2011-27693 Reso RESOLUTION NO. 2011 -27693
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE MAYOR AND
CITY CLERK TO EXECUTE AMENDMENT NO. 4 TO THE AGREEMENT
BETWEEN THE STATE OF FLORIDA DEPARTMENT OF COMMUNITY AFFAIRS
(DCA) AND THE CITY, DATED NOVEMBER 24, 2009, FOR THE ALLOCATION OF
NSP1 FUNDS; APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK
TO EXECUTE AMENDMENT NO. 6 TO THE RELATED AGREEMENT BETWEEN
THE CITY AND MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION
(MBCDC), DATED JANUARY 21, 2010, FOR THE ALLOCATION OF NSP1
FUNDS; SAID AMENDMENTS TO ALLOW THE DRAW DOWN OF FUNDS.
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, on March 18, 2009, the City approved Resolution No. 2009 - 27039, approving
the City's planned use of and application of NSP1 funds to purchase and rehabilitate one or more
foreclosed or abandoned multi - family buildings to be made available as rental housing properties for
income qualified households; and
WHEREAS, the City was awarded a total of $9,305,268 in NSP1 funds through several
allocations, by the State of Florida Department of Community Affairs (DCA), the entity managing
HUD's NSP1 allocation to the City of Miami Beach; and
WHEREAS, on September 9, 2009, the City approved Resolution No. 2009 - 27175,
approving the Federally- funded NSP1 Subgrant Agreement between DCA and the City; said
Agreement was executed on November 24, 2009, in the amount $2,549,551, which was amended to
include the next allocations in the amounts of $4,755,717 and $2,000,000 awarded on March 24,
2010, and July 30, 2010, respectively; and
WHEREAS, the City, after conducting a competitive process, awarded $2,376,181.53 of the
initial allocation ($2,549,551 Tess the City's allowable $173,369.47 administration funds) to Miami
Beach Community Development Corporation (MBCDC), which was also approved by the City on
September 9, 2009, per Resolution No. 2009 - 27194, said Agreement was executed on January 21,
2010, in the amount of $2,376,181.53, and was amended to include the next allocations, in the
amounts of $4,432,328 and $1,864,000; executed on July 21, 2010 and July 22, 2010, respectively;
and
WHEREAS, while 82% of the NSP1 funds allocated to MBCDC have been expended,
current economic and banking conditions have impacted MBCDC's ability to obtain construction
lines of credit and have delayed completion of the contractually required activities; and
WHEREAS, DCA/NSP1 representatives have informed City staff that the majority of its
NSP1 sub - recipients are likewise experiencing similar delays and financial hardships; and
WHEREAS, DCA has also granted sub - recipients permission (at their request) to draw down
funds for rehabilitation activities, instead of paying costs out -of- pocket and then seeking
reimbursement; and
i
WHEREAS, the Administration established policies and procedures to ensure that the
projects are build on time and will not overrun approved budgets; and
WHEREAS, the City's Loan Review Committee met on June 20, 2011, and unanimously
passed a motion to support the proposed amendment to Neighborhood Stabilization Program 1
(NSP1) Agreement with revisions to the Policies and Procedures for Draw Downs as noted in the
meeting; and
WHEREAS, the motion was also presented to and approved by the City's Finance and
Citywide Projects Committee ttee June 2
yw � 23, 2011; and
WHEREAS, the Administration hereby recommends and requests amending both
Agreements to include the option of a "draw down" of funds, versus a reimbursement process, to
cover the costs of rehabilitation of the projects.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby approve
and authorize the Mayor and the City Clerk to execute Amendment No. 4 to the Agreement
between the State of Florida Department of Community Affairs and the City, dated November 24,
2009, for the allocation of NSP1 funds; and also approve and authorize the Mayor and City Clerk
to execute Amendment No. 6 to the related Agreement between the City and Miami Beach
Community Development Corporation, dated January 21, 2010, for the allocation of NSP1 funds;
said amendments to allow the draw down of funds.
PASSED AND ADOPTED this 13` day of /11! , 2011.
