20-001779BID Madison Square, Llc And Arc 2019, Llc vs. Florida Housing Finance Corporation Status: Closed Recommended Order on Friday, June 19, 2020.

Summary: Petitioners HTG Addison and Madison Oaks failed to prove that Florida Housing's determination of eligibility and intended award of tax credits were contrary to statutes, rules, the RFA, clearly erroneous, contrary to competition, arbitrary or capricious.

M ADISON S QUARE , LLC, A ND A RC 2019,

LLC ,

Petitioners , Case No. 20 - 1779BID

vs.

F LORIDA H OUSING F INANCE

C ORPORATION ,

Respondent ,

and

D IPLOMAT S OUTH , LLC,

Intervenor .

/

M ADISON O AKS E AST , L L C, A ND A RC

2019, LLC,

Petitioners ,

vs . Case No. 20 - 1780BID

F

LORIDA H OUSING F INANCE

C ORPORATION ,

Respondent,

and

R

ETREAT A T C OCOA C OMMONS , LLC,

A ND T RANQUILITY A T M ILTON , LLC,

Intervenors .

/

R ECOMMEN DED O RDER

These cases came before Administrative Law Judge Darren A. Schwartz of

the Division of Administrative Hearings ( " DOAH " ) for final hearing on

May 8, 2020, by Zoom Conference.

A PPEARANCES

For Petitioner HTG Addison II, LLC , and Intervenor HTG Edgew ood,

Ltd. :

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

1400 Village Square Boulevard, Suite 3 - 231

Tallahassee, Florida 32312

For Petitioners Madison Square, LLC , and Arc 2019, LLC ; and Madison

Oaks East, L LC, and Arc 2019, LLC:

J. Timothy Schulte, Esquire

Zimmerman, Kiser & Sutcliffe, P.A.

315 East Robinson Street

Post Office Box 3000 (32802)

Orlando, Florida 32801

For Petitioners Rochester Park, Ltd., and Rochester Park Deve loper, LLC:

Craig D. Varn, Esquire

Manson Bolves Donaldson Varn, P.A.

106 East College Avenue , Suite 82 0

Tallahassee, Florida 32301

For Respondent Florida Housing Finance Corporation :

Betty Zachem, Esquire

Florida Hous ing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301

For Intervenors Tranquility at Milton , LLC ; Diplomat South, LLC; and

Westside Phase I, LLLP:

Michael P. Donaldson, Esquire

Carlton Fields

215 South Monroe Street, Suite 500

Tallahassee, Florida 32302 - 0190

For Intervenor Retreat at Cocoa Commons, LLC:

Donna Elizabeth Blanton, Esquire

Radey Law Firm, P.A.

301 South Bronough Street, Suite 200

Tallahassee, Flo rida 32301

S TATEMENT OF T HE I SSUE S

Whether Respondent, Florida Housing Finance Cor poration’s ( " Florida

Housing " ) intended action to award housing ta x credit funding to Intervenors

Westside Phase, I, LLLP ( " Westside " ), HTG Edgewood, Ltd . ( " HTG

Edgewood " ), Diplomat South, LLC ( " Diplomat " ), and Tranquility at Milton,

LLC ( " Tranquility " ), under Request for Applications 2019 - 113 Housing Credit

Financing for Affordable Housing Developments Located in Medium and

Small Counties (the " RFA " ), is contrary to governi ng statutes, rules, the RFA

specifications, and clearly erroneous, contrary to competition, arbitrary, or capricious.

P RELIMINARY S TATEMENT

These cases involve multiple protests to a Notice of Intent to Award issued

by Florida Housing. On August 20, 2019, Florida Housing issued the RFA,

soliciting applications to compete for an allocation of Federal Low - Income

Housing Tax Credit Funding ( " housing tax credits " ) for the construction of

affordable housing developments in medium and small counties. Modificatio ns to the RFA were issued on September 10, 2019. In response to

the RFA, Florida Housing received 184 applications, includin g applications

from Petitioners HTG Addison, II, LLC ( " HTG Addison " ); Rochester Park

Ltd., and Rochester Park Developer, LLC ( " Roche ster " ); Madison Square,

LLC , and ARC 2019, LLC ( " Madison Square " ); and Madison Oaks East, LLC ,

and ARC 2019, LLC ( " Madison Oaks " ).

On March 6, 2020, Florida Housing posted notice of its intended dec ision

to award funding to 11 ap plicants, including Interv enors Westside, HTG

Edgewood, Diplomat, and Tranquility. Petitioners timely filed Notices of Protest and Petitions for Formal Administrative Proceedings and Intervenors

timely intervened. On April 9, 2020, Florida Housing referred the matters to

DOAH to as sign an Administrative Law Judge to conduct the final hearing.

On April 9, 2020, Florida Housing also filed a motion to consolidate these

matters with other matters filed by Turn stone Eustis, LP (DOAH Case

No. 20 - 1775BID); Tranquility Milton, LLC ("Tranqu ility Milton") (DOAH

Case No. 20 - 1776BID); and Meadowlark Court, Ltd . (DOAH Case

No. 20 - 1777BID). On April 17, 2020, the undersigned entered an Order

granting the motion and set the final hearing for May 8, 2020. On April 20,

2020, Rochester filed an unopp osed motion to amend its petition. On April 27,

2020, Meadowlark Court, Ltd ., filed a voluntary dismissal of its petition in

DOA H Case No. 20 - 1777BID. On April 30, 2020, the undersigned entered an

Order granting Rochester’s motion. On May 4, 2020, Turnston e Eustis, LP ,

filed a voluntary dismissal of its petition in DOAH Case No. 20 - 1775BID and

Madison Oaks filed a notice of voluntary dismissal of its challenge to the

Retreat at Cocoa Commons, LLC , in DOAH Case No. 20 - 1780BID. On May 4,

2020, Rochester, Flor ida Housing, and HTG Edgewood also entered into a

written stipulation in DOAH Case No. 20 - 1778BID for the entry of findings of

fact and a recommended order deeming HTG Edgewood’s application for funding ineligible and Rochester’s application eligible for f unding. On May 5,

2020, Tranquility filed an unopposed motion to amend its notice of

appearance in DOAH Case No. 20 - 1780BID.

