Legal's ResolutionRESOLUTION NO. 2010-27390
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, TAKING THE FOLLOWING
ACTIONS WITH RESPECT . TO THAT CERTAIN AFFORDABLE
HOUSING PROJECT, KNOWN AS THE NEPTUNE APARTMENTS, AND
LOCATED AT 1632 MERIDIAN AVENUE, MIAMI BEACH, FLORIDA (THE
PROPERTY), TO BE ACQUIRED AND REHABFLITATED BY MIAMI
BEACH COMMUNITY DEVELOPMENT CORPORATION (MBCDC),
PURSUANT, IN PART, TO FUNDING, IN THE AMOUNT OF
$4,432,382.24, ALLOCATED BY THE CITY TO MBCDC UNDER THE
NSP1 PROGRAM.: 1) APPROVING A ONE TIME ONLY TRANSFER 1N
THE OWNERSHIP OF THE. PROPERTY FROM MBCDC TO MBCDC:
NEPTUNE, LLC, A LIMITED LIABILITY CORPORATION WHOSE SOLE
MEMBER AND AGENT IS,MBCDC; 2}APPROVING A SUBORDINATION
(TO SECOND PLACE) OF THE CITY'S INTEREST/MORTGAGE IN/ON
THE PROPERTY, IN FAVOR OF A LOAN (TO BE SECURED BYA FIRST
MORTGAGE ON THE PROPERTY), IN THE AMOUNT OF $700,000,.
MADE TO MBCDC BY INTERNATIONAL FINANCE BANK (IfB LOAN).;
AND 3) FURTHER AUTHORIZING THE CITY MANAGER AND THE CITY
CLERK TO EXECUTE ANY AND ALL DOCUMENTS TO EFFECTUATE
THE AFQRE TAT D TRANSACTIONS, IN SUCH FORM AS SHALL BE
RE-VIEWED AND APPROVED BY THE CITY ATTORNEY'S OFFICE.
WHEREAS, on July 31, 2008., the United States Congress enacted the Housing and
Economic Recovery Act of 2008, thereby creating.the Neighborhood Stabilization Program
1 (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, the State of Florida received an NSP1 allocation of $91,.141,478 to
provide funding to those units of local .government, including. the City of Miami Beach,
which received $2,549,551.00 in NSP1 funds; and.
WHEREAS, on March 18, 2009, the City Commission approved Resolution No.
2009-27039, approving the City's planned use of and .related application for the NSP1
funds, in the amount of $2.,376,181.53, to purchase and rehabilitate, as necessary, one (1)
or more foreclosed and abandoned multi-family buildings in the City; and
WHEREAS, on September 9,.2009, the City Commission adopted Resolution No.
2009-27194, which accepted the City Manager's recommendation pursuant to a City-
. issued Request for Proposals from qualified housing developers for qualified projects under
the NSP1 Program, and authorized the Mayor and City Clerk to execute. ari NSP1
Agreement with MBCDC (as the sole responsive proposer), dated January 27, 2010, in the
amount of $2,376,181.53, for MBCDC's acquisition and rehabilitation of The Madeleine
Apartments, located at 7871-7861 Crespi Boulevard (the Property); and
WHEREAS, on January 20, 2010, the State of Florida Department of Community
Affairs (OCA) recommended that the City attach any additional allocations to the existing
NSP1 Grant Agreement between the City and DCA, dated November 24, 2009, after DCA
observed that the City had already awarded the original NSP1 funding allocation to
MBCDC, its HUD-recognized Community Housing Development Organization (CHDO); and
WHEREAS, on March 24, 2010, the DCA awarded the City additionaf NSP1 grant
monies, in the amount of $4,755,717; the award of these funds was memorialized as
. Modification No. 1 to the November 24, 2009 NSP1 Grant Agreement; and
WHEREAS, under the authority granted to the City pursuant to Resolution'No. 2010-
27348, the, City and MBCDC entered into and executed Amendment No. 2 to the January
27, 2010 NSP1 Agreement with MBCDC, allocating funding (including NSP1 funding, a set
forth below) in the amount of $4,679,226.78, to MBCDC for the proposed purchase and .
