Resolution 2023-32574RESOLUTION NO. 2023-32574
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING, IN SUBSTANTIAL FORM, AN "AS
IS" RESIDENTIAL CONTRACT FOR SALE AND PURCHASE BETWEEN THE
CITY, AS BUYER, AND GERARDO E FERRER HERNANDEZ, AS SELLER,
FOR THE CITY'S PURCHASE OF A MULTIFAMILY PROPERTY, LOCATED
AT 971 79 TERRACE, MIAMI BEACH, FLORIDA, FOR THE TOTAL SALES
PRICE NOT TO EXCEED $800,000.00 PLUS CLOSING COSTS, PAYABLE
FROM COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS AND
HOME INVESTMENT PARTNERSHIP (HOME) FUNDS; SAID PURCHASE
BEING CONTINGENT UPON: (1) THE CITY MANAGER'S ACCEPTANCE OF
INSPECTIONS IN ACCORDANCE WITH THE CONTRACT; (2) AN
INDEPENDENT APPRAISAL REFLECTING AN APPRAISED MARKET VALUE
FOR THE PROPERTY EQUAL TO OR GREATER THAN THE SALES PRICE
OF UP TO $800,000.00; (3) SATISFACTION OF HUD'S AREA MEDIAN
PURCHASE AND MAXIMUM PER -UNIT SUBSIDY REQUIREMENTS; AND (4)
RECEIPT OF FUNDING AUTHORIZATION FROM HUD; AND, FURTHER,
AUTHORIZING THE CITY MANAGER TO TAKE ALL ACTIONS, AND
NEGOTIATE AND EXECUTE ALL DOCUMENTS, WHICH MAY BE
NECESSARY IN CONNECTION WITH THE PURCHASE, REHABILITATION
AND COMPLETION OF THE PROPERTY AS AN AFFORDABLE HOUSING
PROJECT PURSUANT TO HUD GUIDELINES.
WHEREAS, the City's Comprehensive Plan, amended via Ordinance 2017-4147,
established the goal of creating and maintaining 6,300 affordable housing units to serve low -
and moderate -income and special needs households within its boundaries; and
WHEREAS, the strengthening of the City's real estate market, coupled with the sharp
reduction in housing funds from the state and federal governments, have severely curtailed the
development growth the City experienced in 2000 - 2011; and
WHEREAS, in 2014 and 2015, the City acquired the 5 properties listed below from the
Miami Beach Community Development Corporation (MBCDC) as a result of a series of
programmatic and financial irregularities that jeopardized the ongoing use of these properties as
affordable housing:
• Neptune Apartments (35 units)
• Lottie Apartments (9 units)
• Madeleine Village Apartments (16 units)
• London House Apartments (24 units)
• Barclay Apartments; and
WHEREAS, in 2014, the Barclay was red -tagged by the City's Building Department for
having repeatedly failed to complete its 40-year assessment and was vacated of tenants by
MBCDC that same year; and
WHEREAS, the other 85 units have been managed by the .Office of Housing and
Community Services since their acquisition; and
WHEREAS, in 2019 the City acquired a 5-unit property located at 795 81 Street,
bringing the total count of units owned and operated by the City to 89; and
WHEREAS, the City is a U.S. Department of Housing and Urban Development (HUD)
and automatically qualifies for an annual allocation of federal funding under HUD's grant
programs including the HOME Investment Partnership (HOME) Program and Community
Development Block Grant (CDBG) funds; and
WHEREAS, cities that receive entitlement funds from the CDBG program are required to
use their funds in a timely manner; and
WHEREAS, to determine whether entitlement grantees meet timely performance, HUD
calculates the ratio of unexpended funds to the annual grant award 60 days prior to the end of
the program year; and
WHEREAS, as such, the City must spend $746,004.00 to meet the 1.5 ratio by July 27,
2023 to comply with HUD rules; and
WHEREAS, on June 22, 2022, the City Commission adopted Resolution 2022-32188
allocating a total of $636,183.67 in Community Development Block Grant (CDBG) funds for the
acquisition of units to be added to the City's affordable housing portfolio; and
WHEREAS, the completion of this acquisition activity will ensure the City will be in
compliance with the CDBG timeliness requirements for the 2022 program year, while also
adding additional units to the affordable housing portfolio; and
WHEREAS, to maximize and leverage resources, in addition to the $636,183.67 in
CDBG funds allocated via Resolution 2022-32188, the City Commission adopted Resolution
2023-32524, allocating a total of $296,795.88 in HOME funds for a total of $932,979.55
("Appropriated Funds") to increase affordable housing units and ensure timely and compliant
expenditure of HUD funds; and
WHEREAS, the Administration identified one property on the market within the available
budget; and
WHEREAS, the property is a one-story, 2,036 SF duplex, located at 971 79 Terrace,
Miami Beach, FL 33141 (the "Property"); and
WHEREAS, the Property is comprised of two, two -bedroom, one -bathroom units and
features private parking and a backyard, which along with the unit composition of the building,
will be accommodating to families, a critical need in our City; and
WHEREAS, the current asking price is $850,000.00 and the Administration would like to
negotiate a price not to exceed $800,000.00 to have funds available to make any needed
repairs to the Property; and
