20-003094BID Quail Roost Transit Village I, Ltd. vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Wednesday, September 23, 2020.

Summary: Petitioner proved that Intervenor's application was ineligible for funding due to failure to disclose all principals and failure to provide accurate coordinates for scattered sites.

For Respondent Florida Housing Finance Corporation (“Florida Housing”):

Betty Za chem, Esquire

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301

For Intervenor 675 Ali Baba, LLC (“Ali Baba”):

Michael P. Donaldson, Esquire

Carlton Fields, P.A.

215 South Monroe Street, Suite 500

Tallahassee, Florida 32302

S TATEMENT OF T HE I SSUE S

The issue s are whether the actions of Florida Housing concerning the

review and scoring of the responses to Request for Applications 2020 - 208

(“RFA”), titled “SAIL and Housing Credit Financing for the Construction of

Workforce Housing,” were contrar y to the agency’s governing statutes, rules,

policies, or the RFA specifications and, if so, whether the challenged award

was contrary to competition, clearly erroneous, or arbitrary and/or capricious.

P RELIMINARY S TATEMENT

On February 24, 2020, Florida H ousing issued the RFA, requesting

applications for an allocation of State Apartment Incentive Loan (“SAIL”) funding and housing credits toward the construction or rehabilitation of

affordable Workforce Housing developments.

The application deadline for the

RFA was March 30, 2020. The RFA was modified on March 13, 2020, and on

March 19, 2020, but the appl ication deadline was unchanged. There were

22 applications submitted in response to the RFA, including applications

from Quail Roost and Ali Baba.

On June 11, 2020, Florida Housing posted its Notice of Intent to Award

funding pursuant to the RFA, entitled “RFA 2020 - 208 Board Approved

Scoring Results.” The Notice of Intent stated Florida Housing’s intention to

award funding to three applicants, including Ali Baba.

Quail Roost timely filed a Notice of Protest and Petition for Formal

Administrative Hearing (the “Petition”) . Ali Baba timely intervened. On July

13, 2020, Florida Housing referred the case to the Division of Administrative Hearings (“DOAH”) for the assignment of an ALJ and the conduct of a formal

hearing. The case was set for hearing on August 12, 2020, on which date it

was convened and completed.

On August 10, 2020, the parties submitted a Joint Pre - h earing Stipulation

that has been used in the pr eparation of this Recommended Order. The

Pre - hearing Stipulation identified three issues: 1) Quail Roost contended that

Ali Baba should be found ineligible for failure to disclose a member of the Board of Directors of its developer on its Principals Discl osure Form, and for

misidentifying the name of the project manager in the Principals Disclosure

Form; 2) Quail Roost contended that Ali Baba should be found ineligible

because the latitude and longitude of the coordinates it provided in its

application for its Scattered Sites were not accurate; and 3) Quail Roost

contended that Ali Baba should be found ineligible because the contract

documents it provided to demonstrate site control did not constitute valid

contracts under Florida law.

By the time of the Pre - hearing Stipulation, Florida Housing had come to

agree with Quail Roost’s position on the first two issues and therefore agreed with Quail Roost that Ali Baba was not eligible for funding. At the outset of

the final hearing, Quail Roost announced that it was dropping the third

issue. Thus, despite the nominal alignment of the parties, Florida Housing

and Quail Roost were in fact aligned in taking the position that Ali Baba

should be found ineligible.

At the hearing, Quail Roost presented the testimony of Marissa Button,

Florida Housing’s Director of Multifamily Allocations. Ali Baba presented the

testimony of Dr. Willie Logan, the Chief Executive Officer and President of

Opa - Locka Community Development Corporation.

Joint Exhibits 1 through 7 were admi tted into evidence. Quail R oo st ’s

Exhibits 1 through 6 were admitted into evidence. Quail Roost ’s Exhibit 6

was the deposition of Jean Salmonsen, an Assistant Director of the

Multifamily Program Department at Florida Housing. Ali Baba’s Exhibits 3

through 7 were admitted into evidence.

The one - volume Transcript of the final hearing was filed with DOAH on

August 24, 2020. The parties timely filed their Proposed Recommended

Orders on September 3, 2020. The Proposed Recommended Orders have been duly considere d in the writing of this Recommended Order.

Except where otherwise indicated, all references to the Florida Statutes in

this Recommended Order are to the 2020 edition.

F INDINGS OF F ACT

Based on the evidence adduced at hearing, and the record as a whole, the

following Findings of Fact are made:

T HE P ARTIES

1. Quail Roost was an applicant for funding in the RFA. Quail Roost’s

application was assigned number 2020 - 461SC and was preliminarily deemed

eligible for consideration for funding, but was not selected for funding.

2. Ali Baba was an applicant for funding in the RFA. Ali Baba’s

application was assigned number 2020 - 476BS and proposed a development

named City Terrace in Miami - Dade County. Ali Baba’s application was

preliminarily deemed eligible and was se lected for funding under the terms of

the RFA.