rehabilitation of the Neptune Apartments, located at 1632 Meridian Avenue, .Miami Beach,
Florida (the Property); and
WHEREAS, MBCDC has proposed to purchase the Property at a purchase price of
$5,657,850 (which rneets,the NSP1 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) NSP1 remaining funds, in the amount of $246,898.53;
2) NSP1 funds 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
WHEREAS, in order 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
WHEREAS, IFB has requested a subordination of the City's position in order to
secure a first lien collateral position on the Property; and
WHEREAS, by subordinating its interest, the City's exposure will be $700,000, in a
project-that, once complete, will be worth in excess of the acquisition price; and
WHEREAS, MBCDC has -also created anot-for-profit entity, MBCDC: Neptune,
LLC, which, as the intended owner of the Property, is the successor in interest to MBCDC
(and will assume all interest and title to the Property); and
WHEREAS, MBCDC is the sole member and agent of MBCDC: Neptune, LLC; and
WHEREAS, the Administration recommends that the City Commission approve a
transfer in the ownership of the Property from. MBCDC to MBCDC: Neptune, LLC, and',
further, consent to the subordination to IFB.
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 approve a subordination (to second .place). of the City's
interest/mortgage in/on the affordable housing project to be acquired and rehabilitated by
MBCDC, known as the Neptune Apartments, located at 1632 Meridian Avenue, Miami
Beach', Florida (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 Development
Corporation (MBCDC) by International Finance Bank; approve a transfer in the ownership
of the Property from MBCDC 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.
PASSED AND ADOPTED this 12T" day of May, 2010.
,,
MPv OR
ATTEST:.'
' _ r ~ ~~
CITY' CLERK
F:\RHCD\$ALL\HSG-CD\ALL\NSP 11Resolutions\Revised Reso 2010 27390.doc
APPROVED AS TO
FORM & LANGUAGE
e~ FOR CUTION
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-''Gft Attomey~ Date -
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2010-27390
.RESOLUTION NO~`__ _;
A RESOL . ION OF THE MAYOR AND CITY COMMISSLON OF THE
CITY OF MI BEAICH, FLORIDA, TAKING' THE FOLLOWING
ACT{ONS !NI H RESPECT TO THAT CERTAIN AFFORDABLE
` HOUSING .PRO ECT TO 'BE ACQU{RED AND REHABILITATED BY
MIAM{ -BEACH COMMUNITY. DEVELOPMENT CORPORATION
(MBC®C), AND K OWN. AS THE NEPTUNE, LOCATED AT 1632
MERIDIAN AVENUE, MIAMI BEACH, 'FLORIDA (THE PROPERTY)1)
APPROVING ,4 CON ENT TO ASSIGNMENT OF THAT CERTAIN
AMENDMENT TO NSP GREEMENT; DATED MARCH 30, 2010; ~Y `
AND BETWEEN ` THE TY -AND MBCDC (WHICH .AMENDMENT '
ALL®CATED~ FUNDING TO MBCDC, IN THE AINIOUNT OF
. $4,432,328024, FOR ACQ SITON OF THE PROPERTY); SAfD
ASSIGNMENT RECOGNIZING THE OWNE'RSH1P OF THE PROPERTY
AS BE{NG TRANSFERRED FR M MBCDC {ASSIGNOR): TO MBCDC;
NEPTUNE, LLC, A LIMITED LIAB ITY CORPO.RATION WHOSE SOLE
' ` MEMBER AND AGENT IS MBCDC; ),APPROVING A SUBORDINATION
(TO SECOND PLACE) OF THE CIT 'S INTEREST/MORTGAGE IN/ON .
. THE PROPERTY, I'N FAVOR OF A LO (TO BE SECURED BYA`FIRST
MORTGAGE ON THE PROPERT.Y),.I THE AMOUNT OF $700,000;
MADE TO MBCDC BY INTERNATIONAL {NANCE BANK (IFB LOAN);
' AND 3) FURTHER AUTHORIZING THE CIT MANAGER.AND THE CITY
`., ~ :CLERK TO EXECUTE ANY AND ALL DOCU ENTS TO EFFECTUATE _ .
` THE AFORESTATED TRANSACTIONS, IN SU H fORM AS SHALL BE
REVIEWED AND APPROVED BY THE CITY AT ORNEY.'S OFFICE.
` WHEREAS, on March 18, 2009, the Mayor and Cr .Commission adopted .
` Resolution No. 2009-2703.9, approving the City's planned use of; nd related application
.. for, aNeighborhood-Sfabilization Program (NSP) grant, in the am nt of $2,545,511, to
purchase. aril rehabilitate, as necessary, one or more foreclosed an abandoned multi-
family buildings'in the City of Miami Beach (as determined by the City's neatest need), to
be'made available, as rental properties for income-qualified households, i accordance with
NSP rules, as promulgated by the Florida Department of CommunityAffair (DCA) and the
United States Department of Housing and Urban Developmerit; and.
