2004-25545 Reso
RESOLUTION NO. 2004-25545
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING
CONTINUATION OF THE CITY OF MIAMI BEACH'S
FORGIVENESS OF THE HOUSING AUTHORITY OF THE CITY
OF MIAMI BEACH'S (HACMB) PAYMENT IN LIEU OF TAXES
(PILOT) PAYMENT THROUGH 2023, IN FULL AND FINAL
SETTLEMENT AND SATISFACTION OF ANY AND ALL
CLAIMS THAT THE HACMB MAY HAVE AGAINST THE CITY
(INCLDUlNG BUT NOT LIMITED TO ALL REIMBURSEMENT
CLAIMS RELATED TO LETTERS OF AGREEMENT ENTERED
INTO BETWEEN THE CITY AND HACMB BETWEEN JUNE 24,
1992 THROUGH FEBRUARY 2000) PURSUANT TO FINDING IA
OF AUDIT REPORT NO. 0l-AT-202-100l, ISSUED BY THE
OFFICE OF THE INSPECTOR GENERAL OF THE U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
(HUD), DATED OCTOBER 20, 2000 (THE AUDIT REPORT);
PROVIDED FURTHER THAT THE CITY'S FORGIVENESS OF
HACMB'S PILOT PAYMENT THROUGH 2023 WILL RESULT IN
THE CLOSURE BY HUD OF FINDING IA OF THE AUDIT
REPORT; PROVIDED FURTHER THAT THE ACTIONS TAKEN
BY THE CITY IN THIS RESOLUTION ARE TAKEN SOLEY IN
FULL AND FINAL SETTLEMENT OF THE AFORESTATED
MATTERS, AND DO NOT REPRESENT ANY ADMISSION OF
LIABILITY ON THE CITY'S PART, EITHER WITH REGARD TO
THE CITY'S REIMBURSEMENT TO THE HACMB AND/OR THE
FINDINGS IN THE AUDIT REPORT; PROVIDED FURTHER
THAT THE CITY'S FORGIVENESS OF THE HACMB'S PILOT
PAYMENT THROUGH 2023, AND THIS PROPOSED
SETTLEMENT, IS SUBJECT TO AND CONDITIONED UPON
THE CITY'S 1) RECEIPT OF A FULLY EXECUTED RELEASE
AND SATISFACTION BY HACMB, AND 2) RECEIPT OF A
LETTER FROM HUD EVIDENCING HUD'S AGREEMENT TO
CLOSE FINDING IA OF THE AUDIT REPORT.
WHEREAS, representatives of the Housing Authority of the City of Miami
Beach (HACMB) and of the City of Miami Beach Administration met on June 11, 1992
to agree on a mission statement designed to utilize portions of the HACMB's Section 8
reserves for community development activities; and
WHEREAS, the mission statement provided that the community development
activities must meet BUD's criteria and receive annual BUD approval; and
WHEREAS, on June 24, 1992, the HACMB Board adopted a resolution that
approved the mission statement; and
WHEREAS, prior to implementation, the mission statement was reviewed and
approved by HUD representatives in the HUD TalIahassee Office; and
WHEREAS, on November 10, 1992, HACMB approved a Letter of
Understanding between the City of Miami Beach and HACMB for the development of a
Joint Program for Housing Assistance-Related Community Development Enhancement in
the City of Miami Beach to provide the folIowing services: enhanced code compliance,
subsidized affordable child care, enhanced police protection, and recreational activities;
the Letter of Understanding was ratified by the City Commission on November 18, 1992;
and
WHEREAS, subsequent Letters of Understanding for continuation of the
provision of the aforestated services, with the exception ofthe enhanced code compliance
component, were entered into by the City and the HACMB, and ratified by the City on
September 22, 1994; September 24, 1997; and March 3, 1999, respectively (including the
November 10, 1992 Letter of Understanding, colIectively referred to as the Letters of
Understanding); and
WHEREAS, from inception of the mission statement on June 24, 1992 through
February 2000, the HACMB expended $938,619 of its Section 8 administrative fee
reserves to fund the provision of the aforestated services as described in the Letters of
Understanding; and
WHEREAS, on October 20, 2002, the HUD, Office of Inspector General (OIG)
issued Audit Report No. 01-AT-202-1001 (Audit Report); Finding IA of the Audit Report
disalIowed $795,178 of the $938,619 paid by the HACMB to the City for services