3. Florida Housing is a public corporation created pursuant to section

420.504, Florida Statutes. Its purpose is to promote the public welfare by

administering the governmental function of financing affordab le housing in

Florida. 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. § 420.5099, Fla. Stat. Florida Housing has the responsibility and

authority to establish p rocedures for allocating and distributing low income

housing tax credits. For purposes of this proceeding, Florida Housing is an

agency of the State of Florida.

T HE C OMPETITIVE A PPLICATION P ROCESS

4. The low - income housing tax credit program was enacted t o incentivize

the private market to invest in affordable rental housing. Housing credits are

awarded competitively to housing developers in Florida for qualifying rental

housing projects. These credits are then typically sold by developers for cash

to rais e capital for their projects. The effect is to reduce the amount of money

that the developer is required to borrow commercially. In return for the subsidized debt reduction, a housing credit property is required to offer lower, more affordable rents. Devel opers must also agree to keep rents at affordable

levels for periods of thirty to fifty years.

5. Florida Housing is authorized to allocate low - income housing tax

credits, SAIL funding , and other named funding by section 420.507(48).

Florida Housing has a dopted Florida Administrative Code C hapter 67 - 60 to

govern the com petitive solicitation process. Rule 67 - 60.009(1) provides that

parties wishing to protest any aspect of a Florida Housing competitive

solicitation must do so pursuant to section 120.57(3), F lorida Statutes.

6. Funding is made available through a competitive application process

commenced by the issuance of a request for applications. Rule 67 - 60.009(4)

provides that a request for application is considered a “request for proposal”

for purposes o f section 120.57(3)(f).

7. Applicants request a specific dollar amount of housing credits to be

awarded to the applicant each year for a period of ten years. A successful

applicant usually sells the rights to the future income stream of housing

credits to an investor to generate the amount of capital needed to build the

development. This sale is usually by way of an ownership interest in the applicant entity. The amount of funding that Florida Housing can award to

an applicant depends on such factors as an RFA - designated percentage of the

projected Total Development Cost; a maximum funding amount per

development based on the county in which the development will be located;

and whether the development is located within certain designated areas of

some countie s.

8. The RFA was issued on February 24, 2020, with responses due on

March 30, 2020. The RFA was modified on March 13, 2020, and March 19, 2020, but the application deadline was unchanged. No challenges were made to the terms of the RFA.

9. Florida Housin g expects to award up to $17,954,000 in SAIL funding

and up to $2,980,000 of housing credits through the RFA.

10. Florida Housing received 22 applications in response to the RFA.

11. A Review Committee was appointed to review the applications and

make rec ommendations to Florida Housing’s Board of Directors (the “Board”).

The Review Committee found 19 applications eligible and three applications ineligible for funding. Through the ranking and selection process outlined in

the RFA, three applications were pr eliminarily recommended for funding,

including that submitted by Ali Baba. The Review Committee developed

charts listing its eligibility and funding recommendations to be presented to

the Board.

12.

On June 11, 2020, Florida Housing’s Board met and conside red the

recommendations of the Review Committee.

13. Also, on June 11, 2020, at approximately 4:35 p.m., Quail Roost and

all other applicants in the RFA received notice via the Florida Housing

website of the Board’s eligibility determinations and of the p reliminary

selection of certain eligible applicants for funding, subject to satisfactory

completion of the credit underwriting process. The notice consisted of two

spreadsheets, one listing the Board approved scoring results in RFA 2020 - 208

and one identif ying the applications which Florida Housing proposed to fund.

14. Ali Baba’s was one of the applications proposed for funding. Under the

scoring and ranking mechanism of the RFA explained below, Quail Roost’s

application would be selected for funding were Ali Baba’s application to lose

points or be found ineligible.

15. Quail Roost timely filed the Petition. Ali Baba timely intervened. The

Petition was referred to the DOAH .

16. The RFA provided point scoring for mandatory “eligibility items.” The

RFA then set forth an “Application Sorting Order” of funding goals and

priorities that were used to break ties in the point scoring. Only applications that met all the eligibility items could participate in the ranking scheme that determined funding selection.

17. The RFA included only one point scoring item. Applicants could

receive five points for submission of a Principals Disclosure Form stamped by Florida Housing as “Approved” during the Advance Review Process. The

Advance Review Process is available online and includes instructions and

samples to assist the applicant in completing the Principals Disclosure Form. Section Four A.3.c.(2) of the RFA states: “Note: It is the sole responsibility of

the Applicant to review the Advance Review Process procedures and to

submit any Principals Disclosure Form for review in a timely manner in order to meet the Application Deadline. ”

18. The stated goal of the RFA was to fund one application in Monroe

County and one application in a “Large County,” i.e., Broward, Duval,

Hills borough, Miami - Dade, Orange, Palm Beach, or Pinellas County.

