19-002275BID Htg Oak Valley, Llc vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Tuesday, July 16, 2019.

Summary: Intended action deeming an application eligible despite material ambiguity therein regarding the amount of equity available for construction should be set aside; another applicant's proximity points should be reduced to conform to corrected distance data.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HTG OAK VALLEY, LLC,

Petitioner,

vs. Case No. 19 - 2275BID

FLORIDA HOUSING FINANCE

CORPORATION,

Respondent,

and

HARMONY PINEWOOD, LLC ; AND

NORTON COMMONS, LTD.,

Intervenor s .

_______________________________/

FOUNTAINS AT KINGS POINTE

LIMITED PARTNERSHIP ,

Petitioner,

vs. Case No. 19 - 2276BID

FLORIDA HOUSING FINANCE

CORPORATION,

Respondent.

_______________________________/

RECOMMENDED ORDER

Th e s e case s came before Administrative Law Judge John G.

Van Laningham for final hearing on June 3 and 4 , 201 9 , in

Tallahassee , Florida.

APPEARANCES

For HTG Oak Valley, LLC:

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

1725 Capital Circle Northeast, Suite 304

Tallahassee, Florida 32 30 8

For Florida Housing Finance Corporation :

Betty Zachem , Esquire

Christopher D. McGuire, Esquire

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee , Florida 3 23 0 1 - 1329

For Fount ains at Kings Pointe Limited Partners hip :

J. Stephen Menton, Esquire

Rutledge Ecenia, P.A.

119 South Monroe Street, Suite 202

Post Office Box 551

Tallahassee, Florida 32302 - 0551

For Harmony Pinewood, LLC :

Brian B. Waterfield

Timshel Development Group

310 South Dillard Street, Suite 135

Winter Garden, Florida 347 87

For Norton Commons, Ltd.:

Craig D. Varn, Esquire

Manson Bolves Donaldson Varn, P.A.

106 East College Avenue, Suite 820

Tallahassee, Florida 32301

Amy Wells Brennan, Esquire

Manson Bolves Donaldson Varn, P.A.

109 North Brush Street, Suite 300

Tampa, Florida 33602

STATEMENT OF THE ISSUES

The issues in this protest are whether either or both of

Respondent ' s intended actions in dispute ÏÏ namely , (i) deeming

one application eligible for funding despite the existence of

reasonable grounds for uncertainty as to whether the amount of

capital the applicant's equity proposal states will be in vested

during construction is sufficient to cover development costs ;

and (ii) awarding another applicant a number of proximity points

based on information in its application that was later

discovered to be mistaken ÏÏ are contrary to governing statutes,

admi nistrative rules, or the specifications of the solicitation;

and, if so, whether the erroneous action or actions are contrary

to competition, clearly erroneous, or arbitrary or capricious.

PRELIMINARY STATEMENT

On September 6, 2018 , Respondent Florida Hou sing Finance

Corporation ( " FHFC " ) issued Request for Applications 2018 - 110

for the purpose of awarding low - income housing tax credits . On

March 22, 2019, FHFC announced its intent to select ten

applicants for funding, including Norton Commons, Ltd. ( " Nort on

Commons " ) , and Harrison Parc, Ltd. ( " Harrison Parc " ).

Petitioners HTG Oak Valley, LLC ( " HTG Oak Valley " ) , and

Fountains at Kings Pointe Limited Partnership ( " Fountains " ) were

deemed eligible, but not selected for funding.

HTG Oak Valley ; HTG Gulf, LLC ( " HTG Gulf " ) ; HTG Spring, LLC

( " HTG Spring " ) ; and Fountains timely filed Notices of Protest

followed by Petitions for Formal Administrative Hearing. All

petitions were referred to the Division of Administrative

Hearings ( " DOAH " ) , where the undersigned consolidate d the four

cases. A fter a pre - hearing conference on May 6, 201 9 , the final

h earing was scheduled to commence on May 31, 2019, in

Tallahassee, Florida. Prior to hearing, HTG Spring and HTG

Gulf filed notices of voluntary dismissal. Those cases were

severed , and the undersigned relinquished jurisdiction over them

to FHFC, leaving the consolidated cases numbered 19 - 2275BID

and 19 - 2276BID (the " 2018 - 110 Protests " ) at DOAH.

On May 24, 2019, FHFC filed a n unopposed motion to

consolidate the 2018 - 110 Protests with The Vistas at

Fountainhead Limited Partnership v. Florida Housing Finance

Corp. , DOAH Case No. 19 - 2328BID ( the " Vistas Protest " ) , for

hearing only, which was granted . The three consolidated cases

were scheduled for final hearing together on June 3 and 4, 2019.

O n May 29, 2019 , Harmony Pinewood, LLC ( " Harmony Pinewood " ) ,

whose substantial interests are being determined in the 2018 - 110

Protests , filed a Notice of Appearance/Motion to Intervene ,

which, despite bein g untimely, was granted with limitations.

The parties entered into a detailed Joint Pre - hearing

Stipulation , which was filed on May 30, 2019. A S upplement to

the Joint Pre - hearing Stipulation was filed on May 31, 2019,

outlining the various funding scen arios that might result,

depending on the outcome of these proceedings . To the extent

relevant, the stipulated facts have been incorporated herein .

The final hearing took place as scheduled, with all parties

present . All parties presented the testimony o f Marisa Button ,

FHFC ' s Director of Multifamily Programs. Norton Commons

presented the testimony of James Dyal. Brian Waterfield

testified o n behalf of Harmony Pinewood. Fountains called as

witnesses David Urban of RBC Capital Markets and Scott Deaton, a

principal of Fountains. Joint Exhibits 1 through 12 were

received into evidence. HTG Oak Valley ' s Exhibits 1 through 6

and Norton Commons ' Exhibits 1 through 3 were admitted as well .

FHFC offered no additional exhibits.

On June 6, 2019, Norton Commo ns and HTG Oak Valley filed a

Joint Notice of Voluntary Dismissal of Specific Issues. In the

joint notice, Norton Commons voluntarily dismissed its obj ection

to HTG Oak Valley ' s claimed proximity to a medical facility , and

HTG Oak Valley voluntarily dismi ssed its protest relating to the

sufficiency of Norton Commons ' disclosure of p rincipals. This

Recommended Order will not address those matters.

The three - volume transcript was filed on June 18, 2019.

All parties timely filed Proposed Recommended Orders , which were

considered in preparing this Recommended Order .

U nless otherwise indicated, citations to the official

statute law of the state of Florida refer to Florida Statutes

201 8 .

FINDINGS OF FACT

1. FHFC is the housing credit agency for the state of

Florida whose responsibilities include the awarding of low -

income housing tax credits , which developers use to financ e the

construction of affordable housing. Tax credits are distributed

pursuant to a competitive process similar to a public

procurement th at starts with FHFC ' s issuance of a r equest for

a pplications. 1 /

2. On September 6, 2018 , FHFC issued Request for

Applications 201 8 - 11 0 ( the " RFA " ) . Applications were originally

due on October 23, 2018, but this deadline was extended to

December 4 , 201 8 .

3. FHFC received 191 applications in response to the RFA ,

through which FHFC seeks to award housing credits worth u p to

approximately $14 .3 million for developme nts that will be

located in medium counties. A Review Committee was appointed to

evaluate the applications and make recommendations to FHFC ' s

Board of Directors (the " Board " ).

