98-003441RX Lakewood Senior Apartments Limited Partnership vs. Florida Housing Finance Corporation Status: Closed DOAH Final Order on Thursday, January 7, 1999.

Summary: Rule imposing 15 percent penalty for errors on application for affordable housing not an invalid exercise or delegated legislative authority. Rule properly applied to Petitioner.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LAKEWOOD SENIOR APARTMENTS )

LIMITED PARTNERSHIP, )

)

Petitioner, )

)

vs. ) Case Nos. 98-3441RX

) 98-3873

FLORIDA HOUSING FINANCE )

CORPORATION, )

)

Respondent, )

)

and )

)

LCA DEVELOPMENT, INC.; THE )

GATEHOUSE GROUP, INC.; VESTCOR )

EQUITIES, INC.; and THE )

WILSON COMPANY, )

)

Intervenors. )

_________________________________)

FINAL ORDER

A formal hearing was held in these cases before Larry J.

Sartin, a duly designated Administrative Law Judge of the

Division of Administrative Hearings, on October 12, 13, and 23,

1998, in Tallahassee, Florida.

APPEARANCES

For Petitioner: James C. Hauser, Esquire

Warren H. Husband, Esquire

Skelding, Labasky, Corry, Hauser,

Joll y & Metz, P.A.

Post Office Box 669

Tallahassee, Florida 32302

For Respondent: Michael J. Glazer, Esquire

Stephanie W. Redfearn, Esquire

Ausley & McMullen

227 South Calhoun Street

Tallahassee, Florida 32301

and

Stephen M. Donelan, Esquire

Florida Housing Finance Corporation

227 North Bronough Street, Suite 5000

Tallahassee, Florida 32301-1329

For Intervenors: J. Stephen Menton, Esquire

Rutledge, Ecenia, Underwood,

Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

The issue in Case No. 98- 3441RX is whether a 15 percent

penalty provision of the Florida Housing Finance Corporation's

1998 Application Package for Low Income Housing Tax Credits,

adopted and incorporated into the Florida Administrative Code, by

reference pursuant to Rules 67-48.002(10) and 67-48.004(1),

Florida Administrative Code, constitutes an invalid exercise of

delegated legislative authority.

The issue in Case No. 98-3873 is whether Respondent

appropriately applied the 15 percent penalty to Petitioner on its

1998 Application for Low Income Housing Tax Credits.

PRELIMINARY STATEMENT

On or about March 10, 1998, Petitioner submitted an

application for 1998 Low Income Housing Tax Credits with

Respondent. Petitioner requested tax credits of 1.1 million

dollars to help finance a 150-unit apartment complex in Orange

County, Florida. On or about May 13, 1998, Respondent notified

Petitioner of its score. Petitioner learned that its score for

Form 4 of its application had been subjected to a penalty of 22.5

points. This penalty resulted from the imposition of a 15

percent penalty for an error on Form 4 of Petitioner's

application.

On or about June 15, 1998, Petitioner filed a Petition for

Informal Administrative Hearing with Respondent to contest the

imposition of the 22.5 point penalty. On or about July 13, 1998,

a second Petition for Informal Administrative Hearing was filed

with Respondent challenging the rejection of its application. On

or about July 28, 1998, Petitioner filed a Motion to Transfer

Proceedings to the Division of Administrative Hearings with

Respondent.

By letter dated August 31, 1998, Respondent filed the two

petitions and the motion to transfer with the Division of

Administrative Hearings and requested the assignment of an

Administrative Law Judge to conduct formal proceedings. The

petitions were designated Case No. 98-3873. The case was

assigned to Administrative Law Judge Mary W. Clark.

A related case, Oaks Trail Associates, Ltd. vs. Florida

Housing Finance Corporation , DOAH Case No. 98-3874, was filed

simultaneously with Case No. 98-3873. The Oaks Trail Associates,

Ltd. (hereinafter referred to as "Oaks Trail") case was also

assigned to Judge Clark.

On July 28, 1998, Petitioner and Oaks Trail filed a Petition

to Determine Invalidity of Existing Rules, alleging that the 15

percent penalty provision of Respondent's 1998 Application

Package for Low Income Housing Tax Credits, adopted and

incorporated into the Florida Administrative Code, by reference

pursuant to Rules 67-48.002(10) and 67-48.004(1), Florida

Administrative Code, constitutes an invalid exercise of delegated

legislative authority.

Petitioner simultaneously filed a second Petition to

Determine Invalidity of Existing Rules alleging that provisions

of Respondent's 1998 Application Package for Low Income Housing

Tax Credits, adopted and incorporated into the Florida

Administrative Code, by reference pursuant to Rules 67-48.002(10)

and 67-48.004(1), Florida Administrative Code, to the extent

relied upon by Respondent to reject Petitioner's application for

"altering" the application constituted an invalid exercise of

delegated legislative authority.

The rule challenge petition filed by Petitioner and Oaks

Trail was designated Case No. 98- 3441RX. The rule challenge

petition filed solely by Petitioner was designated Case No. 98-

3442RX. Both cases were assigned to the undersigned by Orders of

Assignment entered July 30, 1998.

On August 14, 1998, Case Nos. 98- 3441RX and 98-3442RX were

consolidated and scheduled for a September 28 and 29, 1998,

hearing. On September 17, 1998, an order consolidating Case Nos.

98- 3441RX, 98- 3442RX, 98-3873, and 98-3874 was entered without

objection. By the same order, the formal hearing was rescheduled

for October 12 and 13, 1998.

On September 17, 1998, Petitions to Intervene filed by LCA

Development, Inc., The Gatehouse Group, Inc., Vestcor Equities,

Inc., and the Wilson Company in the four consolidated cases were

granted.

On September 17, 1998, Oaks Trail filed a Notice of

Dismissal in Case No. 98-3874. Oaks Trail also filed a Notice of

Withdrawal from Case No. 98- 3441RX. By order entered September

23, 1998, Case No. 98-3874 was closed and Oaks Trail was

dismissed from Case No. 98- 3441RX.

On October 5, 1998, Petitioner filed a Notice of Partial

Dismissal Regarding DOAH Case No. 98-3873 and a Notice of

Dismissal of Case No. 98- 3442RX. Based upon a Stipulation

entered into by the parties and attached to the notices,

Petitioner voluntarily dismissed those portions of its challenge

in Case No. 98-3873 to the rejection by Respondent of its

application for an "alteration" of its application and all of

Case No. 98- 3442RX. By order entered October 8, 1998, Case No.

98- 3442RX was closed and it was acknowledged that portions of

Case No. 98-3873 had been dismissed by Petitioner.

Prior to the formal hearing of the remaining cases, Case No.