19. The Application Sorting Order was set f orth as follows at Section

Five B.2. of the RFA:

The highest scoring Applications will be

determined by first sorting together all eligible Application s from highest score to lowest score,

with any scores that are tied separated in the

following order:

a. First, by the Application’s eligibility for the

Proximity Funding Preference (which is outlined in Section Four A.5.e. of the RFA) with Applications t hat qualify for the preference listed above

Applications that do not qualify for the preference;

b. Next, by the Application’s Leveraging Level which is outlined in Item 3 of Exhibit C of the RFA (with Applications that have a lower Leveraging

Level list ed above Applications with a higher

Leveraging Level);

c. Next, by the Application’s eligibility for the

Florida Job Creation Funding Preference (which is

outlined in Item 4 of Exhibit C) with Applications that qualify for the preference listed above App lications that do not qualify for the preference; and

d. By lottery number, resulting in the lowest lottery number receiving preference.

20. The RFA’s “Funding Test” provision at Section Five B.3. stated that

applications “will only be selected for fun ding if there is enough Wo rkforce

SAIL funding available to fully fund the Applicant’s Workforce SAIL Request

Amount, and, Monroe County Applications will only be selected for funding if

there is enough Workforce SAIL funding available to fully fund the

Ap plicant’s Workforce SAIL Request Am ount, and enough Competitive

9% Housing Credit funding available to fully fund the Applicant’s

Competitive 9% Housing Credit Request Amount.” The total available

amount was $17,954,000 in SAIL funding, with at least $2,52 0,000 of that

amount reserved for Monroe County.

21. Section Five B.4. of the RFA described a “County Award Tally” that

provided as follows:

As each Application is selected for tentative

funding, the county where the proposed

Development is located will ha ve one Application

credited towards the County Award Tally. The Corporation will prioritize eligible unfunded Applications that meet the Funding Test and are

located within counties that have the lowest

County Award Tally above other eligible unfunded Appl ications with a higher County Award Tally

that also meet the Funding Test, even if the Applications with a higher County Award Tally are

higher ranked.

22. The RFA’s “Funding Selection Order” was set forth as follows at

Section Five B.5.:

a. The first Ap plication selected for funding will be

the highest ranking eligible Application that is

eligible for Monroe County Goal.

b. The next Application selected for funding will be

the highest ranking eligible Application that is eligible for the Large County G oal.

c. Once the goals are met or if there are no eligible

Applications that can meet the goals, then the

Corporation will select the highest ranking eligible unfunded Application(s) subject to the Funding Test and County Award Tally.

d. If funding rem ains after funding all eligible

Application(s) that can meet the Funding Test or because there is no eligible unfunded Application that can be fully funded, then no further

Applications will be selected for funding and any

remaining Total Remaining SAIL fu nding, as well as any unallocated 9% HC funding, will be distributed as approved by the Board.

P RINCIPALS D ISCLOSURE F ORM

23. The RFA required applicants to upload the Principals Disclosure

Form, the full title of which is “Principals of the Applicant an d Developer(s)

Disclosure Form” (Form Rev. 05 - 2019).

24. As an eligibility item, Section Four A.3.c.(1) of the RFA required that

the Principals Disclosure Form:

must identify, pursuant to Subsections 67 -

48.002(94), 67 - 48.0075(8) and 67 - 48.0075(9),

F.A.C., the Principals of the Applicant and

Developer(s) as of the Application Deadline. A

Principals Disclosure Form should not include, for any organizational structure, any type of entity that is not specifically included in the Rule definition of Principals.

25. As stated above, applicants received 5 points if the uploaded

Principals Disclosure Form was stamped “Approved” duri ng the Advance

Review Process. Ali Baba’s Principals Disclosure Form went through the

Advance Review Process and was stamped “Approved for Housing Credits” by

Florida Housing staff on March 16, 2020. Ali Baba’s application was awarded

the requisite 5 points.

26. Rule 67 - 48.002(94)(a) defines “Principal” for entities including

corporations, limited partnerships, limited liability companie s, trusts, and

public housing authorities. For a corporation, “Principal” means “each officer,

director, executive director, and shareholder of the corporation.”

27. Quail Roost alleges that Ali Baba is ineligible for funding and should

lose 5 points for f ailure to disclose all of the principals of the applicant and its

developer, Opa - Locka Community Development Corporation, Inc. (“Opa -

Locka Corp.”). Specifically, Quail Roost alleges that the name of Chad

Jackson, a member of the Board of Directors of Opa - L ocka Corp., was not

disclosed on Ali Baba’s Principals Disclosure Form.

28. Ali Baba concedes that members of the Board of Directors of the Opa -

Locka Corp. are by definition principals who must be included on the

Principals Disclosure Form. Ali Baba also c onceded that Mr. Jackson was a

member of the Board of Directors and was not included on Ali Baba’s

Principals Disclosure Form.

29. Dr. Willie Logan, the President and CEO of Opa - Locka Corp., testified

that Mr. Jackson is a local low - income housing residen t who is an appointed

member of the Board of Directors of Opa - Locka Corp. Dr. Logan testified that

a resident such as Mr. Jackson must be on the Board of Directors in order for

Opa - Locka Corp . to receive funding from the U.S. Department of Housing

and Urba n Development.

