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99-23155 RESO RESOLUTION NO. 99-23155 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A SECOND AMENDMENT TO THE AMENDED AND RESTATED HOME INVESTMENT PARTNERSHIPS PROGRAM (HOME) AGREEMENT DATED JULY 19, 1996, BETWEEN THE CITY OF MIAMI BEACH AND BAY ROAD VENTURE, INC., PERTAINING TO THE LAND ACQUISITION AND CONSTRUCTION OF A CONDOMINIUM BUILDING AT 1401 BAY ROAD, MIAMI BEACH, FLORIDA, IN ORDER TO: 1) DECREASE THE NUMBER OF HOME PROGRAM HOMEOWNERSHIP UNITS FROM A MINIMUM OF 37 TO A MINIMUM OF 35, AND 2) PERMIT THE FIRST MORTGAGE LENDER, A THIRD PARTY FINANCIAL INSTITUTION, TO DETERMINE THE HOME BUYER'S ALLOWABLE DEBT LEVELS. WHEREAS, on July 28, 1993, the Mayor and City Commission approved Resolution No. 93-20859 authorizing the execution of a HOME Investment Partnerships Act Program (HOME) Agreement between the City of Miami Beach and Affordable Landmarks, Inc.; and WHEREAS, the Agreement, in the amount of$1,250,000, provided HOME funding to be used towards the cost of land acquisition and construction of a mixed-income condominium at 14th Street and Bay Road; and WHEREAS, the Agreement provided for a homeownership project that would provide a set- aside of HOME assisted homeownership units for eligible homebuyers; and WHEREAS, on August 31, 1994, the City Manager executed a site transaction Agreement which further specified the requirements of the HOME program relative to the project; and WHEREAS, the August 31, 1994 Agreement provided for a one-time only assignment from Affordable Landmarks, Inc., to Bay Road Venture, Inc.; and WHEREAS, Bay Road Venture, Inc., is the successor in interest to Affordable Landmarks, Inc., and has assumed all of the obligations of Affordable Landmarks, Inc., under both the July 28, 1993 and the August 3 1, 1994 Agreements; and WHEREAS, on July 17, 1996, the Mayor and City Commission approved Resolution No. 96-22084 authorizing the Mayor and City Clerk to execute an Amended and Restated Agreement providing for an increase in HOME assisted units, an increase in HOME funds, and a downsized project of 52 units; and WHEREAS, on January 27, 1997, a First Amendment to the Amended and Restated Agreement, which was considered non-substantial and did not alter the cost or scope of the project, was executed by the City Manager; and WHEREAS, on March 26, 1999, the City's Loan Review Committee reviewed and recommended approval of an amendment to the Amended and Restated Agreement including: 1) decreasing the minimum number of HOME units from 37 to 35; 2) allowing the first mortgage lender to determine the home buyer's allowable debt ratios; and 3) eliminating the certification requirement for all subsequent sales of HOME units within the project. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA that the Mayor and City Clerk are hereby authorized to execute a Second Amendment to the Amended and Restated HOME Investment Partnerships Program (HOME) Agreement dated July 17, 1996, between the City of Miami Beach and Bay Road Venture, Inc., pertaining to the land acquisition and construction of a condominium building at 1401 Bay Road, Miami Beach, Florida, in order to: 1) decrease the number of HOME Program homeownership units from a minimum of37 to a minimum of35, and 2) permit the first mortgage lender, a third party financial institution, to determine the home buyer's allowable debt levels. PASSED AND ADOPTED THIS 12th DAY OF May , 1999 ATTEST: ~}fcu~ MAftJ CITY CLERK sails\#2-499amend.res APPROVED AS TO FORM & lANGUAGE & FOR EXECUTION ~;~~~ SECOND AMENDMENT TO AMENDED AND RESTATED AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED AGREEMENT (the "Amendment" ) is made and entered into as of the 12th day of May , 1999, by and between THE CITY OF MIAMI BEACH, a Florida municipal corporation, having its principal office at 1700 Convention Center Drive, Miami Beach, Florida, hereinafter referred to as the "City," and BAY ROAD VENTURE, INC., a Florida corporation, having its principal office at 