18-002130BID Htg Heron Estates Family, Llc vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Friday, June 29, 2018.

Summary: Petitioners failed to prove that Florida Housing's determinations of eligibility and its intended award of tax credits were clearly erroneous, contrary to competition, arbitrary or capricious.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HTG HERON ESTATES FAMILY, LLC,

Petitioner,

vs. Case No. 18 - 21 30BID

FLORIDA HOUSING FINANCE

CORPORATION AND OCEAN BREEZE

EAST APARTMENTS, LLC,

Respondents.

_______________________________/

CHANNEL SIDE APARTMENTS, LTD,

Petitioner,

vs. Case No. 18 - 2132BID

FLORIDA HOUSING FINANCE

CORPORATION AND OCEAN BREEZE

EAST APARTMENTS, LLC,

Respondents,

and

HTG HERON ESTATES FAMILY, LLC,

Intervenor.

_______________________________/

RECOMMENDED ORDER

On May 21 , 2018 , Administrative Law Judge Hetal Desai of the

Florida Division of Administrative Hearings (DOAH) held a final

evidentiary hearing in the above - styled consolidated cases in

Tallahassee, Florida.

APPEARANCES

For HTG Heron Estates Family, LLC :

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

1725 Capital Circle Northeast , Suite 304

Tallahassee, Florida 32308

For Florida Housing Finance Corporation :

Betty Zachem, Esquire

Florida Housing Fina nce Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301

For Ocean Breeze East Apartments, LLC:

Michael P. Donaldson, Esquire

Carlton Fields Jorden Burt, P.A.

215 South Monroe Street, Suite 500

Post Office Drawer 190

Tallahassee, Florida 32302 - 0190

For Channel Side Apartments, LTD:

M. Christopher Bryant, Esquire

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

Post Office Box 1110

Tallahassee, Florida 32302 - 1110

STATEMENT OF THE ISSUE S

The issues presented for determination are whe ther Florida

Housing Finance Corporation Ó s determination that the three

applicant - parties were eligible for the allocation of low - income

housing tax credits ; and its intended decision to award such tax

credits to Ocean Breeze East Apartments, LLC, are cont rary to

governing statutes, rules, or the solicitation specifications. 1/

PRELIMINARY STATEMENT

On October 6, 2017, Respondent, Florida Housing Finance

Corporation (Respondent or Florida Housing), issued a Ð Request

for Applications 2017 - 113 Housing Credi t Financing for Affordable

Housing Developments Located in Broward, Duval, Hillsborough,

Orange, Palm Beach, and Pinellas Counties Ñ (the RFA). The RFA

solicited applications to compete for tax - credit funding for

multifamily affordable housing developments .

On March 16, 2018, Florida Housing notified the public of

its intended decision to award tax - credit funding to one

applicant from each of the six counties. Germane to this

consolidated proceeding, Florida Housing announced the results of

its review and scoring of the applications, and its intent to

award tax - credit funding for Palm Beach County to Ocean Breeze

East Apartments, LLC (Ocean Breeze), as the eligible applicant

receiving the maximum number of points and having the lowest

tiebreaking lottery nu mber.

Ocean Breeze; HTG Heron Estates Family, LLC (HTG Heron); and

Channel Side Apartments, LTD (Channel Side) timely filed notices

of intent to protest, followed by timely formal written protests,

to contest Florida Housing Ós intended action for Palm Beac h

County, pursuant to secti on 120.57(3), Florida Statutes.

Following an unsuccessful resolution meeting pursuant to

section 120.57(3 )( d)1., Florida Housing referred the three

protests to DOAH and filed a motion requesting consolidation.

The cases were con solidated and duly noticed for a final hearing.

A telephonic status conference hearing was held on May 3,

2018. During that conference the parties discussed the

appropriateness of Ocean Breeze Ó s administrative protest and its

status as a party in the othe r two cases, in light of the fact it

was the intended awardee. Ultimately, the undersigned determined

Ocean Breeze had standing as a party (as opposed to an

intervenor), severed the protest initiated by Ocean Breeze from

the remaining consolidated cases, and relinquished jurisdiction

of Ocean Breeze Ó s petition to Housing Finance.

Prior to the hearing, the parties filed a Joint Pre - hearing

Stipulation in which they set forth an extensive list of agreed

upon facts and issues of law. The parties Ó stipulatio ns have

been incorporate d below to the extent relevant.

At the outset of the hearing, a motion by HTG Heron

requesting official recognition was addressed. 2/ HTG Heron chose

not to renew the request for official recognition and the

documents at issue were n ot offered in evidence by HTG Heron .

The parties offered Joint Exhibits J - 1 through J - 8, which

were admitted in evidence. Significantly, the RFA was Joint

Exhibit J - 1.

Florida Housing presented the testimony of Marisa Button,

its corporate representative and the director of Ð Multifamily

Allocations. Ñ Florida Housing offered no exhibits other than the

joint exhibits.

HTG Heron presented no witnesses, but questioned Ms. Button

and relied on the deposition transcript of Ms. Button. HTG

Heron Ó s Exhibits 1 t hrough 3 and 8 were admitted in evidence.

Channel Side presented no witnesses, but also questioned

Ms. Button. Channel Side Ó s Exhibits 1 throu gh 4 were admitted in

evidence.

Ocean Breeze also questioned Ms. Button, and presented the

testimony of the foll owing witnesses: Lewis Swezy, its corporate

representative; and Michael Simon, the executive director of

Boynton Beach Community Redevelopment Agency (BBCRA). Ocean

Breeze Ó s Exhibits 1 and 2 were admitted into evidence.

The hearing Transcript was filed o n May 30, 2018. The

parties timely filed their Proposed Recommended Orders (PROs) on

June 11, 2018. The PROs have been carefully considered in the

preparation of this Recommended Order.

