2009-27194 ResoRESOLUTION NO. 2009-27194
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY
MANAGER, PURSUANT TO A CITY REQUEST FOR PROPOSALS FROM
AFFORDABLE HOUSING DEVELOPMENT ENTITIES REGARDING FEDERAL
NEIGHBORHOOD STABILIZATION PROGRAM FUNDS (NSP1) FOR PURCHASE
AND REHABILITATION OF FORECLOSED AND/ORABANDONED RESIDENTIAL
PROPERTY; AUTHORIZING THE MAYOR AND THE CITY CLERK TO EXECUTE
AN AGREEMENT WITH MIAMI BEACH COMMUNITY DEVELOPMENT
CORPORATION (MBCDC), AS THE SUCCESSFUL PROPOSER, SUBJECT TO
THE APPROVAL OF THE RECOMMENDED USE BY MBCDC BY U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) AND THE
STATE OF FLORIDA DEPARTMENT OF COMMUNITY AFFAIRS (DCA), AND
CONTINGENT ON THE CITY-PROCURED APPRAISED VALUE BEING IN
ACCORDANCE WITH NSP1 RULES; PROVIDED FURTHER, HOWEVER, THAT
IN THE EVENT THAT HUD OR THE DCA DOES NOT APPROVE THE
RECOMMENDED USE BY MBCDC, THEN AUTHORIZING THE CITY MANAGER
TO REJECT ALL PROPOSALS PURSUANT TO THIS RFP FOR NSP1 FUNDS
AND ISSUE A NEW REQUEST FOR QUALIFICATIONS FROM DEVELOPERS
FOR USE OF THE NSP1 FUNDS
WHEREAS, on July 31, 2008, the United States Congress enacted the Housing and
Economic Recovery Act of 2008 (HERA), thereby creating the Neighborhood Stabilization Program
(NSP1), which directed the Department of Housing and Urban Development (HUD) to allocate $3.93
billion to states and units of local government as emergency assistance for the purchase and
redevelopment of abandoned and foreclosed homes; and
WHEREAS, on December 1, 2008, the State of Florida, acting through its Department of
Community Affairs (DCA) published its Neighborhood Stabilization Program Substantial
Amendment pursuant to the requirements of HERA; and
WHEREAS, the City of Miami Beach was awarded a total of $2,549,551 from HUD
Neighborhood Stabilization Program (NSP1) through the State's DCA as the Pass-through entity;
and
WHEREAS, on February 9, 2009, the City conducted a public hearing to provide information
regarding the NSP program; and
WHEREAS, on March 11, 2009, the Neighborhood/Community Affairs Committee
considered potential uses of the NSP1 funding and expressed an interest in preference being given
for rental units to serve moderate income families; and
WHEREAS, on March 18, 2009, Resolution No. 2009-27039 was adopted approving the
City's planned use of and application for NSP1 funds and related application to DCA, which was the
purchase and rehabilitation of one or more foreclosed or abandoned multi-family buildings in the City
of Miami Beach target areas to be kept as rental properties to benefit income-qualified households
in accordance with Neighborhood Stabilization Program; and
WHEREAS, on May 6, 2009, the City issued a Request for Proposals (RFP) from qualified
housing developer(s) to purchase foreclosed and/or abandoned residential units in Miami Beach, to
oversee any needed rehabilitation and to resell and/or manage and renting the units complying with
all the rules required by the HUD's Neighborhood Stabilization Program, as enunciated in Federal
Register, Vol. 73, No. 194 and administered by the State of Florida's Neighborhood Stabilization
Program Substantial Amendment; and
WHEREAS, the minimum requirements outlined in the RFP mirrored the requirements of the
NSP program and were stated as follows: (1.) To administer the primary and initial goal of use of
NSP funds -- the purchase and renting of buildings -the applicant must show they have 5 years
experience in renting affordable housing and be anot-for-profit or a housing authority or the
Applicant must partner with an entity with such status and experience. If there is a partnership
formed for this purpose, the Applicant must attach a memorandum of understanding between itself
and the qualified entity. (2.) Evidence of the applicant's ability to fulfill all duties and requirements.