30. Though Mr. Jackson’s name is not included on the Principals

Disclosure Form, Ali Baba did disclose Mr. Jackson’s name in a list of its

2019 - 2020 Board of Directors included as part of Attachment 3 of its

application. Non - Profit entities are required to submit “the names and

addresses of the members of the governing board of the Non - Profit entity” in

Attachment 3. Ali Baba argues that this submission should be sufficient to

render Ali Baba’s failure to include Mr. Jackson’s name on the Pri ncipals

Disclosure Form a minor irregularity.

31. Marisa Button, Director of Multifamily Programs for Florida Housing,

testified as to the reasons Florida Housing requires disclosure of all principals on the Principals Disclosure Form. The RFA includes a f inancial

arrearage requirement stating that an application will be deemed ineligible

for funding if the applicant or any affiliated entity is in financial arrears to

Florida Housing. Ms. Button testified that Florida Housing uses the information on the Pri ncipals Disclosure Form to ensure that the financial

arrearage requirement is met and no principals are in financial arrearages to Florida Housing.

32. Ms. Button testified that Florida Housing also uses the Principals

Disclosure Form as a cross - reference to determine whether any of the

disclosed entities or individuals have been de - obligated or barred from

participation in Florida Housing’s programs.

33. Ms. Button testified that Florida Housing considers it a material

deviation from the RFA requirements when an applicant fails to disclose a

principal on the Principals Disclosure Form. She testified that the disclosure

of Mr. Jackson’s name elsewhere in Ali Baba’s application does not change

the analysis because Florida Housing cannot take it upon itself t o presume

that an individual not named in the Principals Disclosure Form is a principal

of the applicant.

34. Ms. Button explained that before adopting the RFA process in which a

number of solicitations are issued for various funding sources over the cour se

of a year, Florida Housing used a single annual application called the

“Universal Cycle.” She stated that Attachment 3 is a holdover from the

Universal Cycle process, which did not require the filing of a Principals

Disclosure Form. Florida Housing used Attachment 3 to verify an applicant’s

status as a nonprofit entity for those projects that included funding goals for

nonprofits.

35. Ms. Button testified that Florida Housing currently reviews

Attachment 3 to ensure that entities designating themselves as nonprofits

have included their supporting information. It is in no way interchangeable with the Principals Disclosure Form.

36. Ms. Button also noted that the list of Ali Baba’s Board of Directors

included in Attachment 3 was dated March 26, 2020. The a pplication deadline was March 30, 2020. Ms. Button testified that, even if Florida

Housing were inclined to allow Attachment 3 to supplement the Principals Disclosure Form, the time difference between the two documents would

render Attachment 3 unreliable as an indicator of Ali Baba’s principals as of

the application deadline.

37. Quail Roost pointed to another discrepancy in Ali Baba’s Principals

Disclosure Form. As stated above, the name of the applicant entity is “675 Ali

Baba, LLC.” The project manager of 675 Ali Baba, LLC , is “675 Ali Baba

Manager, LLC.” However, Ali Baba’s Principals Disclosure Form identified

the manager as “Ali Baba Manager, LLC.”

38. Ali Baba concedes that its manager was not accurately disclosed on

the Principals Disclosure Form. D r. Logan testified that this was a mere

typographical error and that to his knowledge no entity called “Ali Baba

Manager, LLC , ” existed. Ali Baba pointed to multiple other places in its

application that correctly identified the manager as “675 Ali Baba Man ager,

LLC.”

39. Ms. Button testified that Florida Housing considers the misnaming of

the management entity to be a material error for the same reason it finds the

omission of an individual principal to be a material error: Florida Housing

cannot perform du e diligence checks on the entity if it is not correctly

identified. Ms. Button acknowledged that Florida Housing has treated

typographical or grammatical errors as minor irregularities in the past;

however, this was not a minor irregularity because the fai lure to correctly

name the manager affected Florida Housing’s ability to investigate the entity

for financial arrears or debarment.

40. As in the case of Mr. Jackson, the fact that 675 Ali Baba Manager,

LLC , was correctly identified elsewhere in Ali Baba’s application did not

affect the analysis. Ms. Button testified that Florida Housing does not, and cannot , under its rules and the principles of competitive bidding, look beyond

the Principals Disclosure Form to determine the identities of the applicant’s p rincipals.

S CATTERED S ITES

41. As an eligibility requirement in the RFA, applicants were required to

provide information regarding the location of their proposed developments.

Section Four A.5.d.(1) of the RFA required that a Development Location

Point ( “DLP”) be stated for the latitude/longitude coordinates in decimal

degrees, rounded to at least the sixth decimal place. The DLP identified by

Ali Baba is not in dispute in this proceeding.

