Loading...
Amendment 7 to NSP1 Agreement t-2 i AMENDMENT NO. 7 TO NEIGHBORHOOD STABILIZATION PROGRAM 1 (NSP1) AGREEMENT, DATED JANUARY 27, 2010, BETWEEN CITY OF MIAMI BEACH, FLORIDA AND MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION THIS AMENDMENT NO. 7 TO NEIGHBORHOOD STABILIZATION PROGRAM 1 (NSP1) AGREEMENT is entered into this /944 day of F v 2012, by and between the CITY OF MIAMI BEACH, a Florida municipal c poration, having its principal office at 1700 Convention Center Drive, Miami Beach, Florida, (City), and MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION, a Florida not - for - profit corporation, having its principal office at 945 Pennsylvania Avenue, Miami Beach, Florida 33139 (MBCDC or Developer). WITNESSETH: WHEREAS, on July 31, 2009, pursuant to the City's application for same authorized under Resolution No. 2009 - 27039, the City was awarded a grant under the NSP1 Program, in the amount of $2,549,551, and, accordingly, on November 24, 2009, the City entered into an NSP1 Grant Agreement with the State of Florida Department of Community Affairs (DCA); and WHEREAS, as authorized pursuant to Resolution No. 2009 - 27194; the City entered into an NSP1 Agreement with Developer (as the sole responsive proposer pursuant to a City issued Request for Proposals for potential NSP1 funded projects), dated January 27, 2010, in the amount of $2,376,181.53, for funding related to Developer's acquisition and rehabilitation of a sixteen (16) unit residential property located at 7871 Crespi Boulevard, Miami Beach, Florida (the Crespi Project), with any remaining funds to be utilized for the "Secondary Objective Project —Home Ownership Activities;" and WHEREAS, on February 3, 2010, pursuant to Resolution No. 2010- 27335, the City was authorized to execute subsequent amendments to the NSP1 Agreement with Developer, for any additional NSP1 funds which might be granted pursuant to the City's requests; and WHEREAS, on February 3, 2010, pursuant to Resolution No. 2010 - 27348, the City was authorized to enter into and execute Amendment No. 1 to the NSP1 Agreement with Developer, approving a transfer in the ownership of the Crespi Project from MBCDC, to MBCDC: Madeleine Village, LLC, a Florida limited liability corporation whose sole member and agent is MBCDC; and WHEREAS, on March 24, 2010, the City was awarded an additional allocation of NSP1 funds, in the amount of $4,755,717, and, accordingly, executed Modification No. 1 to the November 24, 2009 NSP1 Grant Agreement with DCA; and 1 WHEREAS, on March 30, 2010, City and Developer also executed Amendment No. 2 to the Developer's NSP1 Agreement, to identify and include the Neptune Project, and to identify the additional NSP1 funding being allocated for said project, in the amount of $4,679,226.78; and WHEREAS, on July 1, 2010, the City was awarded an additional allocation of $2,000,000 in recaptured NSP1 funds, and, accordingly, executed Modification No. 2 to the November 24, 2009 NSP1 Grant Agreement with DCA; and WHEREAS, on March 3, 2010, Developer entered into a contract for purchase and sale of the Lottie Apartments, a nine (9) unit residential property, located at 530 75` Street, Miami Beach, Florida, for a purchase price of $1,185,000; and WHEREAS, on July 22, 2010, City and Developer executed Amendment No. 3 to Developer's NSP1 Agreement, to identify and include the Lottie Apartments Project, and to identify the additional NSP1 funding being allocated for said Project, in the amount of $1,864,000.00 for the acquisition and rehabilitation; and WHEREAS, on September 17, 2010, City and Developer executed Amendment No. 4 to Developer's NSP1 Agreement, to transfer ownership of the Lottie Apartments from MBCDC, to MBCDC: Lottie Apartments, LLC, a Florida limited liability corporation whose sole member and agent is MBCDC; and WHEREAS, on May 11, 2011, pursuant to Resolution No. 2011- 27657, City was authorized to enter into and execute Amendment No. 5 to the NSP1 Agreement with Developer, extending the Term through March 1, 2013; and WHEREAS, on July 13, 2011, pursuant to Resolution No. 2011 - 27693, the City was authorized to enter into and execute Amendment No. 6 to the NSP1 Agreement with Developer, adopting the "City's Policies and Procedures: Construction Draw Down Payment Methodology', dated July 13, 2011; and WHEREAS, pursuant to the provisions of Chapter 2011 -142, Laws of Florida, the DCA Division of Housing and Community Development was transferred to the Department of Economic Opportunity (DEO), effective October 1 2011; and WHEREAS, during DSO's audit of the City's NSP1 Program, which occurred during the week of October 17, 2011, DEO staff required implementation of a new DEO policy to complete NSP1 projects ahead of HUD's expenditure plan; and WHEREAS, DEO staff revised the Term, to provide for a new contract expiration date, from March 1, 2013, to November 23, 2012; and WHEREAS, DEO staff also requested that additional terms to be added to the NSP1 Agreement between the City and Developer to memorialize certain policies and procedures. NOW THEREFORE, in consideration of the mutual promises contained herein, City and Developer hereby amend the NSP1 Agreement, dated January 27, 2010, as follows: 2 1. Section 11, on page 4 of the Agreement, is deleted in its entirety and replaced with the following: Section 11. Term: This Agreement shall commence upon the last date of execution by the parties hereto (the Execution Date), and shall terminate eighteen (18) months after said Execution Date (the Term). Any costs incurred by the Developer prior to the Execution Date which were not approved by the City, will not be reimbursed by the City. Notwithstanding the preceding, the City herebyagrees to a one -time extension of the Term, through November 23, 2012, which extension shall be contingent upon approval by the State of Florida, in accordance with the guidelines established in the 2008 State of Florida Action Plan Substantial Amendment (Attachment VIII). If approved, by the State, the aforestated one -time extension is intended to be co- terminous with the City's DEO contract expiration date; and with the understanding that, at the end of the Term, the State has the authority to re- capture any remaining unused funds. 