On May 5, 2020, the undersigned entered an Order closing DOAH Case

Nos. 20 - 1775BID and 20 - 1777BID, and relinquishing jurisdiction of these

cases to Florida Housing. On May 5, 2020, Madison Square, Florida Housing,

and Diplomat entered into a written stipulation in DOAH Case No. 20 -

1779BID for the entry of findings of fact and a recommended order deeming Diplomat’s application for fu nding ineligible and Madison Square’s

application eligible for funding. On May 6, 2020, Tranquility Milton filed a

voluntary dismissal of its petition in DOAH Case No. 20 - 1776BID. On May 7,

2020, the undersigned entered an Order closing DOAH Case No. 20 - 17 76BID

and relinquishing jurisdiction of this case to Florida Housing.

The final hearing commenced as schedule d and concluded on May 8,

2020. At the hearing, the parties presente d evidence as to DOAH Case

Nos. 20 - 1780BID and 20 - 1770BID. Madison Oaks prese nted the testimony of

Marisa Button and Stacy Banach. Tranquility presented the testimony of

Todd Wind. HTG Addison presented the testimony of Marisa Butt on. Joint

Exhibits 1 through 10 and 12 through 14 were received into evidence.

Madison Oak’s Exhibits 2 through 4, 6, 7, 11 , and 13 were received into

evidence. Tranquility’s Exhibits 1 through 6 were received into evidence.

HTG Addison’s Exhibits 1 through 4 were received into evidence. Madison

Square’s Exhibit 2 was received into evidence.

The one - volu me final hearing Transcript was filed on May 21, 2020. All of

the parties except HTG Edgewood and Retreat at Cocoa Commons, LLC,

timely filed proposed recommended orders, which were considered in the

preparation of this Recommended Order. HTG Edgewood and Retreat at

Cocoa Commons, LLC, did not file proposed recommended order s . The

stipulated facts in the parties’ stipulations filed May 4 and 5, 2020; the Joint

Pre - hearing Stipulation filed May 6, 2020; and the Joint Stipulation filed

May 20, 2020, have been incorporated herein as indicated below. Unless

otherwise indicated, references to the Florida Statutes are to the 2019 version.

F INDINGS OF F ACT

1. Florida Housing is a public corporat ion created pursuant to

section 420.504, Florida Statutes. Its purpo se is to promote public welfare by

administering the governmental function of financing affordable housing in Florida. Pursuant to section 420.5099, Florida Housing is designated as the

housing credit agency for Florida within the meaning of section 42(h)( 7)(A) of

the Internal Revenue Code , and has the responsibility and authority to

establish procedures for allocating and distributing low income housing tax

credits.

2. The low income housing tax credit program (commonly referred to as

" tax credits " or " ho using credits " ) was enacted to incentivize the private

market to invest in affordable rental housing. These housing tax credits are

awarded competitively to housing developers in Florida for rental housing

projects that qualify. These credits are then norm ally sold by developers for

cash to raise capital for their projects. The effect is that the credits reduce the

amount that the developer would otherwise have to borrow. Because the total

debt is lower, a housing tax credit property can (and must) offer lo wer, more

affordable rents. Developers also covenant to keep rents at affordable levels

for periods of 30 to 50 years as consideration for receipt of the housing

credits. The demand for housing tax credits provided by the federal

government exceeds the sup ply.

The Competitive Application Process

3. Florida Housing is authorized to allocate housing tax credits and other

funding by means of a request for applications or other competitive

solic itation in section 420.507(48) and Flor ida Administrative Code

Cha pter 67 - 60, which govern the competitive solicitation process for several

different programs, including the program for housing tax credits. Chapter 67 - 60 provides that Florida Housing allocate its competitive funding through

the bid protest provisions of section 120.57(3) , Florida Statutes .

1

4 . In their applications, applicants request a specific dollar amount of

housing tax credits to be given to the applican t each year for a period of

ten years. Applicants normally sell the rights to that future stream of income

housing tax credits (through the sale of almost all of the ownership interest

in the applicant entity) to an investor to generate the amount of capital

ne eded to build the development. The amount which can be received depends

1 A request for application is equivalent to a " request for proposal " as indicated in rule 67 -

60.009(3).

upon the accomplish ment of several factors, such as a certain percentage of

the projected t otal d evelopment c ost; 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 desi g nated areas of

some counties. T his, however, is not an exhaustive list of the factors

considered.

5 . The RFA was issued on August 20 , 201 9 , and responses were initially

due October 2 9 , 201 9 . The RFA was modified on September 10 , 201 9 , and t he

application deadline was extended to November 5 , 201 9 . No challenges were

made to the terms of the RFA.

6 . Through the RFA, Florida Housing expects to award up to an estimated

$ 14 ,8 05 , 028 of housing tax credits to proposed developments in medium

counties and up to a n estimated $1,413,414 of housing credits to proposed

developments in small counties. Florida Housing received 184 applications in

response to the RFA.

7 . A review committee was appointed to review the applications and make

recommendations to Florida Hous ing's Boa rd of Directors (the " Board " ). The

review committee found 1 6 9 applications eligible and 15 applications

ineligible. Through the ranking and selection process outlined in the RFA,

11 applications were preliminarily recommended for funding. The revi ew

committee developed charts listing its eligibility and funding

recommendations to be presented to the Board.

