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