A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING, IN SUBSTANTIAL FORM, AMENDMENT NO. 1 TO THE CONTRACT BETWEEN THE CITY AND AZULEJO, INC., RELATING TO THE REHABILITATION OF THE CITY’S AFFORDABLE HOUSING PROJECT KNOWN AS THE LOTTIE APARTMENTS, LOCATED AT 530 75TH STREET; SAID AMENDMENT MODIFYING THE SCOPE OF WORK FOR THE PROJECT, BY ELIMINATING FIVE (5) OUT OF THE TOTAL NINE (9) APARTMENT UNITS FROM THE SCOPE AND ADDING THE REPLACEMENT OF THE HVAC UNITS FOR ALL OF THE APARTMENT UNITS TO THE SCOPE; REDUCING THE PROJECT BUDGET FROM $819,585 TO $669,926, MAKING THE EXCESS FUNDS, IN THE AMOUNT OF $149,659, AVAILABLE FOR A FUTURE PROJECT OR FUTURE PHASES OF THIS PROJECT; AND FURTHER AUTHORIZING THE CITY MANAGER AND CITY CLERK TO EXECUTE THE FINAL NEGOTIATED AMENDMENT, SUBJECT TO REVIEW AND FORM APPROVAL BY THE CITY ATTORNEY.

On February 8, 2017, the Mayor and Commission awarded the rehabilitation of the Lottie Apartments to Azulejo, Inc., the general contractor that submitted the lowest, responsive bid for ITB No. 2017-027-ZD.

The project’s original scope of work included the rehabilitation of the interior and exterior façade of the nine-unit apartment building using environmentally friendly materials. As part of its due diligence, the City requested a new elevation survey of the property. The survey results showed that the building elevation was 6.9 NVGD and not 8.6 ft. as previously established. Because of its true elevation, a substantial rehabilitation of the property would have triggered code requirements to raise the first floor habitat level above flood elevation of 9ft. NVGD. It is structurally unfeasible to raise the building to the required flood elevation. Therefore, we are proposing a reduction to the project’s scope to address crucial deficiencies of the building while still complying with code and budgetary constraints and ensuring that the building remain safe, sanitary housing for its tenants as required by the U.S. Department of Housing and Urban Development (HUD).

In order to maintain this project below the classification of substantial renovation, staff proposes reducing the project scope by eliminating the rehabilitation of five units. Due to HUD guidelines, activities are considered at risk and flagged in the system if the activity has had no draws for a year or more. Therefore, to avoid this activity from being flagged by HUD, the balance of funds that would not be used to cover rehabilitation costs will be removed from this activity. The second phase of this project will start one year after the date of issuance of the Certificate of completion for the first phase. We are proposing that the second phase be considered a separate project that will be procured at a later time as material costs and building conditions may escalate in the interim. 

The phasing of this project will allow for the replacement of the outdated HVAC units for each of the nine apartments while still maintaining the project under budget and below the substantial remodeling and flood elevation requirements.

The following is the proposed adjustments to the contract amount that has been agreed to by Azulejo, Inc.:

Original Contract Amount:          $ 819,585

Proposed Amount of Reduction: $ 149,659

Revised Contract Amount:          $ 669,926

The Administration recommends that the Mayor and City Commission approve the amended scope and reduced budget for the Lottie Apartment rehabilitation project to ensure compliance with HUD rules and enable the ongoing use of this residential building by its tenants.