42. Section Four A.5.d.(2) of the RFA stated that if the proposed

development consists of Scattered Sites, i.e, non - contiguous parcels, 2 then in

addition to the DLP information, the applicant must “provide the latitude

and longitude coordinates of one point located anywhere on the Scattered

Site” for each Scattered Site. As with the DLP, the coordinates for the

Scattered Sites were required to be stated in decimal degrees and rounded to

at least the sixth decimal place.

43. In its application, Ali Baba proposed a development that included

three Scattered Sites. Ali Baba p rovided the following latitude and longitude

coordinates for those sites: A) 25.901060, - 80.251883; B) 25.901267,

- 80.251473; and C) 25.901884, - 80.253365.

44. Ms. Button testified that Florida Housing takes the coordinates in the

application at face valu e and does not verify whether the coordinates

provided for the Scattered Sites are actually on the proposed sites.

45. During discovery in this proceeding, Quail Roost established that, due

to a mapping error, Ali Baba’s identified coordinates for the thre e Scattered

Sites were not located on the Scattered Sites, but approximately 35, 73,

and 75 feet off the Scattered Sites, respectively.

46. As an eligibility item, the RFA included a mandatory distance

requirement. In Miami - Dade County, the distance betwee n the DLP and the

coordinates provided for any Scattered Sites must be at least 0.5 miles from

the closest development that is identified as serving the same demographic as

that proposed by the applicant.

47. Ms. Button testified that the mandatory distanc e requirement ensures

that Florida Housing does not fund developments in close proximity to other

2 A detailed definition of “Scattered Sites” is set forth in rule 67 - 4 8.002(106).

recently funded developments serving the same demographic, thus avoiding

issues with leasing and occupancy rates for new developments.

48. To confirm distan ces from other developments, the RFA instructs

applicants to use Florida Housing’s Development Proximity List, dated

August 16, 2019 (“Proximity List”). The Proximity List contains information

on recently funded developments, including latitude and longitu de

coordinates, addresses, and whether the demographic of the development is classified as Family, Elderly, Non - ALF, ALF, or Workforce Housing.

49. Florida Housing uses the DLP and Scattered Sites coordinates

provided by successful applicants to develop t he Proximity List for the next

funding cycle of applications. The developments receiving funding in this

RFA will be added to the Proximity List for prospective applicants in the

2020 - 2021 funding cycle to evaluate for the mandatory distance requirement.

F lorida Housing has created a draft Proximity List for the next funding cycle

that includes the coordinates provided in the Ali Baba application. The draft

Proximity List puts future applicants on notice of applications that are in litigation, including the Ali Baba application.

50. In its application, Ali Baba selected the Workforce Housing

demographic. According to the Proximity List, the closest Workforce Housing development is approximately 5 miles from Ali Baba’s proposed development. Ali Baba argues t hat its inaccurate Scattered Sites coordinates should be

considered a minor irregularity because the distances from the sites are less than 100 feet and did not change the finding that the Ali Baba development

would not be located within 0.5 miles of the c losest Workforce Housing

development funded by Florida Housing.

51. Ali Baba argues that because the draft Proximity List provides notice

that its application is subject to litigation, no reasonable prospective

applicant would rely on Ali Baba’s coordinate s. Ali Baba notes that Florida

Housing retains the authority to revise the coordinates on the draft Proximity

List. Ali Baba contends that the purpose of the mandatory distance

requirement is to measure proximity to the nearest development and that it

is u ndisputed that Ali Baba’s proposed development is more than 0.5 miles

away from the nearest Workforce Housing development funded by Florida

Housing. Ali Baba urges that the minimal error as to the Scattered Sites

coordinates in its application should be de emed a minor irregularity that

conferred no competitive advantage on Ali Baba.

52. Ms. Button testified that the error in Ali Baba’s coordinates for its

Scattered Sites is a material deviation that renders the Ali Baba application

ineligible for funding. The fact that the next closest Workforce Housing

development was over 5 miles away does not make Ali Baba’s error a

waivable minor irregularity because the coordinates provided did not meet

the requirements of the RFA. Ms. Button testified that Scattered S ite s

coordinates are an eligibility item and Ali Baba’s error thus renders its

application ineligible for funding.

53. Absent litigation, Florida Housing would have no way of knowing that

an applicant’s Scattered Sites coordinates were not accurate. Florid a Housing takes the coordinates at face value and does not take measurements or have

surveyors confirm the information. Instead, it relies on the application and

the fact that the applicant certifies that the information in the application is

true and corr ect. Ms. Button testified that inaccurate coordinates can affect a

prospective applicant’s decision on whether to apply for funding because

applicants rely on the coordinates in the Proximity List to determine whether

or not they can meet the mandatory dis tance requirement.

54. Florida Housing reasonably concludes that an applicant bears

ultimate responsibility for the accuracy of the information submitted in its application. The fact that litigation has in this case provided a correction to

Ali Baba’s err oneous Scattered Sites coordinates does not transform Ali

Baba’s failure to comply with an eligibility item into a minor irregularity.

