2014-28803 Reso RESOLUTION NO, 2014-28803
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, APPROVING AND AUTHORIZING THE CITY MANAGER TO
SUBMIT A REQUEST TO THE STATE OF FLORIDA DEPARTMENT OF ECONOMIC
OPPORTUNITY (DEO) TO AMEND THE CITY'S NEIGHBORHOOD STABILIZATION
PROGRAM 1 (NSP1) GRANT AGREEMENT IN THE AMOUNT OF $201,801.66;
AUTHORIZING THE CITY MANAGER TO UTILIZE THESE AMENDED FUNDS FOR
THE ACQUISITION OF THE LOTTIE APARTMENTS, MADELEINE VILLAGE
APARTMENTS AND NEPTUNE APARTMENTS; AND FURTHER DIRECTING THAT
THE REMAINING FUNDS BE USED TO CREATE AN OPERATING RESERVE FOR
THE SUBSEQUENT MAINTENANCE OF THE AFOREMENTIONED PROPERTIES.
WHEREAS, on July 31, 2008, the United States Congress enacted the Housing and Economic
Recovery Act of 2008, thereby creating the Neighborhood Stabilization Program 1 (NSP1), which directed
the Department of Housing and Urban Development (HUD) to allocate $3.93 billion to states and units of
local government as emergency assistance for the purchase and redevelopment of abandoned and
foreclosed homes; and
WHEREAS, the State of Florida Department of Economic Opportunity (DEO) is the entity
managing the NSP1 allocation to the City of Miami Beach; 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 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 authorized the City to enter into 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 was to fund the acquisition and rehabilitation of one affordable
housing project, which resulted in MBCDC's acquisition of the 16-unit foreclosed building, located at 7871
Crespi Boulevard, which was later named The Madeleine; and
WHEREAS, on February 3, 2010, the MBCDC Agreement was amended per Resolution No.
2010-27335, to allow for the allocation of additional NSP1 funds received by the City, in the amount of
$4,755,717; and
WHEREAS, the additional acquisition and rehabilitation funds resulting from the second and third
allocations were authorized for MBCDC's 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 and is suitable for families, located at 530 75 Street;
and
WHEREAS, on May 12, 2010, the City Commission approved Resolution No. 2010-27390,
authorizing the reallocation of NSP1 funds, in the amount of $246,898.53, from The Madeleine to The
Neptune; utilizing the second NSP1 allocation, in the amount of $4,432,328.24; utilizing FY2009/10 US
HUD HOME funds, in the amount of $650,000; and subordinating the City's first lien position for The
Neptune to private bank financing acquired by MBCDC, in the amount of$700.000; and
WHEREAS, the City was allowed to use a maximum of 6.8%, or $632,758, of the total NSP1
allocation for administrative funds (Administrative Funds); and
l
WHEREAS, as of September 30, 2012, the remaining balance of Administrative Funds was
$300,953.95, and the City's NSP1 grant agreements with the DEO ( DEO Agreement) and MBCDC
Agreement were set to expire on November 23, 2012; and
WHEREAS,.the DEO requested that City again extend the DEO Agreement and the MBCDC
Agreement through February 15, 2013, in order to rent all 60 units for The Madeleine, The Neptune and
The Lottie and meet the National Objective as established by HUD; and
WHEREAS, the DEO requested the City again extend the DEO Agreement and the MBCDC
Agreement for an additional six (6) months, in order to occupy all units, close out the NSP1 grant, and
resolve the pending issue of the City's unspent Administrative Funds; and
WHEREAS, pursuant to Resolution No. 2013-28139, the DEO Agreement and the MBCDC
Agreement were extended through August 15, 2013; and
. WHEREAS, as of April 1, 2013, The Madeleine, The Neptune, and The Lottie were fully leased
and the HUD National Objective was met; and
WHEREAS, the DEO requested that the DEO Agreement be extended six (6) months, from
February 15, 2014 through August 15, 2014, in order to close out the NSP1 grant, and provide an
opportunity for the City to find eligible NSP1 activities to enable the expenditure of unspent Administrative
Funds; and
WHEREAS, the current balance of unspent Administrative Funds is approximately $2011801.66;
and
WHEREAS, the City Commission approved the use of these funds to purchase and rehabilitate,
as necessary, foreclosed or abandoned properties for the use of rental housing unit(s) for low to
moderate income persons until all funds are fully expended at its June 11, 2014 meeting; and
WHEREAS, at its September 17, 2014, the City Commission provided the City Manager with the
approval to pursue the acquisition of five affordable housing properties currently owned by Miami Beach
Community Development Corporation; and
WHEREAS, two of these properties, the Lottie Apartments and the Madeleine Village
Apartments, are eligible to be acquired with NSP1 funds; and
WHEREAS, the NSP1 funds are sufficient to cover the closing costs associated with the
acquisition of these properties; and
WHEREAS, the Neptune Apartments, also one of the properties identified for acquisition, was
acquired and rehabilitated with NSP1 funds; and
WHEREAS, the Neptune Apartments has a mortgage held by a private lending institution that
would require pay-off at time of acquisition; and
WHEREAS, NSP1 funds can be utilized to partially pay for the payoff of the mortgage and closing
costs for the Neptune Apartments; and
WHEREAS, the balance of the NSP1 funds, remaining after property acquisition, can be utilized
to create operating reserve accounts to ensure the ongoing maintenance of these properties.