If the Applicant does not qualify to administer the supplemental allocation and wishes to apply for
the regular allocation portion of the City's NSP1 funds, they must show that they possess a
minimum of two years developing, rehabilitating, and renting properties in South Florida; and
WHEREAS, on May 20, 2009, anon-mandatory pre-submission meeting was held and staff
explained the RFP objectives and minimum requirements; and
WHEREAS, on July 31, 2009, three applications were received, but only one application
from Miami Beach Community Development Corporation (MBCDC), was deemed responsive; and
WHEREAS, MBCDC's application requested a total of $2,545,511 to contribute $2,061,456
to the primary objective of purchase and rehabilitation of afour-building complex containing 16 units
at 7871 Crespi Boulevard, Miami Beach, Florida, plus the balance of the request to purchase five
scattered home ownership sites as per the secondary objective outlined in the RFP; and
WHEREAS, the proposed purchase price of the proposed property is $1,150,000, and a fully
executed Contract for Sale and Purchase was attached to the application, proposed rehabilitation
includes new roofs, new doors and windows, new the inside the apartments, new air conditioning
systems and repainting inside and outside; and
WHEREAS, NSP1 rules require that acquisition price be a minimum of one percent below
appraised value, therefore an award of funding to MBCDC must be contingent on the City-procured
appraised value being in accordance with NSP1 rules; and
WHEREAS, a contract between the City and a successful proposer must be approved by the
State DCA and be in accordance with HUD rules, therefore an award of funding to MBCDC must be
contingent on the State's approval; and
WHEREAS, on August 19, 2009, the Loan Review Committee reviewed the responsive
application and recommended that the City award NSP1 funds to MBCDC as the only responsive
applicant.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF
THE OF THE CITY OF MIAMI BEACH, FLORIDA, accepts the recommendation of the City
Manager, pursuant to a City Request For Proposals from affordable housing development entities
regarding federal Neighborhood Stabilization Program Funds (NSP1) for purchase and rehabilitation
of foreclosed and/or abandoned residential property; authorizing the Mayor and the City Clerk to
execute an agreement with Miami Beach Community Development Corporation (MBCDC), as the
successful proposer, subject to the approval of the recommended use by MBCDC by U.S.
Department of Housing and Urban Development (HUD) and the State of Florida Department Of
Community Affairs (DCA), and contingent on the City-procured appraised value being in accordance
with NSP1 rules; provided further, however, that in the event that HUD or the DCA does not approve
the recommended use by MBCDC, then authorizes the City Manager to reject all proposals
pursuant to this RFP for NSP1 funds and issue a new Request For Qualifications from developers
for use of the NSP1 funds.
PASSED AND ADOPTED this 9th day of September , 2009.
ATTEST:
~~~~
CITY CLERK
MAY R
Robert Parcher
T:\AGENDA\2009\September 9\Regular\NSP Award & Agreement - RESO.doc
Matti Herrera Bower
A~~ AS T~
FORM ~ LANGUAGE
~ FOR EXECUTION
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City A Date
COMMISSION ITEM SUMMARY
Condensed Title
A resolution accepting the recommendation of the City Manager, pursuant to a City RFP regarding Neighborhood
Stabilization Program Funds (NSP1) for purchase and rehabilitation of foreclosed and/or abandoned residential property;
authorizing the Mayor and the City Clerk to execute an agreement with MBCDC, as the successful proposer, subject to the
approval of the recommended use by MBCDC by HUD and the DCA, and contingent on the City-procured appraised value
being in accordance with NSP1 rules; provided further, however, that in the event that HUD or the DCA does not approve
the recommended use by MBCDC, then authorizing the City Manager to reject all proposals pursuant to this RFP for NSP1
funds and issue a new Request For Qualifications (RFQ) from developers for use of the NSP1 funds.
