15-003302BID Houston Street Manor Limited Partnership vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Tuesday, August 18, 2015.

Summary: Intended award of tax credits to Intervenor should not be implemented because Intervenor's application contained a material misrepresentation, without which its application would not have been selected; recommended that award go to Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOUSTON STREET MANOR LIMITED

PARTNERSHIP ,

Petitioner,

vs. Case No. 15 - 330 2BID

FLORIDA HOUSING FINANCE

CORPORATION ,

Respondent,

and

POWERS AVENUE SENIOR APARTMENTS,

LTD., d/b/a PINE GROVE SENIOR

APARTMENTS ,

Intervenor.

/

RECOMMENDED ORDER

This case came before Administrative Law Judge

John G. Van Laningham for final hearing on July 8 , 201 5 ,

in Tallahassee , Florida.

APPEARANCES

For Petitioner: M. Christopher Bryant , Esquire

Oertel, Fernandez, Bryant and

Atkinson, P.A.

Post Office Box 1110

2060 Delta Way

Tallahassee, Florida 32 30 2 - 1110

For Respondent: Christopher D. McGuire , Esquire

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

227 North Bronough Street, Suite 50 00

Tallahassee , Florida 3 23 0 1

For Intervenor: Michael J. Glazer , Esquire

Erik M. Figlio , Esquire

Ausley and McMullen , P.A.

123 South Calhoun Street

Post Office Box 391

Tallahassee , Florida 3 23 01

STATEMENT OF THE ISSUES

The issues in this bid protest are whether Respondent's

preliminary decision to award low - income housing tax credits to

Intervenor should be implemented, notwithstanding the fact that,

unbeknownst to Respondent during the evaluation and scori ng of

the competing applications, Intervenor's application contained a

material misrepresentation about a transit service, which

Intervenor urges is a minor irregularity that can be waived;

and, if the preliminary decision is set aside, whether

Respondent should award the credits to Petitioner, who is next

in line, but whose application, Intervenor alleges, contains

material deviations from the specifications that render it

nonresponsive.

PRELIMINARY STATEMENT

On November 21, 2014 , Respondent Florida Housing Finance

Corporation issued Request for Applications 2014 - 115 for the

purpose of awarding tax credits for the development of

a ffordable h ousing in Broward, Duval, Hillsborough, Orange, Palm

Beach, and Pinellas Counties . According to the te rms of the

solicitation, only one development in the "Family or Elderly

Demographic Commitment" category w ill be funded in Duval County.

On May 8, 2015, Respondent announced its intent to select

ten applicants for funding, including Intervenor Powers Avenu e

Senior Apartments, Ltd., d/b/a Pine Grove Senior Apartments ,

whose proposed development would serve the Elderly demographic

in Duval County . Thereafter, Petitioner Houston Street Manor

Limited Partnership timely notified Respondent of its intent to

chal lenge the award to Intervenor, and on May 26, 2015,

Petitioner filed a formal written protest alleging that

Intervenor's application should be rejected as nonresponsive.

The case was referred to the Division of Administrative

Hearings ("DOAH") , where the protest petition was filed on

June 9, 20 15 . The next day, a Notice of Appearance was filed

on behalf of Intervenor , who thereupon became a party to the

proceeding .

The final hearing took place on July 8, 2015 , as scheduled,

with all parties present . The parties stipulated to a number of

facts as set forth in their Joint Pre - Hearing Stipulation , and

to the extent relevant these undisputed facts have been

incorporated herein . Joint Exhibits 1 through 4 were admitted

into evidence with the consent of a ll parties.

Petitioner elicited testimony from Ken Reecy, an employee

of Respondent; and Ken Bowron, Jr., an employee of Petitioner.

In addition, Petitioner's Exhibits 5 and 6 were admitted into

evidence. Intervenor offered, as Intervenor's Exhibits 1 - 3

respectively, the depositions of Amy Garmon, an employee of

Respondent; and James Klement and Folks Huxford, employees of

the City of Jacksonville. These depositions, together with

their exhibits, were received in evidence. Respondent presented

no evide nce.

The final hearing transcript was filed on July 21, 2015 ,

making the p roposed recommended o rders d ue on July 31 , 20 15 ,

pursuant to the schedule established at the conclusion of the

final hearing. Each party timely filed a Proposed Recommended

Order. All of the parties' post - hearing submissions were

carefully considered during the preparation of this Recommended

Order.

U nless otherwise indicated, citations to the official

statute law of the state of Florida refer to Florida Statutes

2015.

FINDINGS OF FACT

1. Respondent Florida Housing Finance Corporation ("FHFC ")

is the housing credit agency for the state of Florida whose

responsibilities include the awarding of low - income housing tax

credits , which developers use to financ e the construction of

affordable housing. Tax credits are made available annually

pursuant to a competitive cycle that starts with FHFC's issuance

of a Request for Applications.

2. On November 21, 2014 , FHFC issued Request for

Applications 2014 - 115 ( the " RFA"), whose full title ÏÏ " Housing

Credit Financing for Affordable Housing Developments Located in

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

Counties " ÏÏ generally describes the developments for which FHFC

expects to award tax credits totaling up to approx imately $15. 5

million to selected applicants proposing to construct such

projects in accordance with the specifications of the RFA,

FHFC's generally applicable standards, and all other governing

laws. Applications were due on February 3, 2015.

3. Applica nts were required to make a commitment to serve

one of several populations: Family, Elderly, or Homeless.