1130 Washington Avenue, Miami Beach, Florida, hereinafter referred to as the "Owner." RECITALS A. City and Owner have executed that certain Amended and Restated Agreement dated July 17, 1996 and First Amendment To Amended and Restated Agreement dated January 27, 1997 (the "Agreement"). All capitalized terms in this Second Amendment shall have the same meaning as in the Agreement unless otherwise provided herein. B. Owner has requested that City make certain modifications to the Agreement, and the City is willing to do so provided that Owner gives City the representations, assurances and other agreements hereinafter set forth. AGREEMENT NOW, THEREFORE, in consideration of the promises and of the mutual covenants and agreements hereinafter set forth, the parties hereto do hereby agree as follows: 1. The Recitals hereinabove contained are true and correct and are made a part hereof. 2. In all references throughout the Agreement to the minimum number of HOME units, the number thirty-seven (37) is replaced by the number thirty-five (35) 3. Subsection 5 of the Agreement, the deleted in its entirety and the following is thereof: last sentence is inserted in lieu In determining affordability, OWNER shall ascertain the income of the Qualified Buyer, the monthly housing costs (including condominium fees) and the percentage of the Qualified Buyer's income available for servicing debt on the Qualified Unit (which shall be based on the allowable debt ratios acceptable to the first mortgage lender). 4. Subsection 14 of the Agreement, the first sentence is deleted in its entirety and the following is inserted in lieu thereof: OWNER shall certify to the City at the time of sale of each HOME unit. 5. Except as amended by this Amendment, no term or condition of the Agreement shall be modified and the same shall remain in full force and effect; provided, however, if any revision of this Amendment is in conflict with, or inconsistent with, any information in the Agreement, the provision contained in this Amendment shall govern and control. 6. This Amendment shall be binding upon and shall inure to the benefit of the respective successors and assigns of the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and date first above written. WITNESS: BAY ROAD VENTURE, INC., a Florida corp ration F. Saland, President '-=-, --., "< ~ By: CITY OF MIAMI BEACH, a Florida municipal corporation ATTEST: (Uk}f~ By: f!I){ Mayor f:\bs\SAILS\2nd-AMEN.AGl APPROVED AS TO FORM & lANGUAGE & fOR EXECUTION Af~ r/f/fjJ City AttorMV Dot. -2- CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 http:\\cLmiami-beach.f1.us TO: FROM: SUBJECT: COMMISSION MEMORANDUM NO. 32~ 9, Mayor Neisen O. Kasdin and Members of the City Co mission DATE: May 12, 1999 Sergio Rodriguez City Manager A RESOL I N OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A SECOND AMENDMENT TO THE AMENDED AND RESTATED HOME INVESTMENT PARTNERSHIPS PROGRAM (HOME) AGREEMENT DATED JULY 17, 1996, BETWEEN THE CITY OF MIAMI BEACH AND BAY ROAD VENTURE, IN c., PERTAINING TO THE LAND ACQUISITION AND CONSTRUCTION OF A CONDOMINIUM BUILDING AT 1401 BAY ROAD, MIAMI BEACH, FLORIDA, IN ORDER TO: 1) DECREASE THE NUMBER OF HOME PROGRAM HOMEOWNERSHIP UNITS FROM A MINIMUM OF 37 TO A MINIMUM OF 35, AND 2) PERMIT THE FIRST MORTGAGE LENDER, A THIRD PARTY FINANCIAL INSTITUTION, TO DETERMINE THE HOME BUYER'S ALLOWABLE DEBT LEVELS. ADMINISTRA TION RECOMMENDATION: Adopt the Resolution. BACKGROUND: On July 28, 1993, the City Commission adopted Resolution No. 93-20859 authorizing the execution of a HOME Agreement with Affordable Landmarks, Inc., a Miami Beach based firm specializing in the development, acquisition, rehabilitation, construction and management of multi-family properties. This Agreement was the first for the City under the federal HOME Investment Partnerships Act Program (HOME), of which the City is an entitlement recipient of funding. Affordable Landmarks, Inc. is a Florida corporation that is wholly owned by Robert F. Saland. Mr. Saland is also the President of Bay Road Venture, Inc. (Owner), a Florida corporation formed August 22, 1994 to construct a condominium building at 1401 Bay Road. The Agreement provided HOME Program funds in the amount of$1,250,000 to Bay Road Venture, Inc. for the land acquisition to construct a mixed-income high-rise condominium building. Under the terms of the Agreement, the HOME funds are structured as a loan to be passed on from the Owner to the individual home buyers toward the purchase of the units as interest free second mortgages. 