Resolutions - C7 J
|TO:||Honorable Mayor and Members of the City Commission|| |
|FROM:||Alina T. Hudak, City Manager|| |
|DATE:||April 28, 2023|
|SUBJECT:||A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING, IN SUBSTANTIAL FORM, AN "AS IS" RESIDENTIAL CONTRACT FOR SALE AND PURCHASE BETWEEN THE CITY, AS BUYER, AND GERARDO E FERRER HERNANDEZ, AS SELLER, FOR THE CITY'S PURCHASE OF A MULTIFAMILY PROPERTY, LOCATED AT 971 79 TERRACE, MIAMI BEACH, FLORIDA, FOR THE TOTAL SALES PRICE NOT TO EXCEED $800,000.00 PLUS CLOSING COSTS, PAYABLE FROM COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS AND HOME INVESTMENT PARTNERSHIP (HOME) FUNDS; SAID PURCHASE BEING CONTINGENT UPON: (1) THE CITY MANAGER'S ACCEPTANCE OF INSPECTIONS IN ACCORDANCE WITH THE CONTRACT; (2) AN INDEPENDENT APPRAISAL REFLECTING AN APPRAISED MARKET VALUE FOR THE PROPERTY EQUAL TO OR GREATER THAN THE SALES PRICE OF UP TO $800,000.00; (3) SATISFACTION OF HUD'S AREA MEDIAN PURCHASE AND MAXIMUM PER-UNIT SUBSIDY REQUIREMENTS; AND (4) RECEIPT OF FUNDING AUTHORIZATION FROM HUD; AND, FURTHER, AUTHORIZING THE CITY MANAGER TO TAKE ALL ACTIONS, AND NEGOTIATE AND EXECUTE ALL DOCUMENTS, WHICH MAY BE NECESSARY IN CONNECTION WITH THE PURCHASE, REHABILITATION AND COMPLETION OF THE PROPERTY AS AN AFFORDABLE HOUSING PROJECT PURSUANT TO HUD GUIDELINES.|
The Administration recommends approving the resolution to purchase a multi-family building for use as affordable housing, as detailed below.
The City of Miami Beach (the "City") 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 real estate market coupled with the sharp reduction in housing funds from the state and federal government curtailed this growth.
In 2014 and 2015, the City acquired the five (5) properties listed below from the Miami Beach Community Development Corporation (MBCDC) due to a series of programmatic and financial irregularities that jeopardized the ongoing use of these properties as affordable housing.
- Neptune Apartments (35 units)
- Lottie Apartments (9 units)
- Madeleine Village Apartments (16 units)
- London House Apartments (24 units)
- Barclay Plaza Apartments (66 units)
In 2014, the Barclay was red-tagged by the City's Building Department for having repeatedly failed to complete its 40-year assessment. As a result, the property was vacated of tenants by MBCDC that same year. The other 85 units within the portfolio have been managed by the Office of Housing and Community Services since their acquisition. In 2019, the City also acquired a 5-unit property located at 795 81 Street, bringing the total count of units owned and operated by the City to 89.
The City has also supported the development of affordable housing via the award of federal funds to the following affordable housing projects owned by the Housing Authority of the City of Miami Beach (HACMB):
- 1144 Marseille Dr (22 units)
- 1158 Marseille Dr (20 units)
- 280 S Shore Dr (119 units)
- 8127 Crespi Blvd (12 units)
- 841 80th street (4 units)
The City is a U.S. Department of Housing and Urban Development (HUD) designated entitlement city as determined by decennial census information on population growth lag, overcrowding, age of housing stock, and poverty. As an entitlement city, Miami Beach automatically qualifies for an annual allocation of federal funding under HUD's grant programs, including the HOME Investment Partnership (HOME) Program and Community Development Block Grant (CDBG).
Cities that receive entitlement funds from the CDBG program must use their funds in a timely manner. To determine whether entitlement grantees meet timely performance, HUD calculates the ratio of unexpended funds to the annual grant award 60 days before the end of the program year. The City's next CDBG timely performance test will be on August 2, 2023. As such, the City must spend $746,004.00 to meet the 1.5 ratio by July 27, 2023, to comply with HUD rules.
