2008-26850 ResoRESOLUTION NO.
2008-26850
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING
THE FOLLOWING ACTIONS WITH REGARD TO THE
AFFORDABLE HOUSING RENTAL PROJECT ACQUIRED
AND TO BE REHABILITATED BY MIAMI BEACH
COMMUNITY DEVELOPMENT CORPORATION (MBCDC),
KNOWN AS THE VILLA MARIA, AND LOCATED AT 2800
COLLINS AVENUE: 1) AUTHORIZING THE RELEASE OF
AN EXISTING RECORDED MORTGAGE AND SECURITY
AGREEMENT AGAINST LOTS 1, 2, 6 AND 7 OF THE
PROPERTY, IN THE AMOUNT OF $1.6 MILLION, AND
PROVIDING FOR EXECUTION AND RECORDATION OF A
NEW MORTGAGE, NOTE, AND SECURITYAGREEMENT, IN
THE AMOUNT OF $3.2 MILLION (CONSISTING OFTHE
EXISTING $1.6 MILLION, AS WELL AS AN ADDITIONAL $1.6
MILLION IN PREVIOUSLY APPROPRIATED, BUT NOT YET
RECORDED, HOME FUNDS) AGAINST LOTS 1 AND 2
ONLY; 2) APPROVING A SUBORDINATION OF THE CITY'S
$3.2 MILLION INTEREST/NEW MORTGAGE IN FAVOR OF A
$3 MILLION CONSTRUCTION LOAN MADE TO MBCDC BY
INTERNATIONAL FINANCE BANK (IFB LOAN); 3)
PROVIDED THAT THE CITY'S APPROVAL OF
SUBORDINATION TO THE IFB LOAN SHALL BE ONLY FOR
THE DURATION OF THE CONSTRUCTION LOAN, AT WHICH
TIME MBCDC SHALL EITHER PAY OFF THE IFB LOAN OR,
IF ANY PART OF THE IFB LOAN IS SOUGHT TO BE
CONVERTED INTO A PERMANENT LOAN AGAINST THE
VILLA MARIA PROPERTY, THEN MBCDC SHALL OBTAIN
THE CITY MANAGER'S PRIOR WRITTEN CONSENT; AND 4)
FURTHER AUTHORIZING THE CITY MANAGER TO
EXECUTE ANY AND ALL DOCUMENTS TO EFFECTUATE
THE AFORESTATED TRANSACTIONS.
WHEREAS, the 34-unit Villa Maria Apartments, located at 2800 Collins Avenue, was
purchased by MBCDC on March 18, 2005, at a cost of $2,600,000, to be rehabilitated and
renovated as an affordable housing rental project; and
WHEREAS, the purchase price was paid with $1,600,000 of HOME funds received
from the City, and $1,400,000 of seller financing; and
WHEREAS, on Aprit 11, 2007, the City Commission approved another $1,600,000
allocation to MBCDC from the HOME Set-Aside Program, which had previously been
committed to MBCDC for the development of affordable housing, to pay off the seller
financing; and
WHEREAS, the balance of the funds paid for interest, closing costs and pre-
development costs; and
WHEREAS, the original total projected cost for the rehabilitation of Villa Maria
Apartments was $7,298,565.; and
WHEREAS, due to increased construction and carrying costs, the total projected
cost is now $8,418,729; and
WHEREAS, two of the originally projected funding sources -- the 2007 Florida
Housing Financing Corporation State Apartment Incentive Loan Program ($1,083,565), and
the 2007 Miami-Dade Surtax funds ($800,000) -did not materialize; and
WHEREAS, MBCDC was subsequently awarded, but has not yet received,
$2,000,000 from the Florida Housing Finance Corporation (FHRP) Special Housing and
Development Program (SHADP); and
WHEREAS, in an effort to proceed in a timely fashion with the rehabilitation of the
project, MBCDC has applied for, and was approved for, construction financing from
International Finance Bank (IFB), in the amount of $3 million (the IFB Loan); and
WHEREAS, as MBCDC receives its awarded $2 million SHADP funding, as well as
County awarded funding, those funds will be utilized to pay down the IFB Loan, which is
projected to be reduced to $482,922 by project completion, which is estimated to occur by
December, 2009; and
WHERAS, IFB's commitment for commercial construction financing to MBCDC is
conditioned upon being the first mortgage holder; and
WHEREAS, MBCDC has requested that the City release its existing $1,600,000
mortgage on the property, and replace it with a new, and previously funded, mortgage, in
the amount of $3,200,000; the City's $3.2 million mortgage will encumber Lots 1 and 2 of
the property (the actual Villa Maria site); and
WHEREAS, the City's new mortgage will be closed at or around the same time as
an institutional first mortgage with International Finance Bank (for the IFB Loan), a second
mortgage in favor of Florida Housing Finance Corporation (FHFC), and a third mortgage in
favor of Miami-Dade County; and
WHEREAS, upon the closing of the IFB mortgage/IFB Loan, IFB will require the City
to enter into a subordination agreement of the City's $3.2 million interest/new mortgage;
and
WHEREAS, the IFB Loan is intended only for the duration of the construction of the
project; upon completion of construction, MBCDC shall be required to either pay offthe IFB
Loan or, if any part of the IFB loan is sought to be converted into a permanent loan against
the Villa Maria property, then the City Manager's prior written consent shall be required.