C ONCLUSIONS OF L AW

55. The Division of Administrative Hearings has jurisdiction of the subject

matter of and the parties to this proceeding. §§ 120.569 and 120.57(1) and (3),

Fla. Stat.

56. Quail Roost has standing to challenge Florida Housing’s scoring and

review decision as to Ali Baba.

57. This is a competitive procurement protest proceeding and as such is

governed by se ction 120.57(3)(f), which provides as follows, in pertinent part:

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's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, or all solicitation

specificatio ns. The standard of proof for such

proceedings shall be whether the proposed agency

action was clearly erroneous, contrary to competition, arbitrary, or capricious....

58. Pursuant to section 120.57(3)(f), the burden of proof rests with

Petitioner as the party opposing the proposed agency action. See State

Contracting and Eng’g Corp. v. Dep’t of Transp ., 709 So. 2d 607, 609 (Fla. 1st

DCA 1998). Petitioner must prove by a preponderance of the evidence that

Florida Housing’s proposed action is arbitrary, cap ricious, or beyond the

scope of Florida Housing’s discretion as a state agency. Dep’t of Transp. v. Groves - Watkins Constructors , 530 So. 2d 912, 913 - 14 (Fla. 1988); Dep’t of

Transp. v. J.W.C. Co ., 396 So. 2d 778, 787 (Fla. 1st DCA 1981). See also

§ 120.57( 1)(j), Fla. Stat.

59. The First District Court of Appeal has interpreted the process set forth

in section 120.57(3)(f) as follows:

A bid protest before a state agency is governed by

the Administrative Procedure Act. Section

120.57(3), Florida Statutes (Su pp. 1996) provides

that if a bid protest involves a disputed issue of

material fact, the agency shall refer the matter to

the Division of Administrative Hearings. The

administrative law judge must then conduct a de novo hearing on the protest. See § 120.57 (3)(f), Fla.

Stat. (Supp. 1996). In this context, the phrase "de

novo hearing" is used to describe a 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 eva luate the

action taken by the agency. See Intercontinental

Properties, Inc. v. Department of Health and Rehabilitative Services , 606 So. 2d 380 (Fla. 3d DCA 1992) (interpreting the phrase "de novo hearing" as it was used in bid protest proceedings

before t he 1996 revision of the Administrative

Procedure Act).

State Contracting and Eng’g Corp ., 709 So. 2d at 609.

60. The ultimate issue in this proceeding is “ whether the agency's

proposed action is contrary to the agency's governing statutes, the agency's

r ules or policies, or the bid or proposal specifications. ” In addition to proving

that Florida Housing breached this statutory standard of conduct, Petitioner also must establish that Florida Housing’s violation was either clearly erroneous, contrary to com petition, arbitrary, or capricious. § 120.57(3)(f),

Fla. Stat.

61. The First District Court of Appeal has described the “ clearly

erroneous ” standard as meaning that an agency's interpretation of law will be

upheld “ if the agency's construction falls withi n the permissible range of

interpretations. If, however, the agency's interpretation conflicts with the

plain and ordinary intent of the law, judicial deference need not be given to it. ” Colbert v. Dep’t of Health, 890 So. 2d 1165, 1166 (Fla. 1st DCA

2004) (citations omitted); s ee also Anderson v. Bessemer City , 470 U.S. 564,

573 - 74, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518, 528 (1985)(“Where there are

two permissible views of the evidence, the factfinder’s choice between them

cannot be clearly erroneous.”) .

62. An agency decision is “ contrary to competition ” when it unreasonably

interferes with the objectives of competitive bidding. Those objectives have

been stated to be:

[T]o protect the public against collusive contracts;

to secure fair competition upo n equal terms to all

bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism

and fraud in various forms; to secure the best

values for the [public] at the lowest poss ible

expense; and to afford an equal advantage to all desiring to do business with the [government], by

affording an opportunity for an exact comparison of

bids.

Harry Pepper & Assoc., Inc. v. City of Cape Coral , 352 So. 2d 1190, 1192 (Fla.

2d DCA 1977)( quoting Wester v. Belote , 138 So. 721, 723 - 24 (Fla. 1931)).

63. An agency action is capricious if the agency takes the action without

thought or reason or irrationally. An agency action is arbitrary if it is not

supported by facts or logic. See Agrico Che m. Co. v. Dep’t of Envtl. Reg. , 365

So. 2d 759, 763 (Fla. 1st DCA 1978).

64. To determine whether an agency acted in an arbitrary or capricious

manner, it must be determined “ whether the agency: (1) has considered all

relevant factors; (2) has given actua l, good faith consideration to those

factors; and (3) has used reason rather than whim to progress from

consideration of these factors to its final decision. ” Adam Smith Enter. v.

Dep’t of Envtl. Reg. , 553 So. 2d 1260, 1273 (Fla. 1st DCA 1989).

65. Howeve r, if a decision is justifiable under any analysis that a

reasonable person would use to reach a decision of similar importance, the

decision is neither arbitrary nor capricious. Dravo Basic Materials Co. v.

