2013-28293 Reso 2013-28293
RESOLUTION NO.
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. 6 TO THE NEIGHBORHOOD
STABILIZATION PROGRAM 1 (NSP1)SUBGRANT AGREEMENT BETWEEN THE
CITY AND THE STATE OF FLORIDA DEPARTMENT OF ECONOMIC
OPPORTUNITY (DEO) MODIFYING THE EXPIRATION DATE OF THE
SUBGRANT AGREEMENT, FROM AUGUST 15, 20139 TO FEBRUARY 15, 2014.
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 an initial
allocation plus two-subsequent allocations; and
WHEREAS, the State of Florida Department of Economic Development(DEO) is the entity
managing the NSP1 allocation to the City of Miami Beach; and
WHEREAS,the Administration conducted a duly-noticed procurement process for award of
the first allocation, resulting in the City Commission's approval on September 9,2009,of Resolution
No. 2009-27194 which authorizing the execution of an Agreement with Miami Beach Community
Development Corporation to carry out the City's planned use of, and application for, NSP1 funds
("MBCDC Agreement"); and
WHEREAS,the initial strategy resulted in the acquisition and rehabilitation of one affordable
housing project, specifically a 16-unit foreclosed building located at 7871 Crespi Boulevard, which
was later named The Madeleine; and
WHEREAS, on February 3, 2010, the City's Agreement with MBCDC was amended per
Resolution No. 2010-27335,to allow for the allocation of additional NSP1 funds received by the City;
and -
WHEREAS, the additional funds resulting from the second and third allocations were
authorized for the acquisition and rehabilitation of The Neptune, a 35-unit foreclosed apartment
building located at 1632 Meridian Avenue, and The Lottie,a nine-unit foreclosed apartment building,
located at 530 75 Street, which contains large apartments and is suitable for families;
WHEREAS,the City was allowed to use a maximum of 6.8%of the total NSP1 allocation for
administrative expenses, resulting in a total of $632,758 being allocated for administrative
expenses, and $8,672,510 being allocated for NSP1 project development; and
WHEREAS, MBCDC provided an analysis demonstrating that if the current debt service is
reduced,the reduction of the rents for 17 of the units may continue to be rented for$620 per month,
instead of the HUD-approved maximum rent of$722; and
WHEREAS, such analysis was presented to and approved by the Finance and Citywide
Projects Committee on November 9, 2012, and was predicated upon the building not being fully
leased; and
WHEREAS,at the November 14, 2012 City Commission meeting both of the City's contracts
were extended through February 15, 2013, pursuant to Resolution No. 2012-28063; and
WHEREAS, on February 6, 2013, pursuant to Resolution No. 2013-28139, both contracts
were extended through August 15, 2013; and
WHEREAS, as of April 1, 2013, all three projects were 100% leased, meeting a National
Objective; and
WHEREAS,as of April 24, 2013, all three projects had received a Certificate of Occupancy;
and
WHEREAS, as of May 1, 2013, the remaining unexpended administrative funds were
approximately $222,000; and
WHEREAS, the State's DEO has requested that the City's contract be extended an
additional six-months, thru February 15, 2014, in order to close out the grant, and resolve the
pending issue of the City's unspent administrative funding; and
WHEREAS,the Administration has determined that it is no longer necessary to pay down the
debt service at The Neptune, as the building is fully rented; and
WHEREAS,the Administration concurs with the six-month extension,which will also enable
the Administration to find an NSP1-eligible activity and expend the remaining funds.
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. 6 to the Subgrant
Agreement between the City and the State of Florida Department of Economic Development
(DEO) modifying the expiration date of the Subgrant Agreement, from August 15, 2013, to
February 15, 2014.
PASSED AND ADOPTED this�_day of J11 , 2013.
ATTEST: p�
CORP
CITY CLERK ORATED= OR
4�0 AP PROVE®AS TO
..� C FARM &LANGUAGE
R••f
12ro
.. • �, '� EXECUTION
� z1 (
L�
ttom pate
COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Authorizing an Amendment to'the NSP1 Agreement between the City and the State of Florida Department of Economic
Opportunity DEO to extend the expiration date to February 15, 2014.
Key Intended Outcome Supported:
Increase access to workforce or affordable housing.
Supporting Data(Surveys,Environmental Scan,etc.): Based on the Strategic Plan 2011 Update,the number of affordable housing units is
4,743.
Issue:
Shall the City approve an amendment extending the expiration date of the NSP1-related contract with the State DEO from August 15,2013,to
February 15,2014, in order to fully expend administrative funding on an NSP1-eligible activity as originally intended by the program?
Item Summa /Recommendation:
The U.S. Housing and Economic Recovery Act of 2008 created the Neighborhood Stabilization Program (NSP1),which directed 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. Miami Beach applied for 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 and was awarded a total of
$9,305,268 through an initial allocation plus two subsequent allocations. The State DEO is the pass-through entity handling HUD's NSP1
allocation to the City. The initial allocation to the City in the amount of$2,549,551 was formula-based. The second and third allocations in
the amounts of$4,755,717 and$2,000,000,respectively,were awarded to the City after the original recipients,Apopka and Clearwater,failed
to meet the program's benchmarks. The City consistently demonstrated above-average performance.