WHEREAS,. on July 19; 2009, the City was awarded an NSP grant (thr gh DCA),,
in the amount of $2,549,551., for the purchase and rehabilitation of foreclosed pr ernes to
be renovated fior affordable housing; and -
WHEREAS, the City's needs, resources, and inventory Hof foreclosed prop rties
- which are suitable-for affordable housing for the target population, and demonstr ed
capacity: to obligate the funds expeditiously, prompted IJCA sfaff to ask the City to ident' y
additional projects and seek recaptured funds; and
~, i
iIVHER S, on January 20, 2010, DCA staff recommended that the City attach any
` additional altoca ~ons to the existing grant agreement governing the award of the. NSP
funds afiter DCA o served that the City had already awarded the original NSP funding
allocation to -M'BCD ;its HUD-recognized Community Housing :Development Organization
{CHDO) (pursuant to Request for Proposals process; wherein MBCDC was selected as
.the sole responsive -bid er) and
lIIIH€REAS, on. Mar h 24, 2010,: the DCA awarded the City additional NSP grant
monies, in.-the ,amount of $4; 55,717; the award of these funds was memorialized as an
amendment to the original NS agreement; and
o/VH:EREAS, MBCDC has roposed the purchase of the Neptune Apartments,
loca#ed at 1632 Meridian Avenue (t e Property), at a purchase price. of $5,657,850 (which.
meets the NSP purchase "requireme t of 1 % below appraised value);: and
. 'WHEREAS, funding for MBCDC purchase of the Property (as well as for closing
',costs and .costs for rehabilitation) is to c e from the following sources:
.. 1) fV6P remaining funds, in the amo nt of $246,898.53
` 2) N5P funds available from the secon allocation, in the amount of $4;432,328..24
3) FY2009/10 HOME CHDO funds, i'n the.' mount of $650,000; and
IONHEREAS, in order to complete the balance fhe purchase price for the Property; .
tVIBCDC has a so applied for a loan from International 'Hance Bank (IFB),_in the amount of
_ $700,000; and -
1lVHEREAS IFB has requested a subordination of e City's position in order to
secure a first lien collateral position. on the Property; and
VIIHEREAS,.by subordinating its interest, the City's expos e.vvill be $700,000, in a
project that; once complete, wilt be worth in excess of the acquisiti n price; and
ViIHEREAS, MBCDC has also created anot-for-profit. entity, BCDC: Neptune,,
. 'LLC, which; as the intended owner. of the Property, is the successor in i Brest to MBCDC
(and wilt assume all interest and title to the Property).; and
NVHEREAS, MBCDC is the sole member and agent of MBCDC: Kept ne; LLC; and
- 1SVHEREAS; the Administration recommends that the City Commission consent to
. MBCDC's request to assign its rights in the Property to MBCDC: Neptune, LLC, nd further
consent.to the ubordination to-fFB.
NOVN TH EfORE,..BE IT DULY RESOLVED BY THE MAYOR AN® CITY .:
COMMISSION OF' . E_ CITY OF MIAMI BEACH, FLORIDA, that the .Mayor and City
Ctammission hereby pprove a subordinatioh (to~ .second plane) of the City's
interest/mortgage in/on t property,. in favor of a loan (to be secured- by a first mortgage
on .the Property), in. the: mount of $700,000, made to Miami Beach Community
_ Development. Corporation BCDC) by .:Internationale .Finance Bank, regarding the
affordable housing project to a acquired and rehabilitated by MBCDC; known as the
Neptune Apartments, and loca d at 1632 Meridian Avenue;.. approve an assignment
~,
k recognizing the ownership ofthe operty as being transferred from MBCDC (assignor) to
MBCDC: Neptune,, LLC, a;limited ~ bility corporation..whose sole member and agent is
- _; M:BCDC; and further authorize the ity ,Manager and City .Clerk to execute any and all
docu-menu#o effectuate the aforestate transaction, as wel'I as-closing of the .Property., in
such.form as shall be reviewed and app owed by the City Attorney's Office.-
PASSED AND ADOPTED this
a~ day of ~ :. , 2010,
. .. M YOR .
.: ATTEST:
~~
~~ ~ APPROVED AS TO
C7TX -CLERK , .
