09-004682BID Elmwood Terrace Limited Partnership vs. Florida Housing Finance Corporation
 Status: Closed
Recommended Order on Thursday, November 12, 2009.

View Dockets  
Summary: Specifications of the RFP were contrary to the agency's governing statutes and rules.






15Petitioner, )


18and )




27Intervenor, )


30vs. ) Case No. 09-4682BID





43Respondent, )


46and )




55Intervenor. )



60Pursuant to notice, a final hearing was held in this case

71on September 23 through 25, 2009, in Tallahassee, Florida,

80before Susan B. Harrell, a designated Administrative Law Judge

89of the Division of Administrative Hearings.


96For Petitioner: J. Stephen Menton, Esquire

102Rutledge, Ecenia, & Purnell, P.A.

107119 South Monroe Street, Suite 202

113Post Office Box 551

117Tallahassee, Florida 32302

120For Intervenor RST Fruitland Housing, L.P.:

126Michael P. Donaldson, Esquire

130Carlton Fields, P.A.

133215 South Monroe Street, Suite 500

139Post Office Drawer 190

143Tallahassee, Florida 32302-0190

146For Respondent: Wellington Meffert, Esquire

151Florida Housing Finance Corporation

155227 North Bronough Street, Suite 5000

161Tallahassee, Florida 32301-1329

164For Intervenor Brownsville Village II, Ltd.:

170Donna E. Blanton, Esquire

174Radey, Thomas, Yon & Clark, P.A.

180301 South Bronough Street, Suite 200

186Tallahassee, Florida 32301


193The issue in this case is whether the specifications,

202terms, and conditions of the Request for Proposals 2009-04

211issued by Respondent are contrary to Respondent’s governing

219statutes, rules, or policies.


225On July 31, 2009, Respondent, Florida Housing Finance

233Corporation (Florida Housing), issued Request for Proposals

2402009-04 (the RFP), which solicited proposals from developers

248seeking funding for affordable housing projects in Florida. On

257August 5, 2009, Petitioner, Elmwood Terrace Limited Partnership

265(Elmwood), timely submitted a notice of intent to protest

274certain specifications in the RFP. Elmwood timely filed a

283Formal Written Protest and Petition for Administrative Hearing

291(the Petition) on August 17, 2009.

297The Petition was forwarded to the Division of

305Administrative Hearings on August 26, 2009. RST Fruitland

313Housing, L.P. (Fruitland), filed a Petition for Leave to

322Intervene on September 9, 2009. Brownsville Village II, Ltd.

331(Brownsville), filed a Petition for Leave to Intervene on

340September 10, 2009. By Order dated September 17, 2009, the

350petitions to intervene were granted.

355At the commencement of the final hearing, Elmwood submitted

364a Motion to Amend Petition. The motion was orally granted at

375the final hearing. The parties submitted an executed Joint Pre-

385hearing Stipulation at the commencement of the final hearing.

394The Joint Pre-hearing Stipulation contained admitted facts on

402pages 8 through 19. To the extent relevant, those admitted

412facts have been incorporated into this Recommended Order.

420At the final hearing, Elmwood called the following

428witnesses: Donald Paxton, Kevin Tatreau, and Rob Vogt.

436Fruitland called Michael Hartman as its witness. Florida

444Housing called Steve Auger as its witness and submitted the

454deposition of Laura Cox. Brownsville did not present any

463witnesses at the final hearing, but submitted the deposition of

473Lloyd Boggio.

475Joint Exhibits 1 through 35 were admitted in evidence.

484Elmwood’s Exhibits 1, 2, 3, 6, and 7 were admitted in evidence.

496Fruitland’s Exhibits 1 through 4 were admitted in evidence.

505Florida Housing’s and Brownsville’s Joint Exhibits 1 through 8

514were admitted in evidence.

518The four-volume Transcript was filed on October 12, 2009.

527On October 21, 2009, Elmwood and Fruitland filed an Unopposed

537Motion for Leave to Exceed Page Limitation. The motion was

547granted by Order dated October 21, 2009. The parties timely

557filed their proposed recommended orders on October 22, 2006.

566The proposed recommended orders have been given consideration in

575the preparation of this Recommended Order.


5841. Elmwood is a Florida limited partnership and is engaged

594in the development of affordable housing in Florida.

6022. RST is a Florida limited partnership authorized to do

612business in Florida and is in the business of providing

622affordable housing.

6243. Florida Housing is a public corporation created by

633Section 420.504, Florida Statutes (2009), 1 to administer the

642governmental function of financing or refinancing of affordable

650housing and related facilities in Florida. Florida Housing’s

658statutory authority and mandates are contained in Chapter 420,

667Part IV, Florida Statutes. Florida Housing is governed by a

677Board of Directors (Board), consisting of nine individuals

685appointed by the Governor and confirmed by the Senate.

6944. On July 31, 2009, Florida Housing issued the RFP,

704setting forth criteria and qualifications for developers to seek

713funding for affordable housing projects from funds that Florida

722has received through the American Recovery and Reinvestment Act

731of 2009, PL 111-5 (ARRA). ARRA was enacted in 2009 by Congress

743as part of the federal economic stimulus efforts and was signed

754into law on February 17, 2009.

7605. Elmwood and RST received notice of the RFP through

770e-mail notification on July 31, 2009. The RFP required

779applicants to submit proposals to Florida Housing no later than

7892:00 p.m. on August 14, 2009. Elmwood and RST are “applicants”

800as defined in the RFP. Elmwood and RST submitted separate

810applications, intending to seek financing for their affordable

818housing projects by applying for funding from the sources that

828are proposed to be allocated through the RFP.