98- 3441RX and Case No. 98-3873, the parties filed a Joint

Prehearing Stipulation. The parties stipulated to the issues

which remained to be decided and certain facts, which have been

included in this Final Order to the extent determined relevant.

The parties also agreed that Case No. 98-3873 should be conducted

as a Summary Hearing pursuant to Section 120.574, Florida

Statutes.

At the final hearing Petitioner presented the testimony of

Gwen Lightfoot, Angeliki Sellers, Edward S. Ryan, and Don Paxton.

Petitioner's Exhibits 1-8, 10, 12-16, 18, 20-25, 27-30, 35-54,

57-58, and 62-69 were accepted into evidence. Petitioner's

Exhibits 17 and 19 were marked for identification, but withdrawn.

Petitioner's Exhibit 55 was marked and offered into evidence, but

was rejected. Petitioner's exhibits 6-8, 13-15, 24-25, 28-30,

35-54, 57, 62-63, and 67-69 were accepted into evidence only to

the extent ultimately determined relevant to this proceeding.

Respondent presented the testimony of Ms. Lightfoot and Ms.

Sellers. Respondent's Exhibits 1-11 were accepted into evidence.

Intervenors called no witnesses and offered no exhibits.

Official recognition of Part V, Chapter 420, Florida

Statutes, was taken.

The transcript of the formal hearing was filed on

November 9, 1998. Proposed orders were, therefore, required to

be filed on or before November 19, 1998. Petitioner filed a

proposed order on November 19, 1998. Respondent and Intervenors

jointly filed a proposed order on November 19, 1998. Those

proposed orders have been fully considered in entering this Final

Order.

FINDINGS OF FACT

A. The Parties .

1. Petitioner, Lakewood Senior Apartments Limited

Partnership (hereinafter referred to as "Lakewood"), was an

applicant for 1998 Low Income Housing Tax Credit funding.

2. Respondent, the Florida Housing Finance Corporation

(hereinafter referred to as "FHFC"), has been designated by the

State of Florida to administer a Low Income Housing Tax Credit

Program. Section 420.5099, Florida Statutes. FHFC is governed

by a nine-member board (hereinafter referred to as the "Board").

The members of the Board are appointed by the Governor.

3. Intervenors, LCA Development, Inc. (hereinafter referred

to as " LCA"), The Gatehouse Group, Inc. (hereinafter referred to

as "Gatehouse"), Vestcor Equities, Inc. (hereinafter referred to

as " Vestcor"), and The Wilson Company (hereinafter referred to as

"Wilson"), were all applicants for 1998 Low Income Housing Tax

Credit funding.

B. The Low Income Housing Tax Credit Program .

4. To encourage the development of low-income housing for

families, Section 42 of the Internal Revenue Code of 1986,

creates federal income tax credits that are allocated to each of

the states for award through state-administered programs to

developers of rental housing for low-income and very low-income

families. Tax credits allocated to developers through the

program may be sold by the developer to generate a substantial

portion of the funding necessary for construction of low-income

housing projects.

5. The program has been in existence in Florida since 1987.

Since its inception, in excess of 43,000 affordable housing units

have been produced in Florida through the program.

6. Every year each state receives an annual allotment of

tax credits. Generally, Florida's annual allotment of tax

credits is apportioned among three county groupings based on

population: large counties, medium counties, and small counties.

Applicants compete for the tax credits allocated to a group based

upon which county an applicant's proposed housing is to be

located in.

7. Section 420.5099, Florida Statutes, establishes FHFC's

responsibility for the allocation of Florida's share of tax

credits:

The corporation shall adopt allocation procedures

that will ensure the maximum use of available tax

credits in order to encourage development of low-

income housing in the state, taking into

consideration the timeliness of the application,

the location of the proposed housing project, the

relative need in the area for low-income housing

and the availability of such housing, the

economic feasibility of the project, and the

ability of the applicant to proceed to completion

of the project in the calendar year for which the

credit is sought.

8. Section 42 of the Internal Revenue Code of 1986,

requires that each state ensure that the minimum amount of tax

credits necessary for an applicant to implement a proposed

project are awarded in order to ensure the maximum use of a

state's available credits. How tax credits are allocated is

required to be reviewed at three distinct phases in order to

carry out this goal: the first phase is the initial

application/allocation phase; the second phase is a credit

underwriting carryover stage; and the last phase is a final cost

certification stage.

9. Section 42 of the Internal Revenue Code of 1986,

requires that each state establish a qualified allocation plan

(hereinafter referred to as the "Allocation Plan") establishing

the procedures to be followed in awarding low income tax credits

allocated to the state. Consistent with this requirement, FHFC

has adopted an Allocation Plan for Florida through the adoption

of Chapter 67-48, Florida Administrative Code.

10. The Allocation Plan establishes a competitive

application process intended to carry out the first stage

required by the Internal Revenue Code.

11. The actual application (hereinafter referred to as the

"Application") used to carry out the first stage of the

allocation process provided for in the Application Plan is

revised by FHFC on an annual basis. The Application is adopted

as part of an Application Package, which includes the

Application, tabs, and instructions thereto adopted by FHFC. The

Application Package is amended each year to refine and clarify

the Application Package, and to implement any new directives from

the Board. Once revised, the Application Package is adopted by

rule.

12. Once the annual Application Package is adopted and an

annual application cycle opens, the adopted Application Package

is made available to interested persons for completion and

submission to FHFC. Completed Applications received by FHFC are

evaluated and scored pursuant to the Application Package,

projects are ranked within their respective county groupings, and

the highest ranked projects are invited to participate in the

second stage of the allocation process, credit underwriting.

13. Once an applicant completes credit underwriting and

receives a Preliminary Allocation Certification indicating the

amount of tax credits preliminarily allocated to the project, the

applicant may proceed to construct the project. Once the project

is completed, the applicant enters the final phase of the

process, the Final Cost Certification phase.

14. The Internal Revenue Code requires that all credits

allocated to a state for a particular year must be allocated by

December 31 of that year. Any credits not allocated go into a

national pool consisting of all credits not used by December 31.

All states that use all their credits by December 31 are then

eligible to share in the credits available in the national pool.

FHFC makes every effort to ensure that it allocates all of

Florida's allocated credits so that the State may participate in

the national pool.

C. The Application Process .

15. Prior to each application cycle, FHFC revised its

previous year's Application Package and adopts an Application

Package for the upcoming year by rule.

16. After adopting the Application Package by rule, FHFC

opens the cycle and makes the Application Package available.

17. All Applications are required to be fully completed and

filed by a date certain specified in the rules. Information

contained in the Application is required to be certified true and

accurate by the applicant.

18. All submitted Applications are evaluated and scored by

a Review Committee pursuant to the procedures established in the

rules. See Rule 67-48.004, Florida Administrative Code.