Key Intended Outcome Supported:
Increase access to workforce or affordable housing.
Supporting Data (Surveys, Environmental Scan, etc.): Based on the 2007 Customer Satisfaction Survey, affordable
housing was a concern for 82% of those surveyed.
Issue:
Shall the City award MBCDC NSP1 funds for the purchase and rehabilitation of foreclosed and/or abandoned residential
property?
Item Summa /Recommendation:
The City of Miami Beach was awarded a total of $2,549,551 from HUD's Neighborhood Stabilization Program (NSP1). The
State's Department of Community Affairs (DCA) is the pass-through entity handling Miami Beach's NSP1 allocation.
On May 6, 2009, the City issued a Request for Proposals (RFP) from qualified housing development entities to provide
property services related to the City's primary objective under the Neighborhood Stabilization Program of purchasing,
rehabilitating, and renting foreclosed multi-family buildings; and if funding allows, the secondary objective of assisting
income-qualified home buyers in purchasing foreclosed single family units in Miami Beach. On July 31, 2009, three
applications were received, but only one, Miami Beach Community Development Corporation's (MBCDC), was deemed
responsive.
MBCDC's application requested a total of $2,545,511, of which $2,061,456 was proposed to be used for the primary
objective of purchasing and rehabilitating a 16-unit building, and $484,055 to purchase five scattered site homeownership
units per the secondary objective outlined in the RFP. Notwithstanding, the entire NSP1 allocation is actually $2,549,551, of
which the City may retain 6.8% for monitoring activities. Therefore, the funding available for award is $2,376,181.53 and, as
such, the funding available for the secondary objective as proposed by MBCDC is reduced accordingly to $347,725 from the
$484,055 proposed..
It is recommended that the City's NSP1 funds be awarded to MBCDC as the successful applicant under the RFP, subject to
approval by HUD or the DCA of MBCDC's intended use of the funding, and contingent on the City-procured appraisal value
being in accordance with NSP1 rules. In the event that HUD or the DCA does not approve the use as recommended by
MBCDC, then the City Manager requests authorization to reject all proposals pursuant to the RFP for NSP1 funds, and
issue an RFQ from ualified develo ers for use of the NSP1 funds.
Advisory Board Recommendation:
On August 19, 2009, the Loan Review Committee reviewed the responsive application and recommended that the City
award NSP1 funds to MBCDC as the only responsive applicant.
Financial Information:
Source of Funds: Amount Account Approved
1 $2,376,181.53 new
2
NSP
OBPI Total $2,376,181.53
Financial Im act Summa
City Clerk's Office Legislative Tracking:
Anna Parekh
Sign-Offs•
Department Director Assists City Manager City Manager
AP H JMG
T:\AGENDA\2009\September 9\Regular\NSP Award & Agreemenf = SUMM.doc (f / i ~~
M I AM I g E,A H AGENDA DATE -' ! -('
m MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: September 9, 2009
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE
CITY MANAGER, PURSUANT TO A CITY REQUEST FOR PROPOSALS FROM
AFFORDABLE HOUSING DEVELOPMENT ENTITIES REGARDING FEDERAL
NEIGHBORHOOD STABILIZATION PROGRAM FUNDS (NSP1) FOR
PURCHASE AND REHABILITATION OF FORECLOSED AND/OR ABANDONED
RESIDENTIAL PROPERTY; AUTHORIZING THE MAYOR AND THE CITY
CLERK TO EXECUTE AN AGREEMENT WITH MIAMI BEACH COMMUNITY
DEVELOPMENT CORPORATION (MBCDC), AS THE SUCCESSFUL
PROPOSER, SUBJECT TO THE APPROVAL OF THE RECOMMENDED USE
BY MBCDC BY U.S. DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT (HUD) AND THE STATE OF FLORIDA DEPARTMENT OF
COMMUNITY AFFAIRS (DCA), AND CONTINGENT ON THE CITY-PROCURED
APPRAISED VALUE BEING IN ACCORDANCE WITH NSP1 RULES;
PROVIDED FURTHER, HOWEVER, THAT IN THE EVENT THAT HUD OR THE
DCA DOES NOT APPROVE THE RECOMMENDED USE BY MBCDC, THEN
AUTHORIZING THE CITY MANAGER TO REJECT ALL PROPOSALS
PURSUANT TO THIS RFP FOR NSP1 FUNDS AND ISSUE A NEW REQUEST
FOR QUALIFICATIONS FROM DEVELOPERS FOR USE OF THE NSP1 FUNDS.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
On November 4, 2008, Letter to the Commission No. 286-2008 updated the Mayor and Commission on
funding announced by US HUD for the Neighborhood Stabilization Program, a product of the Housing and
Economic Recovery Act 2008 (HERA). In anticipation of the final program rules being published, the
Commission was given an overview of eligibility requirements and potential uses of the funding.
