HomeMy WebLinkAboutM-94-0254CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
TO: Honorable Mayor and DATE
Members of the City Commission
SUBJECT;
FROM : Ces. dio REFERENCES
Cit Y nager
ENCLOSURES.
W 31 1994 FILE :
Report on St. Hugh Oaks
Village Condominium Project
Al'
City Connission Agenda ?I
Item - April 14, 1994
At the February 17, 1994 City Commission meeting, a request was
made to provide a status report on the City -sponsored St. Hugh
Oaks Village Condominium project currently under construction in
the Coconut Grove neighborhood. More specifically, the request
centered around the proposed sales price of the homes being
developed, in addition to the selection/marketing process that
will be utilized by the City.
BACKGROUND:
In September of 1986, through Resolution No. 86-766, the City
Commission authorized and directed the City Manager to acquire by
negotiated purchase, a three (3) acre parcel of land located at
3601 S.W. 37th Avenue (St. Hugh Oaks) for the purpose of
developing housing affordable to moderate income families. The
subject parcel was acquired by the City for $1,071,000.
At the February 12, 1987 City Commission meeting, a resolution
was placed on the City Commission agenda by the City
Administration, recommending to designate as a Category "B"
Project, the development of a forty (40) unit townhome project
affordable to moderate income families. Subsequently, through
Motion No. 87-157, the City Commission deferred consideration on
the proposed action and instructed the City Administration to
conduct a townhall meeting in the Coconut Grove neighborhood in
order to secure input from the residents and neighborhood
organizations located in the area.
During a series of public meetings held in the Coconut Grove
neighborhood the residents vehemently opposed the development of
townhome units on the property. As a result, the proposed
housing proposal planned for the St. Hugh Oaks parcel was
modified to accommodate the development of thirty (30) new single
family detached housing units on the property.
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Honorable Mayor and
Members of the City Commission
Page 2
In February of 1989, the City Commission through Resolution No.
89-165, approved the architectural firm of Andres Duany and
Elizabeth Plater-Zyberk, Architect, Inc., as the most qualified
firm to provide professional planning and design services in
connection with the proposed thirty (30) unit residential housing
project.
At the April 25, 1991 City Commission meeting, the City
Administration made a request for the approval of a Major Use
Special Permit in connection with the proposed housing project.
At that meeting, many of the Coconut Grove residents in
attendance expressed both support and objections toward the
proposed housing project. After much debate, it was recommended
by the area residents that the density of the project be reduced
from thirty (30) to twenty-three (23) single family homes. As a
result, through Resolution No. 91-325, the City Commission
approved the issuance of a Major Use Special Permit to allow for
the development of a twenty three (23) unit residential detached
condominium project on the city -owned St. Hugh Oaks parcel.
In October of 1992, through Resolution No. 92-660, the City
Commission accepted the bid of Associates Construction
Corporation in the amount of $2,258,000 and authorized the City
Manager to execute a contract in connection with the development
of the 23 unit condominium housing project located at Douglas
Road and Franklin Avenue. Construction on the project commenced
in September of 1993.
PROPOSED SALES PRICE
During the initial planning phase of the St. Hugh Oaks Village
Housing Project, the proposed sales price which was discussed
with the Coconut Grove neighborhood was projected to be between
$70,000 - $75,000 for each home. The estimated sales price of
$70,000 - $75,000 was based on the St. Hugh Oaks parcel being
developed as a forty (40) unit townhome project over seven (7)
years ago.
Since then as enumerated previously, the housing project has been
considerably reduced in density to only twenty three (23) single
family detached homes. This downsizing of the project, together
with the increases in the cost of construction materials and
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Honorable Mayor and
Members of the City Commission
Page 3
labor over the past seven (7) years has substantially increased
the cost of the project. Moreover, there have been a number of
unexpected cost increases associated with revisions in the South
Florida Building Code requirements imposed as a result of
Hurricane Andrew. The project's cost overruns can also be
attributed to the more than seven (7) month delay in the
commencement of construction due to the new construction
water/sewer moratorium imposed by Metropolitan Dade County in
early February of 1993.
The projected total development cost for the St. Hugh Oaks
Village Condominium Project is $3,570,000. This amount includes
the following:
Land Cost $1,071,000
Construction Cost (Bid) $2,258,000
Architectural Fees $ 125,000
Estimated Cost Increase $ 116,000
$3,570,000
Based on the City's actual cost for developing the St. Hugh Oaks
parcel, the homes would .have to be marketed at $155,217/unit
($3,570,000 / 23 homes) in order for the City to recapture its
total cost of developing the St. Hugh Oaks property.