NOW THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission approve and authorize the following actions with regard to the affordable
housing rental project acquired and to be rehabilitated by Miami Beach Community
Development Corporation (MBCDC), known as the Villa Maria, and located at 2800 Collins
Avenue: 1) The release of an existing recorded mortgage and security agreement against
Lots 1, 2, 6 and 7 of the property, in the amount of $1.6 million, and (concurrently)
execution and recordation of a new mortgage, note, and security agreement, in the amount
of $3.2 million (consisting of the existing $1.6 million mortgage, as well as an additional
$1.6 million in previously appropriated, but not yet recorded, HOME funds) against Lots 1
and 2 only; 2) approving a subordination of the City's $3.2 million interest/new mortgage in
favor of a $3 million construction loan being made to MBCDC by International Finance
Bank (IFB Loan); 3) provided that the City's approval of subordination to the IFB Loan shall
only be for the duration of the construction loan, at which time MBCDC shall either pay off
the IFB Loan or, if any part of the IFB Loan is sought. to be converted into a permanent
loan against the Villa Maria property, then MBCDC shall be required to obtain the City
Manager's prior written consent; and 4) further authorizing the City Manager to execute any
and all documents to effectuate the aforestated transactions.
APPROVED AS TO
FARM & LANGUAGE
PASSED AND ADOPTED this 16th day of July , 2008.
ATTEST:
~l/t-~~
CITY CLERK M OR
Robert Patcher Matti Herrera Bower
T:\AGENDA\2008Uu1y 16\Consent\MBCDC Villa Maria Subordination Reso.doc
8~ FOR EXECUTION
Iv v$
COMMISSION ITEM SUMMARY
Condensed Title:
A resolution regarding the affordable housing rental project acquired and to be rehabilitated by the Miami Beach
Community Development Corporation (MBCDC), known as the Villa Maria, located at 2800 Collins Avenue, to: 1)
authorize the release of an existing recorded mortgage and security agreement against Lots 1, 2, 6 and 7 of the property in
the amount of $1.6 million, and providing for execution and recordation of a new mortgage, note, and security agreement,
in the amount of $3.2 million (the existing $1.6 million, as well as an additional $1.6 million previously appropriated, but not
yet recorded in HOME funds) against Lots 1 and 2 only; and 2) approve a subordination of the City's $3.2 million
interest/new mortgage in favor of a $3 million construction loan being made to MBCDC by International Finance Bank
(IFB); provided that the City's approval of the subordination of the IFB loan is only for the duration of the construction loan
and that MBCDC shall either pay off the fFB loan or, if any part of the IFB loan is sought to be converted into a permanent
loan against the Villa Maria property, then requiring the City Manager's further consent.
Ke Intended Outcome Su orted:
Increase access to workforce or affordable housing.
Supporting Data (Surveys, Environmental Scan, etc.):
Based on the 2007 Customer Satisfaction Survey, 75% of residents rank the quality of life within the City of Miami Beach
favorably, however, in regards to Construction/Development -Housing, 67% of respondents indicated that the City of
Miami Beach should ensure the rovision of housin for the elder) /seniors.
Issue:
Shall the City terminate its $1,600,000 mortgage and replace it with a new mortgage in the amount of $3,200,000 which
has already been funded from HOME program funds, and.enter into a subordination agreement in favor of International
Finance Bank?
item summa ircecommenaaiion:
The 34-unit Villa Maria Apartments, located at 2800 Collins Avenue, was purchased by MBCDC on March 18, 2005 at a
cost of $2,600,000. The purchase price was paid with $1,600,000 of HOME funds received from the City of Miami Beach,
and $1,400,000 of seller financing. The balance of the funds paid for interest, closing costs and pre-development costs.