19. In 1998, the Review Committee was a committee of eight

persons designated by the rules to organize the scoring of all

applications. The Review Committee was made up of seven members

of the staff of FHFC appointed to by the Board and one member of

the staff of the Department of Community Affairs. Rule 67-

48.002(80), Florida Administrative Code.

20. Following the notification of preliminary scores,

applicants are given a week to review the scores of all

applicants. See Rule 67-48.005, Florida Administrative Code.

Once notified of the preliminary scores, applicants have the

right to file a written Notification of Possible Scoring Error

(hereinafter referred to as a " NOPSE"). A NOPSE could be filed

to point out a possible scoring error on the applicant's score or

on any other applicants' score.

21. All NOPSE's filed during the 1998 cycle were reviewed

by FHFC to determine if any modification in an applicant's score

should be made.

22. Following the resolution of all NOPSE's, the

preliminary scores of all applicants are reviewed by the Board.

After the Board's review and approval of the preliminary scores

and the ranking of applicants, notice of intended funding is

provided to each applicant.

23. Following approval of preliminary scores by the Board,

applicants are given a second opportunity to challenge their

preliminary score or the preliminary score of any other applicant

by filing a Direct or Competitive Appeal. See Rule 67-48.005,

Florida Administrative Code.

24. No authority for re-scoring any Application, other than

as the result of the filing of a NOPSE or a Direct or Competitive

Appeal, was authorized for the 1998 cycle pursuant to Chapter 67-

48, Florida Administrative Code.

25. Following the resolution of all Direct or Competitive

Appeals, the Board approves the final scores awarded to each

Application by final order of the FHFC.

26. Final scores are ranked by county grouping and a

"funding line" is determined. The funding line is the point on

the ranking sheet for each county group which represents the cut-

off between those applicants that will be funded and those that

will not. Applicants ranked above the funding line are given the

opportunity to advance to the next two phases of the process

required for them to receive funds. See Rule 67-48.026, Florida

Administrative Code. For example, for the large county group,

the amount of tax credits requested by the highest ranked

applicant is deducted from the total tax credits available for

the large county group. The amount of tax credits sought by the

next highest ranked applicant is then deducted from the remaining

tax credits. This process is followed until all the tax credits

available for the large county group are allocated.

D. The Credit Underwriting Phase .

27. Those applicants to whom tax credits are tentatively

allocated during the application process are next invited to

"credit underwriting." Rule 67-48.026, Florida Administrative

Code.

28. A "credit underwriter" is defined in Rule 67-

48.002(25), Florida Administrative Code, as follows:

(25) "Credit Underwriter" means the legal

representative under contract with [FHFC] having

the responsibility for providing stated credit

underwriting services. Such services shall

include, but not be limited to, reviewing the

financial feasibility and viability of Projects

and proposing to the Corporation the amount of a

SAIL or HOME loan and/or the amount of Tax Credit

needed, if any.

The credit underwriter provides a comprehensive analysis of the

preliminarily approved Applications, the applicant, the real

estate market, the development economics, and the project's

ability to proceed.

29. The credit underwriter verifies the accuracy of

information contained in the Application, confirms that the

Application complies with applicable statutory and rule

requirements of the FHFC, and determines whether the project is

financially feasible as presented.

30. Although Applications are required by the rules to be

reviewed on their face, during the credit underwriting phase the

credit underwriter is allowed to look at pertinent information

not contained within the submitted Application. The credit

underwriter verifies the accuracy and reasonableness of the

information provided in an Application. The credit underwriter

looks at the availability of financing, the structure of the

proposal, and the estimated total project cost.

31. The credit underwriter may adjust the financial

projections set forth in the Application. Historically, the

credit underwriter typically increases project costs.

32. Ultimately, the credit underwriter recommends a

preliminary allocation of tax credits to each applicant above the

funding line. The amount of tax credits recommended may differ

from that requested by the applicant. The amount initially

requested by the applicant, however, cannot be exceeded. The

applicant is limited to the lower of the amount applied for, the

lowest amount needed for financial viability, or the qualified

basis calculation amount.

33. FHFC may accept, modify, or reject the credit

underwriter's recommendations. Rule 67-48.026(10), Florida

Administrative Code.

34. Applicants successfully completing the credit

underwriting phase are issued a Preliminary Allocation

Certification which indicates the amount of tax credits

preliminarily allocated to the project.

E. The Final Cost Certification Phase .

35. Construction of the project typically takes two to

three years from the submittal of the Application.

36. If a project cannot be completed by the end of the

calendar year, the applicant must enter into a Carryover

Agreement. Pursuant to this agreement, FHFC promises to allocate

a "not to exceed" amount of tax credits to the project if it is

completed within two years in accordance with the Carryover

Agreement.

37. Once the project is completed, the applicant is

required to submit a Final Cost Certification. The Final Cost

Certification details the actual costs incurred in completing the

project, verified by an independent certified public accountant.

Prior to 1998, the Final Cost Certification had to be certified

by a credit underwriter.

38. One purpose for the Final Cost Certification is to

ensure that actual costs are consistent with, and do not exceed,

those allowed by federal and state requirements.

39. The applicant is issued an IRS Form 8609 which

establishes the amount of tax credits allocated to the applicant.

The amount of tax credits allocated after the Final Cost

Certification may be less than the originally approved tax

credits for the project.

F. The 1998 Application Package; Project Funding & Economic

Viability (Project Cost Pro Forma), Form 4 .

40. Effective January 6, 1998, FHFC adopted by reference in

its rules the 1998 Application Package, "Form CAP98." Rules 67-

48.002(10) and 67-48.004(1), Florida Administrative Code.

41. The adoption of the 1998 Application Package and the

allocation of tax credits through the application phase was

consistent with the description of the application process,

supra .

42. Among the forms required to be submitted as part of the

1998 Application was Form 4, "Project Funding & Economic

Viability (Project Cost Pro Forma)."

43. The purpose of Form 4 is to ensure that an applicant

had firm commitments for funding from financially capable sources

sufficient to cover the costs of the project which would not be

covered by tax credits.

44. A total of 150 points were available for the

information on Form 4. This was the highest possible single

award of points in the 1998 Application.

45. To the extent that firm commitments were not

demonstrated on Form 4, an applicant was to be awarded less than

150 points.

46. In two places on Form 4, applicants are informed that

they could not request a developer fee in excess of the limits

established by the FHFC rules and the 1998 Application Package.

For Lakewood's Application, the maximum developer fee was 20

percent of project cost.