4. Pursuant to the ranking and selection pro cess outlined

in the RFA, applican ts were evaluated on eligibility items and

were awarded points for other items. The eligi bility items

included Submission Requirements, Financial Arrearage

Requirements, and a Total Development Cost Per Unit Limitation

requirement. To be eligible for funding, an application must

meet all of the eligibility items. A Funding Test in the RFA

pr ovides that " [a]pplications will be selected for funding only

if there is enough funding available to fully fund the Eligible

Housing Credit Request Amount. "

5. The Review Committee found 181 ap plications eligible

(95 percent of the total ) , deemed ten app lications ineligible ,

and selected ten applications for recommend ation to the Board

for funding. At a meeting o n March 22, 2019, the Board approved

the Review Committee ' s eligibility and funding r ecommendations.

That same day, FHFC notified all applicants that the Board had

approved the staff recommendations. The notice , which was

posted on FHFC ' s website, listed the many eligible applica nts

along with the handful of eligible applicants that had been

chosen for an intended award of housing c redits. Among the

putative successful applicants were Norton Commons and Harrison

Parc. 2 / Though deemed eligible, HTG Oak Valley, Harmony

Pinewood, and Fountains were not recommended for funding.

6 . Harmony Pinewood. Harmony Pinewood timely submitted a n

a pplication requesting an allocation of housing credits for an

86 - unit housing development in Brevard County. FHFC determined

that Harmony Pinewood ' s application was eligible for an award of

housing credits but did not preliminarily select Harmony

Pinew ood for funding. In evaluating Harmony Pinewood ' s

application, FHFC found that the applicant had earned enough

proximity points to qualify for the Proximity Funding

Preference , which give s Harmony Pinewood an advantage in the

ranking over other applicants who failed to qualify for the

preference.

7. Applicants earn proximity points based on the distance

between the ir Development Location Point ( " DLP " ) 3 / and the

Transit Service or Community S ervice they selec t . The closer

the applicant ' s DLP is to the corresponding Transit or Community

S ervice , the more proximity points the applicant will receive .

As an e ligible Community Service, an applic a nt might choose a

Grocery Store, Public School, Medical Facility , or Pharmacy .

8. The RFA require d ap plicants to " state [] [their

respective DLPs] in decimal degrees, rounded to at least the

sixth decimal place. " Harmony Pinewood selected latitude

28.041319 and longitude - 80.615026 as the coordinates for its

DLP.

9. As a C ommunity S ervice, Harmony Pinewo od identified a

Grocery Store, Thrifty Specialty Produce, located at 2135 Palm

Bay R oa d N ortheast , Palm Bay, F lorida 32905, latitude 28.035489,

longitude - 80.610050. The RFA instruct ed applicants to round up

the distance between the DLP and selected service to the nearest

hundredth of a mile. Harmony Pinewood ' s application declared

t he distance between its DLP and Thrifty Specialty Produce to be

exactly one - half of a mile.

10. The RFA require d applicants to obtain a mini mum of

7 .0 proximity points to be eligible for funding. Applicants

needed to earn 9 .0 or more proximity points to be entitled to

the Proximity Funding Preference. During the evaluation, FHFC

does not independently calculat e any distance s based on the

coo rdinates provided by applicant s, but instead awards points

based on the distance s stated in the applications, which it

accepts as true . The distance of 0.50 miles entitled Harmony

Pinewood to an award of 3.5 proximity points for its Grocery

Store , which contributed to the applicant ' s total proximity

score of 9.0.

11. Ba sed on the coordinates provided in Harmony

Pinewood ' s application, however, the distance between its DLP

and Thrifty Specialty Produce is, in fact, 0.51 miles when

rounded up to the neares t hundredth of a mile , as Brian

Waterfield , testifying at hearing on behalf of Harmony Pinewood,

admitted. According to Mr. Waterfield , Harmony Pinewood had

intended to enter " 28.041 2 19 " rather than " 28.041 3 19 " as the

latitude coordinate for its DLP but m ade a typographical error .

He claimed that if the latitude had been entered correctly

as " 28.041219, " then the distance s shown in Harmony Pinewood ' s

a pplication would be correct.

12. HTG Oak Valley protests the award of 3.5 Grocery Store

proximity points to Harmony Pinewood ' s application , a sserting

that the score was based on an erroneous ly reported distance of

one - half mile. HTG Oak Valley urges that this error be treated

as a minor irregularity; that the distance in question be

corrected to 0.51 miles in accordance with the RFA ' s directions

concerning rounding; and that Harmony Pinewood ' s Grocery Store -

related proximity points be reduced to 3.0 to conform to the

revised DLP - to - service distance. This would bring Harmony

Pinewood ' s total proximity score down to 8.5 , rendering Harmony

Pinewood ineligible for the Proximity Funding Preference . FHFC

agrees with HTG Oak Valley.

13. Harmony Pinewood contends that the error in its

application was not in the reported distance but rather in the

DLP latitud e coordinate . Harmony Pinewood urges that this error

be treated as a minor irregularity ; that th e latitude in

question be corrected to 28.041219 in accordance with the

applicant ' s intent; and that the initial scoring decision to

award Harmony Pinewood 3.5 Grocery Store - related proximity

points be upheld.

14. The problem with Harmony Pinewood ' s position is that

no one reviewing the information provided within the application

could discover the alleged typographical error in the DLP

latitude coordinate except Harmony Pinewood itself . In

contrast, any party using the coordinates stated in the

application could attempt to verify the accuracy of the reported

distance between Harmony Pinewood ' s DLP and Thrifty Specialty

Produce .

15 . Taking this a step further, the long itude and latitude

coordinate s of a DLP constitute the numerical expression of a

subjective decision on the part of the applicant , a value

judg ment w hich is not falsif iable , despite the apparent

exactitude of the figu res . This is because the DLP is, by

definition, " a single point selected by the Applicant on the

proposed Development site that is located within 100 feet of a

residential building existing or to be constructed as part of

the proposed Development. " Fl a. Admin . Code R . 67 - 48.002(34)

(emphasis added) . There are , in other words, no right or

wrong DLP s , only compliant and noncompliant DLPs . Harmony

Pinewood ' s DLP, as described in its application, satis fies

r ule 67 - 48.00 2(34) , and th us is a responsive, conf o rming ,

compliant DLP ; there is nothing facially or inherently irregular

about it .

16. The selection of a DLP is, moreover, a competitive

decision because the chosen location directly affects the number

of proximity points to which an application may be entitled . It

is a decision that makes an application more or less competitive

relative to the other applications. In this respect, selecting

a DLP is analogous to deciding upon a price to bid on a

contract. Imagine a second - ranked bidder claiming that i t had

meant to bid $ 28 , 041 , 2 19 instead of $ 28 , 041 , 3 19 , wher e $100

would make the difference between winning and losing. Unless

there were clear evidence in the bid that the lower price had

been intended, there would be no practical distinction

whatsoever between " correcting " the supposed clerical

error and " amending " the bid based on extrinsic evidence

submitted post decision . The latter is clearly prohibited. See

§ 120.57(3)(f), Fla. Stat; cf. Fla. Admin. Code R . 67 - 60.009(4) .

17. Because post - deadline amendments to an a pplication

based on extrinsic evidence are impermissible , an applicant's

subjective competitive decisions must be deemed both final as of

the application deadline, and fully expressed within the four

corners of the applicat ion. Thus, it should be rare f or an

alleged error in the expression of a competitive decision to be

deemed a minor irregularity . To make such a finding of minor

irregularity in an exceptional situation , two necessary (but

perhaps not sufficient) conditio ns would have to be met:

(i) the alleged error would need to be reasonably apparent to

anyone on the face of the application and (ii) the intended

statement , free of error, would need to be unmistakably

expressed somewhere in the application. So, for an example,

recall the previous hypothetical but assume , as additional

facts, that the bid price of $28,041,319 is necessarily the

product of a unit price ( " a " ) times a certain number of

units ( " b " ), and that both a and b are clearly stated in the bid.