8 . On March 6 , 20 20 , the Board met and considered the recommenda tions

of the review committee. Also, on March 6 , 20 20 , at approximately 9: 35 a. m.,

Petitioners and all other applicants received notice that the Board

determined whether applications were eligible or ineligible for consideration for funding, and that certain eligible applicants were selected for award of

housing credits, subject to s atisfactory completion of th e credit underwriting

process. Such notice was provided by the posting of two spreadsheets on the

Florida Housing website, www.floridahousing.org , one listing the Board

approved scoring results and one identifying the applicatio ns which Florida

Housing proposed to fund.

9 . In the March 6 , 20 20 , posting, Florida Housing announced its intention

to award funding to 11 applicants, including Westside, HTG Edgewood,

Diplomat, and Tranquility . Petitioners timely filed notices of protest and

petitions for formal administrative proceedings, and Intervenors timely

intervened .

The RFA Ranking and Selection Process

1 0 . The RFA contemplates a structure in which the applica nt is scored on

eligibility items and obtains points for other items. A summary of the

eligibility items is available in section 5.A.1 . , beginning on page 6 4 of the

RFA. Only applications that meet all the eligibility items will be eligible for

funding and considered for funding selection.

1 1 . There were two total point ite ms scored in this RFA. Applicants could

receive five points for Submission of Principal s Disclosure Form , stamped by

the Corporation as " Pre - Approved , " and five points for Development

Experience Withdrawal Disincentive, for a total application score of up to

ten points.

12. The RFA has three funding goals:

a. The Corporation has a goal to fund four Medium

County Developments that qualify for the Local

Government Areas of Opportunity Funding Goal

outlined in Section Four A.11.a. of the RFA .

b. The Corpora tion has a goal to fund two

Developments with a Demographic commitment of

Family that select and qualify for the Geographic Areas of Opportunity/SADDA Goal outlined in Section Four A.11.b. of the RFA .

c. The Corporation has a goal to fund one (1)

Devel opm ent that qualifies for the Local

Community Revitalization Initiative Goal outlined in Section Four A.11.c. of the RFA .

*Note: During the Funding Selection Process

outlined below, Developments selected for these

goals will only count toward one goal.

1 3 . As part of the funding selection process, the RFA starts with the

application sorting order on page 68 . The highest scoring applications are

determined by first sorting together all eligible applications from the highest

score to lowest score, with any scores that are tied separated as follows:

( 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 that qualify for the preference listed above Applications that do not qualify for the preference;

( b ) Next, by the Application's eligibility for the Per

Unit Construction Funding Preference which is outlined in Section Four A.1 0 .e. of the RFA (with

Applications that qualify for the preference listed above Ap plications that do not qualify for the

preference);

( c ) Next, by the Application's eligibility for the

Development Category Funding Preference which is outlined in Section Four A.4 . b . (4) of the RFA

(with Applications that qualify for the preference liste d above Applications that do not qualify for the

preference);

( d ) Next, by the Application's Leveraging

Classification, applying the multipliers outlined in

item 3 of Exhibit C of the RFA (with Applications

having the Classification of A listed above

App lications having the Classification of B);

( e ) Next, by the Application's eligibility for the

Florida Job Creation Funding Preference which is

outlined in Item 4 of Exhibit C of the RFA (with

Applications that qualify for the preference listed above Appl ications that do not qualify for the

preference);

( f ) And finally, by lottery number, resulting in the

lowest lottery number receiving preference.

14. The RFA includes a Funding Test where small county applications will

be selected for funding only if th ere is enough small county funding available

to fully fund the eligible housing credit request amount, and medium county

applications will be selected for funding only if there is enough medium

county funding available to fully fund the eligible housing cr edit request

amount.

15. The RFA outlines a specific County’s Award Tally:

As each application is selected for tentative

funding, the county where the proposed Development is located will have one Application credited towards the County’s Award Tally. Th e

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 Applications with a higher County Award Tally

that also meet the F unding Test, even if the

Applications with a higher County Award Tally are

higher ranked.

1 6 . According to the RFA , the funding selection process is as follows :

a. The first Application selected for funding will be

the highest ranking eligible Applic ations that qualifies for the Local Community Revitalization

Initiative Goal .

b. The next four Applications s elected for funding

will be the highest ranking eligible Medium County Applications that qualify for the Local Government

Areas of Opportunity Fu nding Goal, subject to the

Funding Test and the County Award Tally.

c. The next two Application s selected for funding

will be the highest ranking eligible Family

Applications that qualify for the Geographic Areas

of Opportunity/HUD - designated SADDA Goal,

subject to the Funding Test and the County Award

Tally .

d. The next Applications selected for funding will

be the highest ranking eligible unfunded Small

County Applications that (i) can meet the Small

County Funding Test and (ii) have a County Award

Ta lly that is less than or equal to any other eligible

unfunded Small County Applications. If Small

County funding remains and no unfunded eligible Small County Application can meet the Small County Funding Test, no further Small County Applications will be selected and the remaining

Small County funding will be added to the Medium

County funding amount.

e. The next Application(s) selected for funding will

be the highest ranking eligible unfunded Medium County Applications that (i) can meet the Medium Count y Funding Test and (ii) have a County Award

Tally that is less than or equal to any other eligible unfunded Medium County Applications.

f. If Medium County funding remains and no unfunded eligible Medium County Application can meet the Medium County Fund ing Test, no further

Applications will be selected and the remaining

funding will be distributed as approved by the

Board.

17. According to the terms of the RFA:

Funding that becomes available after the Board takes action on the [Review] Committee’ s

recommendation(s), due to an Applicant withdrawing its Application, an Applicant declining its invitation to enter credit underwriting, or an

Applicant’s inability to satisfy a requirement

outlined in this RFA, will be distributed as approved by the Boar d.