Under the selection process that the RFA prescribes, only one

project targeted for either the Family or Elderly population in

Duval County will be s elected for funding. The dispute in this

case arises from FHFC's preliminary decision regarding the award

of credits for the Duval County development intended to serve

the Family or Elderly demographic. Petitioner Houston Street

Manor Limited Partnership ("Houston Street") and Intervenor

Powers Avenue Senior Apartments, Ltd., d/b/a Pine Grove Senior

Apartments ("Pine Grove") each timely submitted an application

proposing to build affordable housing for elderly residents in

Duval County, making them direct competitors for the sole award

available for such a project.

4. The RFA provided that applications would be evaluated

and scored by a committee, with the scoring to be based on

" Mandatory Items " and " Point Items " identified in a table

included in the RFA. Upon completing its evaluation, the

committee was required to list the eligible applications in

order from highest total score to lowest total score, and to

make a recommendation to FHFC's B oard of Directors .

5. In theory, the award sh ould go to the applicant with

the highest score. Because of the likelihood , however, that

multiple applications w i l l get perfect scores ÏÏ as it happened,

all 49 of the eligible applications in the Family or Elderly

Demographic Co mmitment category received the maximum score of 23

points ÏÏ the RFA established a sequence of six tiebreakers, the

sixth being a lottery, with the award falling to the application

having the lowest, r andomly assigned lottery number.

K nowledgeable developer s underst oo d that , i n practice, most of

the successful applications would be lottery winners owing their

selection largely to luck .

6. It is therefore no t surpris ing that all e ight eligible

applications proposing to serve the Family or Elderly population

i n Duval County received the full 23 points. None of the firs t

five tiebreakers separated these applications , which forced a

lottery. Pine Grove had the lowest lottery number (14) ,

followed by Houston Street Manor (25). Thus, Pine Grove was

chosen for preliminary funding , as FHFC announced on May 8,

2015 .

7. The RFA specifie s two Point Items in th e Family or

Elderly Demog raphic Commitment category. One Point Item is

"Local Government Contributions," for which a maximum of 5 .0

points could be awarded. The other is "Proximity to Transit and

Community Services," which was worth a maximum of 18 "proximity

points." To be considered eligible for funding, an applicant

needed to receive at least 10.25 proximity points, including a

m inimum of 2 .0 points for Transit Services. 1 / Significantly, a n

applicant who earned 12.25 or more proximity points would be

given the maximum Total Proximity Score of 18. Thus, to be

eligible an applicant needed to qualify for a Transit Service

Score of at least 2 .0 plus win 8.25 additional proximity points;

to be competitive , however , it had to win at least 1 0 .25

additional proximity points , to "bump up" to 18 .

8. During the evaluation and scoring, Pine Grove received

a Transit Service Score of 5 .0 , which, together with the 9.5

proximity points that Pine Grove earned for its proximity to

other community services, gave Pine Grove a raw score of 14.5

and, consequently, a Total Proximity Score of 18 ÏÏ the maximum.

Pine Grove's Transit Service Score, ho wever, was based upon a

representation of material fact that ÏÏ it is undisputed ÏÏ was not

correct. To understand the problem requires a more detailed

explanati on of the Transit Services criteria.

9. The RFA required an applicant to select one ÏÏ and only

one ÏÏ Transit Service upon which its Transit Service Score would

be based. The category of Transit Services comprises five

specifically defined services divided into three subgroups as

follows: (1) Private Transportation Ï 2 points; (2) Public Bus

Stop Î max imum 2 points ; and (3) Public Bus Transfer Stop;

Public Bus Rapid Transit Stop; or Public Rail Station Ï maximum

6 points . The services relevant to this case are Public Bus

Stop and Public Bus Transfer Stop.

10. The RFA defines Public Bus Stop in relevan t part as

follows:

[A] Public Bus Stop means a fixed location

at which passengers may access one or two

routes of public transportation via buses.

The Public Bus Stop must service at least

one bus route with scheduled stops at least

hourly during the time s of 7am to 9am and

also during the times of 4pm to 6pm Monday

through Friday, excluding holidays, on a

year - round basis.

RFA at 21.

11. The pertinent provisions of the definition of Public

Bus Transfer Stop provide as follows:

[A] Public Bus Transfer St op means a fixed

location at which passengers may access at

least three routes of public transportation

via buses. Each qualifying route must have

a scheduled stop at the Public Bus Transfer

Stop at least hourly during the times of 7am

to 9am and also dur ing the times of 4pm to

6pm Monday through Friday, excluding

holidays, on a year - round basis. This would

include both bus stations (i.e., hubs) and

bus stops with multiple routes.

RFA at 21.

12. The number of proximity points that would be awarded

fo r a Public Bus Stop or a Public Bus Transfer Stop, if an

applicant chose one or the other as the sole service upon which

its Transit Service Score would be based, was not committed to

the discretion of the evaluators . Rather, the RFA prescribes

the precis e number of points to be assigned, based on an

objective criterion, namely the distance in miles between the

proposed development and the particular service. Thus, a Public

Bus Stop would be scored as follows:

RFA at 24.

13. A Public Bus Transfer Stop, in contrast, would be

awarded points pursuant to the following schedule:

RFA at 25.

14. The RFA required applicants to attach to their

applications a Surveyor Certification Form completed and signed

by a licensed surveyor. On this form, the surveyor must state

the latitude and longitude coordinates for, among other things,

the selected Trans it Service, e.g., Public Bus Stop or Public

Bus Transfer Stop, together with the distance in miles between

such service and the proposed development. By signing the form,

the surveyor declares, under penalties of perjury, "that the

foregoing statement is t rue and correct." RFA at 86.