If a × b = $28,041, 2 19 instead of $28,041,319 , then someone other

than the applicant would be able to discover the mathematical or

clerical error in the bottom - line price quote, and it would be

fairly clear from the face of the bid that $28,041,219 was the

inte nded price. Such an error might be correctible in the

agency ' s discretion. 4 /

18. That is not the situation here. The coordinates of

Harmony Pinewood ' s DLP appear only once in its application.

Because of the rounding involved, moreover, the " true "

coordinates cannot be derived from the stated distance of

0.50 miles. Unlike the product of a times b , which can be only

one number, there are multiple DLP longitude - latitude pair s that

corr espond to the stated distance of 0.50 miles ÏÏ or, at a

minimum, t he evidence fails to rule out such diversity . The

only way for anyone besides Harmony Pinewood to know that the

DLP latitude "should have been" 28.041219 is to hear it from

Harmony Pinewood.

19. Under these circumstances, the undersigned determines

that the DLP coordinates in Harmony Pinewood's application must

be considered the true and correct, full and final expression of

the applicant's decision to select that particular location for

its DLP. Therefore, the irregularity in Harmony Pinewood's

applicat ion is not the stated DLP latitude; it is the stated

distance between the DLP and the Grocery Store, which should be

0.51 miles instead of 0.50 miles. Because the RFA requires an

award of 3.0 proximity points for a distance of 0.51 miles, and

because the distance irregularity does not otherwise render

Harmony Pinewood's application nonresponsive, the correct, and

only nonarbitrary , solution to the problem is for FHFC to reduce

the number of Grocery Store proximity points awarded to Harmony

Pinewood's appli cation , from 3.5 as intended, to 3.0.

20. Fountains. Fountains submitted an application

requesting an allocation of housing credits for a proposed

120 - unit housing development in Flagler County. FHFC determined

that Fountains was eligible for an award of housing credits but

did not preliminarily select the Fountains application for

funding. HTG Oak Valley protests FHFC's intended decision to

deem Fountains eligible for funding, alleging that Fountains '

application is materially nonresponsive ÏÏ and thus should be

rejected as ineligible ÏÏ for failing clearly to state that an

amount of equity sufficient to cover the anticipated development

costs would be invested in the project prior to construction

complet ion.

21. The RFA requires that an applicant must submit , as

part of its application, a D evelopment Cost Pro Forma detailing

both the anticipated costs of the proposed development as well

as the anticipated funding sources for the proposed development.

In order to demonstrate adequate funding, the Total Construction

Sources (including equity proceeds/ capital contributions and

loans) , as shown in the pro forma , must equal or exceed the

Total Development Costs reflected therein . During the scoring

process, i f a funding source is not considered or is adjusted

downward, then Total Development Costs might wind up exceed ing

Total Construction Sources , in which event the applicant is said

to suffer from a construction funding shortfall (deficit) . If

an applicant has a funding shortfall, it is ineligible for

funding.

2 2 . The Development Cost Pro Forma does not allow

applicants to include in their Total Construction Sources any

equity proceeds to be paid after construction completion.

Instead, the applicant must s tate only the amount of "Equity

Proceeds Paid Prior to Completion of Construction." The pro

forma defines "Prior to Completion of Construction" as "Prior to

Receipt of a Final Certificate of Occupancy."

2 3 . The RFA requires , as well, that an equity pro posal

letter be included as an attachment to the application. For a

housing credit equity proposal to be counted as a source of

financing, it must meet the following criteria:

• Be executed by the equity provider;

• Include specific reference to the

Applican t as the beneficiary of the equity

proceeds;

• State the proposed amount of equity to be

paid prior to construction completion ;

• State the anticipated Eligible Housing

Credit Request Amount;

• State the anticipated dollar amount of

Housing Credit allocation t o be purchased;

and

• State the anticipated total amount of

equity to be p rovided.

(Emphasis added).

2 4 . As Attachment 14 to its application, Fountains

submitted an equity proposal letter from RBC Capital Markets

("RBC") executed by David J. Urban ( the "Equity Proposal") . In

relevant part, the Equity Proposal states:

Anticipated Total

Equity to be provided: $15,510,849*

Equity Proceeds Paid

Prior to or simultaneous to

closing the construction

financing: $2,481,736* (min. 15%)

Equity Proc eeds to be

Paid Prior to Construction

Completion: $8,686,075

Pay - In Schedule: Funds available for Capital

Contributions

#1: $2,481,736* be paid prior

to or simultaneously with the

closing of the construction

financing.

Funds available for Capital

Contribution #2 $2,326,627*

prior to construction

completion .

Funds available for Capital

Contribution #3 $3,877,712*

concurrent with permanent loan

closing.

Equity Proceeds Paid at Lease

Up $5,428,797*

Equity Proceeds Paid at 8609

$1,395,977*

*All n umbers rounded to nearest dollar .

2 5 . T he Pay - In Schedule in t he Equ ity Proposal refers

to "permanent loan closing" as the moment when C apital

C ontribution #3 will be made "available." The Equity Proposal

does not, however, define or discuss permanent l oan closing,

and , to the point , does not specify when it is expected to

occur. Of potential relevance in this regard is a letter from

JP Morgan Chase Bank, N.A. (the "Chase Letter"), which is

included as Attachment 16 to Fountains' application .

26. Unlik e the Equity Proposal, the Chase Letter, if not

the last word on the subject, at least sheds some light on the

timing of th e crucial milestone , i.e., "permanent loan closing."

Although the Chase Letter is full of escape clauses and does

"not represent a c ommitment" or "an offer to commit," t he

document nevertheless outlines the terms for the closing of the

proposed construction and permanent loans. T he proposed terms

call for the payment of a $10,000 Conversion Fee at p ermanent

l oan closing and impose preconditions for the conversion from

the construction loan to the permanent loan , which include a

requirement that there have been " 90% economic and physical

occupancy for 90 days. " No evidence was presented as to the

meaning of this language , but the term " physical occupancy " is

clear and unambiguous ÏÏ and it plainly happens after receipt of a

f inal c ertificate of occupancy, which , under the RFA, is the end

point of the construction phase.

2 7 . HTG Oak Valley argues that the P ay - In S chedule ca sts

doubt on whether the entire amount stated in the Equity

Proposal's line - item entry for " Equity Proceeds to be Paid Prior

to Construction Completion " ($8,686,075) will be paid before the

final certificate of occupancy is issued. According to HTG Oak

Valley , the Pay - In Schedule shows that the third c apital

c ontribution will be paid after construction completion because

the second c apital c ontribution, which is the earlier of the

two, is due to occur "prior to construction completion ." Thus,

HTG Oak Va lley contends that Fountains ' construction financing

sources should be reduced by $3,877,712, thereby creating a

construction financing shortfall and rendering the Fountains

a pplication ineligible for funding.

2 8 . HTG Oak Valley finds support for its posi tion in an

unlikely place, namely, FHFC's intended rejection of the

application that The Vistas at Fountainhead Limited

Partnership ("Vistas") submitted in response to Request for

Applications 2019 - 105 ("RFA 2019 - 105"). That proposed agency

action is relevant because Vistas had attached to its

application an equity proposal letter from RBC whose terms and

conditions ÏÏ other than the dollar amounts and (obviously) the

applicant's name ÏÏ are identical to those of the Equity Proposal

for Fountains. During the evaluation of applications under

RFA 2019 - 105, which took place at around the same time as the

review of applications pursuant to the RFA at issue here, FHFC's

scorer determined that C apital C ontribution #3 should be

excluded from the amount of equity proceeds to be paid prior to

construction completion , with the result that the Vistas

application was deemed ineligible for funding due to a funding

shortfall.

