2011-27723 Reso Inc. RESOLUTION NO. 2011 -27723
A RESOLUTION OF THE MAYOR AND THE CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, APPROVING A SUBORDINATION OF A CITY
MORTGAGE, IN THE AMOUNT OF $1,024,708, MADE TO MBCDC: THE
ALLEN, LLC (MORTGAGOR) FOR THE REHABILITATION OF THE
AFFORDABLE HOUSING PROJECT KNOWN AS "THE ALLEN HOUSE ",
LOCATED AT 2001 WASHINGTON AVENUE, MIAMI BEACH, FLORIDA; SAID
SUBORDINATION, IN FAVOR OF A $263,300 LOAN (MADE TO MBCDC: THE
ALLEN LLC) BY GREAT FLORIDA BANK, IN CONNECTION WITH MBCDC'S
REDUCTION /CONVERSION OF ITS CONSTRUCTION FINANCING FROM
GREAT FLORIDA BANK, IN THE AMOUNT OF $500,000, TO PERMANENT
FINANCING, IN THE AMOUNT OF $263,300; AND FURTHER AUTHORIZING
THE CITY MANAGER AND THE CITY CLERK TO EXECUTE ANY AND ALL
DOCUMENTATION RELATED THERETO.
WHEREAS, on March 14, 2007, the Chairperson and Members of the Miami Beach
Redevelopment Agency (RDA) adopted Resolution No. 545 -2007, authorizing an appropriation of
$13,650,000 from City Center /Historic Convention Village (City Center) Redevelopment Agency non -
TIF funding sources, to Miami Beach Community Development Corporation (MBCDC) for the
purchase of three (3) properties located within the City Center RDA: 1940 Park Avenue (The
Barclay); 1965 -1975 Washington Avenue (The London House); and 2001 Washington Avenue (The
Allen House); and
WHEREAS, the Resolution approved the terms and conditions for a Loan Agreement
between the RDA and MBCDC, governing the use of all funding allocated in connection with the
purchase of these properties, which are to be restored, renovated, operated and maintained by
MBCDC for the purpose of preserving these historic structures within the City Center RDA, and to
also maintain the units as affordable housing for low to moderate income individuals; and
WHEREAS, the portion of the funds allocated to the purchase of The Allen House was
$3,469,347.50; and the RDA funds are secured by a Loan Agreement and Declaration of Restrictive
Covenants, dated April 30, 2007 (the RDA Loan); and
WHEREAS, since the acquisition of the properties, MBCDC has been conducting a
phased renovation of the buildings and, to initiate the rehabilitation of The Allen House, MBCDC
applied for, and received, a construction loan, in the amount of $500,000, from Great Florida Bank
(GFB); and
WHEREAS, the terms of this financing commitment included a provision for the GFB to
hold a first mortgage position for the amount of the loan; accordingly, on April 16, 2008, the RDA
adopted Resolution No. 556 -2008, consenting to a subordination of the RDA Loan to the GFB
construction loan; and
WHEREAS, to complete the rehabilitation of The Allen House, MBCDC subsequently
secured additional financing from the City, through its CDBG, HOME, and SHIP programs, totaling
$1,024,708 (the City Mortgage); and
WHEREAS, to secure this financing, the City required the execution of a Mortgage and
Security Agreement, and a Promissory Note; the executed Mortgage was recorded on July 5, 2011
with a requirement that no other debt could be in a senior lien position to the City; and
WHEREAS, MBCDC and GFB now wish to convert the $500,000 construction loan to a
permanent loan, and reduce the loan to $263,300; one of GFB's conditions for the loan is for GFB
to be granted a first mortgage position for the amount of the loan; and
WHEREAS, accordingly, MBCDC and GFB have requested that the City subordinate its
interest in The Allen House property (i.e. the $1,024,708 City Mortgage) to the $263,300 being
provided by the permanent loan; and
WHEREAS, the Administration recommends approval of the subordination of the City
Mortgage to the $263,300 loan by Great Florida Bank, in connection with MBCDC's conversion of its
$500,000 construction financing to permanent financing (in the reduced loan amount).