15. Pine Grove submitted a Surveyor Certification Form

which identified a Public Bus Transfer Stop as its Transit

Service:

Joint Ex. 3 at 52 of 101 . Because the distance between this

service and the proposed development w as stated to be 0.55

miles, Pine Grove received 5 .0 proximity points pursuant to the

schedule reproduced above.

16. The site whose coordinates are shown in Pine Grove's

Surveyor Certification Form is , in fact, a bus stop, which the

Jacksonville Transpo rtation Authority ("JTA") refers to as Stop

#4203. But, as the parties have stipulated, only two routes

serve Stop #4 2 03 during the morning and afternoon rush hours.

Consequently, c ontrary to the representation in Pine Grove's

application, Stop #4203 is not a Public Bus Transfer Stop as

that term is defined in the RFA , but a less - prized Public Bus

Stop .

17. Houston Street raised this issue as a protest ground

in its formal petition challenging the proposed award to Pine

Grove. During discovery, Pine Grove confessed error and

admitted that Stop #4203 is only a Public Bus Stop, not a Public

Bus Transfer Stop . Thereafter, FHFC announced that it would

side with Houston Street in arguing that Pine Grove's

application must be rejected as ineligible since S top #4203, as

a Public Bus Stop greater than 0.30 miles from the proposed

development, earns just 0.0 points under the applicable scoring

schedule ÏÏ 2 .0 points less than the Required Minimum Transit

Service Score of 2. 0.

18. Pine Grove would be dead in the water at this point

but for an un likely , yet undisputed, factual twist. It turns

out that JTA Stop #1397, which is located 0.48 miles from Pine

Grove's proposed development, happens to qualify as a Public Bus

Transfer Stop. Had Pine Grove identified Stop #1397 as its

Transit Service, it legitimately would have been entitled to 5.5

points. In other words , Pine Grove could have offered an actual

Public Bus Transfer Stop that is closer to its proposed

development than Stop #4203 ( and thus more valuable in terms of

proximity points ) , but instead it identified a Public Bus Stop ÏÏ

which it misrepresented as a Public Bus Transfer Stop ÏÏ that was

worth less in proximity points than Stop #1397 even if it truly

were a Public Bus Transfer Stop, and is worth less as the Public

Bus Stop it truly is.

19. Houston Street and FHFC have framed their objection to

Pine Grove's application in terms of responsiveness, contending

that Pine Grove's failure to identify a Transit Service eligible

for at least the Required Minimu m Transit Service Score is a

material deviation that the agency cannot waive. This has

opened the door to Pine Grove's argument th at falsely describing

Stop #4203 in its Surveyor Certification Form as a Public Bus

Transfer Stop worth 5. 0 proximity points should be deemed a

minor irregularity given the existence of Stop #1397, which

everyone agrees is a Public Bus Transfer Stop that would have

been worth 5.5 proximity points to Pine Grove, had Pine Grove

relied upon Stop #1397. Pine Grove's position is par t "no

competitive advantage" (as indeed citing Stop #4203 was not

advantageous in light of the superior alternative) and part "no

harm, no foul."

20. Before examining the question s of whether Pine Grove's

designating Stop #4203 as its Transit Service wa s a deviation

from the specifications and, if so, whether such a lack of

responsiveness should be considered a material deviation or a

minor irregularity, the undersigned wants to mention a point

that the parties have not raised, but which nevertheless

war rants consideration. Preliminarily, though, the undersigned

stresses that no allegation was made, no evidence was received,

and no finding is being made that Pine Grove intended to deceive

FHFC by holding out Stop #4203 as a Public Bus Transfer Stop.

Rat her, although there is no direct evidence in the record, the

logical and reasonable inference based on the circumstances is

that Pine Grove simply made an unfortunate and costly mistake in

failing timely to discover that Stop #4203 does not qualif y as a

Pu blic Bus Transfer Stop , as Pine Grove honestly had believed .

21. That said, by identifying Stop #4203 in its Surveyor

Certification Form as a Public Bus Transfer Stop, Pine Grove

unequivocally represented that the material facts concerning

this parti cular stop satisfied the RFA's definition of a Public

Bus Transfer Stop ÏÏ and they did not. Not to put too fine a

point on it, the representation that Stop #4203 is a Public Bus

Transfer Stop was a false statement of material fact ÏÏ objective

fact at that, not ultimate fact involving the exercise of

discretion or judgment, and not opinion. To be sure, this

material misrepresentation was not intentionally false. But it

was false .

22. Like all applicants, Pine Grove was required to submit

with its application a fully executed Applicant Certification

and Acknowledgment Form. Among the statements therein whose

truth Pine Grove confirmed is the following:

In eliciting information from third parties

required by and/or included in this

application, the Applicant has provided such

parties information that accurately

describes the Development as proposed in

this Application. The Applicant has

reviewed the third party information

included in this Application and/or provided

during the credit underwriting process and

the information provided by any such party

is based upon, and accurate with respect to,

the Development as proposed in this

Application .

Joint Ex. 3 at 26 of 101 (emphasis added) . In signing this

form, Pine Grove's agent "declare[d] and certi f[ied] that [he]

ha[d] read the foregoing and that the information is true,

correct, and complete."

