20-003582BID La Estancia, Ltd vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Thursday, October 1, 2020.

Summary: The greater weight of the evidence indicates that Florida Housing?s review and scoring of the applications responding to the RFA were not clearly erroneous, contrary to competition, arbitrary, or capricious.

For Intervenor: Michael P. Donaldson, Esquire

Carlton Fields

215 South Monroe Street , Suite 500

Tallahassee, Florida 32302

S TATEMENT OF T HE I SSUE

The is sue is whether Florida Housing Finance Corporation’s (“Florida

Housing”) review and scoring of the applications responding to RFA 2020 - 104

SAIL Funding for Farm W orker and Commercial Fishing Worker Housing

(“the RFA”) were clearly erroneous, contrary to co mpetition, arbitrary, or

capricious.

P RELIMINARY S TATEMENT

Florida Housing issued the RFA on April 15, 2020, seeking applications

for financing to supplement the construction or rehabilitation of affordable

housing for farm workers or commercial fishing w orkers. On May 19, 2020,

La Estancia, Ltd. (“La Estancia”) , and Partnership in Housing, Inc. (“Pueblo

Bonito”) , submitted applications in response to the RFA.

Florida Housing posted notice of its intent to award funding to Pueblo

Bonito on July 17, 202 0. La Estancia petitioned for a formal administrative

hearing on August 3, 2020, alleging that its application should have received a higher score than Pueblo Bonito’s and should have thus been selected for

funding. Florida Housing referred this matter to DOAH on August 13, 2020, and the undersigned issued a Notice scheduling the final hearing for

September 10, 2020. The undersigned also issued on August 18, 2020, an

Order granting Pueblo Bonito’s Motion to Intervene.

The final hearing took place as sched uled. Joint Exhibits 1 through 7 were

accepted into evidence. La Estancia called Steve Auger as a witness and introduced Exhibits 2, 6, and 9 through 12 into evidence. Florida Housing

called Marisa Button as a witness and introduced no exhibits into eviden ce.

Pueblo Bonito introduced Exhibits 1 1 through 4 and 7 into evidence but called

no witnesses.

The final hearing T ranscript was filed on September 14, 2020. By

agreement of the parties, the proposed recommended orders were filed on

September 25, 2020, an d considered in the preparation of this Recommended

Order.

F INDINGS OF F ACT

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

the stipulated facts, and matters subject to official recognition, the following

Findings of Fact are ma de:

1. Florida Housing is a public corporation created pursuant to

s ection 420.504, Florida Statutes (2020). 2 Its purpose is to promote public

welfare by admin istering the financing of affordable housing in Florida.

2. Florida Housing is authorized by section 420.507(48), to allocate federal

low income housing tax credits, State Apartment Incentive Loans (“SAIL”) ,

and other funding by means of competitive solicitations. Florida

Administrative Code Chapter 67 - 60 provides that Florida Housing will

allocat e its competitive funding through the bid protest provisions of s ection

120. 57(3), Florida Statutes.

3. Funding is available through a competitive application process

commenced by the issuance of a Request for Applications , which is equivalent

to a “reques t for proposal” as described in r ule 67 - 60.009(4).

1 Muller of Florida Housing. Pueblo Bonito’s Exhibit 1 is the deposition of Nancy

2 Unless stated otherwise, all statutory references shall be to the 2020 version of the Florida

Statutes.

4. Through the RFA, Florida Housing seeks to award up to an estimated

total of $5,131,050 in SAIL Financing for the construction or rehabilitation of

affordable housing developments for farm workers and co mmercial fishing

workers. The RFA was issued on April 15, 2020 , and a modified version was

issued on April 24, 2020. The application deadline was May 19, 2020.

5. La Estancia and Pueblo Bonito submitted applications proposing the

rehabilitation of existin g farm worker housing in Hillsborough and Lee

Counties, respectively. Both applications were deemed eligible for funding.

6. A r eview c ommittee was appointed to review the applications and make

recommendations to Florida Housing’s Board of Directors ( “ the Board”).