Dep’t of Transp. , 602 So. 2d 632 n.3 (Fla. 2d DC A 1992).

66. While an application containing a material deviation is unacceptable,

not every deviation from a competitive solicitation is fatal. A deviation is only

fatal if it is material. The deviation is “only material if it gives the bidder a

substant ial advantage over the other bidders and thereby restricts or stifles

competition.” Tropabest Foods, Inc., v. Fla . Dep ’ t of Gen . Servs . , 493 So. 2d 50,

52 (Fla. 1d DCA 1986). See also Robinson Electrical Co., Inc. v. Dade C ty . , 417

So. 2d 1032, 1034 (Fla. 3d DCA 1982).

67. Rule 67 - 60.008, “Right to Waive Minor Irregularities , ” provides:

Minor irregularities are those irregularities in an

Application, such as computation, typographical, or other errors, that do not result in the omission of any material in formation; do not create any

uncertainty that the terms and requirements of the competitive solicitation have been met; do not provide a competitive advantage or benefit not enjoyed by other Applicants; and do not adversely impact the interests of the Corp oration or the

public. Minor irregularities may be waived or corrected by the Corporation.

P RINCIPALS D ISCLOSURE F ORM

68. Section Four A.3.c.(1) of the RFA provides in relevant part:

To meet eligibility requirements, the Principals Disclosure Form must id entify, pursuant to Subsections 67 - 48.002(94), 67 - 48.0075(8) and 67 -

48.0075(9), F.A.C., the Principals of the Application and Developer(s) as of the Application Deadline….

69. Rule 67 - 60.006(1) provides:

The failure of an Applicant to supply required info rmation in connection with any competitive

solicitation pursuant to this rule chapter shall be grounds for a determination of nonresponsiveness with respect to its Application. If a determination

of nonresponsiveness is made by the Corporation,

the Applica tion shall be considered ineligible.

70. Quail Roost argued, and Florida Housing came to agree, that Ali

Baba’s application materially deviated from the requirements of the RFA by

failing to disclose two principals, Chad Jackson and 675 Ali Baba Manager,

LLC, on its Principals Disclosure Form. Ali Baba contends that the correct

identity of its principals was readily discoverable within the four corners of

its application and therefore that the failure to include their names on the

Principals Disclosure Fo rm should be treated as a minor irregularity.

71. Florida Housing initially determined that Ali Baba’s Application was

eligible for funding. Based on new information gleaned during discovery,

Florida Housing now takes the position that the Ali Baba applica tion should

be found ineligible for funding. Florida Housing’s current litigation position is

not entitled to the same deference as the preliminary decision by the Board to

find Ali Baba eligible for funding. The burden still rests on Quail Roost to prove by a preponderance of the evidence that Florida Housing’s proposed

action in finding Ali Baba eligible for funding is contrary to its governing statutes, rules or policies, or RFA specifications and that Florida Housing’s violation was either clearly erron eous, contrary to competition, arbitrary, or

capricious.

72. In urging a conclusion that its mistake should be deemed a minor

irregularity, Ali Baba relies on Ambar Riverview, Ltd. v. Fl orida Hous ing

Fin ance Corp oration , DOAH Case No. 19 - 1261BID (Fla. DOAH May 21,

2019; Fla. Hous. Fin. Corp. , June 21, 2019), in which the petitioner argued

that the successful applicant should be deemed ineligible because it failed to

identify the multiple roles of certain disclosed principals. The successful

applicant’s Prin cipals Disclosure Form identified several persons as “officers”

of the corporation but failed to indicate that they were also “directors.” Their status as directors was revealed only in Attachment 3 of the application.

73. In Ambar , ALJ Darren A. Schwartz concluded that the identification

of all principals on the Principals Disclosure Form was sufficient and that

there was no requirement to state the multiple roles of each principal in the

Principals Disclosure Form. ALJ Schwartz further concluded that, in any

event, the information regarding the multiple roles of the disclosed principals

could be found within the four corners of the application and “[a]t most, [the

successful applicant’s] failure to identify the multiple roles of its disclosed

principals in the Principals Disclosure form is a waivable, minor

irregularity.” Ambar RO at ¶ 67 .

74. Ambar is readily distinguishable from the instant case. Ali Baba is

correct that the full information as to its principals may also be found “within

the four corners of the application” as was the case in Ambar . However, Ali

Baba neglects to note the significant distinction between its situation and

that presented in Ambar : Ali Baba did not name all of its principals in its

Principals Disclosure Form. The successful bi dder in Ambar disclosed the

names of all its principals on the Principals Disclosure Form, which allowed

Florida Housing to perform its due diligence regarding the principals’

financial arrears and/or debarment. Ali Baba did not merely neglect to

disclose all roles played by its principals , i t omitted the names of its

principals, thus depriving Florida Housing of the ability to perform its due

diligence in the fashion required by the RFA and Florida Housing’s rules.