47. The parties stipulated that Lakewood's Form 4

demonstrated that all necessary funding for its project was

firmly secured. Therefore, the parties agreed that, but for the

imposition of the penalty provision at issue in this proceeding,

Lakewood was entitled to an award of 150 points for Form 4.

G. The 15% Penalty .

47. The following provision appears on Form 4 of the 1998

Application:

FULL POINTS WILL BE AWARDED ONLY IN THE EVENT

THAT ALL INFORMATION REQUIRED BY THIS FORM IS

PROVIDED IN STRICT ACCORDANCE WITH THE FORM'S

REQUIREMENTS. FAILURE TO PROVIDE COMPLETE,

ACCURATE INFORMATION IN THE FORMAL AND LOCATION

PRESCRIBED BY THIS FORM WILL RESULT IN A 15%

REDUCTION OF POINTS FOR FORM 4. ONLY INFORMATION

CONTAINED WITH THIS APPLICATION WILL BE

CONSIDERED FOR PURPOSES OF POINTS AWARDED OR

APPEALED.

(This provision will hereinafter be referred to as the

"15% Penalty"). The 15% Penalty appears in materially

identical form on Forms 5, 6, 7, 8, 10, and 22 of the

1998 Application.

H. The Development of the 15% Penalty .

48. Since the inception of the Low Income Housing Tax

Credit Program in Florida, the application process has become

increasingly competitive and litigious. For example, for the

1998 cycle FHFC received Applications for approximately 72.6

million dollars but only approximately 10.7 million dollars of

tax credits available. Consequently, only eleven of the ninety

Applications will likely be funded from the 1998 cycle.

49. Because of the increased competitiveness and the

litigious nature the application process, the Board appointed a

Combined Cycle Committee (hereinafter referred to as the "Cycle

Committee") to work with the staff of FHFC to improve the

Application and application process for the 1998 cycle. The

Board also instructed staff to strictly construe the Application,

make sure forms in the 1998 Application were as clear as

possible, and to implement a penalty for failures to follow the

instructions.

50. The development of the 1998 Application Package began

in the spring of 1997. On July 14, 1997, the first rule

development workshop was held. The purpose of the workshop,

which was attended by approximately forty individuals, was to

provide a forum for comments and suggestions from developers and

other interested persons concerning the Application Package and

the process.

51. Following the July 1997 workshop, FHFC prepared a draft

of the 1998 Application Package. The draft consisted of the 1997

Application Package with changes proposed for the 1998 cycle

noted with strike-through for deleted language and underlining

for added language. See Respondent's Exhibit 2, the "Red Book."

52. Among the proposed changes to the 1997 Application

Package contained in the Red Book was the inclusion of the

following language on Page 1 of the Instructions:

FULL POINTS WILL BE AWARDED ONLY IN THE EVENT

THAT ALL INFORMATION REQUIRED BY EACH FORM IS

PROVIDED IN STRICT ACCORDANCE WITH THE

APPLICATION REQUIREMENTS. FAILURE TO PROVIDE

COMPLETE, ACCURATE INFORMATION IN THE FORMAT AND

LOCATION PRESCRIBED BY THE APPLICATION WILL

RESULT IN A REDUCTION OF POINTS AS INDICATED ON

EACH FORM. ONLY INFORMATION CONTAINED WITH THIS

APPLICATION WILL BE CONSIDERED FOR PURPOSES OF

POINTS AWARDED OR APPEALED .

This language was repeated throughout the Red Book,

modified only to specify that the penalty was 15 percent

and to refer to the specific section or form the language

was included in.

53. The 15% Penalty applied only to the points available

for a form on which an error or omission occurred. The penalty

applied regardless of the number of errors or omissions on a form

and regardless of the significance of the error or omission.

54. FHFC was aware at the time that it was considering the

15% Penalty that the point difference between the highest and

lowest point totals above the funding line for the 1997 cycle for

the large county category was 43.03 points. FHFC also knew that

historically only a half point to two points separated funded

applicants and unfunded applicants.

55. The 15% Penalty modified the previous treatment of

errors or omissions on Applications. Prior to 1998 if an error

was made in an Application, the Application was either rejected

if the error related to certain specified "threshold

requirements" or staff simply corrected the error. For example,

if an applicant requested a developer fee in excess of the

developer fee cap, scorers would adjust the claimed fee downward.

No penalty would be imposed on the applicant.

56. Copies of the Red Book were made available to

interested persons to review before and during a second rule

development workshop held on September 22, 1997. The purpose of

this workshop was to review the proposed changes in the Red Book

and to give the approximately sixty-five individuals that

attended the workshop an opportunity to make comments and

suggestions as to how to improve the Application Package and the

application process.

57. The 15% Penalty was specifically explained during the

September 22, 1997, workshop. Lakewood was represented at the

meeting. The following explanation of the 15% Penalty was given:

Before we go on into rules and QAP things, I

want to add one more global comment to be sure

everybody in this room understands the new big

change in the application whereby you [sic] if

you don't fill it out exactly the way the

instructions tell you, you're going to get

penalized then and there, okay? There's a 15%

penalty on many of these forms. On Form 3 we set

out a chart for you to show that if you don't

give all the information exactly where you say it

is in the application, all your T's are crossed

and your I's dotted, you're going to get reduced

points.

Now, the whole purpose of this is not to make

your life miserable or to make our lives

miserable. It is to make you pay attention to

the application and to reduce appeals, okay?

FHFC Exhibit 11.

58. In addition to the two workshops, two public meetings

were held by the Cycle Committee to discuss the proposed

Application Package. Questions and comments concerning the

proposed Application Package were invited.

59. FHFC staff were also available to answer questions

concerning the 1998 Application Package and the process at any

time up until the deadline for submittal of the 1998 Application.

60. Throughout the period of time during which the 1998

Application Package was being developed, FHFC staff emphasized

the need for accuracy on the Application and explained to

prospective applicants that the 15% Penalty existed.

61. FHFC formally adopted the 1998 Application Package

containing the 15% Penalty. No challenges to the rule which

incorporated the 1998 Application Package were filed before the

rule became effective.

62. Full-day workshops were subsequently conducted by FHFC

throughout the State to explain how to complete the 1998

Application and to answer questions thereon. The 15% Penalty was

explained during these workshops.

I. Purpose for the 15% Penalty .

63. It is important for Applications to be complete and

accurate during the application phase. The application phase is

FHFC's first opportunity to analyze proposed projects in

accordance with the Internal Revenue Code and FHFC's rules. The

Internal Revenue Code requires that the minimum number of tax

credits necessary to complete a project be determined during the

application phase. Therefore, even though modifications may be

made during the credit underwriting and final phases, FHFC is

still required to make sure that Applications approved in the

application phase are as accurate as possible. FHFC's purpose

for adopting the 15% Penalty was described by Gwen Lightfoot,

Deputy Development Officer for FHFC:

Well, it's - we have to go into a little bit of

history in order to really understand from whence

this approach came. When I first came to the

Agency, that was in 1992, we had enough credits

that everybody that applied that was really ready

to go would be able to get the credits. And

there were times at the end of the year when

staff would be frantically calling up developers

and saying, Do you have a site, are you ready to

go? You know, you told me that you were going to

turn this application in and we didn't get it and

we need one more to secure the national pool.