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 City Manager to submit a request to the State of Florida Department of Economic Opportunity (DEO)
to amend the City's Neighborhood Stabilization Program 1 (NSP1) grant agreement, in the amount of
$201,801.66; authorize the City Manager to utilize these amended funds for the acquisition of the Lottie
Apartments, Madeleine Village Apartments and Neptune Apartments; and further direct that the remaining
funds be used to create an operating reserve for the subsequent maintenance of the aforementioned
properties.
PASSED AND ADOPTED this o2 9 day of f�Ct � , 2014.
ATTEST:
Rafael E. Granado "tyC,leprk Phili 'L 1 e, Mayor
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COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Authorizing the City Manager to submit budget amendment to the State of Florida Department of
Economic Opportunity (DEO) to enable the amendment of remaining Neighborhood Stabilization Program 1
(NSP1) funds for the acquisition of the Lottie Apartments, Madeleine Village Apartments and Neptune
Apartments,and if funds remain,establish operating reserves for the aforementioned properties.
Key Intended Outcome Supported:
N/A
Supporting Data(Surveys, Environmental Scan, etc.):
N/A
Item Summa /Recommendation:
The City is the recipient of Neighborhood Stabilization Program 1 (NSP1) funds awarded by the State of Florida
Department of Economic Opportunity(DEO).The City's remaining balance of NSP1 funds is$201,801.
At its September 17, 2014 meeting, the City Commission approved the acquisition of five MBCDC to secure City
assets that had been invested in these properties. Three of these properties were initially acquired and
rehabilitated with NSP1 funds: Lottie Apartments (Lottie), Madeleine Village Apartments (Madeleine) and
Neptune Apartments (Neptune).While the City will acquire these properties for$10 each, the associated closing
costs are substantially greater. The estimated closing costs are $23,065 for the Lottie and Madeleine. The
Neptune and Allen Apartments (Allen) have mortgages financed by private lending institutions that will require
pay-off. The Administration will return to Commission to allocate funds for the acquisition of the Madeleine, Allen
and Barclay Plaza Apartments in the coming weeks.
NSP1 guidelines allow the City to utilize its remaining funds to acquire these properties as a means of preserving
the affordable housing units created with their initial purchase. DEO has already provided support for the
Administration's recommendation of reprogramming the existing NSP1 balance and amending the City's grant
budget to enable the use of these funds for the acquisition of previously-assisted NSP1 properties.The remaining
balance of $178,176 can then be utilized to establish operating reserve accounts to ensure the upkeep and
maintenance of these properties as rent revenues will not be sufficient for a considerable period.
If needed, these funds can also be utilized to help fund the acquisition of the remaining NSP1-assisted property,
the Neptune Apartments and, if funds still remain, also establish an operating reserve for this building.
Administration Recommendation -Adopt the Resolution.
Advisory Board Recommendation:
N/A
Financial Information:
Source of Amount Account
Funds: 1 $201,801 138.5668.000111, 000326, 000343, 000349
2
3
OBPI Total $201,801
Financial Impact Summary: Funds will acquire noted properties with balance for operating reserves.