131 AGENDA ITEM Cl E DATE 5-12-94 COMMISSION MEMORANDUM PAGE 2 On August 31, 1994, a site transaction agreement was entered into by the City with the Owner providing for a 96-unit condominium to be constructed at 14th Street and Bay Road. The building was intended to have 25 one and two bedroom units set aside as HOME units for income eligible home buyers receiving HOME program second mortgages. The sale price of the HOME units would be below market rate according to HUD/FHA maximum mortgage limits for Miami-Dade County (currently $118,750), the remaining units to be sold at market rate prices (currently starting at $145,000). As a result of the January 1994 amendment to the City's Comprehensive Plan and the City's Planning- in-Progress Ordinance, the proposed condominium building was down-zoned from RM2 to RMl. Therefore, the overall project was reduced from fifteen stories to four stories to comply with these new requirements. On July 17, 1996, the City adopted Resolution No. 96-22084 entering into an Amended and Restated HOME Agreement with the Owner. Under the terms of the Amended and Restated Agreement, the City approved a downsized project consisting of 52 two-bedroom units of which the number ofunits to be set aside as HOME units were increased from the previous 25 to 37. An additional $595,091 in HOME funds, for a total of $1,845,091, was approved for subsidies required by the increased number of HOME units. Also in accordance with the terms of the Amended and Restated Agreement, $150,000 of the HOME funds were allocated to pay impact fees not otherwise waived by the City, Miami-Dade County, State of Florida or other governmental authorities. The balance of HOME funds, $1,695,091, is structured as a loan. This loan is paid back by passing the HOME funds to individual home buyers as interest free second mortgages. As mandated by the HOME Program regulations, home buyers are selected based on strict income guidelines established by U.S. HUD. Current maximum income limits are $25,000 (1 person household), $28,550 (2 person household), $32,100 (3 person household) and $35,700 (4 person household). Income is verified using intake procedures specified by HUD which include third party verification of employment and income. As each unit is sold, a portion of the HOME funds will be allocated to the HOME unit buyer as a silent second mortgage. The second mortgage is non-interest bearing and has no monthly payment obligation, however, the loan will be repayable to the City upon the sale of the unit. These funds will be secured by the second mortgage requiring repayment to the City's HOME Trust Fund upon the sale of the unit. A partial release and satisfaction of lien in favor of the Owner is to be executed by the City and recorded simultaneously with the recording of each HOME second mortgage. Construction of the Sails Condominiums commenced in September 1997 and the project is now approximately 85% complete. The total project cost is $5,865,091. The first mortgage lender, City National Bank, has provided a $3.2 million dollar loan. The City has provided HOME funds in the amount of$1,845,091 and the developer equity is $820,000. The City's investment represents 32% of the total project cost. The City's HOME investment is secured by a second mortgage on the property. To protect the City's investment, the Owner provided the City with a performance bond that guarantees completion of the project. 