WHEREAS, the Administration will have to follow the Uniform Relocation Assistance and
Real Property Acquisition Policies Act (URA) requirements, in the event that the existing tenants
are not able to continue living at the Property as an affordable housing project; and
WHEREAS, typical closing costs for a purchase and sale transaction could total
approximately three percent (3%) of the sales price ($24,000.00), which costs will be paid from
the Appropriated Funds; and
WHEREAS, the cost associated with the URA requirements will also be paid from the
Appropriated Funds; and
WHEREAS, due to the nature of these funds, the Administration must complete an
environmental review process, required for all HUD -assisted projects, and await the receipt of
HUD's authorization to release the funds, to ensure that the proposed project does not
negatively impact the surrounding environment and that the property site itself will not have an
adverse environmental or health effect on end users; and
WHEREAS, the environmental review must be completed, with an approved request for
release of funds from HUD, prior to closing; and
WHEREAS, language delineating this requirement has been included in the proposed
purchase contract as a contingency; and
WHEREAS, the Administration anticipates an estimated $200,000.00 for rehabilitation
and URA requirements; a more precise estimate will be obtained following an engineer's
assessment and roof inspection conducted during the due diligence phase; and
WHEREAS, after closing costs, an estimated $100,000.00 will be remaining to expend
on the rehabilitation of the Property; and
WHEREAS, the City expects to receive $610,709.00 in State Housing Initiatives
Partnership Program (SHIP) funds after June 2023; up to 75% of this funding can be set -aside
for construction costs, and a portion of these funds can be allocated to the rehabilitation of the
Property if there is a funding gap; and
WHEREAS, the SHIP Program includes set -aside requirements related to rental
properties and homeowner programs; therefore, approximately $213,478.20 of FY 2023 SHIP
funds would be the maximum permitted allocation funding for the rehabilitation of this rental
Property; and
WHEREAS, HUD requires all HOME projects to complete a subsidy layering review and
underwriting to determine the maximum HOME funding allocation and compliance with
maximum per -unit subsidy limits, which are published by HUD annually; and
WHEREAS, after the project's completion, the Property will remain affordable and must
comply with HOME rent limits for thirty (30) years; and
WHEREAS, the purchase of the Property is a significant expenditure planned to
contribute towards the achievement of the timely performance test; and
WHEREAS, the Administration recommends that the Mayor and City Commission
approve, in substantial form, the "As Is" Residential Contract for Sale and Purchase between
the City, as buyer, and Gerardo E. Ferrer Hernandez, as seller, for the purchase of the Property,
for the total sales price of an amount not to exceed $800,000.00 plus closing costs, a draft copy
of which is attached to the City Commission Memorandum accompanying this Resolution; and
further authorize the City Manager to take all actions, and negotiate and execute all documents,
necessary in connection with the purchase, rehabilitation and completion of the Property as a
multi -family affordable housing project pursuant to HUD guidelines.
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, in substantial form, an "As Is" Residential Contract for Sale and Purchase between the
City, as Buyer, and Gerardo E. Ferrer Hernandez, as Seller, for the purchase of a multifamily
property, located at 971 79 Terrace, Miami Beach, Florida, for the total sales price not to
exceed $800,000.00 plus closing costs, payable from Community Development Block Grant
(CDBG) funds and Home Investment Partnership (HOME) funds; said purchase being
contingent upon: (1) the City Manager's acceptance of inspections in accordance with the
contract; (2) an independent appraisal reflecting an appraised market value for the Property
equal to or greater than the sales price of up to $800,000.00; (3) satisfaction of HUD's area
median purchase and maximum per -unit subsidy requirements; and (4) receipt of funding
authorization from HUD; and, further, authorize the City Manager to take all actions, and
negotiate and execute all documents, which may be necessary in connection with the purchase,
rehabilitation and completion of the Property as an affordable housing project pursuant to HUD
guidelines.
PASSED and ADOPTED this 2-8 day of ` =1? ?- I L 2023•
ATTEST:
�& MAY 9 2
Rafael E. Gra ado, City Cferk
202.E
Dan Gelber, Mayor
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
Cy-r— - t -3
City Attorney T— Date
Resolutions - C7 J
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Alina T. Hudak, City Manager
DATE: April 28, 2023 .