2. A new Section 29, entitled "Additional Conditions Required by State of Florida, Department of Economic Opportunity (DEO)" is hereby added as follows: Section 29: Additional Conditions Required by State of Florida, Department of Economic Opportunity (DEO) 29.1 Developer Fee: Developer Fee shall be capped at a maximum of 16% of eligible Developer costs. Eligible Developer cost is defined as costs after acquisition, construction costs, and carrying costs, and shall not include payments for principle interest taxes and insurance. 29.2 Retainage: City shall retain 10% of all draw or reimbursement requests from every Developer payment request. 29.3 Cancelled Check Documentation: Developer shall submit copies of cancelled checks with all reimbursement requests prior to receiving payment. 29.4 Project Budgets and Schedules: Developer's revised project budget allocations and schedules, dated 10/26/11 as per Attachment I, shall replace the original budget allocations and schedules and the revised project budget allocation and schedules shall not result in any additional allocations other than the total $8,672,509.78 that the City has already allocated to these projects under the NSP1 Program. Corresponding modifications to the existing recorded mortgages shall be executed and recorded. The mortgage modifications will only reflect a re- allocation of amounts among the Proiects and will not result in an increase or decrease of funds other than the total amount 3 J of funds that the City has already allocated to these projects under the NSP1 Program ($8,672,509.78.) 29.5 Use of Contingency Funds: Developer shall pay for any debt service, interest payments, and taxes from the project's contingency funds. Additional use of Contingency funds shall require City and DEO approval. 29.6 Developer Definition regarding Program Income: City shall incorporate HUD's NSP Policy Alert dated July 13, 2011, Attachment II, regarding Program Income to the Agreement terms, which defines the Developer as an "end user" who was procured through an RFP process, and therefore Developer may retain all Program Income. 29.7 Independent Audits of Program Income: The three corresponding limited liability corporations who have taken title to the buildings shall procure yearly independent audits regarding program income and shall submit such report to the City, the cost of the yearly independent audits shall be borne by the corporate owner of each proiect from its operating expenses. 2. All other terms and conditions of the NSP1 Agreement (as amended) shall remain unchanged and in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment No. 7 to NSP1 Agreement as of the date first written above. MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION ATTEST: a Florida not - for - profit corporation "' , /--. " /'z' 4 !=�:- tary Roberto D orre President, Authorized Signatory ATTEST: CITY OF MIAMI BEACH a Florida Municipal Corporation City Clerk yor APPROVED AS TO F:IRHCDI$ALLIHSG- CDIALLINSP 11MBCDC Correspondence\Amendments\NSP1 AMENDMENT 7 NEW TERMS.doc FORM S LANGUAGE & FOR EXECUTION 4 t- I r � Ct- ' Attome Date' ATTACHMENT I NSP1 Projects Summary A. MADELEINE APARTMENTS BUDGET MODIFICATION REV 10/2612011 I i # CONCEPT ORIGINAL BUDGET JINCREASEIDECREASd FINAL BUDGET 1 AQUISITION $1,150,000.00 $0.00 $1,150,000.00 2 CONSTRUCTION COST $587,000.00 - $134,004:99 $452,995.01 3 CONSTRUCTION CONT $150,000.00 $83;700.00 $66,300.00 4 PREDEVELOPMENT / S $153,842.00 $28,843.50 $182,685.50 5 DEVELOPERS FEE $88,440.00 $6,689.48 $95,129.48 TOTALS $2,129,282.00 - $182,172.01 $1,947,109.99 I � I B. NEPTUNE APARTMENTS BUDGET MODIFICATION REV 10/2612011 # CONCEPT ORIGINAL BUDGET INCREASE ! DECREAS FINAL BUDGET 1 AQUISITION $5,657,850.00 $0.00: $5,657,850.00 2 CONSTRUCTION COST $175,001.00 $123,516.48 $298,517.48 3 CONSTRUCTION CONT $0.00 $55,000.00 $55,000.00 4 PREDEVELOPMENT / S $196,375.78 $12,032.12 $208,407.90 5 DEVELOPERS FEE $0.00 $69,637;57 $69,637.57 TOTALS $6,029,226.78 $260,186.17 $6,289,412.95 I I i C. j LOTTIE APARTMENTS BUDGET MODIFICATION REV 10/26/2011 # CONCEPT ORIGINAL BUDGET JINCREASE / DECREASd FINAL BUDGET 1 AQUISITION $1,185,000.00 $0.00 $1,185,000.00 2 CONSTRUCTION COST $549,100.00 $227,588.65 $321,511.35 3 CONSTRUCTION CONT $14,172.00 $60,828.00 $75,000.00 4 PREDEVELOPMENT / S $102,746.00 $33;570.50' $136,316.50 5 DEVELOPERS FEE $25,886.00 $42,273.21 $68,159.21 TOTALS $1,876,904.00 - $90,916.94 $1,785,987.06 Total three Projects: $10,022,510.00 Total Funds Available: NSP1 Funds $8,672,510.00 HOME Funds $650,000.00 IFB Financing $700,000.00 j $10,022,510.00 1/26/2012 4:47 PM Madeleine MBCC LLC ESTIMATING PAGE # 1 DATE DECEMBER 28 2009 REVISED 10/26/2011 CLIENT MBCDC: THE MADELEINE VILLAGE PROJECT NSP - CRESPI (REVISED LOCATIO17871 -7861 CRESPI BLVD. MIAMI BE, SCHEDUL NINE (18) MONTHS 72 Weeks PROJECT COST SCOPE OF WORK DIVISION ! �u ENEI? AL REQU R NTS �� 600 . 0 1000 GENERAL CONDITIONS /SUPERINTENDENT $ - $ 11,375.00 $ 11,375.00 1002 GENERAL CONDITIONS /PROJECT MANAGER $ - $ 13,000.00 $ 13,000.00 1003 GENERAL LABOR $ 30,000.00 $ (28,800.00) $ 1,200.00 1004 TELEPHONE (MOBILE & JOBSITE) $ - 1004 TELEPHONE (MOBILE & JOBSITE) $ - $ 541.67 $ 541.67 1005 TEMPORARY POWER & UTILITIES $ 8,000.00 $ (7,400.00) $ 600.00 1006 SMALL TOOLS $ 600.00 $ 900.00 $ 1,500.00 1007 WATER & ICE $ 250.00 $ 291.67 $ 541.67 1008 TRUCK AND AUTO ALLOWANCE $ - $ 1,140.00 $ 1,140.00 1009 GAS OIL AND TOLL ALLOWANCE $ - $ 704.17 $ 704.17 1010 MOBILIZATION & SET -UP $ 2,000.00 $ (2,000.00) $ - 1009 TRUCK & AUTO ALLOWANCE $ - 1010 BOND $ - 1020 ARCHITECT /ENGINEERING FEES $ - 1021 MASTER PERMIT FEE (ALLOWANCE) $ - 1021.1 SHOP DRAWINGS PERMITS FEE (ALLOWANCE) $ - 1022 PLANS PROCESSING FEES $ - 1023 BLUEPRINTS /REPRODUCTIONS $ - 1024 CLEANING /FINAL CLEANING $ - 1023 CLEANING / FINAL CLEANING $ - $ 800.00 $ 800.00 1024 