FINDING S OF FACT

Parties and Process

1 . Florida Housing is a public corporation and, for the

purposes of these proceedings, is an agency of the State of

Florida.

2 . Pursuant to section 420.5099, Florida Statutes, Florida

Housing is designated as the housing credit agency for Florida

within the meaning of section 42(h)(7 )(A) of the Internal Revenue

Code and has the responsibility and authority to establish

procedures for allocating and distributing low - income housing tax

credits. 3/

3 . Florida Housing is authorized by law to allocate tax

credits (and other funding) by mea ns of requests for proposal or

other forms of competitive solicitation. On October 6, 2017,

Florida Housing published the RFA, starting the competitive

application process being challenged in this proceeding.

Completed applications were due December 28, 2017. 4/

4 . As explained below, all of the non - agency parties (HTG

Heron, Channel Side, and Ocean Breeze) in this case applied for

funding for a proposed development in Palm Beach County.

5 . According to the terms of the RFA, only one application

for each county was to be funded. Moreover, the RFA Ó s stated

goal was to fund one application wherein the applicant applied

and qualified as a non - profit applicant. This non - profit goal

did not apply within each of the six counties included in this

RFA; one non - profit applicant in any of the six counties could

satisfy the non - profit applicant goal for the entire RFA.

6 . No challenges were made to the terms or requirements of

the RFA.

7 . HTG Heron is an applicant to the RFA, requesting an

allocation of $1,54 1,751.00 in competitive tax credits. Its

application, assigned number 2018 - 289C, was deemed eligible for

consideration but was not selected for funding under the RFA.

8 . Channel Side is also an applicant to the RFA. It is

requesting an allocation of $2, 100,000.00 in competitive tax

credits. Its application, assigned number 2018 - 278C, was deemed

eligible for consideration but was not selected for funding under

the RFA.

9 . Ocean Breeze is an applicant requesting an allocation of

$2,070,000.00 in competit ive tax credits. Its application,

assigned number 2018 - 286C, was deemed eligible for consideration

and was selected for funding under the RFA, subject to a cre dit

underwriting review process .

10 . Florida Housing has adopted Florida Administrative Code

Ch apter 67 - 60 to govern the competitive solicitation process for

several different programs, including the tax credit program. See

§ 420.507(48), Fla. Stat. The bid protest provisions of section

120.57(3) are adopted as part of the process for allocating t ax

credits, except that no bond is required. See Fla. Admin Code

R. 67 - 60.009.

11 . A review committee was appointed to evaluate the

applications and make recommendations to Florida Housing Ó s Board

of Directors (the Board).

12 . Thirty - three application s for the RFA were received,

processed, deemed eligible or ineligible, scored, and ranked,

pursuant to the terms of the RFA; Florida Administrative Code

Chapters 67 - 48 and 67 - 60 ; and applicable federal regulations.

13 . The review committee found 25 applic ations eligible and

eight applications ineligible. Through the ranking and selection

process outlined in the RFA, seven applications were recommended

for funding , including Ocean Breeze. The review committee

developed charts listing its eligibility and f unding

recommendations to be presented to the Board.

14 . On March 16, 2018, the Board met and considered the

recommendations of the review committee for the RFA. The same

day, the applicants to the RFA received notice of the Board Ó s

determinations as to whether the applications were eligible or

ineligible for consideration for funding, and which of the

eligible applicants were selected for award of tax credits,

subject to satisfactory completion of a credit underwriting

process. Such notice was provided by the posting of two

spreadsheets, one listing the Ð eligible Ñ applications to the RFA

and one identifying the applications which Florida Housing

proposed to fund. 5/

15 . Relevant to this proceeding, Florida Housing announced

its intention to award fundi ng for Palm Beach County to Ocean

Breeze, which received the maximum points available. Channel

Side and HTG Heron were deemed eligible and scored the maximum

number of points, but were not recommended for funding.

16 . Each applicant - party timely filed a Notice of Protest

and Petition for Formal Administrative Proceedings.

RFA

17 . The RFA contemplated a structure in which each

applicant is scored on eligibility items and obtains points for

other items. To determine if an application is eligible for

fundi ng , it must meet all of the requirements listed in section

5.A.1, of the RFA. The following eligibility terms and

requirements are challenged in this proceeding:

• The evidence of co ntrol of the development site (site

c ontrol) by Ocean Breeze and Channel Si de; and

• The address of the development site provided by HTG

Heron.

18 . For scoring the applications, the RFA allows up to a

total of 20 points with the following point allocations:

• Submission of Principal Disclosure f orm stamped by

Corporation as Ð Pre - A pproved Ñ (5 points);

• Development Experience Withdrawal Disincentive (5

points) ; and

• Local Government Contribution Points (5 points) or

Local Government Area of Opportunity Points (10 points).

1 9 . As explained in pages 66 - 67 of the RFA, the first step

in evaluating the a pplications is the sorting o rder. All

eligible applications are ranked by first sorting all eligible

applications from the highest score to the lowest score, with any

scores that are tied separated in the following order:

(1) First, by t he Application Ó s eligibility

for the Proximity Funding Preference (which

is outlined in Section Four A.5.e. of the

RFA) with Applications that qualify for the

preference listed above Applications that do

not qualify for the preference;

(2) Next, by the A pplication Ó s eligibility

for the Per Unit Construction Funding

Preference which is outlined in Section Four

A.11.e. of the RFA (with Applications that

qualify for the preference listed above

Applications that do not qualify for the

preference);

(2) [sic] Next, by the Application Ó s

eligibility for the Development Category

Funding Preference which is outlined in

Section Four A.4.b.(4) of the RFA (with

Applications that qualify for the preference

listed above Applications that do not qualify

for the preferen ce);

(3) [sic] Next, by the Application Ó s

Leveraging Classification, applying the

multipliers outlined in Item 3 of Exhibit C

of the RFA (with Applications having the

Classification of A listed above Applications

having the Classification of B);

(4) [s ic] Next, by the Application Ó s

eligibility for the Florida Job Creation

Funding Preference which is outlined in

Item 4 of Exhibit C of the RFA (with

Applications that qualify for the preference

listed above Applications that do not qualify

for the prefere nce); and

(5) [sic] And finally, by lottery number,

resulting in the lowest lottery number

receiving preference .