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 a
subordination of a City mortgage, in the amount of $1,024,708, made to MBCDC: The Allen, LLC
(Mortgagor), for the rehabilitation of the affordable housing project known as The Allen House ",
located at 2001 Washington Avenue, Miami Beach, Florida; said subordination in favor of a
$263,300 loan (made to MBCDC: The Allen, LLC) by Great Florida Bank, in connection with
MBCDC's reduction /conversion of its construction financing from Great Florida Bank in the amount
of $500,000, to permanent financing, in the amount of $263,300; and further authorizing the City
Manager and the City Clerk to execute any and all documentation related thereto.
PASSED and ADOPTED this 944 day of S4 -P/' , 2011
ATTEST:
i
CLAA. pkt„ixe,
� : j
Robert Parcher, City Clerk � ,,..., s 44; atti Herr ra Bower, Mayor
0
* INCORP ORA I
H 2 .'.-
APPROVED AS TO
FORM & LANGUAGE
• - ;:i
0 Attorne Da
COMMISSION ITEM SUMMAR
Condensed Title:
A resolution approving a subordination of the City's $1,024,708 interest in The Allen House in favor of a $263,300 loan by Great
Florida Bank to MBCDC: The Allen, LLC, in connection with MBCDC's conversion of its $500,000 construction loan to a permanent,
reduced loan amount.
Key Intended Outcome Supported:
1. Increase access to workforce or affordable housing. 2. Improve the lives of elderly residents.
Supporting Data (Surveys, Environmental Scan, etc.: Based on the 2009 Customer Satisfaction Survey: 17.5% of businesses
feel that lack of workforce housing is one of their most important challenges; 80% of residents 65 or older rated City response to
expectations as good or excellent.
Issue:
Shall the City subordinate its lending position for grant funding provided to Miami Beach Community Development Corporation
(MBCDC), in favor of Great Florida Bank's lending position in connection with MBCDC's construction loan, which was originally
$500,000 and which is being converted and reduced to a $263,300 permanent loan?
Item Summary /Recommendation:
On March 14, 2007, the RDA authorized an appropriation of Center /Historic Convention Village Redevelopment Agency non -TIF
funding sources to MBCDC for the acquisition of The Allen House, located at 2001 Washington Avenue for purposes of retaining
much - needed affordable housing. The funds allocated to the purchase of The Allen House were secured by a Mortgage with the
RDA. Shortly thereafter, MBCDC obtained a construction loan from Great Florida Bank (the Bank) in the amount of $500,000 for the
rehabilitation of the property; that loan was conditioned upon the RDA subordinating its lending position to the Bank. On April 16,
2008, the RDA adopted Resolution No. 556 -2008 consenting to subordination by the RDA to Great Florida Bank. The subordination
of governmental funds for the purpose of acquiring or rehabilitating affordable housing is common practice.
Additional funding required to complete the rehabilitation of The Allen House (City CDBG, HOME, and SHIP funds) was allocated
over several funding cycles and following City Commission approval. As is customary, the City required that MBCDC secure the
funding during the affordability period; a Mortgage and Security Agreement, as well as a Promissory Note with a requirement that no
other debt could be in a senior lien position were executed by MBCDC in the City's favor. The new mortgage was recorded July 5,
2011. At that time no request was made to subordinate the City's new mortgage lending position to the original Bank loan's position.
Rehabilitation of The Allen House is now complete and a Certificate of Occupancy was issued on June 15, 2011. The Bank and
MBCDC wish to convert the 2008 construction Bank loan to a reduced permanent loan in the amount of $263,300. As is customary,
the Bank is conditioning the loan conversion with a subordination of the City's $1,024,708 Mortgage position prior to the closing of
the transaction.
It is recommended that the Mayor and City Commission approve the subordination of the City's $1,024,708 interest in favor of a
$263,300 loan by Great Florida Bank in connection with MBCDC's conversion and reduction of its $500,000 construction financing to
permanent financing.