And so, you know, that was the atmosphere under

which the credit program was operating six years

ago.

It was critical for us to get the national pool

in those days because that would add, oh, $6

million to the amount of credits that we would

have, which is thousands of unit. So, each year

we got more and more competitive, more and more

developers learned about the program, more and

more developers realized that they could make a

good living with, you know, affordable housing.

The mechanism that the code creates encourages

public/private partnerships, so this is a good

way for the private community to provide

affordable housing and make a living. So, the

competition became more and more intense.

In 1997, by then, it was extremely contentious,

litigious, extremely competitive. I can remember

- I think it was in 1996, it might have been the

year before, we had over 300 issues on appeal,

and that's just insanity. So in this scope of

things we tried to come up with a way to make

sure that this application was accurate and

complete and - well, I guess those are the best

words - because we have a mandate in the Federal

code and in the State code that we can allocate

no more credits than is absolutely necessary for

the project viability. That means it is critical

for us to have an accurate and complete

application.

The overall purpose of the app is to be an

objective mechanism by which we can maximize the

use of the credits. We have got to have a way to

be sure that we are getting the best bang for our

buck, I guess is a good way to say it. So, when

we laid the penalty over the entire application,

we were searching for a rational, fair, objective

approach which was designed to reduce appeals, to

be fair to everybody, come up with a mechanism by

which we could award partial points for people

who had done, you know, the main thrust of the

particular question but had for some reason not

done it perfectly, rather than make them lose all

of the points for an issue, we only make them

lose a%age of the points.

The other big thing that played into the

decision to go with this penalty approach is that

in the six years that I have been reviewing these

applications there is a very strong and direct

correlation between an applicant's ability to put

together a complete, thorough, accurate, well

thought out and organized application. And the

product that they produce and the way that they

handle the compliance period.

These properties are not just coming in the

door, getting their credits and going out the

door and never seeing the agency again. We have

to monitor them for 50 years. So, the attention

to detail is so critical that, in addition to

being a mechanism to select between really good

applicants, it is also - it lets them know, it

helps teach the applicant what they are in for

with regard to detail and long-term commitments.

It is just the whole thing to help us get an

accurate and complete application so we can

accurately allocate credits. (Transcript 71)

64. By its terms, the 15% Penalty applied regardless of the

magnitude of the error committed on an Application. For example,

if an amount was overstated by $1.00, a 15 percent penalty

applied. The application of the 15% Penalty was based upon an

objective determination of whether an error occurred. The staff

had no discretion to make a subjective determination as to the

significance of an error or omission.

65. Although it was not the intent of FHFC for the

imposition of the 15% Penalty to be the determining factor in

whether an applicant was awarded tax credits, the effect of the

15% Penalty can have that impact.

J. Imposition of the 15% Penalty on Lakewood .

66. On or about March 10, 1998, Lakewood submitted a

completed 1998 Application to FHFC for 1998 tax credit funding.

Lakewood sought approximately 1.14 million dollars in tax credits

for a 150-unit apartment complex to be located in Orange County,

Florida.

67. Lakewood's Application was completed by Don Paxton, an

employee of the developer, contractor, and management company for

Lakewood.

68. Mr. Paxton attended the September 22, 1997, rule

development workshop. Mr. Paxton was aware and understood that

the 15% Penalty had been included in the 1998 Application and

that it was intended to punish for inaccuracies contained in

submitted Applications. He also was aware that the 15% Penalty

applied to inaccuracies on Form 4. Finally, Mr. Paxton was aware

that the developer fee available for Lakewood's proposed project

was limited to 20 percent of project cots.

69. On Form 4 of Lakewood's Application, Lakewood claimed a

developer fee in excess of the 20 percent of project cost

limitation Lakewood was subject to. The developer fee requested

by Lakewood was $1,959,714.00, or $240,000.00 in excess of the

maximum developer fee Lakewood could request.

70. The excess amount included in the developer fee cost

claimed by Mr. Paxton represented an advisory fee which Lakewood

had agreed to pay to Affordable Housing, an advisory group

specializing in the development and marketing of tax credit-

financed housing for senior citizens. Nothing in Lakewood's

submitted 1998 Application informed FHFC that the excess amount

included as a development fee by Lakewood was attributable to

Affordable Housing. Based upon what was provided to FHFC by

Lakewood in its Application, it was reasonable for FHFC to

conclude that Lakewood was requesting a developer's fee in excess

of 20 percent of project cost.

71. Mr. Paxton included the advisory fee because of an

instruction of page 10 of Form 4 that "Consulting fees, if any,

must be paid out of the developer fee." Mr. Paxton knew,

however, that Affordable Housing was not a consultant as the term

"consultant" is used in the 1998 Application Package.

72. Mr. Paxton's interpretation of the instruction

concerning the payment of consultant fees on page 10 of Form 4

was not reasonable.

73. Mr. Paxton also included the advisory fee as part of

the developer fee because that was the only way for Lakewood to

treat the $240,000.00 fee as a cost eligible for tax credit

reimbursement. While it was a part of the total project cost, it

was not part of the project cost eligible for reimbursement with

tax credits.

74. The inclusion of the advisory fee as part of the

developer fee did not diminish the fact that Lakewood's Form 4

demonstrated secure financing and, consequently, the economic

feasibility of its project and its ability to proceed.

75. Due to the excessive developer fee included by Lakewood

on Form 4, the scorers of Lakewood's Application imposed the 15%

Penalty. A total of 22.5 points was deducted from the 150 points

Lakewood would otherwise have been entitled to for Form 4.

76. With the reduction of Lakewood's total score by 22.5

points, Lakewood fell below the funding line for the 1998 cycle.

Without the 22.5 point penalty, Lakewood would have been above

the funding line.

K. Other Applications of the 15% Penalty .

77. FHFC applied the 15% Penalty to other applicants during

the 1998 cycle for errors on Form 4, including the inclusion of

developer fees in excess of applicable limits. For example, the

penalty was imposed on Applications 8, 9, 30, 58, and 59.

