LTC 227-2023 Update on the Purchase of 971 79 TerraceDocuSign Envelope ID: D94011 CB-F592-4249-A675-D86D786B01 BF
MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC # 227-2023 LETTER TO COMMISSION
TO:
FROM:
Honorable Mayor Dan Gelbe(\n�bers of the City Commission
Alina T. Hudak, City ManageL,¥.i\ r\ I
DATE: May 15, 2023
SUBJECT: Update on the Purchase of 971 79 Terrace
The purpose of this Letter to Commission is to provide an update on the status of the purchase of
a multifamily property located at 971 79 Terrace, Miami Beach, FL, utilizing Community
Development Block Grant (CDBG) and Home Investment Partnership (HOME) funds.
The Mayor and City Commission authorized the purchase contract on April 28, 2023 via Resolution
No. 2023-32574. Unfortunately. on May 11, 2023, the seller's agent advised that the seller accepted
another offer that had more favorable terms for the seller.
As indicated in Resolution No. 2023-32574 (attached), completing this acquisition activity was
imperative to ensure compliance 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 proposed that the City close on a property
with sufficient time to complete the fiscal draw by July 27, 2023. The purchase options in the real
estate market remain scarce based on the limited funding available. The Office of Housing and
Community Services has identified another unit and is currently conducting the due diligence
process. If the due diligence process is successful, the Administration will include an item on the
June 28, 2023 Commission agenda for consideration by the Mayor and City Commission.
Should you have any questions, please contact Alba Tarre at (305) 673-7000 ext. 26175.
Attachment:
Resolution No. 2023-32574
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DocuSign Envelope ID. D94D11CB-F592-4249-A675-D86D786B01BF
RESOLUTION 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
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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
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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.
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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.
Ass and AoPrEeo o 28 a,hP1 202a
ATTEST:
Dan Gelber, Mayor
MAY 0 2 2023
APPROVED AS TO
FOR M & LAN G UAGE
& FOR EXECUTION
he '12
City Attorney ~I Date
Docu Si gn Envelope ID, D94D11CB-F592-4249-A675-D86D78601BF
Resol utions-C7 J
MIAMI BE AC H
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, 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, LOCATEDAT97179 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 TH E SALES PRICE OF UP TO $800,000.00; (3)
SATISFACTION OF HUD'S AREA MEDIAN PURCHASE AND MAXI MUM
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.
R E C O M M E N D ATI O N
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 "Ci ty") Comprehensive Plan, amended via Ordinance 2017-4147,
established the goal of creating and maintaining 6,300 affordable housing units to serve low- and
mod erate-i ncome and special needs households within its boundaries. While the City added 363.
un its to its affordable housing stock from 2000 - 2011, the real estate mar k et coupled with the shar p
reduction in housing funds from the state and federal government curtailed this growth.
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In 2014 and 2015, the City acq uired the five (5) properties listed be low from the Mi a mi Beach
C om mun ity Develop men t Corp oration (M BC D C ) due to a series of progr ammat ic an d financi al
irr eg ularities that jeo pardized the ongoing use of these prope rties as affordable housing.
• Neptune Ap artme nts (35 units)
• Lottie Ap artme nts (9 units)
• M adeleine Vi llage Ap art me nts (16 units)
• London House Ap artme nts (24 units)
• B arcl ay Plaza Ap artme nts (66 units)
t
In 2014, the Barclay w as red-tagged by the City's Building Departme nt fo r having repeatedly failed
to com pl ete its 40-year assessme nt. As a result, the pro pe rty was vaca ted of tenants by M BC D C that
sa me year. The other 85 units wi thin the portfolio have be en ma naged by the O ffice of Housing and
Commun ity Servi ce s since their acq uisition. In 2019, the C ity also acq uired a 5-unit pro perty loca ted
at 795 81 Stree t, bringing the total co unt of units own ed and ope rated by the City to 89.
The C ity has also suppor ted th e devel op men t of affordable housing via the award of federal fu nds to
the fo llowi ng affordable housing project s own ed by the Housing Au thority of the C ity of Miami Beach
(HACMB):
P re-D evelopme nt
• 1144 M ars eille Dr (22 units)
• 1158 M ars eille Dr (20 units)
• 280 S Shore Dr (119 units)
• 8127 C respi Blvd (12 units)
• 84 1 80 street (4 units)
T he C ity is a U.S. Depart me nt of Housing and U rb an Developme nt (H U D ) designated entitleme nt
city as determin ed by dece nnial ce nsus info rma tion on po pulation growt h lag, overcrow ding, age of
housing stock, and po verty . As an entitleme nt city, Miami Beach automa tica lly qualifies for an annual
alloca tion of fed eral fu nding und er HU D's gran t progr am s, incl uding the HO M E Inv estmen t
P artn ersh ip (H O M E) Prog ram and Com mun ity Devel opmen t Block Gr an t (CD B G ).
C ities that rece ive entitleme nt fu nds from the C D BG program mu st use their fu nds in a timel y
ma nner. To determin e wh eth er entitleme nt gra ntees me et timel y pe rforma nce , H UD ca lculates the
ratio of unexpen d ed fun d s to the an nual gran t aw ard 60 days bef or e th e en d of the prog ram year.
