16-001137BID Redding Development Partners, Llc, And Htg Hammock Ridge, Llc vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Tuesday, April 19, 2016.

Summary: Because Intervenor's application contained a material non-waivable error, tax credits should be awarded to Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HTG HAMMOCK RIDGE, LLC, AND

REDDING DEVELOPMENT PARTNERS,

LLC,

Petitioner s ,

vs. Case Nos. 16 - 1137BID

1 6 - 113 8 BID

FLORIDA HOUSING FINANCE

CORPORATION ,

Respondent ,

and

BROWNSVILLE MANOR, LP; GROVE

MANOR PHASE I, LTD; JIC GRAND

PALMS, LLC; MADISON PALMS, LTD;

AND RST THE PINES, LP,

Intervenor s.

_______________________________/

RECOMMENDED ORDER

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

of Administrative Hearings (DOAH) , conducted the final hearing

on March 23 , 201 6 , in Tallahassee, Florida.

APPEARANCES

For Petitioner : Maureen McCarthy Daughton, Esquire

(HTG) Maureen McCarthy Daughton, LLC

1725 Capital Circle Northeast, Suite 340

Tallahassee, Florida 3230 8 - 1591

For Petitioner: M. Christopher Bryant, Esquire

( Redding) Oertel, Fernandez, Bryant

& Atkinson, P.A.

Post Office Box 1110

Tallahassee, Florida 32302 - 1110

For Respondent : Betty C. Zachem, Esquire

Eric S. S onderl ing, Esquire

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 32301 - 13 29

For Intervenor s: Michael P. Donaldson, Esquire

(Brown sv ille , Carlton Fields Jorden Burt, P.A.

The Pines , and Post Office Box 190

Grove Manor) Tallahassee , Florida 32 3 02 - 0190

For Intervenor: Donna E lizabeth Blanton, Esquire

(Grand Palms) Radey Law Firm , P.A.

301 South Bronough Street , Suite 200

Tallahassee, Florida 32301 - 1706

For Intervenor: No appearance

( Madison Palms)

STATEMENT OF THE ISSUE S

The issue s are (1) whether Florida Housing Finance

Corporation 's (Florida Hou sing ) intended decision to award low -

income housing tax credits for an affordable housing development

in medium - size counties to Grove Manor Phase I, LTD ( Grove

Manor) , JIC Grand Palms, LLC ( Grand Palms) , Madison Palms, Ltd.

( Madison Palms) , a nd RST The Pines, LP ( The Pines ), wa s contrary

to solicitation specifications , and if so, whether that

determination was clearly erroneous , arbitrary , capricious , or

contrary to competition ; and (2) whether Florida Housing 's

determination that Brownsville Manor, LP ( Brownsville), achieved

the maximum available score of 28 points was contrary to

solicitation specifications, and if so, whether that

determination was clearly erroneous, arbitrary , capricious, or

contrary to competition .

PRELIMINARY STATEMENT

On September 3, 2015, Florida Housing issued Request for

Applications 201 5 - 106 (RFA) , which solicited applications to

compete for federal low - income housing tax credit funding (tax

credits) for affordable housing developments in small and medium

counties. Only the applications for developments in medium

counties are at issue here. Ninety - eight a ppl ications were

submitted in response to the RFA . On January 29, 2016, Florida

Housing posted a notice of its intended decision to award

funding for family and elderly affordable housing to eight

a pplicant s , including Grove Manor, Grand Palms, Madison Palms,

and The Pines.

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

HTG timely filed a formal written protest to the award of tax

credits to Grove Mano r . Although HTG and Grove Manor received

the same score, Grove Manor had a more favorable lottery number

than HTG and was preliminarily awarded the tax credits. The

matter was referred to DOAH and assigned Case No. 16 - 1137BID .

In a separate formal writ ten protest to the same RFA ,

R edding Development Partners, LLC (Redding), which was not

awarded tax credits due to a higher lottery number , challenged

the number of points given Grove Manor, The Pines, Grand Palms,

and Madison Palms . It also challenged th e score of Brownsville ,

which was not awarded tax credits but ranked ahead of Redding

due to a lower lottery number. Th e protest was assigned Case

No. 16 - 1138BID. The two cases were consolidated by Order dated

March 1, 2016. Redding was later granted le ave to amend its

protest.

