HomeMy WebLinkAboutR-98-1189J-98-1187
11/30/98
RESOLUTION NO. 9 8 - I 18 9
A RESOLUTION RELATING TO THE INDIAN RIVER
INVESTMENTS HOUSING PROJECT, A 66 UNIT
MULTIFAMILY APARTMENT COMPLEX CONSISTING OF
THREE (3) BUILDINGS OWNED BY INDIAN RIVER
INVESTMENTS MANAGEMENT CO., INC., IN THE
OVERTOWN TARGET AREA; AUTHORIZING AND
DIRECTING THE CITY MANAGER TO: (1) WAIVE
APPROXIMATELY $154,243.44, IN PAST DUE
INTEREST PAYMENTS AND $11,918.79, IN LATE
FEES, ASSOCIATED WITH THE CITY 'S OUTSTANDING
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
LOAN IN THE PRINCIPAL AMOUNT OF APPROXIMATELY
$677,993.91; (2) ALLOW FOR THE SALE OF THE
AFOREMENTIONED HOUSING PROJECT AND THE
TRANSFER AND/OR ASSIGNMENT OF THE SECTION 8
MODERATE REHABILITATION PROGRAM HOUSING
ASSISTANCE PAYMENTS CONTRACT TO THE
PROSPECTIVE PURCHASER, IF APPLICABLE; AND (3)
EXECUTE ALL THE NECESSARY DOCUMENTS TO
CONSUMMATE THE PROPOSED PURCHASE TRANSACTION
ACCEPTABLE TO THE CITY ATTORNEY, SUBJECT TO
CERTAIN TERMS AND CONDITIONS.
WHEREAS, in July, 1989, Mr. Ted Weitzel, President of
Indian River Investments Management Co., Inc., as the owner
("owner") of a 66-unit multifamily apartment complex, commonly
known as the Indian River Investments' Section 8 Housing
Projects, received a Community Development Block Grant ("CDBG")
Program loan in the amount of $850,000 from the Department of
Development and Housing Conservation ("City Loan"), for the
rehabilitation of three (3) multifamily apartment buildings
located at 1201 Northwest 2nd Avenue, 1232 Northwest 1st Place,
CITY 430SU IISSION
MEETING OF
DEC 0 81998
Rewiufion No.
and 149 Northwest llth Street, Miami, Florida, in the Overtown
target area ("Property"); and
WHEREAS, the City's CDBG Program loan is for a term of
fifteen (15) years, at seven percent (7%) rate of interest, with
a monthly loan repayment of $7,640.44, per month; and
WHEREAS, in August, 1990, a fifteen (15) year Section 8
Moderate Rehabilitation Program Housing Assistance Payments
("HAP") Contract was executed between the City of Miami, Indian
River Investments Management Co., Inc., and the U.S. Department
of Housing and Urban Development for the provision of affordable
housing to low and moderate income tenants in the Overtown
target area; and
WHEREAS, the HAP Contract with the property owner provides
for the payment of approximately $29,500 in rental payments per
month and expires in June, 2005; and
WHEREAS, a first mortgage exists with Community
Reinvestment Fund, Inc., a Minnesota based non-profit
corporation, with an outstanding principal balance of
approximately $472,912; and
WHEREAS, currently the first mortgage with Community
Reinvestment Fund Inc. is in arrears for approximately $300,000,
and the mortgagee has recently initiated foreclosure proceeding
against the subject properties; and
WHEREAS, in October, 1998, Mr. Ted Weitzel, President of
Indian River Investments Management Co., Inc., notified the City
of Miami that he is currently attempting to sell 100% of the
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stock in the company to Mrs. Tamara Talamas, an out -of state
investor; and
WHEREAS, as a part of the sale of stock transaction, Mrs.
