The following are MBCDC items being tracked for compliance as of this writing:
Villa Matti Apartments – The chairlift has been inoperable since July 2018. The lift was replaced and is currently pending inspection by the City. Tenants with mobility impairments must use the rear entrance of the building almost half a block away in order to access the property. As of February 7, 2020, MBCDC reported the final inspection of the equipment is scheduled for February 21, 2020.
Jefferson Apartments – The building received an unsafe structure violation on August 15, 2019. The building’s first floor shows evidence of structure deterioration and will require the replacement or repair of the first-floor foundation and flooring. As of this writing, MBCDC is currently working with an architect to design plans to enable the repair and received an extension from the Building Department to complete the work until April 2020.
Shelbourne Apartments – The building requires extensive renovation that will result in the temporary relocation of 29 tenants. An architect has been retained and the tenant relocation process is expected to commence in March 2020. MBCDC has identified an alternate placement within its portfolio for 25 tenants, two (2) will be placed in an assisted living facility and two (2) will find alternate housing.
Villa Maria Apartments- Building Violation No. US2019-03162 was issued July 24, 2019 for an unsafe structure, due to the deterioration of the stucco in the walkway throughout the property. MBCDC is attempting to make the repair and is seeking to expedite the permit. The violation will not be closed until final inspection is obtained in the related permits.
Financial Statements
On February 5, 2020, MBCDC provided Consolidated Financial Statements for FY 2018. The statements delineated the increased deficit from 2017 to 2018 and highlighted the subsequent events that have impacted the organization’s financial capacity and compliance with federal programs.
The report also listed a variety of current material weaknesses and significant deficiencies in connection to the agency’s internal controls, accounting processes and tenant management that have persisted for five (5) years. MBCDC provided a response that included corrective actions as part of a corrective action plan within the report.
Financial Statements Year-End Closing Process and Review of Journal Entries; Error in HUD subsidy Billing and Revenue Recognition; Prior Year Adjustment.
Corrective action: Management hired a third-party accounting firm to review and reconcile certain balance sheet accounts and make the necessary year-end closing entries for FY 2018 and FY 2019. There should be a clearly defined review and approval process for journal entries recorded during the year. Management was recommended to engage the appropriate personnel, including legal counsel, to review agreements in order to ascertain the amounts due in connection with all agreements and implement a financial close checklist.
City opinion: In order to ensure compliance with federal programs, the auditees must submit financial reports to the Federal Audit Clearinghouse, including a data collection form and reporting package upon completion of the annual audit in accordance with 2 CFR Part 200. The deadline for this submission is the earlier of the 30 days after receipt of the auditors’ reports or nine (9) months after the end of the audit period unless a longer period is agreed to in advance by the cognizant or oversight agency for the audit. As such, MBCDC failed to submit the financials contractually required and are in default of their funding agreements with the City.
Financial reporting; Due to/ Due from Account Reconciliation; Missing records.
Corrective action: Management has implemented internal controls over financial reporting through hiring a third-party property management company.
City opinion: Royal American Management (RAM) is now overseeing all matters related to property management, accounts payable and rent collection. Tenants reported in July 2019 that rent collections were not being conducted in a timely manner as rent checks were taking more than two months to be cashed. The City discussed this issue with MBCDC and RAM. As of this writing, both entities confirm all rent collections are done in a timely manner.
Tenant files showed discrepancies in connection to annual recertifications; Tenant Rent Overcharge; Form and Reporting Package.
Corrective action: The current management company has presented a robust system of internal controls for financial reporting and compliance.
City opinion: The City has monitored several tenant files to ensure compliance throughout 2019, in response to tenant claims of expired leases and recertifications. One of the most critical factors of administering an affordable housing program is ensuring that all current tenants are income-eligible and have a valid lease. Several tenants in the agency’s portfolio receive vouchers from subsidy programs and can be at risk of termination if their leases are not maintained compliant. After close monitoring and consistent supervision by the City, RAM was able to complete outstanding certifications. MBCDC and RAM have advised their new software will notify tenants within 60 days their recertification date and should prevent future failings.
Property Tour February 13, 2020
City staff accompanied Commissioner Richardson, MBCDC board members, and Royal American Property Management staff on a tour of the following properties:
Allen Apartments- The Allen is a historic property located across from the newly-renovated Convention Center and received funding from various federal, state and county grants. Some of the property deficiencies noted are spalling throughout the façade (caused by the construction in the property to the north side), cracks throughout the stucco, water intrusion in the lobby ceiling and strong odor of moisture and humidity throughout the carpeted common areas. RAM informed tour attendees that the carpet would be removed from all common areas in an effort to relieve the retention of humidity. There are currently four (4) vacancies at the Allen, which will be filled during the relocation of tenants currently residing at the Shelbourne Apartments.
Westchester Apartments- The historic property is no longer under affordability with the City of Miami Beach but demonstrates need for structural repairs to the façade and the subflooring. RAM noted there is a 95% occupancy rate at the property.
Jefferson Apartments- The elderly-designated historic property currently has a building violation for an unsafe structure that will require the relocation of tenants living on the first floor by March 2020. RAM expects the work to be completed within six (6) months, which will include the replacement of flooring in the common area and inside the units. The City has requested a relocation plan that must include the detailed location of all relocated tenants and five (5) tenants will have to be relocated outside of the agency’s portfolio. RAM is hiring a third party to oversee the relocation process. All tenants in the Jefferson will have to be relocated outside of the agency’s portfolio.
Meridian Apartments- The historic property is designated for elderly and formerly homeless. RAM states there are challenges with filling vacancies because the rent is set at $900 and most of the designated population does not meet the income requirements. There are some visible deficiencies with the settling of the structure that may be resolved as a maintenance issue.
Aimee Apartments- 530 & 532 Michigan Avenue- The property is currently at 100% occupancy. Tenants have reported pest control issues and HVAC system issues in the past. All issues related to maintenance have been resolved within the past six (6) months.