7. The scoring of the applications was based on a 100 - point scale.

Applicants submitting a Principal Disclosure Form that ha d be en stamped

“ pre - approved ” receive d five points. The remain ing points were awarded

based on the subjective scoring of narrative sections within the applications,

and the maximum points were available as follows:

¤ Current and Future Need for F arm W orker or Commercial Fishing

Worker Hous ing in the Area (“ Need ” ): 15 points

¤ Experience Operating and managing Farm W orker or Commercial

Fishing Worker Housing ( “ Experience ” ): 20 points

¤ Outr each, Marketing, and Referral (“ Outreach ” ): 30 points

¤ Resident Access to Onsite and Offsite Progr ams, Services, and

Resources ( “ Access ” ): 30 points .

8. With regard to Need, the 20 19 Rental Market Study prepared for

Florida Housing by the Shimberg Center for Housing Studies at the

University of Florida determined that 14.2 percent of Florida’s farm workers

are employed in Hillsborough County and 2.55 percent are employed in Lee

Coun ty. Pueblo Bonito noted in its application that its development is only

three miles from th e Collier County line, and 5.63 percent of the state’s farm

workers are employed in Collier County. La Estancia did not reference

Manatee County in its application b ut noted in its request for a formal

administrative hearing that its development is a similar distance from

Manatee County, and 6.88 percent of the state’s farm workers are employed

there.

9. The Shimberg study also calculated need for farm worker housin g type

by county with 3,813 multifamily units needed in Hillsborough County, 741

multifamily units needed in Lee County, 1,546 multifamily units needed in

Collier County, and 2,337 multifamily units needed in Manatee County.

10. For some RFAs, Florida Hous ing imposes additional conditions on

applications for developments located in Limited Development Areas

(“LDAs”). T he main purpose of an LDA is to protect Florida Housing’s funded

developments in a particular area. An LDA is generally an area that Florida

Housing has placed a boundary around that limits different types of new

development. Florida Housing annually publishes an LDA Chart on its

website list ing areas or counties that may apply in the RFA cycle for the

coming year. T he mere existence of an LDA does not prohibit d evelopment

within the LDA. This is especially true for rehabilitation projects like those

proposed in the instant case.

11. A n RFA must specifically reference the LDA in order for the LDA to

apply.

12. The first draft of the 2020 LDA C hart was not published by Florida

Housing until May 29, 2020, and thus the modified RFA issued on April 24,

2020, included no reference to the LDA Chart. Nor did the RFA include any

specific provisions regarding LDAs.

13. The first draft of the 2020 LDA C hart and each subsequent draft or

amendment included Lee County for farm worker housing. Florida Housing

indicated that the basis for Lee County’s LDA designation was a downward

trend in occupancy rates. T he occupancy rate for the housing stock in Lee

Coun ty for the period of August 2019 through January 2020 was 91.67

percent as compared to 95.83 percent for the period of September 2019

through February 20 20 . Based on this trend , Lee County was proposed as an

LDA for the 2020/2021 Florida Housing RFA fundin g cycle , which became

effective July 10, 2020.

14. The following table reflects how the review committee awarded points

to the two applicants:

Pueblo Bonito La Estancia

Principal Disclosure Form (5) 5 5

“Need” (15) 12 12

“Experience” (20) 16 17

“ Outreach” (30) 27 27

“Access” (30) 25 24

Total (100) 85 85

15. In the event of a tie, Florida Housing designed the RFA and the

associated ru les to incorporate a series of “ tie - breakers. ” The tiebreakers, in

the order of applicability, were :

a. By point s received for the Need criterion, with more points

preferred. Both applicants received 12 points for need.

b. By SAIL Request Amount Per Unit, with lower SAIL funds per unit

preferred. Both applicants requested $50,000 in SAIL funds per unit.

c. By Total SAIL Request Amount as a percentage of Total

Development Cost (“TDC”), with applicants whose SAIL request amount is

90 percent or less of TDC preferred. Both applicants’ Total SAIL Request

Amount was 90 percent or less of their respective TDCs.

d. By a Fl orida Job Creation Preference. Both applicants satisfied this

preference.

e. By lottery numbers randomly assigned to the applications when they

were submitted to Florida Housing. Pueblo Bonito had lottery number 1, and

La Estancia had lottery number 2.