20 . In other words, those competing for the RFA must first

submit an application that meets all the eligibility criteria and

does not have a ny significant omissions or errors before it is

scored.

2 1 . After scoring, any tiebreakers are determined strictly

by the luck of the draw. After applications are filed, but before

they are scored, Florida Housing randomly assigned each a lottery

number, and the highest scoring applicant with the lower number

wins any ties, thus becoming the intended funding recipient.

2 2 . The notice of the intended award does not end the

process, and the selection of an applicant for funding does not

guarantee distribut ion of tax credits to that applicant. Florida

Housing Ó s representative, Ms. Button, explained at the hearing:

Q Okay. What happens once a preliminary

agency action from Florida Housing becomes

final agency action?

A The awardees who are recommended or

preliminarily approved for funding, once that

becomes final, those applicants are then

invited to credit underwriting by Florida

Housing.

* * *

Q Can you provide some general information

about credit underwriting?

A Credit underwriting is ess entially a

de novo review of all the information that

the applicant has provided in their

application to proceed forward with the

proposed development. Florida Housing

retains their party underwriters who review

that information and provide recommendat ions

to Florida Housing.

2 3 . S imilarly, the RFA provides that each selected awardee

must complete a credit underwriting process before receiving

funding or credits. The RFA states on page 68:

Notwithstanding an award by the Board

pursuant to his RFA, fu nding will be subject

to a positive recommendation from the Credit

Underwriter based on criteria outlined in the

credit underwriting provisions in Rule

Chapter 67 - 48, F.A.C.

24 . Rule 67 - 48.0072, in turn, provides in part:

Credit underwriting is a de novo review of

all information supplied, received or

discovered during or after any competitive

solicitation scoring and funding preference

process, prior to the closing on funding,

including the issuance of IRS Forms 8609 for

Housing credits. The success of an Applicant

in being selected for funding is not an

indication that the Applicant will receive a

positive recommendation from the Credit

Underwriter or that the Development team Ó s

experience, past performance or financial

capacity is satisfactory.

25 . T hus , an application might fail in this de novo credit

underwriting phase and never receive funding, even though it was

Ð awarded Ñ tax - credit funding as a result of a proceeding such as

this one. In that event, page 67 of the RFA provides:

4. Returned Allo cation

Funding that becomes available after the

Board takes action on the [Review]

Committee Ó s recommendation(s), due to an

Applicant withdrawing its Application, an

Applicant declining its invitation to enter

credit underwriting, or an Applicant Ó s

inabil ity to satisfy a requirement outlined

in this RFA and/or Rule Chapter 67 - 48,

F.A.C., will be distributed as approved by

the Board.

26 . T herefore, if an intended applicant (such as Ocean

Breeze), was nominally selected for funding at the end of the

eligib ility and scoring phase, but failed to garner a positive

recommendation from the credit underwriting process, the next

eligible applicants in the queue (such as HTG Heron and Channel

Side) would be awarded the tax credits. As a result, in this

consolidate d proceeding , the objective of Petitioners is to

displace any and all applicants in more favorable positions.

27 . Here, Petitioner Channel Side challenges the

eligibility of both the Ocean Breeze and HTG Heron applications;

and Petitioner HTG Heron challe nges the eligibility of Ocean

Breeze. Ocean Breeze, in turn, challenges both HTG Heron Ó s and

Channel Side Ó s eligibility. The specific issues raised as to the

three challenged applications will be discussed below.

OCEAN BREEZE APPLICATION

28 . HTG Heron and Channel Side challenge Ocean Breeze Ó s

eligibility based on the RFA requirements relating to site

control. The parties have stipulated , and the undersigned finds,

that site control must have been demonstrated as of the

application deadline of December 28, 2017.

29 . The RFA provides three ways an applicant can

demonstrate site control: (1) eligible contract, (2) deed or

certificate of title, or (3) lease.

30 . Ocean Breeze utilized the first method to satisfy the

site control requirement by submitting a document titled

Ð Purchase and Development Agreement Ñ (PDA) as Exhibit 8 to its

Application. The PDA included two attachments: the Ð Legal

Description Ñ and a Ð Reverter Agreement. Ñ

31 . Petitioners challenge the enforceability of the PDA on

two apparent grounds: (1) it was not executed by the applicant 6/ ;

and (2) it was executed before the applicant was properly

incorporated to do business within the State of Florida.

32 . The RFA, however, does not mention Ð enforceability Ñ of

a contract in its definitio n for Ð Eligible Contract. Ñ The

requirements for establishing site control though an eligible

contract are found on page 30 through 31 of the RFA.

Eligible Contract - For purposes of this RFA,

an eligible contract is one that has a term

that does not expir e before June 30, 2018 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 June 30, 2018;

specifically states that the buyer Ó 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 Ó s rights, title and

interests in the eligib le contract to the

Applicant, is provided. Any assignment must

be signed by the assignor and the assignee.

If the owner of the subject property is not a

party to the eligible contract, all documents

evidencing intermediate contracts,

agreements, assignme nts, options, or

conveyances of any kind between or among the

owner, the Applicant, or other parties, must

be provided, and, if a contract, must contain

the following elements of an eligible

contract: (a) have a term that does not

expire before June 30, 2 018 or contain

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 June 30, 2018, and

(b) specifically state that the buyer Ó s

remedy for default on the part of the seller

includes or is specific performance.