ATTEST:
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CITY CLERK M A OR
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COMMISSION ITEM SUMMARY
Condensed Title:
A resolution authorizing an amendment to the NSP1 agreement dated November 24, 2009, between the City and the
State of Florida DCA and the related agreement between the City and MBCDC, to allow the draw down of funds
pursuant to approved Policies and Procedures.
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 approve amendments to contracts with DCA and MBCDC to allow construction draws as allowed by US
HUD and pursuant to approved Policies and Procedures?
Item Summary/Recommendation:
The City of Miami Beach was awarded a total of $9,305,268 of NSP1 funds through an initial allocation and two
subsequent allocations. The State's Department of Community Affairs (DCA) is the pass- through entity handling
HUD's NSP1 allocation to the City of Miami Beach. On September 9, 2009, the City approved Resolution No. 2009-
27175 approving the Agreement with DCA in the amount of $2,549,551, which was subsequently amended to include
the additional allocations of NSP1 funds to the City.
After conducting a duly- noticed procurement process, the City Commission awarded $2,376,181.53 of the initial NSP1
funds to Miami Beach Community Development Corporation (MBCDC), to acquire a 16 -unit building. The resulting
agreement was also amended to allow for the allocation of additional NSP1 funds to MBCDC to acquire two more
buildings, providing a total of 60 units to be rehabilitated to assist income eligible persons, as well as stabilize
neighborhoods affected by foreclosure.
While most of the NSP1 funds were expended for the acquisition of the three buildings, current banking conditions
have impacted MBCDC's ability to obtain construction lines of credit and have delayed completion of the contractually
required rehabilitation activities. After conferring with DCA/NSP1 representatives, City staff was informed that the
majority of its NSP1 sub-recipients are likewise experiencing similar delays and financing hardships. Many other
J Y P P 9 Y 9 P Y
communities have also requested and been granted permission to draw funds for rehabilitation activities instead of
paying costs from out -of- pocket and then seeking reimbursement. Therefore, following the instructions of the DCA
staff, City staff is requesting that the contract between DCA and the City, as well as the corresponding contract
between the City and MBCDC, be amended to incorporate a draw down process as allowed by US HUD. City staff
prepared Policies and Procedures for Construction Draw Down Payment Methodology which are consistent with HUD
rules, construction industry standards, and our own Capital Improvements Program office process, to be followed at
each time a request for payment is requested by the Developer /Sub - recipient.
On June 20, 2011, the City's Loan Review Committee reviewed the proposal for draw down payments and
unanimously passed a motion to support the proposed amendment to the NSP1 agreements with revisions to the
Policies and Procedures for Draw Downs as noted in the meeting. Revised Policies and Procedures were presented
to, and accepted by, the City's Finance and Citywide Projects Committee on June 23, 2011.
Advisory Board Recommendation:
Loan Review Committee approved on 6/20/11. Finance and Citywide Projects Committee approved on 6/23/11.
Financial Information:
Source of Funds: Amount Account Approved
1
NSP 2
OBPI Total
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Anna Parekh
Sign -Offs:
Department Director A si . nt Cit Manager City Manager
AP I hI fort ...„T om ?
H , JMG
T:\AGENDA\2011 \5 -11 -11 \NSP Agreement EXTENSION for DCA & MBCDC - SUMM.doc \
MIAMIBEACH AGENDA ITEM C 7
DATE 7 -/3 -//
m MIAMI BEACH
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: July 13, 2011
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE MAYOR
AND CITY CLERK TO EXECUTE AMENDMENT NO. 4 TO THE AGREEMENT
BETWEEN THE STATE OF FLORIDA DEPARTMENT OF COMMUNITY
AFFAIRS AND THE CITY, DATED NOVEMBER 24, 2009, FOR THE
ALLOCATION OF NSP1 FUNDS; APPROVING AND AUTHORIZING THE
MAYOR AND CITY CLERK TO EXECUTE AMENDMENT NO. 6 TO THE
RELATED AGREEMENT BETWEEN THE CITY AND MIAMI BEACH
COMMUNITY DEVELOPMENT CORPORATION, DATED JANUARY 21, 2010,
FOR THE ALLOCATION OF NSP1 FUNDS; SAID AMENDMENTS TO ALLOW
THE DRAW DOWN OF FUNDS.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
BACKGROUND
Resolution No. 2009 -27039 was adopted by the City Commission on March 18, 2009, approving
the City's application for and planned use of funds available through the United States Department
Of Housing and Urban Development's (HUD) Neighborhood Stabilization Program 1 (NSP1) funds
for the purchase and rehabilitation of one or more multi - family buildings to be kept as rental
properties to benefit income qualified households in accordance with the NSP1 regulations, with an
end goal of stabilizing neighborhoods impacted by foreclosures.
