The Miami Beach Community Development Corporation (the “MBCDC”) was founded in 1981 by the Miami Design Preservation League. In the 1990s, the MBCDC shifted its primarly focus from preservation to developing affordable housing and serving the low-income residents of Miami Beach. The MBCDC acquired several affordable housing properties by securing funding from private lenders and local municipalities. Since 2000, the City of Miami Beach (the “City”) has granted MBCDC over $28 million (through multiple funding sources) to acquire and rehabilitate twelve (12) multi-family housing properties comprised of sixteen (16) different buildings and containing 323 income-restricted units.

 The City is a U.S. Department of Housing and Urban Development (HUD) designated entitlement city as determined by the decennial census information on population growth lag, overcrowding, age of housing stock, and poverty. The City has been an entitlement city since 1975, and as such is eligible for funding through HUD programs. 

In May 2013, the City embarked on an extensive review of its U.S. Department of Housing and Urban Development (HUD) funded projects and operations. This extensive review included the analysis of projects undertaken between 2008 and 2013 by the MBCDC, the City's largest HUD-funded beneficiary, as well as the City's internal processes, operations, and staff. The City offered a plan to address the agency's operational problems while securing the City's fiscal interests and the well-being of the tenants housed by MBCDC. The proposed plan included a transfer of title of certain properties from the MBCDC to the City. The City suggested that MBCDC surrender the title to the following properties: Allen Apartments, Barclay Plaza Apartments, London House Apartments, Lottie Apartments, Madeleine Village Apartments, and Neptune Apartments.

On February 12, 2014, the Mayor and City Commission approved the transfer of the London House Apartments via Resolution No. 2014-28506. On September 17, 2014, the Mayor and City Commission approved the transfer of the Allen Apartments, Barclay Plaza Apartments, London House Apartments, Lottie Apartments, Madeleine Village Apartments, and Neptune Apartments via Resolution No. 2014-28756. Since then, the City’s allocated its federal and state funding allocations to rehabilitate the London House Apartments, the Lottie Apartments, the Madeleine Village Apartments, and Neptune Apartments.

Throughout 2014-2019, the City held multiple discussions with MBCDC to address the agency’s financial insolvency, including selling scattered sites (which had met the affordability period requirements) to reduce its debt load and to create an operating reserve.

At the February 13, 2019 City Commission meeting, the Mayor and City Commission held a discussion regarding MBCDC, its financial condition, and a variety of compliance concerns identified by Miami-Dade County (County) and the City. The Mayor and City Commission initially made a referral to the Neighborhood 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.

On March 6, 2019, MBCDC closed on the sale of the Seymour Building, its corporate offices. 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.

At its May 2019 meeting, the FCWPC requested that an update on MBCDC and its fiscal position become a recurring reporting item to the Committee every 90 days. Since the May 2019 FCWPC meeting, the City commenced tracking its receipt of tenant complaints for MBCDC-owned properties.

In 2021, Miami-Dade County Audit and Management Services Department (AMS) completed its three-year assessment/audit of MBCDC. Their findings were transmitted in a Memorandum dated April 8, 2022 (Attachment A). The audit focused on adherence to the County’s Rental Regulatory/Grant Agreementsand did not include the following properties: Meridian Place, Crespi Park Apartments, Fernwood Apartments, Villa Matti, The Shelbourne Apartments, and Camacho Apartments. Below is a summary of the audit findings at the time:

Despite the MBCDC’s efforts to restructure its governing board and improve the organization’s operations, it could no longer maintain the assets due to rising insurance and utility costs. In December 2021, both the Miami-Dade Department of Public Housing and Community Development (PHCD) and the MBCDC Board of Directors began discussing the business terms regarding the county’s potential acquisition of the MBCDC portfolio.

On April 4, 2023, the Miami-Dade County Board of County Commissioners approved Resolution No. 230469 approving terms of and authorizing the County Mayor to execute a Memorandum of Agreement (MOA) with MBCDC to take over ownership and control of the property portfolio of MBCDC. The Resolution authorized the County Mayor to execute a contract for sale and purchase for the Fernwood Apartments and the Shelbourne Apartments, approving and authorizing the assumption of a total amount of forgivable debt on all properties and the total amount of institutional debt on all properties and eligible capital expenses from available housing funds.