provided by the City pursuant to the Letters of Understanding, stating that the City should
have provided and paid for certain police protection, recreation, and code enforcement
services therein through local tax revenues; and
WHEREAS, the Audit Report, Finding lA, concluded that the City of Miami
Beach is to reimburse the HACMB the amount of $748,616, a reduced amount
representing payment in fulI of the $795,178 requested reimbursement; and
WHEREAS, in fulI and final settlement and satisfaction of alI payments that may
be due by the City to the HACMB pursuant to Finding IA of the Audit Report, and in
order to close the finding against the City under Finding lA of the Audit Report, the City
herein recommends continuing to extend the foregiveness of the the HACMB's PILOT
payment through the Year 2023; and
WHEREAS, HUD and the HUD OIG have approved of the City's proposed
PILOT payment extension, through the year 2023, as the means for resolving the City's
reimbursement due to the HACMB; and
-
WHEREAS, by Resolution dated March 9, 2004, the Board of Commissioners of
the HACMB approved the proposed settlement, which would represent full
reimbursement of the $748,616 reimbursement required by HUD under Finding IA of the
Audit Report; and
WHEREAS, the Administration would request approval of the aforestated
settlement subject to the conditions set forth in this Resolution.
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 authorize continuation of the City of Miami
Beach's forgiveness of the Housing Authority of the City of Miami Beach's (HACMB)
payment in lieu of taxes (PILOT) payment through 2023, in full and final settlement and
satisfaction of any and all claims that the HACMB may have against the city (including
but not limited to all reimbursement claims related to Letters of Agreement entered into
between the City and HACMB between June 24, 1992 through February 2000) pursuant
to Finding IA of Audit Report No. 01-At-202-1001, issued by the Office of the Inspector
General of the U.S. Department of Housing and Urban Development (HUD), dated
October 20, 2000 (the Audit Report); provided further that the City's forgiveness of
HACMB's Pilot payment through 2023 (pILOT schedule attached) will result in the
closure by HUD of Finding IA of the Audit Report; provided further that the actions
taken by the City in this Resolution are taken solely in full and final settlement of the
aforestated matters, and do not represent any admission of liability on the City's part,
either with regard to the City's reimbursement to the HACMB and/or the findings in the
Audit Report; provided further that the City's forgiveness of the HACMB's Pilot
payment through 2023, and this proposed settlement, is subject to and conditioned upon
the City's 1) receipt of a fully executed release and satisfaction by HACMB, and 2)
receipt of a letter from HUD evidencing HUD's Agreement to close Finding IA of the
Audit Report.
PASSED and ADOPTED this
,2004.
ATTEST:
~
~(t:1
CITY CLERK
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APPAOVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
F:\cmgr\$ALLIBOBIHACMBReso.doc
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CITY OF MIAMI BEACH
COMMISSION ITEM SUMMARY
m
Condensed Title:
A Resolution authorizing continuation of the City of Miami Beach's forgiveness of the Housing Authority of
the City of Miami Beach's Payment In Lieu Of Taxes (PILOT) payment through 2023, which at final
payment will result in the closure of the U.S. HUD Office of Inspector General Audit Finding 1A regarding
ex enditures throu h a 1992 Interlocal A reement with the Ci of Miami Beach.
Issue:
Shall the City approve a PILOT forgiveness continuation to close audit finding?