132 COMMISSION MEMORANDUM PAGE 3 Robert Saland, owner of Affordable Landmarks, Inc., has extensive experience in the development of residential multi-family buildings in Miami Beach. Affordable Landmarks, Inc. and/or its affiliates have completed the buildings listed below: The Chelsea Condominium - acquisition and rehabilitation of 24 units located in three buildings at 530-550 15th Street; construction completed in 1993 The Roosevelt Condominium - acquisition and rehabilitation of 37 units located at 1255 Pennsylvania Avenue; construction completed in 1993 Riviera Apartments - acquisition and rehabilitation of 56 unit rental development located at 337 20th Street; construction completed in 1993 London Arms Apartments - acquisition and rehabilitation of 58 unit rental development located at 727 Collins Avenue; construction completed in 1991 Metropole Apartments - acquisition and rehabilitation of 42 unit rental development at 635 Collins Avenue; construction completed in 1990 ANAL YSIS: On April 28, 1999, this item was presented to the City Commission and deferred to May 12, 1999 due to the following concerns to be clarified: · the benefits to the City in agreeing to such a modification · the effect on the City's position as a result of any increase in the second mortgage . the income eligibility guidelines established for prospective buyers · the effect on the City of any subsequent resale of the unit. The Amended and Restated Agreement included a clause that in the event the HOME funds available to the Owner were not sufficient to provide second mortgages for all of the 37 HOME units, then additional HOME funds would be allocated by the City or the number of HOME units would be decreased, at the City's discretion. The HOME Agreement contemplated such a modification due to the developer and the City's inability to project the composition of prospective home buyers. 133 COMMISSION MEMORANDUM PAGE 4 Therefore, Bay Road Venture, Inc. is requesting an amendment reducing the number of units from 37 to 35 units along with two other modifications as stated below. Said modification is reflective of the composition of home buyers being realized at the project. On March 26, 1999, the City's Loan Review Conunittee reviewed the proposed amendment to the Agreement and reconunended that the City Conunission approve the amendment. The three modifications to the Agreement under the proposed amendment would be as follows: . The minimum number of HOME units is to be decreased from 37 to 35 units. Bay Road Venture, Inc. began marketing the HOME units during June 1998. Currently, 31 HOME units are under contract and 25 of the 31 units have required $50,000 in HOME second mortgages. The balance, $445,091, only allows for an average second mortgage of$37,091 for the remaining 12 HOME units, which is insufficient since some applicants will require a maximum of $50,000 in second mortgages in order to participate. By decreasing the number of HOME units from 37 to 35, the balance of HOME funds should be sufficient to provide the necessary second mortgage funding. . The first mortgage lender would determine allowable debt levels for each individual home buyer. The existing Agreement restricts the monthly housing debt to a range between 28% and 35%. In certain instances, a higher debt may be appropriate. Most first mortgage lenders have available specially designed mortgage underwriting packages for people that do not meet standard lender requirements. A lower down payment is allowed and more lenient debt-to-income ratios are accepted. The HOME Program does not have a regulatory limitation as to the housing cost to household income ratio. . Correction of a technical error in the Agreement. The Agreement is to be modified to delete the current requirement that the Owner make certifications to the City at the time of sale of each HOME unit and each time thereafter as to all subsequent sales of HOME units. Certifications will only be required on the initial sale of each HOME unit. There is no HOME Program regulatory requirement or intent by the City to require the Owner