003-2007 SHIP and CDBG Programs - MBCDC
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Office of the City Manager
RECEIVED
2001 APR 25 AM 10: 55
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~ MIAMI BEACH
003-2007
FROM:
Commissioner Jerry Libbin -I /
Jorge M. Gonzalez, City Manager Y'n
April 23, 2007 0
TO:
DATE:
SUBJECT: SHIP and CDBG Programs - MBCDC
This memorandum is provided as a follow up to your questions regarding the State Housing
Initiative Partnership (SHIP) and federal Community Development Block Grant program funds
allocated to MBCDC for their homeownership and rehabilitations programs.
The SHIP program provides funding for homeownership assistance to first time homebuyers, as
well as rehabilitation assistance to eligible participants. The CDBG program funds rehabilitation
assistance. Each program has separate rules and requirements, including different restrictive
covenants. Funds have been allocated under the SHIP program for rehabilitation assistance
only in the last two years.
As we have previously explained, the City requires MBCDC to ensure that a restrictive covenant
is filed for any property that is assisted under these programs. The restrictive covenant protects
the City's investment of these funds. The term of the restrictive covenant varies by program.
The restrictive covenant form is developed by the City, through our Attorney's office.
The responses to your specific questions are provided below:
1. Can SHIP Homeownership funds be allocated after a purchase? If so, under what
circumstances?
Home ownership funds are used for down payment assistance and closing costs. As such, they
are allocated at the time of purchase.
We were provided a selection of restrictive covenant documents by Ms. Galit Bitton, a former
SHIP program funds recipient. It is our understanding that these documents were intended to
reflect allocations made under the homeownership program after the purchase of the units. We
reviewed the documents provided and find no instance of any allocation of homeownership
funds after the purchase of the unit. However, staff has confirmed that an incorrect restrictive
covenant was filed for the SHIP rehabilitation program funds for several of these cases; a
restrictive covenant was filed indicating the funds were allocated for a purchase, although the
funds were in fact provided for rehabilitation (as documented in the client files).
Rehabilitation funds can be provided to a unit that is already owned by the applicant. As such,
the date of the restrictive covenant filed for rehabilitation assistance could be years after the
purchase date. Staff is working with our legal department to prepare the necessary
documentation to re-file the restrictive covenants for those program recipients that received
rehabilitation funds, but for which an incorrect restrictive covenant was filed. As we previously
noted, the rehabilitation funds have only been allocated under the SHIP program for two years.
We ore committed to providing excel/ent public service ond sofety to all who live, work, and play in our vibrant, tropical, historic community
Page 2 of 3
SHIP and COSG Program Funds
It is important to note that the term of the restrictive covenant for SHIP homeownership and
SHIP rehabilitation is the same, thus there is no impact to the fund recipient.
2. Can homeownership funds be allocated more than once? Can one applicant receive
two allocations for homeownership?
SHIP Homeownership funds can only be allocated one time, at the time of purchase.
However, a recipient can also apply and receive SHIP rehabilitation funds for the same unit. As
such, SHIP funds can be allocated to an eligible recipient for both the homeownership and the
rehabilitation programs, as long as they do not exceed the maximum amount allowed per
applicant, or $40,000.
We have found no instance of a double allocation of homeownership funds to anyone applicant.
3. Can multiple restrictive covenants be recorded for one applicant?
Yes. Since restrictive covenants are used to protect the City's investment, a covenant would be
filed for any separate allocation of funds provided under a program. For example, an applicant
that receives SHIP homeownership funds and subsequently receives rehabilitation funds would
have two restrictive covenants, one for each amount provided, recorded on the property.
4. What is the maximum amount of funding available to an applicant under the SHIP
Rehabilitation program and the COSG rehabilitation program?
The SHIP, the maximum allocation for rehabilitation is $40,000 (or the balance of funds up to
$40,000, iffunding has already been allocated under this program for homeownership). Under
the COBG Rehabilitation program, the maximum allocation for an eligible participant is $15,000.
5. What are the restrictive covenant terms for the SHIP program? Is it the same for
homeownership as for rehab?
The restrictive covenant terms under the SHIP program are the same whether the funds are
allocated for homeowner or for rehabilitation. The typical term has been 10 years. The
restrictive covenant terms are five years under the COBG program.
6. Can an applicant receive funding from both SHIP rehabilitation funds and COBG
rehabilitation funds? Can an applicant receive both homeownership funds and
rehabilitation funds?
Yes, a recipient can receive both homebuyer and rehabilitation assistance from the SHIP
program (subject to a three-year wait period and a maximum allocation of $40,000), homebuyer
assistance under the SHIP program and rehabilitation assistance under the COBG program, or
rehabilitation assistance under both.
7. What is the maximum in funds that MBCDC can retain for their
oversight/administration of the SHIP programs and COBG rehabilitation program?
There are no administration charges retained by MBCDC for the SHIP or COBG programs.
However, under the SHIP program, MBCOC is allowed to retain 5% of rehabilitation costs for
supervision; they are permitted to retain 10% of the purchase price for homeownership
assistance provided.
We ore committed to providing excel/ent public service and safety to all who lIVe, work, and play in our vibrant, tropical, historic community
Page 3 of 3
SHIP and COBG Program Funds
It is important to note, however, that funds are allocated to MBCDC for them to allocate either
through the Homeownership program or the rehabilitation program.
In addition, the funds are allocated based on program eligibility; purchase funds cannot be
provided to participants that already own their home.
8. What is the total number of applicants that have received assistance from MBCOC
under these programs?
In the previous LTC provided on this subject, we reported to you that MBCDC had successfully
served 338 applicants. This number is correct. The information is tracked by applicant. As
such, if an applicant received assistance under the SHIP homeownership program and the SHIP
rehabilitation program (or other eligible combination), it would be counted as one applicant.
As we previously advised you, in addition to program monitoring conducted by our staff, the
State's contracted monitor conducts reviews of SHIP recipients. The last State SHIP program
review of MBCDC indicated no major issues with MBCDC's oversight, use of funds, etc. As you
are also aware, City staff has been working with MBCDC on improvements to their application
process to avoid any future confusion for applicants as to the program rules and restrictions, and
to ensure they incorporate the recommendations that have been made by the City. MBCDC is
close to completing the revised documents.
As always, please feel free to see me if you have any questions or require additional information.
cc: Mayor and Commissioners
Hilda M. Fernandez, Assistant City Manager
Vivian Guzman, Neighborhood Services Director
Thomas Urriola, Neighborhood Services Department/CD
F:\cmgr\$ALL\Hilda\Neighborhood Services\Community Oevelopment\Ship and COBG Programs - MBCOC
We are committed to providing excel/ent public service and sofety to 011 who Irve, work, ond ploy' in our Vlbront, tropical, historic community