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HomeMy WebLinkAboutR-90-0398J-90-442 5/24/90 398 RESOLUTION NO. 90- A RESOLUTION AUTHORIZING THE CITY MANAGER TO NEGOTIATE AN AGREEMENT BETWEEN THE CITY OF MIAMI AND THE ALLAPATTAH BUSINESS DEVELOPMENT AUTHORITY FOR THE PROVISION OF $179,000 IN THE FORM OF A GRANT, IF FEDERALLY APPROVED, FROM THE CITY'S MINI-UDAG-LOAN POOL FUND OF THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM TO THE ALLAPATTAH BUSINESS DEVELOPMENT AUTHORITY FOR THE PURPOSE OF PROVIDING FINANCIAL ASSISTANCE IN THE ACQUISITION OF PROPERTY LOCATED AT 3721-3735 NORTHWEST 17TH AVENUE FOR THE PROPOSED DEVELOPMENT OF A SMALL STRIP SHOPPING CENTER, SUBJECT TO THE CONDITION THAT IF CONSTRUCTION OF THE PROPOSED SHOPPING CENTER IS NOT UNDERWAY AFTER TWO YEARS AND COMPLETED AFTER THREE YEARS FROM DATE OF ACQUISITION, TITLE TO SAID PROPERTY SHALL VEST IN THE CITY. WHEREAS, the Allapattah Business Development Authority (ABDA) presented to the City Commission a proposal to develop a small strip shopping center along Northwest 37th Street and 17th Avenue and in order to implement this project ABDA will need to acquire the property located at 3721-3735 Northwest 17th Avenue; and WHEREAS, ABDA does not have the required funds to either purchase the property or develop said project and has therefore requested that the City provide initial financial assistance; and WHEREAS, on October 12, 1989, the City Commission instructed the administration to conduct two real estate appraisals on the — property located at 3721-3735 Northwest 17th Avenue and owned by Ralph and Gloria Packingham; and WHEREAS, an appraisal review of the initial appraisals obtained is required for the purchase of any property with Federal funds; and WHEREAS, the appraisal review on said property established a market value of $130,000 with estimated closing costs of $8,000; CITY COMMSSION ,ETNG OF MAY 24 1990 90- 398 NOW, THEREFORE, BE IT RESOLVED BY THE COMPITS3TON 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 to negotiate an agreement between the City of Miami and the Allapattah Business Development Authority for the provision of $179,000 in the form of a grant to the Allapattah Business Development Authority from the City's MINI-UDAG Loan Pool fund of the Community Development Block Grant (CDBG) Program for the acquisition of the property located at 3721-3735 Northwest 17th Avenue for the purpose of developing a small strip shopping center. Section 3. (a) The normal matching requirements of the MINI-UDAG program are hereby waived. This waiver will apply exclusively to the acquisition of this property. (b) The City's herein grant is contingent upon approval of the same by appropriate federal agencies. Section 4. The herein allocation is hereby further conditioned upon title to the property located at 3721-3735 Northwest 17th Avenue acquired through the herein allocation by the Allapattah Business Development Authority vesting in the City of Miami if construction is not initiated within two (2) years and completed within three (3) years from date of acquisition. Section 5. This Resolution shall become effective immediately upon its adoption. PASSED AND ADOPTED this 24th day of May , 1990. ~l XAVIER L. SUA , MAYOR CITY CLERK 2 - 90- 398 0 0 COMMUNITY DEVELOPMENT APPROVAL: FRAN9 C TANEDA, DIRECTOR DEPARTMENT OF COMMUNITY DEVELOPMENT BUDGETARY REVIEW: MANOHAR S. A, DIRECTOR DEPARTMENT BUDGET FINANCIAL REVIEW: Y CARLO . GARCIA, DIRECTOR FINANCE PARTMENT PREPARED AND APPROVED BY: ALBERTINE B. SMITH CHIEF ASSISTANT CITY ATTORNEY APPROVED AS TO FORM AND CORRECTNESS: JO GE L. FERN DEZ CI Y ATTCRNE RFC:gb:M1518 - 3 - 90- 398 CITY OF MIAMI, FLORIDA INTEROFFICE MEMORANDUM To Honorable Mayor and Members DATE May p, 1990 FILE of the City Commission SUBJECT Acquisition of Property at 3721-35 N.W. 17th Avenue, Miami 1 —� FROMREFERENCES Cesar H. Odi City Commission Meeting City Manager ENCLOSURE. May 24, 1990 As per instructions from the City Commission on the October 12, 1990 meeting, two (2) real estate appraisals and a review appraisal were conducted on the commercial property located at 3721-35 N.W. 17th Avenue, Miami, which is owned by Ralph and Gail Packingham. The review appraisal recommends a fair market value of $130,000. If the City Commission is desirous of acquiring such property, it is recommended that $138,000 be allocated to the Allapattah Business Development Authority to acquire such property ($130,000 for acquisition and $8,000 for closing cost), with a clause in said contract that the property would revert back to the City in the event that construction has not been initiated within two (2) years and completed within three (3) years of closing and authorizing the City Manager to negotiate such contract. The proposed use of the site in question would be to build a new shopping center on the site. At this time no developer has come forward with the require financial commitments in place for construction of the building. No market study, feasibility analysis, or cash flow projections substantiating the acquisition and construction of the shopping center have been conducted. The proposed course of action concerning this acquisition is for the City to award a grant for the sales price to the Allapattah Business Development Authority to allow for the acquisition of the site from property owners Ralph and Gail Packingham. The Allapattah Business Development Authority (ABDA) applied for a grant from the Office of Community Services (OCS) to finance the acquisition and construction of a shoppin- center on the subject site. The grant was not awarded and efforts made by ABDA to obtain funds from private banks never materialized, thus financing was never secured for this project. yw- i f i 8 The Honorable Mayor and Members of the City Commission Page -2- The two (2) appraisals made on the subject site determined a fair market value of $214,000 and $179,000 respectively. Federal regulations require a mandatory appraisal review on both appraisals to assure that they meet applicable appraisal requirements and prior to acceptance seek necessary corrections or revisions. The review appraiser approves or recommends approval of one of the appraisal as an adequate basis for the offer of just compensation, or may develop appraisal documentation to support a new approved or recommended value. In this particular case, the appraisal review conducted on the property determined a fair market value of $130,000. Aside from the purchase price, it is estimated that closing costs associated with this acquisition will total $8,000. The property is a retail stores building with four (4) tenants: (1) Pewwe' s Grocery (2) Hair by Mr. Ralph (3) Hel cobm's Upholstery (4) Elaine's Clothing Store By acquiring the property, the City will automatically trigger payment for moving and related expenses as well as relocation and reestablishment expenses. Since ABDA does not have the financial resources to cover these expenses, the City will have to meet the federal requirements and pay for the moving and relocation expenses. Each of the four (4) tenants presently operating a business in this commercial property would be entitled to receive the following benefits for moving and relocation expenses: I. 1. Payment of Actual Reasonable Moving and Related Expenses 1. Transportation of personal property up to 50 miles. 2. Packing, crating, unpacking and uncrating or personal property. The Honorable Mayor and Members of the City Commission Page -3- 3. Disconnecting, dismantling, removing, reassembling, and reinstalling relocated machinery, equipment, and other personal property. 4. Storage of personal property up to 12 months. 5. Insurance for the replacement value of the personal property being moved and stored. 6. Any licenses, permit, or certification required at the replacement location. 7. Replacement value of property lost, stolen, or damaged while moving. 8. Professional Services for: a) Planning the move of the personal property. b) Moving the personal property. c) Installing the relocated personal property at the replacement location 9. Relettering signs and replacing =_ stationary that are rude obsolete as a result of the move. 3 a 30� 398 The Honorable Mayor and Members of the City Commission Page -4- 10. Actual direct loss of tangible personal property incurred as a result of moving or discontinuing the business. 11. The reasonable cost incurred in attempting to sell an item that is not to be relocated. 12. Purchase of substitute personal property. 