On April 28, 2023, at the request of Vice-Mayor Arriola, the City Commission referred to the Finance & Economic Resiliency Committee (FERC) a discussion regarding the mismanagement of the MBCDC.

On May 8, 2023, MBCDC and PHCD executed a Memorandum of Understanding, which outlined the transition of managerial and financial oversight of the assets from the MBCDC to PHCD and, ultimately, their legal conveyance to Miami-Dade County.  The result of the transfer of the MBCDC portfolio to the county will preserve the long-term affordability of these assets for decades to come at a time when Miami-Dade County is experiencing its worst housing affordability crisis.

City’s Efforts to Preserve Affordable Housing

To ensure that Miami Beach meets its affordable housing goals with the right partners, the City issues a Request for Applications (RFA) on an annual basis to solicit eligible projects for the use of HOME and CDBG funds. The City reviews submissions to evaluate project eligibility and compliance with HUD rules and regulations, in addition to project feasibility. The goal is to select the most suitable projects and sub-recipients that will contribute positively to the City’s affordable housing objectives.

HUD has strict requirements for affordable housing projects to ensure decent, safe, and sanitary living conditions. As per Code of Federal Regulations (CFR) 24 Part 4080, in order to meet federal, state, and local housing and occupancy codes, the structure must meet Uniform Building Code, National Electrical Code, International Confernce of Building Officials Plumbing Code, the Uniform Mechanical Code, and HUD Minimum Property Standards. Throughout 2019, the City issued MBCDC several default notices for failing to abide by HUD regulations requiring annual tenant income certifications and the issuance of leases. As a participating jurisdiction and entitlement community, the City must enforce affordable housing requirements and monitor all properties throughout the affordability period of every project. The City must also monitor all properties throughout the affordability period.

As a recipient of federal allocations, including HOME Investment Partnership Program funds, the City must also adhere to CFR 24 Part 92504 and enter into a written agreement with any entity to receive those funds prior to disbursement. The City must include several stipulations within the agreement associated with the project for the duration of the affordability period. The agreement must require the housing to meet the property standards and must also require owners of rental housing assisted with HOME funds to maintain housing compliance for the duration of the affordability period. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards of CFR § 92.251 and verify the information submitted by the owners per the requirements of CFR § 92.252. The inspections must follow the inspection procedures established by the participating jurisdiction to meet the inspection requirements. The on-site inspections must occur within 12 months after project completion and at least once every 3 years thereafter during the period of affordability.

While the City has received complaints related to MBCDC properties, 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. The Building Department inspected the Jefferson Apartments in 2019 and issued a violation that required MBCDC to provide an engineering report on the safety of the building’s structure.

Throughout MBCDC’s challenges, the City and County have collaborated to ensure the 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 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 were resolved.

The Miami Beach MBCDC has undergone significant financial and operational challenges over the years. MBCDC acquired several affordable housing properties through funding from private lenders and local municipalities, receiving substantial support from the City, totaling over $28 million, for the acquisition and rehabilitation of various multi-family housing properties.

However, MBCDC's financial struggles and compliance concerns prompted a thorough review by the City. This process led to a decision by the City to assume certain property titles from MBCDC in 2014, addressing some financial insolvency issues. Additionally, the County conducted an audit in 2021 leading to the proposal for Miami-Dade County to take over ownership and control of the entire MBCDC property portfolio. This initiattve aims to preserve the long-term affordability of the properties, particularly given Miami-Dade County's current housing affordability crisis.

Throughout this challenging period, the City has remained committed to preserving affordable housing and enforcing HUD regulations. The City continues to issue annual Request for Applications (RFA) to select suitable projects and sub-recipients, ensuring compliance with federal, state, and local housing codes. The City has also diligently monitored MBCDC properties, conducting inspections and addressing complaints to maintain decent and safe living conditions for residents.

As we move forward, the City will continue its efforts to address affordable housing challenges, ensure compliance with regulations, and support initiatives that benefit the community and its residents.