The City of Miami Beach was awarded a total of $9,305,268 in NSP1 funds through an initial
allocation and two subsequent allocations. The State's Department of Community Affairs (DCA) is
the pass- through entity handling HUD's NSP1 allocation to the City of Miami Beach.
On September 9, 2009, the City approved Resolution No. 2009 -27175 authorizing the execution of
the Federally- funded Subgrant Agreement with DCA. That Agreement for $2,549,551 was
subsequently amended to include the additional allocations in the amounts of $4,755,717 and
$2,000,000 (awarded on March 24, 2010, and July 30, 2010, respectively).
After conducting a duly- noticed procurement process, the City Commission awarded
$2,376,181.53 of the initial NSP1 allocation to Miami Beach Community Development Corporation
(MBCDC) for the acquisition of a 16 -unit building. That Agreement was subsequently amended
(with Commission approval) to allow for the allocation of additional NSP1 funds received by the
City to MBCDC (in the amount of $4,432,328 and $1,864,000 respectively), which was used to
acquire two more buildings, providing for a total of 60 units being rehabilitated to assist income
eligible persons, as well as stabilize neighborhoods affected by foreclosure.
NSP1 Amendment
Page 2 of 3
The administration has established policies and procedures to ensure that the projects are built on
time and will not overrun approved budgets. In addition, independent evaluations of the budgets
and scope have been retained by licensed professionals to compare quality of construction and
costs with local industry standards.
While 82% of the NSP1 funds allocated to MBCDC have been expended, one of the highest
expenditure rates for this program in the State, current economic and banking conditions have
impacted MBCDC's ability to obtain construction lines of credit and have delayed completion of the
contractually required rehabilitation activities. After conferring with DCA/NSP1 representatives, City
staff was informed that the majority of its NSP1 sub - recipients are likewise experiencing similar
delays and financing hardships. Many other communities have also requested and been granted
permission to draw down funds for rehabilitation activities instead of paying costs from out -of-
pocket and then seeking reimbursement. This alternative payment methodology means that
instead of having the non- profit developer secure construction loans or otherwise pay the
reimbursement packages submitted by their general contractors (GC) and then submit a
reimbursement request to their funders, the general contractor's reimbursement request is
submitted to the funding agency (in this case the City) for review and payment. The reimbursement
payment still passes through the non - profit developer back to the GC. The payment requests
continue to be evaluated at both the non - profit developer and funder level to ensure that the
expenses submitted are correct and eligible expenses. More specifically, draw requests would
require standard A1A forms and documentation.
In short, a "draw down" reimbursement does not mean advancing funds prior to expenses
occurring but, rather, allowing for the intermediary process — payment by the non - profit developer
of the reimbursement request submitted by the GC and then reimbursement to the non - profit
developer of their payment to the GC — to be eliminated. It remains a reimbursement process. This,
in turn, eliminates the need for the non - profit developer to secure private construction financing.
This "draw down" process is permitted by USHUD regulations.
ANALYSIS
While at this time it is expected that the remaining NSP1 funds will be expended and the
rehabilitation of the three buildings will be completed by March 31, 2012, well within the NSP
program deadline of March 1, 2013, compliance with this deadline is contingent upon available
financing.
