15-003304BID Pinnacle Heights, Llc vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Monday, August 31, 2015.

Summary: Petitioner established that Intervenor's application was incorrectly scored by agency; tax credits for affordable housing awarded to Petitioner rather than Intervenor.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PINNACLE HEIGHTS, LLC,

Petitioner ,

vs. Case No. 1 5 - 3304 BID

FLORIDA HOUSING FINANCE

CORPORATION ,

Respondent ,

and

RIO AT FLAGLER, LP,

Intervenor.

_______________________________/

RECOMMENDED ORDER

D. R. Alexander, Administrative Law Judge of the Division

of Administrative Hearings (DOAH) , conducted the final hearing

on August 6, 2015, in Tallahassee, Florida.

APPEARANCES

For Petitioner : J. Stephen Menton, Esquire

Rutledge Ecenia, P.A.

119 South Monroe Street , Suite 202

Tallahassee, Florida 32301 - 1591

Gary J. Cohen, Esquire

Shutts and Bowen, LLP

1500 Miami Center

201 South Biscayne Boulevard

Miami, Florida 33131 - 4329

For Respondent : Betty C. Zachem, Esquire

Florida Housing and Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 32301 - 1367

For Intervenor: Michael P. Donaldson, Esquire

Carlton Fi elds Jorden Burt, P.A.

Post Office Box 190

Tallahassee , Florida 32 3 02 - 0190

STATEMENT OF THE ISSUE

The issue is whether Florida Housing and Finance

Corporation 's intended decision to award low income housing tax

credits for an affordable housing development in Miami - Dade

County to Rio at F lagler, LP (Rio) , was contrary to solicitation

specifications , and if so, whether that determination was

clearly erroneous or contrary to competition .

PRELIMINARY STATEMENT

On November 21, 2014, Florida Housing Finance Corporation

(Florida Housing or agency) issued Request for Applications

2014 - 116 (RFA) , which solicited applications to compete for

federal low - income housing tax credit funding (tax credits) for

affordable hou sing developments in Miami - Dade County.

A ppl ications were submitted in response to the RFA by a number

of developers , including Rio and Pinnacle Heights, LLC

(Pinnacle) . On May 8, 2015, Florida Housing posted a notice of

its intended decision to award fu nding for family and elderly

affordable housing to Rio and two other applicant s not relevant

here, whose application s w ere deemed to be eligible . Although

Pinnacle's application was also determined to be eligible, Rio

had a lower tiebreaking lottery numbe r than Pinnacle , and Rio

was awarded the tax credits.

P ursuant to section 120.57(3), Florida Statutes (201 5 ),

P innacle timely filed a notice of intent to protest, followed by

a formal written protest . In its formal written protest,

Pinnacle alleged tha t but for Florida Housing erroneously

scoring Rio's application, it would have received the requested

funding. The matter was referred to DOAH to resolve the

dispute. Prior to the hearing, Florida Housing changed its

position and now contends that Rio's application was incorrectly

scored and that Pinnacle, rather than Rio, should receive the

funding.

At the final hearing, P etitioner presented the testimony of

one witness. Petitioner 's Exhibit 5 was accepted in evidence.

Rio presented the testimony of one witnes s. Rio's Exhibits 2

through 4, 6, and 7 were accepted in evidence. Joint Exhibits 1

through 8 were also accepted in evidence.

A one - volume Transcript of the hearing was prepared . All

parties filed p roposed r ecommended o rders, which have bee n

considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Florida Housing is a public corporation created

pursuant to section 420.504. One of its responsibilities is to

award low - income housing tax credits, which developers use to

fi nance the construction of affordable housing. Tax credits are

made available to states annually by the United States Treasury

Department and are then awarded pursuant to a competitive cycle

that starts with Florida Housing's issuance of a RFA.

2. In thi s case, the RFA was issued on November 21 , 2014,

modified slightly on January 30, 2015 , and required the filing

of applications by February 10, 2015 . According to the RFA,

Florida Housing is expected to award up to an estimated

$4,367,107 of housing cred its for the following demographic set -

aside : housing projects targeted for either the family or

elderly population in Miami - Dade County. The credits w ill be

awarded to the applica nts with the highest total scores .

3 . Pinnacle submitted Application No. 2 015 - 211C seeking

$2,560,000.00 in annual allocation of housing credits to finance

the construction of a 104 - unit residential rental development to

be known as Pinnacle Heights. Rio submitted Application No.

2015 - 217C seeking $1,940,000.00 in annual alloca tion of housing

credits to finance the construction of a 76 - unit residential

development to be known as Rio at Flagler.

4 . The agency's Executive Director appointed a review

committee comprised of Florida Housing staff to evaluate the

applications for e ligibility and scoring. Fifty - three

applications were received, processed, deemed eligible or

ineligible, scored, and ranked pursuant to the terms of the RFA,

administrative rules, and applicable federal regulations.

Applications are considered for fundi ng only if they are deemed

"eligible," based on whether the application complies with

various content requirements. Of the 53 applications filed in

response to the RFA , 43 were found to be eligible, and ten were

found ineligible. Both Pinnacle and Rio we re found eligible for

the family/elderly demographic .

