2012-27841 Reso RESOLUTION NO. 2012-27841
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING A ONE-TIME ONLY
SUBORDINATION OF THAT CERTAIN MORTGAGE AND SECURITY
AGREEMENT, IN THE AMOUNT OF $2,864,642, DATED JULY 5, 2011,
GIVEN BY MBCDC: MERIDIAN PLACE, LLC, A FLORIDA LIMITED
LIABILITY CORPORATION,AS MORTGAGOR, TO THE CITY OF MIAMI
BEACH, AS MORTGAGEE, IN FAVOR OF A COMMERCIAL LENDER,
TO BE DETERMINED BY MBCDC, FOR AN AMOUNT NOT TO EXCEED
$980,000; AND FURTHER AUTHORIZING THE CITY MANAGER TO
EXECUTE ALL APPLICABLE DOCUMENTATION.
WHEREAS, in order for MBCDC to be able to acquire the property known as
Meridian Place, located at 530 Meridian Avenue (the Property), it was necessary for
MBCDC to request a loan, in the amount of $1,500,000, from the Miami Beach
Redevelopment Agency; and
WHEREAS, on February 5, 2007, a Mortgage and Security Agreement and a
Promissory Note, in the amount of$1,500,000, were executed by MBCDC: Meridian Place,
LLC, a Florida limited liability corporation; said Mortgage and Note securing the funds
provided to MBCDC by the Miami Beach Redevelopment Agency (RDA)for the purchase
of the Property (the RDA Mortgage); and
WHEREAS, in order to complete the total rehabilitation of the Property, which when
completed will provide 34 affordable housing units for income-eligible households, and to
meet HUD's national objective, MBCDC obtained funding directly from U.S. HUD, the State
of Florida, Miami-Dade County, and the City of Miami Beach U.S. HUD HOME and
Community Development Block Grant (CDBG) funds, to cover the costs of construction;
and
WHEREAS, on July 5, 2011 a Mortgage and Security Agreement, in the amount of
$2,864,642, was executed by MBCDC: Meridian Place, LLC, as mortgagor, securing the
City's HOME and CDBG funds (the City's Mortgage); and
WHEREAS, since MBCDC's acquisition of the Property, MBCDC has been
conducting a phased rehabilitation of the Property, and the project is now 70% complete;
and
WHEREAS, in order to proceed and to complete the rehabilitation of the Property,
MBCDC must seek commercial bank loan financing, in an amount not to exceed $980,000;
and
WHEREAS, one of the conditions of the commercial bank loan is that the bank be
granted a first mortgage position for the amount of the loan; and
WHEREAS, pursuant to the current terms of the City Mortgage, the funding
provided by the City is intended to be superior in dignity to all other liens, titles, claims,
agreements, and/or other encumbrances; and
WHEREAS, based on the Administration's analysis of the project, and the
necessity of completing it and making affordable rental housing available to income-eligible
households, it recommends that the Mayor and City Commission approve a one-time only
subordination of the City Mortgage to a commercial bank, to be determined by MBCDC, in
an amount not to exceed $980,000.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby approve the one-time only subordination of that certain Mortgage and
Security Agreement, in the amount of $2,864,642, dated July 5, 2011, given by MBCDC:
Meridian Place, LLC, a Florida limited liability corporation, as mortgagor, to the City of
Miami Beach, as mortgagee, in favor of a commercial lender, to be determined by MBCDC,
for an amount not to exceed $980,000; and further authorizing the City Manager to execute
all applicable documentation on behalf of the City.
PASSED and ADOPTED this 9,4k day of Fe6--k4rK 2012
ATTEST:
City Clerk yor Matti Herrera-Bower
�.INCORP ORATED'
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T:\AGENDA\2012\FEBRUARY 8\RDA\MERIDIAN RDA LOAN AMENDMENT RESO.DOC
APPROVED AS TO
FORM &LANGUAGE
&FOR EXECUTION
9)w
om Date
COMMISSION ITEM SUMMARY
Condensed Title:
A resolution of the Mayor and City Commission of the City of Miami Beach, Florida, approving a one-time only subordination
of that certain Mortgage and Security Agreement, in the amount of $2,864,642, dated July 5, 2011, between MBCDC:
Meridian Place, LLC, a Florida Limited Liability Corporation, and the City of Miami Beach, in favor of a Commercial Lender
for an amount not to exceed $980,000; and further authorizing the City Manager to execute all applicable documentation.