2 9 . The Vistas and Fountains applications , competing in

separate solicitations, were scored by different FHFC staff

members . The evaluator who scored the financial section of

Vistas' application sought advice concerning her interpretation

of the Equity P roposal , discussing the matter with FHFC's

Director of Multifamily Programs and legal counsel at a

reconciliation meeting that occurred before the R eview C ommittee

convened ; this evaluator encountered no resistance to her plan

of making a downward adjustment to Vistas' equity funding . The

evaluator of the Fountains application did not likewise discu ss

her scoring rationale and thus received no input or guidance

from FHFC's management. Ultimately, however, b ecause each

scoring determination belongs to the R eview C ommittee member

herself or himself , inconsistent or conflicting results are

possible , as these cases demonstrate .

30 . Once in litigation, FHFC discovered that it had

reached opposite scoring conclusions based on the same material

facts . In these proceedings and in the Vistas Protest, FHFC has

stressed its desire to take a consistent appro ach to the

identical Equity Proposals. To that end, in the Vistas Protest,

FHFC has reversed course and argued that , contrary to its

intended action, the E quity P roposal provided by Vistas fully

satisfies the requirements of RFA 2019 - 105 ; there is no fund ing

shortfall; and Vistas ' application is eligible and should be

selected for funding. Deeming Vistas' application eligible

would achieve consistency, of course, by giving favorable

treatment to the applications of both Fountains and Vistas,

which are sim ilarly situated as to the Equity Proposal.

Naturally, HTG Oak Valley urges that consistency be found the

other way around, through the rejection of both applications.

31 . In support of its decision to change position s on

Vistas' Equity Proposal, FHFC relies upon the following

premises, which are equally applicable to the determination of

Fountains' substantial interests: (i ) the Equity Proposal

plainly specifies, in the line - item entry for "Equity Proceeds

to be Paid Prior to Construction Completion , " the amount to be

paid prio r to construction completion; (ii) permanent loan

closing does not necessarily have to occur after construction

completion ; and (iii ) th e information contained in the Pay - In

S chedule is not inf ormation that is required by RFA 2019 - 105 (or

the RFA at issue in this case) .

3 2 . The disputes arising from the scoring of the Equity

Proposal are solvable as matters of law and therefore will be

addressed below.

CONCLUSIONS OF LAW

33 . DOAH has personal and subject matter jurisdiction

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

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

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

determin e the substantial interests of HTG Oak Valley,

Fountains, Harmony Pines, and Norton Commons , each of whom

therefore has standing to participate in this proceeding .

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

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

S tate Contracting & Eng ' g Corp. v. Dep ' t of Transp. , 709 So. 2d

607, 609 (Fla. 1st DCA 1998) , wh ich must establish its

allegations by a preponderance of the evidence. Dep ' t of

Transp. v. J.W.C. Co., Inc. , 396 So. 2d 778, 787 (Fla. 1st

DCA 1981).

35 . Secti on 120.57(3)(f) spells out the rules of decision

applicable in bid protests. In pertinent part, the statute

provides:

In a competitive - procurement protest, other

than a rejection of all bids, the

administrative law judge shall conduct a de

novo 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 bid or proposal

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency actio n was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

3 6 . The undersigned has discussed elsewhere, at length ,

the meaning of this statutory language, the analytical framework

established thereby, and the levels of deference to be a fforded

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

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

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

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

principles here.

37 . The decision whether to " count " or " exclude " all or

part of a funding source is at heart a scoring function.

Instead of awarding points , the evaluator in effect assigns a

grade of " pass " (count t he funds) or " fail " (exclude /reduce the

funds). Scoring decisions are committed to the agency ' s

discretion and thus are accorded the highest deference on

review. In a protest governed by section 120.57(3), therefore,

the undersigned must be reluctant to upset a scoring decision

and even less willing, should it be necessary to invalidate a

score, to re - score the improperly rated item.

38. The parties have paid considerable attention to

Rosedale Holding v. Fl orida Hous ing Fin ance Corp. , FHFC Case

No. 2013 - 038BP (R ecommended Order May 12, 2014 ; FHFC June 13,

2014) . They dispute whether that case is distinguishable or

precedential as regards the scoring of Capital Contribution #3

as de scribed in the Equity Proposal. There are enough

similarities between Ros edale and the cases at hand to warrant a

closer look at the earlier decision.

39 . In his Recommended Order in Rosedale (the " Rosedale

RO " ), the hearing officer made the following findings of fact:

30. In response to [the requirement in

the RFA that an equity proposal " state the

proposed amount of equity to be paid p rior

to construction completion, " ] Palm Village

provided at Attachment 13 a Term Sheet

setting forth the proposed equity investment

in the proposed Palm Village Project from

SunTrust Communi ty Capital, LLC. At page 2

the Term Sheet states: " The proposed amount

of equity to be paid prior to construction

completion is $2,127,118. " This total is

to be paid in two separate capital

contributions referenced in the Term Sheet.

31. The first cap ital contribution of an

estimated $1,160,246 would be paid when the

partnership was entered into. The second

capital contribution of an estimated

$966,872 would be paid only upon receipt of

each of the following: 1) final

Certificates of Occupancy on all units by

the appropriate authority; 2) certification

by the STCC Construction Inspector that

the project was completed in accordance

with the plans and specifications, and

3) acknowledgements by Lender of completion

of the Project in accordance with the

P roject documents.

32. The Development Cost Pro Forma in the

RFA defines " Prior to Completion of

Construction " as " Prior to Receipt of Final

Certificate of Occupancy or in the case of

Rehabilitation, prior to placed - in - service

date as determined by the Ap plicant. "

Rosedale RO at 12 - 13 .

40 . Regarding the equity proposal at issue in Rosedale ,

the hearing officer concluded as follows:

41. The equity proposal from Sun Trust

Community Capital included a statement that

$2,127,118 would be paid prior to

construction completion. On its face this

appears to meet the requirements of the RFA

and to demonstrate adequate funding levels.

However, th e equity proposal also stated

that almost half of this amount would in

fact not be paid until final certificates of

occupancy on all units were received, not

until the construction inspector certified

that the project was completed, and not

until the lende r agreed that the project was

complete.

42. It is quite clear from the terms of

the RFA that equity to be paid " prior to

construction completion " means that it must

be paid before the final certificates of

occupancy are obtained. Regardless of the

rather generic statement of how much would

be paid prior to construction completion,

the most reasonable reading of the Term

Sheet is that some $966,862 would not be

paid prior to construction completion.

There is an internal inconsisten cy in the

Term Sheet, but it does not appear to be a

typographical or mathematical error and

Florida Housing was correct not to consider

this a minor irregularity that could be

waived. Furthermore, it was at least not

unreasonable for Florida Housing to g ive

more weight to the specific and detailed

limitations on the second capital

contribution than to the general statement

about how much would be paid prior to

construction completion.

43. Palm Village argues that because

there is no definition of " prior to

construction completion " the interpretation

of this phrase must be left up to the

Applicant. I n fact, that term is defined in

the Development Cost Pro Forma. Even if it

were not, the Applicant would not be free to

interpret the phrase however it wish ed, no

matter how illogical. It is simply

unreasonable to think that " prior to

construction completion " actually means

sometime after the construction engineer has

certified that the project is complete.

44. Florida Housing ' s determination that

Palm Vil lage failed to demonstrate adequate

funding is not clearly erroneous, nor was it

arbitrary or capricious. There is also

nothing in the record to suggest that this

determination is contrary to competition.

Rosedale RO at 35 - 36.

