The Administration recommends approving the resolution to purchase a multifamily building for use as affordable housing as detailed below.

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. While the City added 363 units to its affordable housing stock from 2000 – 2011, the strengthening of the City's real estate market coupled with the sharp reduction in housing funds from the state and federal government curtailed this growth and no new City-sponsored units have been added since 2011.

An opportunity to add to the City's affordable housing stock has materialized as a result of the City's resolution of past compliance issues with the U. S. Department of Housing and Urban Development (HUD). On July 2, 2018, the City Commission approved Resolution No. 2018-30374. This action appropriated $1,079,000 from the general fund to be used for the repayment of HUD grant funds to comply with the decision of the  Office of the Inspector General Audit and as recommended by Letter to Commission (580-2017) on December 5, 2017.

These funds are available for use pursuant to expenditure rules and deadlines prescribed by the Community Development Block Grant (CDBG) and HOME Investments Partnership (HOME) programs.

The funds returned to the City’s line of credit may be used to acquire, develop or rehabilitate affordable housing for households earning up to 80 percent of area median income (AMI). To increase the supply of affordable housing and ensure timely expenditure of these HUD funds, the Commission approved Resolution No. 2018-30551 authorizing the purchase of a qualifying multifamily property that can be acquired and made ready for tenancy with the available HUD funds. This property, once acquired, would subsequently house income-eligible households drawn from the City's affordable housing wait list. The Administration will follow HUD requirements to reallocate those funds.

Multifamily Property Purchase

The Administration has identified and executed a purchase agreement for a multifamily property located at 795 81^ST St, Miami Beach, FL 33141. The original offer submitted by the Administration was $1,025,000 and the seller submitted a counter offer of $1,090,000. The Administration submitted the attached counter offer of $1,050,000 which was acceptable to the seller and includes a timeline that will ensure timely expenditure of CDBG funds. The two-story, 4,883-square foot building is comprised of five units: two, three-bedroom/one-bathroom; two, two-bedroom/one-bathroom; and one, one-bedroom/one-bathroom. The unit composition of the building can accommodate families in need of affordable housing, a critical need in our City.

All of the units are occupied and 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.

The URA provides important protections and assistance for people affected by the acquisition, rehabilitation, or demolition of real property for federally-funded projects. This law was enacted by Congress 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 anticipates an estimated $500,000 to $1,100,000 for rehabilitation and Universal Relocation Act Requirements. A more precise estimate will be obtained following an engineer’s assessment and roof inspection conducted during the due diligence phase.

The affordable rents for the building will be as follows:

The Administration is fully funding all eligible projects received for the FY 2019 HOME and CDBG RFP earlier this year. A balance of CDBG funds in the amount of $396,037 and HOME funds in the amount of $529,067 (amount contingent upon HOME subsidy limits) can be utilized to ensure the acquired building can be properly rehabilitated. HUD sets maximum per-unit subsidy limits for the HOME Program; therefore, an approximate amount of $271,000 in HOME funds can be allocated to this property. The Administration is requesting the full balance of the unprogrammed CDBG funds and $271,000 in HOME funds be allocated to the rehabilitation of the acquired property and that $258,067 of the remaining HOME funds be allocated to homeownership assistance. This use will further leverage the funds to increase the number of affordable housing units in the City while promoting homeownership.

HUD Requirements

HUD requires entitlement jurisdictions to submit a Five-Year Consolidated Plan, which establishes the strategic framework upon which the City utilizes its funds. The Consolidated Plan is augmented and refined by the City’s annual submission of a one-year Action Plan, which delineates the specific projects and activities funded by each year’s HUD allocation.

From time to time, it is necessary for the City to process a substantial amendment to the five-year Consolidated Plan or the one-year Action Plan to allow for the funding of new activities, modifications or other administrative actions. Any proposed amendment that is considered a substantial amendment is subject to the citizen participation process; requires formal action by the City Commission; and requires approval by HUD. Furthermore, a 30 day public notice is required to provide the opportunity for the public to review and comment on the proposed substantial amendments. The City will consider all comments or views received from the public concerning proposed substantial amendments in accordance with 24 CFR 91.105 (c) (3). A summary of these comments and views shall be attached to the substantial amendment submitted to HUD.

Accordingly, the repayment funds returned to the City require substantial amendments as listed below:

• Substantial amendments to the FY 2007-2012, 2014, 2018 Action Plans and corresponding FY 2003-07, FY 2008-12, FY 2013-17, FY 2018-22 Consolidated Plans:

  • To include acquisition as a project utilizing multiple year CDBG and HOME repayment funds, as detailed below:

• Revision to the draft 2019 Action Plan, and corresponding FY 2018-2022 Consolidated Plan to:

  • Allocate previously unprogrammed CDBG funds in the amount of $396,037 and HOME funds in the amount of $529,067 (amount contingent upon HOME subsidy limits) to multifamily rehabilitation; and

  • Include Homeownership Assistance as a Project in the Plan with an allocation of $258,067 in HOME funds.

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. The City’s next CDBG timely performance test will be on August 2^nd. As such, the City must meet the 1.5 ratio by July 27th in order to comply with HUD rules. In order to meet this timeline, the City would have to close on this property before this date so that the fiscal draw is completed by July 27th. The HUD repayment funds are counted in the ratio test as they were returned to the City’s line of credit last year. The purchase of the Property is a significant expenditure planned to contribute towards the achievement of the timely performance test.

The Administration recommends approval and authorization of the purchase and rehabilitation of the property at 795 81^ST St, Miami Beach, FL 33141 for multifamily affordable housing and authorizing the City Manager to execute all required documents.