TEMPORARY TOILETS $ - $ 510.00 $ 510.00 1025 DUMPSTERS $ 4,500.00 $ 1,300.00 $ 5,800.00 1400 QUALITY CONTROL / PUNCH LIST $ - $ 1,000.00 $ 1,000.00 1500 OFFICE TRAILER $ - 1503 TEMPORARY TOILETS $ - 1506 SURVEYING / LAYOUT $ - 1507 THRESHOLD INSPECTOR (ALLOWANCE) $ - 1508 MATERIAL TESTING (ALLOWANCE) $ - 1510 JOBSITE SIGN $ - 1511 MAIN OFFICE COURIER SERVICE $ - 1550 OSHA REQUIREMENTS (BARRICADES & RAILINGS) $ 250.00 $ 200.00 $ 450.00 DIVISION 2 SITE WORK,. A $14,817a n�?.., f '' 2070 SELECTIVE DEMOLITION $ - $ 5,000.00 $ 5,000.00 2100 CLEAR & GRUB $ - $ - $ - 2101 DEWATERING $ - 2200 FILL TO GRADE EXCAVATION $ - $ - $ 2201 FINAL GRADING $ 2225 POUR STRIP/TRENCH BF /COMPACTION $ 2230 COMPACTION & SOIL DENSITY TEST (ALLOWANCE) $ Pagel Madeleine 2250 TERMITE CONTROL /SOIL PREP $ 2,000.00 $ (2,000.00) $ 2252 SEWER (OFF -SITE) $ - 2370 HELICAL PILES $ - 2500 STORM DRAINAGE $ - 2520 BRICK PAVERS $ - 2551 WATER (FIRE LINE - From existing backflow to Bldg) $ - 2551 IRRIGATION SYSTEM $ 2,200.00 $ (2,200.00) $ - 2600 PAVING $ 2610 STRIPPING /SIGNS /BUMPERS $ 2621 CONCRETE (CURBS/VALLEY GUTTER/OFF SITE SIDE W $ 2622 PAVING & DRAINAGE PERMITS, FEES AND AS- BUILTS $ 2623 GUARD RAILS $ - 2630 SIDEWALKS (AS PER PLANS) $ - 2710 FENCES & GATES $ 5,600.00 $ (5,600.00) $ 2750 IRRIGATION SYSTEM $ - 2800 LANDSCAPING $ 5,000.00 $ (5,000.00) $ - ©IVISIQN 3 - 33610:: 3301 CONCRETE CAST IN PLACE $ - $ - $ - 3320 LIGHTWEIGHT CONCRETE $ - 3340 TWIN TEES & HOLLOW CORE $ - 3400 PRECAST CONCRETE $ - 3730 CONCRETE RESTORATION $ - $ - $ - 3735 CONCRETE FLOORING (GYP- CRETE) $ DIVISION 4'- MASO f�': NOT USED $ - ©IVISRipN S e 5120 STRUCTURAL STEEL $ - 5121 METAL EMBEDS ON TILT -UP $ - 5300 METAL DECK $ - $ _ $ _ 5510 MEZZANINE (HOLLOW CORE) $ - 5520 MISCELLANEOUS STEEL & RAILINGS $ - $ 8,000.00 $ 8,000.00 5999 MISC. WELDING $ - 6100 ROUGH CARPENTRY $ - $ - $ - 6190 6140 WOOD FRAMES $ - $ - $ 6200 TRIM CARPENTRY $ - $ - $ _ 6410 CABINETRY/VANITY TOPS $ 27,500.00 $ (8,500.00) $ 19,000.00 DIVISION URN» Pty , , :.. PI T 7100 7100 WATERPROOFING /CAULKING $ 800.00 $ (150.00) $ 650.00 7200 INSULATION INTERIOR PARTITIONS $ - 7300 .<, 7301 INSULATION $ - $ 6,000.00 $ 6,000.00 7400 CANOPIES /METAL $ - 7810 SKYLIGHTS $ - E N ' 7,400.00 11 8100 METAL DOORS & FRAMES $ 4,200.00 $ (4,200.00) $ - 8200 WOOD DOORS & FRAMES $ 3,200.00 $ (800.00) $ 2,400.00 8210 FRONT ENTRANCE DOOR $ - 8360 OVERHEAD DOORS $ Page 2 Madeleine 8500 WINDOWS /STOREFRONTS $ - 8510 ROOF HATCH (1) $ - 8201 8500 8700 HARDWARE $ 2,000.00 $ (2,000.00) $ - 8830 MIRRORS (MEDICINE CABINETS) $ 4,000.00 $ (3,440.00) $ 560.00 DI VISION 9 " FIIdI$HE r t 9160 STUCCO & MOLDINGS $ - $ 4,000.00 $ 4,000.00 9250 GYPSUM WALLBOARD SYSTEMS $ 18,000.00 $ 27,000.00 $ 45,000.00 9255 FIRE RATING (ALL PENETRATIONS & CHASES) $ 1,700.00 $ (200.00) $ 1,500.00 9300 CERAMIC TILE @ BATHROOMS $ 4,200.00 $ (4,200.00) $ - 9301 CERAMIC TILE @ CORRIDOR, LAUNDRY & STORAGE $ - 9302 CERAMIC TILE @ LIVING AREAS $ 33,000.00 $ (19,400.00) $ 13,600.00 9500 ACOUSTICAL CEILING & INSULATION (R -19) $ - 9615 MARBLE WINDOW SILLS $ 9682 CARPET FLOORING $ - $ - $ - 9683 MARBLE WINDOW SILLS $ 3,800.00 $ (3,800.00) $ - 9684 WOOD BASE (4 ") $ 4,500.00 $ (1,000.00) $ 3,500.00 9900 PAINT $ 20,100.00 $ (2,100.00) $ 18,000.00 9901 FLOOR SEALER $ - DI,VISItN =; SPECIALTIES 5*af3 O a r .• �. 10160 TOILET PARTITIONS $ 10200 LOUVERS & VENTS $ - 10400 SIGNAGE $ - $ - $ - 10552 MAILBOX $ 350.00 $ 900.00 $ 1,250.00 10685 CLOSET WIRE SHELVING $ 2,800.00 $ (2,200.00) $ 600.00 10700 CANVAS AWNINGS $ - 10800 TOILET ACCESSORIES (HC BATHROOMS) $ - 10800 TOILET ACCESSORIES (STANDARD BATHROOMS) $ 2,400.00 $ (480.00) $ 1,920.00 10999 STORM SHUTTERS $ - DIVIS 11001 RENTAL EQUIPMENT (CRANE /HOIST) $ 900.00 $ (900.00) $ - 11001 RENTAL EQUIPMENT BACKHOE & BOBCAT $ - 11100 DOCK LEVELERS 6'X8'- 25,000LBS (1) $ - 11452 KITCHEN APPLIANCES $ 22,400.00 $ (9,500.00) $ 12,900.00 11875 DOCK BUMPERS (10X12X4) $ - 12500 WINDOW TREATMENT $ - $ - $ 12300 CABINETS & STORAGE (LOCKERS) $ - NOT USED $ - IMS z i .. 14200 ELEVATORS $ - 15180 FIRE PROTECTION / FIRE SPRINKLERS $ 15400 PLUMBING SYSTEM & FIXTURES $ 65,500.00 $ (28,200.00) $ 37,300.00 15550 FIRE EXTINGUISHERS $ 550.00 $ (20.00) $ 530.00 15618 WAREHOUSE VENTILATION $ - 15770 HVAC $ 51,200.00 $ (26,200.00) $ 25,000.00 DIVISION 16 ELECTRICAL $82,500.00 16100 ELECTRICAL FIXTURES & PACKAGE $ 57,500.00 $ (9,300.00) $ 48,200.00 Page 3 Madeleine 16150 FIRE ALARM SYSTEM $ 25,000.00 $ (25,000.00) $ - 16200 SOUTHERN BELL 4" PVC $ - SUBTOTAL PROJECT $ 532,000.00 $ 186,150.00 $ 423,352.51 SUPERVISION ADMINISTRATION $ 55,000.00 $ (55,000.00) $ - LIABILITY INSURANCE $ 235.25 $ 235.25 CONTRACTOR'S OVERHEAD $ - $ 23,525.80 $ 23,525.80 CONTRACTOR'S FEE $ - $ 5,881.45 $ 5,881.45 CONTINGENCY $ 150,000.00 $ (150,000.00) $ - TOTAL PROJECT $ 737,000.00 $ (284,004.99) $ 452,995.01 PHASE 1 $129,280.00 PHASE 2 $ 323,715.01 THE MADELLEINE SOFT COST DETAILS 10126/2011 CONCEPT AMOUNT TITLE EXPENSES $ 9,420.00 LEGAL FEES $ 8,350.00 STAMP AND RECORDIN $ 13,387.00 INSURANCE $ 27,742.00 CLOSING MISC. COSTS $ 330.00 INSURANCE BUILDER'S $ 13,054.00 SURVEY $ 2,000.00 APPRAISAL $ 5,000.00 ARCHITECTURAL DRA $ 20,000.00 INSPECTION FEES (A/E $ 5,000.00 SITE MAINTENANCE $ 4,434.77 FILE STORAGE AND WI $ - SELLER INSURANCE $ - CORPORATE FORMATH $ 450.00 ENVIROMENTAL $ 8,000.00 PROPERTY TAX $ 26,988.00 DEPOSIT REFUND $ - BUILDING PERMITS AN $ 30,000.00 SOFT COSTS CONTING $ 8,529.73 TOTAL SOFT COSTS $ 182,685.50 Total PI, T, & Ins. $ 67,784.00 Waymmurgim SUPERVISION AND AD $ 95,129.48 TOTAL OTHER COSTS $ 345,598.98 A. MADELLEINE APARTMENTS BUDGET MODIF REV 10/26/2011 # CONCEPT RIGINAL BUDG ASE / DEC FINAL BUDGE 1 AQUISITION 1,150,000.00 0.00 1,150,000.00 Page 4 Madeleine 2 CONSTRUCTION COSTS 587,000.00 - 134,004.99 452,995.01 3 CONSTRUCTION CONTINC 150,000.00 - 83,700.00 66,300.00 4 PREDEVELOPMENT / SOF 153,842.00 28,843.50 182,685.50 5 DEVELOPERS FEE 88,440.00 6,689.48 95,129.48 TOTALS 1 2,129,282.001-182,172.011 1,947,109.99 Page 5 MBCCLLC ESTIMATING PAGE # 1 DATE 20- Apr -11 REVISED 10/26/2011 CLIENT MBCDC THE NEPTUNE