On December 1, 2008, the State of Florida, acting through its Department of Community Affairs (DCA),
published its Neighborhood Stabilization Program Substantial Amendment pursuant to the requirements of
HERA. The City of Miami Beach was awarded a total of $2,549,551 from HUD's first round of the
Neighborhood Stabilization Program (NSP1) through the State's DCA, who is serving as the pass-through
entity.
On February 6, 2009, a Letter to the Commission announced the City's allocation and outlined the rules for
use and administration of the NSP1 funds as outlined by the DCA. The Administration recommended that a
foreclosed or abandoned single-owner, multi-family building be purchased with the portion of funds which must
be reserved for the low-income population to provide rental housing. The LTC stated that the City would
competitively select a sponsor with the required demonstrated capacity.
NSP1 Award to MBCDC
September 9, 2009
Page 2 of 4
On February 9, 2009, a public hearing was conducted to provide information regarding the NSP1 program.
Approximately fifteen members of the public attended.
On March 11, 2009, the Neighborhood/Community Affairs Committee considered potential uses of the NSP1
funding and expressed an interest in preference being given for rental units to serve moderate income
families.
On March 18, 2009, Resolution No. 2009-27039 was adopted approving the City's planned use of NSP1 funds
and related application to DCA, which was for the purchase and rehabilitation of one or more foreclosed or
abandoned multi-family buildings in the City of Miami Beach target areas, to be kept as rental properties to
benefit income-qualified households in accordance with the Neighborhood Stabilization Program.
On May 6, 2009, a Request for Proposals (RFP) was issued after required notices and advertisements were
published. Staff also sent informational notices county-wide to a broad list of developers, not-for-profit
organizations and other community-based organizations announcing the issuance of the RFP.
The RFP sought proposals from qualified housing developer(s) which had to demonstrate the following:
i) identified a foreclosed or abandoned building or buildings for purchase;
ii) have some sort of site control such as a purchase agreement or option to purchase;
iii) provide a detailed development budget and operating pro-forma showing feasibility and leverage; and
iv) show they are qualified to provide a full range of real estate services related to purchase,
rehabilitating, and renting multi-family rental buildings (or in the case of our secondary strategy,
buying, rehabilitating and reselling single family residences to income-qualified households).
Minimum requirements outlined in the RFP mirrored the requirements of the NSP1 program and were stated
as follows:
(1.) To administer the primary and initial goal of use of NSP funds --the purchase and renting of
buildings -the applicant must show they have five years experience in renting affordable housing and
be snot-for-profit or a housing authority OR the Applicant must partner with an entity with such status
and experience. If there is a partnership formed for this purpose, the Applicant must attach a
memorandum of understanding between itself and the qualified entity.
(2.) Evidence of the applicant's ability to fulfill all duties and requirements. If the Applicant does
not qualify to administer the supplemental allocation and wishes to apply for the regular allocation
portion of the City's NSP funds, they must show that they possess a minimum of two years
experience developing, rehabilitating and renting properties in South Florida.