18. All 184 applications for the RFA were received, processed, deemed

eligible or ineligible, scored, and ranked, pursuant to the terms of the RFA,

Florida Administrative Code Chapters 67 - 48 and 67 - 60, and applicable

federal regulations.

HTG Edge wood’s Application (DOAH Case No. 20 - 1778BID)

19. During scoring, Florida Housing determined that the HTG Edgewood

application was eligible and, pursuant to the terms of the RFA, selected HTG

Edgewood for funding.

20. HTG Edgewood, Florida Housing, and Ro chester now agree that HTG

Edgewood’s application is ineligible for consideration for funding and t he

application of Rochester is eligible for funding. Accordingly, HTG Edgewood,

Florida Housing, and Roch ester agree that Florida Housing should deem the

HTG Edgewood application ineligibl e for funding and Rochester ’s application

eligible for funding.

Diplomat’s Application ( DOAH Case No. 20 - 1779BID )

21. During scoring, Florida Housing deemed the Diplomat application

eligible and , pursuant to the terms of th e RFA, preliminarily selected

Diplomat for funding.

22. Diplomat and Madison Square now agree that Diplomat is ineligible

for funding. Florida Housing does not contest Diplomat’s admission of ineligibility.

23. Madison Square, Diplomat, and Florida Housi ng agree that Madison

Square is eligible for funding.

Tranquility’s Application (DOAH Case No. 20 - 1780BID)

24. Florida Housing deemed the Tranquility application eligible for

funding, and pursuant to the terms of the RFA, Tranquility was selected for prel iminary funding.

Tranquility’s Principals Disclosure Form

25. Madison Oaks contests Florida Housing’s preliminary selection of

Tranquility for an award of housing tax credits. In its challenge, Madison

Oaks argues that Tranquility failed to correctly com plete its Principals

Disclosure Form by not identifying the multiple roles of its disclosed

principal. Specifically, Madison Oaks argues that Tranquility failed to list

Tranquility Milton Manager, LLC, which is disclosed as a manager, as a non -

investor mem ber as well. Accordingly, Madison Oaks contends Tranquility is

not eligible or should lose five points.

26. The purpose of the Principals Disclosure Form is to allow Florida

Housing to track an entity’s past and future dealings with Florida H ousing so

tha t Florida Housing is aware of the entity with which it is dealing. In regard

to principal disclosure, the RFA states, in relevant part:

c. Principals Disclosure f or the Applicant and for

each Developer (5 points)

(1) Eligibility Requirements

To meet the submission requirements, the

Applicant must upload the Principals of the

Applicant and Developer(s) Disclosure Form (Form

Rev. 0 5 - 2019 )( " Principals Disclosure Form " ) with

the Application and Development Cost Pro Forma, as outlined in Section Three above. Prior versions

of the Principal Disclosure Form will not be accepted.

The Principals Disclosure Form must identify ,

pursuant to subsections 67 - 48.002(94), 67 -

48.0075(8) and 67 - 48.0075(9), the Principals of the

Applicant and Developer(s) as of the Applica tion

Deadline. The investor limited partner of an

Applicant limited partnership or the investor member of an Applicant limited liability company

investor must be identified. 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.

(2) Point Item

Applicants will receive 5 points if the uploaded Principal Disclosure Form was stamped " Approved "

during the Advance Review Process. The Advance

Review Process for Disclosure of Applicant and

Developer Principals is available on the RFA

Website and also includes samples which may

assist the Applicant in completing the required

Principals Disclosure Form.

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.

27. The RFA website provides guidance and instructions to assist

applicants in completing the principal disclosure. The instructions state: " List

the name of each Member of the Applicant Limited Liability Company and

label each as either non - investor Member or investor Member (i.e., equity

provider and/or placeholder), as applicable . "

2 8. The RFA website guidance and instructions further provides

Frequently Asked Questions ( " FAQ’s " ) concerning principal disclosures.

29. FAQ number 4 states:

Q: If the Applicant entity is a member managed

limited liability company, how should it be r eflected

on the form since there is no " member - manager "

choice at the First Principal Disclosure Level?

A: Each member - manager entity/ person should be

listed twice — once as a non - investor member and

once as a manger. If Housing Credits are being

reque sted, the investor - member(s) must also be

listed in order for the form to be approved for a Housing Credit Application.

30. On its Principals Disclosure Form, Tranquility listed two entities at

the first principal disclosure level: Tranquility Milton Man ager, LLC,

identified as a manager of the applicant and Timshel Partners, LLC,

identified as an investor member of the applicant. However, Tranquility

failed to identify the dual role of Tranquility Milton Manager, LLC , as a non -

investor member in addition to its disclosed role as a manger.

31. Nevertheless, Tranquility’s equity proposal letter submitted as part of

its application identified Tranquility Milton Manager, LLC , as a member of

the LLC because according to the equity proposal, Tranquility Milton

Manager, LLC , would retain a .01% ownership interest in the company.

Thus, the role of Tranquility Milton Manager, LLC , as a member is available

within Tranquility’s application.

32. Tranquility participated in Florida Housing’s Advance Review Process,

and on October 17, 2019, Florida Housing approved the Principals Disclosure

Form submitted by Tranquility during the Advance Review Process for an

award of housing credits. During scoring, Tranquility received five points for

having its Principals Disclosu re Form stamped " Approved " by Florida

Housing.

33. Tranquility’s Principals Disclosure Form met the eligibility

requirements of the RFA and Tranquility is entitled to the five points.

34. In addition, Ms. Button persuasively and credibly testified that even if

Tranquility’s failure to list the dual role of its disclosed principal on the

Principals Disclosure Form is an error, it is so minor as to constitute a waivable, minor irregularity. As detailed above, Tranquility Milton Manager,

LLC , was specifical ly designated as a man a ger on the form and information

identifying Tranquility Milton Manager, LLC’s , additional role as a member

is included in the equity proposal letter submitted with the application.