8366. On August 5, 2009, Elmwood timely submitted notice of

846its intent to protest the RFP, and, on August 17, 2009, timely

858filed its Formal Written Protest and Petition for Administrative

867Hearing, in accordance with the provisions of Subsection

875120.57(3)(b), Florida Statutes, and Florida Administrative Code

882Rule 28-110.004. As an interested developer, who intended to,

891and did, seek funding from the sources being allocated through

901the RFP, Elmwood’s substantial interests are affected by the

910terms of the RFP.

9147. On August 18, 2009, Florida Housing issued its RFP

9242009-04 Statement of Necessity to Continue RFP Process After Bid

934Protest is Filed (Statement of Necessity), pursuant to

942Subsection 120.57(3)(c), Florida Statutes. The Statement of

949Necessity was not challenged. On August 20, 2009, Florida

958Housing proceeded with making determinations of eligibility for

966funding under the RFP.

9708. Both RST and Brownsville were selected for funding and

980invited into credit underwriting as provided in the RFP.

989Elmwood was not selected for funding.

9959. On September 9, 2009, RST filed its Petition for Leave

1006to Intervene on behalf of Elmwood to challenge the minimum

1016occupancy standard of 92% required in the RFP. On September 10,

10272009, Brownsville filed its Petition for Leave to Intervene on

1037behalf of Florida Housing.

104110. Florida Housing administers several programs aimed at

1049assisting developers to build affordable multi-family rental

1056housing in an attempt to protect financially marginalized

1064citizens in Florida from excessive housing costs. The programs

1073through which Florida Housing allocates resources to fund such

1082affordable housing in Florida include: a federally funded

1090multi-family mortgage revenue bond program (MMRB), established

1097under Section 420.509, et. seq. , Florida Statutes; the State

1106Apartment Incentive Loan Program (SAIL), created pursuant to

1114Section 420.5087, et seq. , Florida Statutes; and the federal Low

1124Income Housing Tax Credit Program (the Tax Credit Program),

1133established in Florida pursuant to Section 420.5099, Florida


114211. These funding sources are allocated by Florida Housing

1151to finance the construction or substantial rehabilitation of

1159affordable housing. A portion of the units constructed based on

1169funding from these programs must be set aside for residents

1179earning a certain percentage of area median income (AMI).

1188Generally, the units are targeted to tenants earning 60% of AMI

1199or below. The primary program at issue in this proceeding is

1210the Tax Credit Program.

121412. The Tax Credit Program was created by the Federal

1224Income Tax Reconciliation Act of 1986, as a means to induce the

1236private sector to construct and manage affordable housing

1244projects. The Tax Credit Program is governed by the Internal

1254Revenue Code, 26 U.S.C. Section 42.

126013. Low income housing tax credits (Tax Credits) come in

1270two varieties: competitively awarded “9%” Tax Credits and non-

1279competitively awarded “4%” Tax Credits. For the 9% Tax Credits,

1289the federal government annually allocates a specific amount of

1298Tax Credits to each state using a population-based formula.

130714. Tax Credits are a dollar-for-dollar offset to federal

1316income tax liability. Developers awarded the Tax Credits get

1325the credit amount every year for ten years. The developer will

1336often sell the future stream of Tax Credits to a syndicator,

1347who, in turn, sells them to investors seeking to shelter income

1358from federal income taxes. For example, a developer who

1367receives a $1,000,000 award of Tax Credits is entitled to that

1380amount of tax credit paid each year for ten years, for a face

1393value of $10,000,000. The developer sells the Tax Credits to a

1406syndicator or investor who has tax liability sufficient to

1415absorb the amount of credits. If the selling price is 85 cents

1427on the dollar, the sale of the Tax Credits would generate

1438$8,500,000 cash.

144215. Unlike a loan or the proceeds from issuance of bonds,

1453a developer who is awarded Tax Credits and syndicates those Tax

1464Credits receives cash equity with no debt associated with it.

1474Thus, Tax Credits provide an attractive subsidy and,

1482consequently, are a highly sought-after funding source.

148916. Florida Housing is the designated agency in Florida to

1499allocate Tax Credits to developers of affordable housing,

1507pursuant to Section 420.5099, Florida Statutes. Every year

1515since 1986, Florida has received an allocation of Tax Credits to

1526be used to fund construction of affordable housing.

153417. As required by Section 42 of the Internal Revenue

1544Code, each year Florida Housing adopts a Qualified Allocation

1553Plan (QAP), which sets forth the allocation methodology for the

1563competitive 9% Tax Credits. The QAP must be approved by the

1574Governor each year. The QAP is also adopted and incorporated by

1585reference into Florida Housing’s rules. See Fla. Admin. Code

1594R. 67-48.002(95).

159618. The 2009 QAP includes the following provision:

1604In order for the Corporation to implement

1611the provisions of the Recovery and

1617Reinvestment Act of 2009 (the “2009 Stimulus

1624Act”), any funds received pursuant to 2009

1631Stimulus Act may be allocated by a

1638competitive request for proposal or

1643competitive application process as approved

1648by the Board. Any such process will be

1656governed by Section 42, IRC, and Chapter 67-

166448, F.A.C., as applicable, or, an emergency

1671rule authorized by the Florida Legislature

1677specifically for the 2009 Stimulus Act, if


1685The 2009 QAP was adopted as part of the 2009 Universal Cycle

1697rules by Florida Housing’s Board on March 13, 2009. At that

1708time, Florida Housing had not yet received guidance from the

1718federal government as to how the ARRA funds should be allocated.