5 . The RFA specifies a sorting order for funding eligible

applicants. All eligible applicants in the family/elderly

demographic, including Pinnacle and Rio, achieved the maximum

score of 23 based on criteria in the RFA . Recognizing that

there would be more applications than available credits, Florida

Housing established an order for funding for applicants with

tied scores using a sequence of six tiebreakers, with the last

being a lottery number assi gned by the luck of the draw.

Applications with lower lottery numbers (closer to zero) are

selected before those with higher lottery numbers.

6 . B oth Pinnacle and Rio received the maximum 23 points

and met all tiebreaker criteria. In other words, both h ad so -

called "perfect" applications. The ultimate deciding factor for

perfect applications is a randomly generated lottery number that

is assigned at the time each application is filed. Rio's number

is four, while Pinnacle's number is six. B ecause Rio h ad a

lower lottery number than Pinnacle, Florida Housing issued its

notice of intent to award tax credits to Rio and ano ther

applicant (with a lower lottery number) not relevant here .

7. Pinnacle timely filed a formal written protest. As

amended, Pinna cle's protest is narrowed to a single issue --

whether the bus stop identified in Rio's application is a Public

Bus Transfer Stop, as defined in the RFA. A failure to comply

with th is provision would lower Rio's total proximity score and

make it ineligibl e to receive tax credit funding.

8. The RFA specifies two Point Items in the family/elderly

demographic category. The first Point Item is "Local Government

Contributions," for which a maximum of five points could be

awarded. The second is "Proximity to Transit and Community

Services," for which points are awarded based on the distance

between the proposed development and the selected transit and

community service. A maximum of six proximity points are

allowed for Transit Services , while a maximum of 12 proximity

points are allowed for Community Services for a total maximum of

18 proximity points. Under the terms of the RFA, if a n

applicant achieve s a minimum of 12.25 proximity points for

Community Service s and Transit Service s , a "point boost" up to

the maximum total score of 18 proximity points is added to the

applicant's score . Rio's transit score of six points is the

focus of th is dispute.

9 . T he RFA lists five types of Tran sit S ervices that an

applicant can self - select to obtain proximity points, i ncluding

Public Bus Stop (maximum two points) and Public Bus Transfer

Stop (maximum six points). Applicants may select only one type

of transit services on which to base their transit score .

Depending on the type of t ransit s ervice selected, an applicant

may receive up to a maximum of six points for Transit Services .

To verify the information in the application, a n applicant must

submit a Surveyor Certification Form , which is completed and

signed by a licensed surveyor. In making its preliminary

decisio n to award tax credits , Florida Housing relies on the

information provided in the form and does not second - guess the

surveyor. Issues regarding the accuracy of th e information in

the form are presented through challenges by other applicants.

1 0 . Because Rio had only ten points for proximity to

Community Services, it needed at least 2.25 transit points in

order to obtain the minimum 1 2 .25 proximity points necessary to

achieve a point boost up to 18 points and be in the running for

funding. Accordingly, Ri o's application sought six points for

the project site's proximity to a Public Bus Transfer Stop . A

Public Bus Transfer S top is defined on page 19 of the RFA as

follows:

This service may be selected by Family and

Elderly Demographic Applicants. For

purpo ses of proximity points, a Public Bus

Transfer Stop 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 h ourly during the times of 7 a.m. to

9 a.m. and also during the times of 4 p.m.

to 6 p.m. 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. Bus routes

mu st be established or approved by a Local

Government department that manages public

transportation. Buses that travel between

states will not be considered.

1 1 . In sum , a Public Bus Transfer Stop is a fixed location

at which passengers may access "at lea st three routes of public

transportation via buses , " with each route having a scheduled

stop at th at loca tion at least hourly during morning and

afternoon rush hours, Monday through Friday , on a year - round

basis .

1 2 . To comply with th is requirement , and based upon oral

information provided by customer service at Miami - Dade Transit

Authority (Authority) , Rio selected a bus stop located at West

Flagler Street and Northwest 8th Avenue. Rio represented that

th is location was served by three qualifying route s: Route 6

(Coconut Grove), Route 11 (Florida International University -

University Park Campus), and Route 208 (Little Havana

Circulator).

1 3 . The RFA requires that a bus route be established or

approved by the " local government department " that manages

public transportation, in this case the Authority. Florida

Housing defers to the local government in determining whether a

selected bus route is a qualifying bus route within the meaning

of the RFA .

14 . The head of th e local government department that

manages public transportation is Gerald Bryan, the chief of

service planning and scheduling. By deposition, Mr. Bryan

testified that the location selected by Rio has only two

qualifying routes: 11 and 208. Route 6, the third route relied

upon by Rio, d oes not run hourly during the requisite rush hour

times as required by the RFA and therefore is not a qualifying

route. With only two qualifying routes, the transit service

selected by Rio is a P ublic B us S top for which only two points,

rather than six, c an be awarded. Had this information been

available to Florida Housing when it reviewed Rio's application,

Rio's proximity score would have been less than 12.25, making it

ineligible to receive a point boost and achieve the maximum

total score of 18 proxim ity points.