23. As is now known, a third party ( Pine Grove's surveyor )

provided information about Stop #4203 that was not accurate with

respect to the proposed devel opment . Pine Grove's submission of

third party information that contained a false statement of

material fact (i.e., that Stop #4203 is a Public Bus Transfer

Stop located 0.55 miles from the proposed development) was a

deviation from the RFA's specificatio ns, including the

provisions of the Applicant Certification and Acknowledgment

Form set forth above. The undersigned is inclined to believe

that a false statement of material fact in a bid or similar

response to a public solicitation should almost always be deemed

a material deviation. Agencies reasonably and justifiably rely

upon the statements of fact contained in such documents, and

therefore the disincentives to making factual misstatements ,

even innocently, should be strong and consistently applied .

24. Here, however, as mentioned, no party has urged that

Pine Grove's application be deemed nonresponsive for

misrepresenting the true nature of Stop #4203, and therefore the

undersigned will not recommend that the case be decided on th is

basis. Nevert heless, it should be stated that to treat Pine

Grove's application as having accurately identified Stop #4203

as a Public Bus Stop, which is the premise behind Houston Street

and FHFC's position, is to waive the material misrepresentation

in Pine Grove's S urveyor Certification Form ÏÏ a significant, and

arguably unduly generous, threshold concession to Pine Grove.

25. Once the misrepresentation is overlooked, it is not

obvious that a deviation exists that would make Pine Grove's

application nonresponsive. B us Stop #4203 meets the RFA's

definition of a Public Bus Stop worth up to 2 .0 points. Thus,

it is a n Eligible Service that does not depart from the

specifications for a Public Bus Stop. Pine Grove's application

was not "nonresponsive" for identifying a P ublic Bus Stop as its

Transit Service.

26. Located at a distance of 0.55 miles from the proposed

development, Bus Stop #4203 was entitled to a score of 0.0

according to the RFA's scoring schedule, which requires that 0.0

points be awarded to a Public Bus Stop that is farther than 0.30

miles from the proposed development. That Bus Stop #4203 must

be awarded no points does not , of itself, make Pine Grov e's

application nonresponsive ; it just means that the application

will receive fewer points than the maxim um available for this

item. T he RFA pointedly does not state that reliance upon a

Public Bus Stop located more than 0.30 miles from the proposed

development will result in a finding of noncompliance , and it

strongly implies otherwise by instructing that distant Public

Bus Stops shall be given a score, albeit a score of zero . Pine

Grove's application was not "nonresponsive" merely for

identifying a faraway Public Bus Stop as its Transit Service.

27. Because Bus Stop #4203 could be awarded no more than

0. 0 points, however, Pine Grove's application fails to earn the

Required Minimum Transit Service Score of 2 .0 , which makes it

ineligible to be considered for funding. Being found ineligible

for funding due to a low score is different from being deemed

nonre sponsive to the specifications . T o be sure, in this

instance the effect is the same, either way. But still, it is

at best debatable whether there is any deviation here that FHFC

could waive as a minor irregularity, even if it wanted to.

28. Putting as ide that technicality, t he irreducible

problem for Pine Grove is that, to remain in line for the award,

it must receive at least 2.75 proximity points for its Transit

Service . Pine Grove needs a Transit Service Score of 2.75 to

get a raw score of 12.25 an d hence an adjusted Total Proximity

Score of 18 . Without a Total Proximity Score of 18, Pine Grove

will not have a perfect overall score of 23, and without a

perfect overall score, Pine Grove is out of the lottery.

29. Pine Grove's irreducible problem is insoluble because

a Public Bus Stop such as Stop #4203 cannot receive more than

2.0 points , and Pine Grove needs 2.75 . Therefore, even if FHFC

could deem Pine Grove's reliance upon a Public Bus Stop that is

situated beyond the 0.30 - mile limit a "minor irregularity"; and

even if FHFC could then award Pine Grove the full 2.0 points for

Stop #4203 , these extraordinary (and probably impermissible)

steps still would be in sufficient to keep Pine Grove in first

place for preliminary funding . Obviously FHFC co uld not award

Pine Grove more than the maximum score of 2.0 points for a

"nonresponsive" distant Public Bus Stop.

30. The only way for Pine Grove to hold on to its

preliminary funding would be for FHFC to treat S top #4203 as a

Public Bus Transfer Stop even though, pursuant to the

unambiguous specification s of the RFA , it is a Public Bus Stop .

This, it seems to the undersigned, would not be a matter of

waiving a "minor irregularity," but instead would amount to

pretending that one clearly defined Transit Service (Public Bus

Stop) i s another clearly defined Transit Service (Public Bus

Transfer Stop), for the sole purpose of raising an applicant's

score above that which the RFA plainly requires. Such agency

conduct would be both clearly erroneous an d contrary to

competition ÏÏ in short, impermissible.

31. Pine Grove has a point when it asserts that the

existence of Stop #1397 means that its proposed development

actually would be located close to adequate transportation

services ÏÏ a fact that is undispu ted ÏÏ and therefore that the

needs behind the Transit Services component of the proximity

criteria would be fulfilled notwithstanding Pine Grove's

misplaced reliance upon Stop #4203. Rejecting Pine Grove's

application for lack of a nearby Transit Service w hile knowing

that a nearby Transit Service exists does seem somewhat unfair.

