The Administration recommends approving the resolution.

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 and the sharp reduction in housing funds from the state and federal government curtailed this growth.

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 August 2, 2023. As such, the City must spend $538,749.00 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 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 by July 27, 2023.

The Mayor and City Commission authorized the purchase contract on April 28, 2023, via Resolution No. 2023-32574 to purchase a multifamily property at 971 79 Terrace, Miami Beach, FL.

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.  

The Administration intended to utilize the funding to acquire a multi-family property. However, the options in the real estate market remain scarce based on the limited funding available, especially for multifamily properties. Based on the Affordable Housing Advisory Committee’s recommendation on June 20, 2023,  the Administration recommends the purchase of a condominium unit to rehabilitate and rent to a low- to moderate-income household. This strategy would allow for the timely expenditure of CDBG funding and increase affordable housing.

The Office of Housing and Community Services (OHCS) has identified a unit and is currently conducting the due diligence process. The property is a 538 SF condominium unit located at 8420 Byron Ave Unit 5, Miami Beach, FL 33141. The 40-year recertification for the building was completed on January 25, 2022. The scope of the project includes property acquisition, interior rehabilitation, tenant relocation, and temporary holding costs (such as monthly homeowner association fees of $332 and utilities estimated at $100) while the unit is being rehabilitated.

Once the rehabilitation is complete, the unit will be rented to a low- to moderate-income homebuyer. Although the unit is expected to appraise at the asking price of $220,000, to be competitive, the City will offer to pay up to $30,000.00 above appraised value, not exceeding the asking price. CDBG funds can also be used to temporarily manage the acquired property until the property is rented to a low- to moderate-income tenant.

The Administration will have to follow the 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 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.

The Administration anticipates an estimated $80,000 for all costs associated with rehabilitation, URA requirements, and the temporary cost of managing the unit, including homeowner association fees and utilities.

In order to preserve the opportunity to purchase the Property and ensure the timely expenditure of the CDBG funds, the City Attorney’s Office form approved the “As Is” Sale and Purchase Agreement, for signature by the City Manager, contingent upon the Mayor and City Commission approving the contract; otherwise, the contract would automatically terminate and the City would be entitled to a refund of its deposit, in the amount of $1,000.00.

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.”