Resolution 2020-31224 RESOLUTION NO. 2020-31224
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING AND ACCEPTING PAYMENT IN
THE AMOUNT OF $46,962.50, AS FULL AND FINAL SATISFACTION OF A
STATE HOUSING INITIATIVES PARTNERSHIP (SHIP) ACT LOAN, IN THE
PRINCIPAL AMOUNT OF $17,352.50, AND SECURED BY A DECLARATION
OF RESTRICTIVE COVENANT, RECORDED ON JUNE 30, 2010, IN
OFFICIAL RECORDS BOOK 27336, AT PAGE 4484; WHICH WAS
EXECUTED BY THE OWNER OF THE PROPERTY LOCATED AT 3481
SHERIDAN AVENUE, IN FAVOR OF THE CITY; SAID AMOUNT INCLUDING
A COMPROMISE BETWEEN THE HEIRS OF THE ESTATE OF LEONARD
KUSHELL IN THE CALCULATION OF THE SHARED EQUITY PROVISION
CONTAINED WITHIN THE RESTRICTIVE COVENANT; AND PROVIDED
THAT THE PERSONAL REPRESENTATIVE OF THE ESTATE OF LEONARD
KUSHELL EXECUTES A RELEASE OF LIABILITY AGAINST THE CITY IN
THE FORM THAT IS ACCEPTABLE TO THE CITY ATTORNEY.
WHEREAS, the State of Florida enacted the William E. Sadowski Affordable Housing Act,
Chapter 92-317 of Florida Sessions Laws, allocating a portion of documentary stamp taxes on
deeds to local governments for the development and maintenance of affordable housing; and
WHEREAS, the City is a recipient of grant funds pursuant to the State Housing Initiatives
Partnership (SHIP) Act, codified in Sections 420.907-420.9079, Florida Statutes, and awards
SHIP Program funds to eligible persons to partially assist in the construction, rehabilitation, or
financing of eligible housing without the requirement for repayment as long as the condition of
the award is maintained; and
WHEREAS, the City administers monitors existing SHIP Program loans under the
affordability period of up to fifteen (15) years ("Affordability Period"), whereby a grantee cannot
rent, sell or refinance the property without paying for the SHIP Program loan; and
WHEREAS, loans are secured by a Declaration of Restrictive Covenant ("Covenant"),
setting forth the terms of the SHIP Program, including a provision that requires Owner to share
in the profit from the sale of the property ("Shared Equity Provision") in the event of a sale of the
property prior to the expiration of the Affordability Period; and
WHEREAS, the City issued a SHIP Program loan, in the amount of $17,352.50, to Leonard
Kushell, who resided at 3481 Sheridan Avenue ("Owner"), secured by a Covenant recorded on
June 30, 2010, in Official Records Book 27336, at page 4484, which Covenant contained a
Shared Equity Provision; and
WHEREAS, the Shared Equity Provision of the Covenant states that "If the unit is sold
between the first and the tenth year, 50% of the profit shall be paid to the City; if the unit is sold
between the eleventh and the fifteenth year, 25% of the profit shall be paid to the City", however the
Covenant does not defined how the profit would be calculated; and
WHEREAS, in December 2019, an heir of the Estate of Leonard Kushell notified the City of
the Owner's death and requested a payoff amount in order to move forward with the sale of the
property during the affordability period; and
WHEREAS, the heirs of the Estate of Leonard Kushell have taken the position that they
should not be responsible for the additional payment pursuant to the Shared Equity Provision,
based upon conflictive language in the Covenant, as follows: (1) the heirs should be excluded
parties under the Shared Equity Provision; and (2) the Covenant states that the SHIP Program
funds were utilized in the purchase of the property in order to provide affordable housing;
however Owner had owned the property since June 1, 1987; and
WHEREAS, the City Administration disagrees with the Estate as to the first basis, as the