15 . Because Rio is ineligible for funding , the next

applicant in line is Pinnacle, as it has the next lowest lottery

number among the eligible applications that received 23 points.

16 . Rio does not dispute that Route 6 fails to make the

r equisite stops during rush hours to be considered a qualifying

route. However, it contends that Route 11 functionally serves

as two distinct routes b ecause it has two separate destinations:

the Mall of the Americas and Florida International University

Pa rk Campus . But whether Route 11 is a single route or two

routes is a determination that must be made by the local

government , and not the applicant. Mr. Bryan testified that the

Authority established Route 11 as a single route with two

separate terminati on points . He further explained that it is a

standard practice for a single route , such as Route 11, to have

more than one terminus in order to provide a higher level of

customer service. Because Florida Housing does not second guess

the determination of the local government, the undersigned has

rejected Rio 's assertion that the bus stop is a Public Bus

Transfer Stop. Without the inclus ion of the six proximity

points for this type of t ransit s ervice , Rio's application is

not eligible for funding in this cycle .

CONCLUSIONS OF LAW

17 . P innacle's protest to Florida Housing's proposed

contract award is governed by section 120.57(3)(f), as follows:

In a competitive - procurement protest, other

than a rejection of all bids, proposals, or

replies, the administr ative law judge shall

conduct a de novo proceeding to determine

whether the agency's proposed action is

contrary to the agency's governing statutes,

the agency's rules or policies, or the

solicitation specifications. The standard

of proof for such proceed ings shall be

whether the proposed agency action was

clearly erroneous, contrary to competition,

arbitrary, or capricious.

18 . Pinnacle has the burden of proof to establish that

Florida Housing's proposed action is : (1) contrary to its

governing statute s , (2) contrary to its rules or policies, or

(3) contrary to the RF A specifications. Pinnacle's formal

protest alleges that the scoring of Rio's application is

contrary to the RFA specifications.

19 . To prevail, P innacle must prove , by a preponderance of

the evidence, that Florida Housing's proposed action is: (1)

clearly erroneous; (2) contrary to competition; or (3) arbitrary

or capricious, that is, an abuse of discretion. See, e.g. ,

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

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

Mar. 20, 2002). The formal protest asserts that the proposed

action is clearly erroneous and contrary to competition.

2 0 . Agency action will be found to be clearly erroneous if

it is without ration al support and , consequently, the

Administrative Law Judge has a "definite and firm conviction

that a mistake has been committed." U.S. v. U.S. Gypsum Co. ,

333 U.S. 364, 395 (1948).

2 1 . An act is contrary to competition if it (1) creates

the appearance o f opportunity for favoritism; (2) erodes public

confidence that contracts are awarded equitably and

economically; (3) causes the procurement process to be genuinely

unfair or unreasonably exclusive; or (4) is unethical,

dishonest, illegal, or fraudulent. Syslogic Tech. Servs., Inc.

v. S. Fla. Water Mgmt. Dist. , Case No 01 - 4385BID (Fla. DOAH

Jan. 18, 2002), modified in part , Case No. 2002 - 051 (SFWMD

Mar. 6, 2002).

2 2 . For the reasons previously found, t he proximity

scoring for Rio upon which the prelimi nary allocation was based

i s clearly erroneous and contrary to the RFA specifications.

The deviation from specifications is not a minor irregularity.

To allow the initial scoring for Rio to stand would not only be

contrary to the RFA, it would be contrar y to competition and

give Rio a competitive advantage . The agency itself agrees that

the preliminary scoring of Rio's application was incorrect.

Pinnacle has satisfied its burden of proof.

2 3 . With the correction of scoring, Rio is ineligible for

fundin g, and Pinnacle should be moved into the funding range.

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 finding that Rio 's application is inel igible

for funding and that Pinnacle's application should be selected

for funding under RFA 2014 - 116.

DONE AND ENTERED this 31st day of August , 2 0 1 5 , in

Talla hassee, Leon County, Florida.

S

D . R. ALEXANDER

Administrative Law Judge

Division of Administrati ve 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 31st day of August , 2 01 5 .

COPIES F URNISHED:

Kate Fleming, Corporation Clerk

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 32301 - 1367

(eServed)

Michael P. Donaldson, Esquire

Carlton Fields Jorden Burt, P.A.

Post Office Box 190

Tallahassee, Florida 32302 - 0190

(eServed)

Hugh R. Brown , General Counsel

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 323 01 - 1367

(eServed)

Betty C. Zachem, Esquire

Florida Housing Finance Corporation

227 North Bron ough Street , Suite 5000

Tallahassee, Florida 323 01 - 1367

(eServed)

J. Stephen Menton, Esquire

Rutledge Ecenia, P.A.

119 South Monroe Street , Suite 202

Tallahassee, Florida 32301 - 1591

(eServed)

Gary J. Cohen, Esquire

Shutts and Bowen, LLP

1500 Miami Cente r

201 South Biscayne Boulevard

Miami, Florida 33131 - 4329

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

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

this Recommended O rder should be filed with the agency that will

render a final order in this matter.