This sense of unfairness is ameliorated in part , however, by the

recognition that Pine Grove's preliminary selection was, after

all, the result of the "luck of the draw" ÏÏ not qua litative

superiority over other applicants. It is eliminated by the

recognition that to accept Pine Grove's application as the

winner would require FHFC to give Pine Grove a Transit Service

Score to which it clearly is not entitled ÏÏ in effect handing out

" bonus points " ultimately explicable, if with a wink and a nod,

only as an impermissible tribute to Stop #1397. 2 /

32. In sum, Pine Grove's application was technically

responsive to the RFA. Unbeknownst to Pine Grove and FHFC,

however, Pine Grove's appli cation contained a material

misrepresentation ÏÏ namely that Stop #4203 is a Public B us

Transfer Stop ÏÏ upon which FHFC reasonably relied in giving Pine

Grove a Transit Service Score of 5.0, which, under the RFA's

unambiguous scoring schedule , was the correct score to give for

a Public Bus Transfer stop located 0.55 miles from the proposed

development. As everyone now agrees, Stop #4203 is not a Public

Bus Transfer Stop, but a Public Bus Stop ÏÏ a n Eligible Service,

without question , but one which, under the RF A's scoring

schedule, earns just 0.0 points. Adjusting Pine Grove's Transit

Service Score to 0.0, as must be done after forgiving and

correcting the misrepresentation, makes Pine Grove's application

ineligible for further consideration for failure to achieve the

Required Minimum Transit Score of 2.0. Even if eligible,

however, Pine Grove necessarily would be out of the running, for

with a Transit Service Score of 0.0 (ignoring eligibility), Pine

Grove's overall score falls short of the perfect 23 that seven

other competitors achieved.

33. If Pine Grove is eliminated from consideration, as the

undersigned will recommend, the next applicant in line is

Houston Street, holder of the second lowest lottery number.

Pine Grove asserts t hat Houston Street's application is

nonresponsive for two reasons: (1) failure to demonstrate site

control and (2) failure to prove its ability to proceed. These

issues will be taken up in turn.

34. "Evidence of Site Control" is an unscored Mandatory

It em. The RFA instructs that the " Applicant must demonstrate

site control by providing, as Attachment 14 to Exhibit A, the

documentation required . . . below. If the proposed Development

consists of Scattered Sites, site control must be demonstrated

for al l of the Scattered Sites. " RFA at 31. As relevant to

this case, the document necessary to establish site control is

an "Eligible Contract," which is an instrument defined in

pertinent part as follows:

For purposes of the RFA, an eligible

contract is one that has a term that does

not expire before July 31, 2015 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 July 31, 2015;

specifically states that the buyer ' s 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.

RFA at 31.

35. Houston Street's proposed development would be located

on property comprising two contiguous parcels, each of which

Houston Street has under contract to purcha se. Houston Street

provided both contracts as evidence of site control, attaching

them to its application as instructed .

36. One of the two parcels is 0.09 acres owned by Kesher

Investments, LLC ("Kesher") , for which Houston Street has agreed

to pay $7 50,000. Based on the Real Estate Purchase Agreement

supplied as evidence of site control , the Kesher parcel remained

on the market as of the date Houston Street submitted its

application to FHFC . Paragraph 18 of the contract provides:

RIGHT OF FIRST REFU SAL . It is understood

that Purchaser is planning to apply for

housing tax credits from the FHFC. Seller

shall continue to market the property until

FHFC approved or denies Purchasers

application for tax credits, bonds or other

similar financing. If any other written

purchase offer for Property is submitted and

deemed acceptable to Seller, the offer shall

be presented to Purchaser and Purchaser

shall have ten (10) days in which to match

the terms of written offer or terminate this

Agreement and receive a full refund of the

Deposit and neither party shall have any

further ob ligations under this Agreement.

Only exception to this First Right of

Refusal is if such submitted written offer

is from an entity that would be a competitor

for FHFC tax credits, bonds or other type of

similar financing then that offer will be

deemed unacceptable.

Joint Ex. 2 at 65 of 111.

37. The Real Estate Purchase Agreement requires the

parties to close on the Kesher parcel "no later than

August 31st, 2015, unless the closing date is extended."

Joint Ex. 2 at 5 9 of 111. The agreement provides extension

options, as follows:

Purchaser shall have the right to extend the

closing for the payment of Two Thousand Five

Hundred Dollars ($2,500) per 30 day

("Extension Period") for Four (4) Extension

Periods. The extension fee(s) shall be

released to Seller by the Escrow Agent

immediately upon notice from Purchaser to

Seller to extend the contract. Payment of

extension fee(s) to be deducted from the

Earnest Money Deposit. All extension fee(s)

released to Seller through Escrow Agent

shall be non - refundable, but applicable to

the purchase price, and shall be deemed to

be liquidated damages in the event this

transaction does not close and is earned as

such by Seller.

Joint Ex. 2 at 59 of 111.

38. T he other parcel is owned by Downtown Station, LLC.

It is 0.50 acres , and Houston Street has agreed to purchase the

property for $975,000. Like the Kesher parcel, this half - acre

piece of land remained on the market as of the date Houston

Street submitted its application , according to a provision of

the Real Estate Purchase Agreement which provides as follows:

Continued Marketing/Right of First Refusal.

It is agreed that Seller herein, shall

continue to m arket the subject Property and

entertain any and all offers to purchase the

said Property by others. Should Seller

receive an offer to purchase the subject

property from any other person or entity,

with terms and conditions acceptable to

Seller, Seller sh all provide Purchaser

herein notice of same. Purchaser shall have

ten (10) days from notice of the foregoing

that it wishes to purchase the subject

property on the same terms and conditions as

offered by another buyer. If Purchaser

herein does not agree to purchase the

subject property in accordance with said

terms and conditions, then Seller shall have

the right to proceed to sell the subject

property to the subsequent buyer and this

Agreement shall be null and void, at which

time any and all deposits pl aced by

Purchaser herein shall be returned to

Purchaser.