Tamara Talamas would secure a new mortgage loan of approximately
$1,400,000, which would be used to refinance the outstanding
debt on the properties, thereby providing for a pay off of both
the existing first mortgage loan with Community Reinvestment
Fund, Inc., and the City of Miami's second mortgage; and
WHEREAS, pursuant to the Audit Report dated May 26, 1998,
by the U.S. Department of Housing and Urban Development's
District Office of the Inspector General, it is mandated that
the City address its multifamily housing loan portfolio and the
defaulted loans in the amount of approximately $9,904,456; and
WHEREAS, the City Administration has determined that it is
in the City's best interest to allow for the refinancing and
purchase of the Indian River Investments Management Co., Inc.'s,
Section 8 Moderate Rehabilitation Program Projects with the
aforementioned prospective purchaser in order to safeguard the
City's CDBG second mortgage in the amount of approximately
$844,156.14, inclusive of past due interest payment and late
fees; and
WHEREAS, it is recommended that the City Commission approve
the aforementioned purchase transaction in order to effectuate a
pay off of the City's outstanding second mortgage on the subject
properties;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE
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98-H89
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 to
waive all past due interest payments and late fees in an amount
of approximately $166,162.23, as of September, 1998, in
connection with the City's outstanding second mortgage loan of
$677,993.91, (principal balance).
Section 3. The City Manager is hereby authorized and
directed to proceed with the proposed sale transaction between
Indian River Investments Co., Inc., and the prospective
purchaser of the subject properties, to provide for the transfer
and/or assignment of the City's Section 8 Moderate
Rehabilitation Program Housing Assistance Payments Contract, if
necessary to consummate the said purchase transaction.
Section 4. The City Manager is hereby authorized1/ and
directed to execute all the necessary legal documents to
consummate the proposed purchase transaction, in a form
l� The herein authorization is further subject to compliance with all
requirements that may be imposed by the City Attorney, including but not
limited to those prescribed by applicable City Charter and Code
provisions.
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acceptable to the City Attorney.
Section 5. The proposed discount of the City's Loan,
the proposed purchase transaction between Indian River
Investments Co., Inc., and the prospective purchaser shall be
subject to approval by the City's Housing Loan Committee, the
State of Florida Oversight Review Board and the U.S. Department
of Housing and Urban Development.
Section 6. This Resolution shall become effective
immediately upon its adoption and signature of the Mayor.Z/
PASSED AND ADOPTED this 8th day of p,-rpmh4nr , 1998.
JOE CAROLLO, MAYOR
In accordance with Miami Code Sec. 2-36, since the Mayor did not indicate approval of
this legislation by signing it in the designated place provided, said legislation now
becomes effective with the elapse of ten (10) d s from the date of Commissicn action
regarding same, without the Mayor xerci ' veto.
ATTEST:
Walt J eman, City Clerk
WALTER J. F CITY CLERK
APPRO, AS O FO-W'AND CORRECTNESS:t/
t �.A"'/s
NDRIYVILARELLO
ATTORNEY
W3087:BSS:kc
If the Mayor does not sign this Resolution, it shall become effective at
the end of ten calendar days from the date it was passed and adopted.
If the Mayor vetoes this Resolution, it shall become effective
immediately upon override of the veto by the City Commission.
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98-1189
CITY OF MIAMI, FLORIDA 23
INTER -OFFICE MEMORANDUM
TO: The Honorable Mayor and Members of
the City Commission
FROM: Donald arshaw
City
RECOMMENDATION:
DATE : `9 FILE
iVC. ,
SLIWECT : Resolution Relating to Indian River
Investments Management Co., Inc.
REFERENCES: City Commission Agenda Item
ENCLOSURES: December 8, 1998
It is respectfully recommended that the City Commission adopt the attached resolution relating to the
proposed purchase of the Indian River Investments Section 8 Housing Project, a 66-unit multifamily
apartment complex, located in the Overtown neighborhood. The attached resolution further authorizes
the City Manager to waive approximately $154,243.44 in past due interest payments and $11,918.79 in
late fees associated with the City's outstanding CDBG Program multifamily rehabilitation loan of
approximately $677,993.91.