16. Nancy Muller was the Review Committee member assigned to review

and score the “ N eed” narrative section of the Applications responding to the

RFA. Ms. Muller is currently a Policy Specialist with Florida Housing. Prior

to her current position, Ms. Muller w as , for many years , the Director of Policy

and Special Programs.

17. In reviewing and scoring the a pplications submitted to Florida

Housing in the instant case, Ms. Muller indicated that she first read the

narrative question of the RFA and broke the questi on down into four

separate component parts. The components include d : ( a) current and future

need fo r farm workers over the next 10 to 15 years ; ( b) location and proximity

of farms and other type s of farm work that typically use farm worker labor ;

( c) infor mation concerning the type s of crops, seasons, etc. and the demand

for specific farm worker housing ; and ( d) whether waivers have been

requested or granted for either the proposed Development or Developments

in the area. N ext, Ms. Muller reviewed each a ppl ication against those

component parts and u ltimately awarded La Estancia and Pueblo Bonito 12

points each for their respective response to the need section.

18. Marisa Button, Florida Housing’s corporate representative, testified

that just because the docu mented need for farm worker housing is higher in

Hillsborough County than it is in Lee County does not mean that La Estancia

should have received a higher sco re in the narrative section than Pueblo

Bonito because the RFA “sets forth a much more nuanced req uest for the

description of the current and future needs in the area for the proposed development. So it’s not limited to just a flat - out look at the county under the

Shimberg study. If [that] were the case, we wouldn’t need to have a narrative scoring com ponent of the RFA.”

19. Ms. Muller and Ms. Button persuasively testified that numeric need

was just one of the components an applicant needed to address in responding

to the needs question. In fact , Ms. Muller indicated she recognized the

greater numeric need for farm worker housing in Hillsborough County, and

the greater need factored into her consideration of that particular component.

However, Ms. Muller pointed out that because both proposed projects were

rehabilitation of existing units, neither was a ctually addressing nor reducing

the numeric need for new units. Ms. Muller acknowledged that La Estancia’s

response at this component of the need analysis was “stronger” because of the

greater need.

20. Nevertheless, Ms. Muller indicated that while La Est ancia

demonstrated a greater numeric need, Pueblo Bonito’s response was

“stronger” in other areas of the overall need response. Specifically , Pueblo

Bonito provided a stronger response as to the location and proximity of farms

and other types of farm work that use farm worker labor. Ms. Muller

considered and evaluated the strengths and weakness es of each response and

no one component was weighted greater than any other component.

21 . Based on the scoring and tie - breakers, the review committee

recommended Pu eblo Bonito fo r funding. However, the Board’s deliberations

were not to be limited to the review committee’s recommendation or information provided by the review committee. With regard to the Board’s funding selection, the RFA stated that:

[t]he Board may use the Applications, the

Committee’s scoring, any other information or recommendation provided by the Committee or

staff, and any other information the Board deems

relevant in its selection of Applicants to whom to

award funding.

22 . The Board met o n J uly 17, 2020, to consider the review committee’s

recommendation and preliminarily selected Pueblo Bonito for funding,

subject to satisfactory completion of the credit underwriting process.

3 Florida

3 The RFA also employed a “Funding Test” to be used in the selection of applications for

funding. The “Funding Test” re quired that the amount of unawarded SAIL funding must be

enough to fully fund that applicant’s SAIL request amount. After the selection of Pueblo

Bonito for funding, there was only $1,131,050 in SAIL funding remaining, and that was not

enough to fund La Es tancia’s $4,200,000 SAIL request.

Housing staff did not inform the Board that Lee County had been designated

as an LDA for f arm w orker housing on the 2020 LDA Chart. Also, there is no

evidence that any Board member knew of Lee County’s LDA status or of

declining farm worker housing occupancy when they voted to select Pueblo

Bonito for funding.