Key Intended Outcome Supported:
1. Increase access to workforce or affordable housing. 2. Improve the lives of elderly residents.
Supporting Data(Surveys,Environmental Scan,etc.): Based on the 2009 Customer Satisfaction Survey: 17.5%of
businesses feel that lack of workforce housing is one of their most important challenges; 80% of residents 65 or older
rated City response to expectations as good or excellent
Issue:
Shall the City authorize a subordination of its lien/security position to a commercial bank lender.
Item Summa /Recommendation:
MBCDC purchased Meridian Place, an affordable rental housing project, located at 530 Meridian Avenue,for the purpose of
rehabilitating the building to provide affordable housing. Total currently allocated grant and loan funds for the project are
$7,915,085, including County-allocated and City-allocated federal affordable housing entitlement funds from the HOME and
Community Development Block Grant(CDBG) programs.The City allocates its HOME and CDBG funds for capital projects
as loans. Project funding also includes MBCDC-secured State funds, additional U.S. HUD vouchers, as well as a
commitment from Miami Dade County District 5 General Obligation Bond funds (County GOB) for$440,431.
However, until MBCDC is able to complete the required processes for drawing down those various funding sources,
including retainers held from City allocations, a cash flow gap in the amount of$977,975 is impeding the completion of the
project,which is currently 70%complete. MBCDC has expressed a need to obtain commercial bank financing for an amount
not to exceed $980,000 in order to complete the project. An item on the February 8, 2012 Redevelopment Agency agenda
includes a recommended modification to the current RDA loan issued to MBCDC for the project. This modification is
necessary as a cash flow analysis reflects that the affordable housing rents are not sufficient to make the necessary debt
payments on the RDA loan, and the project will not pass a necessary underwriting review by the private lender.
It is customary for commercial banks to request a first lending security position. Additionally, and consistent with the City's
prior practice, the RDA agenda item also recommends that the RDA loan (as modified) be subordinated to allow for the
private financing to be secured. Likewise, in an effort to facilitate the closing of the current cash flow gap and completion of
the project,the Administration is recommending approval of a one-time only subordination of the City's lending position in the
recorded mortgage which secures funding allocated from US HUD HOME and CDBG funding, in the amount of$2,864,642,
dated July 5, 2011, between MBCDC: Meridian Place, LLC, a Florida Limited Liability Corporation, and the City of Miami
Beach, in favor of a commercial lender for an amount not to exceed $980,000.
Advisory Board Recommendation:
On October 27, 2011, no recommendation was made by FCWPC. On January 19, 2012, FCWPC discussion of RDA Note
modification and related debt subordination and recommendation of its referral to the City Commission for approval.
Financial Information:
Source of Amount Account
Funds: 1
OBPI Total
Financial Impact Summary: N/A
City Clerk's Office Legislative Tracking:
Anna Parekh, ext. 6471
Sign-Offs:
AP
t
TAAGENDA\2012\Fe1bruary Meridian City Subordination CC Summary.doc
AGENDA ITEM C-7 L'
MIAMIBEACH DATE 2 4- 12-
m MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachEgov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera-Bower a Members of the City Commission
FROM: *og e . Gonzalez, City Man ' r
DATE: February 8, 2012
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA,APPROVING A ONE-TIME ONLY SUBORDINATION OF
THAT CERTAIN MORTGAGE AND SECURITY AGREEMENT, IN THE AMOUNT
OF $2,864,642, DATED JULY 5, 2011, GIVEN BY MBCDC: MERIDIAN PLACE,
LLC, A FLORIDA LIMITED LIABILITY CORPORATION, AS MORTGAGOR, TO
THE CITY OF MIAMI BEACH,AS MORTGAGEE, IN FAVOR OF A COMMERCIAL
LENDER,TO BE DETERMINED BY MBCDC, FOR AN AMOUNT NOT TO EXCEED
$980,000; AND FURTHER AUTHORIZING THE CITY MANAGER TO EXECUTE
ALL APPLICABLE DOCUMENTATION.
This item is a companion item to RDA Agenda item 1 A.
ADMINISTRATION RECOMMENDATION
Adopt the resolution.
