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HomeMy WebLinkAboutCC 1998-12-08 Discussion Item (5)INTER -OFFICE NIE1,I0RAN►JWA The Honorable Mayor and Members of the City Commission E ENCE Donald H. Warshaw City Manager OEC 4 1998 Report on Code Violations and Davis -Bacon Compliance of Property at N.W. 3 Avenue between 19`h and 20`' Streets Follow-up to City Commission Meeting of November 17, 1998 The following information is provided in response to the City Commission's inquiry of Davis - Bacon and- code compliance issues raised at its meeting of November 17, 1998 regarding property located at R.W. Yr Avenue between 19P and 20 Streets. The Administration has identified three (3) multifamily rehabilitation projects funded by the City in this area. These projects are: • New Arena Square North and South, Ltd. • A & S Darring • F & L Johnson Attachment 1, entitled Multifamily Rehabilitation Projects Located in the Overtown Target Area, provides an overview of these projects. This overview provides background information that includes: • Project Name • Owner • Address • Financing • Project Approval Date • General Contractor • Project Status. The Administration's research of these City funded multifamily rehabilitation projects included the review of records in three (3) City departments. The Department of Community Development is responsible for the monitoring of compliance with Davis -Bacon requirements while NET investigates code enforcement issues and the Department of Building and Zoning examines violations involving the structural soundness and safety of structures. The following information provides a specific review of the Administration's findings in each of the aforementioned three (3) categories: Department of Community Development - Davis -Bacon Compliance In accordance with federal regulations, the 137 unit New Arena Square Project is the only activity among the identified, City funded Overtown projects that is subject to Davis -Bacon regulations. Under the HOME Investment Partnership Program (HOME), Davis -Bacon requiremVnts apply when construction work is to be completed on properties where twelve (12) or more units are assisted by the HOME Program (see Attachment 2). The A & S Darring Project located at 240 N.W. 17 Street has been awarded HOME funds to assist in the rehabilitation of nine (9) units and the F & L Johnson Project at 219 N.W. 16 Street has likewise received HOME funds to renovate six (6) units. Since these projects fall below the twelve(12) unit threshold, these two (2) projects are not bound by Davis -Bacon regulations. The New Arena Square Project has been awarded both Community Development Block Grant Funds (Ci7BG) and HOME funds must satisfy Davis -Bacon requirements in the rehabilitation of properties at the following addresses: • 233 N.W. 20 Terrace 0 240 N.W. 21 Terrace • 301 N.W. 22 Street • 222 N.W. 22 Street The Department of Community Development has monitored the New Arena Square Project for compliance with Davis -Bacon regulations since the project's inception in late 1997. The Federal Labor Standards Provisions HUD Form 4010 and the Davis -Bacon Wage Determination issued for construction work on this project are included in the agreement between the developer and prime contractor. To ensure that there are no misunderstandings regarding the obligation of all contractors involved in the project, Community Development staff conducted a pre -construction conference with the prime contractor on November 3, 1997 to explain Federal grants requirements, including Federal Labor Standards Provisions and Davis -Bacon compliance. As part of the contract compliance review process, staff has reviewed certified payrolls submitted to the City from the all contractors working on the project through November 13, 1998. These payrolls document wages paid, the social security number, address and trade classification information for each employee performing work on this specific project. The prime contractor and general contractors attest that the information provided on the certified payrolls is accurate and correct. Also, as part of the monitoring process for Davis -Bacon compliance, the Department of Community Development conducts periodic on -site visits that include interviews with employees working on the project to ensure that appropriate wages are being paid. The frequency of these visits is predicated on the results of the on -site inspection. If staff