33 . The initial paragraph of the PDA identifies the parties

to the PDA as Ð Boyton Beach Community Redevelopment Agency , Ñ as

the Ð Seller, Ñ and Ð Ocean Breeze East Apartments , LLC Ñ as the

Ð Purchaser. Ñ

3 4 . Paragraph 14 of the PDA designates the following for

purposes of notices:

If to Purchaser: Ocean Breeze East Apartments, LLC

Attn: Lewis Swezy

7735 NW 146 Street, Suite 306

Miami Lakes, FL 33016

3 5 . Under the signature block, however, the PDA states it

was executed on behalf of the Ð Purchaser Ñ by Ð OCEAN BREEZE

APARTMENTS LLC B y Ocean Breeze East GP LLC Ñ and signed by Lewis

Swezy, Ð Title: Authorized Member Ñ on Decembe r 8, 2017.

36 . Ð Ocean Breeze East, GP, LLC Ñ does not exist and never

has in Florida. The parties admit that this entity was not in

existence on December 8, 2017 , and was never subsequently formed.

Ocean Breeze admits the identification of Ð Ocean Breeze East, GP,

LLC Ñ was in error.

37 . The PDA was executed on behalf of the Ð Seller Ñ by BBCRA

and signed by Steven B. Grant, Ð Title: Chair Ñ on December 15,

2017.

38 . Paragraph 4 of the PDA indicates that its effective

date is the date when the last party sign ed the PDA; in this case

being the date t he BBCRA executed the document -- December 15,

2017.

39 . The Reverter Agreement is executed by the Ð Purchaser Ñ

Ð Ocean Breeze East Apartments, LLC Ñ and signed by Lewis Swezy,

Ð Title: Manager of Manager, Ñ on December 12, 2017.

40 . The Reverter Agreement is executed by the Ð Seller, Ñ

BBCRA , and signed by Steven B. Grant, Ð Title: Chairman Ñ on

December 15, 2017.

41 . Mr. Swezy testified Ocean Breeze complied with all the

terms of the PDA, including submitting an initial $25,000 deposit

within two days of full execution of the PDA and a second deposit

within 30 days.

42 . The Articles of Organization for Ocean Breeze East

Apartments, LLC were filed on December 19, 2017 , and effective

December 14, 2017.

43 . Rachael Grice, Florida Housing Multifamily Programs

Manager, scored the site control portion for this RFA based on

the information in the application. Mrs. Grice found that Ocean

Breeze met the RFA requirements for site control.

44 . It is unnecessary, and beyond the s cope of the

undersigned Ó s jurisdiction, to make a factual or legal

determination as to the enforceability of the PDA. The RFA does

not mention enforceability or validity as requirements for an

Ð E ligible C ontract Ñ for site control purposes.

45 . There is n o dispute that on its face, the PDA with the

Reverter Agreement satisfied the RFA Ó s requirements for an

Ð Eligible Contract Ñ listed on page 30 and 31. In fact, as of the

date of the application deadline the following was true:

• Ocean Breeze East Apartments, LLC , was listed as the

applicant for the RFA.

• Ocean Breeze East Apartments, LLC , was listed as the

Ð Purchaser Ñ on the PDA.

• Mr. Swezy had signature authority to bind Ocean Breeze

and was listed on the Ocean Breeze application as the Ð Authorized

Representat ive. Ñ

• Ocean Breeze East Apartments, LLC , and Mr. Swezy were

identified in the notice provision in the PDA.

• The Reverter Agreement, which was signed after the PDA,

correctly identified the applicant entity as Ocean Breeze East

Apartments, LLC.

• E ffective Dec ember 14, 2017 , Ocean Breeze was

incorporated. The PDA was fully executed on December 15, 2017.

4 6 . H TG Heron and Channel Side have not established that

the PDA was fatally flawed or that Florida Housing erred in

accepting the PDA as an Ð eligible contrac t Ñ satisfying the RFA Ó s

site control requirement.

4 7 . Even if the PDA contained errors by listing Ð Ocean

Breeze East GP, LLC Ñ in the signature block or was prematurely

signed before Ocean Breeze was effectively incorporated, the

evidence at the hearing established that it was a minor

irregularity waivable by Florida Housing, and that Florida

Housing would have waived any such errors.

4 8 . If the PDA is ultimately determined to be unenforceable

and site control is not established at the credit underwriti ng

stage, Petitioners would be next in line to be selected to

receive the tax credits under the terms of the RFA.

49 . The preponderance of the evidence established that

Ocean Breeze Ó s application is eligible for funding, it received

the proper scoring, a nd should be the intended award for Palm

Beach County.

HTG HERON APPLICATION

50 . Channel Side and Ocean Breeze challenge the eligibility

of the HTG Heron application because they claim it fails to

satisfy the RFA eligibility requirement to provide a corr ect

a ddress of the proposed d evelopment sit e. Page 18 of the RFA

requires in relevant part:

Indicate (1) the address number, street name,

and name of city, and/or (2) the street name,

closest designated intersection, and either

name of city or unincorpora ted area of

county.

5 1 . Ms. Button testified the purpose of the address

requirement in the RFA is to allow parties, including Florida

Housing, to know where the proposed development will be built and

to ensure the property has access to utility and other services.

In that vein, the RFA does not require the street identified in

an application to be a publicly maintained street.

52 . In its application, HTG Heron provided the address of

the proposed development as Ð W 17th Ct., W 17th Ct. and Nor th

Congress Ave., Riviera Beach, Ñ along with latitudinal and

longitudinal coordinate s of the development location.