In the parties' Joint Prehearing Stipulation, Madison Palms

agreed that the public bus stop identified in its application is

not a public bus stop as defined in the RFA , which results in a

loss of proximity points and renders it i neligible for funding.

Also, Grove Manor agreed that the public school identified in

its application is not a public school as defined in the RFA,

which results in a loss of proximity points . While still

eligible, Grove Manor is no longer in the funding range. HTG is

now ranked as the next eligible applicant for funding .

At the final hearing, Redding presented the testimony of

four witnesses. Also, Redding Exhibit s 1 through 6, 8, 9, 12

through 20, 22, and 28 were accepted in evidence. The Pines

presen ted the testimony of one witness. Its Exhibit s 1 through

5 were accepted in evidence. Brownville presented the testimony

of four witnes s es . Brownsville Exhibits 1 through 10 we re

accepted in evidence. Florida Housing, HTG , and Grand Palms

presented no witnesses . HTG Exhibits 1 and 2 and Grand Palms

Exhibits 1 through 3 were accepted in evidence. Finally, Joint

Exhibits 1 through 4 were accepted in evidence. Two depositions

of Horace L. Jones, Director of Development Services for

Escambia County , were late - filed by Redding and Brownsville.

A two - v olume Transcript of the hearing was prepared . The

parties filed p roposed r ecommended o rders, which have been

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

finance the construction of affordable housing. Tax credits are

made available to states annually by t he United States Treasury

Department and are then awarded pursuant to a competitive cycle

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

2. On September 3, 2015, Florida Housing issued an RFA in

which it expected to award up to an estimated $ 10,7 63,426.00 of

tax credits for affordable housing developments in medium

counties. The RFA also requested proposals for housing

developments in small counties, but that portion of the RFA is

not at issue. All applicants in this proceeding proposed

developm ents in medium counties. They include Redding (Seminole

County), HTG (Hernando County), Brownsville (Escambia), Grove

Manor (Polk County), Grand Palms ( Manatee County), Madison Palms

(Brevard County), and The Pines (Volusia County).

3. F lorida Housing r etain ed the right to " waive M inor

I rregularities in an otherwise valid Application" filed pursuant

to the RFA. Fla. Admin. Code R. 67 - 60.008. A "minor

irregularity" is defined as "a variation or condition of the

Application pursuant to this rule chapter that does not provide

a competitive advantage or benefit not enjoyed by other

Applicants, and does not adversely impact the interests of the

Corporation or the public." Fla. Admin. Code R. 67 - 60.002(6).

These rules are particularly relevant in this case, as during

the scoring process Florida Housing waived minor irregularities

for several applicants .

4 . Florida Housing's Executive Director appointed a review

committee comprised of Florida Housing staff to evaluate the

applications for eligibility and sco ring. Ninety - eight

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 funding only if they a re deemed

"eligible," based on whether the application complies with

various content requirements. Of the 98 applications filed in

response to the RFA, 88 were found to be eligible, and ten were

found ineligible. All applicants in this case were

prelimin arily deemed to have eligible applications and received

a maximum score of 28 points .

5 . The RFA specifies a sorting order for funding eligible

applicants. Recognizing that there would be more applications

than available credits, Florida Housing establis hed an order for

funding for applicants with tied scores using a sequence of five

tie breakers, with the last being a lottery number assigned by

the luck of the draw. Applications with lower lottery numbers

(closer to zero) are selected before those with higher lottery

numbers.

6 . On January 29, 2016, Florida Housing posted a notice

informing the participants that it intended to award funding to

eight developments in medium counties , including those of Grove

Manor, Grand Pa lms, Madison Palms, and The Pine s. While the

applications of HTG, Brownsville , and Redding were deemed to be

eligible, they were not entitled to a preliminary award of

funding because of their lottery number ranking . The randomly

assigned lottery numbers of th os e applicants are as foll ows:

HTG (14) , Brownsville (16) , and Redding (17) .

7. HTG and Redding timely filed formal written protest s .

HTG's protest is directed only at Grove Manor 's application .

Because Grove Manor agreed that its score should be adjusted

downward , HTG is the next applicant in the funding range and

should be awarded tax credits , assuming it successfully emerges

from the credit underwriting process . No party has challenged

the scoring of HTG's application.