identifies problems with a contractor, these visits will be conducted more frequently. Conversely, if the contractor consistently complies with federal regulations, the spot checks may be bi-monthly. As a result of on -site and letter interviews, wanes paid by three (3) subcontractors were questioned. In the case of MAR-B Plumbing, employees responding to these interviews were paid appropriately. A -Alert Electric was required to pay restitution for underpayments made to employees. The Department of Community Development recently advised LACO Air ConditionLing of payroll inconsistencies resulting from a comparison of the payroll documentation submitted by the contractor and interviews conducted with employees of the project. Following staff s analysis of additional information and existing documentation, a final determination will be made regarding the wage issue of this subcontractor. If necessary, the subcontractor will be ordered to pay restitution to the affected employees. It should be noted that the latest employee interviews conducted November 4, 1998 show no underpayments. The Department of Community Development will continue to closely monitor the New Arena Square and other applicable projects for compliance with Davis -Bacon requirements. NET - Code Enforcement Violations A review of NET records indicates that cases have been opened for code enforcement violations at each of the identified multifamily rehabilitation projects (see Attachment 3). The New Arena Square Project has been cited for violations at three (3) of its four (4) project locations as follows: • 233 N.W. 20 Terrace - This property was cited for an overgrown lot violation in 1998 and the case remains open. • 301 N.W. 22 Street - This property was cited for illegal dumping in 1998 and the case has been closed. • 222 N.W. 22 Street - This property received one (1) citation in 1996 for abandoned vehicles and two (2) violations in 1998, one for a vacant/unsecured building and the other for debris placed on the right of way. All three (3) cases have been closed. Since the A & S Darring Project was approved for funding by the City Commission to rehabilitate the structure at 240 N.W. 17 Street, the project has received one (1) citation for an overgrown lot and this case has been closed. Likewise, the F & L Johnson Project, located at 219 N.W. 16 Street was ticketed for illegal dumping and this case has also been closed. Department of Building and Zoning - Unsafe Structures The Department of Building and Zoning reports one (1) open complaint for an unsafe structure at the New Arena Square Project located at 233 N.W. 20 Terrace. This is the last of four (4) sites to be rehabilitated in this project. A Final Notice to repair or demolish this structure was sent to the owner in October of 1998. When the owner failed to comply with the notice by the October 20, 1998 deadline, the case was included among those properties scheduled to appear before the Unsafe Structures Board of Miami -Dade County in January, 1999. When staff tram the Department of Community Development investigated this matter further, the owner was unaware of any action to be taken against the property and advised staff that notification had not been received relating to the open complaint. A review of the records in Building and Zoning reveals that a certified letter had been sent to the Tallahassee address of New Arena Square North and South LTD. This letter was refused October 9, 1998, resulting in the aforementioned action. It should'also be noted that a review of Community Development records indicates that one (1) CDBG payment in the amount of $41,671 was made on April 14, 1998 for demolition costs incurred at the 233 N.W. 20 Terrace project site. No other CDBG payments have been made to rehabilitate this structure. Typically, demolition costs represent 10% of total project budget. The draw for demolition costs at the 233 N.W. 20 Terrace structure was 8%. Staff from the Departments of Community Development and Building and Zoning conducted an on -site inspection of the property to determine its current status. As previously documented by inspectors from Building and Zoning, the structure continues to be vacant, open and abandoned and must be secured—Md owner has expressed a desire to comply with the requirements of the City. Building and Zoning will be sending a new certified letter requesting that the owner provide a plan of action to address the unsafe