78. FHFC initially imposed the 15% Penalty on the

Application of Kay Larkin because the requested developer fee

combined with the requested consulting fee, which was separately

listed, exceeded the applicable developer fee. FHFC took this

position even though the separately listed consulting fee was

included as an ineligible cost. Kay Larkin challenged the 15%

Penalty. FHFC subsequently agreed to remove the penalty because

it was decided that FHFC should not have combined the eligible

developer costs and the ineligible consulting fee. The developer

fee standing alone did not exceed the developer fee cap. The Kay

Larkin matter is distinguishable from this matter because

Lakewood listed the entire amount as an eligible developer fee.

79. In the case of the 1998 Application filed by Harvard

House, FHFC did fail to impose the 15% Penalty for the inclusion

of a developer fee in excess of the developer fee cap. It failed

to impose the penalty through oversight. Although Lakewood

pointed this error out in a NOPSE it filed concerning its score,

no NOPSE or direct or competitive appeal was filed by any

applicant concerning the Harvard House Application. FHFC,

therefore, had no authority pursuant to the 1998 Application to

modify the score it had awarded Harvard House.

80. FHFC committed the same error in scoring the

Application submitted by Orchid Trace, which had included a

developer fee in excess of the limit of $1.00. Again, although

Lakewood raised this error in a NOPSE concerning its score, no

NOPSE or direct or competitive appeal concerning Orchid Trace's

score was filed.

81. FHFC's imposition of the 15% Penalty to Applications

which included developer fees in excess of the developer fee caps

was consistent except to the extent that FHFC inadvertently

failed to impose the penalty on Harvard House and Orchid Trace.

82. Some applicants failed to include a general contractor

fee on the Project Cost Pro Forma of Form 4. General contractor

fees were limited to 14 percent of project cost. FHFC did not,

however, impose the 15% Penalty on those applicants for their

omission. Two applicants above the funding line, Magnolia Pointe

and Nantucket Bay, failed to include any general contractor fee

on the appropriate line. Most applicants, including Lakewood,

left some line blank on the 1998 Application and were not

penalized.

83. The following instruction was included on page 1 of the

1998 Application:

BE SURE TO ANSWER ALL QUESTIONS, FOLLOW ALL

INSTRUCTIONS AND FILL IN ALL LINES. DO NOT LEAVE

ANY BLANKS. IF AN ITEM IS NOT APPLICABLE TO THIS

PROJECT, INDICATE BY USING "N/A". INCOMPLETE OR

BLANK ITMES WILL RESULT IN LOSS OF POINTS.

84. Applicants were not specifically required to report a

general contractor fee on their Form 4. In some cases,

applicants did not incur general contractor fees. Consequently,

on those forms where the applicant did not include a general

contractor fee, the FHFC had to assume that the applicant did not

intend to pay a general contractor fee.

85. Where a particular item was not specifically required

or FHFC could not know whether an item had been left off in

error, FHFC interpreted the 15% Penalty to not require the

imposition of a penalty for merely failing to mark the item

"N/A."

L. Intervenors' Standing .

86. Intervenors are engaged in the business of providing

affordable residential rental units for low income and/or very

low income persons.

87. Intervenors, through subsidiaries or affiliates,

submitted Applications to FHFC seeking allocation of tax credits

from the 1998 combined cycle pursuant to Section 420.5099,

Florida Statutes (1998). Intervenors, through subsidiaries or

affiliates, also submitted Applications seeking tax credits from

one or both of the preceding two cycles (1996 and 1997), and

anticipate filing Applications in the 1999 cycle.

88. For the 1998 cycle, Intervenors, through subsidiaries

or affiliates, submitted the following Applications for projects

located in FHFC's large county group and were awarded the

following points:

Company Project Scores

LCA 050C - Magnolia Pointe 652.75

Gatehouse 075CS - Nantucket Bay

Apartments 644.47

077C - The Rosemary 656.00

Vestor 040C - Courtney Manor

Apartments 640.75

Wilson 047C - Windermere

Apartments 640.75

89. The scores for Intervenors' projects were based upon

FHFC staff's comparative review and scoring of the Applications

submitted in the 1998 cycle, resolution of all direct and

competitive appeals, informal hearings conducted by FHFC

designated Hearing Officers, and Board action at its August 21

and September 11, 1998, meetings.

90. At the commencement of the final hearing in these

cases, the Board had not entered final orders on the scoring of

the 1998 Application. The projects of LCA and Gatehouse,

however, were above the funding line and were issued "at risk"

invitations to credit underwriting. The projects of Vestcor and

Wilson were tied with a third applicant for the remaining tax

credits for the large county group, which was not sufficient to

fund all three projects.

91. On October 16, 1998, the Board voted to issue final

orders confirming the scores of all applicants except Lakewood.

The Board issued final orders for the funding of all of

Intervenors' projects.

92. If Lakewood prevailed in this proceeding and the 15%

Penalty was not imposed, its score would rank it ahead of

Vestcor's and Wilson's projects. Based upon the Board's action

at the October 16, 1998, meeting, however, the projects of

Vestcor and Wilson will still be funded.

CONCLUSION OF LAW

A. Jurisdiction .

93. The Division of Administrative Hearings has

jurisdiction over the parties to, and the subject matter of, this

proceeding. Sections 120.56(1) and (3), 120.569, and 120.57(1),

Florida Statutes (1997).

B. Standing .

94. Sections 120.56(1) and (3), Florida Statues, allow any

person that is "substantially affected by an agency rule" to

institute a proceeding to determine whether the rule is "an

invalid exercise of delegated legislative authority."

95. Section 120.569, Florida Statutes, allows any person

whose "substantial interests" are determined by proposed agency

action to challenge the agency's action through a proceeding

pursuant to Section 120.57, Florida Statutes. If the proceeding

involves a disputed issue of material fact, the proceeding is to

be conducted pursuant to Section 120.57(1), Florida Statutes.

96. The evidence in these cases proved that Lakewood was

denied tax credits by FHFC. The evidence also proved that the

Department, in denying tax credits to Lakewood, applied the 15%

Penalty and that the 15% Penalty constitutes a rule of FHFC.

Lakewood, therefore, was "substantially affected" by the

Department's rule and action, and had standing to institute this

proceeding under both Sections 120.56 and 120.569, Florida

Statutes.

97. As to Intervenors, the evidence proved and the parties

stipulated that Intervenors participated in the 1998 cycle and

were governed by the 15% Penalty provision. The evidence,

however, failed to prove that Intervenors were "substantially"

affected by the 15% Penalty.

98. In order to conclude that Intervenors were

"substantially affected" by the 15% Penalty or the application of

the 15% Penalty to Lakewood, Intervenors were required to prove

that they will suffer an injury of sufficient immediacy to

entitle them to participate in this proceeding. See Ameristeel

Corporation v. Clark , 691 So. 2d 473 (Fla. 1997).

