2010-27390 ResoF .
j 2010-27390
RESOLUTION NO.*
-- -.~
A RESOLUTLOIV O'F THE MAYOR AND CITY COMMISSLON OF THE
. CITY OF MIAMI BEACH, FLORI®A, TAKING THE FOLLOWING
- -
ACTIONS VIIITH RESPECT T® THAT CERT~4IN AFFORDABLE
. HOUSING PROJECT TO BE ACQUIRED AND REHABILITATED BY
MIAMI BEACH COMMUNITY. ®EVELOPMENT~ CORPORATION
(MBC®C), AND KNOWN. AS THE NEPTUNE, LOC~4TE® AT 1.632
MERIDIAN AVENUE, MIAMI .BEACH, FLORIDA (THE PROPERTY)1)
APPR®VING A- CONSENT TO ASSIGNMENT O~ THAT CERTAIN
AMENDMENT TO NSP AGREEMENT, DATED MARCH 30, 2010, ~Y
AND BETWEEN ` THE CITY AND fVIBCDC (1nIHICH .AMEN®MENT
ALLOCATED FUNDING ~TO MBCDC, ;IN .THE AMOUNT OF
$4,432,328°24, F®R ACQUISITON OF THE .PROPERTY); SAID
ASSIGNMENT RECOGNIZING THE OWNERSHIP OF THE PROPERTY
AS BEING TRANSFERRED FROM M_BCDC (ASSIGNOR) ~ T® MBCDC:
NEPTUNE, LLC, A LIMITED LIABILITY CORPORATION WHOSE SOLE
MEMBER AND AGENT IS MBCDC; 2) APPROVING A SUS®RDINATION
.
. (TO SECOND PLACE) OF THE CITY'S INTEREST/MORTGAGE IIlI/ON .
THE PROPERTY, I'N FAVOR OF A LOAN: (TO BE SECURED ~Y A`FIRST
MORTGAGE ON THE PROPERT.Y), IN THE AMOUNT OF $700,000,
MADE TO MBCDC BY INTERNATIONAL FINANCE BANK. (lF6 LOAN);
AND 3) FURTHER AUTHORIZING THE CITY MANAGER.AND THE CITY
:CLERK TO EXECUTE ANY:AND ALL DOCUMENTS TO EFFECTUATE
THE AFORESTATED TRANSACTIONS, IN SUCH. FORM AS SHALL DE
REV1EIOVE'D AND APPROVED BY THE CITY ATTORNEY,'S OFFICE.
. OIVHEREAS, on March 18, 2009, the Mayor .and City Commission adopted
. Resolution No. 2009-27039, approving the City's planned use of, and related application
for, a Neighborhood Stabilization Program (NSP)- giant, in the amount of $2,545,511, to
purchase. and rehab~ifitate, as necessary,. one or more foreclosed and abandoned multi-
family buildingsfin the City of Miami Beach,(as determined by the City's greafest need), to
be made avalakile as rental. properties for.income-qualified households, in accordance with
IVSP rules, as promulgated by the Florida Department of Community Affairs (®CA) and the
..United States ®epartment of Housing and Urban Developmerit; and. .
WHEREAS, on: July 19, 2009, the City was awarded an NSP grant (through DCA),
in the amount of $2,549,551, for the-purchase and rehabilitation of foreclosed properties to
. be renovated for affordable housing; and'
. ~ WHEREAS, the City's needs, resources, and inventory of foreclosed properties
- which are suitable for affordable housing for the target population, and demonstrated
capacity: to obligate the funds expeditiously, prompted ~DCA staff to ask the City to .identify
. additional projects and seek recaptured funds.; and -
~i
iIVHEREAS, on January 20, -2010, DCA staff recommended That the City attach any
additional allocations to the existing grant agreement governing the award of the, NSP
funds-after .DCA observed that the City had already awarded the original NS,P funding
allocation to M'IBCDC, its HUD-recognized Community Housing .Development Organization
. ~ (CHDO) (pursuant to a Request for Proposals process, wherein MBCDC was selected as
the sole responsive bidder); and ~ ~ "
V1IHERE~4S, on March 24, 2010,. the DCA awarded the City additional NSP grant
monies, in the a"mount of $4;755,717; the award of these funds was memorialized as an
amendment to fhe original NSP agreement; and
~VH'EREt45, MBCDC has- proposed the purchase of the Neptune Apartments(
located.. at 1632 Meridian Avenue (the Property), at a purchase price. of $5,657,850 (which.
meets the NSP purchase requirement of 1 % below appraised value); and
..
'WHEREAS, funding for MBCDC's purchase of the Property (as well as for closing
,costs and .costs for rehabilitation) is to come from the following sources: .