13. Searching for a replacement location (transportation, meals and lodging, unearned salary and fees for a real estate agent). NOTE: The benefit listed above are unlimited and directly related to the actual needs of the business. Payment of these benefits to each of the four (4) tenants could substantially increase the total cost of the proposed acquisition. Up to $10,000 II. Reestablishment Expenses Each of the four (4) tenants may be _ eligible to receive a payment not to exceed $10,000 for expenses actually incurred in relocating and reestablishing at a replacement site. 00- 398 The Honorable Mayor and Members of the City Commission Page -5- III. Fixed Payment for Moving Expenses Each of the four (4) tenants to be di spl aced as a result of the acquisition may be eligible to choose a fixed payment in lieu of the payments for actual moving and related expenses, and actual reasonable reestablishment expenses. This fixed payment shall equal the average annual net earnings of the business but not less than $1,000 or more than $20,000. i $1,000 - $20,000 ( In lieu of I & II) Payment of the moving and related expenses, as well as the relocation and reestablishment expenses, would be mandatory. If the acquisition of the subject property is carried out with Community Development Block Grant (CDBG) funds, the purchase will need to meet one of the mandatory CDBG National Objectives. In this case, given the location of the property, it could qualify under the Area Benefit for Low and Moderate Income People or under the Low/Moderate Income Jobs Creation and Retention. TOTAL COST An estimated total cost of this project would be as follows: Land Acquisition (appraisal review value) $130,000 Estimated Closing Costs 8,000 Moving Expenses ($1,000 to $20,000 per tenant) 1)4,000 - 80,000 Construction of New Shopping Center (Soft and Hard Cost - Estimate) 520,000 Total: $762,000-UUT,-= 9®- 398 1Z The Honorable Mayor and Members of the City Commission Page -6- NOTE: If tenants exercise their right to be compensated for actual moving, relocation, and reestablishment expenses, the total cost of the acquisition could be substantially increased since benefits will be based on actual expenses with no limit. Public Benefit U.S. HUD strongly encourages grantees to carefully examine and weigh the needs for public assistance before using scarce public resources for economic development activities. Even though it is not mandatory, a necessary or appropriate determination is suggested by HUD to ensure that the amount of financial assistance is not excessive taking into account, primarily, the extent of public benefit expected to be derived from the economic development activity. The City would have to maintain files containing documentation of the financial analysis of the activity as well as public benefit factors that were considered in making the determination that the assistance is necessary or appropriate. The documentation should clearly show that the level of CDBG funds allocated for the activity is reasonable, considering the needs of the subrecipient and the amount and nature of the public benefit to be achieved. As circumstances warrant, said documentation should include a market study, a feasibility study, or a management assessment background. HUD will review this documentation to determine if the City has conducted the analysis, the decision to fund the activity is defensible, and the amount of assistance is reasonable in relation to the public benefit to be achieved. An important Factor of this suggested determination consists of maximizing and verifying private sources of debt financing. This is important because scarce government Funds should not be substituted for available private funds. If the project is financially feasible and private financing is available, then there is less need for public assistance. I The Honorable Mayor and Members of the City Commission Page -7- City Ownership In the event ASDA i s unabl a to devel op a shoppi ng center on the subject site and construction work does not begin after two (2) years from the. date of acquisition, then the ownership rights of this property will be transferred to the City of Miami. In this case, the City will become the landlord for the four (4) tenants presently occupying the commercial site. This will make the City responsible for maintenance of the property, insurance, rent collection, compliance with fire and safety regulations, and eventual disposition of the land through a bid process. OLly-7 � 30- 398