53 . Ryan McKinless, Multifamily Programs Senior Analyst for

Florida Housing , scored the development address section for

this RFA. Mr. McKinless fou nd that HTG Heron met the

requirements in the RFA for provid ing an address of the proposed

d evelopment.

54 . Here, Channel Side and Ocean Breeze argue Florida

Housing erred in accepting the Ð W. 17th Ct . Ñ address provided by

HTG Heron because the address d oes not exist. They point to the

site sketch submitted by HTG Heron in support of its application

which references a Ð W. 17th Street Ñ (not Ð W. 17th C t. Ñ ) and has

Ð W. 17th Street Ñ intersecting with Ð Congress Avenue Extension, Ñ

(not Ð N. Congress Ave. Ñ ). In support of this position that

Ð W. 17th C t . Ñ does not exist, Ocean Breeze and Channel Side also

rely on a 1975 plat and a 1999 City of Rivera Beach Ordinance.

55 . The sketches attached to HTG HeronÓs application each

contain the disclaimer ÐNOT A SURVEY .Ñ

5 6 . Although the sketches contain a reference to an

abandonment relating to ÐW. 17 th Ct.,Ñ the 1999 Ordinance

describing the abandonment relied on by Channel Side and Ocean

Breeze was not submitted to Florida Housing.

57 . Regardless, t his plat and ord inance information was not

required by the RFA nor was it considered by Florida Housing in

determining whether to accept the address submitted by HTG Heron

for eligibility determination purposes.

58 . There was no evidence at the hearing that the Ð W. 17 th

Court Ñ address misled Florida Housing (or anyone else) or caused

confusion as to the location of HTG Heron Ó s proposed development.

To the contrary, other information in the application supports

accepting the provided address.

• The Ð Local Government Verific ation o f Status of Site

Plan Approval f or Multifamily Developments Ñ form executed by the

City Manager of Riviera Beach affirms the Ð W. 17 th Ct. Ñ address.

• The Ð Local Government Verification that Development is

Consistent with Zoning and Land Use Regulations Ñ form executed by

the City Manager of Riviera Beach affirms the Ð W. 17 th Ct. Ñ

address.

• The Ð Verification of Availability of Infrastructure -

Electricity Ñ form executed by an Associate Engineer from Florida

Power and Light affirms the Ð W. 17 th Ct. Ñ address.

• The Ð Verification of Availability of Infrastructure Ñ

form for water and sewer services executed by a Utilities

Engineer from City of Riviera Beach affirms the Ð W. 17 th Ct. Ñ

address.

• The Ð Verification of Availability of Infrastructure -

Roads Ñ form executed by a City Engineer from the City of Riviera

Beach affirms the Ð W. 17 th Ct. Ñ address.

• The Ð Local Government Verification of Contribution -

Grant Ñ form executed by the Interim City Manager of Riviera Beach

affirms the Ð W. 17 th Ct. Ñ address.

• The acting direct or of the City of Riviera Beach,

Department of Community Development confirms by letter that the

property at the Ð 2003 W. 17 th C ourt (adjacent to North Congress

Avenue) Ñ address is located with a Ð Qualified Census Tract for

2017 and 2018 Ñ and attaches a di agram of that tract.

• Documentation from the Palm Beach County Property

Appraiser Ó s website lists the address location as Ð 2003 W. 17 th

Ct. Ñ

59 . Given that the purpose of providing an address was

fulfilled and there was no ambiguity as to the actual locat ion of

the HTG Heron Ó s development site, Channel Side and Ocean Breeze

failed to prove that Florida Housing erred in accepting HTG

Heron Ó s address for the purposes of eligibility.

60 . At the hearing, HTG Heron also submitted a certified

copy of a 2017 map from the Palm Beach County Property

Appraiser Ó s Office for range 43, township 42, which includes the

area of the proposed development in HTG Heron Ó s application, and

indicates there is a Ð W. 17 th Ct. Ñ that intersects with

Ð N. Congress Avenue. Ñ

6 1 . Ther e was a preponderance of evidence establishing HTG

Heron Ó s designation in its application of Ð W 17th Ct., W 17th Ct.

and North Congress Ave., Riviera Beach Ñ was not an error, and

that HTG Heron Ó s application is eligible for funding.

CHANNEL SIDE APPLICATI ON 7/

62 . To satisfy the Site Control requirements Channel Side

submitted a Purchase and Sale Agreement that lists among the

sellers an entity named Ð MWCP, Inc. , f/k/a Blueprint Properties,

Inc., a Delaware corporation whose post office addr e ss is 248

Col umbia Turnpike F l orham Park, NJ ( Ò Blueprint Ó ) Ñ in the initial

paragraph .

6 3 . MWCP , Inc. (MWCP) did not exist in Florida when the

Purchase and Sale Agreement was executed. The parties stipulated

that the reference in the Channel Side site control document s to

MWCP was erroneous and that the owner of the property for the

Channel Side Ó s proposed development as of the application

deadline was a Delaware corporation known as Blueprint

Properties, Inc., which has never operated as , or been

corporately related t o , MWCP.

64 . Rachel Grice, Florida Housing Multifamily Programs

Manager, scored the Site control portion of this RFA based on the

information in the Application. Mrs. Grice found that Channel

Side met the RFA requirements for Site control.

65 . The RFA d oes not require the listing of related names

of any corporations other than the applicant or developer. Thus,

the error in the Purchase and Sale Agreement does not seem to

affect Channel Side Ó s satisfaction of any requirement of the RFA.

66 . The error is insignificant and immaterial. There was

no evidence presented at the hear ing that Channel Side received a

competitive advantage by identifying Ð MWCP, Inc. f/k/a Blueprint

Properties, Inc. Ñ instead of simply ÐBlueprint PropertiesÑ as the

seller . The slig ht error conferred no competitive advantage on

Channel Side; its application received no more points than it was

entitled to by reason of the mistake.

