C7L-Approve One-Time Only Subordination Of Mortgage And Security Agmt With MBCDCCOMMISSION ITEM SUMMARY
Condensed Title:
A resolution of the Mayor and City Commission of the City of Miami Beach, Florida, approving a one-time only subordination
of that certain Mortgage and Security Agreement, in the amount of $2,864,642, dated July 5, 2011, between MBCDC:
Meridian Place, LLC, a Florida Limited Liability Corporation, and the City of Miami Beach, in favor of a Commercial Lender
for an amount not to exceed $980,000; and further authorizing_ the City_ Manager to execute all a_pplicable documentation.
Key Intended Outcome Supported:
1. Increase access to workforce or affordable housing. 2. Improve the lives of elderly residents.
Supporting Data (Surveys, Environmental Scan, etc.): Based on the 2009 Customer Satisfaction Survey: 17.5% of
businesses feel that lack of workforce housing is one of their most important challenges; 80% of residents 65 or older
ated City response to expectations as good or excellent
Issue:
Shall the City authorize a subordination of its lien/security position to a commercial bank lender.
Item Summary/Recommendation:
MBCDC purchased Meridian Place, an affordable rental housing project, located at 530 Meridian Avenue, for the purpose of
rehabilitating the building to provide affordable housing. Total currently allocated grant and loan funds for the project are
$7,915,085, including County-allocated and City-allocated federal affordable housing entitlement funds from the HOME and
Community Development Block Grant (CDBG) programs. The City allocates its HOME and CDBG funds for capital projects
as loans. Project funding also includes MBCDC-secured State funds, additional U.S. HUD vouchers, as well as a
commitment from Miami Dade County District 5 General Obligation Bond funds (County GOB) for $440,431.
However, until MBCDC is able to complete the required processes for drawing down those various funding sources,.
including retainers held from City allocations, a cash flow gap in the amount of $977,975 is impeding the completion of the
project, which is currently 70% complete. MBCDC has expressed a need to obtain commercial bank financing for an amount
not to exceed $980,000 in order to complete the project. An item on the February 8, 2012 Redevelopment Agency agenda
includes a recommended modification to the current RDA loan issued to MBCDC for the project. This modification is
necessary as a cash flow analysis reflects that the affordable housing rents are not sufficient to make the necessary debt
payments on the RDA loan, and the project will not pass a necessary underwriting review by the private lender.
It is customary for commercial banks to request a first lending security position. Additionally, and consistent with the City's
prior practice, the RDA agenda item also recommends that the RDA loan (as modified) be subordinated to allow for the
private financing to be secured. Likewise, in an effort to facilitate the closing of the current cash flow gap and completion of
the project, the Administration is recommending approval of a one-time only subordination of the City's lending position in the
recorded mortgage which secures funding allocated from US HUD HOME and CDBG funding, in the amount of $2,864,642,
dated July 5, 2011, between MBCDC: Meridian Place, LLC, a Florida Limited Liability Corporation, and the City of Miami
Beach, in favor of a commercial lender for an amount not to exceed $980,000.
Adviso Board Recommendation:
On October 27,2011, no recommendation was made by FCWPC. On January 19,2012, FCWPC discussion of RDA Note
modification and related debt subordination and recommendation of its referral to the Ci Commission for a roval.
Financial Information:
Source of Amount
Funds: 1
OBPI Total
Financial Impact Summary: N/A
Ci Clerk's Office Le islative Trackin
Anna Parekh, ext. 6471
AP
T:\AGENDA\2012\February 8\Meridian City Subordination CC Summary.doc
MIAMI BEACH 239
Account
AGENDA ITEM _C_/_L __
D·ATE 2 -8' -/2-
lD MIAMI BEACH ""='"
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Members of the City Commission
FROM: r
DATE: February 8, 2012
SUBJECT: A · RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING A ONE-TIME ONLY SUBORDINATION OF
THAT CERTAIN MORTGAGE AND SECURITY AGREEMENT, IN THE AMOUNT
OF $2,864,642, DATED JULY 5, 2011, GIVEN BY MBCDC: MERIDIAN PLACE,
LLC, A FLORIDA LIMITED LIABILITY CORPORATION, AS MORTGAGOR, TO
THE CITY OF MIAMI BEACH, AS MORTGAGEE, IN FAVOR OF A COMMERCIAL
LENDER, TO BE DETERMINED BY MBCDC, FOR AN AMOUNT NOT TO EXCEED
$980,000; AND FURTHER AUTHORIZING THE CITY MANAGER TO EXECUTE
ALL APPLICABLE DOCUMENTATION.
