A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING, SOLELY FOR THE LIMITED PURPOSES OF SECTION 147(F) OF THE INTERNAL REVENUE CODE AND SECTION 163.01, FLORIDA STATUTES, THE ISSUANCE BY THE CAPITAL TRUST AGENCY OF ITS MORTGAGE FACILITIES REVENUE BONDS, IN ONE OR MORE SERIES PURSUANT TO A PLAN OF FINANCE, IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $38,450,000, FOR THE PURPOSE OF FINANCING THE FACILITIES HEREIN DESCRIBED, LOCATED AT 1040 COLLINS AVENUE ("COUNCIL TOWERS NORTH") AND 533 COLLINS AVENUE ("COUNCIL TOWERS SOUTH"), WHICH FINANCING FOR THE FOREGOING AFFORDABLE SENIOR HOUSING FACILITIES IS CONTEMPLATED PURSUANT TO THE TERMS OF CITY'S LONG-TERM LEASE AGREEMENTS WITH THE MIAMI BEACH SENIOR CITIZENS HOUSING DEVELOPMENT CORPORATION, INC.; AND PROVIDING AN EFFECTIVE DATE.

The Administration recommends approving the issuance by Capital Trust Agency of its Mortgage Facilities Revenue Bonds to Elderly Housing Development and Operations Corporation for the purpose of financing the project described below.

The City of Miami Beach (Lessor) and Miami Beach Senior Citizens Housing Development Corporation, Inc., as assignee of Senior Citizens Housing Development Corporation of Miami Beach (Lessee), are parties to two separate, but similar, lease agreements, both dated July 9, 1976 (collectively Leases).  The Leases are for the air rights located above the City-owned properties located at 533 Collins Avenue (Council Towers South) and 1040 Collins Avenue (Council Towers North).  Council Towers South is a 12 story building consisting of 125 units and approximately 115,231 square feet.  Council Towers North is a 12 story building consisting of 125 units and approximately 115,036 square feet.  Both buildings were completed in 1979 and offer quality affordable housing for low-income senior citizens.

In August 2017, Lessee requested an extension of the Leases, for a period of 50 years, in order to enable Lessee to obtain financing for capital renovations to both buildings.  The renovations would include, but not be limited to, site work, exterior façade work, new windows, interior common areas and office renovations, apartment renovations, and building systems (e.g., elevators, roof, electric, plumbing, water pumps, generators, fire alarm systems, etc.).  On April 11, 2018, the Mayor and City Commission adopted Resolutions 2018-30280 and 2018-30281 approving Amendments No.1 to the Leases extending the terms for a period of 50 years, commencing July 9, 2026 and ending July 8, 2076.  On April 22, 2020, the Mayor and City Commission approved Amendments No. 2 to incorporate certain HUD requirements and modifications necessary for HUD to grant its consent and approval of Amendments No.1, approve the assignment of the Leases and to agree to insure the mortgage loan that will refinance the properties and pay for the agreed upon improvements. 

On June 5, 2019, the Mayor and City Commission adopted Resolution 2019-30858, approving the issuance by Capital Trust Agency of its Mortgage Facilities Revenue Bonds to Elderly Housing Development and Operations Corporation for the purpose of financing the project, which approval has a one year “expiration date” for the federal tax-exempt financing purposes in accordance with Section 147(f) of the Internal Revenue Code. Due to delays on the Council Towers financing transaction, including delays attributable to the COVID-19 pandemic, Lessee may not be able to close on its financing before the “expiration date”.

Accordingly, even though Lessee intends to close on its financing by the end of May, 2020 (within the original one year approval period), in case of additional unforeseen delays, Lessee seeks a new approval from the Mayor and City Commission for the  issuance by Capital Trust Agency of its Mortgage Facilities Revenue Bonds to Elderly Housing Development and Operations Corporation for the purpose of financing the project in order to renew the “expiration date” for federal tax-exempt financing purposes in accordance with Section 147(f) of the Internal Revenue Code.  Lessee has already submitted its plans to the Building Department for review, and the building permit is expected as soon as the City begins to issue building permits once the COVID-19 emergency subsides.

The Capital Trust Agency (CTA) submitted an updated letter to the City Manager dated April 22, 2020 (attached hereto as Exhibit “A”).  The CTA was created in 1999 through enabling Florida statutes that provide for governmental entities to sponsor and facilitate public purpose financings that meet applicable state and federal laws.  CTA has agreed to issue its revenue bonds in an amount not to exceed $38,450,000 (Bonds) in one or more series, either taxable or tax-exempt, or both, and loan the proceeds thereof to Elderly Housing Development and Operations Corporation (EHDOC), a not for profit corporation of the District of Columbia, authorized to do business in the State of Florida, and/or one or more related and/or affiliated entities, and a tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Service Code of 1986 (Code).  EDHOC is an affiliate of the City’s Lessee, the Miami Beach Senior Citizens Housing Corporation, Inc.  The Lease Amendment previously approved by the City Commission contemplated a tax exempt financing through either the Lessee and/or related entities.

The Bonds are being issued to finance or refinance, including through reimbursement, (i) the acquisition, renovation, installation and equipping, together with the acquisition and installation of related facilities, fixtures, furnishings and equipment, of both Council Towers buildings, (ii) the funding of any necessary capitalized interest, (iii) the funding of any necessary reserves, (iv) the payment of certain costs of issuing the Bonds (collectively, the Facilities or Project).

In order for the Bonds to be issued as tax-exempt bonds, certain requirements of the Code relating to the issuance of the Bonds must be met.  One such requirement is the approval by the City of the use of the proceeds of the Bonds within the City in accordance with the Tax Equity and Fiscal Responsibility Act, as required by Section 147(f) of the Code.  Additionally, for purposes of Section 163.01, Florida Statutes, as amended, CTA also requests the City’s permission to finance the Project within the City’s corporate limits.

As referenced in the Resolution and the indemnity provided by the Borrower, the purpose of this item is to hold a public hearing and facilitate the issuance of the financing for the improvements of the Council Towers North and South buildings, both of which serve elderly residents in the City.  The City will have no liability or obligation to pay principal of or interest on the Bonds.  The Bonds will be limited obligations of CTA, payable solely from the revenue derived from EHDOC and pledged to the payment of the Bonds.  The City’s approval of the issuance of the Bonds is subject to any other approvals required under the Leases. 

Additionally, the City, the City Commission and its employees and agents have been granted appropriate indemnity by way of the Indemnification Certificate of the Borrower, attached to the Resolution accompanying this memorandum.