67 . Ms. Button reasonably testified that had Florida

Housing known about the mistaken listing of MWCP as the seller,

it would have waived the error as a minor irregularity.

68 . The applicant - parties failed to prove that Channel

Side Ó s application reflecting the Ð wrong corporate entity Ñ as the

seller was an error affecting eligibility of Channel Side Ó s

appli cation, or that Florida Housing erred in accepting the

Purchase and Sale Agreem ent as proof of site control.

69 . The mistake was, at worst, a minor, inconsequential

error that was waivable.

70 . Based on the preponderance of the evidence, Channel

Side Ó s application is eligible for funding.

CONCLUSIONS OF LAW

71 . The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding. §§ 120.569 and 120.57(1), (3), Fla. Stat.

72 . All of the applicant - parties have standing.

Specifically, Petitioners have standing to protest the proposed

decisions to fund Ocean Breeze; Channel Side and Ocean Breeze

have standing to challenge the determinations that HTG Heron Ó s

application is eligible for funding; and Ocean Bre eze and Channel

Side have standing to challenge the determinations that HTG

Heron Ó s application is eligible for funding. Madison Highlands,

LLC v. Fla. Housing. Fin. Corp. , 220 So. 3d 467, 474 (Fla. 5th

DCA 2017)(finding standing where Ð Madison Highlands . . . alleges

that the applications of the four higher - ranked applicants had

deficiencies and that if the FHFC had properly scored or

considered the higher - ranked applicants, it would have been

awarded the housing tax credits for the Hillsborough County

de velopment. Ñ ).

73 . Section 420.507 provides the statutory authority for

Florida Housing to award low - income housing tax credits by

requests for proposals or other competitive solicitation.

74 . These consolidated competitive solicitation protests

are go verned by section 120.57(3)(f), which provides as follows:

Unless otherwise provided by statute, the

burden of proof shall rest with the party

protesting the proposed agency action . 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 Ó s proposed action is contrary to the

agency Ó s governing statutes, the agency Ó s

rules or policies, or the solicitation

specifications. T he standard of proof for

such proceedings shall be whether the

proposed agency action was clearly erroneous,

contrary to competition, arbitrary, or

capricious . (emphasis added).

75 . As the parties protesting Florida Housing Ó s proposed

action, Petitioner s bear the burden of proof by a preponderance

of the evidence. §§ 120.57(3)(f) and 120.57(1)(j), Fla. Stat.

76 . Although competitive - solicitation protest proceedings

are described in section 120.57(3)(f) as de novo, courts have

held these hearings are a Ð form of intra - agency review. The

judge may receive evidence, as with any formal hearing under

section 120.57(1), but the object of the proceeding is to

evaluate the action taken by the agency. Ñ State Contracting and

Eng Ó g Corp. v. Dep Ó t of Transp. , 709 So. 2d 607, 609 (Fla. 1st

DCA 1998).

77 . A new evidentiary record is developed in the

administrative proceeding for the purpose of evaluating the

proposed action taken by the agency. See J. D. v. Dep Ó t of Child .

& Fams . , 114 So. 3d 1127 (Fla. 1st DCA 2013 ) (describing

administrative hearings to review agency action on applications

for exemption from disqualification as akin to bid protest

proceedings under section 120.57(3)).

78 . Contrary to the arguments at the hearing, although

section 120.57(3)(f) stat es new evidence cannot be offered to

amend or supplement a party Ó s application, the administrative law

judge is not confined to only the information submitted to the

agency. Instead, new evidence may be offered in a competitive

protest proceeding to prove that there was an error in another

party Ó s application. Intercontinental Props. Inc. v. Dep Ó t of

Health and Rehab Servs. , 606 So. 2d 380 (Fla. 3d DCA 1992).

Conversely, a party may present new evidence to prove that an

error in a party Ó s application is a minor irregularity that

should be waived. Id.

79 . A Ð minor irregularity Ñ is defined by rule as follows:

Ð Minor Irregularity Ñ means a variation in a

term or condition of an 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 [Florida Housing] or

the public

Fla. Admin. Code R. 67 - 60.002(6). Pursuant to rule 67 - 60.008 and

the RFA, Florida Housing may waive errors that are not m aterial

or that are Ð minor irregularities. Ñ See Pinnacle Rio, LLC v.

Fla. Housing Fin. Corp. , Case No. 14 - 1398BID, 2014 Fla. Div. Adm.

Hear. LEXIS 285, *30 - 32 (Fla. DOAH June 4, 2014, FHFC June 13,

2014) (where information omitted from one part of RFA doc ument

but found in other parts of document, Florida Housing had

discretion to consider omission a minor irregularity). A

deviation Ð is only material if it gives the bidder a substantial

advantage over the other bidders and thereby restricts or stifles

com petition. Ñ Tropabest Foods, Inc. v. Dep Ó t of Gen. Servs. , 493

So. 2d 50, 52 (Fla. 1st DCA 1986).

80 . After determining the relevant facts based upon

evidence presented at hearing, the administrative law judge Ó s

role is to evaluate the agency Ó s intended a ction in light of

those facts. The agency Ó s determinations must remain undisturbed

unless clearly erroneous, contrary to competition, arbitrary, or

capricious. A proposed award will be upheld unless it is

contrary to governing statutes, the agency Ó s rule s, or the

solicitation specifications.

81 . The Ð clearly erroneous Ñ standard has been applied to

both factual determinations and interpretations of statute, rule,

or specification. A factual determination is Ð clearly erroneous Ñ

when the reviewer is Ð left with a definite and firm conviction

that [the fact - finder] has made a mistake. Ñ Tropical Jewelers,

Inc. v. Bank of Am., N.A. , 19 So. 3d 424, 426 (Fla. 3d DCA 2009).