T:\AGENDA\201D1May 12\GonsentWSF Neptune Subordinatioh Reso:doc ~ o ELUTION
~~~Q
,.
~ ome to
. ~ COMMISSION ITEM SUMMARY
Condensed Title:
A resolution approving. a consent to assignment of the NSP1 -Agreement from MBCDC to MBCDC: The Neptune, LLC; approving a
subordination to second place of the ,City's interest in a mortgage on the,property; and further authorizing the City Manager to execute any.
and all documents to effectuate the aforestated transactions. "
Ke Intended Outcome Su ported:
_ .. ,
Increase access to workforce or affordable. housing.
Supportirig Data (Surveys,'Environmentai Scan, etc.):
Based onftie 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 Tlie Neptune, a 35-unit apartment building
located. at 1632. Meridian AVenue,'to be utilized as affordable housing. pursuant 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 to-the City's needs,
~resou~ces, and demoristrated 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 either unable or uriwillirig to utilize NSP funds. A requestfor an addition $5
million allocation`was submitted to DCA and staff identified 879 housing"units iri_ Miami Beach, assessed below $200,000 which-were either
" in apse=foreclosure (showing a lis .pendens or a scheduled auction) or bank-owned (REO) status; .most of which would be suitable for .
affordable housing. DCA staff asked the City to modify the list of properties and identify the most suitable property(ies) for any additional
-NSP1 furids', 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, tall narrowed the:evaluation process to four multi-unit.buildings, includirig 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 ahd was identified as the most viable (closest to being turn-.key) project for the recaptured NSP1 funds.
Ori January 20, 201 O,.DCA staff recommended that, in light of the impending NSP1.obligationdesdline 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 arr additional $4,755,717 NSP1 allocation.. MBCDC entered into an °As Is" Contract for Sale and Purchase
" Agreerrierit 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 priceto $5,657,850.in order to comply with the NSP requirement that the acquisition
~.p~ice be for a minimum of 1%:below appraised value. The closing is tentatively scheduled for May 28,.2010. 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 firorn.th'e original.allocatiori 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; 'FY2009/40 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., If6 requires a first"lien collateral position and has therefore requested a subordination of
the City's position:
As:is.ctastomary for every projectMBCDC develops, a separate ownership entity is,created. In the case of the Neptune Apartments, MBCDC
Neptune, LLG, a .Florida not-for-proft limited liability company will be created to own-the property. However funding allocations have been
awarded 4oMBCDC; snot-for-profit Florida corporation, which is the sole member of MBCDC Neptune, LLC. Therefore an assignment of the
Jan"nary 27, 2010, NSP1 Agreement arid the March 30, 2010 Amendment.. No. 1, from MBCDC, Lnc: to MBCDC Neptune, LLC, is necessary.
iancial'Information~
Source'of Amount ' v ~' '`~ Account ~ s `-
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Funds: '.'
1 N/A N/A
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Financial. Inn act Summa
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--
nna Parekh..
,Sign-Offs:.
F, ,Department Director f =~ w ..` -A
Ada.: s;'+, <,
AP I HMF~
T:IAGENDA12010\May 12\Consent\NSP Neptune Subordin
}~,
. .3 `
~~ ,
ML,~N1I BEACH
City'of Miami Beach., 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miomibeachfl.gov
COMMISSIQN MEMORANDUM
",
`-` .. TO: Mayor Matti Herrera Bower and 'Members of the City Commission
FROM:.: Jorge M. Gonzalez, City Manager
. DATE:., ,May 12, 2010
SUBJECT: ,.A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
. $EACH, FLORIDA, TAKING THE FOLLOWING ACTIONS WITH- RESPECT TO THAT
CERTAIN . AFFORDABLE HOUSING .PROJECT : TO. BE 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-PROFtT CORPORATION,
$AID,ASSIGNMENT TRANSfERRING.OWNERSHIP FROM MBCDC TO MBCDC:
NEPTUNE; LLC; FURTHER APPROVING A SUBORDINATION_(TO SECOND PLACE)
OF THE CITY'S INTEREST/MORTGAGE. 1N/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
IPR~OPERTY 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 BE R€VIEWED AND
` ~ APPROVED BY THE CITY ATTORNEY'S~OFFLCE..
ADMINISTRATION RECOMMENDATION
Adopt the Resolution. .
ANALYSIS
On July 19, 2009, the City of Miami Beach was awarded a totals of $2,549,551 from the .State.