PROJECT COMPLETION WORK FOR C.O (REVISED) LOCATION 1632 MERIDIAN AVENUE MIAMI BEACH SCHEDULE 14 MONTHS (REVISED) 56 PROJECT COST SCOPE OF WORK 1VtS1 Q & FI A�.. AM UNr ., 1000 GENERAL CONDITIONS /SUPERINTENDENT 7,200.00 $ (2,200.00) $ 5,000.00 1002 GENERAL CONDITIONS /PROJECT MANAGER $ 3,500.00 $ (1,500.00) $ 2,000.00 1003 GENERAL LABOR $ 12,120.00 $ (2,120.00) $ 10,000.00 1008 MOBILIZATION & SET -UP $ 900.00 $ (600.00) $ 300.00 1020 ARCHITECT /ENGINEERING FEES $ 10,000.00 $ - $ 10,000.00 1021 MASTER PERMIT FEE (ALLOWANCE) $ 3,000.00 $ (1,500.00) $ 1,500.00 1021.1 SHOP DRAWINGS PERMITS FEE (ALLOWANCE) $ 1,200.00 $ (1,200.00) $ - 1023 BLUEPRINTS /REPRODUCTIONS $ 250.00 $ - $ 250.00 1024 CLEANING /FINAL CLEANING $ 600.00 $ (600.00) $ - 1025 DUMPSTERS $ 495.00 $ - $ 495.00 1400 QUALITY CONTROL / PUNCH LIST $ 300.00 $ 300.00 $ - } . mum 2623 GUARD RAILS $ 4,000.00 $ (4,000.00) $ - 2630 SIDEWALKS (AS PER PLANS) $ - 2710 FENCES & GATES $ - 2750 IRRIGATION SYSTEM $ - 2800 LANDSCAPING $ 1,200.00 $ 600.00 $ 600.00 NG RET . , x „, . , . ,f, ,.., , R e P� ;,., �� sy�y � 3300 CONCRETE / MASONRY / DEMISING WALL / MASONRY $ 2,000.00 $ 2,000.00 $ - NOT USED $ - 5520 MISCELLANEOUS STEEL & RAILINGS 0 1,500.00 $ 13,400.00 14,900.00 6100 ROUGH CARPENTRY 300.00 $ (300.00) - 6410 CABINETRY/VANITY TOPS $ 11,000.00 $ 6,000.00 $ 17,000.00 7100 WATERPROOFING /CAULKING $ 600.00 $ (600.00) $ - 7120 ROOFING $ - $ 950.00 $ 950.00 atVISiON 8 - Dbf)a x� 7 8100 METAL DOORS & FRAMES $ 650.00 $ $ 650.00 8700 HARDWARE $ 450.00 $ 4,648.00 $ 5,098.00 8830 MIRRORS MEDICINE CABINETS $ 1,200.00 $ 1,200.00 $ - p S12 9250 GYPSUM WALLBOARD SYSTEMS $ 2,400.00 $ 7,100.00 $ 9,500.00 9300 CERAMIC TILE @ BATHROOMS 0.00 $ 33,950.00 $ 33,950.00 9302 PORCH TILE RESURFACING 0.00 $ 2,700.00 $ 2,700.00 9684 WOOD BASE (4 ") $ 350.00 $ - $ 350.00 9900 PAINT $ 1,000.00 $ 2,000.00 $ 3,000.00 M y;0 10800 TOILET ACCESSORIES (HC BATHROOMS) $ - $ - 10800 TOILET ACCESSORIES STANDARD BATHROOMS $ 1,450.00 $ 1,450.00 $ - 11452 KITCHEN APPLIANCES 23,000.00 $ 991.90 $ 23,991.90 DIVISION 12 - .FUFNISHJN ......, r � 1 WINDOW TREATMENT 0.00 $ 7,790.48 $ 7,790.48 F�` MY 13000 NOT USED $ - - $ 1/26/2012 4:47 PM 14200 ELEVATORS 15,000.00 $ 5,126.60 $ 20,126.60 15180 FIRE PROTECTION / FIRE SPRINKLERS $ 7,900.00 $ 6,255.00 $ 14,155.00 15400 PLUMBING SYSTEM & FIXTURES $ 15,500.00 $ 26,625.00 $ 42,125.00 15550 FIRE EXTINGUISHERS $ 897.50 $ - $ 897.50 15770 HVAC $ 3,500.00 $ 2,050.00 $ 5,550.00 DIVISION 16 - ELECTRICAL. z 16100 ELECTRICAL FIXTURES & PACKAGE $ 35,884.00 $ 27,445.00 $ 63,329.00 16150 FIRE ALARM SYSTEM $ 4,500.00 $ (4,500.00) $ - SUBTOTAL PROJECT $ 293,128.00 $ 122,361.98 $ 296,208.48 LIABILITY INSURANCE $ 1,154.50 $ 1,154.50 $ 2,309.00 CONTRACTOR'S OVERHEAD NO FEE $ - $ - $ - CONTRACTOR'S FEE NO FEE $ - $ - $ - TOTAL PROJECT $ 294,282.50 $ 123,516.48 $ 298,517.48 THE NEPTUNE SOFT COST DETAILS 10/26/2011 CONCEPT AMOUNT 7 TITLE EXPENSES $ 17,440.93 LEGAL FEES $ 20,099.61 STAMP AND RECORDING FEES $ 23,119.05 INSURANCE $ 12,000.00 OTHER CLOSING COSTS $ 2,733.03 BANK FEES $ 9,500.00 BANK LEGAL FEES $ 9,000.00 BANK MISC FEES $ 1,450.00 INSURANCE BUILDER'S RISK $ 5,000.00 INTEREST RESERVE $ 22,750.00 atty fees $ 10,600.00 SURVEY $ 1,800.00 ARCHITECTURAL DRAWINGS $ - SITE MAINTENANCE $ - FILE STORAGE AND WIRE FEES $ - SELLER INSURANCE $ - CORPORATE FORMATION $ - ENVIROMENTAL $ - PROPERTY TAX $ (4,637.81) DEPOSIT REFUND $ 5,000.00 Additional Interest & Insurance $ 57,924.93 soft cost contingency $ 14,628.16 TOTAL SOFT COSTS $ 208,407.90 Total PI, T, & Ins. $ 97,674.93 SUPERVISION AND ADMINIST. 15 $ 69,637.57 TOTAL OTHER COSTS $ 375,720.40 1/26/2012 4:47 PM B. NEPTUNE APARTMENTS BUDGET MODIFICATION REV 10/26/2011 # CONCEPT ORIGINAL BUDGET REASE / DECREA FINAL BUDGET 1 AQUISITION 5,657,850.00 0.00 5,657,850.00 2 CONSTRUCTION COSTS 175,001.00 123,516.48 298,517.48 3 CONSTRUCTION CONTINGENCY 0.00 55,000.00 55,000.00 4 PREDEVELOPMENT / SOFT COSTS 196,375.78 12,032.12 208,407.90 5 DEVELOPERS FEE 0.00 69,637.57 69,637.57 TOTALS 6,029,226.78 260,186.17 6,289,412.95 4,939,412.95 1/26/2012 4:47 PM Lottie MBCC LLC ESTIMATING PAGE # 1 DATE 30- Jun -10 10/26/2011 CLIENT MBCDC: THE LOTTIE PROJECT NSP - LOTTIE (REVISED) LOCATIO1530 75 STREET MIAMI BEY SCHEDUL NINE (9) MONTHS 36 Weeks PROJECT COST SCOPE OF WORK 6IUISiON,1 - GENERA .� .,EQUIREME 1000 GENERAL CONDITIONS /SUPERINTENDENT $ 16,000.00 $ (4,250.00) $ 11,750.00 1002 GENERAL CONDITIONS /PROJECT MANAGER $ 7,500.00 $ 500.00 $ 8,000.00 1003 GENERAL LABOR $ 25,000.00 $ (19,700.00) $ 5,300.00 1004 TELEPHONE (MOBILE & JOBSITE) $ - 1005 TEMPORARY POWER & UTILITIES $ 3,000.00 $ (500.00) $ 2,500.00 1006 SMALL TOOLS $ 400.00 $ (400.00) $ - 1007 WATER & ICE $ 250.00 $ (250.00) $ - 1008 MOBILIZATION & SET -UP $ 1,200.00 $ 12,800.00 $ 14,000.00 1009 TRUCK & AUTO ALLOWANCE $ - 1010 BOND $ 1020 ARCHITECT /ENGINEERING FEES $ 1021 MASTER PERMIT FEE (ALLOWANCE) $ 1021.1 SHOP DRAWINGS PERMITS FEE (ALLOWANCE) $ 1022 PLANS PROCESSING FEES $ 1023 BLUEPRINTS /REPRODUCTIONS $ 1024 CLEANING /FINAL CLEANING $ - 1025 DUMPSTERS $ 3,150.00 $ 3,100.00 $ 6,250.00 1400 QUALITY CONTROL / PUNCH LIST $ - $ 1,500.00 $ 1,500.00 1500 OFFICE TRAILER $ - 1503 TEMPORARY TOILETS $ - 1506 SURVEYING / LAYOUT $ - 1507 THRESHOLD INSPECTOR (ALLOWANCE) $ - 1508 MATERIAL TESTING (ALLOWANCE) $ - 1510 JOBSITE SIGN $ - 1511 MAIN OFFICE COURIER SERVICE $ - 1550 OSHA REQUIREMENTS (BARRICADES & RAILINGS $ 250.00 $ 350.00 $ 600.00 PLY Z SITE WOR[� �.