As applied to legal interpretations, the Ð clearly erroneous Ñ

standard was defined by the court in Colbert v. Department of

Health , 890 So. 2d 1165, 1166 (Fla. 1st DCA 2004), to mean that

Ð the interpretation will be upheld if the agency Ó s construction

falls within the permissible range of interpretations. If,

however, the agency Ó s interpretati on conflicts with the plain and

ordinary intent of the law, judicial deference need not be given

to it. Ñ (citations omitted).

82 . Whether an agency action is Ð contrary to competition Ñ

must be determined on a case - by - case basis. See R.N. Expertise,

Inc. v. Miami - Dade Co. Sch. Bd. , Case No. 01 - 2663BID, 2002 Fla.

Div. Adm. Hear. LEXIS 163, *55 - 58 (Fla. DOAH Feb. 4, 2002; Miami -

Dade Co. Sch. Bd., Mar. 13, 2002). Examples of such actions

include those which:

(a) create the appearance of and opportunity f or

favoritism;

(b) erode public confidence that contracts are awarded

equitably and economically;

(c) cause the procurement process to be genuinely unfair or

unreasonably exclusive; or

(d) are unethical, dishonest, illegal, or fraudulent. Ñ

Id. at 58 .

83 . An action is Ð arbitrary if it is not supported by

logic or the necessary facts, Ñ an d Ð capricious if it is adopted

without thought or reason or is irrational. Ñ Hadi v. Lib.

Behavioral Health Corp. , 927 So. 2d 34, 38 (Fla. 1st DCA 2006).

If agency action is justifiable under any analysis that a

reasonable person would use to reach a decision of similar

importance, the action is neither arbitrary nor capricious. See

Dravo Basic Materials Co. v. Dep Ó t of Transp . , 602 So. 2d 632,

634 n.3 (Fla. 2d DCA 1992).

OCEAN BREEZE Ó S APPLICATION

84 . As previously determined , the PDA with the Reverter

Agreement submitted by Ocean Breeze satisfied the definition for

an Ð eligible contract Ñ and the requirements for Site Control in

the RFA. Florida Housing Ó s accepta nce of the PDA was not clearly

erroneous , contrary to competition, arbitrary or capricious.

85 . With regard to the site control challenge, HTG Heron

and Channel Side argued that the original contract was fatally

flawed because Ocea n Breeze was not a legal entity , therefore

Mr. Swezy could not have had authority to enter into the PDA, and

the PDA could not be considered an Ð eligible contract. Ñ

Challenges to viability of contracts such as the PDA may only be

resolved by a circuit court; enforceability cann ot be determined

by Florida Housing or an administrative law judge. See Madison

Highlands, LLC, and Am . Residential Dev . , LLC v. Fla. Housing

Fin. Corp. , Case No. 18 - 1558BID, RO at 12 ( Fla. DOAH Jun . 6,

2018; f inal o rder not entered as of the date of this Order )

(citing § 26.012, Fla. Stat.). 8/

86. Regardless , the issue is not whether the PDA was

legally enforceable, but rather, whether it met the definition of

Ð Eligible Contract Ñ in the RFA.

87. The PDA submitted by Ocean Breeze sa tisfies the purpose

of showing s ite c ontrol, and the plain and literal meaning of the

language used in the RFA to define an Eligible Contract.

88 . Petitioners failed to meet their burden to show Ocean

Breeze should have been ineligible based on the validity of the

PDA, and t o prove Florida Housing Ó s decision to award tax - credit

funding to Ocean Breeze was contrary to statutes, rules, or the

RFA specifications. See Pinnacle Rio, LLC , 2014 Fla. Div. Admin

Hear. 285, *50 - 51 (deeming application eligible even though its

site con trol documentation contained an error in the purchaser Ó s

signature block); Houston Street Manor LP v. Fla. Housing Fin.

Corp. , Case No. 15 - 3302BID , 2015 Fla. Div. Adm. Hear. LEXIS 329,

*23 - 32 ( Fla. DOAH Aug. 18, 2015; FHFC Sept. 21, 2015) (finding no

clear error of finding site control requirement satisfied;

addressing the meaning of Ð Eligible Contract Ñ where applicant

demonstrated site control adequately , even though property

continued to be marketed where purchasing agreement contained

right of first refu sal).

89 . Additionally, although not relevant to the issue of

eligibility, the undersigned rejects the argument that if Florida

Housing determines during the credit underwriting process the PDA

is unenforceable, the tax credits would somehow sit fallow. The

RFA specifically provides a remedy for reassigning the funding

a ward to the applicant next in line.

HTG HERON APPLICATION

90 . With regard to the challenge to HTG Heron Ó s

eligibility, the evidence did not demonstrate that Florida

Housing Ó s acceptance of the address was clearly erroneous,

contrary to competition, arbitrary, or capricious. Instead, as

found above, the evidence adduced at hearing established that HTG

Heron met the RFA specifications.

91 . Even if it had been shown that HTG Heron had devi ated

from the RFA instructions by not providing the correct current

address, the actual development site was identifiable and could

have been gleaned from other documentation provided in the

application, such as the coordinate sites and maps. Moreover,

ev en if the use of Ð W. 17th Court Ñ was erroneous, which it was

not, such an error was not shown to give HTG Heron a competitive

advantage. Thus, if an error had been established, it would be a

minor irregularity that could have been waived. See HTG Osprey

Pointe, LLC v. Fla. Housing Fin. Corp. , Case No. 18 - 0479BID, 2018

Fla. Div. Adm. Hear. LEXIS 235, *21 ( Fla. DOAH Apr . 19, 2018)

(finding submission of opposite coordinates for longitude entries

was waivable error where elsewhere in application it was clear

the proposed housing development was in Miami - Dade county, and

not in India).