sale of the Property triggers the Shared Equity Provision as to a sale by the Owner and his
successors and/or assigns; however the City Administration does agree with the Estate as to
the second basis, in that, the Owner had owned the property prior to securing this SHIP
Program loan, therefore this language was placed in error in the Covenant; and
WHEREAS, in an effort to resolve the dispute, the City Administration and the Estate have
agreed to a compromise payoff relating to the Shared Equity Provision, resulting in the amount
of$29,610.00, for a total payoff amount of$46,962.50; and
WHEREAS, the compromise payoff was calculated by taking the SHIP Program loan
amount and dividing it by the TRIM value of the property in the year 2010, in the amount of
$386,138.00, when the SHIP Program loan was provided to Owner, determining a loan to value
percentage of 4.5% and applying this percentage to the current sales price of the property, in
the amount of$658,000, for a total recapture amount of$29,610.00 ("Shared Equity Payment");
and
WHEREAS, the City will utilize these recaptured funds to assist income-eligible participants
fulfill SHIP Program activities; and
WHEREAS, the City Administration recommends approving the compromise Shared Equity
Payment, provided that the personal representative of the Estate of Leonard Kushell executes a
full release of liability to the City, that is acceptable to the City Attorney, in connection with the
acceptance of this compromise payoff amount.
NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, approving and accepting payment, in the amount of
$46,962.50, as full and final satisfaction of a State Housing Initiatives Partnership (SHIP) Act
loan, in the principal amount of $17,352.50, and secured by a Declaration of Restrictive
Covenant, recorded on June 30, 2010,in Official Records Book 27336, at page 4484; which was
executed by the Owner of the property located at 3481 Sheridan Avenue, in favor of the City;
said amount including a compromise between the heirs of the Estate of Leonard Kushell in the
calculation of the Shared Equity Provision contained within the Restrictive Covenant; and
provided that the personal representative of the Estate of Leonard Kushell executes a full
release of liability against the City in the form that is acceptable to the City Attorney.
PASSED AND ADOPTED this 0202 day of dPri/ , 2020.
Dan Gelber, Mayor
ATTEST: / APPROVED AS TO
761 .. c,, FORM& LANGUAGE
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Rafael E. Granado, Cit' CI` rk� INCORPQOR TEDI
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City Attorrie Date
Resolutions-C7 E
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Jimmy L. Morales, City Manager
DATE: April 22, 2020
SUBJECT:A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA,APPROVING AND ACCEPTING PAYMENT IN
THE AMOUNT OF $46,962.50, AS FULL AND FINAL SATISFACTION OF A
STATE HOUSING INITIATIVES PARTNERSHIP (SHIP)ACT LOAN, IN THE
PRINCIPAL AMOUNT OF $17,352.50,AND SECURED BYA DECLARATION
OF RESTRICTIVE COVENANT, RECORDED ON JUNE 30, 2010, IN
OFFICIAL RECORDS BOOK 27336, AT PAGE 4484; WHICH WAS
EXECUTED BY THE OWNER OF THE PROPERTY LOCATED AT 3481
SHERIDAN AVENUE, IN FAVOR OF THE CITY; SAID AMOUNT INCLUDING
A COMPROMISE BETWEEN THE HEIRS OF THE ESTATE OF LEONARD
KUSHELL IN THE CALCULATION OF THE SHARED EQUITY PROVISION
CONTAINED WITHIN THE RESTRICTIVE COVENANT; AND PROVIDED
THAT THE PERSONAL REPRESENTATIVE OF THE ESTATE OF
LEONARD KUSHELL EXECUTES A RELEASE OF LIABILITY AGAINST
THE CITY IN THE FORM THAT IS ACCEPTABLE TO THE CITY
ATTORNEY.
RECOMMENDATION
Adopt the Resolution.