.;.
1) NSP remaining funds, in the„amount of~$246,898.53
2) NSPfunds available from the second allocation, in the amount of $4,432,328.24
3) FY2009/10 HOME. CHDO funds, in the. amount of $650,000; and .~
.. !n/HEREAS, inorder to complete the balance. of the purchase price for the Property;
MBCDC has also applied for a loan from International finance Bank (IFB),~in the amount of
., $700,000:; and
UVHEREAS,, IFS has requested a subordination of the City's position.. in order to
secure a first lien collateral position on the Property; and
. ~ INHE'REAS,.by~subordi~nating its interest, the City's exposure.wili be $700,000, in a
project that; once complete, wil be worth in -excess of the acquisition. price; and
~~ VVHERE~4S, MBCDC has also created anot-for-profit entity, .MBCDC: .Neptune,
. ry ` LLC, which, as the intended owner, of the Property, is the successor in interest to MBCDC
- (anal will assume all interest and title to the Property); and
- .
. WHEREAS, MBCDC is the sole member and agent of MBCDC: Neptune, LLC; and
- ~ " V1/HE'I~EA~S~, the Administration recommends that the City Commission consent to
MBCDC's reques# to assign its rights in the Property to MBCDC: Neptune, LLC,.and further
consent to the subordination to-IFB.
NOV1/ THEREFORE,. ~E IT DULY RESOLVED BY THE MAYOR AND CITY
COMMLSSIOIV OF THE CITY .®F MIAMI BEACH, FLORIDA, that the .Mayor and City
Commission hereby approve ~ a subordination (to~ second place) of the City's
interest/mortgage in/on the property, in favor of a loan (to be secured by a first mortgage
on .the Property), in. the:.amount of $700,000, made to Miami Beach Community
~. ~ Developms~nt Corporation (MBCDC) by , .International Finance Bank, regarding the
affordable housing project to be acquired and rehabilitated by MBCDC, known as the
Neptune ~ Apartments, and located at 1632 Meridian Avenue; approve an assignment
~ recognizing the ownership of the property as being transferred from MBCDC(assignor) to
MBCDC: Neptune,, LLC, a limited liability corporation. whose sole member and agent is
MBCDC; and further authorize the City Manager and City .Clerk to execute any and all
- documents to effectuate the aforestated transaction, as well as-closing of the Property, in
such..form,as shall be reviewed and approved by the City Attorney's Office.
. ,
PASSE® AND A®OPTED this ~ o~ ~~C, day..®f ~ , 201 Oo
M YOR
ATTEST:
:, .: - _
_ ~ CITYCLERK .. ~ APPROVED AS TO
. , - - FORM & LANGUAGE
TION
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`~
. ~ . t9
COMMISSION ITEM SUMMARY
__
Lncrease access to workforce or affordable housing.
Supporting Data (Surv'eys,'Environmental Scan, etc.):
Based on the 2009. CustomerSatisfaction. Survey, 38% of residents rated availability of workforce housing as acceptable /the right amount.
Issue: ..
Shall the City approve documentation facilitating use of NSP1 funding for the acquisition of The Neptune, a 35-unit apartment building
~` ~ located.at 1632,Meridian AVenue,~to be utilized as affordable housin ursuant to .federal and state rules?
Item Summa- /Recommendation:
On July 19, 2009., -the City of Miami Beach was awarded a total of $2,549,551 from the, State (DCA) under the Neighborhood Stabilization
,Program {NSP1) for the purchase and rehabilitation. of foreclosed properties to be renovated for affordable housing. Due tothe City's needs,
resources, and demonstrated capacity to obligate the funds expeditiously, the City was asked by DCA staff to identify additional projects and.
seek funds~being recaptured from other communities which are eitherunable or unwilling to utilize NSP funds. A requestfor an addition $5
million allocation`was submitted to -DCA and staff identified 879 housing units in: Miami Beach, assessed below $200;000 which were either
. in apre-foreclosure (showing a lis pendens or a scheduled auction) or bank-owned.,{REO) status, most of whichwould be suitable for ,
affordable housing. DCA staff asked the City to modify the list of .properties and identify the most suitable property(es) for any additional
. ~ NSP1 funds; taking into consideration HUD's expenditure deadlines. Staff identified 13 foreclosed residential properties suitable for
affordable housing and, after conducting. site evaluations to assess the general acquisition costs and rehabilitation needs~of the identified
buildings, staff narrowed~the:evaluation process to four multi-unit.buildings, including the Neptune, a 35-unit apartment building located at
1632 Meridian Avenue (the Property),. which was being rehabilitated when it was foreclosed upon in June 2009. The. Property's rehabilitation
is 90% complete and-was identified as the most viable (closest to being turn-,key) project for the recaptured NSP1 funds.