99. The only possible injury which Intervenors could suffer

in this proceeding would be a loss of tax credits for the 1998

cycle. The evidence, however, proved that the tax credits for

the 1998 cycle have already been awarded to Intervenors and that

the award will not be changed as a result of this proceeding.

Consequently, Intervenors will not be impacted by any decision

concerning the validity of the 15% Penalty or Lakewood's

challenge to its score.

100. The only possible impact on Intervenors which could

occur as a result of this proceeding is that credits otherwise

available for the 1999 cycle could be reduced by any credits

awarded to Lakewood. Such an impact is too speculative and not

of sufficient immediacy to conclude that Intervenors will suffer

an injury of sufficient immediacy to entitle them to participate

in this proceeding. See Brasfiled & Gorrie General Contractors,

Inc. v. Ajax Construction Company , 627 So. 2d 1200 (Fla. 1st DCA

1993); and Grimes v. Walton County , 591 So. 2d 1091 (Fla. 1st DCA

1992).

101. As to the rule challenge proceeding, the evidence

proved that the 15% Penalty is a rule that only applies to the

1998 cycle. It cannot, therefore, have any direct impact on the

1999 cycle or Intervenors' participation in that cycle. Nor can

it be assumed that Intervenors will be subjected to the 15%

Penalty even if it were adopted for the 1999 cycle.

C. Burden of Proof .

102. The burden of proof, absent a statutory directive to

the contrary, is on the party asserting the affirmative of the

issue in a Chapter 120, Florida Statutes, proceeding. Antel v.

Department of Professional Regulation , 522 So. 2d 1056 (Fla. 5th

DCA 1988); Department of Transportation v. J.W.C. Co., Inc. , 396

So. 2d 778 (Fla. 1st DCA 1981); and Balino v. Department of

Health and Rehabilitative Services , 348 So. 2d 249 (Fla. 1st DCA

1977).

103. In Case No. 98- 3441RX, the rule challenge proceeding,

Lakewood had the burden of proving the invalidity of the

challenged rule. See St. Johns River Water Management District

v. Consolidated- Tomoka Land Co. , 23 Fla. L. Weekly D1787b (Fla.

1st DCA 1998).

104. In Case No. 98-3873, Lakewood also had the burden of

proving its entitlement to the tax credits it has sought from

FHFC.

D. The Rule Challenge .

105. An "invalid exercise of delegated legislative

authority" is defined in Section 120.52(8), Florida Statutes, as

"action which goes beyond the powers, functions, and duties

delegated by the Legislature." In particular, an existing rule

is to be considered an "invalid exercise of delegated legislative

authority" if any one or more of the following apply:

(a) The agency has materially failed to follow

the applicable rulemaking procedures or

requirements set forth in this chapter;

(b) The agency has exceeded its grant of

rulemaking authority, citation to which is

required by s. 120.54(3)(a)1;

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required by s.

120.54(3)(a)1;

(d) The rule is vague, fails to establish

adequate standards for agency decisions, or vest

unbridled discretion in the agency;

(e) The rules is arbitrary or capricious;

(f) The rules is not supported by competent

substantial evidence; or

(g) The rules imposes regulatory costs on the

regulated person, county, or city which could be

reduced by the adoption of less costly

alternatives that substantially accomplish the

statutory objectives.

106. Lakewood has alleged that the 15% Penalty is an

invalid exercise of delegated legislative authority as defined in

Section 120.52(8)(b), (c), (d), (e), and (f), Florida Statutes.

E. Grant of Rulemaking Authority .

107. The specific rulemaking authority cited by FHFC for

the 15% Penalty is Section 420.507(12), Florida Statutes:

[FHFC] shall have all the powers necessary or

convenient to carry out and effectuate the

purposes and provisions of this part, including

the following powers which are in addition to all

other powers granted by other provisions of this

part:

. . . .

(12) To make rules necessary to carry out the

purposes of this part and to exercise any power

granted in this part pursuant to the provisions

of chapter 120.

108. The foregoing grant of rulemaking authority is broad

enough to allow the adoption of any rule by FHFC that does not

enlarge, modify, or contravene the specific provisions of law

FHFC is attempting to implement.

109. The evidence failed to prove that FHFC "has exceeded

its grant of rulemaking authority, citation to which is required

by s. 120.54(3)(a)1" in adopting the 15% Penalty.

F. The Law Implemented by the 15% Penalty .

110. The specific law implemented by FHFC in adopting the

15% Penalty is Section 420.5099, Florida Statutes:

(1) The [FHFC] is designated the housing

credit agency for the state within the meaning of

42(h)(7)(A) of the Internal Revenue Code of 1986

and shall have the responsibility and authority

to establish procedures necessary for proper

allocation and distribution of low-income housing

tax credits and shall exercise all powers

necessary to administer the allocation of such

credits.

(2) The corporation shall adopt allocation

procedures that will ensure the maximum use of

available tax credits in order to encourage

development of low-income housing in the state,

taking into consideration the timeliness of the

application, the location of the proposed housing

project, the relative need in the area for low-

income housing and the availability of such

housing, the economic feasibility of the project,

and the ability of the applicant to proceed to

completion of the project in the calendar year

for which the credit is sought.

. . . .

111. Section 420.5099, Florida Statutes, requires and

authorizes FHFC to accomplish two things: (a) establish

procedures for the allocation of credits; and (2) ensure maximum

use of available tax credits.

112. While Section 420.5099, Florida Statutes, establishes

the criteria FHFC should take into account in carrying out the

charge to ensure maximum use of available tax credits, virtually

no guidance is provided as to the procedures to be established by

FHFC.

113. FHFC has attempted to design an application process

that is fair to all applicants. One that gives all applicants an

equal opportunity to complete for tax credits. FHFC has

encouraged and facilitated the participation of all potential

applicants in the development of the process. Every year FHFC

reviews the process and modifies it in an effort to achieve the

best procedure possible. These efforts are consistent with and

well within the authority of FHFC under Section 420.5099, Florida

Statutes.

114. In adopting the 15% Penalty, FHFC followed all of the

steps it normally takes in adopting the procedures governing the

allocation process for 1998. FHFC elected to adopt the 15%

Penalty in order to encourages accuracy by applicants in

completing the application process, to increase the level of

fairness and objectivity in evaluating Applications, and to

impose a penalty for errors committed by some applicants that

were not committed by others. All of these goals were intended

to improve the allocation procedures which the Legislature

charged FHFC with the responsibility and authority to adopt.

115. In adopting the 15% Penalty, FHFC has not adopted an

additional substantive criterion not authorized by the

Legislature in Section 420.5099(2), Florida Statutes, as argued

by Petitioner. It has only adopted one of the procedural

requirements for allocation which was not specified by the

Legislature, but it was authorized to adopt.

