Loading...
LTC 447-2018 Correspondence from MIami-Dade County to Miami Beach Community DEvelopment Corporation MIAMI BEACH OFFICE OF THE CITY MANAGER NO. LTC # LETTER TO COMMISSION 447-2018 TO: Mayor Dan Gelber and Members of the S ity Commissio FROM: Jimmy L. Morales, City Manager DATE: August 13, 2018 11\ SUBJECT: Correspondence from Miami-Dade Count to Miami Beach Community Development Corporation The purpose of this Letter to Commission is to transmit the attached correspondence from Miami-Dade County's Public Housing and Community Development Department to Miami Beach Community Development Corporation. The correspondence addresses the County's intention to pursue its right of assignment to properties within the City of Miami Beach. If you have any questions, please see me. JLM/KGB/MLR Public Housing and Community Development 701 NW 1st Court• 16th Floor MIAMI•QADE Miami, Florida 33136-3914 COUNTY T 786-469-4100 F 786-469-4199 miamidade.gov August 1, 2018 Ms. Shahrzad Emami, Esq. Legal Service of Greater Miami, Inc. 4343 West Flagler Street Suite 100 Miami, Florida 33134 Re: Miami Beach CDC (MBCDC) Proposed Future Actions Dear Ms. Emami: Thank you for providing information pertaining to the proposed future actions to be undertaken by the MBCDC to address ongoing issues relating to its affordable housing portfolio. My staff and I have reviewed the documents that you provided in their entirety. Unfortunately, the contents of the document met neither the affordable housing preservation goals of the County, nor the financial obligations of MBCDC's current affordable housing portfolio. While my staff and I fully understand and appreciate that the MBCDC is currently facing multifaceted challenges with regard to preserving and operating its affordable housing portfolio, there are several specific items that that are outlined in the documents that you have provided that remain causes of concern for the County. Specifically, these items include but are not limited to the following; • Proposed Staffing Plan —The document proposes that the MBCDC will use funding that it has yet to receive to employ a business consultant, a development consultant, and conduct a search for a new executive management team consisting of a new Executive Director, Deputy Director, and Financial Comptroller. • Operating Projections — The sources of the 8180,000 in funding that are listed in the document are speculative due to the fact that they are based solely on the MBCDC receiving funds from fully awarded grants. Additionally, one of the proposals under consideration states that should the MBCDC continue running with an operating deficit after transferring management control to the redevelopment partner, the partner promises to keep the portfolio solvent by increasing the existing indebtedness of the MBCDC by providing a loan at an unspecified rate and terms with the principle amount to be recaptured after the portfolio has been recapitalized. The lack of detail as to the terms of this potential additional new debt burden is cause for concern and makes evaluating the effects of this option impossible at this time. In suggesting that the MBCDC take on additional debt, the County is concerned that it will place added stress on the financial solvency and preservation of the agency's affordable housing portfolio going forward. Furthermore, the County is concerned that the assumption of additional debt to MBCDC's precarious financial position will put its affordable housing inventory at risk thus placing the agency in a position where it has no alternative other than to convert its affordable Ms. Shahrzad Emami, Esq. August 1, 2018 Page 2 units to market rate rents to reduce its debt burden and remain a going concern. This runs counter to PHCD's over riding concern that the affordable housing stock be preserved. • Redevelopment Proposals—The redevelopment proposals contained in the document are based on the utilization and successful placement of one or more of the following instruments: 9% tax credits, a combination of 4% tax credits and bond funding, and the proposed disposition of at least two yet to be specified properties. Since the properties that would be included in the disposition are not identified in the document, this action alone would result in the loss of affordable housing stock in Miami Beach, the City of Miami, or potentially both jurisdictions. Additionally one of the proposals contained in the document specifically discusses the fact that "significant work needs to be done now to lobby for rule changes that will benefit the MBCDC portfolio" to move forward with redevelopment plans. Since these proposed "rule changes"are not discussed at any point in the document, the County is concerned that any changes that may be requested would enable the developer to eliminate or significantly reduce the number of affordable housing units contained in the portfolio. As mentioned in the past, the County's primary objective and mission is the preservation of affordable housing. Given this goal, the County will only consider suspending the enforcement of the assignment of leases and rents on both the Crespi and the Madison apartments if the MBCDC is amenable to a transfer of its portfolio of 340 units to Miami-Dade County. Under a transfer scenario, the County would work with MBCDC for a period of 60-90 days to transition the properties to the PHCD portfolio at which time the County would assume management of the properties inclusive of the administrative costs associated with the change in status and responsibility of MBCDC. PHCD currently has the capacity, capability, and experience necessary to provide the business, development, and portfolio management expertise required for these properties without the time and expense that would be required if the MBCDC were to implement the recommendations that it has presented. PHCD also has a proven track record of working effectively with developers on major rehabilitation projects as well as the construction of in excess of 3,700 affordable units over the past five years. The transfer of assets to PHCD would also eliminate the need to contract with consulting firms as well as the need to divest of any existing affordable housing assets to fund operational shortfalls. If the MBCDC is not amenable to a transfer of the assets mentioned above, the County will be presented with no other option than to continue to pursue the County's right to the assignment of leases and rents of both of the Crespi, and the Madison properties. As time is of the essence to ensure that decent, safe, sanitary, and affordable housing is provided for the residents PHCD is concluding its negotiations with your agency at this time. We look forward to your response. Should you have any questions, please contact me at (786) 469-4106. Sincerely, Michael Liu Director c: Maurice Kemp, Deputy Mayor Brenda Kuhn-Neuman, CAO David Sherman, CAO Shannon D. Summerset-Williams, CAO James Graham, CFO, PHCD Clarence D. Brown, Division Director, PHCD Jorge Cibran, Division Director, PHCD Annette Molina, PHCD Martin Schwartz, Bilzin, Sumberg, Baena, Price, & Axelrod LLP