The Administration recommends approving the resolution to purchase a multifamily property for use as affordable housing, as detailed below.

The City of Miami Beach (the "City") 2040 Comprehensive Plan established the goal of having a minimum of 6,800 affordable and workforce 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 four (4) 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. Collectively, the properties consist of 84 units as follows:

• Neptune Apartments (35 units)
• Lottie Apartments (9 units)
• Madeleine Village Apartments (16 units)
• London House Apartments (24 units)

The 84 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.

Multifamily Property Purchase

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).

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. 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. Utilizing CDBG and HOME funds for the acquisition of a property will ensure the City will comply with the CDBG and HOME expenditure requirements while increasing affordable housing in the City.

On June 22, 2022, the City Commission adopted Resolution No. 2022-32188 allocating a total of $636,183.67 in CDBG funds for the acquisition of units to be added to the City's affordable housing portfolio. To maximize and leverage resources, the City Commission adopted Resolution No. 2023-32524 on March 27, 2023, allocating an additional $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.

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 available 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.

On March 13, 2024, the Mayor and City Commission adopted Resolution No. 2024-32949, allocating an additional $121,569.44 in prior year unexpended CDBG and HOME funds to the acquisition or rehabilitation of a property and authorizing the City Manager to negotiate and execute a purchase agreement for a total sum not to exceed $1,662,415.00, increasing the City's purchase options.

The Office of Housing and Community Services has identified a 3,603 SF fourplex located at 1735 Normandy Drive, Miami Beach, FL. The one-story property consists of two (2), two-bedroom/two-bath units and two (2), one-bedroom/one-bath units. The four (4) apartments have been rehabilitated including: plumbing, electricity, appliances, and flooring. The scope of the project includes property acquisition, tenant relocation, and window replacement. The advertised asking price for the property is $1,800,000.00 which is significantly higher than comparable sales in the area. The Administration negotiated the purchase price to $1,600,000.00.

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.

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 includes 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.

Rehabilitation Costs and Program Requirements

The Administration anticipates an estimated $200,000 for installation of new impact windows and URA requirements. The City expects to have approximately $450,000 in unallocated CDBG FY 2024 funds available for housing projects, which would become available after October 1, 2024, and can be utilized for these purposes.

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, the property will remain affordable and must comply with HOME rent limits for thirty (30) years.

CDBG Timely Performance

The City's next CDBG timely performance test is scheduled on August 2, 2024. As such, the City must expend $410,295.00 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.”

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 1735 Normandy Drive, Miami Beach, FL 33141, for multifamily affordable housing and authorizing the City Manager to execute all required documents.