structure issues. This letter will also be sent to the local address of the New Arena Square North and South LTD. to insure that the proper local individuals have been notified. Failure to respond to the City's letter by the owner will result in the case being scheduled for a hearing before the Unsafe Structures Board of Miami -Dade County for further action regarding the demolition or repair of the structure. DHWIDB/GCW/DF:df Attachments ** Attachmf 1) Project Name: Owner: Addresses: Multifamily Rehabilitation Projects Located in the Overtown Target Area New Arena Square North & South, Ltd. New Arena Square North & South, Ltd. Salomon Yuken, General Partner 137 Apartments - 233 N.W. 20'h Terrace 240 N.W. 21 ' Terrace 301 N.W. 22n° Street 222 N.W. 22'd Street Financing: • $1,250,000 HOME Program loan, deferred payment loan over a 20 year term with a forgiveness -clause • $300,000 CDBG Program loan @ 4% interest rate for a 15 year term • $1,145,568 private sector Project Approval: October 29, 1997 General Contractor: Encore Builders Braulio Guiterrez, President Project Status: Currently under construction Davis - Bacon requirements apply to all construction work. City of Miami Department of Building & Zoning issues all permits and performs all code compliance inspections. 2) Project Name: A & S Darring Owner: Same as above Address: 240 N.W. 17" Street - 9 Apartments Financing: $189,910 HOME Program loan, $ l 34,9 10 deferred payment loan for 5 year term i with a forgiveness clause. $55,000 loan @ 6% interest rate for a 10 year term. $105,727 private sector Project Approval: December 6, 1996 General Contractor: Encore Builders Braulio Guiterrez, President Project Status: Currently under construction Davis - Bacon requirements do not apply because this project contains fewer than 12 units. City of Miami Department of Building & Zoning issues all permits and performs all code compliance inspections. 3) Project Name: F & L Johnson Owners: Frances & Lorenzo Johnson Address: 219 N.W. 16" Street - 6 Apartments Financing: - $89,940 HOME Program loan, deferred payment loan for a 5 year term with a forgiveness clause. • $71,240 private sector Project Approval: General Contractor: September 13, 1996 Circle R. Construction Rick Nelson, President Project Status: Construction Completed August, 1998. Davis - Bacon requirements do not apply because this project contains fewer than 12 units. City of Miami Department of Building & Zoning issues all permits and performs all code compliance inspections. [Miscsjg]<Multifamily Rehab Projects.doc> RECEIVE® L •�,,,.,.•'' �JUN -1 5 1992 SpecW Attention of: Regional Administrators category 'A Yield Office Managers Regional and Yield Directors for CPD Regional Housing and Public Housing Directors cDBG State and Entitlement Grantees "' AttachrE U.S. Department of Houaing and Urban Dew COMMUNITY PLANNING AND DEVELO Notice CPO-92-19 hued: June .9, 1992 tcpies: June 9, 1993 Cross References: Subject: using Community Development Block Grant (CDBG) funds implementing tht Homz Investment Partnerships and Homeownership for People Everywhere (HOPE) programs PURPOSE This Notice clarifies to what extent CDBG'funds may be usec to pay administrative costs of the HOME Investment Partnerships and Homeownership for People Everywhere (HOPE) programs.- It als addresses related issues including the different definitions of administrative costs among the programs, some eligibility and national objective issues involved when CDBG pays activity costs in a HOXLr- - or HOPE -assisted activity, one -for -one replacement, differences in Davis -Bacon thresholds and the status of 24 CPR 570.206.(g) eligible activities. Note that the programs covered by this Notice vary in purpose, eligible activities, and benefit criteria. Recipients that use CDBG with SOME'or HOPE must ensure that the requirement of each program are met. Any questions or problems should be promptly referred to the appropriate HUD Field, Regional, or Headquarters office., For questions on this Notice, contact the Entitlement Communities Division at (202) 708-1577. CGBE : 0�stmbutmn: w-3-1, N-1 (PIH, H. RC, CPO), W-2, R-1, R-6, 063, R-3-1 (ADM Special (CPO Regional and Field Directors), COSG Entitlement I Grantees HOPE 1 has replacement requirements that are similar to the CDBG one -for -one replacement requirements. While HOPE 1 replacement may meet CDBG requirements, recipients planning to use HOPE 1 and CDBG together should become familiar with the replacement rules for both programs, and contact HUD if there-ar any questions. 