75. Quail Roost cogently argues that trea ting the omission of Chad

Jackson’s name from the Principals Disclosure Form as a minor irregularity

would give nonprofit entities a competitive advantage over for - profit entities.

Ali Baba’s argument as to Mr. Jackson rests on the fact that his name

appea rs on the Board of Directors list included in Ali Baba’s Attachment 3.

As noted in the Findings of Fact, Attachment 3 is required only of nonprofit entities. Allowing Ali Baba to save its application by resort ing to Attachment

3 would be to give Ali Baba a n extra opportunity to provide the principal

information, an opportunity not afforded to for - profit entities.

76. Quail Roost has met its burden and demonstrated by a preponderance

of the evidence that Florida Housing’s proposed action finding the Ali Baba

Application eligible is contrary to the specifications of the RFA and clearly

erroneous.

S CATTERED S ITES

77. Quail Roost argued, and Florida Housing came to agree, that Ali Baba

materially deviated from the requirements of the RFA by failing to list corr ect latitude and longitude coordinates for its Scattered Sites. Ms. Button testified that this was a material error because Florida Housing could not

accurately determine whether Ali Baba’s application met the mandatory

distance requirement of the RFA. Als o, the inclusion of inaccurate

coordinates on the Proximity List could affect other entities’ decisions on

whether to apply for funding in the future.

78. Ali Baba contends this is another minor irregularity because the

distances of the coordinates from th e Scattered Sites were all less than

100 feet and because the Ali Baba application in fact met the mandatory

distance requirement.

79. Ali Baba also contends that the coordinates on the Proximity List can

be changed. Ali Baba also points out that no one c ould reasonably rely on its

coordinates on the current draft Proximity List because they are highlighted

as being in litigation. Ali Baba’s argument ignores the fact that the

inaccurate coordinates would not have been identified had Quail Roost not

raised the issue in litigation. Florida Housing relies on applicants to provide

accurate information. Absent Quail Roost’s protest, Ali Baba’s inaccurate

coordinates would have been on the draft Proximity List without an “in

litigation” notation and future applic ants might have suffered for it.

80. Even assuming Florida Housing’s ability to change applicant -

submitted information on the Proximity List, it is not permissible for Ali

Baba to submit information that amends its application without violating the

statut ory prohibition on an agency considering any “submissions made after the bid or proposal opening which amend or supplement the bid or proposal.”

§ 120.57(3)(f), Fla. Stat. To correct the Proximity List, Florida Housing would

be required to accept revised d ata from Ali Baba or to simply make its own

educated guess as to the correct coordinates. In either event, the end result

would be an illicit amendment of the Ali Baba application after the close of

the application process.

81. Ali Baba’s error in its coor dinates for its Scattered Sites omitted

material information in response to the RFA because the coordinates listed

were not on the proposed affordable housing sites. Ali Baba’s application

clearly failed to meet the requirement of Section Four A.5.d.(2) th at the

coordinates listed must include “one point located anywhere on the Scattered

Site.” It is undisputed that the coordinates provided by Ali Baba were

relatively close to the Scattered Sites but were not on them.

82. This failure to comply with an expr ess term of the RFA cannot be

dismissed as a minor irregularity. Florida Housing has demonstrated that

the coordinates provided by a successful applicant in this RFA are used in the

Proximity List for the next application cycle. But for Quail Roost’s prote st,

prospective applicants would have made business decisions on applying for

funding based on a draft Proximity List that included Ali Baba’s incorrect

coordinates.

83. Quail Roost has demonstrated by a preponderance of the evidence that

Florida Housing’s proposed action finding the Ali Baba Application eligible is

contrary to the specifications of the RFA and clearly erroneous.

R ECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

R ECOMMENDED that the Florida Housing Fin ance Corporation enter a final

order as to 2020 - 208 finding that Ali Baba is ineligible for funding and

awarding funding to Quail Roost, subject to the successful completion of

credit underwriting.

D ONE A ND E NTERED this 23rd day of September , 2020 , in Ta llahassee,

Leon County, Florida.

L AWRENCE P. S TEVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 23rd day of September , 2020 .

C OPIES F URNISHED :

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Str eet

Tallahassee, Florida 32301 - 1329

(eServed)

Michael P. Donaldson, Esquire

Carlton Field s , P.A.

Suite 500

215 South Monroe Street

Tallahassee, Florida 32302

(eServed)

Betty Zachem, Esquire

Florida Housing Finance Corporation

Suite 5000

227 North Brono ugh Street

Tallahassee, Florida 32301

(eServed)

Brittany Adams Long, Esquire

Radey Law Firm, P.A.

Suite 200

301 South Bronough Street

Tallahassee, Florida 32301

(eServed)

Corporation Clerk

Florida Housing Finance Corporation

Suite 5000

227 North Brono ugh Street

Tallahassee, Florida 32301 - 1329

(eServed)

N OTICE OF R IGHT T O S UBMIT E XCEPTIONS

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.