The C ity's next CD BG time ly pe rforma nce test wi ll be on A ugust 2, 2023. As such, the City mu st
spe nd $746,004 .00 to me et th e 1.5 ratio by July 27, 2023, to com pl y wi th HU D rul es.
S everal act ive project s are spe nding CD BG fu nds. H owever; these are either sma ll public serv ice
project s or housing rehabilitation project s wh ich mo ve slowl y. O n June 22, 2022, the C ity
Com mi ssion adop t ed Resol ution 2022-32188 allocating a total of $636,183.67 in Com mun ity
Develop men t Bl oc k G ran t (C D BG ) fun d s for th e acq uisition of units to be added to the City's
afford ab l e housing portfolio. Compl eting this acq uisition acti vity wil l ensure the City wil l com pl y wi th
the C D B G time liness requireme nts fo r th e 2022 progr am yea r wh ile adding additional units to the
affordable housing po rtf olio.
To mee t th e timel y per forman ce test, th e Adm in ist ration propo ses that th e City close on a prope rty
wit h suffi ci ent time to com pl et e th e fiscal dra w by July 27, 2023.
ANALYSIS
M ulti-famil y Prop er ty Purch ase
To ma xi mi ze an d leverage resource s, in addition to th e $636,183.67 in CDBG fu nds alloca ted via
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Resolution 2022-32188, the City Commi ssi on adopted Resolution 2023-32524 alloca ting a total of
$296,795.88 in HOME funds for a total of $932,979.55 to increase affordable housing units and
ensure time ly and comp liant expenditure of HUD funds.
Given the strong real estate market and the limited fun di ng , the options on the ma rket are
sca rce. Acco rding to Florida Realtors data, the median sales price for condomniums in Miami Beach
is $44 0,000. The Administration considered the acquisition of scattered con dominium units but also
took into consi deration the limited option s of con dominium un its on the market, and the pot ential
challenges in dealing with homeo wner association rules, fees and assessme nts.
The Administration search ed for mul ti-family properties and identified one property on the market
within the available budget. The property is a one-story, 2,036 SF duplex, loca ted at 971 79 Terrace,
Miami Beach, FL 33141. The duplex is comp rised of two (2) two-bedroom , one-bathroom units. The
proper ty also features private parking and a backyard, which along with the unit composition of the
building, will accom mo date families, a critical need in our City. The current asking price is $850,000.
The Adm in istration would like to negotiate a fee not exceed ing $800,000 to have funds available to
repair the property .
The Administration will have to follow the Uniform Reloca tion As sistance and Real Property
Acq uisition Policies Act (URA) req uireme nts if the existing tenants ca nnot continue living at the
property as an affordable housing project. The URA provides impor tant protecti ons and assistance
for peo ple affected by acq uiring, rehabilitating, or derrolishing real property for federally-funded
projects. Congress enacted this law to ensure that peo ple wh ose real property is acquired or wh o
mo ve as a direct result of projects receiving federal funds are treated fairly and equitably and rece ive
ass istance in mo ving from the property they occ upy.
The Admin istration must co mp lete an environme ntal review proce ss required by HUD for all funded
projects. The environme ntal review mu st be comp leted, with an approved request to release funds
from HUD before closing , to en sure that the proposed project does not negatively imp act the
surrounding environme nt 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 requireme nt as a contingency. The Ad ministration has begun the environmental review
proce dure with the required 8-step proce ss for activities in a flood plain and the proc ureme nt of a
vendor to co mp lete a Phase 1 environme ntal assessme nt, should the City Commi ssion authorize the
purch ase.
Reh abilitati on Costs and Program Requirements
The Admin istration anticipates an estima ted $200,000 for rehabilitation and URA requireme nts. A
mor e preci se estima te will be obtained following an engineer's assessme nt and roof inspection during
due diligence. Aft er closing costs, an estima ted $10 0,000 will be rema ining to expend on the
rehabilitation of the property .
The City expect s to receive approximately $610,709 in State Housing Initiatives Partnership Program
(SHIP) FY 23-24 funds, whi ch would become available after June 30, 2023. The SHIP Prog ram an d
Florida statute include set-aside requirements related to rental properties and homeo wn er programs .
That me ans that approxima tely $213,478.20 of FY 23-24 SHIP funds would be the ma ximum
per mit ted allocation funding for the rehabilitation of the rental property (co ntingent upon the approval
of the Mayor and Cormi ss ion). If SHIP funding is utilized , after the project's completion, the property
will remain affordable for fifteen (15) years.
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Additionally, HUD requires all HOME projects to complete a subsidy layering review and
underwriting to determine the maximum allowed funding allocation. AII HOME-funded projects must
follow the maximum per-unit subsidy limits, whi ch are published annually. Wi th the inclusion of
HOME funds, housing affordability is extended as after the project's completion, the property will
remain affordable an d must comply wi th HOME rent Ii nits 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 971 79 Ter, Miami Beach, FL 33141, for multi-family
affordable housing and authorizing the City Manager to execute all required documents.
Applicable Area
North Beach
ls this a "Residents Right
to Know" item, pursuant to
City Code Section 2-.142
No
Does this item utilize G.O.
Bond Funds?
No
Strategic Connection
Mobility - Support affordable, compatible workforce housing.
Legislative Tracking
Housing and Community Services
ATTACHMENTS:
Description
a Resolution
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