NEW BUSINESS  17.

COMMITTEE MEMORANDUM

HISTORY:

The City is an entitlement community designated by the U.S. Department of Housing and Urban Development (HUD) and as determined by the decennial census information on population growth lag, age of housing stock, and poverty. As an entitlement community, the City receives an annual allocation under HUD funding through the Community Development Block Grant (CDBG) and HOME Investments Partnership (HOME) programs. HUD requires entitlement jurisdictions to submit a Five-Year Consolidated Plan, which establishes the strategic framework upon which the City utilizes its funds. The Consolidated Plan is augmented and refined by the City’s annual submission of a One-Year Action Plan, which delineates the specific projects and activities funded by each year’s HUD allocation.

The annual allocations have fluctuated from year to year and have been reduced by more than two-thirds since their peak.  The chart below identifies the amount and year of the City’s peak allocation for each program as well as the current award and projected amounts for FY 18/19:

Please note that the number of City staff available to administer these compliance-heavy programs has been reduced over time (including the elimination of one full-time positon last budget cycle) resulting in only one staff person per program.

ANALYSIS:

CDBG Program

The CDBG program supports programming that benefits low-income persons through direct public services and capital improvements. The program has the following expenditure limitations:

• Administration Cap: 20% of award

• Public Services Cap: 15% of award (Please note that public services are inclusive of all direct services benefiting low-income persons that does not include capital projects. i.e. groceries for the elderly, youth services, rent assistance, homeless services, etc.)

The City currently funds a variety of Public Services including:

• Elder services and referral (UNIDAD of Miami Beach)

• Grocery delivery for elderly  and rent/utility assistance (Housing and Community Services)

• After school youth programming (Boys and Girls Club of Miami – Flamingo Park)

Within the last three years, the City had awarded CDBG funds to several non-profit community providers who subsequently declined the awards because they deemed the documentation and compliance requirements too onerous. The providers included:

• Little Havana Activities and Nutrition Center

• Jewish Community Services of South Florida

• Food for All

• Empowering Youth

It should be noted that the City undertook an overhaul of its Sub-Recipient Guidelines in 2013 through 2015 in response to an audit by HUD’s Office of the Inspector General and internal reviews. Many of the audit’s findings were as a result of the City failing to obtain required documentation of service and expenditure from its Sub-Recipients. To ensure compliance, the City revised its Sub-Recipients contracts, reporting forms, and compliance guidelines. In addition, it sponsors an annual compliance workshop and schedules one-on-one meetings with Sub-Recipients to review contracts and documentation requirements.

For the past two years, the City has prioritized CDBG capital funds to address significant needs in its residential portfolio acquired from Miami Beach Community Development Corporation (MBCDC). The City is currently rehabilitating the Lottie Apartments (including roof replacement, lead abatement, new floors, ADA accessibility, and building envelope). The City has projected expending $1,423,687 for the current phase of rehabilitation.

The City has also begun to rehabilitate bathrooms at the Neptune Apartments as they were completed by MBCDC without shower pans resulting in severe water damage throughout the building. The Neptune Apartments rehabilitation is estimated at $2,066,826 and includes extensive work including: roof replacement; termite treatment; building envelope and facade restoration; replacement of HVAC; electrical work; and floor replacement; among others. The City’s funding gap remains at $710,300 for Phase 1 of this project.

HOME Program

The HOME program supports the creation and retention of affordable housing to benefit low-income persons. The program has the following expenditure limitations:

• Administration Cap – 10% of award

• Community Housing Development Organization (CHDO) Cap – 15% of award

CHDO’s are affordable housing development organizations that request certification from the City annually to become eligible to receive HOME funds for qualified affordable housing projects that serve households earning up to 80 percent of Area Median Income (AMI).

Unlike CDBG, the HOME program requires the City to provide a 25 percent non-federal match. The City utilizes its State Housing Initiatives Program (SHIP) allocation, its salary match from the General Fund (as HOME does not generate sufficient funds to fully fund its administration requirements) and a running carryover from the City’s Redevelopment Agency (RDA) acquisition of three affordable housing properties in 2007 (the Allen Apartments, Barclay Plaza Apartments and London House Apartments). The current match carryover is $ 2,529,800.

Up until 2013, the City awarded its HOME funds exclusively to Miami Beach Community Development Corporation (MBCDC).  However, a litany of compliance violations led the City to withhold CHDO status and federal funding to the agency since 2013. MBCDC applied for CHDO designation in March 2018 but has been unable to provide requested financial documentation to complete the application review and has several outstanding audit findings that undermine the agency’s capacity to undertake any further projects.  In fact, Miami-Dade County issued MBCDC a notice of default and foreclosure proceedings on April 27, 2018 for compliance issues at the Crespi Park Apartments.

For the past two years, the City has been prioritizing the use of HOME funds to address the significant capital needs at its residential properties acquired from MBCDC including the Lottie Apartments and Madeleine Village Apartments. Please note that the City did not access General Fund or other City monies to acquire or rehabilitate any its residential properties. HUD funds have been solely used to fund the acquisition and necessary rehabilitation of these properties.

Awarding HUD Funds

The City’s Consolidated Plan provides a variety of ways for the City to award its HUD funds including:

• The City may issue a simplified or limited application with grantee follow-up;

• The City may survey qualified organizations via a direct solicitation;

• The City may respond to unsolicited applications after review of eligibility; or

• The City may review the performance of existing sub-recipients before renewing their ongoing programmatic participation.

For the past two years, given the delay in HUD issuing awards and the need to submit the Annual Plan in August while complying with all noticing requirements, the City has awarded its Public Services funds to existing providers with the capacity and willingness to provide ongoing services in compliance with HUD regulations while ensuring the maximum number of people served. As noted previously, some of the previously funded agencies declined HUD funds because of the high documentation and compliance standards for use of federal funds.

The City has prioritized its capital funds for the rehabilitation of its residential housing properties to ensure meeting HUD’s decent, safe and sanitary housing standard. The City, which acquired its residential properties without General Fund monies, operates the properties solely from rental income which funds all staffing, operational and maintenance expenses. The City also established its security deposits fund account and operating reserves from rental income collected.

CONCLUSION:

The Administration is seeking direction and encourages discussion on this item.