41 . To summarize, i n the r elevant part of Rosedale , the

hearing officer upheld the intended score of " fail " given to the

proposed second capital contribution from SunTrust Community

Capital, LLC. ( " STCC " ) , a score which had been based on the Term

Sheet ' s plain disclosure that the p ayment was not going to occur

" prior to construction completion " as that term was defined in

the applicable pro forma . Whether an intended score of " pass "

vis - à - vis the second contribution likewise would have survived

review is somewhat unclear; applying the deferential standard of

review applicable to scoring decisions, the hearing officer in

Rosedale seems to have stopped short of concludin g that FHFC was

required not to consider the second capital contribution ,

although he implied as much . Because the intended decision to

treat the Fountains application as eligible for funding raises

the unexamined question of whether the agency committed

reversible error in counting (rather than excluding) a capital

contribution, Rosedale is, if not inapposite, not qu ite " on all

fours " either, at least as to Fountains.

42 . Rosedale is more analogous to the Vistas Protest,

since the intended a ction in Rosedale was , as it is in the

Vistas Protest, to exclude a proposed capital contribution

deemed to be payable after the completion of construction.

There is a factual distinction between the cases, however. The

Term Sheet at issue in Rosedale unambiguously conditioned the

payment of the second capital contribution on events that

clearly would take place after " Receipt of Final Certificate of

Occupancy, " which, according to the Development Cost Pro Forma

in Rosedale , was the milestone that would signal the completion

of construction. In contrast, the Equity Proposals for both

Vistas and Fountains unambiguously condition t he availability of

Capital Contribution #3 on the simultaneous occurrence of

" permanent loan closing " without clearly stating when that event

will take place in relation to Receipt of a Final Certificate of

Occupancy, which the applicable pro forma (as in Rosedale )

designates as the end point of construction.

43 . The Rosedale RO arguably veils this distinction

because it concludes that the STCC Term Sheet ÏÏ by stating

" generically " that a total of $2.1 million would be paid prior

to construction completion, while also specifying that nearly

$1 million of that sum would not be paid until after the receipt

of final certificates of occupancy ÏÏ suffered from " an internal

inconsistency . " The reasonable inference , however, is that the

parties to the Term Sheet ( ST CC and Palm Village) had reached a

private agreement regarding the meaning of the term " prior to

completion of construction . " T he Term Sheet was presumably

internally consistent with the parties ' intent that $2.1 million

would be paid " prior to construction completion " as they used

and mutually understood that term . In any event, the Term Sheet

was not facially or patently ambiguous because the term

" construction completion " is not literally or exclusively

synonymous with " Receipt of a Final Cer tificate of Occupancy "

but could be understood and used by the parties to a consensual

agreement to mean, e.g., " permanent loan closing, " among other

possible events, so that , as between the parties, any event

occurring prior to permanent loan closing woul d be deemed by

contract to have taken place prior to construction completion. 5 /

44 . Palm Village ' s problem was that it and STCC ' s

definition of " prior to construction completion " differed from

the definition of that same term as set forth in the Developme nt

Cost Pro Forma, and it was that latter definition, of course,

which determined whether a funding source could be considered as

part of an applicant ' s construction financing. The bottom line,

therefore, is that although the Term Sheet was internally

consistent , it nevertheless unambiguously showed that a

substantial portion (about $1 million) of the STCC equity

investment would not be paid " prior to construction completion "

under the external, but controlling , definition of that term.

45 . Once this is recognized, it becomes clear that, in

Rosedale , FHFC had no choice but to deduct, from the applicant ' s

total construction financing, the second capital contribution,

which the equity proposal clearly and unambiguously stated would

not be made until aft er events that could not occur " prior to

construction completion " as that term was defined in the request

for applications , because the agency ' s discretion, though broad,

does not authorize it to act in contravention of the

solicitation ' s plain language.

4 6 . In sum, then, a careful reading of Rosedale reveals it

to be distinguishable from the Vistas and Fountains matters,

because while the Equity Proposals, unlike the STCC Term Sheet,

truly are internally inconsistent (as will be discussed below),

they do not (again unlike the Term Sheet) clearly and

unambiguously state that Capital Contribution #3 will not be

paid " prior to construction completion " as that term is defined

in the RFA. But neither, however, do they clearly and

unambiguously state that Capit al Contribution #3 will be paid

" prior to construction completion " as that term is defined in

the RFA.

47 . The internal inconsistency in the Equity Proposal

stems from the Pay - In Schedule. As a preliminary matter, FHFC

and Fountains argue that, because the RFA does not require an

equity proposal to include a detailed timetable, the Pay - In

Schedule is mere surplusage that can and should be ignored.

This is not a persuasive argument. First, the premise is only

trivially true. The RFA does not specifically require an equity

pay - in schedule, but it does instruct that an equity proposal be

attached to the application. So, whatever is in the equity

proposal must be submitted ÏÏ that is the important requirement.

In that sense, therefore, the RFA did require the submission of

the Pay - In Schedule, as it was part of the Equity Proposal.

48 . Second, and more important, whether required or not,

the Pay - In Schedule contains language bearing on the timing of

certain capital contributions, which is specifically relevant

because of the instruction to " [s]tate the proposed amount of

equity to be paid prior to construction completion, " and is

generally relevant, in any event, as part of the application.

FHFC cannot pick and choose which language of the application to

consider and which to overlook; that would be arbitrary and

contrary to competition. The upshot is that the Pay - In Sche dule

cannot be ignored simply because it creates uncertainty that

otherwise would not exist.

49 . The Pay - In Schedule prescribes the timetable for RBC ' s

proposed equity contributions in chronological order from the

first payment to the fifth (and final) pa yment. Each

installment (or funding window for the second and third

contributions, respectively) is tied to ÏÏ and scheduled to occur

before/at , before , or at ÏÏ a milestone in the life cycle of the

project as follows: #1 Î (before/at) closing of constructio n

financing; #2 Î (before) construction completion; #3 Î (at)

permanent loan closing; #4 Î (at) lease up; and #5 Î (at) filing

of IRS Form 8609 (after the building is placed in service).

50 . Regardless of how " construction completion " is

defined, the mo st natural reading of this schedule is that

Capital C ontribution #3 is scheduled to be made after

construction completion, since Capital Con tribution #2 covers

the entire period during which construction is ongoing. 6 / If

Capital C ontribution #3 were inten ded to be made while

construction continued; that is, if the second and third

contributions were intended to overlap, the Pay - In Schedule

clearly fails to express such intention in an ordinary fashion.

Rather, this normally would be communicated either by tying

Capital C ontribution # 2 to permanent loan closing and making

Capital C ontribution # 3 available prior to construction

completion (reversing the order of these two installments), or

by combining the two contributions into one installment, with

the sum being available prior to construction completion.

51 . If the Pay - In Schedule were the only language in the

application pertaining to the amounts to be paid prior to

construction completion, the undersigned would not hesitate to

conclude, based on the s chedule ' s fairly straightforward

timetable, that the amount of equity to be paid prior to

construction completion is the sum of Capital C ontribution #1

and Capital C ontribution #2. But the Pay - In Schedule does not

stand alone; within just the Equity Propo sal, it is attended by

the line item stating that an amount equal to the sum of the

first three c apital c ontributions will be " Paid Prior to

Construction Completion. " As used in the line item, the term

" Prior to Construction Completion " must be synonymous with

" prior to construction completion " as used in the Pay - In

Schedule, given the identity of the language. Consequently, the

line item can only be understood as meaning that Capital

C ontribution #3 is payable prior to the completion o f

construction , even though the Pay - In Schedule states that

Capital C ontribution #3 is payable after the completion of

construction. Hen ce the internal inconsistency.