BACKGROUND:
In July of 1989, Mr. Ted Weitzel, President of Indian River Investments Management Co., Inc.,
received a CDBG Program loan in the amount of $850,000 from the City's Department of
Development and Housing Conservation for the rehabilitation of three (3) multifamily apartment
buildings located at 1201 N.W. 2"d Avenue, 1232 N.W. 1 S` Place and 149 N.W. 11 th Street, in the
Overtown neighborhood. The City's second mortgage loan of $850,000 was provided at a seven
percent (7%) rate of interest for a term of fifteen (15) years, with a monthly payment of $7,640.44 per
month.
Subsequently, in August of 1990, a fifteen (15) year Section 8 Moderate Rehabilitation Program
Housing Assistance Payments (HAP) Contract was executed between the City of Miami, Indian River
Investments Management Co., Inc. and the U.S. Department of Housing and Urban Development, for
the provision of affordable housing to low and moderate income tenants in the Overtown target area.
The Section 8 Housing Assistance Payments (HAP) Contract with the property owner, which is
administered by the Department of Community Development, provides for the payment of
approximately $29,500 in monthly rental assistance payments to the property owner, and is scheduled
to terminate in June of 2005.
Presently, there exists a first mortgage on the Indian River Investment properties with Community
Reinvestment Fund, Inc., a Minnesota based non-profit corporation with an outstanding principal
balance of approximately $472,912. Currently, the first mortgage with Community Reinvestment
Fund, Inc. is in arrears for approximately $300,000, and Community Reinvestment Fund, Inc. has filed
a lawsuit to foreclose its first mortgage on the properties.
98-1189
The Honorable Mayor and Members of
the City Commission
Page 2
In October of 1998, Mr. Ted Weitzel, President of Indian River Investment Management Co., Inc.,
notified the City of Miami that he was attempting to sell 100% of the stock in the aforementioned
company to Mrs. Tamara Talamas, an out-of-state investor. Under the terms of the purchase, Mrs.
Talamas would pay $1,500,000 for all of the issued and outstanding stock of Indian River Investment
Management Co., Inc. Of that amount, approximately $1,400,000 would be used to pay off the first
mortgage with Community Reinvestment Fund, Inc., approximately $677,993.91 to pay off the
principal balance of the City's second mortgage, a small outstanding loan with Ocean Bank, in addition
to outstanding real-estate taxes, water and sewer bills. The balance of the net cash proceeds received
by Mr. Weitzel would be invested to complete the construction of the Poinciana Village Condominium
project, located in the Overtown target area.
To date, Mrs. Talamas has secured a loan commitment for $1,400,000 in financing from Peninsula
Bank to consummate the purchase transaction. However, in order to move forward with the purchase,
Mr. Weitzel has requested that the City of Miami waive approximately $154,243.44 in past due interest
payments, and $11,918.79 in late fees associated with the City's outstanding CDBG Program loan.
Currently, the principal balance on the City's loan is approximately $677,993.91. In addition, in order
to move forward with the proposed sale transaction between Indian River Investments Co., Inc. and the
prospective purchaser, it may be necessary that the City also allow for the transfer and/or assignment of
the City's Section 8 Housing Assistance Payments Contract to the new owner.
In light of the U.S. HUD audit which mandates that the City of Miami address its multifamily housing
loan portfolio and safeguard U.S. HUD's funds, the Department of Community Development has
determined that it is in the City's best interest to allow for the waiver of approximately $166,162.23 in
past due interest payment and late fees on the City's second mortgage on the subject properties.
In an attempt to address on a case -by -case basis, the delinquent housing loan accounts in the City's
loan portfolio as identified in the HUD audit, it is recommended that the City Commission approve the
attached resolution. Final approval of the proposed purchase transaction will also require approval by
the City's Housing Loan Committee, the State Oversight Board and the U.S. Department of Housing
and Urban D lopment.
DHWZ/GCW/JVH:mb
Enclosure
<Shared/Memosmb-MemoResoIndian River>
98-1_t89