172919. The Florida Affordable Housing Guarantee Program was

1737created in Section 420.5092, Florida Statutes, for the purposes

1746of stimulating creative private section lending activities to

1754increase the supply and lower the cost of financing or

1764refinancing eligible housing, creating security mechanisms to

1771allow lenders to sell affordable housing loans in the secondary

1781market, and encouraging affordable housing lending activities

1788that would not have taken place or that serve persons who would

1800not have been served but for the creation of this program.

1811Florida Housing has accomplished these goals by issuing

1819capitalizing bonds to create the Guarantee Fund, which lowers

1828the interest paid on the MMRB bond debt by serving as a credit


184220. Since 2002, Florida Housing has allocated funding from

1851the MMRB, SAIL, and Tax Credit Programs through a single annual

1862competitive application process known as the “Universal Cycle,”

1871in which the applicants compete against one another for funding.

1881The Universal Cycle and the attendant complex application review

1890process are intended to equitably and reasonably distribute

1898affordable housing throughout Florida.

190221. Florida Housing has adopted rules which incorporate by

1911reference the application forms and instructions for the

1919Universal Cycle to govern the allocation of funds from the

1929various programs it administers. Florida Housing amends it

1937Universal Cycle rules, forms, and instructions every year.

1945Following the completion of the Universal Cycle, Florida Housing

1954engages in an extensive public comment process through which it

1964solicits feedback and comments from developers for the next

1973year’s cycle. Any new amendments are adopted to take effect

1983prior to an established Application Deadline for the ensuing


199322. The process used by Florida Housing to review and

2003approve the Universal Cycle applications is set forth in Florida

2013Administrative Code Rule 67-48.004. Florida Housing reviews all

2021timely-filed applications to determine if threshold requirements

2028are met and scores each application based on factors such as

2039programs for tenants, amenities of the development as a whole

2049and of the tenants’ units, local government contributions to the

2059specific development, and local government ordinances and

2066planning efforts that support affordable housing in general.

2074The process includes a series of tiebreakers to choose among

2084applications with otherwise equal scores.

208923. After the initial review and scoring by Florida

2098Housing, all applications and included exhibits, along with the

2107scores for the applications, are posted on Florida Housing’s

2116website. Applicants are given a specific time period to alert

2126Florida Housing of any errors they believe Florida Housing made

2136in its initial scoring. Florida Administrative Code Rule 67-

214548.005 sets forth an appeal procedure for challenging the


215524. After any appeal proceedings, Florida Housing

2162publishes final rankings which determine which applications are

2170preliminarily selected for funding. The applicants for those

2178applications selected are invited to participate in the credit

2187underwriting process, which is governed by Florida

2194Administrative Code Rule 67-48.0072. A third party financial

2202consultant, who is selected by Florida Housing but paid for by

2213the individual applicant, determines whether the proposed

2220project is financially sound. The credit underwriter reviews

2228all aspects of the proposed development, including financing

2236sources, plans and specifications, cost analysis, zoning, site

2244control, environmental reports, construction contracts, and

2250engineering and architectural contracts. Florida Administrative

2256Code Rule 67-48.0072(10) requires an appraisal and market study.

2265The credit underwriter is required to consider the market study,

2275as well as the development’s financial impact on other

2284developments in the area previously funded by Florida Housing,

2293and make a recommendation for approval or disapproval of


230325. Each year the Universal Cycle provides a mechanism for

2313selecting applications to meet statutory geographic

2319requirements; for certain targeting goals that address housing

2327needs of particular demographic groups, such as farm workers,

2336commercial fishery workers, the homeless, or the elderly; for

2345specific set-asides or targeting goals aimed at addressing

2353identified needs, such as the Florida Keys, inner city areas, or

2364rural development; and for the preservation of existing

2372affordable housing complexes. Each set-aside group essentially

2379has its own separate funding from its share of the funds

2390distributed by Florida Housing.

239426. After the set-aside goals are addressed, Florida

2402Housing then uses the final rankings to try to achieve a

2413distribution of affordable housing units among the county

2421groupings (small, medium, and large, based on population) in

2430accordance with the adopted percentages. Each of the three

2439groups must receive at least 10% of the funds. Within the

2450county size groups, Florida Housing uses a formula called SAUL,

2460which is an acronym for Set-Aside Unit Limitation. The formula

2470is set forth in the application instructions and incorporated by

2480reference into the rules for each Universal Cycle in an attempt

2491to evenly distribute the units.

249627. As part of the Universal Cycle process, Florida

2505Housing designates certain geographic areas of the state that

2514are considered soft markets as “Location A” areas. Florida

2523Housing first began incorporating into its application process a

2532mechanism for identifying weak markets, known as “Location A” in

25422003. The Location A designations are included in the Universal

2552Cycle Application Instructions, which are incorporated by

2559reference in the rules of Florida Housing.

256628. Elmwood timely filed an application in the 2007

2575Universal Cycle, seeking an award of Tax Credits and a

2585supplemental loan to construct a 116-unit family apartment

2593complex, Elmwood Terrace, in Fort Myers, Lee County, Florida.

2602Elmwood’s application received a perfect score and maximum

2610tiebreaker points. As a result, Elmwood was allocated

2618$1,498,680 in Tax Credits. During the credit underwriting

2628process, Elmwood committed to set aside more than the required

2638units for Extremely Low-Income (ELI) households.

264429. Based on the final ranking of its application, Elmwood

2654was invited into the credit underwriting process. The credit

2663underwriter designated by Florida Housing conducted the analysis

2671required under Florida Housing’s rules and issued a favorable

2680recommendation for funding. The Credit Underwriting Report for

2688Elmwood Terrace was accepted by the Florida Housing Board on

2698September 22, 2008.