The RFP requested detailed information and documentation, and further explained program requirements. A
Property Pricing section stated:
The purchase price ofmulti-family buildings by the Applicant shall be equal to the purchase price, plus
all estimated costs for undertaking the required rehabilitations, all closing costs and all reasonable
delivery and carrying costs, but in no event shall it exceed $200, 000 per unit.
On May 20, 2009, anon-mandatory pre-submission meeting was held and staff explained the RFP objectives
and minimum requirements. Four organization's representatives attended the meeting.
On July 31, 2009, three applications were received, but only one, from Miami Beach Community Development
Corporation (MBCDC), was deemed responsive.
NSP1 Award to MBCDC
September 9, 2009
Page 3 of 4
Pursuant to the procedure for evaluation and selection of proposals outlined in the RFP, an evaluation
committee comprised of three persons reviewed the responsive proposal The evaluators were: a City
resident who is an active real estate sales person and a graduate of the City's Leadership Academy; a staff
member of the Housing & Community Development Division with extensive HUD and State program
monitoring experience; and a staff member from the Asset Management Division with real estate contract
management experience. The responsive application met all the minimum requirements stated in the RFP.
As you are aware, MBCDC was first established in 1981 and has been active in revitalization efforts in our city,
including the development of more than 400 units of affordable housing.
The other two applications were deemed non-responsive because they did not meet the minimum
requirements. One applicant did not propose to purchase a foreclosed or abandoned building (as is required
by NSP rules), but instead requested funding for the second phase of an ongoing rehabilitation project in
South Beach. Furthermore, this applicant submitted a Joint Venture Agreement between itself and another
party which stated they are joining for the purpose of the construction and rehabilitation of residences on the
Properties as referenced in "Exhibit A". No exhibit was attached.
The second non-responsive application was from an individual who does not have the required five years of
experience and is neither snot-for-profit corporation, nor a housing authority. This applicant proposed to
assemble a team with a proven track record, but failed to provide the required memorandum of understanding
between itself and the qualified entity. Furthermore, the price for purchase and rehabilitation of the identified
foreclosed or abandoned building exceeded the cap of $200,000 per unit established in the RFP. This non-
responsive application sought funding for five units at $248,097 per unit.
The responsive application from MBDCD seeks NSP1 funding for afour-building complex containing 16 units
at 7871 Crespi Boulevard, Miami Beach, Florida. Each of the 16 units is an efficiency or studio apartment with
one bathroom and full kitchen. The proposed purchase price is $1,150,000, and a fully executed Contract for
Sale and Purchase was attached to the application. The proposal includes rehabilitation mostly of new roofs,
new doors and windows; new the inside the apartments; new air conditioning systems and repainting inside
and outside. The proposed rehabilitation budget per the pro-forma outlines hard costs in the amount of
$600,000; soft costs in the amount of $63,800; developer overhead in the amount of $97,656; and a
contingency of $150,000. The total projected rehabilitation budget is $911,456.
MBCDC's application requested a total of $2,545,511, of which $2,061,456 is for to the primary objective of
purchase and rehab of amulti-unit building at $128,841 per each of the 16 units; and $484,055 was proposed
to purchase five scattered home ownership sites as per the secondary objective outlined in the RFP.
NSP1 rules limited the purchase price of a foreclosed property to be at a discount of 15% from the current
market appraised value. Many entitlement communities indicated to HUD and DCA that some real estate
owned (REO) holders are unable or unwilling to sell a property at a price that reflects such a discount. In
addition, there were concerns about the potentially adverse impact that discounted sales prices on foreclosed
properties may have on other properties in the neighborhood where the foreclosures occurred. Subsequently,
on June 11, 2009, HUD published revisions to NSP1 rules, one ofwhich changed the requirement as follows:
"Each foreclosed-upon home or residential property shall be purchased at a discount of at least one percent
from the current market-appraised value of the home or propen`y."