to be involved with subsequent sales of the HOME units. CONCLUSION: The Administration reconunends that the Mayor and City Conunission authorize the Mayor and City Clerk to execute a Second Amendment to the Amended and Restated HOME Investment Partnerships Program (HOME) Agreement dated July 17, 1996, between the City of Miami Beach 134 COMMISSION MEMORANDUM PAGE 5 and Bay Road Venture, Inc., pertaining to the land acquisition and construction of a condominium building at 1401 Bay Road, Miami Beach, Florida, in order to: 1) decrease the number of HOME Program homeownership units from a minimum of 37 to a minimum of 35, and 2) permit the first mortgage lender, a third party financial institution, to determine the home- buyer's allowable debt levels. IA{f' I~ SR/CMCIRMIMDC/BS Sailsl#2-499.mem 135 'Jf-Z3/,s-S-- ""'-!'/ED : (".. \"- CITY OF MIAMI BEACH OFFICE OF THE CITY ATTORNEY, I ,;" ,.... , P/il"'3f. "-/ I, ~ iC. '"+ MEMORANDUM ~ ,-, i r ~1 0 F fie E TO: Miguell del Campillo Housing Division Director Beth Sweet Housing Specialist FROM: Raul J. Aguila~C\~ First Assistant Cit~ Attorney SUBJECT: City of Miami Beach HOME Loan to Bay Road Venture, Inc. (The Sails) DATE: June 24, 1999 As I informed you today, I have forwarded the attached letter to Attorney Chava Genet, with regard to Commissioner Smith's concerns relative to the proposed first and second mortgage documents on the above-referenced matter. Ms. Genet informed me that not only would she insert the proposed language in their first mortgages, but she would also revise the City's second mortgage documents with regard to condition no. 2 in her attached letter of June 22, 1999. I believe the proposed language will satisfy Commissioner Smith's concerns, as well as the Administration's directive pursuant to the After Action report on this Agenda Item for the City Commission Meeting of May 12, 1999. Should you have any questions or comments, please do not hesitate to contact me. RJA\kw F:IA TTOIAGURIMEMOS\SAILSLAN,MDC cc: ~bert Parcher, City Clerk --.'.... ...' . -.:.,. . ".>- .: -.. ....:/" OFFICE OF THE CITY ATTORNEY ~~tf~7J~ F L o R o A MURRAY H. DUBBIN City Attorney Telephone: Telecopy: (305) 673-7470 (305) 673-7002 June 24, 1999 Chava Genet, Esq. Stearns Weaver, et al. Museum Tower 150 West Flagler Street Miami, FL 33130 Re: City of Miami Beach HOME Loan to Bay Road Venture, Inc. (The Sails) Dear Chava: I am in receipt of your letter dated June 22, 1999, regarding the above-referenced matter. As you know, consistent with the Mayor and City Commission's approval ofthe Second Amendment to the Amended and Restated HOME Agreement, dated July 17, 1996, between the City and Bay Road Venture, Inc. , pertaining to The Sails project, Commissioner Jose Smith requested that additional safeguards be incorporated into the mortgage documents, as set forth in your June 22, 1999 letter. I agree with your letter that the appropriate place within which to memorialize Commissioner Smith's conditions in the fIrst mortgage with each of the individual unit owners, and not the Amended and Restated Agreement. Additionally, as I informed you in our telephone conversation today, as one of Commissioner Smith's conditions provides that if the fIrst mortgage is in default, then the second mortgage with the City shall also be in default, this particular condition needs to also be memorialized in the second mortgage. As you explained, you would draft that language into the City's second mortgage documents and forward same to Beth Sweet of the City's Housing and Community Development Office. Should you have any questions or comments regarding the above, please do not hesitate to contact me. As always, thank you for your anticipated cooperation and continued professional courtesy. cc: Mjguell del Campillo, Housing Division Director L-fleth Sweet, Housing Specialist F:IA TTOIAGURII..ETIERS\SAlLSLAN.CHV 1700 Convention Center Drive - Fourth Floor - Miami Beach, Florida 33139 LAW OFFICES STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERS ON, P .A. MUSEUM TOWER 150 WEST FLAGLER STREET MIAMI, FLORIDA 33130 :~') }-': , \. ...