On January 20, 2010,.. DCA staff recommended that, in light of the impending NSP1.obligation deadline of September 201..0, the City attach
any additional allocations to the existing.agreement governing the award of the NSP1 funds via a contract amendment. DCA observed that
the :City had already awarded the original.NSP1 funding allocation to .its HUD-recognized Community Housing Development Organization
(CHDO) as its development partner after undertaking a Request for Proposals process, wherein. the Miami Beach Community Development
' Corporation.(MBCDC) was selected as the sole responsive bidder.
The City was awarded an additional $4,755,717 NSP1 allocation.. MBCDC entered into an "As Is" Contract for Sale and Purchase
Agreement to acquire the Neptune for $5,700;000.On February 24, 201.0, the Neptune's appraised value was determined to be $$5,715,000
and MBCDC subsequently renegotiated the purchase .price to $5,657,850 in order to comply with the NSP requirement that the acquisition
price be for a minimum of 1 % below appraised` value. The closing is tentatively scheduled for May 28, 201.0. MBCDC proposes to utilize
. funding from the following sources for the acquisition, closing. costs, and completion of.the rehabilitation of the Neptune: NSP 1 balance
available frorn,fhe original allocation in the amount of $246,898.53; NSP 1 funds available after administrative allowance from the second
allocation'in the amount of $4,432,328.24; 'FY2009/10 HOME CHDO funds in the amount of $650,000; private financing by International
Finance Bank {IFB), secured by the necessary mortgage and security agreement against the Neptune Apartments in the amount of
$700;000. In order to provide the bank-financing, IFB requires a firsf lien collateral position and has therefore requested a subordination of
the City's position:
As: is.customary for every project MBCDC develops, a separate ownership entity is created. In the case of the ..Neptune Apartments, MBCDC
Neptune, LLC, a Florida not-for-profit limited liability company will be created to own~the property. However funding allocations have been.
awarded foMBCDC; anot-for-profit Florida corporation, which is the sole member of MBCDC Neptune, LLC. Therefore an assignment of the
January 27,.2010, NSP1 Agreement and the March 30, 2010 Amendment No_ 1, from MBCDC, Inc. to MBCDC Neptune, LLC, is necessary.
Adviso Board Recommendation:.
N/A
Frnancoal Information:
Source of Amount ,',~ Account ` . ' y,
...n
Funds: .
1
N/A .
N/A
. OBPI Total
financial Impact Summary: .
..,~ ...~~~n a v~~~~,C ~CyisiauvC i.racKing:
Anna Parekh .
Sian-Offs:
Department Director Assistant City Manager ,' City Manager.
AP ,. ~. HMF JMG -
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_ City'of Miami Beach., 1700 Convention Center Drive, Miami Beach, Florida 33.139, www.miamibeachfl.gov
,. .
COMMISSION MEMORANDUM
., ..
TO: ~ Mayor Matti Herrera Bower and Members of the City Commission
FROM:. ~ Jorge M. Gonzalez, .City Manager
DATE:., , .May 12, 201"0
SUBJECT:u ~A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACFI, FLORIDA, TAKING THE FOLLOWING ACTIONS WITH RESPECT TO THAT
..:
CERTAIN , AFfO_RDABLE HOUSING PROJECT , TO BEE ACQUIRED AND
. ,
',REHABILITATED BY MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION,
. .
.~ (MBCDC); AND KNOWN AS THE NEPTUNE, LOCATED AT 1632 MERIDIAN AVENUE, .
MIAMI BEACH, FLORIDA (THE PROPERTY); . APPROVING A CONSENT TO
.,
- '~ ~ ASSIGNMENT OF THAT CERTAIN AMENDMENT TO NSP1 AGREEMENT DATED
MARCH 30, 2010 BY AND BETWEEN THE CITY AND MIAMI. BEACH COMMUNITY
...
- DEVELOPMENT CORPORATION (MBCDC), ANOT-FOR-PROFIT CORPORATION,
SAID. ASSIGNMENT TRANSFFERRING .OWNERSHIP FROM M'BCDC TO MBCDC;~
NEPTUNE, LLC; 'FURTHER APPROVING A SUBORDFNATION {TO SECOND PLACE)
,. OF THE CITY'S INTEREST/MORTGAGE. IN/ON THE~PROPERTY 1N FAVOR.OF A
LOAN MADE TO MBCDC BY INTERNATIONAL FINANCE -BANK (FFB LOAN), WITH
- .