270130. By the fall of 2008, significant changes were taking

2711place in the economic environment and the housing market in

2721particular, and it became evident that the market for Tax

2731Credits had precipitously dropped. Tax credits had typically

2739sold in the range of 85 to 95-cents on the dollar in recent

2752years, but the value of Tax Credits had plummeted in the last

2764two years. Sales, when a buyer can be found, are currently in

2776the low 60-cents on the dollar range. Shortly before Elmwood

2786was scheduled to close on its Tax Credits in the fall of 2008,

2799the syndicator who had originally expressed its intent to

2808purchase Elmwood’s Tax Credits informed Elmwood that it would

2817not go forward with the syndication.

282331. Many other projects that were awarded Tax Credits

2832during the 2007 and 2008 Universal Cycles similarly experienced

2841difficulty in finding syndicators to purchase the awarded Tax

2850Credits and, thus, were unable to proceed to closing.

285932. In order to accomplish the legislative mandate to pay,

2869Florida Housing attempted to assist these troubled projects by

2878granting extensions of time to meet various benchmarks in the

2888Tax Credit program.

289133. In January 2009, the Florida Legislature met in

2900special session to address budget revenue shortfalls for the

29092008-2009 fiscal year. Legislation was adopted and signed into

2918law on January 27, 2009, which swept trust fund balances,

2928transferred $30 million from multi-family housing programs to

2936the State Housing Initiative Partnership (SHIP) program, and

2944required Florida Housing to pay $190 million in previously

2953appropriated funds to the treasury by June 1, 2009. These funds

2964were to be taken first from developments that would provide new


297634. In order to accomplish the legislative mandate to pay

2986$190 million to the treasury, Florida Housing had to deobligate

2996approximately $80 to $90 million of funds preliminarily

3004committed to SAIL-funded projects and from funds preliminarily

3012committed to the Community Workforce Housing Innovation Pilot

3020Program (CWHIP) projects. For the first time in Florida

3029Housing’s history, it was compelled to take money away from

3039people at the Legislature’s direction.

304435. In early 2009, in recognition of the collapse of the

3055housing market and the difficulty in marketing Tax Credits, the

3065federal government, as part of it economic stimulus efforts,

3074established mechanisms to assist in the development of

3082affordable housing and offset some of the economic devastation

3091to developers. Congress included specific provisions in ARRA

3099intended to address the condition of the Tax Credit market.

310936. Section 1602 of ARRA allows the state Tax Credit

3119allocating agencies to return up to 40% of the state’s annual

3130Tax Credit allocation, as well as Tax Credits awarded in 2007

3141and 2008 to the federal government, to be exchanged for a cash

3153distribution of 85 cents for each tax credit dollar returned.

3163The exchange of Tax Credits generated a pool of $578,701,964 for

3176the State of Florida.

318037. The Tax Credit Assistance Program (TCAP), a separate

3189provision in ARRA, includes a direct allocation of funds to

3199state housing finance agencies from the Department of Housing

3208and Urban Development to provide gap financing for affordable

3217housing projects that have been affected by the economic

3226downturn. These funds were allocated to the states to “resume

3236funding of affordable rental housing projects across the nation

3245while stimulating job creation in the hard-hat construction


325438. Florida Housing issued the RFP as the method for

3264allocating the Exchange Funds and to provide an opportunity for

3274applicants to request TCAP funds. The RFP solicits proposals

3283from applicants with an “Active Award” of Tax Credits who were

3294unable to close and are seeking alternate funding to construct

3304affordable housing utilizing Exchange Funds from the Tax Credit

3313Exchange Program authorized under Section 1602 of ARRA.

332139. Section 4D.2 of the RFP provides:

33282. Proposed Developments located within a

33342009 Location A Area are eligible to apply

3342only under the following circumstances:

3347a. Developments where the original

3352Application for the Proposed Development was

3358funded under the Housing Credit Hope VI


3366b. Developments where the Original

3371Application for the Proposed Development

3376reflects the Housing Credit Preservation


3382c. Proposed Developments that are located

3388in a 2009 Location A Area that does not have

3398a Guarantee Fund Development with the same

3405Demographic category located in the same

3411county. (Emphasis in original)

341540. The Location A areas in the RFP are the Location A

3427areas in the rules adopted for the 2009 Universal Cycle. The

3438Elmwood Terrace project is located in Lee County, which was not

3449designated as a part of Location A in the 2007 Universal Cycle.

3461The rules for the 2008 Universal Cycle provided that Location A

3472included that part of Lee County lying south of State Road 80

3484and the Caloosahatchee River. The 2008 Location A for Lee

3494County did not specify demographic categories. For the 2009

3503Universal Cycle, all of Lee County was designated Location A for

3514both the family and elderly designations.

352041. The Universal Application Package, which is

3527incorporated by reference in Florida Administrative Code

3534Rule 67-48.004(1)(a), provides:

3537(1) Set-Aside Location A Development


3543A proposed Development qualifies as a Set-

3550Aside Location A Development if the location

3557of the proposed Development is within a Set-

3565Aside Location A Area and the Applicant

3572selected the applicable Demographic

3576Commitment (Elderly or Family) at Part III.D

3583of the Application. The only exception to

3590this provision is if the proposed

3596Development also qualifies as a HOPE VI

3603Development at Part III.A.2.d. of the


3610Applicants with a Set-Aside Location A

3616Development must meet the following set-

3622aside requirements:

3624(a) Applicants requesting Competitive HC

3629must commit to set aside 100 percent of the

3638Development’s residential units at

364250 percent AMI or less; or

3648(b) Applicants requesting MMRB must commit

3654to set aside at least 85 percent of the

3663Development’s residential units at

366750 percent AMI or less.