2. Davis -Bacon ''The Davis -Bacon requirements for the HOME program apply to new construction or rehabilitation of affordable housing where 12 or more units are assisted with HOME funds (592.354). The Davis - 'Bacon requirements apply to HOME projects regardless of whether the HOME funds specifically finance the construction or rehabilitation of the unite or are used for other eligible activities (e.g., acquisition) that constitute assistance to the units to be constructed or: rehabilitated. A HOME project (with no CDBG assistance) that contains 12 or more units, but in which fewer than 12 units are assisted under the HOME program, is not subject to Davis -Bacon requirements. If CDBG funds are used to assist a HOLE activity by financing the construction or . rehabilitation -work in whole or in part, the CDBG Davis -Bacon threshold (S570.603) applies, .e., any property containing eight or more units whose construction or rehabilitation is CDBG- financed would be subject to Davis -Bacon requirements. The use of CDBG funds to assist a HOME project-in_ways other than .financing the construction or rehabilitation work does not trigger the CDBG eight -unit threshold. The HOPE 2 and HOPE 3 programs are not subject to Davis - Bacon requirements. If CDBG funds finance construction or rehabilitation work?on a HOPE 2 or HOPE 3 property in whole or in part, the CDBG Davis -Bacon threshold applies, .e., any property containing eight or more units whose construction or rehabilitation is CDBG-financed would be subject to Davis -Bacon requirements. (Note: for purposes of the CDBG Davis -Bacon threshold, a multifamily condominium building with eight or more units is considered a property with eight or more units, and Davis -Bacon would apply to the CDBG-financed construction or rehabilitation of a single condominium unit in such a building.) The use of CDBG funds' to assist a HOPE 2 or HOPE 3 project in ways other than financing the construction or rehabilitation work does not trigger the CDBG eight -unit threshold. The HOPE 1 program is part of the U.S. Housing Act of 1937, so under Section 12(a) of that Act, Davis -Bacon requirements apply to work that constitutes "development" work (e.g., reconstruction, substantial improvement, remodelling that alters the nature or type of housing units), while HUD -determined wage rates apply to maintenance and non -routine maintenance work. Each of these types of wage requirements applies regardless of the number of units involved and applies to work performed by PHA 12 employees as well as contractors. The use of CDBG funds to finance "development" work on a project covered by 12(a) woul r not involve any additional Davis -Bacon coverage, since all su work is covered by Davis -Bacon requirements under Section 12( X- CURRENT STATUS OF SECTION 570.206(g) Section 570.206(g) of the CDBG regulations states: "CDBG funds may be used for necessary administrative expenses in planaing or obtaining financing for housing z followas for entitlement recipients, assistance authoriz by this paragraph is limited to units that are identifiec the recipient's BUD approved housing assistance plan." This provision has been used by recipients to support expenditusa,--of CDBG funds for administrative expenses of non-CDBG-assisted housing abtivitiea. This provision is, in effect, not available because of its link to a housing assista: plan (8AP)•that is no longer in effect for any grantees. Modifying this provision will require new rulemaking. 13 ** Multifamily Rehabilitation Projects Located In Attachment the Overtown Target Area The following projects have been sited for NET Code Enforcement Violations as follows: ft Address Date Violation Status Open Closed 233 NW 20'h Terrace Case No. 98-09324 Overgrown Lot Open 6/11/98 Pending .301 NW 22"d Street Case No. 98-14744 Illegal Dumping Closed 8/28/98 10/14/98 222 NW 22"d Street Case No. 96-04600 Abandoned Vehicles Closed 3/1/96 1/31/97 Case No. 98-02024 - Vacant/un-secured building Closed 2/3/98 2/26/98 Case No. 98-13295 Debris placed on right -of Closed 8/5/98 8/17/98 way 240 NW 17* Street - Case No. 96-24519 No Certificate of Use Closed 11/20/96 12/1/96 (Building currently under construction) Case No. 97-06542 Overgrown Lot .Closed 4/3/97 4/17/97 219 NW 16`" Street Case No. 98-10175 Illegal dumping Closed 6/24/98 7/6/98 Ticket Issued-CES6525