> _ v�.op 3 , . ; 2070 SELECTIVE DEMOLITION $ - $ 900.00 $ 900.00 2100 CLEAR & GRUB $ - $ 800.00 $ 800.00 2101 DEWATERING $ - 2200 FILL TO GRADE EXCAVATION $ - $ 750.00 $ 750.00 2201 FINAL GRADING $ - 2225 POUR STRIP/TRENCH BF /COMPACTION $ - 2230 COMPACTION & SOIL DENSITY TEST (ALLOWANCE $ - 2250 TERMITE CONTROUSOIL PREP $ 2,000.00 $ (2,000.00) $ 2252 SEWER (OFF -SITE) $ 2370 HELICAL PILES $ 2500 STORM DRAINAGE $ 2520 BRICK PAVERS $ Pagel Lottie 2551 WATER (FIRE LINE - From existing backflow to Bldg) $ - 2551 WATER (HYDRANT ONLY - New 2" Service by WASA $ - $ 500.00 $ 500.00 2600 PAVING $ 2610 STRIPPING /SIGNS /BUMPERS $ 2621 CONCRETE (CURBS/VALLEY GUTTER/OFF SITE SI $ 2622 PAVING & DRAINAGE PERMITS, FEES AND AS -BUI $ - 2623 GUARD RAILS $ - 2630 SIDEWALKS (AS PER PLANS) $ - 2710 FENCES & GATES $ 900.00 $ (900.00) $ 2750 IRRIGATION SYSTEM $ - 2800 LANDSCAPING $ 1,200.00 $ (1,200.00) $ 3300 CONCRETE / MASONRY / DEMISING WALL / MASOI $ 4,500.00 $ (4,500.00) $ - 3301 CONCRETE CAST IN PLACE $ - $ 1,500.00 $ 1,500.00 3320 LIGHTWEIGHT CONCRETE $ - 3340 TWIN TEES & HOLLOW CORE $ - 3400 PRECAST CONCRETE $ - 3730 CONCRETE RESTORATION $ - $ 1,500.00 $ 1,500.00 3735 CONCRETE FLOORING (GYP- CRETE) $ - PIVW 4- K x d NOT USED $ - a � 5120 STRUCTURAL STEEL $ 5121 METAL EMBEDS ON TILT -UP $ 5300 METAL DECK $ $ 22,500.00 $ 22,500.00 5510 MEZZANINE (HOLLOW CORE) $ 5520 MISCELLANEOUS STEEL & RAILINGS $ $ 6,500.00 $ 6,500.00 5999 MISC. WELDING $ - DIVISION 6'- WOODS & PLASTICS Ot} f •� 6100 ROUGH CARPENTRY $ $ 2,450.00 $ 2,450.00 6190 WOOD STAIR AND RAILINGS $ $ 6,500.00 $ 6,500.00 6140 WOOD FRAMES $ $ 2,250.00 $ 2,250.00 6200 TRIM CARPENTRY $ 12,000.00 $ (8,550.00) $ 3,450.00 6410 CABINETRY/VANITY TOPS $ 18,000.00 $ 3,800.00 $ 21,800.00 DIVISION 7 ' THERMAL & MOISTURI ,, 7100 WATERPROOFING /CAULKING $ 1,000.00 $ 800.00 $ 1,800.00 7200 INSULATION INTERIOR PARTITIONS $ - 7300 ROOFING $ 44,000.00 $ (44,000.00) $ - 7301 FIRE & SMOKE PROTECTION $ - $ 1,750.00 $ 1,750.00 7400 CANOPIES /METAL $ 7810 SKYLIGHTS $ 8100 METAL DOORS & FRAMES $ 2,200.00 $ (50.00) $ 2,150.00 8200 WOOD DOORS & FRAMES $ 7,500.00 $ 3,700.00 $ 11,200.00 8210 FRONT ENTRANCE DOOR $ - 8360 OVERHEAD DOORS $ 8500 WINDOWS /STOREFRONTS $ 8510 ROOF HATCH (1) $ 8700 HARDWARE $ 4,000.00 $ (2,200.00) $ 1,800.00 8830 MIRRORS (MEDICINE CABINETS) $ 2,700.00 $ (1,500.00) $ 1,200.00 DI.YISION 9 - FINISH y „. Page 2 Lottie 9160 STUCCO & MOLDINGS $ 24,000.00 $ - $ 9250 GYPSUM WALLBOARD SYSTEMS $ 30,000.00 $ (22,150.00) $ 7,850.00 9255 FIRE RATING (ALL PENETRATIONS & CHASES) $ 1,100.00 $ - $ - 9300 CERAMIC TILE @ BATHROOMS $ 17,000.00 $ $ - 9301 CERAMIC TILE @ CORRIDOR, LAUNDRY & STORA( $ - 9302 CERAMIC TILE @ LIVING AREAS $ 44,000.00 $ (37,300.00) $ 6,700.00 9500 ACOUSTICAL CEILING & INSULATION (R -19) $ - 9615 MARBLE WINDOW SILLS $ - 9682 CARPET FLOORING $ - $ 2,650.00 $ 2,650.00 9683 METAL SUPPORT ASSEMBLIES $ $ 3,150.00 $ 3,150.00 9684 WOOD BASE (4 ") $ 5,000.00 $ - $ - 9900 PAINT $ 20,100.00 $ (14,250.00) $ 5,850.00 9901 FLOOR SEALER $ - DIVISIOI,IJ.. $6,950.dd 10160 TOILET PARTITIONS $ 10200 LOUVERS & VENTS $ - 10400 SIGNAGE $ - $ 600.00 $ 600.00 10552 MAILBOX $ 350.00 $ 400.00 $ 750.00 10685 CLOSET WIRE SHELVING $ 4,200.00 $ (4,200.00) $ - 10700 CANVAS AWNINGS $ - 10800 TOILET ACCESSORIES (HC BATHROOMS) $ - 10800 TOILET ACCESSORIES (STANDARD BATHROOMS) $ 2,400.00 $ (2,400.00) $ 10999 STORM SHUTTERS $ - DIYI A W 1 1,QUIPMEP 11001 RENTAL EQUIPMENT (CRANE /HOIST) $ 500.00 $ (500.00) $ 11001 RENTAL EQUIPMENT BACKHOE & BOBCAT $ - 11100 DOCK LEVELERS 6'X8'- 25,000LBS (1) $ - 11452 KITCHEN APPLIANCES $ 12,400.00 $ (3,400.00) $ 9,000.00 11875 DOCK BUMPERS (10X12X4) $ - DIVISION 12 FURNISHINGS MAE 12500 NOT USED $ - $ - $ - 12300 CABINETS & STORAGE (LOCKERS) $ - DIVISION 13 S a. w NOT USED $ - If3N YI G ° YSTEM' j z 14200 ELEVATORS $ - �C , $101,p5 v 15180 FIRE PROTECTION / FIRE SPRINKLERS $ - 15400 PLUMBING SYSTEM & FIXTURES $ 65,500.00 $ (51,900.00) $ 13,600.00 15550 FIRE EXTINGUISHERS $ 550.00 $ (550.00) $ - 15618 WAREHOUSE VENTILATION $ - 15770 HVAC $ 35,000.00 $ 11,200.00 $ 46,200.00 DIVISION 16, ECGTRICA ., ' $43,750.00 �. 16100 ELECTRICAL FIXTURES & PACKAGE $ 28,000.00 $ 10,900.00 $ 38,900.00 16150 FIRE ALARM SYSTEM $ 15,750.00 $ (15,750.00) $ - 16200 SOUTHERN BELL 4" PVC $ - SUBTOTAL PROJECT $ 462,600.00 $ 186,150.00 $ 276,450.00 LIABILITY INSURANCE $ 3,593.85 $ 3,593.85 CONTRACTOR'S OVERHEAD $ 46,210.00 $ (18,565.00) $ 27,645.00 CONTRACTOR'S FEE $ 23,105.00 $ (9,282.50) $ 13,822.50 CONTINGENCY $ 17,185.00 $ (17,185.00) $ - Page 3 Lottie TOTAL PROJECT $ 549,100.00 $ (227,588.65) $ 321,511.35 THE LOTTIE SOFT COST DE 10/20/2011 CONCEPT AMOUNT ,3.. TITLE EXPENSES $ 9,051.00 LEGAL FEES $ 5,900.00 STAMP AND RECORDING F $ 6,524.00 INSURANCE $ 41,327.84 INSURANCE BUILDER'S RIS $ 5,904.00 SURVEY $ 1,000.00 ARCHITECTURAL DRAWING $ 13,522.42 SITE MAINTENANCE $ 4,434.77 FILE STORAGE AND WIRE F $ 300.00 SELLER INSURANCE $ 12,301.29 CORPORATE FORMATION $ 450.00 ENVIROMENTAL $ 900.00 PROPERTY TAX $ 18,900.00 DEPOSIT REFUND $ 5,000.00 BUILDING PERMITS AND FE $ 6,000.00 SOFT COSTS CONTINGENC $ 4,801.18 TOTAL SOFT COSTS $ 136,316.50 Total PI, T, & Ins. $ 78,433.13 SUPERVISION AND ADMINIS $ 68,159.21 TOTAL OTHER COSTS $ 282,908.84 C. LOTTIE APARTMENTS BUDGET MODIFICATION REV 10/20/2011 # CONCEPT RIGINAL BUDGE REASE7 DECRE FINAL BUDGET 1 AQUISITION 1,185,000.00 0.00 1,185,000.00 2 CONSTRUCTION COSTS 549,100.00 227,588.65 321,511.35 3 CONSTRUCTION CONTINGENC 14,172.00 60,828.00 75,000.00 4 PREDEVELOPMENT / SOFT COc 102,746.00 33,570.50 136,316.50 5 DEVELOPERS FEE 25,886.001 42,273.21 68,159.21 TOTALS 1,876,904.00 - 90,916.94 1,785,987.06 Page 4 ' Ilk, ter. G • f • - ATTACHMENT 11 rg nom 11 e a o a 1z,1101P'gra Many NSP grantees will generate program income. While its use is largely regulated by rules from the CDBG program, some questions have arisen about NSP situations that are less common in the Block Grant Program. This guidance addresses some of those questions and clarifies program income policy on the distribution of Net Operating Income in rental projects. Three appendices include: 1. Examples of NSP program income issues (p. 7) 2. Relevant regulatory citations (p. 10) and 3. Program income in DRGR (p. 15) Definition and Examples Program income is defined as gross income received by the recipient or a subrecipient directly generated from the use of NSP or CDBG funds. The NSP Program follows the CDBG regulations on program income, which can be found in their entirety at the end of this Policy Alert. The Department's policy since 2008 is that NSP program income must be spent on NSP - eligible activities only. Common sources of NSP program