3672(c) All Applicants must meet the minimum

3679ELI Set-Aside threshold set out in Part III

3687E.1.b.(2)(a)(iii) of these instructions.

369142. Because Elmwood’s proposed development is located in

3699Lee County, Florida, the specifications of the RFP prohibit

3708Elmwood from being considered for the allocation of funds in

3718exchange for its Tax Credits.

372343. The RFP provides that any project that receives an

3733allocation of Exchange Funds and/or TCAP Funds will be required

3743to go through the credit underwriting process, including an

3752assessment of market need and impact.

375844. Section 5B.1b of the RFP states that a tentative

3768funding award under the RFP will be rescinded “if the submarket

3779of the Proposed Development does not have an average occupancy

3789rate of 92% or greater for the same Demographic population, as

3800determined by a market study ordered by the Credit Underwriter,

3810and analyzed by the Credit Underwriter and Florida Housing

3819staff, as well as approved by the Board.”

382745. The term “submarket” is used in Florida Housing’s

3836credit underwriting rules in Florida Administrative Code

3843synonymous terms. Determining a submarket or primary area

3851market is very subjective; even two adjacent sites may have

3861different submarkets. Determination of a submarket is an art

3870that involves making judgments. The market analysis, which is

3879required to be done as part of the credit underwriting process,

3890will delineate the primary market area or submarket area of the

3901proposed project. Such delineation will be based on criteria

3910which may be unique to that proposed site. Thus, it is not

3922practical to specify what criteria are used to establish the

3932primary market area or submarket area of a proposed project.

394246. The RFP provides that the demographic grouping

3950submitted in the original application cannot be changed. The

3959RFP allows applicants to change other aspects of their original

3969proposal, including that an applicant may increase the number of

3979proposed units.

398147. Subsequent to the withdrawal of its anticipated equity

3990syndicator in September 2008, Elmwood explored other options

3998that could potentially enable it to proceed to closing. One

4008option that Elmwood proposed to Florida Housing was to change

4018the demographic grouping of Elmwood Terrace to an elderly

4027project. Elmwood formally requested a change to its demographic

4036grouping in a letter from Elmwood’s attorney, Warren Husband, to

4046Florida Housing’s deputy development officer, Deborah

4052Blinderman, dated January 26, 2009. That request was not


406248. Elmwood contends that the prohibition on changing a

4071development’s demographic grouping is contrary to Florida

4078Housing’s policy of allowing other developers to change their

4087demographic groupings. Florida Housing did allow two

4094developments to change their demographic groupings.

410049. On April 24, 2009, the Board granted River Trace

4110Senior Apartments’ request to change its demographic grouping

4118from elderly to family. River Trace Senior Apartments was a

4128development which had been funded in 2000 as an elderly

4138development. It operated for eight years as an elderly

4147development without achieving satisfactory occupancy in its

4154178 units. Based on the development’s history, the Board

4163allowed a demographic grouping change in hopes of achieving

4172satisfactory occupancy levels. Unlike Elmwood’s proposed

4178development, River Trace Senior Apartments was a housing

4186development, which was already built and in operation.

419450. In October 2008, Florida Housing approved a request

4203for a change in demographic grouping in a proposed project. The

4214proposed development, Bradenton Village II, was the third phase

4223of a large HOPE VI redevelopment project and consisted of

423336 units designated as family units. During the permitting

4242process, the City of Bradenton informed the developer that the

4252proposed site could not accommodate the number of parking spaces

4262required for a family development, but the required parking

4271could be provided if 32 of the units were designated as elderly

4283units. Bradenton Village had an investor who was willing to

4293remain in and go forward with the project redesignated as


430451. Florida Housing did not allow changes in pending deals

4314after the Legislature’s special session budget action in

4322January 2009 because of the large number of projects that had

4333lost their funding and proposed changing the scope of their

4343projects to qualify for ARRA funds. These included a number of

4354CWHIP projects. The director for Florida Housing felt that he

4364could not justify allowing Elmwood to change its demographic

4373designation while refusing to allow the deobligated CWHIP

4381developers to change their target markets.

438752. The evaluation process for the RFP is set forth in

4398Section 7 of the RFP and provides that the Florida Housing

4409Review Committee will:

4412[S]elect Applicants most likely to be

4418considered for award, make any adjustments

4424deemed necessary to best serve the interest

4431of Florida Housing’s mission, and develop a

4438recommendation or series of recommendations

4443to the Board. The Committee will then rank

4451the Applications deemed eligible for funding

4457with preference given to Applications that

4463are Shovel-Ready. The Board may use the

4470Proposals, the Committee’s scoring, and any

4476other information or recommendation provided

4481by the Committee or staff, and any other

4489information the Board deems relevant in the

4496selection of Applicants to whom to award



450753. The Division of Administrative Hearings has

4514jurisdiction over the parties to and the subject matter of this

4525proceeding. §§ 120.569 and 120.57, Fla. Stat.

453254. Florida Housing has challenged Fruitland’s standing to

4540intervene in this bid protest. Fruitland’s substantial

4547interests are affected by the specifications that deal with the

455792% occupancy requirement. Although Fruitland has moved to the

4566credit underwriting process, it is still affected by this

4575requirement. Therefore, Fruitland has standing to intervene.

458255. Brownsville also has standing to intervene. Like

4590Fruitland, Brownsville has moved into the credit underwriting

4598process, and a change in the specifications could affect its

4608ability to continue in the process.