BACKGROUND
In 2006, Miami Beach Community Development Corporation (MBCDC) was approached by Carrfour
Supportive Housing about MBCDC's potential interest in acquiring the property located at 530 Meridian
Avenue to ensure its continued availability to the community as affordable housing. Carrfour had
purchased the 72-unit former transient hotel and had planned extensive rehabilitation, but had decided
they were not going to proceed. To complete the transaction, MBCDC requested funding from the City to
assist in the acquisition of the property; RDA loan funds were allocated. MBCDC then pursued funds for
the rehabilitation of the project. To date, the project has received the following funding:
PROJECT FINANCING ACHIEVED
City of Miami Beach — RDA $1,500,000
State of Florida - Housing Demonstration Loan Funds 1,000,000
Miami-Dade County- Documentary Surtax Program 1,379,395
Miami-Dade County- US HUD - HOME Program 395,605
City of Miami Beach - US HUD - HOME Program 2,634,518
City of Miami Beach - US HUD - CDBG Program 230,124
US HUD SRO - Rehab Loan Commitment (Vouchers) 335,012
Miami-Dade District 5 General Obligation Bond 440,431
TOTAL PROJECT FUNDING $7,915,085
Commission Memorandum
February 8, 2012
Meridian Place Consent to Subordination
Page 2 of 2
The total project costs, including acquisition, are currently projected at$8,117,797. The increases in costs
are due primarily to plans revisions required by zoning regulations, historic and accessibility requirements,
and HUD requirements. Total currently allocated grant and loan funds are$7,915,085, including County-
allocated and City-allocated federal affordable housing entitlement funds from the HOME and Community
Development Block Grant(CDBG) programs. The current budget also includes MBCDC's independently
secured State funds, additional U.S. HUD vouchers, as well as a commitment from Miami Dade County
District 5 General Obligation Bond funds (County GOB) for$440,431.
However, until MBCDC is able to complete the required processes for drawing down those various funding
sources, including retainers held from City allocations, a cash flow gap in the amount of $977,975 is
impeding the completion of the project,which is currently 70% complete. MBCDC is pursuing commercial
bank financing for an amount not to exceed $980,000 in order to complete the project. The ability to
secure this financing is contingent on favorable underwriting. A companion item on the RDA agenda of
February 8, 2012 recommends the modification of the terms of the current RDA loan to defer repayment of
the loan until the conclusion of the affordability period. Should that loan modification be approved by the
RDA, MBCDC will proceed with necessary underwriting, apply for commercial gap financing, and proceed
to draw down other funds which were previously committed to the project. That RDA agenda item also
includes a recommended subordination of the RDA loan behind the commercial financing. This is a
common requirement of private funders, and the City Commission has previously approved similar
subordination requests.
In addition to a resolution of the RDA loan terms, in order for MBCDC to proceed with private financing, it
is likewise necessary for the City to subordinate its current position on two loans the City has provided to
MBCDC: 1) U.S. HUD's HOME Investment Partnership Program; and, 2) U.S. HUD's Community
Development Block Grant Program. However, such subordination shall be for the maximum value of the
private financing, which is currently proposed at $980,000. This amount may be further reduced should
MBCDC secure County GOB District 5 funds for this project, as those funds(if received)will be required to
be used to pay down the private financing.
CONCLUSION
It is customary for commercial banks to request a first lending position. A related item on the February 8,
2012 Redevelopment Agency agenda recommends the modification of an existing mortgage and
promissory note between the RDA and MBCDC, as well as RDA approve of the a subordination of the
RDA's lending position to a commercial loan. Likewise, in an effort to facilitate the closing of the current
cash flow gap and completion of the project, the Administration is recommending approval of a one-time
only subordination of the City's lending position in the recorded mortgage which secures funding allocated
from US HUD HOME and CDBG funding, in the amount of $2,864,642, dated July 5, 2011, between
MBCDC: Meridian Place, LLC, a Florida Limited Liability Corporation, and the City of Miami Beach, in favor
of a commercial lender for an amount not to exceed $980,000; and further authorizing the City Manager to
execute all applicable documentation.
JMG/HF/AP/ARB
Attachments:
T:\Agenda\2012\february 8\Meridian City Subordination CC Memo 2-8-2012.doc