The City entered into a grant agreement with the State,and after conducting a procurement process for award of the first allocation,entered
into a related agreement with MBCDC. Both Agreements were subsequently amended to accept and govern the second and third allocations
of funding. Both Agreements currently expire on August 15, 2013. From each of the three allocations,totaling$9,305,268,the City was
allowed to use a maximum of 6.8%for administrative expenses.Therefore,a total of$632,758 was allocated for administration expenses and
$8,672,510 for NSP1 project development. Three foreclosed buildings were acquired by MBCDC pursuant to the NSP1 guidelines. The
Madeleine,a 16-unit building located at 7871 Crespi Boulevard.; The Neptune,a 35-unit building located at 1632 Meridian Avenue;and The
Lottie a nine-unit building located at 530 75 Street.
Upon receiving a request from MBCDC for the use of the unspent administration funds,the Administration had extensive discussions with the
State DEO representatives regarding the eligible uses of the unspent administrative funds. DEO informed the City that the unexpended
administrative funds can be loaned to MBCDC for either debt reduction on The Neptune Apartments,or to establish an operating reserves
account for the 60 units. At that time the Administration recommended reprogramming of the remaining unspent administrative funds to
reduce the debt service at The Neptune Apartments, which would result in a proportionate rent reduction to the upcoming tenants. The
Administration presented a cost analysis of the recommended use of the unspent administrative funds to the Finance and Citywide Projects
Committee,which was approved on November 9, 2012.
On November 14,2012 as the item was on the floor at the City Commission meeting,DEO staff called to announce their plan to extend open
contracts in six month intervals, until the National Objective is met by renting all units and close-out instructions are released by HUD.
Therefore,DEO staff recommended not to loan the.funds to The Neptune until the units were fully rented. Consequently,City staff amended
the agenda item on the floor to solely request an extension of both contracts through February 15, 2013. The request was approved per
Resolution No. 2012-28063.
As of April 24,2013 all three projects were completed and fully rented.The Administration has determined that it is no longer necessary to
pay down the debt service at The Neptune, as the building is fully rented.Therefore,we are proposing to use the additional time afforded
through the extension to devise an alternate strategy that will fully leverage remaining funds on the community's behalf.
As of May 1,2013,unexpended administrative funds were approximately$222,000. The State DEO has asked the City to extend the time of
the agreement to comply with NPS1 close-out instructions and to resolve the pending issue of the City's unspent administrative funding.
Extending the State Agreement an additional six months will enable the Administration to find an NSP1-eligible activity and expend the funds
as intended by the program.
Advisory Board Recommendation:
N/A
Financial Information:
Sou nds: Amount Account Approved
1 $220,000.00 138-5668-XXXXXX
SP 2
OBPI Total
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Maria Ruiz ext. 7260
Si n-Offs:
Department Director ssistant City Mana er ty Ma er
MLR KGB JLM
T:\AGENDA\2013W 'uly 17\NSP1 Agreement Exten n-SUMM.doc
AGENDA I M 7
MIAMI B EAC H
DATE 13
MIAMI BEACH
City of Miami Beath, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Me bers of the City Commission
FROM: Jimmy L. Morales, City Manager
DATE: July 17, 2013
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. 6 TO THE
NEIGHBORHOOD STABILIZATION PROGRAM 1 (NSP1) SUBGRANT
AGREEMENT BETWEEN THE CITY AND THE STATE OF FLORIDA
DEPARTMENT OF ECONOMIC OPPORTUNITY (DEO) MODIFYING THE
EXPIRATION DATE OF THE SUBGRANT AGREEMENT, FROM AUGUST 15,
20139 TO FEBRUARY 15, 2014.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
On July 31, 2008, the United States Congress enacted the Housing and Economic Recovery Act
of 2008, thereby creating the Neighborhood Stabilization Program, 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. Resolution No. 2009-27039 was adopted by the City Commission on March
18> 2009 approving the City's application for and planned use of 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.
On September 9, 2009, the City approved Resolution No. 2009-27175 authorizing the execution
of the Federally-funded Subgrant Agreement with DCA ("State Agreement") for the amount of
$2,5491551.
After the Administration conducted a duly-noticed procurement process for the award of the first
allocation, the City Commission approved on September 9, 2009, Resolution No. 2009-27194
authorizing the execution of an Agreement with Miami Beach Community Development
Corporation (MBCDC) to carry out the City's planned use of, and application for, NSP1 funds
("MBCDC Agreement"). The initial strategy was to fund the acquisition and rehabilitation of-one
affordable housing project. MBCDC identified the 16-unit building located at 7871 Crespi
Boulevard, which was later named The Madeleine.