52 . Ordinarily, when a legal dispute arises from such an

inconsistency in the terms of an instrument, resolution requires

the judge to engage in a two - step analysis. The first step is

to determine " whether the language at issue is either clear or

ambiguous. " Famiglio v. Famiglio , 44 Fla. L. Weekly D1260, 2019

Fla. App. LEXIS 7204, at *17 n.3 (Fla. 2d DCA May 10, 2019).

This is a question of law. Id. If the terms at issue are

ambiguous, then, in step two, the judge must apply the canons of

construction and interpret the uncertain language, as a matter

of law. See, e.g. , Holmes v. Fla. A &M Univ. , 260 So. 3d 400,

404 (Fla. 1st DCA 2018). In some instances, it is permissible

for the judge to receive and consider parol or extrinsic

evidence bearing on the parties ' intent, to assist in the

interpretation. E.g. , Famiglio , 2019 Fla. App. LEXI S 7204 ,

at *7 - 8. In such cases, the parties ' intent becomes a material

fact, but the interpretation of the instrument remains a matter

of law.

53 . It is tempting to travel this familiar path and simply

construe the Equity Proposal, reaching a legal concl usion as to

its best meaning. But this is not an ordinary legal dispute

arising from competing interpretations of a writing. For one

thing, the parties to the respective E quity P roposals under

consideration are not in doubt about what they meant to say

t herein, nor is there a dispute between these parties regarding

their rights and obligations under the proposals.

54 . Moreover, if the rights and obligations of the parties

to the E quity P roposals were relevant to the question at hand ÏÏ

which, not to forg et, is whether FHFC should consider Capital

C ontribution #3 as part of each applicant ' s total construction

funding ÏÏ it is not clear that FHFC would be empowered to

determine such rights and obligations, because jurisdiction to

interpret a contract for that purpose is vested exclusively in

the judiciary. Eden Isles Condo. Ass ' n v. Dep ' t of Bus. &

Prof ' l Reg. , 1 So. 3d 291, 293 (Fla. 3d DCA 2009). Fortunately,

the meaning of the Equity Proposals, as between the parties to

those proposals, is irrelevant to the instant dispute.

55 . What FHFC does have the authority (and, indeed, the

duty) to determine is whe ther an application meets the

requirements of the RFA. This includes the power to decide

whether an equity proposal states an amount of equity to be paid

prior to construction completion that (together with other

funding) is sufficient to cover the projec ted costs of

development as set forth in the pro forma. Such an exercise

might seem to involve the same analysis as a straightforward

contract interpretation. There is a difference, however,

between FHFC ' s setting out to determine the intended meaning of

contractual terms to which private parties have given their

mutual assent, on the one hand; and, on the other, FHFC ' s

deciding whether the parties ' written instrument, as measured

against the specifications of the RFA, complies with the

agency ' s requireme nts.

56 . FHFC and Fountains advocate an interpretive analysis

that blurs this distinction; they would construe the Equity

Proposal to show that the letter states an adequate amount of

equity to be paid prior to construction completion. Their

argument g oes something like this. There is no legal or other

mandate that prohibits permanent loan closing from occurring

prior to construction completion. To be sure, permanent loans

typically close after the completion of construction, but that

is not necessari ly the sequence of events in every instance.

Thus, the Pay - In Schedule does not clearly and definitively

eliminate the possibility that Capital C ontribution #3 might be

paid prior to construction completion. Because the relevant

line item clearly states an amount of equity to be paid prior to

construction completion that obviously includes the third

c apital c ontribution, the parties must have intended that the

permanent loan would close prior to construction completion ÏÏ

which, while admittedly uncommon, i s not unheard of. The Equity

Proposal should be interpreted as reflecting such intent, and,

as so construed, be deemed to state a sufficient amount of

equity to cover the anticipated development costs, in conformity

with the RFA.

57 . Regardless of whethe r the foregoing reasoning is

persuasive, it is neither irrational nor clearly erroneous,

provided the premise behind it is correct. The underlying

premise is that, in determining conformity, FHFC may use its

best judgment to ascertain the most reasonable meaning of an

uncertain or unclear response. For the reasons th at follow,

however, it is concluded that this premise is clearly erroneous

and contrary to competition and therefore must be rejected.

58 . To begin, it will be helpful to recall that the RFA

specification at issue here is the requirement that an equity

proposal must " [s]tate the amount of equity to be paid prior to

construction completion. " An equity proposal that failed to

state any amount of pre - completion equity, even if the number

were ze ro, would be nonresponsive; unless the applicant ' s other

financing sources were sufficient, its application would have to

be deemed ineligible. In contrast, an equity proposal that

states any amount of pre - completion equity is facially

responsive; however , it is responsive in this regard only to the

extent the amount of equity to be paid prior to construction

completion is clearly stated. To the extent the amount of pre -

completion equity is unclear, the equity proposal must be

considered nonresponsive, because an ambiguously expressed

amount is no different, in the context of a competitive

evaluation, from an unexpressed amount.

59 . Why is this so? For starters, ambiguity is

nonresponsive because the relevant RFA provision does not permit

uncertain responses. It should go without saying that the RFA

plainly requires the proposed amount of pre - completion equity to

be clearly st ated. Presumably no one would seriously suggest

that the specification should be read to mean: " S tate at least

ambiguously the proposed amount of equity, " etc. Yet, a fatal

flaw in FHFC and Fountains' position is that it implicitly

revises the specifica tion to include an unstated proviso to the

effect that ambiguous or uncertain responses will be given the

most reasonable interpretation . This is a clearly erroneous

construction of the plain language of the RFA.

60 . Ambiguity is nonresponsive because Fl orida

Administrative Code Rule 67 - 60.008 says so. That rule defines

the term " minor irregularities, " which FHFC in its discretion

may waive or correct, as errors that, among other things, " do

not create any uncertainty that the terms and requirements of

t he competitive selection have been met. " An ambiguous response

by its very nature creates uncertainty that the response is

conforming; absent such uncertainty, the issue of ambiguity

would not surface. 7 /

61 . Rule 67 - 60.008 makes clear that a material amb iguity,

that is , one which creates any uncertainty that the terms and

requirements of the RFA have been met, is an irregularity ÏÏ and

not a minor one at that. Such an irregularity is otherwise

known as a material variance or substantial deviation . By

excl uding material ambiguities from the subset of errors known

as minor irregularities, FHFC ' s own rule, by necessary

implication, classifies an ambiguity involving material

information as a substantial deviation from the specifications,

for deficiencies in a response or bid are either minor (and

waivable) or material (and nonwaivable); there is no middle

ground. FHFC does not have the authority, under r ule 67 - 60.008

or procurement law generally, to waive or correct a material

variance.

62 . To give an unclear provision its most reasonable

interpretation, as FHFC (with the support and encouragement of

Fountains) urges be done in regard to the Equity Proposal, would

be tantamount to " correcting " the irregularity by removing any

uncertainty that the terms and req uirements of the RFA have been

satisfied. In and of itself, the resolution of ambiguity

through reasonable interpretation is, of course, neither

arbitrary nor illogical; indeed, such an approach is required in

some contexts. But this is not a declaratory judgment suit or

breach of contract action in circuit court between parties to a

written instrument whose meaning is in dispute; it is an

administrative competitive - selection protest. In this context,

construing an ambiguous response violates r ule 67 - 60. 008 and for

that reason is plainly and undeniably impermissible. Doing so

would be clearly erroneous.

63 . Finally, even if not otherwise prohibited (which it

is) , resolution of ambiguity by the agency would be contrary to

competition at both ends of the spectrum. At the front end,

FHFC ' s willingness to " correct " uncertainties in an application

at a minimum would remove a salutary disincentive to sloppy

draftsmanship, and might even encourage applicants to use

studied ambiguity on occasion for competitive advantage. Apart

from that, rare is the sentence so clearl y written as to

foreclose a semantic dispute if the stakes are high enough. The

suggestion that material ambiguity should be handled as a minor

irregularity smells like litigation fuel.