BACKGROUND/HISTORY
The State of Florida enacted the William E. Sadowski Affordable Housing Act, Chapter 92-
317 of Florida Sessions Laws, allocating a portion of documentary stamp taxes on deeds to
local governments for the development and maintenance of affordable housing. The State
Housing Initiatives Partnership (SHIP) Act, §420.907-420.9079, Florida Statutes (1992), and
Rule Chapter 67-37, Florida Administrative Code, requires local governments to develop a
one-to three-year Local Housing Assistance Plan(LHAP)outlining how funds will be used.The
LHAP also establishes the maximum SHIP funds allowable for each programmatic strategy.
The City receives an annual allocation of SHIP funds that award income-eligible applicants with
purchase assistance and homeowner rehabilitation, with the intent to preserve affordable
housing.
All loans disbursed to income-eligible program participants are secured by a Declaration of
Restrictive Covenant ("Covenant") for an affordability period of up to fifteen (15) years,
whereby a homeowner cannot rent, sell or refinance the property for the duration of the
Page 162 of 435
affordability period. If the owner is in default of the terms of the agreement, the disbursed
funds must be repaid.Additionally, if the owner sells the property,the Owner is obligated to pay
the City a percentage of the profti realized at the point of sale, in accordance with the
Covenant's recapture provision ("Shared Equity Provision").
The City assisted a homeowner residing at 3481 Sheridan Avenue with $17,352.50 on June
30, 2010, through the City's Homeowner Rehabilitation Program. The affordability period ends
June 30, 2025 and the loan is secured by a Restrictive Covenant recorded June 30, 2010, in
Official Records Book 27336, at page 4484.
ANALYSIS
The Shared Equity Provision of the Covenant states that "if the unit is sold between the first
and the tenth year, 50% of the profit shall be paid to the City; if the unit is sold between the
eleventh and the fifteenth year, 25% of the profit shall be repaid to the City," however, the
Covenant does not define how the profit would be calculated.
In December 2019, an heir of the estate notified the City of the program recipient's death and
requested a payoff amount in order to move forward with the sale of the property during the
affordability period. The heirs of the estate ("Estate") have taken the position that they should
not be responsible for the additional payment pursuant to the Shared Equity Provision, based
upon conflictive language in the Covenant, as follows: (1) heirs should be excluded parties
under the Shared Equity Provision; and (2) the Covenant states that the SHIP Program funds
were utilized in the purchase of the property in order to provide affordable housing; however,
the Owner had owned the property since June 1, 1987. The Administration disagrees with the
Estate as to the first basis, as the sale of the property triggers the Shared Equity Provision as
to the sale by the Owner and his successors and/or assigns; however, the Administration does
agree with the Estate as to the second basis, in that, the Owner had owned the property prior
to securing this SHIP Program loan, therefore this language was placed in error in the
Covenant. In an effort to resolve the dispute, the Administration and the Estate will agree to a
compromise payoff relating to the Shared Equity Provision, resulting in the amount of$29,610
("Shared Equity Payment"),for a total payoff amount of$46,962.50.
The compromise Shared Equity Payment was calculated as such: by taking the SHIP
Program loan amount and dividing it by the TRIM value of the property in the year 2010, in the
amount of $386,138, when the SHIP Program loan was provided to the Owner, determining a
loan value percentage of 4.5% and applying this percentage to the current sales price of the
property, in the amount of $658,000, for a total Shared Equity Payment of $29,610. The City
will utilize recaptured funds to assist income-eligible participants fulfill SHIP Program activities.
Account(s) 152-8000- Amount(s) $46,962.50
369302-00-
312-365-00-
00-00
CONCLUSION
The Administration recommends approving the compromise Shared Equity Payment of
$29,610, provided that the Estate executes a release of liability to the City in connection with
the acceptance of this compromise payoff amount of$46,962.50.
•
Page 163 of 435
Is this a"Residents Right Does this item utilize G.O.
to Know" item, pursuant to Bond Funds?
City Code Section 2-14?
No No
Legislative Tracking
Housing and Community Services
ATTACHMENTS:
Description
❑ Resolution
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