to the application dea dline. However, due to

hurricane damage from the 2005 storms, the owner closed the

Additional Space for repairs in late 2005 through mid - to late -

February 2006, which was after the application deadline. The

Additional Space was thus in existence and avai lable to the

public as of the application deadline, and Respondent properly

excluded the area of the Additional Space in determining whether

the store satisfied, as of the application deadline, the

criteria of 4500 square feet available to the public.

16. Pet itioner contends that the temporary loss of the

Additional Space, due to ongoing repairs, should not cause its

exclusion from the calculation. The problem with this argument

is that it is impossible for Respondent to determine with

reasonable certainty wh ether the owner will complete repairs and

reopen the space as a retail grocery operation. The requirement

that the space be available to the public on a specific date

provides a clear test that is easily administered. The modified

requirement for which P etitioner contends creates uncertainty

and invites contention as to whether certain space was under

repair, the extent of repairs left to complete as of the

application deadline, and similar issues that promise prolific

litigation, not efficient administra tion, of the proximity -

scoring item.

17. Respondent contends that, if the Additional Space

were included, the subject grocery store fails to satisfy the

area criterion because the office space behind the Primary Space

should not have been included as availa ble to the public. The

evidence does not support this contention, although the

treatment of the Additional Space in the Recommended Order moots

this issue.

18. Directly accessible from the Primary Space, the

office space, which totals 107.69 square feet, is separated from

the Primary Space by a locked gate. The owner conducts business

with customers within the office space, but he must determine,

for each customer, whether he wishes to remotely unlock the gate

and allow the customer to enter the office space for such

purposes as cashing a check. In most cases, the owner makes

this determination by viewing the customer through a camera

mounted at the gate. If in doubt, the owner leaves the office

and meets the customer before escorting the customer to the

of fice, where sums of cash are kept. The security is

necessitated by the location of the subject grocery store in a

neighborhood afflicted by crime. The presence of the locked

gate has not caused Respondent to contend that the adjacent

customer bathroom, w hich is also behind the gate, should not be

counted as part of the grocery store, nor should it have this

effect as to the office space behind the gate.

19. Petitioner contends that the hallway and bathroom

behind the Additional Space should have been include d in the

area of the subject grocery store. If these areas had been

available to the public on the application deadline, this

contention would be correct, but the hallway and bathroom were

also unavailable to the public on this date. Even if they were

in cluded, the total area of the subject grocery store would be

only 4085.99 square feet, consisting of 3891 square feet of

Primary Space, 107.69 square feet of office space behind the

Primary Space, and 87.3 square feet of hallway and bathroom

behind the Add itional Space.

20. Petitioner has thus failed to prove that it is

entitled to any tie - breaker points for proximity to a grocery

store.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdiction over the subject matter. §§ 120.569 and 120.57 (1),

Fla. Stat. (2006) and Fla Admin. Code R 67 - 48.005(2).

22. Section 420.5093(3), Florida Statutes, authorizes

Respondent to administer the Housing Credit program and allocate

federal income tax credits to the most suitable applications.

23. Petitioner bears the burden of proving the material

allegations concerning its application. Department of

Transportation v. J. W. C. Company, Inc. , 396 So. 2d 778 (Fla.

1st DCA 1981).

24. Petitioner has failed to prove its entitlement to any

tie - breaker points for proximity of its proposed project to a

grocery store.

RECOMMENDATION

It is

RECOMMENDED that the Florida Housing Finance Corporation

enter a final order dismissing the Petition Requesting Informal

Hearing and Grant of the Relief Requested.

DONE AND ENTERED this 27th day of October, 2006, in

Tallahassee, Leon County, Florida.

S

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 96 75 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 27th day of October, 2006.

COPIES FURNISHED:

Hugh R. Brown, Deputy General Counsel

Wellington Meffert, II, General Counsel

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1329

Sherr y Green, Corporation Clerk

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1329

Stephen T. Maher

Gary Cohen

Shutts & Bowen LLP

201 South Biscayne Boulevard, Suite 1500

Miami, Florida 33131

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions

to this recommended order must be filed with the agency that

will issue the final order in this case .