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, APPROVING, 1N SUBSTANTIAL FORM, AN
"AS IS" RESIDENTIAL CONTRACT FOR SALE AND PURCHASE
BETWEEN THE CITY, AS BUYER, AND GERARDO E. FERRER
HERNANDEZ, AS SELLER, FOR THE CITY'S 'PURCHASE OF A
MULTIFAMILY PROPERTY, LOCATED AT 971 79 TERRACE, MIAMI BEACH,
FLORIDA, FOR THE TOTAL SALES PRICE NOT TO EXCEED $800,000.00
PLUS CLOSING COSTS, PAYABLE FROM COMMUNITY DEVELOPMENT
BLOCK GRANT (CDBG) FUNDS AND HOME INVESTMENT PARTNERSHIP
(HOME) FUNDS; SAID PURCHASE BEING CONTINGENT UPON: (1) THE
CITY MANAGER'S ACCEPTANCE OF INSPECTIONS IN ACCORDANCE
WITH THE CONTRACT; (2)AN INDEPENDENT APPRAISAL REFLECTING
AN APPRAISED MARKET VALUE FOR THE PROPERTY EQUAL TO OR
GREATER THAN THE SALES PRICE OF UP TO $800,000.00; (3)
SATISFACTION OF HUD'S AREA MEDIAN PURCHASE AND MAXIMUM
PER -UNIT SUBSIDY REQUIREMENTS;.AND (4) RECEIPT OF FUNDING
AUTHORIZATION FROM HUD; AND, FURTHER, AUTHORIZING THE CITY
MANAGER TO TAKE ALL ACTIONS, AND NEGOTIATE AND EXECUTE ALL
DOCUMENTS, WHICH MAY BE NECESSARY IN CONNECTION WITH THE
PURCHASE, REHABILITATION AND COMPLETION OF THE PROPERTY
AS AN AFFORDABLE HOUSING PROJECT PURSUANT TO HUD
GUIDELINES.
RECOMMENDATION
The Administration recommends approving the resolution to purchase a multi -family building for use
as affordable housing, as detailed below.
BACKGROUND/HISTORY
The City of Miami Beach (the "City") Comprehensive Plan, amended via Ordinance 2017-4147,
established. the goal of creating and maintaining 6,300 affordable housing units to serve low- and
moderate -income and special needs households within its boundaries. While the City added 363.
units to its affordable housing stock from 2000 _ 2011, the real estate market coupled with the sharp
reduction in housing funds from the state and federal government curtailed this growth.
Page 294 of 991
In 2014 and 2015, the City acquired the five (5) properties listed below from the Miami Beach
Community Development Corporation (MBCDC) due to a series of programmatic and financial
irregularities that jeopardized the ongoing use of these properties as affordable housing.
• Neptune Apartments (35 units)
• Lottie Apartments (9 units)
• Madeleine Village Apartments (16 units)`
• London House Apartments (24 units)
• Barclay Plaza Apartments (66 units)
In 2014, the Barclay was red -tagged by the City's Building Department for having repeatedly failed
to complete its 40-year assessment. As a result, the property was vacated of tenants by MBCDC that
same year. The other 85 units within the portfolio have been managed by the Office of Housing and
Community Services since their acquisition. In 2019, the City also acquired a 5-unit property located
at 795 81 Street, bringing the total count of units owned and operated by the City to 89.
The City has also supported the development of affordable housing via the award of federal funds to
the following affordable housing projects owned by the Housing Authority of the City of Miami Beach
(HACMB):
Pre -Development
• 1144 Marseille Dr (22 units)
• 1158 Marseille Dr (20 units)
• 280 S Shore Dr (119 units)
• 8127 Crespi Blvd (12 units)
• 841 80t' street (4 units)
.The City is a. U.S. Department of Housing and Urban Development (HUD) designated entitlement
city as determined by decennial census information on population growth lag, overcrowding, age of
housing stock, and poverty. As an entitlement city, Miami Beach automatically qualifies for an annual
allocation of federal funding, under HUD's grant programs, including the HOME Investment
Partnership (HOME) Program and Community Development Block Grant (CDBG).
Cities that receive entitlement funds from the CDBG program must use their funds in a timely
manner. To determine whether entitlement grantees meet timely performance, HUD calculates the
ratio of unexpended funds to the annual grant award 60 days before the end of the program year.
The City's next CDBG timely performance test will be on August 2, 2023. As such, the City must
spend $746,004.00 to meet the 1.5 ratio by July 27, 2023, to comply with HUD rules.
Several active projects are spending CDBG funds. However; these are either small public service
projects or housing rehabilitation projects which move slowly. On June 22, 2022, the City
Commission adopted Resolution 2022-32188 allocating a total of $636,183.67 in Community
Development Block Grant (CDBG) funds for the acquisition of units to be added to the City's
affordable housing portfolio. Completing this acquisition activity will ensure the City will comply with
the CDBG timeliness requirements for the 2022 program year while adding additional units to the
affordable housing portfolio.