This item is a companion item to RDA Agenda item 1 A.
ADMINISTRATION RECOMMENDATION
Adopt the resolution.
BACKGROUND
In 2006, Miami Beach Community Development Corporation (MBCDC) was approached by Carrfour
Supportive Housing about MBCDC's potential interest in acquiring the property located at 530 Meridian
Avenue to ensure its continued availability to the community as affordable housing. Carrfour had
purchased the 72-unit former transient hotel and had planned extensive rehabilitation, but had decided
they were not going to proceed. To complete the transaction, MBCDC requested funding from the City to
assist in the acquisition of the property; RDA loan funds were allocated. MBCDC then pursued funds for
the rehabilitation of the project. To date, the project has received the following funding:
PROJECT FINANCING ACHIEVED
City of Miami Beach -RDA
State of Florida -Housing Demonstration Loan Funds
Miamf..P~de county -Documentary surtax Program
Miami-Dade County -US HUD -HOME Program
City of Miami ~ich .. us HUO ... HOME Program
City of Miami Beach -US HUD -CDBG Program
Us HOP SRO; Rehab Loan Commitment (Vouchers)
Miami-Dade District 5 General Obligation Bond
240
$1,500,000
1,000,000
1,379,$95 {'
395,605
2;6341518
230,124
335~012
440,431
Commission Memorandum
February 8, 2012
Meridian Place Consent to Subordination
Page 2of2
The total project costs, including acquisition, are currently projected at $8,117,797. The increases in costs
are due primarily to plans revisions required by zoning regulations, historic and accessibility requirements,
and HUD requirements. Total currently allocated grant and loan funds are $7,915,085, including County-
allocated and City-allocated federal affordable housing entitlement funds from the HOME and Community
Development Block Grant (CDBG) programs. The current budget also includes MBCDC's independently
secured State funds, additional U.S. HUD vouchers, as well as a commitment from Miami Dade County
District 5 General Obligation Bond funds (County GOB) for $440,431.
However, until MBCDC is able to complete the required processes for drawing down those various funding
sources, including retainers held from City allocations, a cash flow gap in the amount of $977,975 is
impeding the completion of the project, which is currently 70% complete. MBCDC is pursuing commercial
bank financing for an amount not to exceed $980,000 in order to complete the project. The ability to
secure this financing is contingent on favorable underwriting. A companion item on the RDA agenda of
February 8, 2012 recommends the modification of the terms of the current RDA loan to defer repayment of
the loan until the conclusion of the afford ability period. Should that loan modification be approved by the
RDA, MBCDC will proceed with necessary underwriting, apply for commercial gap financing, and proceed
to draw down other funds which were previously committed to the project. That RDA agenda item also
includes a recommended subordination of the RDA loan behind the commercial financing. This is a
common requirement of private funders, and the City Commission has previously approved similar ·
subordination requests.
In addition to a resolution of the RDA loan terms, in order for MBCDC to proceed with private financing, it
is likewise necessary for the City to subordinate its current position on two loans the City has provided to
MBCDC: 1) U.S. HUD's HOME Investment Partnership Program; and, 2) U.s. HUD's Community
Development Block Grant Program. However, such subordination shall be for the maximum value of the
private financing, which is currently proposed at $980,000. This amount may be further reduced should
MBCDC secure County GOB District 5 funds for this project, as those funds (if received) will be required to
be used to pay down the private financing.
CONCLUSION
It is customary for commercial banks to request a first lending position. A related item on the February 8,
2012 Redevelopment Agency agenda recommends the modification of an existing mortgage and
promissory note between the RDA and MBCDC, as well as RDA approve of the a subordination of the
RDA's lending position to a commercial loan. Likewise, in an effort to facilitate the closing of the current
cash flow gap and completion of the project, the Administration is recommending approval of a one-time
only subordination of the City's lending position in the recorded mortgage which secures funding allocated
from US HUD HOME and CDBG funding, in the amount of $2,864,642, dated July 5, 2011, between
MBCDC: Meridian Place, LLC, a Florida Limited Liability Corporation, and the City of Miami Beach, in favor
of a commercial lender for an amount not to exceed $980,000; and further authorizing the_City Manager to
execute all applicable documentation.
JMG/HF/AP/ARB
Attachments:
T:\Agenda\2012\february 8\Meridian City Subordination CC Memo 2-8-2012.doc
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RESOLUTION TO BE SUBMITTED
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