On April 11, 200, the City Commission approved another $1,600,000 allocation to MBCDC from the HOME Set-Aside
Program to pay off the seller financing. The balance of those funds was also utilized for pre-development costs. This
additional $1.6 million allocation had previously been committed to MBCDC for the development of affordable housing.
The original total projected cost for the rehabilitation of Villa Maria Apartments was $7,298,565. However, due to
increased construction and carrying costs, the total projected cost is now $8,418,729. The projected completion date is
December, 2009. Furthermore, two of the originally projected funding sources -- the 2007 Florida Housing Financing
Corporation State Apartment Incentive Loan Program ($1,083,565), and the 2007 Miami-Dade Surtax funds ($800,000) -
did not materialize. Subsequently, MBCDC was awarded, but has not yet received, $2,000,000 from Florida Housing
Finance Corporation (FHRP) Special Housing and Development Program (SHADP). MBCDC has applied for and was
approved for construction financing from IFB in the amount of $3 million. As MBCDC receives its awarded its $2 million
SHADP funding and other awarded funding, those funds will be utilized to pay down the IFB loan.
International Finance Bank's commitment is conditioned upon being the first mortgage holder. MBCDC has therefore
requested that the City terminate its $1,600,000 mortgage property and replace it with a new, and previously funded,
mortgage in the amount of $3,200,000. This new mortgage will be closed at or around the same time as an institutional
first mortgage with International Finance Bank, a second mortgage in favor of Florida Housing Finance Corporation
(FHFC), and a third mortgage in favor of Miami-Dade County. The City will be in fourth position. Upon the closing of the
IFB mortgage, IFB will require the City to enter into a subordination agreement.
Board Recommendation:
Financial Information:
Source of Amount Account
Funds: q N/A N/A
OBPI Total
Financial Impact Summary:
Cit Clerk's Office Le islative Trackin
Anna Parekh
Sign-Offs:
Department Director ista t City Manager City Manager
V
m MIAMIBEACH
AGENDA 1 ~~
G~
DATE 7'~~`~~
m MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM-
TO: Mayor Matti Herrera Bower and Members of the ' y Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: July 16, 2008
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, APPROVING THE FOLLOWING ACTIONS WITH REGARD TO
THE AFFORDABLE HOUSING RENTAL PROJECT ACQUIRED AND TO BE
REHABILITATED BY MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION
(MBCDC), KNOWN AS THE VILLA MARIA, AND LOCATED AT 2800 COLLINS
AVENUE: 1) AUTHORIZING THE RELEASE OF AN EXISTING RECORDED
MORTGAGE AND SECURITY AGREEMENT AGAINST LOTS 1, 2, 6 AND 7 OF THE
PROPERTY IN THE AMOUNT OF $1.6 MILLION, AND PROVIDING FOR EXECUTION
AND RECORDATION OF A NEW MORTGAGE, NOTE, AND SECURITY
AGREEMENT, IN THE AMOUNT OF $3.2 MILLION (THE EXISTING $1.6 MILLION, AS
WELL AS AN ADDITIONAL $1.6 MILLION PREVIOUSLY APPROPRIATED, BUT NOT
YET RECORDED IN HOME FUNDS) AGAINST LOTS 1 AND 2 ONLY; 2)
APPROVING A SUBORDINATION OF THE CITY'S $3.2 MILLION INTEREST/NEW
MORTGAGE IN FAVOR OF A $3 MILLION CONSTRUCTION LOAN BEING MADE TO
MBCDC BY INTERNATIONAL FINANCE BANK (IFB LOAN); PROVIDED THAT THE
CITY'S APPROVAL OF THE SUBORDINATION OF THE IFB LOAN IS ONLY FOR
THE DURATION OF THE CONSTRUCTION LOAN AND THAT MBCDC SHALL
EITHER PAY OFF THE IFB LOAN OR, IF ANY PART OF THE IFB LOAN IS SOUGHT
TO BE CONVERTED INTO A PERMANENT LOAN AGAINST THE VILLA MARIA
PROPERTY, THEN REQUIRING THE CITY MANAGER'S FURTHER CONSENT; AND
FURTHER AUTHORIZING THE CITY MANAGER TO EXECUTE ANY AND ALL
DOCUMENTS TO EFFECTUATE THE AFORESTATED TRANSACTIONS.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
The 34-unit Villa Maria Apartments, located at 2800 Collins Avenue, was purchased by MBCDC
on March 18, 2005 at a cost of $2,600,000. The purchase price was paid with $1,600,000 of
HOME funds received from the City of Miami Beach, and $1,400,000 of seller financing. The
balance of the funds paid for interest, closing costs and pre-development costs. On April 11,
2007, the City Commission approved another $1,600,000 allocation to MBCDC from the HOME
Set-Aside Program to pay off the seller financing. The balance of those funds was also utilized
for pre-development costs. This additional $1.6 million allocation had previously been committed
to MBCDC for the development of affordable housing. The original total projected cost for the
rehabilitation of Villa Maria Apartments was $7,298,565. However, due to increased
construction and carrying costs, the total projected cost is now $8,418,729. MBCDC's "Villa
Maria Costs Comparison" is attached as Exhibit 1.