income are: • Payments of principal and interest on loans made with NSP funds; • Proceeds from the sale of properties acquired and /or improved with NSP funds; • Recapture of NSP subsidies if an assisted home is sold before the end of the affordability period; • Interest earned on program income pending its disposition; • Repayments of liens placed on privately owned property that was demolished using NSP money; • Gross income from the use or rental of real property constructed or improved with NSP funds, less the costs incidental to the generation of that income. The following revenues are NOT program income: • Proceeds from fundraising by subrecipients; • Funds collected through special assessments on public improvements (unlikely in NSP ); • Subrecipient proceeds from disposition of real property five years or more after grant close -out; • Income received in a single calendar year by the recipient and all its subrecipients (combined) if the total amount of such income does not exceed $25,000. This is unlikely to occur in NSP; U.S. Department of Housing and Urban Development 1 Office of Block Grant Assistance 2011 -07 • Interest earned on cash advances from the grantee or funds held in a revolving loan fund account (except for funds in approved lump -sum drawdown accounts). Such interest must be returned to HUD for transmittal to the Treasury. Regulatory and Functional Requirements The general rule in drawing NSP and CDBG funds is that funds must only be requested for immediate cash needs. Program income works on a first -in, first -out basis. It must be used before drawing down additional grant funds, unless the program income is in an approved revolving fund. In that case it must be used for the specified purpose of the revolving fund before further drawdowns for that specified activity. Program income may earn interest while being held for the next subsequent cash requirement of the grantee; that interest is also program income. Section 570.504 defines the use of program income, and is available for reference at the end of this policy. Program income must be used for the immediate cash needs of the grantee, regardless of the next activity. That is, program income may not be held, or accumulated, for a specific activity. These activities will receive funding from available program income and grant funds at the time these funds are needed. Example A. Funds on hand in grantee /subrecipient account: Program income received from sale of completed NSP home: ..................... $35,000 B. Funds currently needed for ongoing demolition and land bank projects: ............. $85,000 Request for funds from Line of Credit (B minus A)_____________________ __________ ____ _________________ __$50,000 Note that the source of the program income was different from the activity it was used to fund. Funds on hand from program income must always be disbursed for the next activity. Program income cannot be reserved for a major cost in the future but must always be disbursed when next drawing down funds, except for income in revolving loan funds. Within a revolving fund, program income must similarly be disbursed for the next activity of the fund. When income is generated by an activity that is only partially assisted with NSP funds, the income must be prorated to reflect the percentage of NSP funds used to determine the portion that is program income. Note that NSP grants are not subject to the requirement at 24 CFR 570.504(b)(2)(iii) that program income on hand at the end of the program year that is in excess of one - twelfth of the most recent entitlement grant be remitted to HUD. In all three phases of NSP, program income that is obligated or expended in this way will count toward obligation or expenditure requirements. The requirement to use program income first will not hinder the grantee's ability to meet spending deadlines. For NSP, policies for disposition of program income received after grant close -out have not yet been determined. Grantees should continue to follow the current requirement to use program income only on NSP - eligible activities. Program income retains its character as NSP funding indefinitely unless otherwise provided by HUD in an applicable requirement. In NSP, funds may be spent and returned several times through the cycle of acquisition, rehab, and resale. Grantees must track program income from NSP1, NSP2 or NSP3 separately and use the funds in accordance with the relevant Notices and rules. If a project meets the U.S. Department of Housing and Urban Development 2 Office of Block Grant Assistance 2011 -07 rules of multiple programs (e.g. location, beneficiaries, uses,) then program income may be combined in that project. Note that the initial requirement in the Housing and Economic Recovery Act (HERA) that program income earned after July 30, 2013 be returned to the Treasury has been rescinded. As in CDBG, program income will remain with the grantee. Unless modified in a closeout or other agreement with HUD, all such funds must be documented when received and expended and must be used for NSP- eligible activities. NSP program income must follow all other cross - cutting requirements such as environmental, fair housing and labor laws and must be used in approved target areas or areas of greatest need unless otherwise approved by HUD. The NSP Notices allow 10% of program income to be used for administrative purposes. In general, program income is calculated in proportion to the amount of the total cost that is paid with NSP funds. Gross revenues of $20,000 on the sale of an NSP- assisted house that is financed with 50% NSP funds and 50% other funds would result in NSP program income of $10,000 ($20,000 X 50 %.) Subrecipients and Developers When subrecipients are involved, the grantee and subrecipient may negotiate the disposition of program income in their agreement; there is substantial flexibility in its allocation, subject to the grantee's approval. This applies to members of consortia as well. The written subrecipient agreement must specify whether