-- E. RICHARD ALHADEFF l.OUISE JACOWITZ ALLEN STUART D. AMES LAWRENCE J. BAiliN AMANDA C. BARRY PATRICK A. BARRY SHAWN BAYNE SUSAN FLEMING BENNETT LISA K. BERG MARK J. BERNET HANS C. BEYER STEPHEN R. CALKINS ELLEN I. CHO SETH THOMAS CRAINE PETER L. DESIDERIO MARK P. DIKEMAN DREW M. DILLWORTH SHARON QUINN DIXON ALAN H. FEIN ANGELO M. FILIPPI ANDREA F. FISHER ROBERT E. GALLAGHER, JR. CHAVA E. GENET LATASHA A. GETHERS PATRICIA K. GREEN JOSEPH K. HALL ALICE R. HUNEYCUTT RICHARD B. JACKSON r'~- ~ \- ..: i,"'-. ;...... io MIAMI 1305) 789-3200. BROWARD 19541 483-5440 FAX 13051 789-3395 99 JUH 23 At1 to: 06 BETTY CHANG ROWE OWEN S. FREED STEVEN D. RUBIN . 10.) L.!' 'Ii....: n F f I ~NIOR COUNSEL MIMI L. SALL 1'\1 Y 1-1\ t\i,t I oJ 1..1 1..1:. NICOLE S. SAYFIE .., DAVID M. SMITH RICHARD E. SCHATZ LESTER E. SEGAL DAVID M. SEIFER JOSE G. SEPULVEDA JAY B. SHAPIRO MARTIN S. SIMKOVIC CURTIS H. SITTERSON RONNI D. SOLOMON MARK D. SOLOV EUGENE E. STEARNS JENNIFER D. STEARNS BRADFORD SWING SUSAN J. TOEPFER ANNETTE TORRES DENNIS R. TURNER RONALD l. WEAVER ROBERT I. WEISSLER PATRICIA G. WelLES THOMAS H. WILLIAMS, JR. MARTIN B. WOODS LAND USE CONSULTANT THEODORE A. JEWELL SHARON LEE JOHNSON MICHAEL I. KEYES ROBERT T. KOFMAN CHAD K. LANG PAUL TAGER LEHR VERNON L. LEWIS TERRY M. LOVELL JOY SPILlIS LUNOEEN GEOFFREY MacOONALD MICHAEL C. MARSH BRIAN J. McDONOUGH ANTONIO R. MENENDEZ FRANCISCO J. MENENDEZ ALISON W. MILLER VICKIL YNN MONROE HAROLD D. MOOREFIELD, JR. JOHN N. MURATIDES JOHN K. OLSON JAY P. W. PHILP KARA E. PLUNKETT DAVID C. POLLACK DARRIN J. QUAM JOHN M. RAWICZ PATRICIA A. REDMOND ELIZABETH G. RICE GLENN M. RISSMAN DAVID A. ROTHSTEIN TAMPA OFFICE SUITE 2200 SUNTRUST FINANCIAL CENTRE 401 EAST JACKSON STREET TAMPA, FLORIDA 33802 (813) 223-4800 FORT LAUDERDALE OFFICE SUITE 1 gOO 200 EAST BROWARD BOULEVARD FORT LAUDERDALE, FLORIDA 33301 (954) 482-9500 June 22, 1999 ChavaE. Genet- (305) 789-3512 EMAIL: CGENET@SWMWAS.COM VIA FACSIMILE & UPS DELIVERY City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Attention: Raul Aguila, First Assistant City Attorney RE: City of Miami Beach Home Loan to Bay Road Venture, Inc. Dear Raul: It is my understanding that the Miami Beach City Commission approved the Second Amendment to the Amended and Restated Agreement for the SAll., Project on May 12, 1999. As conditions to the approval of such Second Amendment, Bay Road Venture has agreed to have the following conditions agreed to by the future first mortgage holder for the individual units (the "First Mortgagee"): 1. That the first mortgage will provide that the First Mortgagee shall notify the City if their loan shall go into default. 2. That the first mortgage will provide that if the first mortgage is in default then the second mortgage with the City of Miami Beach shall be in default. 3. The first mortgage will provide that a loan review committee of the City of Miami Beach shall monitor that the individual homeowners are timely making payments on the first mortgage. STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERS ON, P.A. -,I City of Miami Beach June 22, 1999 Page 2 You had also requested that these items be placed in the section of the Amended and Restated Agreement executed between the City of Miami Beach and Bay Road Venture. However, I don't see how it is possible to insert these provisions in such Agreement since it was already executed and approved by the City. Therefore, since these items will need to be placed in the first mortgage with each of the individual unit owners, this letter shall confirm, that Bay Road Venture shall insure that the conditions set forth above are placed in all first mortgages which will encumber the individual units. Please feel free to call me so we could discuss this matter further. Very truly yours, ~9L Chava E. Genet CEG/jj cc: Francisco Rojo (via fax) Beth Sweet G:\ W-CEG\33867\O 1 O\LElTERSIAguila.Lt3 STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERS ON, P.A.