461456. As the party protesting the specifications of the RFP,

4624Elmwood has the burden of proof. See State Contracting and

4634Engineering Corp. v. Dept. of Transportation , 709 So. 2d (Fla.

46441st DCA 1998). Subsection 120.57(3)(f), Florida Statutes,


4652Unless otherwise provided by statute, the

4658burden of proof shall rest with the party

4666protesting the proposed agency action. In a

4673competitive-procurement protest, other than

4677a rejection of all bids, proposals, or

4684replies, the administrative law judge shall

4690conduct a de novo proceeding to determine

4697whether the agency's proposed action is

4703contrary to the agency's governing statutes,

4709the agency's rules or policies, or the

4716solicitation specifications. The standard

4720of proof for such proceedings shall be

4727whether the proposed agency action was

4733clearly erroneous, contrary to competition,

4738arbitrary, or capricious. In any bid-

4744protest proceeding contesting an intended

4749agency action to reject all bids, proposals,

4756or replies, the standard of review by an

4764administrative law judge shall be whether

4770the agency's intended action is illegal,

4776arbitrary, dishonest, or fraudulent.

478057. Elmwood is contesting certain terms, conditions, and

4788specifications of the RFP. Thus, the issue is whether those

4798terms, conditions, and specifications are contrary to Florida

4806Housing’s governing statutes, rules, or policies. Section

4813420.5099, Florida Statutes, designates Florida Housing as the

4821housing credit agency for Florida within the meaning of

4830Subsection 42(h)(7)(A) of the Internal Revenue Code of 1986 and

4840gives Florida Housing “the responsibility and authority to

4848establish procedures necessary for proper allocation and

4855distribution of low-income housing tax credits and [to] exercise

4864all powers necessary to administer the allocation of such

4873credits.” Subsection 420.507(10), Florida Statutes, gives

4879Florida Housing the authority to accept grants from the United

4889States government.

489158. Pursuant to ARRA, Florida Housing is the recipient of

4901a Grant to States for Low-Income Housing Projects in Lieu of

4912Low-Income Housing Credits for 2009 (Grant) in which Tax Credits

4922are exchanged for cash. Florida Housing is required to use the

4933Grant to make subawards to finance the construction or

4942acquisition and rehabilitation of qualified low-income

4948buildings. Subsection 1602(c)(2) of ARRA further requires that

4956“[a]ny such subaward with respect to any qualified low-income

4965building shall be made in the same manner and shall be subject

4977to the same limitations (including rent, income, and use

4986restrictions on such building) as an allocation of housing

4995credit dollar amount allocated by such State housing credit

5004agency under section 42 of the Internal Revenue Code of 1986.”

501559. Subsection 42(m)(1)(C) of the Internal Revenue Code of

50241986 requires that Florida Housing set forth its selection

5033criteria for the allocation of Tax Credits in a qualified

5043allocation plan. Florida Housing has adopted rules which

5051establish the criteria to be used for the allocation of Tax

5062Credits. Those rules are contained in Florida Administrative

5070Code Chapter 67-48. The QAP, which sets out the allocation for

5081the competitive award of Tax Credits, is incorporated by

5090reference in Florida Administrative Code Rule 67-48.002(95).

5097The QAP provides that any funds received pursuant to ARRA will

5108be allocated by a competitive request for proposal or

5117competitive allocation process as approved by the Board. It

5126further provides that the selection process will be governed by

5136Section 42 of the Internal Revenue Code and Florida

5145Administrative Code Chapter 67-48, as applicable, 2 or an

5154emergency rule authorized by the Florida Legislature for ARRA,

5163if any. There were no emergency rules authorized by the

5173Legislature, and none were adopted by Florida Housing.

518160. Subsection 420.507(41), Florida Statutes, provides

5187that Florida Housing has the authority “[t]o conduct and fund,

5197solely from funds derived from amounts other than those

5206deposited into the State Housing Trust Fund, demonstration

5214programs and projects which further the statutory purposes of

5223the corporation, including the power to establish selection

5231criteria by rule or by means of requests for proposals.” No

5242evidence was presented to definitively establish that the Grant

5251funds are not deposited in the State Housing Trust Fund. Based

5262on the terms and conditions of the Grant, Florida Housing is

5273required to “open a new account (Grant Account) with a financial

5284institution for the purpose of receiving grant elections

5292amounts, for making distributions of grant election amounts to

5301other agencies within the State, and for making subawards.” It

5311appears that the monies received from the Grant are not funds

5322that are deposited in the State Housing Trust Fund.

5331Additionally, any interest earned in the Grant Account above

5340$200 must be returned to the United States Treasury.

534961. The Grant is not a demonstration program and is not a

5361project; thus, the provisions of Subsection 420.507(41), Florida

5369Statutes, are not applicable to the RFP at issue. Assuming,

5379arguendo , that the Grant is a demonstration program or a

5389project, Florida Housing elected to establish the selection

5397criteria by rule when it included the allocation of ARRA in the

54092009 QAP, which was incorporated by reference in Florida

5418Administrative Code Rule 67-48.002(95).

542262. Based on the requirement of Subsection 1602(c)(2) of

5431ARRA that the allocation of the Grant funds be allocated in the

5443same manner and subject to the same limitations as an allocation

5454of Tax Credits and the requirement in the 2009 QAP that the

5466selection process will be governed by Section 42 of the Internal

5477Revenue Code and Florida Administrative Code Chapter 67-48 that

5486are applicable to the allocation of Tax Credits, it is concluded

5497that the RFP specifications are governed by Florida

5505Administrative Code Chapter 67-48, as applicable to the

5513allocation of Tax Credits, and Section 42 of the Internal

5523Revenue Code.