116. The 15% Penalty provision is no different in its

purpose than prohibiting modifications or amendments to

Applications after they are filed. Like a cut-off date for when

Applications are deemed complete, ensuring accuracy in

Applications and reducing discretion in evaluating Applications

are reasonable facets of the allocation procedures FHFC is

authorized to adopt.

117. Even Lakewood has accepted the authority of FHFC to

adopt a scoring mechanism that penalizes Applicants for providing

unclear and incomplete information "that impairs FHFC's ability

to assess satisfaction of the statutory criteria." Lakewood,

however, argues that the 15% Penalty goes too far when it applies

to immaterial errors that "do not impair this assessment and are

unrelated to satisfaction of the statutory criteria." This

argument, however, goes to the question of whether the procedure

adopted by FHFC is arbitrary and capricious.

118. The evidence failed to prove that the 15% Penalty

"enlarges, modifies, or contravenes the specific provisions of

law implemented . . . ."

G. Vagueness, Adequacy of Standards, and Discretion .

119. The 15% Penalty is not vague. A rule is vague or

fails to establish adequate standards for agency decisions when

the terms of the rule are so vague that persons of common

intelligence must guess as to the rule's meaning. See Department

of Health and Rehabilitative Services v. Health Care and

Retirement Corporation , 593 So. 2d 539 (Fla. 1st DCA 1992).

120. There is nothing complicated or vague about the 15%

Penalty. The 15% Penalty provides that if an applicant commits

an error in completing a form of the 1998 Application, the points

otherwise awarded for that form are reduced by 15%. Lakewood's

representative understood this result.

121. Any confusion suffered by Lakewood's representative in

this matter related not to the imposition of the 15% Penalty, but

to the complexity of the 1998 Application Package itself. At

best, Lakewood's representative may have been confused about how

to treat the advisory fee Lakewood had incurred. He was not,

however, confused about the fact that developer fees were limited

to 20% of project costs, that the amount included on Lakewood's

1998 Application exceeded that limitation, and that the 15%

Penalty applied to inaccuracies.

122. The fact that FHFC scorers made errors in applying the

15% Penalty does not support a conclusion that the 15% Penalty is

vague. Again, it merely supports the conclusion that the 1998

Application and the evaluation thereof was complex.

H. Arbitrary and Capricious; Competent Substantial

Evidence .

123. A rule is considered arbitrary if it is not supported

by logic or reasons. It is capricious if it is irrational and

not supported by reason. Agrico Chemical Company v. Department

of Environmental Regualtion , 365 So. 2d 759, 763, (Fla. 1st DCA

1978), cert . denied , 376 So. 2d 74 (Fla. 1979).

124. The evidence in this case proved that FHFC's rationale

for adopting the 15% Penalty was based upon logic and reason. It

was not irrational. Nor was it unsupported by the evidence. The

process of allocating tax credits is a detailed and highly

competitive process. FHFC has made every effort to ensure that

the process is as subjective as possible and that its discretion

is limited.

125. The 15% Penalty does have the effect of imposing the

penalty on a wide range of errors. From the fairly insignificant

to the significant. It would not be reasonable, however, to

adopt a penalty for every possible situation. And it would

defeat one of the purposes for adopting the 15% Penalty to adopt

a penalty that allows FHFC to exercise discretion in deciding

when a penalty should be imposed or the extent to which a penalty

should be applied.

126. The evidence failed to prove that the 15% Penalty is

arbitrary or capricious. The evidence also failed to prove that

the 15% Penalty is not supported by competent substantial

evidence.

I. Application of the 15% Penalty to Lakewood .

127. In Case No. 98-3873, Lakewood has argued that FHFC

arbitrarily and capriciously applied the 15% Penalty to its

application. The evidence failed to support this argument.

128. The evidence failed to prove that FHFC applied the 15%

Penalty in an inconsistent manner to similar facts. See Amos v.

Department of Health and Rehabilitative Services , 444 So. 2d 43,

(Fla. 1st DCA 1983).

129. The evidence also failed to prove that FHFC

interpreted or applied the 15% Penalty inconsistently to

similarly-situated parties. See Central Florida Regional

Hospital, Inc. v. Department of Health and Rehabilitative

Services , 582 So. 2d 1193 (Fla. 5th DCA).

130. The evidence proved that in those cases where the 15%

Penalty was not applied, it was not applied through error only.

The evidence also proved that, when FHFC learned of the error, it

was prohibited from taking an action to correct its mistake by

its rules. These facts distinguish FHFC's actions from its

application of the 15% Penalty to Lakewood in these cases.

131. The evidence also failed to prove that the failure to

penalize applicants that did not fill in blanks with a "N/A"

constitutes a similar situation to Lakewood. Failing to include

"N/A" on a line is not the same as including a dollar amount in

excess of the clear instructions as to the amount of developer

fee that an applicant could seek tax credits for. Additionally,

even if the situations were similar, the remedy would not be to

forgive Lakewood's error. The appropriate remedy would be to

impose the penalty on those applicants that failed to include an

"N/A" on blank lines in their applications. This remedy is not

available because all the applicants who made this error are not

before this forum.

132. Finally, the evidence failed to prove that the

application of the 15% Penalty to Lakewood under the

circumstances of this matter was not consistent with the mandate

of the 15% Penalty.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED that Petition to Determine Invalidity of Existing

Rules filed in Case No. 98- 3441RX is DISMISSED. It is further

ORDERED that the Florida Housing Finance Corporation

correctly applied the 15% Penalty on Form 4 of Lakewood Senior

Apartments Limited Partnership's 1998 Application.

DONE AND ORDERED this 7th day of January, 1999, in

Tallahassee, Leon County, Florida.

___________________________________

LARRY J. SARTIN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Buildi ng

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

www.doah.state.fl.us

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 7th day of January, 1999.

COPIES FURNISHED:

James C. Hauser, Esquire

Warren H. Husband, Esquire

Skelding, Labasky, Corry, Hauser,

Jolly & Metz, P.A.

Post Office Box 669

Tallahassee, Florida 32302

Stephen M. Donelan, Esquire

Florida Housing Finance Corporation

Suite 5000

227 North Bronough Street

Tallahassee, Florida 32301-1329

Michael J. Glazer, Esquire

Stephanie W. Redfearn, Esquire

Ausley & McMullen

227 South Calhoun Street

Tallahassee, Florida 32301

Michael G. Maida, Esquire

J. Stephen Menton, Esquire

Rutledge, Ecenia, Underwood,

Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32302

Carroll Webb

Executive Director and General Counsel

Joint Administrative Procedures Committee

Holland Building, Room 120

Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

All parties have the right to submit written exceptions within 15

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.