Madison Oak’s Application ( DOAH Case No. 20 - 1779BI D )

35. Madison Oaks’ application was deemed eligible for funding, but

pursuant to the terms of the RFA, Madison Oaks was not selected for

preliminary funding.

Madison Oaks Site Control Certification

36. Florida Housing and Tranquility now argue that Madis on Oak s failed

to demonstrate site control. As an eligibility item, the RFA requires applicants to demonstrate site control by providing a properly completed and

executed Florida Housing Finance Corporation Site Control Certification

form ( " Site Control Fo rm " ). For the Site Control F orm to be considered

complete , the applicant must attach documentation demonstrating that it is a

party to an eligible contract or lease or is the owner of the subject property.

37. Applicants can demonstrate site control by pr oviding documentation

that meets the requirements in the RFA for an eligible contract, deed or

certificate of title, or a lease.

38. An eligible contract must meet all of the following conditions:

(a) It must have a term that does not expire before

April 30, 2020 or that contains extension options

exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than April 30, 2020;

(b) It must specifically stat e that the buyer’s

remedy for default on the part of the seller includes or is specific performance;

(c) The Applicant must be the buyer unless there is an assignment of the eligible contract, signed by the assignor and the assignee, which assigns all of

the buyer’s rights, title and interests in the eligible contract to the Applicant; and

(d) The owner of the subject property must be the seller, or is a party to one or more intermediate contracts, agreements, assignments, options, or

conveyances b etween or among the owner, the

Applicant, or other parties, that have the effect of

assigning the owner’s right to sell the property to

the seller. Any intermediate contract must meet

the criteria for an eligible contract in (a) and (b)

above.

39. In demo nstrating site control, the RFA states:

Note: The Corporation will not review the site

control documentation that is submitted with the

Site Control Certification form during the scoring

process unless there is a reason to believe that the

form has been i mproperly executed, nor will it in

any case evaluate the validity or enforceability of

any such documentation. During scoring, the

Corporation will rely on the properly executed Site

Control Certification form to determine whether an

Applicant has met the requirements of this RFA to demonstrate site control. The Corporation has no authority to, and will not, evaluate the validity or enforceability of any eligible site control

documentation that is attached to the Site Control

Certification form during the s coring process.

During credit underwriting, if is determined that the site control documents do not meet the above requirements, the Corporation may rescind the

award.

40. Additionally, the RFA requires that the site control " documentation

include all r elevant intermediate contracts, agreements, assignments,

options, conveyances, intermediate leases, and subleases. "

41. In the instant case, Madison Oaks attached a Purchase and Sale

Agreement ( " Madison Oaks Agreement " ) to its Site Control Form.

42. The Madison Oaks Agreement lists West Oak Developers, LLC , as the

" Seller " and Madison Oaks East, LLC , as the " Purchaser. "

43. However, the City of Ocala owns the property in question.

44. The Madison Oaks Agreement in s ection 12 states that : " Seller has a

v alid and binding agreement with the City of Ocala, Florida pursuant to

which Seller has the right to acquire fee simple title to the Property …. "

45. Tranquility and Florida Housing contend that Madison Oaks failed to

demonstrate site control because Madis on Oaks failed to include the City of

Ocala Redevelopment Agreement for Pine Oaks ( " Redevelopment

Agreement " ) in its site control documentation.

46. Madison Oaks maintains that the City of Ocala is a seller , pursuant to

the Joinder and Section 28 of the M adison Oaks Agreement, and therefore,

the Redevelopment Agreement did not need to be included. However, the

Madison Oaks Agreement clearly identifies West Oak as the " Seller " and the

City of Ocala as the " City. "

47. At hearing, Ms. Button persuasively and credibly testified that the

Madison Oaks application is ineligible because it did not include the

Redevelopment Agreement, which is a relevant agreement for purposes of

demonstrating site control. The Redevelopment Agreement was a relevant intermediate co ntract , which was required to be included in Madison Oak’s

application. Madison Oak’s failure to include the Redevelopment Agreement renders its application ineligible.

48. Madison Oaks contends that including the Redevelopment Agreement

in its applicat ion was unnecessary because of a joinder provision within the

Madison Oaks Agreement. The Madison Oaks Agreement contains a Joinder

and Consent of the City of Ocala approved by the City Council ( " the Joinder " ),

whereby the City of Ocala joined and consente d to the Madison Oaks

Agreement " solely for the purposes set forth in, and subject to, Section 28

herein. "

49. The Madison Oaks Agreement in Section 28 states that : " Seller hereby

acknowledges and agrees that in the event of Seller’s default hereunder, th at

is not timely cured, or Seller ' s refusal to close hereunder, Purchaser shall be

entitled to close on the property subject to this Agreement … directly with

the City on the terms and conditions set forth in this Section 28. "

50. However, Section 28 only applies in the event of a default by West

Oaks that is not timely cured or West Oak’s refusal to close. There is no

information within the Madison Oaks application to determine whether a

default or termination of the Redevelopment Agreement occurred as of the

application deadline.

Westside’s A pplication ( DOAH Case No. 20 - 177 0 BID )

51. Florida Housing deemed Westside’s application eligible and , pursuant

to the terms of the RFA, Westside was preliminary selected for funding to

meet the goal to fund one devel opment that qualifies for the Local

Community Revitalization Initiative Goal.

Westside’s Election to Compete for the L ocal Community Revitalization

Initiative Goal

52. In order to qualify for the Local Community Revitalization Initiative

Goal, the RFA s tates:

Applicants for proposed Developments that are

part of a local revitalization plan may elect to compete for this goal. To qualify for this goal, the Applicant must submit the properly completed

Florida Housing Finance Corporation Local

Government/Co mmunity Redevelopment Agency Verification That Development Is Part Of A Local Community Revitalization Plan form (Form Rev. 08 - 2019) as Attachment 18. The form is available

on the RFA Website.

