The Administration recommends approving the Resolution.

The City of Miami Beach (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, over-crowding, age of housing stock, and poverty.  The City of Miami Beach has been an entitlement community since 1975. 

As an entitlement community, the City automatically qualifies for an annual allocation of federal funding under HUD’s grant programs including the Community Development Block Grant (CDBG) Program and the HOME Investment Partnership (HOME) Program, created in 1992 to provide funding specifically for affordable housing.

HUD requires each entitlement community to submit its One-Year Action Plan, on an annual basis, describing how it will utilize funding and resources to address priority needs identified in the City’s Consolidated Plan. The One-Year Action Plan is a component of the Five-Year Consolidated Plan required to be filed with HUD.

From time to time, it may be necessary for the City to process a “substantial amendment” to the Five-Year Consolidated Plan and the One-Year Action Plan to allow for the funding of new activities, modification of existing activities, or other program administrative actions. The City is required by HUD, per Title 24 Code of Federal Regulation (CFR) 91.505 (b), to identify the criteria to be used in determining if a proposed action will be considered a “substantial amendment” as follows:

1. A change in allocation priorities or a change in the method of distributing funds;
2. Funding an activity using funds from any program covered by the Plan (including program income) not previously described in the One-Year Action Plan; or
3. A change in the purpose, scope, location, or beneficiaries of an activity.

Any proposed amendment considered a substantial amendment requires approval by the City Commission. Furthermore, in accordance with Citizen Participation requirements, a thirty (30)-day public notice and public hearing is required to provide the opportunity for the public to review and comment on the proposed substantial amendment. The City will consider all comments or views received from the public concerning proposed substantial amendments in accordance with HUD [24 CFR 91.105 (c)(3)]. A summary of these comments shall be attached to the substantial amendment submitted to HUD.

The CDBG and HOME Program have timeliness requirements regarding the expenditure of funds. HOME funds must be committed to a project within two (2) years of the City’s receipt and expended within five (5) years. The Action Plan is monitored throughout the year to ensure compliance with federal regulations and progress towards the National Objective, which stipulates that HOME-funded activities must create housing units that benefit low- and moderate-income persons who earn at or below eighty percent (80%) of the Area Median Income (AMI). 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.

On June 22, 2022 the City adopted Resolution No. 2022-32188, allocating $636,183.67 in FY 2022 CDBG funds to the acquisition of a property. The City Commission passed Resolution No. 2023-32524, allocating an additional $296,795.88 in HOME funds, bringing the total to $932,979.55.

On April 28, 2023, the Mayor and City Commission approved the purchase of a duplex property at 971 79 Terrace, Miami Beach, FL, through Resolution No. 2023-32574. Unfortunately, on May 11, 2023, the seller’s agent advised that the seller accepted another offer with more favorable terms for the seller.

With no other multifamily properties within the budget, the Administration shifted focus to condominium units. On June 28, 2023, the Mayor and City Commission authorized a condominium unit purchase through Resolution No. 2023-32662. However, due to potential significant special assessments, it was determined that it would not be in the City’s best interest to acquire the property.

On June 28, 2023, the Mayor and City Commission adopted Resolution No. 2023-32637, allocating an additional $607,866.00 in FY 2023 CDBG funds to the acquisition or rehabilitation of a property.

The Administration has reached substantial completion for the rehabilitation at three (3) of its affordable housing properties: Lottie Apartments, Corals Apartments and Neptune Apartments. No additional expenses are anticipated for the completion of these projects and there is a remaining balance. Additionally, there are unexpended CDBG public services funds, resulting in a combined total of $121,569.45 in unexpended CDBG and HOME funds.  Exhibit A provides a detailed breakdown of this funding. To maximize resources, the recaptured HOME and CDBG funds will be combined with the funds currently allocated to the acquisition of a property for a total of $1,662,415.00 to increase affordable housing units and ensure timely and compliant expenditure of HUD funds. Currently, there are multifamily properties available within the allocated budget. The proposed allocated funding would be inclusive of closing costs, relocation, acquisition and rehabilitation if needed.

In accordance with the Citizen Participation Plan, the City advertised a Notice of Public hearing and a 30-day Comment Period (March 4, 2024 – April 2, 2024). The Public Hearing will be held on March 19, 2024.  Public comments received will be included in the amended Action Plan to be submitted to HUD for final review and approval.

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 will have to follow Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) requirements. 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. This means that the City would also have to conduct assessments for the tenant roster to determine whether they meet income guidelines and program eligibility.

The first step in the purchase process will be to identify a property and negotiate terms. Upon successful negotiation, a purchase contract and relevant documents will be executed, contingent on the approval by the City Commission. In order to secure the purchase contract while mitigating the City’s risk, an initial deposit in the amount of $ 1,000 will be made.

The City's next CDBG timely performance test is scheduled on August 2, 2024. As such, the City must expend $532,651.00 to meet the 1.5 ratio by July 27, 2024, and comply with HUD rules. Failure to do so could result in being placed on a HUD performance improvement plan or facing recapture of unspent funds.

Several active projects are utilizing CDBG funds. However, these are either small public service projects or multi-family housing rehabilitation projects which move slowly. Completing this acquisition activity will ensure the City will comply with the CDBG timeliness requirements for the 2023 program year while increasing affordable housing in the City.

To meet the timely performance test, the Administration proposes that the City close on a property with sufficient time to complete the fiscal draw and submit it to HUD by July 27, 2024.

LOBBYIST DISCLOSURE
In accordance with Resolution No. 2023-32857, adopted by the City Commission on December 13, 2023, the following information has been provided by the Administration as it relates to the subject resolution:

1. Was the Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? No

2. If so, specify name of lobbyist(s) and principal(s): N/A

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.”

The Administration recommends approval of the amendment to the Action Plan, recapturing and reallocating CDBG and HOME funds to the acquisition of a property within the City for use as affordable housing to ensure the timely and compliant expenditure of HUD funds.