Department of Community Affairs {DCA) under the Neighborhood Stabilization Program (NSP1) for
the purchaseand rehabilitation of foreclosed properties to be renovated for affordable housing.
While the City was allocated a sum on a formula basis, a formal application for the. use of the funds
was. due to QCA by April, 6, 2009, .along with a.plan for use of the funding;. To meet the DCA's
application dead'l'ine, on Mareh 18,.2009, the City Commission.adopted Resolution No.2009-27039:,
approvi:ng a plan which called for the purchase and rehabilitation, as necessary, of one or more
foreclosed and abandoried multi-family buildings in the City. These buildings would be in those
areas of the City that were determined Ito .have. fhe greatest need. and would 'be made available.as
rental.housing units:for income-qualified households.
Qn November 24, 2009, the :City executed a contract with DCA which. expires on November 23,
2011. fn: anticipation of the contract execution, the City issued a Request for P. roposals on .May 6,
' 2009 to solicit developers. with the capability and: capacity to meet the requirements and strict _
deadlines of the DCA contracf. After evaluation of the submittals, a contract was awarded to Miami
. .. . , .
NSP1 - IVIBCQG Subordination : -.
1Vlay 12, 2090. . '
Page 2
'Beach Community Development Corporation (MBCDC), anot-for=,profit corporation, accepting its
proposal for the_.acq,u'isition and rehabilitation of a sixteen (16) 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 target population, as well. as our 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 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`s Chief 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) dr bank-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~nost suitable property(ies) for any additional NSP1 funds, taking into
~, consideration HUD's expenditure deadlines.'The DCA stressed that the City's response needed to
. , be timely to be considered for: this funding and that the window to 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 _
• suggestbn; commenced an evaluation'of prospecti~e.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-.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. In an abundance of caution, staff procured appraisals for the
Neptune as well as-for the three other previously identified .buildings:
On January 20, 2010,,DCA staff recommended that; in light of the impending NSP1 obligation
_ deadline of September 2010,-t}ie Cty.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 agocation to its HIJD-recognized.Community No~sing-
- 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.
Qn February:3; 201.0 the City CommiSSiori 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
ail 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
chose: buildings to be made available as rental properties for income-qualified households.
` On febYuary 4,:2010, OCA staff notified the City of the additional NSP1 $4,755,717 allocation.
On February 20; 2010, MBCDC 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.'
. - Qri March` 24, 2010, DCA fully executed .Contract Modification No. 1, providing the City with. a
second aI ocation in the amount of $4,755,717.
NSP1 - MBCDC Subordination
' May 92; 20.90 .
Page S
Because NSP rules require that the acquisition price be for a 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, 2Q10.. - _ ~ `
.,1~. ..
-The total available NSP:1 funding available:for this acquisition includes $246;898.53 remaining
balance from the original allocation which is being reprogrammed with the State's approval and will ~:
be :utilized for this acquisition instead of for the. originally proposed Secondary. Objective. Project-
Morne Owrership.Activites. ~ "
MBCDC proposes to utilize funding from-the following ources for the acquisition, closing costs, and
completion of the rehabilitation of the Neptune.:
-. ~• N$P 1 balance available from the original allocation in the amount of $246,898.53
• NSP 1 funds available after administrative allowance from tl-ie second allocation in the
amount of $4,432,328.24 .
:FY2009/10 .HOME CNDO funds in: the amount of $650,000.
• Private financing 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
regaested a subordination of the; City's ,position.
: As is cusfomary 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 wi11' be created to:own the property. However funding:allocations 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 March 30, 2010
- Amendment No. 1, from MBCDC, Inc. to MBCDC Neptune, LLC, is necessary. '
".. ~" .Furthermore, a.reverter clause in favor of the City will be added to ensure that the Rroperty 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 propertys appraised value on February 27; 20.10 was $5,715,000.
The acquisition price is $5,657,850. The grant funding for .the acquisition is beirlg 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 recommendsapproval of the subordination of the,Cty's position to 1.FB in order
to facilitate execution and completion Hof this project and the timely expenditure of both the .HOME
.. and NSF.funds.
Furthermore, the Admiriistration recommends a one. time assignment in the ownership 'of the
Neptune Apart~rnents, located of 1.632 Meridian Avenue, Miami Beach, Florida, from. MBCDC to .
MBCDC"-Neptune;.LLC,, a limited liability corporation whosesole member (agent) is MBCDC.
JMG/HMF/AP _ .
"T;~AGENDA120101May 12\ConsentlNSP Neptune-Subordination Memo.doc