HomeMy WebLinkAboutR-98-0585J-98-569
05/17/98 RESOLUTION NO. 98" 585
A RESOLUTION AUTHORIZING AND DIRECTING THE
CITY MANAGER TO PROVIDE WRITTEN NOTIFICATION
TO LIBERTY HOUSING ASSOCIATES AS THE DEVELOPER
OF THE PROPOSED 134-UNIT HOUSING PROJECT KNOWN
AS NORTHWESTERN ESTATES, THAT IT HAS SIXTY
(60) DAYS TO COMPLY WITH THE RECOMMENDATIONS
IDENTIFIED BY THE U.S. DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT'S DISTRICT OFFICE OF THE
INSPECTOR GENERAL IN ITS AUDIT REPORT DATED
MARCH 26, 1998 AS SPECIFIED HEREIN;
AUTHORIZING AND DIRECTING THE CITY MANAGER TO
DISCONTINUE ALL FUNDING FOR THE PROJECT,
EXCEPT FOR RELOCATION AND SECURITY UNTIL SUCH
TIME AS THE DEVELOPER COMPLIES WITH SAID
RECOMMENDATIONS; FURTHER AUTHORIZING AND
DIRECTING THE CITY MANAGER AND THE CITY
ATTORNEY TO TAKE WHATEVER STEPS ARE NECESSARY
TO ENSURE COMPLIANCE WITH SAID
RECOMMENDATIONS, INCLUDING TERMINATING THE
PROJECT AND RECORDING THE DEED TO THE
PROPERTY, SHOULD THE DEVELOPER FAIL TO COMPLY
WITHIN THE TIME PRESCRIBED.
WHEREAS, pursuant to Resolution No. 95-853, passed and
adopted by the City Commission on December 7, 1995, the City
Commission allocated $4,750,000.00 in HOME Investment Partnership
("HOME") Program funding ("HOME Funds") to the Urban League of
Greater Miami, Inc. and LHL Housing Corporation as a partnership
known as Liberty Housing Associates ("Developer"), for the
development of a 134-unit affordable homeownership project,
planned for development at Northwest 67t" and 69th Streets between
Northwest 7tn and 10th Avenues in the Model City target area,
commonly known as Northwestern Estates ("Project"); and
CITY COMMSION
MEETING OF
JUN 0 9 1998
Reaalutim Zia
98- 585
WHEREAS, pursuant to said Resolution, the City Commission
further directed the City Manager to make immediately available
to the Developer $2,375,000.00 of the HOME Funds for Phase I of
the Project, with the balance of the HOME Funds to be made
available to the Developer for Phase II of the Project upon the
completion of Phase I; and
WHEREAS, Phase I of the Project consisted of the
acquisition of an eleven acre site upon which the Project is to
be developed ("Site"), demolition of the then existing 235
substandard units situated on the site, relocation of the ninety-
six (96) tenants and the commencement of certain other pre -
development activities that were required to commence
construction of the Project; and
WHEREAS, to date, approximately $2,201,638.00 of the
$2,375,000.00 which were allocated for Phase I have been
expended, to include (a) $442,000.00 for Developer's Fees,
General Overhead and Administration, (b) $725,000.00 for Site
acquisition, (c) $426,098.00 for Tenant Relocation, (d)
$362,447.00 for Site work (including demolition and clearing) and
(e) $246,092.00 for Soft Costs (including legal, architectural
and engineering fees); and
WHEREAS, after the Developer's acquisition of the Site,
the Dade County School Board condemned one (1) acre of the Site
for which the Developer received approximately $144,538.00 in
compensation ("Compensation"); and
2 98- 585
WHEREAS, since the Site was acquired with the HOME Funds,
the said Compensation represents program income and pursuant to
the Federal Register Final Rule Part 92.503 (a)(1) is required to
be remitted by the Developer to the City for deposit in the
City's HOME Investment Trust Fund; and
WHEREAS, on February 15, 1996 the City and the Developer
executed the "Covenant Not To Encumber Or Convey And To Deed
Property To The City Of Miami Upon Failure To Commence
Construction Within Time Stipulated Herein", whereby the City
agreed to make disbursements of the HOME funds on the condition
that the construction of the Project commence within twelve (12)
months from the date of the Covenant, otherwise the City could
record the Statutory Warranty Deed, dated February 15, 1996 and
executed by the Developer conveying title to the Property to the
City ("Deed"); and
WHEREAS, the Developer has not commenced construction of
the Project; and
WHEREAS, the U.S. Department of Housing and Urban
Development's District Office of the Inspector General ("OIG") in
its Audit Report dated March 26, 1998, issued a finding regarding
the allocation of the $4,750,000.00 in HOME Funds to the Project,
which concluded that the Project was not feasible; and