23. La Estancia could not have presented the information regarding Lee

County’s LDA status to the Board. The RFA contains a “noninterference” clause prohibiting an applicant or its representative from contacting Board

members or Florida Housing’s staff “co ncerning their own or any other

Applicant’s Application” during the period beginning with the application

deadline and continuing until the Board “renders a final decision on the

RFA.” If an applicant makes such contact in an attempt to influence the

selec tion process, then that applicant’ s application is disqualified. As a result,

La Estancia was unable to correct the review committee’s omission of

information regarding declining farm worker housing occupancy levels in Lee

County.

24. Ms. Button testifie d that it was Florida Housing’s practice not to apply

new standards or requirements that changed after the application deadline when scoring applications. She stated that Florida Housing scores “based on

the terms of the RFA and we wouldn’t retroactively a pply something to those

applications after they’ve been submitted.” She specifically testified that if a

county is designated as an LDA after the application deadline, Florida

Housing would not apply that designation to the application. She also testified that one of the reasons for not considering new requirements after

the application deadline is that applicants would not be allowed to amend

their applications to address these new requirements.

25. Even if the July 10 LDA designation had applied to this RFA, there is

no evidence that it would have changed Florida Housing’s scoring decision.

The primary purpose for the LDA designation is to discourage new

construction that could harm existing developments. In this case, both

applicants are proposing to reh abilitate existing developments, and the

evidence shows that Florida Housing would not prohibit the funding of a

rehabilitation project even if it were in an LDA. Florida Housing has funded

the rehabilitation of farm worker developments located in LDAs sin ce 2013 or

2014. In RFA 2017 - 104, the only previous farm worker RFA in evidence, the

LDA designation did not even apply to rehabilitation projects that were in

Florida Housing’s portfolio. Ms. Muller testified that because the two applicants in this case b oth involved rehabilitation of developments in

Florida Housing’s portfolio, the LDA designation would have been “moot , ”

unless the physical occupancy rates were dire, which they were not. She also

testified that “preservation of existing developments is of much less, if any,

importance related to LDA.”

26. Ms. Button testified that she did not specifically inform the Board of

th e LDA designation “because it’s not relevant to the terms for which the

applications were scored for this RFA, it was not a part o f the RFA terms,

and the applicants did not, you know, apply with that designation put in

place. It’s for a future prospective funding cycle and it was not effective until

after the application due date.”

27. The greater weight of the evidence indicates th at Florida Housing’s

review and scoring of the applications responding to the RFA were not clearly erroneous, contrary to competition, arbitrary, or capricious.

C ONCLUSIONS OF L AW

28. DOAH has jurisdiction over the parties and the subject matter of this

p roceeding. §§ 120.569 and 120.57(3), Fla. Stat.

29. The protest to Florida Housing’ s proposed actions is governed by

section 120.57(3)(f), which provides as follows:

“The burden of proof shall rest with the party protesting the proposed agency action. I n 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 a ction is contrary to the agency’ s

governing sta tutes , the agency’ s rules or policies, or

the solicitation specifications. The standard of proof for such proceedings shall be whether the proposed

agency action was clearly erroneous, contrary to

competi tion, arbitrary, or capricious.”

30 . Colbert v. Departm ent of Health , 890 So. 2d 1165, 1166 (Fla. 1st DCA

2004), defined the clearly erroneous standard to mean that “the

interpretati on will be upheld if the agency’ s construction falls within the

permissible range of interpretations. If however, the agency ’ s in terpretation

conflicts with the plain and ordinary intent of the law, judicial deference need

not be given to it.”

31. An agency action is “contrary to competition” if it unreasonably

interferes with the purposes of competitive procurement, which has been described in Wester v. Belote , 138 So. 721, 723 - 24 (Fla. 1931), as protecting

the public against collusive contracts and to secure fair competition upon

equal terms to all bidders.