Joint Ex. 2 at 80 of 111.

39. Closing on the Downtown Station parcel is to occur "no

later than August 31st, 2015, unless the closing date is

extended." Joint Ex. 2 at 74 of 111. The purchase and sale

agreement gives the buyer four successive options to extend the

closing date for 30 - day period s , respectively, upon payment of

$2,500 for each extension , pursuant to a provision which is

identical to the one in the Kesher agreement, quoted above.

40. Pine Grove argues that Houston Street has failed to

demonstrate site control because the properties it has under

contract are still for sale, and because exercising a right of

first refusal could require Houston Street to meet conditions

besides the p ayment of additional monies. Pine Grove's position

first raises the question of whether both of the agreements

Houston Street provided with its application satisfy the

definition of an "Eligible Contract." If this question were

answered in the negative, then Houston Street's application

would be nonresponsive because the submission of an Eligible

Contract is necessary to demonstrate site control. If the

answer were affirmative, however, a second question would arise,

and that is whether an Eligible Contr act is sufficient to

demonstrate site control. If so, then Houston Street's

application would be responsive. If not, then it would be

necessary to scrutinize the terms and conditions of the Eligible

Contracts to ascertain whether they demonstrate site co ntrol or

(as Pine Grove maintains) a lack thereof.

41. The contracts that Houston Street submitted satisfy

the plain and literal meaning of the language used in the RFA to

define an Eligible Contract. Neither agreement expires before

July 31, 2015, and i n any event both agreements contain

extension options which Houston Street can exercise solely by

paying additional monies. The other requirements of the

relevant definition , e.g., the availability of specific

performance as a buyer's remedy, are met . Th erefore, Houston's

Street's application is responsive to the specifications

mandating that an Eligible Contract be provided as evidence of

site control.

42. The foregoing determination gives rise to the question

of whether an Eligible Contract is sufficie nt to establish site

control. On this point, the RFA is ambiguous. The provisions

dealing with site control reasonably could be understood as

directing that the submission of an Eligible Contract is both

necessary and sufficient to establish the requisit e degree of

control over the proposed development site. Under this

interpretation, the inquiry into Houston Street's site control

ends, for Houston Street provided FHFC with Eligible Contracts

relating to the parcels it hopes to develop.

43. Alternativ ely, the RFA's site control provisions

reasonably could be read as directing that the submission of an

Eligible Contract is necessary , but not sufficient , to prov e the

requisite degree of site control. Pine Grove has offered

evidence showing that, in past cycles, FHFC has examined the

terms and conditions of "Qualified Contracts" (the substantial

equivalent of Eligible Contracts under the RFA) to determine the

existence of site control, and found the site - control evidence

to be insufficient. This suggests that providing the necessary

contract does not necessarily demonstrate site control.

44. Indeed, Pine Grove asserts that under FHFC's previous

interpretations of "site control," Houston Street's

documentation should be found wanting. In one earlier inst ance,

FHFC expressed concern over a Qualified Contract that was

subject to a right of first refusal belonging to a third party.

In other words, by exercising its right of first refusal, a

third party over whom the applicant had no control could

purchase t he proposed development site, and the applicant had no

contractual means of stopping such a sale, which would deprive

the applicant of the subject site. In another past instance,

FHFC found fault with a provision in a Qualified Contract which

gave the sel ler the right (until a certain date) to sell the

property to a third party but did not grant the applicant a

right of first refusal . Here then, once again, a third party

over whom the applicant had no control could purchase the

proposed development site, and the applicant had no contractual

means of stopping such a sale, which would deprive the applicant

of the subject site.

45. Despite some superficial similarities, Houston

Street's situation is distinguishable from these historical

situations because Houston Street, as a hold er of first - refusal

rights , possesses a measure of control over the potential

sale (s) of the development site(s) to a third party or parties

that the previous applicants lacked. Unlike them, Houston

Street has at its disposal con tractual means of stopping another

person from buying the subject parcel(s). The decision whether

to meet the terms and conditions of a competing offer is Houston

Street's to make; therefore, Houston Street controls its own

destiny with regard to the purc hase of the proposed development

site.

46. Consequently, assuming that an Eligible Contract is

not sufficient under the RFA to prove site control, but instead

must be examined to ascertain whether site control exists, the

undersigned determines that H ouston Street's sellers' continued

marketing of the parcels comprising the development site subject

to Houston Street's rights of first refusal is not inconsistent

with Houston Street's retention of adequate control over its

acquisition of the site. In sh ort, it is determined, as a

matter of ultimate fact , that Houston Street has demonstrated

site control adequately for purposes of the RFA. At the very

least, it is determined that FHFC's determination to the same

ef fect was not clearly erroneous. 3 /

47. The RFA requires that an applicant provide

documentation establishing its "Ability to Proceed," including

the following items:

(1) Status of Site Plan Approval. The

Applicant must provide, as Attachment 7

to Exhibit A, the properly completed

and executed Florida Housing Finance

Corporation Local Government

Verification of Status of Site Plan

Approval for Multifamily Developments

form (Form Rev. 11 - 14).