CHANNEL SIDE APPLICATION

92 . Lastly, as to the challenge to Channel Side Ó s error of

listing among the sellers an entity named Ð MWCP, Inc. f/k/a

Blueprint Properties, Inc., a De laware corporation Ñ instead of

Ð Blueprint Properties, Inc., Ñ the evidence did not demonstrate

that Florida Housing Ó s acceptance of Channel Side Ó s application

was clearly erroneous, contrary to competition, arbitrary, or

capricious. See Heritage at Pompano Housing Partners, Ltd. v.

Fla. Housing Fin. Corp . , Case No. 14 - 1361BID , 2014 Fla. Div. Adm.

Hear. LEXIS 296, *36 ( Fla. DOAH June 10, 2014; FHFC June 13,

2014) (deeming application eligible even though its site control

documentation contained an error in i dentifying the seller of the

property).

93 . Instead, the error was simply a mistake that had no

effect on Channel Side Ó s actual control of the site or

eligibility. The error would have to be considered a minor

irregularity that should be waived by Florid a Housing.

94 . Based on the foregoing standards, the challengers

failed to meet their burden to prove that Florida Housing Ó s

determinations related to eligibility were co ntrary to the

governing statutes, rules, policies, or the RFA provision ; or

that Flor ida Housing's award of funding to Ocean Breeze should be

set aside.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Respondent, Florida Housing Finance

Corporation, enter a final order consistent with i ts initial

decisions: (1) finding the applications of Ocean Breeze, HTG

Heron, and Channel Side eligible for funding; (2) awarding the

RFA Palm Beach County funding for the Ocean Breeze proposed

development; and (3) dismissing the formal written protests of

HTG Heron and Channel Side.

DONE AND ENTERED this 29 th day of June , 2018 , in

Tallahassee, Leon County, Florida.

S

HETAL DESAI

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalac hee 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 29 th day of June , 2018 .

ENDNOTE S

1/ All references to the Florida Administr ative Code and the

Florida Statutes are to the 2017 versions.

2 / On May 15, 2018, HTG Heron filed it s Motion for Official

Recognition pursuant to Florida Administrative Code Rule 28 -

106.213(6), and sections 90.202 and 90.203, Florida Statutes

(2017). On May 18, 2018, this motion was denied without

prejudice to renew the motion at the hearing.

3 / Florida Housing Ó s mission is to promote the public welfare

through governmental f inancing for affordable housing in Florida.

4 / Although not crucial to the b id protest analysis, an

explanation of the low - income housing tax credit program (tax

credit program) is helpful in understanding the competitive

nature of the RFA process. The U.Seasury makes tax credits

available to the state of Florida. As explain ed by Judge

Elizabeth McArthur in Heritage at Pompano Hous ing Partners, Ltd.

v. Florida Hous ing Fin ance Corp oration , Case No. 14 - 1361BID (Fla.

DOAH June 10, 2014 ; FHFC June 13, 2014) , t he tax credit program

was enacted by Congress to incentivize private in vestors to

develop affordable rental housing. These are tax credits , not

tax deductions. For exam ple, a $1,000 deduction in a 15 - percent

tax bracket reduces taxable income by $1,000 and reduces tax

liability by $150. However, a $1,000 tax credit reduces tax

liability by $1,000. Moreover, investors receive a dollar - for -

dollar credit against their federal tax liability each year over

a period of ten years. The amount of the annual credit is based

on the amount invested in affordable housing. As such, th ey are

highly sought after among developers.

Obviously, developers can use the awarded tax credits, but

most do not. Rather, more often developers sell the tax credits

to investors to raise equity capital for their projects. T he

sale of purchased tax cr edits can be used for ten years by the

investors that provide the equity . Theoretically, it is a Ð win -

win Ñ for investors, developers and the tenants. When sold, t he

investors provide equity which , in turn, reduces the debt

associated with the project , wh ich , in turn , lower s the

developer Ó s debt . As a result, the housing property can (and

must) offe r lower, more affordable rent. In order to receive the

tax credits, a developer must agree to keep rents at an

affordable level for periods of 30 to 50 years.

5 / These charts were posted online at www.floridahousing.org and

submitted at the hearing as Joint Exhibits 3 a nd 4.

6 / Although in the Joint Stipulation HTG Heron Estates withd rew

its challenge as to whether Ocean Breeze East GP, LLC , wa s a

validly f ormed entity and named as a proper entity in the

application, it is unclear whether Channel Side asserted this

argument as well. Because it was addressed in some of the PROs,

the undersigned has addressed the issue in this Recommended

O rder.

7 / Although not addressed in the hearing, the issue of Channel

Side Ó s eligibility is noted as a disputed issue in the Joint

Stipulation and addressed in all the PROs submitted except for

HTG Heron.

8 / T he subsequent actions of Ocean Breeze and the BBCRA -- the

paymen t of the deposits, and acceptance of benefits under the

contract -- would seem to serve as ratification of the PDA. See ,

e.g. , New Testament Baptist Church, Inc. v. Dep Ó t of Transp. , 993

So. 2d 112 (Fla. 4th DCA 2008).

COPIES FURNISHED:

Hugh R. Brown, Ge neral Counsel

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301 - 1329

(eServed)

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

Suite 304

1725 Capital Circle Northeast

Tallahassee, Florid a 32308

(eServed)

Betty Zachem, Esquire

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301

(eServed)

Michael P. Donaldson, Esquire

Carlton Fields Jorden Burt, P.A.

215 South Monroe Street, Suite 500

Post Office Drawer 190

Tallahassee, Florida 32302 - 0190

(eServed)

M. Christopher Bryant, Esquire

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

Post Office Box 1110

Tallahassee, Florida 32302 - 1110

(eServed)

Corporation Clerk

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301 - 1329

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 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.