At its February 13, 2019 meeting, the Mayor and Commission addressed the financial condition of Miami Beach Community Development Corporation (MBCDC) in light of management changes at the non-profit agency and a variety of compliance concerns noted by Miami-Dade County and the city. The Mayor and Commission initially made a referral to the Neighborhoods Community Affairs Committee (NCAC) for further discussion including addressing the conditions of the agency’s properties and its progress in addressing County compliance concerns. The item was subsequently referred to the Finance and Citywide Projects Committee (FCWPC) for further discussion as the agency’s finances became the central concern.

At its May 2019 meeting, FCWPC requested that an update on MBCDC and its fiscal position become a recurring reporting item to the Committee every 90 days.

As conveyed via LTC 159- 2018, MBCDC had been operating at a recurring annual deficit exceeding $ 100,000.  For the past year, Miami-Dade County and the city have been meeting with MBCDC staff and board members to address the agency's financial situation. On April 27, 2018, the County sent MBCDC correspondence notifying the agency of the County's intent to foreclose on the Crespi Park Apartments as a result of MBCDC's default of its funding agreement.

The county's efforts in working with MBCDC to resolve its financial position dates to 2015 when MBCDC requested permission to sell several affordable units at the Knightsbridge Condominium located at 7133 Bay Drive. These units were acquired as scattered site affordable housing with city and county funds. MBCDC had advised that it intended to sell these units and use the proceeds of the sales to stabilize its housing portfolio and strengthen the agency's financial position and ability to pay debt service on its remaining properties. According to the County, it has been unable to determine how the estimated $ 350,000 from these sales was used by MBCDC.

The Crespi Park Apartments, located at 7825-7835 Crespi Boulevard, are owned and managed by MBCDC. In July 2017, MBCDC was advised by the city and Miami-Dade County's Department of Public Housing and Community Development that it was violating the property's restrictive covenants by converting the property to market rate housing and by failing to notify the County of its intentions to violate the property's restrictive covenant.

In correspondence dated August 1, 2018, Michael Liu, Director of Miami-Dade County's Department of Public Housing and Community Development, notified MBCDC's legal counsel that MBCDC's failure to present a satisfactory corrective action plan to stabilize the agency and its housing portfolio would leave the County with "no other option than to continue to pursue the county's right to the assignment of leases and rents of both the Crespi ( Park Apartments) and the Madison properties." The Madison Apartments is a 17- unit affordable housing property located at 259 Washington Avenue.

During this timeframe, MBCDC closed on the sale of the Seymour Building, its corporate offices, on March 6, 2019. MBCDC sold the property for $2.1 million. After closing costs and the satisfaction of loans, MBCDC reported netting about $1.2 million from this sale that would be used to address outstanding property conditions and reposition the agency's financial condition.

Since the May FCWPC meeting, the city has been tracking its receipt of tenant complaints for MBCDC-owned properties. City staff has intervened and or monitored progress on tenant complaints from a variety of MBCDC properties including:

• Villa Maria Apartments
• Villa Matti apartments
• Crespi Park Apartments
• Allen Apartments
• Jefferson Apartments

While the majority of complaints addressed inoperable or failing air conditioning systems (during the time when temperatures regularly soared to the upper 90s), complaints also included buckling of the first floor at the Jefferson Apartments, inoperable windows, rodent/pest infestations, inoperable washer/dryer machines, falling stucco, leaky/inoperable shower faucets, the absence of maintenance in common areas, and deteriorating kitchen cabinets, among others. (Attached you will find photos of a recent city visit to MBCDC properties.) The Building Department inspected the Jefferson Apartments and issued a violation that requires MBCDC to provide an engineering report on the safety of the building’s structure. This item remains open as of this writing. As previously reported, city staff has been monitoring the installation of the ADA-compliant chairlift for the Villa Matti Apartments for the past year that also remains unrepaired as of this writing.

Throughout MBCDC’s challenges, the city and county have collaborated to ensure monitoring of MBCDC with an emphasis on protecting its residents and preserving its affordable housing portfolio as well as working with MBCDC’s management company, Royal American Management. This has included repeat monitoring of the properties with outstanding complaints as well as providing support and assisting MBCDC in navigating the municipal issues identified at each property such as facilitating interventions with the Finance and Building Departments. As a result of these collaborative efforts, several open items that impeded the issuance of Business Tax Receipts (BTR) for several properties have been resolved.

However, MBCDC continues to struggle with compliance. Attached please find the default letters issued by the city to MBCDC for failing to abide by HUD regulations requiring annual tenant income certifications and the issuance of leases. Despite the provision of an additional week to cure its violations at the Allen Apartments, the follow-up site visit by city staff still found problems with the buildings tenant records as of September 9^th. The remaining two default letters have cure periods that expire after the publishing deadline for this memo.

The city has shared its ongoing concerns with MBCDC’s Executive Director Ahmed Martin and with its board of the director’s Chairperson Monica Matteo-Salinas. The city and county have repeatedly expressed concern regarding compliance lapses, poor property maintenance conditions at the properties and ongoing tenant complaints (i.e. rent checks not being cashed on a timely basis, expired leases, poor maintenance of common areas, etc.). The agency’s troubles, which began in July 2013, have not been substantively addressed almost six years later and the agency’s debt service, coupled with poor property management and compliance challenges, pose a serious financial risk. As a reminder, the city and county have invested millions of dollars in acquiring and rehabilitating MBCDC’s affordable housing stock. The city’s investment stands at $9,690,645 in federal, state and redevelopment agency funds. The federal and state funds require the city to ensure that assisted properties remain compliant with rules and regulations (including property maintenance standards) and continue to serve income-eligible households.

MBCDC will hold a strategic planning retreat for its board of directors and staff on Saturday, September 14^th. MBCDC has invited the city and county to send representatives. MBCDC’s board expects to address the agency’s response to the city’s and county’s ongoing concerns as well as the preservation of its affordable housing stock and stability of its tenants. Staff will provide an update at the September 20^th committee meeting.