LTC 267-2013 The Barclay Elevator MIAMI BEA H
OFFICE OF THE CITY MANAGER
NO. LTC# 267-2013 LETT R TO COMMISSION :Z� —
TO: Mayor Matti Herrera Bower and M mbers of th City Commission
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FROM: Jimmy L. Morales, City Manager
DATE: August 5, 2013 Cr,
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SUBJECT: The Barclay Elevator
The purpose of this Letter To Commission is to address the facts regarding the elevator
at The Barclay, an affordable housing project for elder residents owned and managed by
the Miami Beach Community Development Corporation (MBCDC). The Barclay was the
topic of an article in The Miami Herald published over the weekend. There are several
factual errors presented in the article that must be clarified.
To date, the City has released $70,400 to MBCDC for the modernization of its elevator
at The Barclay (despite an approved budget of only $65,000 for such repairs). The City
has yet to receive a full accounting of how the dispersed funds were expended. More
so, according to the Building Department, MBCDC has yet to apply for or obtain an
elevator permit for this location.
As a point of clarification, MBCDC has ample HOME funds ($388,840.28) available in its
current grant agreements from which to draw and address the needed elevator repairs:
Source Fund Amount Datei of Dateof ist Date of Amoant, Balance,
Awarded'
s .-. Contract Draw Last Draw Released ® - s
Date or
CDBG $ 75,018 10/6/2011 7/20/2012 7/20/2012 $24,753.21 $ 50,264.79
HOME $500,000 3/28/2011 10/11/2011 9/13/2012 $ 111,159.72 $ 388,840.28
$575,018 • $ 135,912.93 $439,105.07
However, it was not until July 16, 2013, that MBCDC submitted budget amendment
requests to the City to address elevator repairs. MBCDC's HOME budget amendment
proposal sought to increase the total amount for elevator repair work and modernization
from $65,000 to $175,833.67. MBCDC is required to submit a detailed explanation
justifying the appropriateness of this expense. IVIBCDC did not. Furthermore, MBCDC
sought to increase the total amount for architectural and engineering work from $20,000
to $39,000. MBCDC is required to submit a detailed explanation justifying the
appropriateness of this expense. MBCDC did not.
MBCDC's CDBG budget amendment sought to shift an additional $20,000 from
rehabilitation to architectural and engineering. Since architectural and engineering costs
were not part of the original award scope, MBCDC is required to submit a detailed
explanation justifying the appropriateness of this expense. MBCDC did not.
Furthermore, MBCDC requested $9,000 in Developer's Fees. Since a Developer's Fee
was not part of the original award scope, it is deemed as profit and is therefore
disallowed
LTC A.2 UU-2 o i 3
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With the deficiencies as noted, the City rejected MBCDC's budget amendment requests
on July 25, 2013. In its rejection, the City advised MBCDC that, should it wish to pursue
the budget amendments, appropriate documentation is required. As of this writing,
MBCDC has yet to resubmit a corrected budget amendment for either HOME or CDBG
funds.
In The Miami Herald article, it states that "In March, MBCDC asked Miami Beach to
release grant money for elevator repairs." In actuality, MBCDC submitted a draw request
to the City for $30,000 on March 25, 2013 to address "electrical gear" but does not
reference the elevator. In addition, MBCDC requested an advance on its Developer's
Fee of $5,000. MBCDC's funds request referenced an invalid grant agreement. Noting
its error, MBCDC asked that the draw be voided. The City voided the draw request as
directed.
On April 9, 2013, MBCDC submitted an advance draw request for $72,424.88 in HOME
funds to address the "elevator machine room". As the grant agreement between the City
and MBCDC is based on reimbursement and only allows for advanced draws with a
construction consultant verifying the scope of work to be undertaken, the City was
required to contract a construction consultant.
Upon completion of the procurement process for a construction consultant, the City
contracted with Douglas Wood & Associates on June 13, 2013. In its report, Douglas
Wood & Associates noted the following deficiencies in MBCDC's draw request which
required corrective action prior to the release of funds:
1. The fiscal documentation from Pinar Electric Ltd, Inc. for the elevator gear
appears to be a quote and not a contract for service as required.
2. The supporting documentation for the Fire Alarm from Silmar Electronics, Inc.
with Life Safety 1St Corp. as the "bill to" party did not reference either MBCDC or
The Barclay and had no evidence of acceptance by MBCDC or its General
Contractor, Al Jer Construction, as required.
In addition, staff noted the following additional discrepancies with the April 9, 2013
MBCDC draw request:
• The AIA Document G702 Application #2 submitted by Pinar Electric Ltd, Inc. on
March 25, 2013 and certified by the Architect, Manny Reus, on March 26, 2013
was actually notarized on February 22, 2013 -- more than a month before the
document was actually certified by the Contractor(Pinar Electric).
• The AIA Document G702 Application #2 by All Jer Construction and dated March
26, 2013 was not certified by the architect of record, Manny Reus, as required,
preventing the release of$9,650.62.
On July 1, 2013, MBCDC submitted a revised draw request increasing the amount of the
advance to $94,259.71 but did not address the documentation issues raised by Douglas
Wood & Associates. Please note that this advanced draw, which addresses work to the
elevator, triggers a budget amendment because the amount requested exceeds the
approved budget.
LTC #. a 44:-20 3
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To date, MBCDC has yet to resubmit a corrected draw request or budget
amendment in compliance with its grant agreement.
As the City's Certified Housing Development Organization and a recipient of housing
funding from other government funders, MBCDC is well versed on the housing
development industry and HUD's policies regarding appropriate documentation and
process for payment requests and budget amendments. City staff has always been and
continues to be available to address questions or concerns while ensuring compliance
with HUD rules and regulations.
In fact, the City began to provide support to residents impacted by the elevator problem
in March 2011. At that time, the City worked with Jewish Community Services to ensure
that meals would be delivered to a homebound client living in the building. More so, the
City proactively promoted Special Needs Registration of these tenants to ensure that, in
the event of a hurricane, the City could provide help as necessary.
In addition, the City interceded on behalf of Barclay residents seeking help with their
Safelink telephone service. On July 27, 2012, a tenant came to the City complaining that
his Safelink phone service was declined because The Barclay was listed as a hotel (not
a residence) and did not have post office —approved mail boxes. It was not until earlier
this year that the building's classification was resolved and the tenant's phone service
was restored.
JLM/KGB/MLR