Consequently, an award of funding to MBCDC must be contingent on the market-appraised value as per
NSP1 regulations. An appraisal was submitted by MBCDC pursuant to the RFP requirements, which was
procured by the seller, and has an appraised market value estimate of $1,450,000.
On August 19, 2009, the Loan Review Committee reviewed the responsive application and unanimously
recommended that, in light of the DCA deadline for the City to obligate the NSP1 funds by January 2010, the
City award NSP1 funds to MBCDC as the only responsive bidder. However, during the review and discussion
NSP1 Award to MBCDC
September 9, 2009
Page 4 of 4
process, the Committee requested the HUD rule concerning the appraised value. At the Committee's request,
staff conducted further research and provided the Committee with federal law 49 CFR 24.103 Criteria for
Appraisals, which sets out the minimum requirements and qualifications of appraisers, including that the
appraiser be State licensed or certified in accordance with title XI of the Financial Institutions Reform,
Recovery, and EnforcementAct of 1989 (FIRREA) (12 U.S.C. 3331 et seq.). Therefore, in an effortto ensure
absolute compliance with the HUD appraisal process, the City is in the process of procuring its own appraisal.
A Request for Bids was sent out to 15 appraisal firms on August 21, 2009. Seven responses were received
on August 28'h, and an engagement letter was mailed on the same date to the most responsive bidder. The
appraisal is due September 18, 2009. The revised HUD NSP rule requires that the acquisition price be a
minimum of one percent below appraised value. Consequently, an award of funding to MBCDC must be
contingent on the appraised value being at or over $1,161,500. The Contract for Sale and Purchase attached
to the application reflects a purchase price of $1,150,000. The Miami-Dade County 2009 Market Value for
7871 Crespi Boulevard is $1,233,384. The 2008 market value was $1,331,134. Furthermore, the DCA requires
that any awarded contract between the City and the developer/sub-recipient must be approved by DCA prior to
execution.
It should be noted that the entire NSP1 allocation is actually $2,549,551, of which the City may retain 6.8% for
monitoring activities. Therefore, the funding available for award is $2,376,181.53 and, as such, the funding
available for the secondary objective as proposed by MBCDC is reduced accordingly to $347,725 from the
$484,055 proposed. The $173,369.47 administrative funds must be spent within the three program years;
however, monitoring activities are anticipated to continue after the expiration of this grant due to the ongoing
income qualification requirements and conditions of the 15-year restrictive covenant which will be required for
this property.
Because a contract between the City and a successful proposer must be approved by the State DCA and be in
accordance with HUD rules, in the event that this proposed contract between the City and MBCDC for NSP1
funds is rejected by the DCA and/or HUD, then the Administration requests authorization to issue a Request
for Qualifications (RFQ) from developers with at least five years experience providing rental housing to the
target population or, pursuant to NSP1 rules, an entity which will partner with one or more local housing
authority ornon-profit organization in the County with such experience, for the purpose of selecting a qualified
developer or entity to identify, purchase, rehabilitate and operate rental housing for eligible participants.
CONCLUSION
The Administration recommends the award of a contract to Miami Beach Community Development
Corporation for the NSP1 allocation, less the City's administrative funding, for a total award amount of
$2,376,181.53 for the primary objective of purchasing and rehabilitating the foreclosed or abandoned property
at 7871 Crespi Boulevard, subject to the approval of the recommended use by MBCDC by HUD and DCA, and
contingent on the City-procured appraised value being in accordance with NSP1 rules; and for the secondary
objective of purchasing five scattered site homeownership units.
In the event that HUD or the DCA does not approve the recommended use by MBCDC, then the
Administration recommends that the City Manager be authorized to reject all proposals pursuant to this RFP
and issue a new RFQ from developers for use of the NSP1 funds.
JMG/HMF/AP/aa
T:WGENDA\2009\September 9\F2egular\NSP Award & Agreement - MEMO.doc