8. Redding's protest is directed at the applications of

The Pines, Madison Palms, Grand Palms, and Grove Manor , who were

selected for funding . Redding also contends that Brownsville,

which has a lower lottery number, should have been deemed

ineligible or assigned a lower score so that it would no longer

be in the funding range. In a n unusual twist of events that

occurred after the posting of the notice on January 29, 2016,

Madison Palms and Grove Manor agreed that they are either

ineligible or out of the funding range . Therefore , assuming

that adequate fu nds are available , in order for Redding to be

awarded credits, it must establish that at least one of its

remaining targets ( Grand Palms, Brownsville, and T he Pines ) is

ineligible or should be assigned fewer points . No party has

challenged the scoring of Redding's application.

9. Under the RFA, applicants are awarded points in three

categories: g eneral d evelopment e xperience, l ocal g overnment

contributions, and p roximity to services . D epending on whether

family or elderly units are being proposed, to ob tain proximity

to service points, an applicant may select among several types

of community services , including transit , a grocery store, a

medical facility, a pharmacy, or a public school. Redding has

challenged the number of proximity points awarded to T he Pines

for proximity to a medical facility and public school , Grand

Palms for proximity to a pharmacy , and Brownsville for proximity

to a public bus transfer stop . Based on Florida Housing's

preliminary review of the applica tions , all three ac hieved a

t otal proximity score of 18 points .

10. The RFA requires that a n applicant submit a Surveyor

Certification Form with its application. Th e form identif ies a

Development Location Point (DLP) , which is representative of

where the development is located and must be on or within

100 feet of an existing residential building or a building to be

constructed. The DLP is represented by a latitude and longitude

coordinate. The distance from the DLP to the selected service

is how the proximity points are award ed.

11. The services on which a n applicant intends to rely

must also be identified on the form, along with the location of

the service , as well as the latitude and longitude coordinates

for each service . The RFA requires that the coordinates

"represent a point that is on the doorway threshold of an

exterior entrance that provides direct public access to the

building where the service is located." Jt. Ex. 1, p. 25.

1 2 . Redding contends that the coordinates for certain

services selected by The Pines, Gran d P alms , and Brownsville are

not on the "doorway threshold of an exterior entrance that

provides direct public access to the building where the service

is located . " Accordingly, it argues that the number of

proximity points awarded to each applicant must be lowered.

1 3 . The Pines selected a public school that has no doors

allowing direct public access to the facility. Instead, the

school is a series of buildings and classrooms connected by

sidewalks and covered breezeways, making a primary "doorway

thres hold" problematic. The office is interior to the school.

Given this unusual configuration, The Pines placed the

coordinates at a student drop - off area in front of the school,

where students then walk under the covered breezeways to their

classrooms , and members of the public walk to offices and /or

classrooms. Even if Redding's desired point for the coordinates

was used, there would be no difference in the awarded proximity

points , as the change in distance would be minimal. The

coordinates for The Pines ' medical facility are approximately

90 feet from the door that provides direct public access. This

was due to an error by the surveyor, who used the back of the

facility, rather than the front doorway threshold. Even if the

front door had been used for the threshold, The Pines would

still be entitled to the same amount of proximity points , as the

change in distance would be minimal and not change the scoring .

The slight error in the form is a waivable minor irregularity.

14. Brownsville s elected a pub lic bus transfer stop for

its tr ansit service. Due more than likely to a digital error in

one of the satellites used to pinpoint the spot , the coordinates

were approximately 15 0 feet from the canopy where passengers

load and unload. Even if the correct p oint had been used, it

would not change the amount of proximity points awarded to

Brownsville. The slight error in the form is a waivable minor

irregularity.

15. Finally, Grand Palms selected a pharmacy for one of

its services. During the process of loc ating the doorway

threshold at the pharmacy, a traverse point was established

70 feet east of the doorway threshold. This was necessary

because of an overhang above the doorway threshold. A

measurement was then made from th e traverse point to the door way

threshold. By mistake, t he coordinates on the form represented

the location of the t raverse point , instead of the doorway

threshold of the pharmacy. However, t his 70 - foot error did not

affect the distance from the pharmacy to the DLP or the points

aw arded to Grand Palms for proximity to a pharmacy. The slight

error in the form is a waivable minor irregularity.