any program income received by the subrecipient is to be returned to the grantee or retained by the subrecipient. If the latter, the agreement must describe which NSP - eligible activities such program income will fund. Subrecipients are described at 24 CFR 570.500(c). Section 570.503 describes the rules for subrecipient agreements. These sections are reproduced in full in Appendix 2. The financial records of the. subrecipient (as well as the grantee) must include complete information on the receipt and expenditure of program income. At the end of the term of the Agreement, program income on hand or subsequently received by a subrecipient must be returned to the grantee unless otherwise specified in the subrecipient agreement. Grantees may designate a different subrecipient for use of program income, but should specify in the first agreement that program income will be returned to the grantee. In accordance with the first use rules, though, this program income may not be held for the disbursement to the second subrecipient. Rather, funding of the second subrecipient will be available from future program income or grant funds remaining in the line of credit. Revenues received by developers are NOT considered program income. This is because developers are treated in NSP as end users, not intermediaries like subrecipients. Households receiving financial assistance are also considered end users and are not required to operate like grantees or subrecipients, either. This determination derives from the CDBG regulation below; for NSP, it also applies to new construction. Assistance to private individuals and entities including profit making and nonprofit organizations, to acquire for the purpose of rehabilitation, and to rehabilitate properties, for use or resale for residential purposes; 24 CFR 570.202 (b)(9) Although revenues received by developers are not considered program income, grantees and subrecipients may negotiate terms for transactions which result in the return of some revenues to the grantee or subrecipient. To avoid unduly enriching third parties such as developers, NSP funds must be carefully underwritten. Depending on the underwriting analysis, grantees may require developers to treat the NSP funds as a loan, or may negotiate the return of a percentage of the revenues from rents. U.S. Department of Housing and Urban Development 3 Office of Block Grant Assistance 2011 -07 Income from Rental Properties Program income is defined as gross income less costs incidental to generation of the income. Since this definition corresponds to the calculation of "Net Operating Income (NOI)" and NOI is a commonly used calculation, this guidance will use program income and NOI interchangeably in connection with income generated by rental properties. In NSP, NOI is program income if it is received by grantees and subrecipients. Net operating income received by developers is NOT program income, as noted above. Example: Gross Rents $100,000 Less: Vacancies" $7,000 Effective Gross Income .......... $ 93,000 LESS: Replacement Reserves .......... ( $4,000) Operating Expenses ($45,000) (Maintenance, insurance, utilities, management, etc.) Net Operating Income ............... $44,000 Net operating income from rental properties owned by grantees and subrecipients is calculated rip or to debt service payments. In the example above, the NOI of $44,000 would be program income. However, in many cases, there is more than one source of funds and treatment of program income as a proportional share of NOI could leave insufficient funds for debt service. In the case above, if NSP paid for 50% of the project, NSP program income would be 50% of NOI, or $22,000. If debt service on the private loan that financed the other 50% were $25,000, calculating program income prior to debt service would leave $22,000 for debt service, not enough to keep the loan current. In NSP, HUD allows the use of program income to be applied to debt service under the following conditions: 1. The private loan(s) was used solely to finance the costs of the approved project and was made at the same time as the NSP loan (i.e. was not a existing mortgage); 2. The private loan was made by an external lender (not the grantee or subrecipient); 3. Loan proceeds were used in accordance with all applicable NSP requirements (e.g. environmental, Davis Bacon); 4. Use of the program income for debt service payments was contemplated when the project was approved. Typical Problems with Program Income Improper collection or retention of program income • Subrecipient retains program income without grantee permission, or uses it in violation of terms of Agreement. • Program income in a revolving fund account is not used prior to drawing down additional funds for that activity. U.S. Department of Housing and Urban Development 4 Office of Block Grant Assistance 2011 -07 �s• €'x tip- 't '� 6 �. , �;: � *. - ;; �.., ., , • Subrecipient improperly disposes of property a year after purchase and fails to ensure sale at fair market value (the amount of program income due the grantee is the current flair market value of the property). • When property that is only partially financed with NSP funds is rented or sold, the NSP program does not receive its proportional share of proceeds generated. • Program income is not returned at expiration of a subrecipient agreement. • Grantee or subrecipient treats interest earned on cash advances or on funds in a revolving account as program income, rather than remitting such interest income to the U.S. Treasury. • Failure to repay NSP funds for property acquired or improved with NSP funds in excess of $25,000 when use changes and when new use is ineligible or does not meet a National Objective for the required time period. Improper utilization of program income • Program income is treated by subrecipient as unrestricted funds. • Program income is spent on an activity that is not eligible under NSP rules. • Program income is used for an activity that the grantee has not approved via the Agreement. • Program income