552563. Florida Administrative Code Rule 67-48.004(1)(a)

5531incorporates by reference the Universal Application Package,

5538which is Form UA1016 and which includes the Universal Cycle

5548Application Instructions.

555064. Elmwood challenges the RFP specification that

5557prohibits the consideration of developments located in a

5565Location A area. The RFP specifications relating to Location A

5575developments are contrary to the rules which govern Florida

5584Housing’s allocation of ARRA funds. The Universal Application

5592Package does not prohibit an applicant from being considered for

5602Tax Credits if the applicant commits to set aside 100% of its

5614residential units at 50% AMI or less. The RFP uses the Location

5626A areas as a bar to being considered without consideration of

5637whether the applicant is willing to commit to setting aside 100%

5648of the residential units at 50% AMI or less and includes

5659criteria not set forth in the Universal Application Package such

5669as precluding consideration of developments in a Location A area

5679that contains a Guarantee Fund Development.

568565. The RFP specifications precluding consideration of

5692developments located in a Location A area without consideration

5701of whether the applicant is willing to set aside 100% of its

5713units at 50% AMI or less is clearly erroneous because it is

5725contrary to the Universal Application Package.

573166. Elmwood challenges the RFP requirement that the

5739submarket of the development proposed by an applicant must have

5749a 92% or greater occupancy rate for the same demographic

5759population. Florida Administrative Code Rule 67-48.0072(10)

5765provides that, in order for the credit underwriter to make a

5776favorable recommendation, the submarket of the proposed

5783development must have an average occupancy rate of 90% or

5793greater. The RFP requirement for the 92% occupancy rate is

5803clearly erroneous because it is contrary to Florida Housing’s

5812governing rules.

581467. Elmwood has also challenged the 92% occupancy

5822requirement because the term “submarket” is not defined.

5830Florida Administrative Code Chapter 67-48 uses, but does not

5839define, the term “submarket.” Elmwood has not established that

5848the lack of criteria for determining a submarket in the market

5859study is arbitrary, capricious, clearly erroneous, or contrary

5867to competition. The market studies are site specific, and the

5877results of the market study can be challenged.

588568. The Universal Application Package, which is

5892incorporated by reference in Florida Administrative Code

5899Rule 67-48.004, provides detailed evaluation criteria for the

5907applications that are submitted for Tax Credit developments.

5915Section 7 of the RFP sets forth the evaluation process that is

5927to be used in allocation of funds for the Tax Credit Exchange

5939Program. The RFP provides that the review committee will select

5949applicants “most likely to be considered for award, make any

5959adjustments deemed necessary to best serve the interests of

5968Florida Housing’s mission and develop a recommendation or series

5977of recommendations to the Board.” The review committee will

5986rank the applications deemed eligible for funding and give

5995preference to applications that are shovel ready. The Board

6004then makes an award using the “Proposals, the Committee’s

6013scoring, and any other information or recommendation provided by

6022the Committee or Staff, and any other information the Board

6032deems relevant in its selection of Applicants to whom to award

6043funding.” The RFP is contrary to the Florida Housing’s

6052governing rules as set forth in Florida Administrative Code

6061Rule 67-48.004, which incorporates by reference the evaluation

6069process that is to be used in the selection of applications for

6081awards of Tax Credits.

608569. In a competitive bidding process, it is important to

6095have uniform standards for evaluating the proposals and for such

6105standards to be published at the outset of the process.

6115Otherwise, there is no way to determine whether each proposal is

6126being measured by the same yardstick. The principle was

6135succinctly summarized in Deloitte & Touche LLP v. Dept. of

6145Health and Rehabilitative Services , Case No. 95-0727BID (DOAH

6153May 12, 1995)(citations omitted)( quoting Courtenay v. Dept. of

6162Health and Rehabilitative Services , 12 F.A.L.R. 2226 (1990)).

6170Part of the reciprocity achieved under the

6177competitive bidding process is achieved in

6183the bid specifications and weighted

6188criteria. Potential bidders are advised in

6194advance of the requirements to be met in

6202order to receive the contract award, as well

6210as the standards by which each bid will be

6219evaluated by the agency and each standard’s

6226relative importance to the agency. . . . .

6235Therefore, central to the integrity and

6241reciprocity of the competitive bidding

6246process is the requirement that an agency’s

6253action on a bid can be expressed within the

6262bid specifications and evaluation criteria

6267which it created.

627070. The QAP provides that the Board’s determination of

6279funding for applications must be consistent with the provisions

6288of the QAP. Section 7 of the RFP gives the reviewing committee

6300and the Board unbridled discretion in determining which

6308applicants will be allocated funds. The method of selection is

6318not clearly stated. No criteria are set forth for the ranking

6329of the applications. No criteria are given for how the

6339applications will be scored. Such discretion is contrary to

6348competition, arbitrary, and clearly erroneous.


6354Based on the foregoing Findings of Fact and Conclusions of

6364Law, it is RECOMMENDED that a final order be entered finding:

63751. The specifications of the RFP which exclude

6383consideration of funding for projects located in a Location A

6393area without regard to whether the applicant is willing to lower

6404the AMI for its units to 50% or less are contrary to Florida

6417Housing’s governing statutes.

64202. The provision in the RFP which precludes the applicant

6430from changing its demographic grouping is not contrary to

6439Florida Housing’s policies.

64423. The provision of the RFP which requires 92% occupancy

6452is contrary to Florida Housing’s governing statutes.

64594. The lack of a definition of “submarket” in the RFP is

6471not arbitrary, capricious, clearly erroneous, or contrary to


64805. The provisions of the RFP which eliminate from

6489consideration for funding any project in a county with a

6499Guarantee Fund development is contrary to Florida Housing’s

6507governing statutes.