Following the instructions of the DCA staff, City staff is requesting that the contract between DCA
and the City, as well as the corresponding contract between the City and MBCDC, be amended to
incorporate a draw down process as allowed by US HUD. City staff has prepared Policies and
Procedures for Construction Draw Downs, per guidance on the HOME Training Materials for
Certified Specialists, Chapter 7, Effective Construction Management, dated August 2008. City staff
is proposing to amend both agreements (DCA/City and City / MBCDC) to include the option of a
"draw down" of funds versus a reimbursement process to cover the costs of rehabilitation of the
projects.
The Administration has researched draw -down policies already in place for other HUD funded
NSP1 recipients, for standard construction industry standards, and for our own Capital
Improvements Program office and proposes the process outlined in the attached Policies and
Procedures for Construction Draw Down Payment Methodology to be followed at each time a
request for payment is requested by the Developer /Sub - recipient.
NSP1 Amendment
Page 3 of 3
LOAN REVIEW /FINANCE & CITYWIDE PROJECTS COMMITTEE REVIEWS
The City's Loan Review Committee met on June 20, 2011, and unanimously passed a motion to
support the proposed amendment to Neighborhood Stabilization Program 1 (NSP1) Agreement
with revisions to the Policies and Procedures for Draw Downs as noted in the meeting. The
attached revised Policies and Procedures were presented to, and accepted by, the City's Finance
& Citywide Projects Committee on June 23, 2011.
CONCLUSION
The Administration recommends that the Mayor and City Commission authorize an amendment to
both NSP1 agreements with DCA and with MBCDC, to allow for construction draw down payments.
JMG /HMF /AP /rs
T:\AGENDA\2011 \7- 13- 11 \NSP1- DCA MBCDC Draw Down Amendment - MEMO.docx
ICI
MIAMI BEACH
Office of Real Estate, Housing and Community Development
POLICIES AND PROCEDURES:
CONSTRUCTION DRAW DOWN PAYMENT METHODOLOGY
Rev. 6/22/11
POLICY: The Real Estate, Housing and Community Development Office (REHCD) will ensure
compliance with Federal requirements for payment requests on all City- approved US HUD -
funded capital projects as already established per US HUD HOME Program Rules. The
methodology for payment of US HUD funds for a construction project shall be determined by
the City in full compliance with HUD rules. In the event that a "draw down" methodology is
approved, the following procedures shall be followed.
II. DEFINITIONS:
a. Project: a site or sites together with any building or buildings located on the site(s), which
has been allocated state or federal grant funds and which has been approved by the
funding agency and by the City Commission. The City will have entered into a contractual
agreement, in compliance with grant rules, with a Sub - recipient to be assisted with HUD
funds. Projects will only be eligible for draw downs if a Scope of Work, Budget for Scope
of Work, and a Draw Down Schedule for reasonable and necessary work (as defined by
HUD) has been attached and made part of the grant agreements between the City and the
The "Project" includes construction and /or rehabilitation of HUD-qualifying
Sub -reci lent. Th Pr
P 1
may also include design, permitting, and other HUD-approved and m als
g 9, pP roved activities
properties, Y p
and costs necessary to achieve the objectives of the grant and which have been defined in
the grant agreement.
b. Sub - recipient: the entity, such as the developer, under contract with the City to receive
funding pursuant to federal or state HUD program rules, guidelines and eligible activities.
c. General Contractor (GC): the entity under contract with the Sub - recipient that is performing
construction or rehabilitation services on the project on behalf of the Sub - recipient
d. Construction Consultant: an independent third party (e.g. architect, engineer, contractor,
etc.) who will review all Application and Certification for Payment requests and conduct
construction draw administration and conduct inspections and provide construction
progress reports as necessary.
e. Draw down: For purposes of this policy, this refers to a payment request submitted by a
Sub - recipient for a project for expenses incurred by their GC or other contractors in the
development of that project, including change order reimbursement requests.