16. Florida Housing determined that the coordinates used

by The Pines, Brownsville, and Grand Palms yielded the same

proximity point score ha d they been located at the "doorway

threshold" and/or "embark/disembark location" as defined in the

RFA. Because there is no language in the RFA that provides

direction on how to treat these types of minor errors, or

mandates that Florida Housing treat th em as a non - waivable item,

Florida Housing considers them to be a minor irregularity that

can be waived. In sum, the deviations were immaterial, no

competitive advantage was realized by the applicants , and they

were entitled to the proximity points awarde d during the

preliminary review.

17. Redding also contends that Brownsville is ineligible

for funding because it failed to comply with a material

requirement in the RFA. In its application, Brownsville stated

that it intends to place an 87 - unit develop ment on a "scattered

site" consisting of two parcels (Site I and Site II) with an

intervening roadway (North X Street) between them. The RFA

defines a development which consists of a scattered site " to

mean a single point on the site with the most units t hat is

located within 100 feet of a residential building existing or to

be constructed as part of the required Development." Jt. Ex. 1,

p. 25. Stated another way, if multiple parcels are used for the

development, the DLP must be located on the site which contains

the majority of the residential units. Florida Housing

considers this to be a material , non - waivable requirement of the

RFA.

18. In Brownsville's Surveyor Certification Form, the DLP

is located on Site I , a 1.49 - acre parcel that is zoned

Comm ercial and lies west of Site II . In making its preliminary

decision to award funding to Brownsville, Florida Housing relied

upon the validity of the DLP as of the application deadline and

assumed that Site I would have the majority of the units . It

ha d n o way to verify the accuracy of that information during the

initial scoring process.

1 9 . The RFA requires an applicant to attach to its

application a form entitled , "Local Government Verification t hat

Development is Consistent w ith Zoning a nd Land Use Reg ulations."

Brownsville's verification form was signed by Horace L. Jones,

Director of Development Services for Escambia County , who

confirmed that the intended use of the property was consistent

with local zoning regulations. The verification forms do no t

include any information regarding the number of units on each

parcel of the site. Florida Housing defers to the local

government in determining whether local zoning requirements will

be met.

20 . Mr. Jones later testified b y deposition that Escambia

Co unty zoning regulations allow only "25 dwelling units per

acre" on Site I . Therefore, o n a 1.49 - acre parcel, the maximum

number of units allowed is 36, or less than a majority of the

87 units. Because Brownsville did not comply with a material

re quireme nt of the RFA for a s cattered s ite , Florida Housing now

considers the DLP for proximity purposes to be invalid. Had it

conclude d otherwise, Brownsville would be given a competitive

advantage over the other applicants.

2 1 . Brownsville contends , however, that during the County

site review process, i t will utilize a proc edure by which the

County can consider the two parcels as a "Single Unified

Development" and "cluster" the dwelling units. Although the

County has a process to allow the transfer of density from one

parcel to another, Brownsville had not started this process as

of October 15, 2015, the due date for all applications and the

cutoff date for any changes . Also, this proc ess would entail a

public hearing before the Board of County Commissioners (Board) ,

and there is no guarantee that th e Board would approve the

density transfer. In fact, Mr. Jones testified that he was not

sure if the density transfer was even a viable option.

Therefore, the application of Brownsville contains a material

deviat ion from the RFA and is not eligible for funding.

CONCLUSIONS OF LAW

2 2 . All parties have standing to participate in this

proceeding. No one contended otherwise.

23. HTG's and Redding's protest s to Florida Housing's

proposed contract award are governed by section 120.57(3)(f),

which provides as follows:

In a competitive - procurement protest, other

than a rejection of all bids, proposals, or

replies, the administrative law judge shall

conduct a de novo proceeding to determine

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 proceedings shall be

whether the proposed agency action was

clearly erroneous, contrary to competiti on,

arbitrary, or capricious.

2 4 . HTG and Redding have the burden of pro of to establish

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

governing statutes , (2) contrary to its rules or policies, or

(3) contrary to the RF A specifications. Here, Petitioners

allege only that Florida Housing's proposed agency action is

contrary to RFA specifications.