WHEREAS, the OIG also stated that the City did not execute
its right to record the Deed; and
3 98- 585
WHEREAS, the OIG has recommended that the City be required
to: (a) demonstrate how the Project can be made affordable to low
and very low income families and individuals by obtaining
sufficient subsidies, reconfiguring the Project, or otherwise
reducing the costs; (b) provide evidence that the Developer has
obtained sufficient financing to complete development of the
Project; (c) reimburse $144,538.00 of program income to the
City's HOME Investment Trust Fund; (d) discontinue funding to
Project, except for necessary costs such as relocation and
security until the City complies with the aforementioned
recommendations; and (e) the City should take other appropriate
action, as needed, to protect the U.S. HUD Secretary's interest
and the integrity of the HOME Program, including terminating the
Project;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE
CITY OF MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the
Preamble to this Resolution are hereby adopted by reference
thereto and incorporated herein as if fully set forth in this
Section.
Section 2. The City Manager is hereby authorized and
directed to give written notification to Liberty Housing
Associates as the developer of the proposed 134-unit housing
project known as Northwestern Estates, that it will be afforded
sixty (60) days from the date of this Resolution to: (a)
4 98 - 585
reimburse
the
City
the $144,538.00 in
program
income,
(b)
demonstrate
how
the
Project will be made
affordable
to very
low
and low-income families and individuals by obtaining sufficient
subsidies, reconfiguring the project or reducing the Project's
cost, and (c) provide evidence that sufficient private financing
has been obtained to complete the development of the Project.
Section 3. Should Liberty Housing Associates fail to
comply with any of the provisions set forth in Section 2 within
the time prescribed, the City Manager and the City Attorney are
hereby authorized and directed to take whatever steps are
necessary to ensure the City's compliance with the
recommendations of the U.S. Department of Housing and Urban
Development's District Office of the Inspector General as stated
in its Audit Report dated March 26, 1998, including, but not
limited to terminating the Project and recording the Statutory
Warranty Deed conveying title to the Property to the City.
Section 4. The City Manager is hereby further authorized
and directed to discontinue all funding to the Project, except
for any costs associated with relocation payments and security
for the Site, until such time as the Developer complies with the
recommendations of the OIG as stated in Section 2 hereof.
Section S. This Resolution shall become effective
immediately upon its adoption.
5 98- 585
PASSED AND ADOPTED this 9th day of June , 1998.
JOE CAROLLO, MAYOR
in accordance with Miami Code Sec. 2.-36, since the Mayor did not indicate approval of
thus legislation by signing it in the designated place provided, rak! legstation r
becomes wive with the elapse of ten (10) daN!" #r the date of C c ,essicr1 uc :
ATTEST:
reganft semen without the Mayor exercising z
-
Waite J. a n, City Cleric
WALTER J. FOEMAN, CITY CLERK
DEP, TMENT OF COMMUNITY DEVELOPMENT
REV l [ AND '�PPiROVAL :
GWENDOLYNPOF
WARREN, DIRECTOR
DEPARTMEN COMMUNITY DEVELOPMENT
PREPARED AND APPROVED BY:
I,27DA KELLY K ARSO
ASSISTANT CITY ATT RNEY
0
98- 585
CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM 27f
TO: To The Honorable Mayor, Joe Carollo and DATE: May 11, 1998 FILE
Members of the City Commission
SUBJECT: Resolution Relating to the Northwestern
V Estates Housing Project
FROM: lon(MHWarshaw REFERENCES:
City Manager ENCLOSURES: City Commission Agenda
Item - May 26, 1998
RECOMMENDATION:
It is respectfully recommended that the City Commission adopt the attached resolution,
relating to the development of the proposed 134 unit Northwestern Estates Housing
Project. The attached resolution directs and authorizes the City Manager and the City a
Attorney to take the appropriate steps necessary to ensure full compliance with the
findings and recommendations outlined by the U.S. Department of Housing and Urban
Development's District Office of the Inspector General ("O.I.G") in the audit report dated
March 26, 1998.