Presently, the City is proposing to market these homes under the
FHA 203(b) Program. The maximum mortgage amount under the FHA
203(b) Program is $112,350 for a single family home.
Considering the total cost incurred by the City in the
development of the St. Hugh Oaks parcel, the City Administration
is recommending that these homes be marketed at $115,000. At the
sales price of $115,000, the City would be able to recapture its
construction cost of $2,499,000 and $6,347/unit of site
acquisition cost.
Generally speaking, housing is considered affordable when the
family's monthly housing costs do not exceed approximately one-
third (1/3) of a family's monthly income. At the sales price of
$115,000, the homes would be affordable to moderate income
families and enable the City to recapture all of the City's
construction cost plus some of the land cost.
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Honorable Mayor and
Members of the City Commission
Page 4
Attached in Exhibit "A" is an analysis of the different sale
prices that can be established for the homes that would still
insure that the homes remain affordable to moderate income
families as well as enable the City to recapture certain levels
of its actual construction cost.
BOG ..�
Another significant concern related to the sale of these units
has been the method of selecting the buyers. A method that would
be fair as well as efficient has been a concern of the Members of
the Commission.
The City Administration is considering a lottery system as the
fairest method. In short, at the time that these homes are ready
to be marketed, the availability of these homes would be
advertised for a period of time yet to be determined. During
this time the Administration would begin to pre -qualify the
applicants based on FHA lending guidelines. All of those pre -
qualified prospective buyers would be placed in a lottery, and
the first 23 selected would be the first eligible buyers. The
pre -qualified applicants that were not selected among the first
23 would be placed on a waiting list. These families would be
offered a purchase contract only in the event that any of the
first 23 buyers fail to obtain financing during the full
application and qualification process.
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EXHIBIT "A"
Land $1,071,000
Construction (Bid) $2,258,000
Architects $ 125,000
Estimated Cost Increase $ 116,000
Total Cost $3,570,000
ESTIMATED SALES PRICES
Recapture
all
cost
=
$155,217
Recapture
all
cost
less
25% of
land =
$143,576
Recapture
all
cost
less
50% of
land =
$131,934
Recapture
all
cost
less
75% of
land =
$120,293
Recapture
all
cost
less
land
=
$108,652
Recapture
all
cost
less
land &
arch. _
$103,217
Recapture
original
const. cost
only =
$ 98,173
Estimated sales price of $115,000 would recapture all cost
less 86% of land cost. This results in the return of
$146,000 of the land cost or $6,347./Lot.
AFFORDABILITY
The units are being marketed to target moderate income
families.
Moderate income is defined as an annual gross household
income ranging from 81% to 140% of the median income
adjusted for family size.
The following affordability analysis takes into
consideration a family of four, which would be a typical
family to purchase the 3 bedroom units.
These units will be purchased utilizing FHA financing,
therefore the following, is taking into consideration FHA
qualifying criteria.
Family Size 4
Dade County Median Income $34,800
Moderate Income - up to $48,720
IS
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Sales Price $115,000
Downpayment @ 3% (est.) _ $ 31450
Mortgage Amount - $111,550
$111,550 @ 8 @ 30 year amortization = $818.51
Plus maintenance (est) = 75.00
Plus taxes ($2,000 yr) = 166,00
Total PITI
= $1,059.51
FHA limits allow for total principal, interest, taxes, and
insurance (PITI) not to exceed 29% of a household expense to
gross monthly income, and 41% including other monthly
expenses such as credit cards, personal loans, etc. This
means that the above total payment would be 29% of an income
of $3,653.49/month or $43,842.00 which is within a moderate
income range. In addition a moderate income family could
also have other monthly expenses totalling $600 a month and
qualify for the FHA loan. $1,059.51 + 600 = $1,659.51 / .41
= $4,047.58 x 12 = $48,571.02.
The following
qualify for a
these units.
indicates the
FHA mortgage
This would be
additional expenses of $600
minimum income requirements to
to assist in the purchase of
assuming a family of 4 who has
per month.
Minimum
Estimated
Total Housing
Annual
% of
Hales Price
Mtg. Amt.
Expense (PIT4
Income
Median
$120,000
$116,400
$1,095.10
$49,612
142%
$115,700
$112,243
$1,064.60
$48,720
140%
$108,650
$105,390
$1,014.31
$47,248
135%
$103,220
$100,123
$ 975.67
$46,117
132%
$ 98,180
$ 95,235
$ 961.81
$45,711
131%
$ 90,000
$ 87,300
$ 881.57
$43,363
124%
$ 85,000
$ 82,450
$ 845.98
$42,321
121%
$ 80,000
$ 77,600
$ 810.40
$41,280
118%
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