64 . The bigger threat to competition, however, comes at

the back end . An uncertain response inherently presents wiggle

room for interpretation, and if FHFC were able to exercise the

power to construe, it would have opportunities to show

favoritism and, conversely, to act on bias. To be clear, the

undersigned is not sugge sting that FHFC has done anything of the

sort or otherwise improper here ÏÏ to the contrary, the agency has

handled these cases in a most professional and competent manner,

and its conduct has been beyond reproach. Nor does the

undersigned mean to imply tha t FHFC is somehow likely to behave

improperly in the future. Prohibiting the interpretation of an

ambiguous response should be viewed as a prophylactic measure

rather than a remedial or punitive one.

65 . To elaborate, there are grounds for genuine confus ion

about what would constitute the proper purpose of an

interpretation in this context. In a civil action where the

parties to an agreement dispute its meaning, the court is

required to construe ambiguous language so as to bring it in

line with the parti es ' intent. E.g. , Charbonier Food Servs.,

LLC v. 121 Alhambra Tower, LLC , 206 So. 3d 755, 758 (Fla. 3d

DCA 2016). In that context, in other words, the goal of the

interpretative process is to give the writing the meaning its

subscribers intended it to ha ve. The court does not have a free

hand in choosing between reasonable interpretations.

66 . In a competitive selection, however, similar reliance

upon the parties ' intent would be problematic. This is because,

it may reasonably be presumed that the appl icant always intends

its response to conform to the RFA and maximize the applicant ' s

chances of being selected for funding. Where the terms of an

equity proposal are at issue, as here, the reasonable

presumption again would be, in all cases, that the appl icant and

the potential investor intended the proposal to satisfy fully

all applicable provisions of the RFA. Thus, if the parties '

intent were to be the determinative factor, as in civil

litigation, the rule, as a practical matter, whether explicitly

ack nowledged or not, would be that an ambiguous response must be

construed in favor of the applicant. By rewarding ambiguity,

however, such a rule, it may be confidently predicted, would

have unintended consequences unfavorable to competition.

67 . The under signed believes, therefore, that if ambiguous

responses are to be tolerated, they must not be favored, which

means that the use of the parties ' (or applicant ' s) intent as

the polestar for interpretation should be discouraged . But

while this would solve on e problem, it would create another. If

FHFC were not required to construe an ambiguous response

pursuant to the parties ' intent, what limiting principle would

take its place to assist the agency in choosing which reasonable

interpretation to adopt? Where a writing supports two or more

reasonable interpretations (the definition of ambiguity), could

it ever be said that the agency ' s selection of one reasonable

interpretation over another was arbitrary, capricious, or

clearly erroneous?

68 . Without the part ies ' intent for guidance, the agency

would have no choice but to resort to seeking the " most

reasonable " interpretation, which is basically what FHFC

advocates should be done here. But there is little

" limitation, " if any, in this principle, for, like bea uty,

reasonableness is not quantifiable. Allowing FHFC to adopt the

" most reasonable " interpretation of an ambiguous response would

undermine confidence in the integrity of the competition

because, no matter how responsibly and ethically the agency

carrie d out this task, the possibility of favoritism could never

be completely eliminated, and suspicions of such impropriety

inevitably would arise. For these reasons, the undersigned

concludes that, however good the agency ' s intentions, its

exercise of the po wer of interpretation to shore up an ambiguous

application would open a Pandora ' s Box and hence must be deemed

contrary to competition.

69 . Having concluded that material ambiguity in a response

is a substantial, nonwaivable deviation , the question as to both

the Fountains and Vistas applications boils down to whether an

amount of equity to be paid prior to construction completion

sufficient to cover projected construction costs was clearly and

unambiguously stated. As discussed above , the question of

whether a written instrument is ambiguous is a matter of law.

Further, although an agency ' s exercise of interpretive authority

over an ambiguous instrument might raise separation - of - powers

concerns, there should be no similar objection t o a quasi -

judicial officer ' s determination of ambiguity when necessary to

the performance of an agency ' s clear statutory responsibilities.

See Eden Isles , 1 So. 3d 291 at 293.

70 . Because this proceeding is governed by section

120.57(3), the question ari ses whether FHFC ' s preliminary

decision regarding the ambiguity of a response, to the extent it

has made such a decision, is entitled to deferential review.

The undersigned concludes that ambiguity, like historical facts,

must be determined de novo in an administrative bid protest.

This conclusion is based on the grounds that (i) the

identification of ambiguity does not require the application of

special rules tailored for competitive selection or procurement

processes but, rather, is a function of genera l law; and,

relatedly, (ii) determining whether an instrument is ambiguous

does not fall within FHFC ' s substantive jurisdiction or call

upon any agency ' s special expertise.

71 . " An agreement is ambiguous if as a whole or by its

terms and conditions it c an reasonably be interpreted in more

than one way. " Nationstar Mortg. Co. v. Levine , 216 So. 3d 711,

715 (Fla. 4th DCA 2017). For reasons previously discussed, the

Equity Proposal is burdened with an internal inconsistency

regarding the amount of capital contributions to be paid to

Fountains prior to the completion of construction. Because of

this inconsistency, the proposal can reasonably be interpreted

as providing that Fountains would be paid $8,686,075 prior to

construction completion, and it also ca n reasonably be

interpreted as calling for the payment of $4,808,363 in pre -

completion equity. In and of itself, therefore, the Equity

Proposal is ambiguous in this regard.

72 . This does not necessarily mean that the application as

a whole must be deemed ambiguous as to the amount of pre -

completion equity Fountains would receive. Conceivably, some

other part of the application might make clear that the

permanent loan likely w ould close prior to construction

completion. Were that the case, the internal inconsistency

would disappear, and it might be concluded that the application

unambiguously states that Fountains would be paid $8,686,075

p rior to construction completion.

73 . As it happens, there is another part of the

application that speaks to the timing of permanent loan closing ,

namely the Chase Letter . The Chase Letter sets forth the terms

on which the bank might make a construction loan to Fountains,

which would be conv erted to a permanent loan later on. Although

the Chase Letter clearly states that it does not constitute a

binding commitment, it is nevertheless the only source of

information in the application concerning the timing of a

potential permanent loan closing . Moreover, notwithstanding the

qualifications and caveats contained therein, the Chase Letter

offers to make a construction loan to Fountains of approximately

$10,941,689, which is precisely the amount of first mortgage

financing shown in the applicant ' s Development Cost Pro Forma.

74 . FHFC and Fountains argue that the Chase Letter is

irrelevant and should not be considered. Their arguments might

be persuasive if this were a civil action between Fountains and

RBC in which the terms of the Equity Prop osal were in dispute.

But, of course, this is not such a case, and the ultimate

question here is not whether the Equity Proposal per se is

ambiguous/nonresponsive, but whether the application as a whole

is ambiguous/nonresponsive. It would be arbitrary a nd

capricious not to consider the entirety of the application in

determining this issue. 8 / The Chase Letter might not be part of

the Equity Proposal, but it is part of the application.

75 . The Chase Letter prescribes certain conditions that

must occur pr ior to conversion of the construction loan into a

permanent loan. One of these conditions is " physical occupancy

for 90 days. " Because it is highly unlikely that three months

of physical occupancy would take place prior to the receipt of a

final certific ate of occupancy, the Chase Letter is inconsistent

(to say the least) with the notion that permanent loan closing

would occur prior to construction completion. Consequently, the

Chase Letter does not erase the ambiguity appearing on the face

of the Equity Proposal; to the contrary, it underscores the

uncertainty arising from the proposal ' s internal inconsistency

regarding the timing of Capital C ontribution #3.