65096. The evaluation criteria in Section 7 of the RFP which

6520sets forth the evaluation procedure is contrary to the Florida

6530Housing’s governing rules and statutes.

6535DONE AND ENTERED this 12th day of November, 2009, in

6545Tallahassee, Leon County, Florida.



6553Administrative Law Judge

6556Division of Administrative Hearings

6560The DeSoto Building

65631230 Apalachee Parkway

6566Tallahassee, Florida 32399-3060

6569(850) 488-9675

6571Fax Filing (850) 921-6847


6576Filed with the Clerk of the

6582Division of Administrative Hearings

6586this 12th day of November, 2009.


65931/ Unless otherwise indicated, all references to the Florida

6602Statutes are to the 2009 version.

66082/ Florida Administrative Code Chapter 67-48 deals with other

6617programs in addition to Tax Credit. Therefore, only those

6626provisions of Florida Administrative Code Chapter 67-48 dealing

6634with Tax Credits would be applicable.


6643J. Stephen Menton, Esquire

6647Rutledge, Ecenia, & Purnell, P.A.

6652119 South Monroe Street, Suite 202

6658Post Office Box 551

6662Tallahassee, Florida 32302

6665Donna E. Blanton, Esquire

6669Radey, Thomas, Yon & Clark, P.A.

6675301 South Bronough Street, Suite 200

6681Tallahassee, Florida 32301

6684Michael P. Donaldson, Esquire

6688Carlton Fields, P.A.

6691215 South Monroe Street, Suite 500

6697Post Office Drawer 190

6701Tallahassee, Florida 32302-0190

6704Frederick J. Springer, Esquire

6708Bryant, Miller & Olive, P.A.

6713101 North Monroe Street, Suite 900

6719Tallahassee, Florida 32301

6722Wellington Meffert, Esquire

6725Florida Housing Finance Corporation

6729227 North Bronough Street, Suite 5000

6735Tallahassee, Florida 32301-1329

6738Della Harrell, Corporation Clerk

6742Florida Housing Finance Corporation

6746227 North Bronough Street, Suite 5000

6752Tallahassee, Florida 32301-1329


6761All parties have the right to submit written exceptions within

677110 days from the date of this Recommended Order. Any exceptions

6782to this Recommended Order should be filed with the agency that

6793will issue the Final Order in this case.

Select the PDF icon to view the document.
Date: 11/12/2009
Proceedings: Recommended Order
Date: 11/12/2009
Proceedings: Recommended Order (hearing held September 23-25, 2009). CASE CLOSED.
Date: 11/12/2009
Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
Date: 10/22/2009
Proceedings: Joint Proposed Recommended Order of Respondent Florida Housing Finance Corporation and Intervenor Brownsville Village II, LTD. filed.
Date: 10/22/2009
Proceedings: (Joint) Proposed Recommended Order filed.
Date: 10/22/2009
Proceedings: Notice of Filing Joint Proposed Recommended Order filed.
Date: 10/21/2009
Proceedings: Order Granting Motion for Leave to Exceed Page Limitation.
Date: 10/21/2009
Proceedings: Unopposed Motion for Leave to Exceed Page Limitation filed.
Date: 10/12/2009
Proceedings: Transcript (Volumes I - 4) filed.
Date: 09/23/2009
Proceedings: Joint Pre-hearing Stipulation filed w/judge at hearing.
Date: 09/23/2009
Proceedings: CASE STATUS: Hearing Held.
Date: 09/23/2009
Proceedings: Motion to Amend Petition filed w/judge at hearing.
Date: 09/22/2009
Proceedings: Joint Response of Respondent Florida Housing Finance Corporation and Intervenor Brownsville Village, II, Ltd., to Petitioner's Motion to Amend Petition filed.
Date: 09/22/2009
Proceedings: Joint Prehearing Stipulation filed.
Date: 09/17/2009
Proceedings: Order Granting Petitions to Intervene (RST Fruitland Housing, LP and Brownsville Village, II, Ltd).
Date: 09/16/2009
Proceedings: Notice of Appearance (Frederick Springer) filed.
Date: 09/15/2009
Proceedings: CASE STATUS: Motion Hearing Held.
Date: 09/11/2009
Proceedings: Response to RST Fruitland Housing's Petition for Leave to Intervene filed.
Date: 09/10/2009
Proceedings: Petition for Leave to Intervene (Brownsville Village II, Ltd.) filed.
Date: 09/10/2009
Proceedings: Notice of Appearance (filed by D. Blanton).
Date: 09/09/2009
Proceedings: Petition for Leave to Intervene filed.
Date: 09/03/2009
Proceedings: Order of Pre-hearing Instructions.
Date: 09/03/2009
Proceedings: Notice of Hearing (hearing set for September 23 through 25, 2009; 9:30 a.m.; Tallahassee, FL).
Date: 08/31/2009
Proceedings: CASE STATUS: Pre-Hearing Conference Held.
Date: 08/26/2009
Proceedings: Notice to Interested Parties filed.
Date: 08/26/2009
Proceedings: Request for Proposals 2009-04 filed.
Date: 08/26/2009
Proceedings: Formal Written Protest and Petition for Administrative Hearing filed.
Date: 08/26/2009
Proceedings: Agency referral filed.

Case Information

Date Filed:
Date Assignment:
Last Docket Entry:
Tallahassee, Florida
Florida Housing Finance Corporation


Related DOAH Cases(s) (2):

Related Florida Statute(s) (8):

Related Florida Rule(s) (4):