Included with the form must be either (1) a link to the lo cal community revitalization plan or (2) a

copy of the local community revitalization plan. The

plan must have be en adopted on or before

January 1, 2019.

53. Florida Housing , pursuant to the terms of the RFA , also has a goal to

fund four medium county de velopments that qualify for the Local

Government Areas of Opportunity Funding Goal.

54. Westside included an executed Florida Housing Finance Corporation

Local Government/Community Redevelopment Agency Verification that

Development is Part of a Local Comm unity Revitalization Plan form (the

" Local Community Revitalization Plan Form " ) and a link to the local

government revitalization plan at Attachment 18 of its application.

55. At question 11.c. in the application, applicants are asked to select

" Yes " or " No " from a drop - down menu in response to the question: " Is the

proposed Development eligible for the Local Community Revitalization

Initiative Goal? "

56. Westside selected " No " from the Yes/No drop - down menu in answering

question 11.c. regarding the Local Community Revitalization Initiative Goal.

57. At question 11.a. in the application, applicants are asked to select

" Yes " or " No " from a drop - down menu in response to the question: " Is the

proposed Development eligible for the Local Government Areas of

Opp ortunity Funding Goal? "

58. Westside selected " Yes " from the Yes/No drop - down menu in

answering questions 11.a. regarding the Local Government Areas of Opportunity Funding Goal.

59. During scoring, Westside was deemed to have qualified for the Local

Gover nment Areas of Opportunity Funding Goal and the Local Community

Revitalization Initiative Goal. During the funding selection process, Westside

was selected for funding to meet the Local Government Community

Revitalization Initiative Goal.

60. HTG Addison selected " Yes " from the Yes/No drop - down menu in

answering question 11.c. regarding the Local Community Revitalization Initiative Goal.

61. HTG Addison included an executed Local Community Revitalization

Plan Form at Attachment 18 of its application.

62. HTG Addison selected " No " from the Yes/No drop - down menu in

answering question 11.a . regarding the Local Government Areas of

Opportunity Funding Goal.

63. HTG Addison is the next highest ranked eligible applicant qualified

for the Local Community Revital ization Initiative Goal after Westside. If

Westside is deemed not to have qualified for the revitalization goal, then

HTG Addison, as the next highest ranked eligible applicant, would qualify for

that goal.

64. HTG Addison alleges that Westside should not be selected to meet the

Local Community Revitalization Initiative Goal because Westside selected " No " from the drop - down menu in response Question 11.c.

65. Ms. Button persuasively and credibly testified that Florida Housing

does not rely on the drop - down responses to questions 11a., b., or c. in

determining whether an applicant " elects to be eligible for a certain goal "

because answering " Yes " or " No " to these requirements is not a requirement

of the RFA.

66. Rather, Ms. Button persuasively and credibly testified that in

determining whether an applicant qualifies for a funding goal, Florida

Housing relies on the documentation submitted with the application that is

required for the funding goal.

67. In the instant case, Westside included the executed Flor ida Housing

Finance Corporation Local Government Revitalization Plan form and a link

to the local community revitalization plan at Attachment 18 of its application.

2

68. In addition, Ms. Button persuasively and credibly testified that even if

Westside err ed in selecting " Yes " in response to question 11.c., it is so minor

as to constitute a waivable, minor irregularity because Florida Housing has

the required information within the application (the executed form and a link

to the local community revitalizat ion plan at Attachment 18).

2 Notably, another applicant responding to the RFA, Tranquility at Ferry Pass, selected " Yes "

in response to question 11.c. , but failed to i nclude at Attachment 18 either a copy of or a link

to the local community revitalization plan. During scoring, Florida Housing determined that

Tranquility at Ferry Pass did not qualify for the revitalization goal. Florida Housing’s

scoring of the Westside application is consistent with its scoring of the Tranquility at Ferry

Pass application because in both cases, Florida Housing scored the application based on the requirements of the RFA for the revitalization goal and the documentation submitted in

respon se to those requirements. Florida Housing did not rely on the applicant’s response to

question 11.c. regarding the applicant’s expressions of its own eligibility.

C ONCLUSIONS OF L AW

69 . DOAH has personal and subject matter jurisdiction in this proceeding

pursuant to sections 120.569, 120.57(1), and 120.57(3), Florida Statutes.

70 . Pursuant to section 120.57(3)(f), the burden of proof rest s with

P etitioners as the part ies opposing the proposed agency action. State

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

DCA 1998). Petitioners must sustain their burden of proof by a

preponderance of the evidence. See Dep' t of Transp. v. J.W.C. Co., Inc. , 396

So. 2d 778, 787 (Fla. 1st DCA 1981).

71 . Section 120.57(3)(f) provides, in part, as follows:

Unless otherwise provided by statute, 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 action is

contrary to the agency's governing statutes , the

agency's rules or policies, or the solicitation

specifications. The standard of proof for such

proceedings shall be whether the proposed agency

action was clearly erroneous, contrary to

competition, arbitrary, or capricious.

72. The phrase " de novo proceeding, " as used in section 120.57(3)(f),

describes 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 evaluate the action taken by the agency. " Sta te Contracting ,

709 So. 2d at 609.

73 . A bid protest proceeding is not simply a record review of the

information that was before the agency. Rather, a new evidentiary record

based upon the facts established at DOAH is developed. J.D. v. Fla. Dep't of

Child . & Fams. , 114 So. 3d 1127, 1132 - 33 (Fla. 1st DCA 2013).