76 . It is concluded that the Fountains application is

ambiguous on the question of whether Capital C ontribution #3

would be paid prior to construction completion. This ambiguity

creates uncertainty that the amount of $3,877,712 would be

available for construction funding. Because uncertainty makes a

response nonconforming to the extent thereof , FHFC erred in

" passing " this amount; the evaluator should have excluded this

portion of the total equity proceeds from the applicant's

construction funding .

77 . The decision to count the ambiguously stated portion

of the applicant ' s equity proceeds must have been based either

on the premise (i) that the Equity Proposal clearly states that

the third, $3,877,712 C apital C ontribution would be paid prior

to construction completion, which is incorrect as a matter of

law; or, alternatively, (ii) that the propo sal is best

understood as stating that the $3,877,712 C apital C ontribution

would be paid prior to construction completion, a conclusion

which necessarily would have followed from an interpretive

analysis the engaging in of which was clearly erroneous,

cont rary to competition, or both. A conclusion drawn from a

false or faulty premise is irrational, no matter how well

reasoned, and thus arbitrary or capricious. Therefore, the

intended action of counting the third c apital c ontribution as a

construction fund ing source must be set aside.

78 . Since the decision on funding sources is binary and

one option has been eliminated, there is no room for discretion

in the re - scoring. The third c apital c ontribution must be

excluded from the total construction funding a vailable for the

project. This results in a funding shortfall, at least on

paper, which is all that matters at this juncture. 9 / The nominal

funding shortfall, in turn, renders Fountains ' application

ineligible for selection.

79 . Turning to Harmony Pinew ood, FHFC ' s intended decision

cannot stand, as the agency itself realizes, because Harmony

Pinewood's application, after fixing the factual misstatement

regarding the DLP - to - s ervice distance so that it correctly

states 0.51 miles instead of one - half mile , fails to earn enough

proximity points to be given the Proximity Funding Preference.

Harmony Pinewood's argument that the alleged typographical error

in the DLP latitude coordinate is the real minor irregularity

must be rejected ; amending the latitude coordinate to conform to

Mr. Waterfield's testimony , as Harmony Pinewood urges, would be

in violation of rule 67 - 60.009(4) and contrary to competition ,

and such action, therefore , cannot be recommended.

RECOMMENDATION

Based on the foregoing Findings of F act and Conclusions of

Law, it is RECOMMENDED that the Florida Housing Finance

Corporation enter a f inal o rder rescinding the intended award to

Ha rrison Parc due to ineligibility ; finding HTG Spring and

Fountains ineligible for funding; and reducing Harmon y

Pinewood's proximity points to 8.5 , which requires the

cancelation of its Proximity Funding Preference . It is further

RECOMMENDED that, as a result of the foregoing final actions,

HTG Oak Valley be selected for funding under RFA 2018 - 110 and

Wildwood Preserve Senior Living (not a party to this litigation)

be deselected for funding.

DONE AND ENTERED this 16th day of July , 2019 , in

Tallahassee, Leon County, Florida.

S

JOHN G. VAN LANINGHAM

Admin istrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of July , 2019 .

ENDNOTES

1 / Much like a request for proposals or an invitation to bid, a

request for applications solicits competitive responses from

qualified developers. See Fla. Admin. Code R. 67 - 60.009(4)

(A request for applications "shall be considered a 'request for

proposal.' ").

2 / After being selected for funding, Harrison Parc discovered

that, as of the Application Deadline, there was no Transit

Service located at the coordinates provided in its application.

As a result, Harrison Parc conceded that it was not entitled to

receive any Transit Service points, and that, without such

points, it had failed to achieve the minimum proximity score of

7.0 points to be considered eligible. On June 3, 2019, at

Harrison Parc's request, the undersigned entered an Order

Dropping Harriso n Parc As a Party. The funding intended for

Harrison Parc will need to be reallocated.

3 / The term "development location point" is defined in Florida

Administrative Code Rule 67 - 48.002(34).

4 / It is always worth mentioning that just because an agency

may , in its discretion, waive a minor irregularity does not mean

that the agency must do so.

5 / To be clear, while the parties to an equity proposal are free

to define the term " prior to construction completion " however

they choose for purposes of their agreement, even to the point

of formulating a definition that others might consider

" unreasonable, " the parties are not free to define that same

term for purposes of the RFA, as the hearing officer in Rosedale

correctly concluded. FHFC is free to define " construction

completion " as " Receipt of a Final Certificate of Occupancy, " as

it has done, and that is the definition which must be applied in

evaluating equity proposals submitted in an application for

funding in response to the RFA.

6 / It is logically possible to read the schedule as meaning that

Capital C ontribution #3 will be available at construction

completion, but this must be regarded as, at best, a strained

interpretation.

7 / An ambiguous writing is one whose meaning is uncertain.

Thus, the term " uncertainty, " as used in r ule 67 - 60.008, plainly

includes ambiguity in the legal sense, i.e . , language which is

susceptible to two or more reasonable interpretations. Whether

" uncert ainty " is limited to such ambiguity need not be decided

here. The discussion in this Recommended Order focuses on

semantic ambiguity because that is the nature of the case.

Nothing herein is intended to imply a conclusion that

" uncertainty " for purposes of the r ule is indistinguishable from

" ambiguity " as the latter term is defined in the common law.

8 / Strictly speaking, it is the equity proposal that the RFA

requires must state the amount of equity to be paid prior to

construction completion. The suf ficiency of this amount,

however, depends upon sum total of construction funding

available to the applicant from all sources, including, e.g.,

financing obtained through construction loans, as shown in the

Development Cost Pro Forma. Ultimately, therefore , the

responsiveness of the equity proposal cannot be determined

without referring to other parts of the application.

9 / The undersigned does not find, or need to find, that, if

selected, Fountains would not, in fact, have enough money to

construct the p roposed development. In the real - world event,

the applicant most likely would have sufficient funding. In a

competitive procurement, however, reality often takes a backseat

to the description of reality contained in the proposal or

application. While th is can lead, as here, to regrettable

results in individual cases, which is obviously undesirable, the

alternative ÏÏ inevitably, a fact - finding hearing conducted after

the agency has announced its intended decision, to clarify or

supplement the unartfully dr afted application ÏÏ would be far

worse, and at any rate is prohibited under section 120.57(3)(f)

and r ule 67 - 60.009(4) (" No submissions made after the Application

deadline which amend or supplement the Application shall be

considered. ").

COPIES FURNISHED :

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

1725 Capital Circle Northeast, Suite 304

Tallahassee, Florida 32308

(eServed)

Betty Zachem, Esqui re

Christopher D. McGuire, Esquire

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1329

(eServed)

J. Stephen Menton, Esquire

Rutledge Ecenia, P.A.

119 South Monroe Street, Suite 202

Post Office Box 551

Tallahassee, Florida 32302 - 0551

(eServed)

Brian B. Waterfield

Timshel Development Group

310 South Dillard Street, Suite 135

Winter Garden, Florida 34787

(eServed)

Craig D. Varn, Esquire

Manson Bolves Donaldson Varn, P.A.

106 East College Avenue, S uite 820

Tallahassee, Florida 32301

(eServed)

Amy Wells Brennan, Esquire

Manson Bolves Donaldson Varn, P.A.

109 North Brush Street, Suite 300

Tampa, Florida 33602

(eServed)

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1329

(eServed)

Corporation Clerk

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301 - 1329

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parti es have the right to submit written exceptions within

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

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.