Several active projects are spending CDBG funds. However, these are either small public service projects or housing rehabilitation projects which move slowly. On June 22, 2022, the City Commission adopted Resolution 2022-32188 allocating a total of $636,183.67 in Community Development Block Grant (CDBG) funds for the acquisition of units to be added to the City's affordable housing portfolio. Completing this acquisition activity will ensure the City will comply with the CDBG timeliness requirements for the 2022 program year while adding additional units to the affordable housing portfolio.
To meet the timely performance test, the Administration proposes that the City close on a property with sufficient time to complete the fiscal draw by July 27, 2023.
Multi-family Property Purchase
To maximize and leverage resources, in addition to the $636,183.67 in CDBG funds allocated via Resolution 2022-32188, the City Commission adopted Resolution 2023-32524 allocating a total of $296,795.88 in HOME funds for a total of $932,979.55 to increase affordable housing units and ensure timely and compliant expenditure of HUD funds.
Given the strong real estate market and the limited funding, the options on the market are scarce. According to Florida Realtors data, the median sales price for condominiums in Miami Beach is $440,000. The Administration considered the acquisition of scattered condominium units but also took into consideration the limited options of condominium units on the market, and the potential challenges in dealing with homeowner association rules, fees and assessments.
The Administration searched for multi-family properties and identified one property on the market within the available budget. The property is a one-story, 2,036 SF duplex, located at 971 79 Terrace, Miami Beach, FL 33141. The duplex is comprised of two (2) two-bedroom, one-bathroom units. The property also features private parking and a backyard, which along with the unit composition of the building, will accommodate families, a critical need in our City. The current asking price is $850,000. The Administration would like to negotiate a fee not exceeding $800,000 to have funds available to repair the property.
The Administration will have to follow the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) requirements if the existing tenants cannot continue living at the property as an affordable housing project. The URA provides important protections and assistance for people affected by acquiring, rehabilitating, or demolishing real property for federally-funded projects. Congress enacted this law 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 must complete an environmental review process required by HUD for all funded projects. The environmental review must be completed, with an approved request to release funds from HUD before closing, to ensure that the proposed project does not negatively impact the surrounding environment and that the property site will not have an adverse environmental or health effect on end users, such as future tenants. The purchase contract will include language delineating this requirement as a contingency. The Administration has begun the environmental review procedure with the required 8-step process for activities in a floodplain and the procurement of a vendor to complete a Phase 1 environmental assessment, should the City Commission authorize the purchase.
Rehabilitation Costs and Program Requirements
The Administration anticipates an estimated $200,000 for rehabilitation and URA requirements. A more precise estimate will be obtained following an engineer's assessment and roof inspection during due diligence. After closing costs, an estimated $100,000 will be remaining to expend on the rehabilitation of the property.
The City expects to receive approximately $610,709 in State Housing Initiatives Partnership Program (SHIP) FY 23-24 funds, which would become available after June 30, 2023. The SHIP Program and Florida statute include set-aside requirements related to rental properties and homeowner programs. That means that approximately $213,478.20 of FY 23-24 SHIP funds would be the maximum permitted allocation funding for the rehabilitation of the rental property (contingent upon the approval of the Mayor and Commission). If SHIP funding is utilized, after the project's completion, the property will remain affordable for fifteen (15) years.
Additionally, HUD requires all HOME projects to complete a subsidy layering review and underwriting to determine the maximum allowed funding allocation. All HOME-funded projects must follow the maximum per-unit subsidy limits, which are published annually. With the inclusion of HOME funds, housing affordability is extended as after the project's completion, the property will remain affordable and must comply with HOME rent limits for thirty (30) years.
SUPPORTING SURVEY DATA
|The Mayor and City Commission identified the need for workforce and affordable housing as a key objective in the City’s 2019 Strategic Plan Through the Lens of Resilience. The City’s 2040 Comprehensive Plan prioritizes affordable housing, with the express goal “to encourage redevelopment that provides workforce and affordable housing” within the City.”|
|Expenditures are tied to federal CDBG and HOME funds and will not impact the general fund.|
The property purchase is a significant expenditure planned to contribute towards achieving the CDBG timely performance test. Thus, the Administration recommends approval and authorization of the purchase and rehabilitation of the property at 971 79 Ter, Miami Beach, FL 33141, for multi-family affordable housing and authorizing the City Manager to execute all required documents.
|Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14?|| ||Does this item utilize G.O. Bond Funds?|
|No|| ||No|| |
|Mobility - Support affordable, compatible workforce housing.|
Housing and Community Services