SAID I;FB LOAN TO BE SECURED BY A FIRST MORTGAGE :AGAINST THE
PROPERTY AND FURTHER AUTHORIZING THE CITY MANAGER AND THE CITY
,CLERK TO EXECUTE ANY AND ALL DOCUMENTS TO EFFECTUATE THE
...
AFORESTATED TRANSACTIONS, IN. SUCH FORM AS SHALL Bf REVIEWED AND
..
APPROVED BY THE CITY ATTORNEY'S OFFICE. ..
ADMLNISTRATION RECOMMENDATION ~ ~ .
Adopt the Resolution.. . - ~ .
ANALYSIS
On July 19, 2009, the City of Miami Beach was awarded a total of .$2,549,551 from the State.
~~ ~ ~ ~ Department of Community Affairs (DCA) under the Neighborhood Stabilization Program (NSP1) for
~_ the purchase-and rehabilitation .of foreclosed properties~to be renovated for affordable housing. ~ . .
'. W-hiie the City,was allocated a sum on a formula basis, a formal application for the use of the funds
was. due to DCA by April 6, 2009, .along with a plan for use of the funding;. To meet the DCA's
application deadline, on March 18, 2009, the City Commission adopted Resolution No. 2009-27039,
approving a plan which called for the purchase and rehabilitation, as necessary, of one or more
:for.,eclosed and abandoned multi-family buildings in the City. These buildings would be in those
areas ofi the City that were determined to .have. fhe greatest need and would be made avaiiable~as
. ~ rental. housing units: for income-qualified households.
On November 24, 2009, the City executed a contr-act with DCA which expires on November 23,
2011. In anticipation of the contract execution, the City issued a Request for'Proposals on May 6,
2009 to solicit developers. with the ,capability and capacity to mee# the requirements and strict
- deadlines of the DCA contract.. After evaluation of the submittals, a contract was awarded to Miami
t
,~ ~ NSP1 -MBCDG Subordination.: -
May 12;, 2010 '
Page 2 .
- ~ Beach Community Development Corporation (.MBCDG), anot-for-.profit corporation, accepting its
proposal for the .acquisition and rehabilitation of a sixteen {46) unit residential property located at
7871 Crespi Boulevard, Miami Beach. Any remaining funds after said acquisition and .rehabilitation
are to be utilized :for the Secondary Objective Project- Home Ownership Activities.
Due to the City's needs; resources, and inventory of foreclosed properties which are suitable for
- affordable housing for the tar et o ulation, as well as our demonstrated ca acit to obli ate the
9 P P p Y 9
' funds expeditiously, theCity was asked by DCA staff. to identify additional projects and seek funds
being recaptured from other communities which are either unable or unwilling to utilize NSP funds.
- ~ Therefore, on December 15, 2009; a formal request letter for $5 million, signed by Mayor Bower, as .
the City'sChief .Executive Officer,: was submitted to DCA. Staff identified an inventory of 879. .
housing units in Miami Beach, ..assessed below $200:,000 which were either in apre-foreclosure
. (showing a 1is pendens or a scheduled auction) orbank-owned (REO) status, most of which would
.. be suitable: for affordable housing. In early January, DCA staff asked the City to modify the list of
-properties and identify the most suitable property(ies) for any additional NSP1 funds, taking into
~, ~ consideration HUD's expenditurre deadlines. The DCA stressed that the City's response needed to
. be timely to be considered for this funding and that the window fo apply for this funding was. very
limited,
On January 13; 2010, at DCA's subsequent request for a narrower list of suitable properties, staff
. ,identified 13 foreclosed residential ;properties suitable for affordable .housing, and, at DCA's
suggestion, commenced an evaluation'of prospective acquisition and rehabilitation costs. After
~~ ~ =conducting preliminary site evaluations to assess the general acquisition costs and rehabilitation
needs of the identified buildings, staff narrowed. the evaluation process to four:multi-u it buildings,
.including the Neptune; a~35-unit apartment building located at 1632 Meridian Avenue (the Property),
which was being rehabilitated when it was foreclosed upon in June 2009. Tle Property's
rehabilitation-is 90% complete and was identified as the most viable (closest. to being turn-key)
.project for the recaptured NSP1. funds. In an abundance of caution, staff procured appraisals for the
. Neptune as-well as-for the three other previously identified buildings.
