State funding for Parramore redevelopment project could be tied up by legal challenges

A sample apartment elevation by Tampa-based InVictus Development.
A sample apartment elevation by Tampa-based InVictus Development. (InVictus Development)

A Winter Park developer specializing in affordable housing has a week to decide whether to continue a legal challenge that has delayed the funding award for Orlando's Parramore Oaks redevelopment project.

The Orlando City Council in December unanimously approved the development plan submitted by InVictus Development. The Tampa-based developer emerged from a competitive bid process in early 2016 to redevelop the city-owned 6.34 acres in Parramore into hundreds of mixed-income residential units.

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InVictus applied in December for $21.3 million in Low Income Housing Tax Credits (LIHTC) from the Florida Housing Finance Corp., which had intended to make the award in late March. This pool of tax credits was available to Orange County and five other large population counties, with the agency awarding one project per county in each funding cycle.

But the process has been stalled since three competing bidders, including affordable housing specialist American Residential Development (ARD), filed a pair of objections and rules challenges against the FHFC. Attorney Craig Varn, who represents ARD, told GrowthSpotter his client wasn't on a level playing field because the scoring process was skewed to favor the InVictus project.

Patrick E. Law, a principal with Magnolia Advisors, is managing member of ARD. The Winter Park firm is currently building its second signature seven-story "Madison" tower in Kissimmee. ARD was awarded LIHTCs for both Kissimmee towers from a pool of funds available to small and medium counties and was seeking tax credits for similar projects in Orange County.

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But the InVictus application carried a local government endorsement from the City of Orlando that adds bonus points to the application score, giving it an advantage over competing projects. Varn argued that the state agency was effectively ceding its decision-making to the local govenment.

"Each county chooses one project, otherwise it doesn't mean anything," Varn said on Friday. "You can still apply (without the local endorsement), but you don't get the bonus, and if you don't get the max number of points, you're not in the running."

InVictus President Paula Rhodes said this type of challenge is highly unusual. "Usually challenges come after the awards have been made," she said. "It's holding up everyone, and the real shame is it is holding up construction of much needed housing."

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Administrative Law Judge D.R. Alexander issued a final order on Jan. 18 in favor of the FHFC on the rules challenges. On Jan. 25, Alexander issued a recommended order, also denying the petition from ARD.

ARD and the other challengers have 30 days to decide whether to appeal the case regarding the rules challenge to the District Court. They have until Feb. 6 to file an exception to the recommended order with the FHFC board.

Varn said no decision had been made as of Friday afternoon on whether to continue the legal challenge.

Meanwhile, the FHFC selection committee hasn't even begun to score the tax credit applications for the 2016 cycle, and it won't until the cases are resolved, Rhodes said.

Orlando is considering four proposals to buy and redevelop 6.06 acres in the Parramore neighborhood for mixed-income residential, with affordable housing developers from Orlando, New York, Tampa and Jacksonville still in the running.

"I don't really know what to expect," she said. "These litigants have shown that they are willing to take this as long as it can go."

InVictus had planned to close on the purchase of the Parramore land this summer and break ground shortly thereafter. The developer is under a strict timeline dictated by the city's Development Order. Per the agreement, InVictus must start construction within six months of closing and complete Phase 1 within 18 months.

Have a tip about Central Florida development? Contact me at lkinsler@GrowthSpotter.com or (407)420-6261, or tweet me at @LKinslerOGrowth. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.