(2) Appropriate Zonin g. The Applicant must

provide, as Attachment 8 to Exhibit A,

the applicable properly completed and

executed verification form: (a) Florida

Housing Finance Corporation Local

Government Verification that

Development is Consistent with Zoning

and Land Use Regulations form (Form

Rev. 11 - 14) or (b) Florida Housing

Finance Corporation Local Government

Verification that Permits are not

Required for this Development form

(Form Rev. 11 - 14).

RFA at 60 .

48. Attachment 7 relat es to the status of the project' s

site plan approval. T he form directs the person who signs it to

mark one of three alternative statements to signify which is

applicable to the proposed development. On the form attached to

Houston Street's application, the following statement was

selected:

2. ƙ The above - re ferenced Development is (a)

new construction , or (b) rehabilitation

with new construction, or (c)

rehabilitation, without new

construction, that requires additional

site plan approval or similar process,

and (i) this jur isdiction provides

either preliminary site plan approval

or conceptual site plan approval which

has been issued , or (ii) site plan

approval is required for the new

construction work and/or the

rehabilitation work; howeve r, this

jurisdiction provides neither

preliminary site plan approval nor

conceptual site plan approval, nor is

any other similar process provided

prior to issuing final site plan

approval. A lthough there is no

pre liminary or conceptual site plan

approval process and the final site

plan approval has not yet been issued,

the site plan, in the zoning

designation stated above, has been

reviewed.

T he necessary approval and/or review

was performed on or before the

submission deadline for the above

referenced FHFC Request for

Proposal/Application by the appropriate

City/County legally authorized body;

e.g. council, commission, board,

department, division, etc., responsible

for such approval process.

Joint Ex. 2 at 39 of 111 .

49. The Local Government Verification of Status of Site

Plan Approval must be "signed by the applicable City's or

County's Director of Planning and Zoning, chief appo inted

official (staff) responsible for determination of issues related

to site plan approval, City Manager, or County

Manager/Administrator/Coordinator." Houston Street's form was

signed by Folks Huxford, Chief of the Current Planning Division

for the Cit y of Jacksonville. By signing the form, Mr. Huxford

certified that he had the authority "to verify status of site

plan approval as specified above and . . . that the information

stated above is true and correct." Mr. Huxford wa s an

acceptable signatory.

50. Pine Grove asserts that Houston Street did not obtain

the conceptual site plan approval for which local law allegedly

provides, and therefore that Houston Street's Local Government

Verification of Status of Site Plan Approval form is incorrect

and, ac cordingly , nonresponsive . Pine Grove bases its argument

on certain provisions of the Jacksonville, Florida, Code of

Ordinances, about whose meaning Pine Grove disagrees with

Mr. Huxford, and on the fact that no conceptual site plan

approval ha d been issued for Houston Street's proposed

development.

51. A good place to start in evaluating Pine Grove's

position is with a look at the site - plan status form's purpose.

It is clear from the language of the form that what FHFC wants ,

in a nutshell, is an authoritative statement from the local

government advising that the local government either has

approved, or is currently un aware of grounds for disapproving,

the proposed development's site plan. The relevance of this

statement lies not so much i n its being correct , per se, but in

the fact that it wa s made by a person in authority whose word

carries the weight of a governmental pronouncement . Put another

way , the statement is correct if made by a n official with the

authority to utter the statement on behalf of the local

government; it is a verbal act, a kind of approval in itself .

52. FHFC might , of course, deem a fully executed site - plan

status form nonresponsive for a number of reasons. If it were

determined that the person who signed the form lacked the

requisite authority to speak for the government; if the

statement were tainted by fraud, illegality, or corruption; or

if the signatory withdrew his certification, for example, FHFC

likely would reject the certification. No such grounds were

e stablished in this case, or anything similar.

53. Instead, Pine Grove contends that Mr. Huxford simply

erred, that he should not have signed the Local Government

Verification of Status of Site Plan Approval . Pine Grove makes

a reasonable, or at least pl ausible, case to this effect. The

fatal flaw in Pine Grove's argument , however, is that the

decision whether to grant or deny this particular form of

(preliminary) local governmental approval to Houston Street's

site plan must be made by the local governm ent having

jurisdiction over the proposed development, i.e, t he City of

Jacksonville ÏÏ n ot by Pine Grove, Houston Street, FHFC, or the

undersigned. Mr. Huxford was empowered to make the statement

for the city . He made it. No compelling reason has been shown

here to disturb FHFC's accept ance of Mr. Huxford's certification

as a valid expression of the City of Jacksonville's favorable

opinion, as of the application submission deadline , regarding

Houston Street's site plan.

54. Attachment 8 relates to local zoning and land use

regulations and requires a local official to confirm the

following representation s :

The proposed number of units and intended

use are consistent with current land use

regulations and the referenced zoning

designation or, if the Development consists

of rehabilitation, the intended use is

allowed as a legally non - conforming use. To

the bes t of my knowledge, there are no

additional land use regulation hearings or

approvals required to obtain the zoning

classificati on or density described herein.

Assuming compliance with the applicable land

use regulations, there are no known

conditions whic h would preclude construction

or rehabilitation (as the case may be) of

the referenced Development on the proposed

site.

J oint Ex. 2 at 41 of 111. Mr. Huxford signed Houston Street's

form, verifying that the proposed development is consistent with

the Ci ty of Jacksonville's "local land use regulations and the

[applicable] zoning designation." Mr. Huxford had the authority

to make this statement on the city's behalf .