.. ~ ~ On January 20, 201 O, : DCA staff recommended that; in light of the impending NSP1 obligation
deadline of September 2010, the City.attach any additional.. allocations to the existing agreement.
governing the award of the NSP1 funds via a contract amendment: DCA observed that the City had
already awarded the original NSP1 funding allocation to its HUD-recognized Community Housing
_- Development Organization (CHDO) as its development partner after undertaking a Request for
Proposals process, wherein the'Miami Beach Community Development Corporation.(MBCDC)tyas
.selected as the sole responsive bidder.
.. .
On February:3; 2b10 the City Commission approved Resolution No. 20.10-27335 authorizing the
submission of a request to the,State of Florida; Department of Community Affairs (DCA) for any and
all recaptured NSP1 .,funds to be utilized for the acquisition and rehabilitation, as necessary, of
foreclosed, bank-owned buildings that meet the requirements of the NSP program, such units in
those- buildings to be made available as rental properties for income-qualified households.
. ~ On February 4,:2010, DCA staff notified the City of the additional NSP1 $4,755,717 allocation.
'On February 20; 2010, MBCDG entered: into an "As. Is" Contract for Sale and Purchase Agreement
to acquire the Neptune for $5,700,000. ~ ~ ~ ..
On -February 24,.2010, the Neptune's appraised value was determined' to be $$5,715,000.
- On March 24, 201_.0, :DCA fully executed ,.Contract Modification No. 1, providing the City- with. a
,second: allocation in the amount of $4,755,717. ~ -
NSP.1 - NIBCDC Subordination
` ~ May ~12, 2010
Page 3
~Becatase NSrP rules require that the acquisition price be fora minimum of 1 % below appraised value,
`. ~ MBCDC re-negotiated the purchase price of the Neptune to $5,657,850. The closing is tentatively
' ~ scheduled for May 28, 2010.
.J~. `
"~ ~ -~ The total available NSP1 funding available,-for- this acquisition includes $246,898.53 remaining
:: ~ balance.from the original allocation which is.being reprogrammed with the State's approval~and wi'II ~:
be utilized for this as uisition instead of for the. on mall ro osed Seconda Ob'ective Pro'ect-
q 9~ Yp p ry. J J
Horne ,Ownership.Activities.
MBCDC proposes to utilize funding from the following sources for the acquisition, closing costs, and
completion of the ;rehabilitation of the Neptune:
. ~ `• N'SP 1 balance available from the original allocation in the amount of $246,898.53
. - .• NS'P .1 funds available after administrative allowance from thesecond allocation in the
., amount of $4,432,328.24 ~ ..
• FY2Q09/10 HOME CHDO funds in the amount of $650,000
' ~ • Private finnancing by International. Finance Bank (tFB), secured by the .necessary mortgage
-_ ~ '- ~ ~ and security agreement against the~Neptune Apartments in the amount of $700,000
~~ In order to provide the bank. financing; IFB requires a first lien collateral position.and has therefore
requested a subordination of the. City's position.
~~ As is customary for every project MBCDC develops, a separate ownership entity is created.ln the
~` ~ case of .the Neptune Apartments, MBCDC Neptune, LLC, a Florida not-for-..profit. limited liability
company will' be created to,own the property. However funding allocation`s have been awarded to
~~ ~ MBCDC,~'a not-for-profit Florida corporation, which is the sole member of MBCDC Neptune, LLC.
Therefore an assignment of the January 27, `2010., NSP1 Agreement and the Marche 30, 2010 ~,
Amendment No. 1, from MBCDC,~ Inc. to MBCDC Neptune, LLC, is.necessary.
. ~' .1=urthermore, a reverter clause in-favor of the Citywill be added to .ensure that the Property remains .
as affordable housing during an Affordability„Period of~thirty.{30) years. .
.. CONCLUSION .
IFB's request for a senior ien position to the local jurisdiction is typical in government-assisted
affordable housing projects.. The :property's appraised value on February 27; 20.1.0 was $5,715,000.
. The acquisition .price is $5;657,850. The grant funding for ,the acquisition is being secured 'by a
mortgage, note,. and a restriction that the property be kept as affordable housing for thirty (30) years,.
which is beyond the State's requirement of a fifteen (15) year. affordability period. The City's
exposure will . be $700,000, in a project that., once completed; will be worth in excess of the
acquisition price.. ~ .
. .
The Administration recommends approval of the subordination of the City's position to IFB in order
to facilitate execution and completion of #his project and the timely expenditure of both the HOME
:. ~ , and NSP.funds.
Furthermore, the Administration recommends a one time assignment in the ownership 'of the
- Neptune Apartments, located at 1632Meridian Avenue, .Miami Beach, Florida, from MBCDC to
MBCDC"Neptune,.LLC,~a limited`Liability corporation whosesole member{agent) is MBCDC.
JMG/HMF/Af'. ~.
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