Item Summary/Recommendation:
In 1992 the City of Miami Beach in partnership with the Housing Authority of Miami Beach (HACMB)
undertook a special program for added services to Housing Authority properties. The program for
additional services provided that the City of Miami Beach enhance services in the area of Code, Police,
Recreation and Child care. The enhanced services were to be paid with a reserve that was maintained by
the Housing Authority for community development activities. In a subsequent audit of the program and its
expenditures by the HUD Office of the Inspector General, the Inspector General made a determination that
$748,616 of the enhanced services program was ineligible for reimbursement from the Housing Authority's
reserves which were under the review and authority of HUD. In exploring options other than litigation, the
City has found a vehicle which is acceptable both to HUD and to the Housing Authority which is
recommended for the Commission's consideration and approval. In order to resolve the outstanding audit
finding, the City proposed and HUD and the Housing Authority agreed to continue the forgiveness of the
PILOT payment through the year 2023. Previously the City has extended a benefit to the Housing Authority
in the form of forgiveness of a Payment In Lieu Of Taxes (PILOT) to the City. PILOT payments are
commonly made from one tax exempt govemmental agency (Housing Authority) to another (the City) in lieu
of property taxes. The PILOT's are intended to reimburse the receiving agency for governmental services
rendered, but not paid for, as a result of tax exempt status. Essentially the Housing Authority is permitted
not to pay the equivalent of property taxes on properties that they hold or operate for their various
clienteles. The benefit is intended to allow in this instance more affordable rents.
Advisory Board Recommendation:
I N/A
Financial Information:
Source of
Funds:
D
Finance Dept.
islative Trackin
Si n-efts:
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AGENDA ITEM R7 &-
DATE <f-It(-OCi
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
www.miamibeachfl.gov
COMMISSION MEMORANDUM
From:
Mayor David Dermer and
Members of the City Commission
Jorge M. Gonzalez ~
City Manager 0-
Date: April 14, 2004
To:
Subject:
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AUTHORIZING CONTINUATION OF THE
CITY OF MIAMI BEACH'S FORGIVENESS OF THE HOUSING
AUTHORITY OF THE CITY OF MIAMI BEACH'S PAYMENT IN LIEU OF
TAXES (PILOT) PAYMENT THROUGH 2023, WHICH AT FINAL PAYMENT
WILL RESULT IN THE CLOSURE OF THE U,S, HUD OFFICE OF
INSPECTOR GENERAL AUDIT FINDING 1A, AS RELATING TO SECTION
8, RESERVE FUNDS USED TO PAY FOR POLICE SERVICES, CODE
ENFORCEMENT AND RECREATION ACTIVITIES THROUGH A
NOVEMBER 10, 1992 INTERLOCAL AGREEMENT WITH THE CITY OF
MIAMI BEACH,
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
In 1992 the City of Miami Beach in partnership with the Housing Authority of Miami Beach
(HACMB) undertook a special program for added services to Housing Authority properties.
The program for additional services provided that the City of Miami Beach enhance
services in the area of Code, Police, Recreation and Child care. The enhanced services
were to be paid with a reserve that was maintained by the Housing Authority for community
development activities.
Prior to undertaking this program of enhanced services, both the Housing Authority and the
City reviewed and received the approval of the program with the Tallahassee Office of the
U.S. Department of Housing and Urban Development (HUD).
Between 1992 and 2000 the City undertook the enhanced services program and the City
was paid $938,619 for those services from the Housing Authority reserves.
In a subsequent audit of the program and its expenditures by the HUD Office of the
Inspector General, the Inspector General made a determination that $748,616 of the
enhanced services program was ineligible for reimbursement from the Housing Authority's
reserves which were under the review and authority of HUD.
Subsequent to the finding, the City and Housing Authority have spent a significant amount
of effort to demonstrate to the Office of the Inspector General that not only did the City
receive HUD approval for the program but the services were rendered and documented as
approved. The Office of the Inspector General has dismissed the City's arguments and
continued to insist that the funds be repaid by the City to the Housing Authority.