74 . After determining the relevant facts based on the evidence presented

at hearing, Florida Housing's intended action will be upheld unless it is

contrary to the governing statutes, the corporation 's rules, or the bid

specifications. The agency's intended action must also remain undisturbed

unless it is clearly erroneous, contrary to competition, arbitrary, or capricious.

7 5 . The Florida Supreme Court explained the " clearly erroneous " standard

as follows:

[ A ] finding of fact is clearly erroneous when,

although there is evidence to support such finding,

the reviewing court upon reviewing the entire evidence is left with the definite and firm conviction that a mistake has been committed. This

standa rd plainly does not entitle a reviewing court

to reverse the finding of the trier of fact simply because it is convinced that it would have decided the case differently. Such a mistake will be found to

have occurred where findings are not supported by subs tantial evidence, are contrary to the clear weight of the evidence, or are based on an

erroneous view of the law. Similarly, it has been

held that a finding is clearly erroneous where it

bears no rational relationship to the supporting

evidentiary data, wh ere it is based on a mistake as

to the effect of the evidence, or where, although there is evidence which if credible would be substantial, the force and effect of the testimony

considered as a whole convinces the court that the

finding is so against the g reat preponderance of the

credible testimony that it does not reflect or represent the truth and right of the case.

Dorsey v. State , 868 So. 2d 1192, 1209 n.16 (Fla. 2003).

76 . The " contrary to competition " standard preclude s actions , which, at a

minimu m: (a) create the appearance of and opportunity for favoritism;

(b) erode public confidence that contracts are awarded equitably and

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

unreasonably exclusive; or (d) are unethical, dis honest, illegal, or fraudulent.

Ambar Riverview, Ltd. v. Fl a . Hous. Fin. Corp . , Case No. 19 - 1261BID (Fla.

DOAH May 21, 2019 ; F HFC June 21, 2019).

77 . An action is " arbitrary if it is not supported by logic or the necessary

facts, " and " capricious if it is adopted without thought or reason or is

irrational. " Hadi v. Lib. Behav. Health Corp. , 927 So. 2d 34, 38 - 9 (Fla. 1st

DCA 2006). If agency action is justifiable under any analysis that a

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

decision is neither arbitrary nor capricious. J.D. , 114 So. 3d at 1130. Thus,

under the arbitrary or capricious standard, " an agency is to be subjected only

to the most rudimentary command of rationality. The reviewing court is not

authorized to exami ne whether the agency's empirical conclusions have

support in substantial evidence. " Adam Smith Enters., Inc. v. Dep't of Envtl.

Reg. , 553 So. 2d 1 260, 1273 (Fla. 1st DCA 1989). Nevertheless,

the reviewing court must consider whether the

agency: (1) has co nsi dered 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 each of these factors to its final decision.

Id.

78 . Moreover, it has long been reco gnized that " [a]lthough a bid containing

a material variance is unacceptable, not every deviation from the invitation

to bid is material. It is only material if it gives the bidder a substantial

advantage over the other bidders and thereby restricts or sti fles competition. "

Tropabest Foods, Inc. v. State , Dep't of Gen. Servs. , 493 So. 2d 50, 52 (Fla. 1st

DCA 1986).

79 . Pursuant to rule 67 - 60.008, Florida Housing has reserved the right to

waive minor irregularities in an application. Under this rule, minor

i rregularities are those errors " that do not result in the omission of any

material information; 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 n ot enjoyed by other Applicants; and do not

adversely impact the interests of the Corporation or the public. "

80 . In Ambar Riverview , Ltd. , Ambar argued that Las Brisas should be

ineligible or lose five points because Las Brisas failed to identify the mult iple

roles of a disclosed principal. However, the multiple roles of the disclosed

principal could be found within the four corners of the application. The

undersigned concluded there was no requirement to include the multiple

roles of the disclosed princip al in the Principal Disclosures Form and, in any

event, Las Brisas’ s failure to identify the multiple roles of its disclosed

principals on the form was, at most, a waivable, minor irregularity.

81 . However, in HTG Village View, LLC v. Florida Housing Finan ce

Corporation , Case No. 18 - 2156BID (Fla. DOAH J uly 27, 2018; FHFC

Sept . 17, 2018), Adm inistrative Law Judge Yolo nda Y. Green properly found

Marquis Partners ineligible by failing to disclose Leon Wolfe as a manager of

Cornerstone Marquis, LLC , on its Prin cipals Disclosure Form. In Blue

Broadway, LLC v. Florida Housing Finance Corporation , Case No. 17 -

3273BID ( Fla. DOAH Aug. 29, 2017; FHFC Sept. 22, 2017), Administrative

Law Judge Linzie F. Bogan properly found an intervenor ineligible by failing

to disclos e two officers (Jason Pritchard and Nathan Barth) on its Principals

Disclosure Form.

82 . Applying the foregoing legal principles to the instant case, Florida

Housing's proposed action in awarding the housing tax credits to Tranquility ,

and not Madison Oak s , is not contrary to the governing statutes, rules, the

RFA specifications, clearly erroneous, contrary to competition, arbitrary, or capricious.

8 3 . As detailed above, Tranquility identified Tranquility Milton Manager,

LLC , on the Principals Disclosure form as a manager. The information

regarding Tranquility Milton Manager, LLC’s , additional role as a member

was also available within the equity proposal included within Tranquility’s

application. This is not a situation, as in the cases of HTG Village Vie w , LLC ,

and Blue Broadway, LLC , where an applicant failed to identify a principal.

84 . At most, the failure of Tranquility to identify Tranquility Milton

Manager, LLC’s , additional role as a member on the Principals Disclosure

Form is a waivable, minor ir regularity. Madison Oaks failed to demonstrate

that Florida Housing’s proposed action finding the Tranquility application

eligible and awarding it five points is contrary to governing statutes, rules,

the RFA specifications, or clearly erroneous, contrary to competition,

arbitrary, or capricious. In sum, Tranquility is eligible for funding and should

not lose any points.