City Clerk's Office Legislative Tracking:
Maria Ruiz/Housing &Community Services
Sign-Offs:
Department Director Assist City Manager ity Manager
MLR KGB JLM
AGENDA ITEM C 7A
DATE / a 9�
MIAMI BEACH
City of Miami Beath, 1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members of a City Co ission
FROM: Jimmy L. Morales, City Manager
DATE: October 29, 2014
SUBJECT:
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE CITY
MANAGER TO SUBMIT A REQUEST TO THE STATE OF FLORIDA
DEPARTMENT OF ECONOMIC OPPORTUNITY (DEO) TO AMEND THE
CITY'S NEIGHBORHOOD STABILIZATION PROGRAM 1 (NSP1) GRANT
AGREEMENT IN THE AMOUNT OF $201,801.66; AUTHORIZING THE CITY
MANAGER TO UTILIZE THESE AMENDED FUNDS FOR THE ACQUISITION
OF THE LOTTIE APARTMENTS, MADELEINE VILLAGE APARTMENTS AND
NEPTUNE APARTMENTS; AND FURTHER DIRECTING THAT THE
REMAINING FUNDS BE USED TO CREATE AN OPERATING RESERVE FOR
THE CONTINUED MAINTENANCE OF THE AFOREMENTIONED
PROPERTIES.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
BACKGROUND
The City is the recipient of Neighborhood Stabilization Program 1 (NSP1) funds awarded
by the State of Florida Department of Economic Opportunity (DEO). In total, the City
received $9,305,268 in NSP1 funds which enabled the acquisition and rehabilitation of
three affordable housing projects:
• Lottie Apartments (Lottie)
• Madeleine Village Apartments (Madeleine)
• Neptune Apartments (Neptune)
These properties are currently owned and managed by Miami Beach Community
Development Corporation (MBCDC). The City's remaining balance of NSP1 funds is
$201,801.
At its September 17, 2014 meeting, the City Commission approved the acquisition of five
MBCDC properties in order to secure the City assets that had been invested in these
properties. The properties acquired and rehabilitated with NSP1 funds are among those
approved for acquisition: Lottie, Madeleine and Neptune.
Commission Memorandum
NSP1 Budget Amendment
October 29, 2014 Page 2 of 2
ANALYSIS
The Lottie and Madeleine were acquired and rehabilitated solely with NSP1 funds. NSP1
requires that properties acquired and/or rehabilitated with its funds remain affordable for
a minimum of 20 years. Because MBCDC has had difficulty managing its portfolio of
properties, the City's acquisition will ensure that these affordable housing projects
remain in the City's affordable housing stock and compliant with the terms of the City's
use of NSP funds.
The City will acquire these properties for $10 each. However, the closing costs
associated with the change in title are substantially greater. The estimated closing costs
are:
Property/Location Estimated Costs
Lottie Apartments/530—75 Street $ 13,500
Madeleine Village Apartments/7871 Cres i Boulevard $ 9,565
NSP1 guidelines allow the City to utilize these funds to acquire these properties as a
means of preserving the affordable housing units created with their initial purchase. DEO
has already provided support for the Administration's recommendation reprogramming
its existing NSP1 balance and amending the City's grant budget for the acquisition of
previously-assisted NSP1 properties. The remaining balance of $178,176 can then be
utilized to establish operating reserve accounts to ensure the upkeep and maintenance
of these properties as rent revenues will not be sufficient for a considerable period. If
needed, these funds can also be utilized to help fund the acquisition of the remaining
NSP1-assisted property, the Neptune Apartments and, if funds still remain, also
establish an operating reserve for this building.
In addition, the Administration expects to return to the Commission in the coming weeks
to secure the funds necessary to acquire the remaining MBCD C properties es approved for
acquisition: Barclay Plaza Apartments, Allen Apartments and the Neptune. Please note
that the Allen and Neptune properties have mortgages secured by private lending
institutions which will require pay-off at the time of acquisition.
CONCLUSION
The Administration recommends approving and authorizing the City Manager to submit a
request to DEO amending the City's Neighborhood Stabilization Program 1 (NSP1) grant
agreement to enable the City Manager to utilize NSP1 funds for the acquisition of the
Lottie Apartments, Madeleine Village Apartments and Neptune Apartments; and further
directing that the remaining funds be used to create an operating reserve for the
contin d maintenance of the aforementioned properties.
JM/K MLR/
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