4XV311111W "I
In December of 1995, through Resolution No. 95-853, the City Commission allocated
$4,750,000 in Home Investment Partnership Program funding to the Urban League of
Greater Miami, Inc. and LHL Housing Corporation, in connection with the development
of a 134 unit affordable homeownership project in the Model City neighborhood.
Pursuant to Resolution No. 95-853, the City Commission directed the City Manager to
allocate and to make available immediately funding in the amount of $2,375,000 for
Phase I of the proposed housing project and $2,375,000 for Phase II after the completion
of Phase I.
Phase I of the proposed housing project essentially consisted of the acquisition of the
eleven (11) acre project site, demolition of the thirty-three (33) substandard apartment
buildings which were situated on the site, relocation of the former ninety-six (96) tenants
and the commencement of architectural and other zoning/platting activities required by
the City to commence construction. To date, approximately $2,173,450 of the
$2,375,000 in Home Program funding allocated to Phase I has been expended in
connection with the aforementioned predevelopment activities.
98- 585
Honorable Mayor Joe Carollo and
Members of the City Commission
Page 2
Approximately $725,000 in Home Program funds were utilized by the developer for the
acquisition of the project site. Subsequently, one (1) acre of the subject parcel was
acquired by the Dade County School Board through condemnation proceedings and the
developer received approximately $144,538 in compensation from the School Board.
Since the project site was acquired with Home Program funds, the $144,538 in proceeds
received by the developer represents program income and should be returned to the City
to be deposited in the City's Home Investment Trust Fund.
The U.S. Department of Housing and Urban Development's District Office of the
Inspector General ("OIG") in its audit report dated March 26, 1998, has issued a finding
relative to the City's allocation of $4,750,000 in Home Program funding to the proposed
housing project, which has been determined not to be economically feasible.
In an effort to resolve this finding, the District Office of the Inspector General has
mandated that the City be required to take the following actions:
1) Demonstrate how the proposed Northwestern Estates Housing Project can be
made affordable to very low and low income families by obtaining the
necessary subsidies to make the units affordable.
2) Provide evidence that the developer has obtained sufficient private financing
to complete the development of the proposed housing project.
3) Aggressively pursue the repayment of the $144,538 in program income
received by the developer as compensation from the Dade County School
Board for the one (1) acre acquired through the condemnation proceedings.
4) Discontinue any additional funding to the project except for certain costs
associated with relocation payments to the former tenants and security.
5) Take other appropriate action, as needed, to protect the Secretary of the U.S.
Department of Housing and Urban Development's interest and the integrity of
the Home Program, including terminating the project.
On February 19, 1998, a letter was forwarded to Mr. T. Willard Fair, President and CEO
for the Urban League of Greater Miami, Inc., outlining the preliminary findings of the
draft audit report by the U.S. Department of Housing and Urban Development's District
98 - 585
Honorable Mayor Joe Carollo and
Members of the City Commission
Page 3
Office of the Inspector General, dated November 21, 1997. At that time, the Urban
League of Greater Miami, Inc. was advised that prior to the City providing any additional
Home Program funds to the project, it was imperative that Liberty Housing Associates
provide the City with a certified or cashier's check in the amount equal to the entire
proceeds received from the sale of the one (1) acre of land to the Dade County School
Board. In addition, the Urban League was also advised that all files and records relative
to the tenant relocation phase of the project would have to be turned over to the City
within ten (10) days from the date of the letter.
On April 13, 1998, a meeting was held with Mr. Fair and the principals of Liberty
Housing Associates, to discuss the OIG findings and the need to take corrective action
immediately. To date, the developer has not responded to any of the corrective actions,
identified by the OIG in order to address the findings which were cited.
As per the attached resolution, it is recommended that the developer of the proposed
Northwestern Estates Housing Project be afforded sixty (60) days from the date of this
action, to come into full compliance with the requirements of the OIG audit report. In the
event that the developer is found to be in noncompliance within the time frame stated, it
is recommended that the City Manager and the City Attorney be allowed to take the
appropriate steps required to ensure full compliance with the findings and the
recommendations outlined in the OIG audit report dated March 26, 1998.
JGP:CMC:GCW:JBH:sjg
[Memosjg] <Northwestem.doc>
., .
98- 585