8 5. On the issue of site control, Madison Oaks substantially deviated from

the requirements of the RFA and is ineligible by failing to sub mit the

Redevelopment Agreement with its site control documentation. The

Redevelopment Agreement is a relevant, intermediate agreement required to

be included within the site control documentation. Flagship Manor, LLC v.

Fl a . Hous. Fin. Corp . , 199 So. 3d 1 090 (Fla. 1st DCA 2016)(upholding Florida

Housing’s conclusion that applicant was ineligible for failing to provide

exhibit to site control contract and that failing to provide docum ent was not

minor irregularity).

8 6 . Madison Oaks’ reliance on VLX Prope rties, Inc. v. Southern States

Utilities, Inc. , 792 So. 2d 504 (Fla. 5th DCA 2001), is misplaced. That case

involved a claim for inverse condemnation and has no application to the

instant case. Moreover, as detailed above, the Joinder in the instant case o nly

applies in the event of a default by West Oaks that is not timely cured or

West Oak’s refusal to close. There is no information within the Madison Oaks application to determine whether a default or termina tion of the

Redevelopment Agreement occurred as of the application deadline.

8 7 . Tranquility sufficiently demonstrated that Florida Housing’s proposed

action finding the Madison Oaks application eligible is contrary to the

governing statutes, rules, the RFA specifications, clearly erroneous, contrary

to competition, arbitrary, or capricious. In sum, Madison Oaks is not eligible

for funding.

8 8 . Finally, as to Westside’s application and the Local Community

Revitalization Initiative Goal, the failure to check " Yes " from the drop - down

menu in response to Question 11.c. did not relate to a requirement of the

RFA. As detailed above, Ms. Button persuasively and credibly testified that

in determining whether an applicant qualifies for a funding goal, Florida

Housing relies on the documentation submitted with the application that is

required for the funding goal. In the instant case, Westside included the

executed Florida Housing Finance Corporation Local Government

Revitalization Plan form and a link to the local community revitalization plan

at Attachment 18 of its application.

89 . In addition, Ms. Button persuasively and credibly testified that even if

Westside erred in selecting " Yes " in response to question 11.c., it is so minor

as to constitute a waivable, minor irregularity because Florida Housing has

th e required information within the application (the executed form and a link

to the local community revitalization plan at Attachment 18).

90 . HTG Addison’s reliance on Berkeley Landing, Ltd. , and Berkely

Landing Developer, LLC v. Florida Housing Finance Co rporation , Cas e

No. 20 - 0 140BID (Fla. DOAH Apr. 6, 2020; F HFC Apr. 17, 2020), is misplaced.

That case involved materially contradictory information regarding an eligibility requirement of the RFA. The Berkeley Landing application named an individual as its authorized principal representative, but that individual

did not meet the requirements of the RFA to be an authorized principal representative. As detailed above, the answer to Question 11.c. in the instant

case did not relate to a requirement of the RFA a nd Westside submitted the

proper documentation required by the RFA to demonstrate it qualifies for the

funding goal.

91 . In sum, HTG Addison failed to demonstrate that Florida Housing’s

propos ed action finding the Westside application eligible is con trary to

governing statutes, rules, the RFA specifications, or clearly erroneous,

contrary to competition, arbitrary, or capricious. In sum, Westside is eligible

for funding.

R ECOMMENDATION

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

R ECOMMENDED that Florida Housing Finance Corporation enter a final order:

(1) dismissing the protests of HTG Addison and Madison Oaks; (2) finding the

HTG Edgewood, Diplomat , and Madison Oaks applications ineligible for

funding; an d (3) finding the Ro chester , Madison Square, Tranquility, and

Westside applications eligible for funding.

D ONE A ND E NTERED this 19th day of June, 2020 , in Tallahassee, Leon

County, Florida.

D ARREN A. S CHWARTZ

Administrative Law Judge

Division of Administ rative 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 19 th day of June , 2020 .

C OPIES F U RNISHED :

Hugh R. Brown, General Counsel

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 32301 - 1329

(eServed)

Maureen McCarthy Daughton, Esquire

Maureen McCarthy Daughton, LLC

1400 Village Square Boulevard , Suite 3 - 231

Tallahassee, Florida 32312

(eServed)

Amy Wells Brennan, Esquire

Manson Bolves Donaldson Varn, P.A.

109 North Brush Street , Suite 300

Tampa, Florida 33602

(eServed)

Michael P. Donaldson, Esquire

Carlton Fields

215 South Monroe Street , Suite 500

Tallahassee, Florida 32302

(eServed)

Sarah Pape, Esquire

Zimmerman, Kiser & Sutcliffe, P.A.

315 East Robinson Street, Suite 600

Post Office Box 3000 (32802)

Orlando, Florida 32801

(eServed)

J. Timothy Schulte, Esquire

Zimmerman, Kiser & Sutcliffe, P.A.

315 East Robinson Street

Post Office Box 3000 (32802)

Orlando, Florida 32801

(eServed)

Craig D. Varn, Esquire

Manson Bolves Donaldson Varn, P.A.

106 East College Avenue , Suite 820

Tallahassee, Florida 32301

(eServed)

Donna Elizabeth Blanton, Esqui re

Radey Law Firm, P.A.

301 South Bronough Street , Suite 200

Tallahassee, Florida 32301

(eServed)

M. Christopher Bryant, Esquire

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

Post Office Box 1110

Tallahassee, Florida 32302 - 1110

(eServed)

Betty Zachem, Esq uire

Florida Housing Finance Corporation

227 North Bronough Street , Suite 5000

Tallahassee, Florida 32301

(eServed)

Corporation Clerk

F lorida H ousing F inance C orporation

227 North Bronough Street , Suite 5000

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.