III. REQUIRED DOCUMENTATION:
REHCD shall require the following documentation to be provided by the Sub - recipient for
each draw -down request submitted to the Office:
a. Application and Certification for Payment AIA Document G702 and G703 (Schedule of
Values) signed by the contractor and architect, and notarized.
b. Any change orders or deviations from the original Scope of Work or Budget for Scope of
Work will require City Manager approval and will be submitted on an Application and
Certification for Payment AIA Document G701, signed by the contractor and architect, and
notarized.
c. Lien waivers from each GC, contractor, and /or subcontractor for the funds being requested
will be submitted with the Application and Certification for Payment.
d. Verification of payment of Davis -Bacon Wages and other labor standards, including
original, signed payroll certificates for previous work completed.
e. Quarterly construction status reports (submitted by Sub - recipient within ten (10) business
days following end of quarter).
1
IV. PROCESSING OF DRAW DOWN REQUESTS
a. REHCD shall review the draw down request package to ensure it includes all of the
required documents and the required signatures.
b. REHCD shall confirm that the Sub- recipient is current in their quarterly reporting prior to
processing any payment for a draw down request. If the Sub - recipient is not current on
their quarterly construction status reports, the Sub - recipient shall be notified in writing. If
the required quarterly construction status report is not submitted prior to the completion of
the review of the draw down, REHCD may withhold payment of that draw down request
until such time as the report is received,
c. All draw down requests shall be date stamped upon receipt in REHCD and the draw down
request shall be forwarded to the REHCD staff responsible for contract management for
the related grant agreement.
d. REHCD shall review the draw down request and provide comments, notations and
recommendations on the funding request, including review of the back -up documentation
provided to ensure documentation is consistent with the Scope of Work, Budget for Scope
of Work, and Draw Down Schedule attached to the grant agreement. REHCD may conduct
a site visit or request additional documentation or information as part of this review.
e. REHCD will provide the selected Construction Consultant with the Sub - recipient's draw
package and AIA forms for review.
f. Construction Consultant shall review the draw request, conduct site inspections to verify
completion of the work and adherence to the contractually approved Scope of Work,
Budget for Scope of Work, and Draw Down Schedule, and verify compliance with codes
and building standards and requirements.
g. Construction Consultant shall produce a report providing their professional opinion and
recommendation on the draw request submitted, including any recommendations for
modifications or specific exceptions.
h. REHCD shall review the Construction Consultant's recommendations and develop a
request for payment through the City's Finance Department, The Construction Consultant's
report and recommendations, as well as Staff's recommendations should they differ from
the Construction Consultant, shall be referenced in the documentation submitted to the
Finance Department with the payment request. If the payment request is less than the
original draw down request, REHCD shall notify the Sub - recipient, in writing, that an
adjustment has been made to the draw down request, the dollar value of the adjustment
and why the adjustment was made. The Sub - recipient may re- submit disallowed expenses.
Prior to payment of final draw down request, the Construction Consultant shall conduct a
closeout inspection(s). REHCD will process the final draw down payment request after
receipt and review of the Construction Consultant's final report and receipt of a copy of the
Certificate of Occupancy.
j. Sub - recipient must provide REHCD with proof of deposit of the draw down payment
reflecting that the deposit was made within five (5) business days after payment was made
to the Sub - recipient by the City.
k. Within ten (10) business days following the deposit of the draw down payment, the Sub -
recipient must provide REHCD with a copy of a cashed check(s) evidencing full payment
from Sub - recipient to the contractor(s) for the services and goods provided, as reflected in
the draw down request. Failure to provide a cancelled check(s) can result in the
withholding of any future draw down request payments.
V. PROJECT DRAW DOWN REQUEST TRACKING
a. REHCD shall note in the project ledger the date of the receipt of the draw down
reimbursement request; which draw down number request was submitted; whether the
request is a change order and, if so, what change order number it is; the amount
requested; the final amount paid to the Sub - recipient following review of the draw down
request; and confirmation of receipt of the cancelled check from the Sub - recipient to the
contractor(s).
2
VI. OTHER
In all other regards relating to monitoring and inspection of the Sub - recipient's project
implementation, REHCD shall follow the guidance on Inspections and Specifications -
Management Perspectives, per Chapter 7, Effective Construction Management, pages 7/14-
16, of the HOME Certified Specialist - Administration Training Manual, dated August 2008
(three pages attached).
3