Advisory Board Recommendation:
N/A
Financial Information:
Source of Funds: Amount Account
1 N/A
2
3
OBPI Total
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Anna Parekh X7260
Sign -Offs:
Department Director hissi - tant City Manager City Manager
AP JMG
AGENDA ITEM G ? R
MIAMI BEACH ?-1V
— if DATE 1
� 7 if
el MIAMI
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 14, 2011
SUBJECT: A RESOLUTION OF THE MAYOR AND THE CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING A SUBORDINATION OF A
CITY MORTGAGE, IN THE AMOUNT OF $1,024,708, TO MBCDC: THE
ALLEN, LLC (MORTGAGOR), FOR THE REHABILITATION OF THE
AFFORDABLE HOUSING PROJECT KNOWN AS "THE ALLEN HOUSE ",
LOCATED AT 2001 WASHINGTON AVENUE, MIAMI BEACH, FLORIDA, IN
FAVOR OF A $263,300 LOAN (MADE TO MBCDC: THE ALLEN LLC) BY
GREAT FLORIDA BANK; SAID SUBORDINATION IN CONNECTION WITH
MBCDC'S REDUCTION /CONVERSION OF ITS CONSTRUCTION
FINANCING FROM GREAT FLORIDA BANK, IN THE AMOUNT OF
$500,000, TO PERMANENT FINANCING, IN THE AMOUNT OF $263,300;
AND FURTHER AUTHORIZING THE CITY MANAGER AND THE CITY
CLERK TO EXECUTE ANY AND ALL DOCUMENTATION RELATED
THERETO.
ADMINISTRATION RECOMMENDATION
Adopt the resolution.
BACKGROUND
On -
O March 14, 2007, the RDA adopted Resolution No. 545 2007 authorizing an appropriation
p g
of
$13,650,000 from City Center /Historic Convention Village (City Center) Redevelopment Agency
non -TIF funding sources, to Miami Beach Community Development Corporation (MBCDC). The
purpose of the funding was to provide MBCDC with the balance due in connection with its
purchase of three properties located within the City Center RDA: 1940 Park Avenue (The
Barclay); 1965 -1975 Washington Avenue (The London House); and 2001 Washington Avenue
(The Allen House). The Resolution approved the terms and conditions for a Loan Agreement
between the RDA and MBCDC, governing the use of all funding allocated in connection with the
purchase of these properties, which are to be restored, renovated, operated and maintained by
MBCDC for the purpose of preserving these historic structures within the City Center RDA, and
to also maintain the units as affordable housing for low to moderate income individuals. The
portion of the funds allocated to the purchase of the Allen House was $3,469,347.50.
On April 16, 2008, via Resolution 556 -2008, the RDA consented to a first mortgage
encumbrance of the RDA's interest in The Allen House in accordance with the provisions of a
Loan Agreement, Note and Restrictive Covenant between the RDA and MBCDC: The Allen,
LLC, dated April 30, 2007, said Mortgage in connection with MBCDC's application to Great
Florida Bank (the Bank) for permanent construction financing, in the amount of $500,000 to fund
the rehabilitation of The Allen House.
City Commission Memorandum
September 14, 2011
Page 2
The terms of this financing commitment included a provision for the Bank to hold a first
mortgage position for the amount of the loan, which is a common requirement of commercial
bank loans in this type of transaction.
To complete the rehabilitation of The Allen House, additional financing was required. Therefore,
over the course of several years, City entitlement funds from Community Development Block
Grants, HOME Program, and State SHIP funds totaling $1,024,708 were allocated over several
funding cycles and via several grant agreements between MBCDC and the City. As is
customary, the City required that MBCDC secure the funding during the required affordability
period. Therefore, a Mortgage and Security Agreement as well as a Promissory Note were
executed by MBCDC: The Allen, LLC, which combined the CDBG, HOME, and SHIP grants.
This new mortgage was recorded July 5, 2011 with a requirement that no other debt could be in
a senior lien position. At that time, a request to subordinate the City's new mortgage to the
original bank loan was not made.
Rehabilitation of The Allen House is now complete and a Certificate of Occupancy was issued
on June 15, 2011. The Bank and MBCDC wish to convert the remaining balance, $263,300, of
the original $500,000 construction loan to permanent financing. As such, the Bank has
requested that the City subordinate its position to the new Bank loan.
ANALYSIS
Based on pro -forma operating statements, recently analyzed as part of a HUD - required Subsidy
Layering Review, the property will generate enough rental income to cover the debt service
requirements.
Based on the Miami -Dade County Property Appraiser's Office, the property has an assessed
value of $2,841,792. This assessment, which was done prior to the completion of the
rehabilitation, does not take into consideration the $1.7 million in rehabilitation improvements
made by MBCDC.
CONCLUSION
The Administration recommends approval of the subordination of the City's $1,024,708 interest
in favor of a $263,300 loan by Great Florida Bank in connection with MBCDC's conversion of its
$500,000 construction financing to permanent financing in the reduced loan amount.
JMG /HF /AP /ARB
T:\Agenda\2011 \9 -14 -11 WIIenSubordinationToGFB