55. Pine Grove claims that Houston Street's Local

Government Verification T hat Develo pm ent Is Consistent W ith

Zoning and Land Use Regulations form is incorrect and

nonresponsive because Houston Street has not yet obtained all

the necessary land use approvals, including the allegedly

available conceptual site plan approval mentioned previousl y .

Pine Grove's argument in this regard is identical to its

objection to Houston Street's site - plan status form, which was

rejected above. For the reasons previously given, therefore, it

is found that FHFC did not err in accept ing Mr. Huxford's

verificat ion of consistency with local zoning and land use

regulations as a valid expression of the City of Jacksonville's

position on these matters in relation to Houston Street's

proposed project .

56. Thus, it is determined, as matter s of ultimate fact,

that Ho uston Street's application satisfied the RFA 's

specifications pertaining to Evidence of Site Control and

Ability to Proceed, and that FHFC made no mistake s in deeming

the application compliant with these requirements.

CONCLUSIONS OF LAW

5 7 . DOAH has personal and subject matter jurisdiction in

this proceeding pursuant to sections 120.569, 120.57(1), and

120.57(3), Florida Statutes . See also Fla. Admin. Code R.

67 - 60.009 . FHFC's decisions in this competitive process

determin e the substant ial interests of Pine Grove and Houston

Street, each of whom therefore has standing to participate in

this proceeding .

5 8 . Pursuant to section 120.57(3)(f), the burden of proof

rests with the party opposing the propos ed agency action, s ee

State Contractin g & Eng'g Corp. v. Dep't of Transp. , 709 So. 2d

607, 609 (Fla. 1st DCA 1998) , who must establish its allegations

by a preponderance of the evidence. Dep't of Transp. v. J.W.C.

Co., Inc. , 396 So. 2d 778, 787 (Fla. 1st DCA 1981).

5 9 . Section 120.57(3)(f), Florida Statutes, spells out the

rules of decision applicable in bid protests. In pertinent

part, the statute provides:

In a competitive - procurement protest, other

than a rejection of all bids, the

administrative law judge shall conduct a de

novo proceedi ng to determine whether the

agency's proposed action is contrary to the

agency's governing statutes, the agency's

rules or policies, or the bid or proposal

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency act ion was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

60 . The undersigned has discussed elsewhere, at length ,

the meaning of this statutory language, the analytical framework

established thereby, and the levels of deference to be afforded

to the agency's preliminary findings and conclusions. See,

e.g. , Care Access PSN, LLC v. Ag. for Health Care Admin. ,

Case No . 13 - 4113BID, 2014 Fla. Div. Adm. Hear. LEXIS 3 , 41 - 55

(Fla. DOAH Jan. 2, 2014) . It is not necessary to review these

principles here.

61. FHFC's intended decision cannot stand, as the agency

itself realizes, because Pine Grove 's application, after fixing

the factual misstatement about Stop #4203, fails to earn enough

points to remain competitive or even eligible . Pine Grove urges

the undersigned to recommend that FHFC waive a minor

irregularity in its application ÏÏ meaning not the material

misrepresentati on (which FHFC is willing to overlook), but the

reliance on Stop #4203 instead of Stop # 1397. What Pine Grove

really seeks (and needs) is the waiver of the RFA scoring

specifications so that at least 2.75 points could be awarded for

a faraway Public Bus S top . Such an action would be, of course,

clearly contrary to the specifications; it cannot be

recommended.

62 . T he undersign ed found no variance, material or

otherwise, between Houston Street's application and the RFA

specifications relating to Evidenc e of Site Control and Ability

to Proceed. Therefore, it is concluded that Pine Grove's

objection s establish no grounds for disqualifying Houston

Street's application as nonresponsive .

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Florida Housing Finance

Corporation enter a Final Order rescinding the preliminary award

to Pine Grove and designating Houston Stree t as the recipient of

the tax credits being made available for the development in the

"F amily or Elderly Demographic Commitment" category to be built

i n Duval County .

DONE AND ENTERED this 18th day of August , 201 5 , in

Tallahassee, Leon County, Florida.

S

___________________________________

JOHN G. VAN LANINGHAM

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.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 18th day of August , 2015.

ENDNOTES

1 / For some applicants, the required minimum Transit Servic e

Score was 1.5. This reduced threshold is not applicable,

however, in the instant case.

2 / Section 120.57(3)(f), Florida Statutes, forbids consideration

of "submissions made after the bid or proposal opening which

amend or supplement the bid or proposal." Thus, FHFC is not

permitted to award an applicant points, even (or perhaps

especially) if only by implication, for a quality established

exclusively by in formation or evidence submitted post - opening.

3 / In light of these determinations, it is not necessary for the

undersigned to resolve the ambiguity in the RFA's site control

provisions. To avoid future uncertainty, however, FHFC might

want to make clear its interpretation of these provisions in its

Final Order, or to consider tightening the pertinent provisions

in its next request for applications.

COPIES FURNISHED :

M. Christopher Bryant, Esquire

Oertel, Fernandez, Bryant and

Atkinson, P.A.

Post Office Box 1110

2060 Delta Way

Tallahassee, Florida 32302 - 1110

(eServed)

Christopher D. McGuire, Esquire

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301

(eServed)

Michael J. Glazer, Esquire

Erik M. Figlio, Esquire

Ausley and McMullen, P.A.

123 South Calhoun Street

Post Office Box 391

Tallahassee, Florida 32301

(eServed)

Kate Flemming, Corporation Clerk

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 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.