2 5 . To prevail, HTG and Redding must prove by a

preponderance of the evidence that Florida Housing's proposed

action is: (1) clearly erroneo us; (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 two for mal protest s assert that the

proposed agency action is clearly erroneous , contrary to

competition, arbi trary, or capricious .

2 6 . Because Grove Manor has stipulated that the public

school selected for proximity points is not a public school as

defined by t he RFA, its score for proximity points must be

reduced by 4.0 points. Therefore, it is no longer in the

funding range of this RFA. HTG should accordingly be

recommended for full funding, subject to credit underwriting.

2 7 . Madison Palms has agreed that the public bus stop

identified in its application is not a public bus stop as

defined in the RFA. Therefore, it is no longer in the funding

range of the RFA.

2 8 . Redding conten ds that the applications of The Pines,

Grand Palms, and Brownsville have coor dinates for services that

do not represent a point that is on the doorway threshold of an

exterior entrance that provides direct public access to the

building where the service is located. While this assertion is

correct, the deviations on the form were i mmaterial, they did

not affect the scoring, and they gave no competit ive advantage

to th e applicants. Absent any languag e in the RFA mandating

that these deviations are non - waivable, Florida Hou sing has the

discretion to treat the mistakes or errors as mi nor

irregularit ies . See Pinnacle Rio, LLC v. Fla. Hous. Fin. Corp. ,

Case No. 14 - 1398BID (Fla. DOAH June 4, 2014 , FHFC June 13,

2014) (where information omitted from one part of RFA document

but found in other parts of document , Florida Housing had

discreti on to consider omission a minor irregularity) ; Heritage

at Pompano Hous. Partne rs, Ltd. v. F la. Hous. Fin. Corp. , Case

No. 14 - 1361BID (Fla. DOAH June 10, 2014, FHFC June 13, 2014)

(coordinates placed at exit rather than entrance of public

school considered a minor irregularity) ; Fla. Admin. Code R. 67 -

60. 002(6) and 67 - 60.008 .

2 9 . By a preponderance of the evidence, Redding has

established that it was contrary to RFA specifications to award

proximity points to B rownsville when its DLP was on a parcel

that Brownsville could not place a majority of its residential

units. The error is material and non - waivable. Florida Housing

now agrees that t o award points under these circumstances would

be clearly erroneous and give Brownsville a competitive

advantage ov er the other applicants . See , e.g. , U.S. v. U.S.

Gypsum Co. , 333 U.S. 364, 395 (1948) ; 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).

30 . In summary, the preliminary award of tax credits to

Grove Manor and Madison Palms should be rescinded ; Brownsville 's

application should be deemed to be ineligible for funding ; and

HTG and Redding should be awarded tax credits.

RECOMMENDATION

Based on th e 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 Grove

Manor Phase I , Ltd. and Madison Palms, Ltd.; determining that

Brownsville Mano r, LP, is ineligible for funding; and

designating HTG Hammock Ridge, LLC, and Redding Development

Partners, LLC, as the recipients of tax credits being made

available for developments in RFA 1015 - 106.

DONE AND ENTERED this 19th day of April , 2 0 1 6 , in

Talla hassee, Leon County, Florida.

S

D . R. ALEXANDER

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 w ith the Clerk of the

Division of Administrative Hearings

this 19th day of April , 2 01 6 .

COPIES FURNISHED:

Kate Fleming, Corporation Clerk

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 32301 - 13 29

(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 - 13 29

(eServed)

Betty C. Zachem, Esquire

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 323 01 - 13 29

(eServed)

M. Christopher Bryant, Esquire

Oertel, Fernandez, Bryant & Atkinson, P.A.

Post Office Box 1110

Tallahassee, Florida 32302 - 1110

(eServed)

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

Suite 340

1725 Capital Circle Northeast

Tallahassee, Florida 32308 - 1591

(eServed)

Donna Elizabeth Blanton, Esquire

Radey Law Firm, P.A.

Sui te 200

301 South Bronough Street

Tallahassee, Florida 32301 - 1706

(eServed)

Douglas P. Manson, Esquire

Manson Bolves Donaldson, P.A.

1101 West Swann Avenue

Tampa, Florida 33606 - 2637

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the r ight to submit written exceptions within

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

this Recommended Order should be filed with the agency that will

render a final order in this matter.