32. A capricious action “is taken without thought or reason or

irrationall y.” Agrico Chem . Co. v. Dep ’ t of Envtl. Reg. , 365 So. 2d 759, 763

(Fla. 1st DCA 1978). “An arbitrary decision is one that is not supported by facts or logic[.]” Id. The inquiry to be made in determining whether an agency

has acted in an arbitrary or capric ious manner involves consideration of

“whether the agency: (1) has considered all relevant factors; (2) has given

actual, 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). Dravo Basic Materials Co. v. Department of

Transportation , 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992), stated that “[i]f

an administrative decision is justifiable under any analysis that a reasonable

person would use to reach a decision of similar importance, it would seem

that the decision is neither arbitrary nor capricious.”

33. Although competitive - procurement protest proceedings are described

in section 120.57(3)(f) as de novo , competitive - procurement protest hearings

are a “ form of intra - agency review[,] ” in which the object is to evaluate the

action taken by the agency. State Contracting and Eng’ g Corp. v. Dep ’ t of

Transp. , 709 So. 2d 607, 609 (Fla. 1st DCA 1998)

34. La Estancia failed to demonstrate that Florida Housing’s review and

scoring of the applications responding to the RFA were clearly erroneous,

contrary to competition, arbitrary, or capricious.

35. La Estancia argues that either the scorer, the Review Committee, or

the Board should have given more weight to the Shimberg study’s conclusions

that there were more farm workers in Hillsborough County than in Lee

County, and that more new housing units were needed in Hillsborough

County tha n in Lee County. The evidence shows that Florida Housing did

consider this study in the scoring of the applications, but that it did not rely

on it to the exclusion of the actual narrative responses in the applications.

Ms. Muller sufficiently explained he r well - reasoned process for evaluating the

narrative portions of the applications, and there is no question that she was

qualified to perform that evaluation. Her scoring of the application s ection

was a rational, good faith exercise of her honest judgment based on

consideration of the relevant factors.

36. La Estancia also argues that the designation of Lee County as an LDA

for farm worker housing in the upcoming RFA cycle should have been

considered when scoring th e RFA. The evidence is clear, however, that the

2020 LDA chart was in applicable to the applications in the RFA, and that

even if it had been, it would not necessarily have changed the scoring or

selection process. I f Florida Housing had used the 2020 LDA chart in its

determination , that might w ell have been considered clearly erroneous,

contrary to competition, arbitrary, or capricious.

37. Despite the fact that the LDA Chart did not exist as of the application

deadline and the fact that the LDA Chart was not referenced in the RFA or

specificall y considered by Ms. Muller, La Estancia argues that the Board

should have been advised of its existence. If it had been so advised, La

Estancia further argues that the Board could have awarded funding to it

rather than to Pueblo Bonito. In support of this argument, La Estancia notes

the RFA’s statement that :

[t]he Board may use the Applications, the

Committee’s scoring, any other information or

recommendation provided by the Committee or staff, and any other information the Board deems relevant in its sele ction of Applicants to whom to

award funding.

38. Ms. Button provided a rational explanation for why Florida Housing’s

staff did not inform the Board at the July 17, 2020, meeting that Lee County

had been designated as an LDA for farm worker housing or th e reasons why

it had been so designated on the LDA Chart.

R ECOMMENDATION

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

R ECOMMENDED that Florida Housing Finance Corporation enter a Final

Order dismissing La Esta ncia, Ltd. ’s formal written protest and awarding

funding to Partnership in Housing, Inc.

D ONE A ND E NTERED this 1st day of October, 2020, in Tallahassee, Leon

County, Florida.

G. W. C HISENHALL

Administrative Law Judge

Division of Admini strative 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 1st day of October, 2020 .

C O PIES F URNISHED :

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301 - 1329

(eServed)

M. Christopher Bryant, Esquire

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

Post Office Box 1 110

Tallahassee, Florida 32302 - 1110

(eServed)

Michael P. Donaldson, Esquire

Carlton Fields

Suite 500

215 South Monroe Street

Tallahassee, Florida 32302

(eServed)

Christopher Dale McGuire, Esquire

Florida Housing Finance Corporation

Suite 5000

227 Nort h Bronough Street

Tallahassee, Florida 32301

(eServed)

Corporation Clerk

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301

(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.