is not used in compliance with all applicable regulations. • The subrecipient draws down program funds without using program income first. Improper recording and reporting of program income • Subrecipient's financial records do not describe receipt and use of program income in an accurate, complete, and timely fashion. • Subrecipient has an inadequate system to monitor repayment or sale of loans that it has made with NSP funds. • Information on the status and use of program income reported to grantee by subrecipient is inaccurate or untimely. Useful Strategies for Avoiding Problems with Program Income (1) Have a detailed explanation of program income requirements in a written Agreement with each subrecipient. (2) Provide technical assistance to subrecipients in setting up their record - keeping systems to capture data on program income. (3) For those subrecipients operating loan programs, provide technical assistance to ensure adequate loan documentation and loan servicing systems. (4) Require detailed program income information as part of regular progress reports and drawdown requests from subrecipients, with periodic on -site "spot- checking" of records by the grantee to confirm the reported data. (5) Have an accurate and useful way to track program income as it is received and expended, and ensure that program income earned by NSP1, NSP2 and NSP3 is kept separate. U.S. Department of Housing and Urban Development 5 Office of Block Grant Assistance 2011 -07 r Technical assistance with early intervention to identify problems while they are still quite small is particularly important with respect to program income. In the event that the subrecipient has misspent program income, a grantee may have no option other than to disallow the related expenses. A disallowance is likely to represent a severe burden to a subrecipient and can impose a serious strain on the grantee's relationship with the subrecipient. Ideally, any program income issues encountered with subrecipients will be of a minor and correctable nature. However, if the subrecipient is not responsive to directed corrective action, and /or persists in viewing the program income as "its own money," the grantee must act expeditiously to curtail the subrecipient's authority to retain and use such funds. U.S. Department of Housing and Urban Development 6 Office of Block Grant Assistance 2011 -07 5.12 4.12 3.12 2.12 « 1.12 12.11 11.11 10.11 9.11 8.11 F " 7.11 6.11 5.11 4.11 3.11 2.11 12.10 °11.10" 10.10 9.10 8.10 7.10` r 5.1 O7" ` O =; O 3.10 N o 2.10 51.10 °12,09 d ;10.09 W 9.09 W a 0 W > � w CD o U. W O Z Z E" U LU V r W Q CO o U) w Of d F d w w U) z Q o o C Q 0 � o z o P% W U O W f- U CD O " Q �_ O Q Z Of (� Q H Z c w W O U) U) Z w Y J W Z W O 2 cn Z Z j Z z 0� Q > O D c6 O O w 0 0 z 0 0¢ z 0 �rr 0 0 1<1 1<1 o o Jul v IWI I m I lc)l 2 ■1 ■■ MIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII ■IIIHIIII ■ ®III 1111111111111111111 1° Ir ■1111111111 ■ ®III 1111111111111111111: 1 1 ■1111111111 ■1 ■® ®111111 IIIII1III MEN IIII II1 9 1 ■111111111111 ■■® 11111111111111111111111 111 1 1 ■1111111111■ ■ ■ ®IIIIIIIIIIIIIIIIIIIIIII 1 11111 ■1111111111■ ■1 ■ miIIII111111111111111111 1 IIIIII ■111111111111 ■ ■ =IIIIIIIIIIIIIIIIIIIIIII 11111111■ 111111111111 ■■ ■ mill NINE 11111111 ■111111111111 ■ ■ ®IIIIIIIIIIIIIIIIIIIIIII IIIIIIII ■111111111111 IN ■ milli 1IIIIIII11111111111 IIIIIIII ■111111111111 ■ ■ ®IIIIIIIIIIIII gill IIIIII IIIIIIII ■111111111111 ■ ■ MINNIE MINION IIII IIII II IIIIIIII■111111111111 ■ ■ ®IIIIIIIIIIIIIIIIIIIIIII IIIIIIII IIIIIIIIIIH ■ ■ _ ®11111111111111111111111 11111111 111111111111 ■ ®11111111111111111111111 11111111 IIIIIIIIIIH ■ ■ � 11111111111111111111111 11111111 IIIIIIIIIIH ■■ ■ m II I I II I II I I III MINION V I I I II I I ■ll l lllllHl ■■ MIIIIIIIIIIIIIIIIIIIIIII IIIIIIII ■IIIHHIII ■■ M11111111111111111111111 11111111 ■1 1111/11111 ■ M IIIIIIIIIIIIIII 111 1 1111111111 ■1 IIIHIIN ■ M IIIIIIIIIIIIIII III IIIIIIIIIIII 111111111111 1 ■■ Milli IMINION IIII 111 IIIIIIIIIIII 11111111111 1 ■ ■MIIIIIIIIIIIIIIIIIIIIIIIIIIIII ■1111111111 1 ■ ■�1 I 1 IIIHIIII IIIIIIIIIIIIIIII ■11.11111111 1 ■ � 1 1 IIIIIIIIIIIII IIIIIIIIIIIIII ■1 :11111111 1 = � 1 I IIIIIIIIIIIII 11111111111111 ■11:111111111 ,E ®III 11111 1 1 111 11111111111111 11 11111/111 ttuz > Cay • • ■1 ■® 1■■■�■■■■■■■■■■■■■■�■■�■�■■■■�■ ■ ■1111 ■1 �1■■■■■■■■■■■■■■■■■■�■■� ■■■ ■ ■® 111111111 ■1, ■■ ®�■■■■■■■■■■■■■■■■■■�■■� ■■■ ■ ■® 111111111 ■1 ■■ ®1�■■■■■■■■■■■■■■■■■■■■■ ■■■ ■ ■ I 1 ■1 � ■■ ®1■■■■■■■■■■■■■■■■�■■■■� ■■■ ■ ■� 111111111 ■1 � :� ®1■■■■■■■■■■■■■■■■■■■■■� ■ ■1111■ 111111111 ■1 z- ■ ■ ■�1 ■ ■ ■N ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■� ■ ■■ ■1111 111111111 ■1 � ■■ �1 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■� ■� ■■ ■1111■ ■111111111 ■1��� , ■■ �1 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■1111 ■I ■■ ■1111■ ■111111111 ■I�r ■ ■ ■ ®It ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■1111■ ■� ■ ■ ■ ■ ■ ■ ■ ■■ ■111111111 ■1 k ■■ �1 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■1111 ■1111 ■ ■ ■ ■ ■■ ■111111111 ■■ ®It ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■1111■ ■� ■ ■ ■ ■ ■ ■ ■■ ■111111111 -1 :� y ■ ■ ■�1 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■I ■■ ■ ■ ■� ■ ■ ■ ■ ■ ■ ■■ ■111111111 1� ■■■® It ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■11111111 - � ■■ _ ®It ■ ■� ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■� ■ ■ ■ ■ ■ ■� ■ ■■ ■1111 ■111111111 1; x ■■ ®It ■ ■� ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■1111■■ ■ ■ ■ ■ ■ ■ ■■ ■111111111 1 , ■■ ®It ■ ■� ■ ■ ■ ■ ■ ■■■ ■ ■ ■�■ ■1111■ ■ ■ ■ ■ ■ ■ ■■ ■111111111 ■■ 1■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■■ ■1111■■ ■ ■ ■ ■ ■■ ■111111111 ■■ milli 1■■ ■ 1111■■■■■ ■ ■ ■ ■ ■ ■� ■ ■ ■ ■ ■ ■ ■ ■■ ■111111111 E i ■ • ' 1■■■■ ■■■■■■■■■ ■ ■�■ ■1111■■■■■■■ ■11- 111111 1 � ■ ' 1 1111■ ■ ■ ■ ■ ■ ■ ■ ■� ■� ■ ■ ■� ■ ■ ■ ■ ■ ■ ■ ■ ■ ■11 :111111 14 r r ■ = �1 ■ ■ ■■ ■1111■ ■ ■ ■� ■ ■ ■ ■ ■� ■ ■ ■ ■ ■ ■■■■■11 :111111 .1 ` ■ • ' 1■■ 1111■ ■ ■ ■ ■� ■ ■� ■� ■ ■ ■ ■ ■ ■� ■ ■ ■11 111111 t YPJ:r, • •