In the meantime, two of the originally projected funding sources -- the 2007 Florida Housing
Financing Corporation State Apartment Incentive Loan Program ($1,083,565), and the 2007
Miami-Dade Surtax funds ($800,000) -did not materialize. Subsequently, MBCDC was
Page 2 of 2
Villa Maria
awarded, but has not yet received, $2,000,000 from Florida Housing Finance Corporation
(FHRP) Special Housing and Development Program (SHADP). In light of the circumstances,
and in an effort to proceed in a timely fashion with the rehabilitation of the Villa Matti project,
MBCDC has applied for, and was approved for, construction financing from IFB in the amount of
$3 million. MBCDC's "Proposed Sources and Uses for Villa Maria Apartments" is attached as
Exhibit 2. As MBCDC receives its awarded its $2 million SHADP funding and County awarded
funding, those funds wilt be utilized to pay down the IFB loan, which is being projected to be
reduced to $482,922 by project completion, estimated to occur by December, 2009.
The existing recorded mortgage and security agreement is currently against Lots 1, 2, 6 and 7 of
the property. Villa Maria currently sits on Lots 1 and 2. The proposed future Villa Matti project
will be constructed on lots 6 and 7 only. Pursuant to Exhibit 3, MBCDC proposes to complete
both projects by leveraging City of Miami Beach funding in orderto obtain U.S. HUD funds, State
funds, Miami-Dade County funds, and commercial construction financing.
The commitment for commercial construction financing from International Finance Bank's is
conditioned upon being the first mortgage holder. MBCDC has therefore requested that the City
terminate its $1,600,000 mortgage property and replace it with a new, and previously funded,
mortgage in the amount of $3,200,000. This new mortgage will be closed at or around the same
time as an institutional first mortgage with International Finance Bank, a second mortgage in
favor of Florida Housing Finance Corporation (FHFC), and a third mortgage in favor of Miami-
Dade County. The City will be in fourth position. Upon the closing of the IFB mortgage, IFB will
require the City to enter into a subordination agreement.
A subordination of the City's $3.2 million interest/new mortgage in favor of a $3 million
construction loan being made to MBCDC by IFB is only for the duration of the construction loan.
MBCDC shall be required to either pay off the IFB loan or, if any part of the IFB loan is sought to
be converted into a permanent loan against the Villa Maria property, then the City Manager's
further consent must be granted.
CONCLUSION
The Administration recommends approval of the proposed amendments.
JMG/HMF/AP
T:WGENDA\2008\July 16\Consent\MBCDC Villa Maria Subordination Memo.doc
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EXHIBIT 1
PROPOSED SOURCES AND USES FOR VILLA MARIA APARTMENTS
SOURCES
Cit of Miami Beach HOME ~ $3,200,000.00
Miami Dade Count HOME $1,215,000.00
Miami Dade Count Surtax $1,000,000.00
State of Florida SHADP $2,000,000.00
Cit of Miami Beach SHIP 06/07 $285,464.00
Cit of Miami Beach HOME NOFA 10/1/07 $185,273.00
Cit of Miami Beach CDBG Relocation $50,000.00
International Finance Bank $482,992.00
$8,418,729.00
USES
Purchase Price $2,600,000.00
Rehabilitation Costs $3,800,000.00
Pre-Develo ment Costs $1,687,294.00
Rehabilitation Contin enc $331,435.00
$8,418,729.00
EXHIBIT 2
Villa Maria and Villa Matti Financing
Bank Loans
State of Florida
k 12.4%
k'
r r
U.S. HUD $5,210,470
City of Miami Beach 4,720,737
Miami-Dade County 3,715,000
State of Florida 2,000,000
Bank Loans 482 992
$16,129,199
EXHIBIT 3
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