Since the City has exhausted all opportunities to provide additional documentation and
information relative to the services provided, the City was left with one of two options to
resolve the Office of the Inspector General's audit finding. The City could either litigate
with HUD to attempt to prove the validity of its position or find an alternative means to
satisfy the outstanding payment which the Office ofthe Inspector General insists be made
by the City.
In exploring options other than litigation, the City has found a vehicle which is acceptable
both to HUD and to the Housing Authority which is recommended for the Commission's
consideration and approval.
Previously the City has extended a benefit to the Housing Authority in the form of
forgiveness of a Payment In Lieu Of Taxes (PILOT) to the City. PILOT payments are
commonly made from one tax exempt governmental agency (Housing Authority) to another
(the City) in lieu of property taxes. The PILOT's are intended to reimburse the receiving
agency for governmental services rendered, but not paid for, as a result of tax exempt
status. Essentially the Housing Authority is permitted not to pay the equivalent of property
taxes on properties that they hold or operate for their various clienteles. The benefit is
intended to allow,in this instance/more affordable rents.
In order to resolve the outstanding audit finding, the City proposed and HUD and the
Housing Authority agreed to continue the forgiveness of the PILOT payment through the
year 2023. The length of the PILOT payment is specifically calculated so as to provide for
the full repayment of the funds in dispute with HUD as a result of the audit finding. The
Resolution has a schedule of PILOT payments which are anticipated between approval
and the year 2023 in which the program expires.
The PILOT payment schedule has been reviewed and approved by HUD and the Housing
Authority. The formula is a HUD approved calculation utilizing rentals which are charged to
property owners as the primary method to establish a Payment In Lieu Of Taxes (PILOT).
As the exhibit illustrates, a calculation of rent charged minus certain allowances is
undertaken to arrive at a net facility rent collected, of which 10% in each fiscal year is
chargeable as an annual Payment In Lieu Of Taxes (PILOT).
As the City of Miami Beach would have more than likely extended the forgiveness of a
PILOT to the Housing Authority for this time period, in any event, this Resolution and
formal forgiveness of the PILOT payment not only resolves the HUD Audit Finding but also
does not impose upon the City the need for a cash outlay for the services previously
rendered.
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EXHIBIT TO THE CITY OF MIAMI BEACH'S
PILOT RESOLUTION No,
The Housing Authority of the City of Miami Beach
Reconciliation of Payments in Lieu of Taxes (PILOT) for FY' 2003 using HUD Form 52267
1. Dwelling Rental (RTN, RTS, 211 Collins)
2. Excess Utilities
3. Nondwelling Rental
4. Total Rental Charged
5. Utilities Expense
6. Shelter Rent Charged (less Utilities)
784,685.00
0.00
34,164.00
818,849.00
257,717.00
561,132.00
7. Account Rec. at the beginning
8. Collection Losses
9. Account Rec. at the end
3,896.00
4,289.00
257.00
10. Shelter Rent Collected (6+7-8-9)
560,482.00
,Hll,' ~i ~ld },{ ~<lli-I ~~ ,'H-" jo', r ..~1, 01 ~~ I ......}-lr t. 'J.~
Interlocal cost
748,616.00
Estimated Pilot for FY" 2010
Estimated Pilot for FY' 2011
Estimated Pilot for FY' 2012
Estimated Pilot for FY' 2013
Estimated Pilot for FY' 2014
Estimated Pilot for FY' 2015
Estimated Pilot for FY' 2016
Estimated Pilot for FY' 2017
Estimated Pilot for FY' 2018
Estimated Pilot for FY' 2019
Estimated Pilot for FY' 2020
Estimated Pilot for FY' 2021
Estimated Pilot for FY" 2022
Partial Estimated Pilot for FY' 2023
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
56,048.00
19,992.00
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