To meet the timely performance test, the Administration proposes that the -City close on a property
with sufficient time to complete the fiscal draw by July 27, 2023.
ANALYSIS
Multi -family ProWdy Purchase
To mabmize and leverage resources, in addition to the $636,183.67 in CDBG funds allocated via
Page 295 of 991
Resolution 2022-32188, the City Corrrrission adopted Resolution 2023-32524 allocating a total of
$296,795.88 in HOME funds for a total of $932,979.55 to increase affordable housing units and
ensure timely and compliant expenditure of HUD funds.
Given the strong real estate market and the limited funding, the options on the market are
scarce. According to Florida Realtors data, the median sales price for condominiums in Miami Beach
is $440,000. The Administration considered the acquisition of scattered condominium units but also
took into consideration the limited options of condominium units on the market, and the potential
challenges in dealing with homeowner association rules, fees and assessments.
The Administration searched for multi-familyproperties and identified one property on the market
within the available budget. The property is a one-story, 2,036 SF duplex, located at 971 79 Terrace,
Miami Beach, FL 33141. The duplex is comprised of two (2) two -bedroom, one -bathroom units. The
property also features private parking and a backyard, which along with the unit composition of the
building, will accommodate families, a critical need in our City. The current asking price is $850,000.
The Administration would like to negotiate a fee not exceeding $800,000 to have funds available to
repair the property.
The Administration will have to follow the Uniform Relocation Assistance and Real Property
Acquisition Policies Act (URA) requirements if the existing tenants cannot continue living at the
property as an affordable housing project. The URA provides important protections and assistance
for people affected by acquiring, rehabilitating, or demolishing real property for federally -funded
projects. Congress enacted this law to ensure that people whose real property is acquired or who
move as a direct result of projects receiving federal funds are treated fairly and equitably and receive
assistance in moving from the property they occupy.
The Administration must complete an environmental review process required by HUD for all funded
projects. The environmental review must be completed, with an approved request to release funds
from HUD before closing, to ensure that the proposed project does not negatively impact the
surrounding environment and that the property site will not have an adverse environmental or health
effect on end users, such as future tenants. The purchase contract will include language delineating
this requirement as a contingency. The Administration has begun the environmental review
procedure with the required 8-step process for activities in a floodplain and the procurement of a
vendor to complete a Phase 1. environmental assessment, should the City Commission authorize the
purchase.
Rehabilitation Costs and Program Requirements
The Administration anticipates an estimated $200,000 for rehabilitation and URA requirements. A
more precise estimate will be obtained following an engineer's assessment and roof inspection during
due diligence. After closing costs, an estimated $100,000 will be remaining to expend on the
rehabilitation of the property.
The City expects to receive approximately $610,709 in State Housing Initiatives Partnership Program
(SHIP) FY 23-24 funds, which would become available after June 30, 2023. The SHIP Program and
Florida statute include set -aside requirements related to rental properties and homeowner programs.
That means that approximately $213,478.20 of FY 23-24 SHIP funds would be the maximum
pemnitted allocation funding for the rehabilitation of the rental property (contingent upon the approval
of the Mayor and Commission). If SHIP funding is utilized, after the project's completion, the property
will remain affordable for fifteen (15) years.
Page 296 of 991
Additionally, HUD requires all HOME projects to complete a subsidy layering review and
underwriting to determine the maximum allowed funding allocation. All HOME -funded projects must
follow the maximum per -unit subsidy limits, which are published annually. With the inclusion of
HOME funds, housing affordability is extended as after the project's completion, the property will
remain affordable and must comply with HOME rent limits for thirty (30) years,.
SUPPORTING SURVEY DATA
The Mayor and City Commission identified the need for workforce and affordable housing as a
key objective in the City's 2019 Strategic Plan Through the Lens of Resilience. The City's 2040
Comprehensive Plan prioritizes affordable housing, with the express goal "to encourage
redevelopment that provides workforce and affordable housing" within the City."
FINANCIAL INFORMATION
Expenditures are tied to federal CDBG and HOME funds and will not impact the general fund.
CONCLUSION
The property purchase is a significant expenditure planned to contribute towards achieving the
CDBG timely performance test. Thus, the Administration recommends approval and authorization of
the purchase and rehabilitation of the property at 97179 Ter, Miami Beach, FL 33141, for multi -family
affordable housing and authorizing the City Manager to execute all required documents.
Applicable Area
North Beach
Is this a "Residents Right Does this item utilize G.O.
to Know" item, pursuant to Bond Funds?
City Code Section 2-14?
No No
Strategic Connection
Mobility - Support affordable, compatible workforce housing.
Legislative Tracking
Housing and Community Services
ATTACHMENTS:
Description
❑ Resolution
Page 297 of 991