CITY OF MIAMI BEACH
NSP1 Agreement Extension
Page 2 of 3
The City of Miami Beach was awarded a total of $9,305,268 in NSP1 funds through an initial
allocation plus two subsequent allocations. The State's Department of Community Affairs (DCA),
now known as the Department of Economic Opportunity (DEO), is the pass-through entity
handling HUD's NSP1 allocation to the City. The initial allocation to the City in the amount of
$2,549,551 was formula-based. The second and third allocations in the amounts of $4,755,717
and $2,000,000, respectively, were awarded to the City after the original recipients, Apopka and
Clearwater, failed to meet the program's benchmarks. Conversely, the City of Miami Beach
consistently demonstrated above-average performance.
On February 3, 2010, pursuant to Resolution No. 2010-27335, the State Agreement for the first
allocation was subsequently amended to include the two additional allocations in the amounts of
$4,755,717 and $2,000,000 which were awarded on March 24, 2010, and July 30, 2010,
respectively. From each of the allocations, now totaling $9,305,268, the City was allowed to use
a maximum of 6.8% for administrative expenses. Therefore, a total of $632,758 was allocated for
administration expenses and $8,672,510 for NSP1 project development.
I
Also, on February 3, 2010, pursuant to the same resolution noted above, the MBCDC Agreement
was amended to allow for the allocation of additional NSP1 funds received by the City. The
additional acquisition and rehabilitation funds resulting from the second and third allocations were
authorized for the acquisition and rehabilitation of The Neptune, a 35-unit foreclosed apartment
building located at 1632 Meridian Avenue; and The Lottie, a nine-unit foreclosed apartment
building which contains large apartments suitable for families, located at 530 75 Street. Including
the additional funding, a total of 60 units were purchased and rehabilitated for income-eligible
Miami Beach residents.
As of October 15, 2012, only 23 out of 35 units (66%) in The Neptune Apartments had been
occupied. Although there was an extensive waiting list for affordable housing, MBCDC asserted
that not many individuals were able to pay the rents established to cover the operating costs of
the building. A total of 18 units have been allocated for individuals with incomes at or below 50%
of the Area Medium Income (AMI), which is currently $52,600 in Miami-Dade County. The
remaining 17 units are allocated for individuals with incomes up to 120% of AMI, creating a small
mixed income community.
Hence, MBCDC submitted a request for the use of the unspent administration funds to pay down
the debt service at The Neptune in order to reduce the rents and occupy the units timely. The
Administration had extensive discussions with the State DEO representatives regarding the
eligible uses of the unspent administrative funds. DEO informed the City that the unexpended
administrative funds can be loaned to MBCDC as requested, or the establishment of an operating
reserves account for the 60 units were eligible uses. At the time, the Administration
recommended reprogramming of the remaining unspent administrative funds to reduce the debt
service at The Neptune Apartments, which would result in a proportionate rent reduction to the
upcoming tenants, predicated on the fact that the building had yet to reach full tenancy. The
proposed plan of the unspent administrative funds was approved by the State DEO staff. The
Administration presented an analysis of the recommended use of the unspent administrative
funds to the Finance and Citywide Projects Committee at its November 9, 2012. The proposal
was subsequently approved by the Committee.
On November 14, 2012 as the item was on the floor at the City Commission meeting, DEO staff
called to announce its plan to extend open contracts in six month intervals, until the National
Objective is met and close-out instructions are released by HUD. Therefore, DEO staff
recommended the City continue to expend the administrative funds as originally allocated until a
National Objective is met. Consequently, City staff amended the agenda item on the floor to
solely request an extension of both contracts through February 15, 2013. The request was
CITY OF MIAMI BEACH
NSP1 Agreement Extension
Page 3 of 3
approved per Resolution No. 2012-28063.
As of January 31, 2013, all three projects were substantially complete and 65% of the units were
occupied. Therefore, on February 6, 2013, pursuant to Resolution No. 2013-28139, both
contracts were further extended through August 15, 2013.
As of April 1, 2013, all units were rented, reaching 100% occupancy and meeting a National
Objective. The Madeleine received a Certificate of Occupancy (CO) on October 11, 2012; The
Neptune received a CO on November 15, 2012; and The Lottie received a Temporary CO on
November 21, 2012, and a CO on April 24, 2013. Consequently, the request submitted by
MBCDC for the use of the unspent administrative funds to pay down the debt service at The
Neptune is no longer pertinent, as the conditions which lead to the request have changed
considerably.
As of May 1, 2013, the remaining unexpended administrative funds were approximately
$222,000. The State DEO has requested that the City's contract be extended through February
15, 2014, in order to close out the grant and resolve the pending issue of the City's unspent
administrative funding. The Administration has determined that it is no longer necessary to pay
down the debt service at The Neptune, as the building is fully rented. Extending the State
Agreement an additional six months will enable the Administration to find an NSP1-eligible activity
and expend the funds as intended by the program.
CONCLUSION
The Administration requests extending the City's Agreement with the State DEO to reflect a new
expiration date of February 15, 2014, and further recommends that the Mayor and City
Commission authorize Amendment No. 6 to the Subgrant Agreement between the State of
Florida DEO and the City modifying the expiration date of the Subgrant Agreement from August
15, 2013 to February 15, 2014.
JLM/KGB/MR/rs
i