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Home My WebLink AboutM-87-0352i (4jt: f MATTY HIRAI City Clerk C'�fCO F10��t; April 21, 1987 Mr. Rodriguez de Quesada Miami, Florida Dear Mr. Rodriguez de Quesada: CESAR H. ODIO !— City Manager Please be advised that the City of Miami Commission passed the following motion on its meeting of April 9, 1987: MOTION NO. 87-352 A MOTION AUTHORIZING AND DIRECTING THE CITY MANAGER TO ALLOCATE $309000 FOR "FLORIDA HOUSING COOPERATIVE INC." IN CONNECTION WITH THE PURCHASE OF PROPERTY FOR CONVERSION TO LOW AND MODERATE INCOME COOPERATIVE HOUSING, WITH THE PROVISO THAT: a) THE CITY AUDIT HAS BEEN TOTALLY CLEARED; b) IF ANY PROCEEDS ARE DERIVED FROM THE CONVERSION, SUCH PROCEEDS SHALL COME BACK TO THE CITY COMMISSION FOR FURTHER CONSIDERATION AT THAT TIME; c) IF THE PROJECT IS NOT BUILT WITHIN 12 MONTHS, THE $309000 SHALL BE REPAID TO THE CITY. The above motion was moved by Commissioner Carollo, seconded by Vice Mayor Plummer and passed with one negative vote from Commissioner Kennedy. If we can be of further.assistance, please let us know. Sincerely, VSv ia Lowman Chief Deputy Clerk F'7. v � � J OFFICE OF THE CITY CLERK/City Hall/3500 Pan American Drive/P.O.Box 330708/Miami, Florida 33233-0708/(305) 579-6065 interest rate of lc.-- 93-1 CITY OF MIAM1, FLORIDA 83 INTER -OFFICE MEMORANDUM TO. Honorable Mayor and Members of the City Commission FROM: Cesar H. Odio f� DATE: March 24, 1987 '"`E' SUBJECT: Florida Housing Cooperative, Inc.'s Cooperative Conversion Proposal REFERENCES: City Manager City Commission Agenda ENCLOSURES: Discussion Item April 9, 1987 On March 13, 1987, Mssrs. Carlos Rodriquez Quesada and Roberto Godoy, officers of Florida Housing Cooperative, Inc. (FHC), appeared before the City Commission with a proposal for the use of the $30,000 in llth year CDBG funding, reserved by the Commission for housing cooperative development through Motion No. 86-370. In brief, FHC requested the funding in the form of a grant in order to provide a downpayment on the purchase of a four dwelling unit rental apartment building located at 626 S.W. 4th Avenue, which FHC proposed to convert to cooperative housing within twelve months of the acquisition date. Staff was directed to analyze FHC's proposal and report back to the City Commission as to its feasibility. Summary of FHC Proposal The essential elements of FHC's proposal are as follows: 1. FHC proposes to purchase a rental apartment building located at 626 S.W. 4th Avenue, consisting of four, two e bedroom apartments. : 2. FHC proposes to finance the purchase of the property for which the current owner is asking $130,250, by: N - Using the $30,000 in CDBG funding reserved by the City Commission as a downpayment; - assuming, from the current g property owner, a $93,250 FHA insured first mortgage carrying a 10% rate; and j - by providing the current property owner with $7,000 purchase money mortgage, which is payable in full within three years of the date of acquisition of the property. This "balloon" mortgage carries an accruing interest rate of 10%. 93-1 C 3. Within one year of the date of acquisition of the property, FHC proposes to convert it from rental use to a four unit housing cooperative. 4. FHC proposes to sell the dwelling units to qualified members of the cooperative to be formed for $35,065 per unit, which on a per unit basis represents a $2,502.50 increase over FHC's initial per unit acquisition cost. 5. FHC proposes to obtain individual unit financing for the cooperative members by: - Allowing the cooperative to assume the balance of the FHA insured first mortgage; and, - obtaining deferred second mortgage financing for the cooperative members through Dade County Documentary Surtax Program, or through a conventional lender. According to FHC's feasibility analysis, individual cooperative/tenant share costs will be approximately $330.00 to $385.00 per month, depending upon the type of second mortgage financing FHC is able to obtain for the cooperative members. 6. FHC proposes to use the profit generated by the purchase and conversion of the property to undertake additional property acquisition and conversion projects. The profit generated by this initial project will be approximately $33,000. Staff Analysis Staff has conducted an analysis of the various aspects of FHC's proposal and offers the following observations and recommendations for the City Commission's consideration: 1. The proposed purchase price of the four dwelling unit rental apartment building FHC is planning to acquire, $130,200, is not supported by a real estate appraisal, however, it is comparable to that of similar rental properties in the market area. 2. The acquisition financing proposed by FHC (see point 2, Summary of FHC Proposal, above) will enable FHC to operate the property for the proposed twelve month rental period with a net operating profit of approximately $4,850. E 3. During the proposed twelve month rental operating period, FHC proposes to structure the cooperative organization necessary for conversion and obtain share financing for the cooperative member/tenants. This financing is not in place at present, and the fact that it is not characterizes FHC's proposal as speculative in nature (FHC's proposed cooperative financing is outlined in point 5, Summary of FHC Proposal, above). 4. FHC's proposed unit/share prices of $35,065 per dwelling unit appear to be reasonable from the market standpoint, but are not substantiated either by a market study or by conditional end financing commitments. S. It is important to note that the $30,000 CDBG grant being requested by FHC for acquisition downpayment purposes will not be passed on to the cooperative owners in the form of reduced cooperative share costs. Instead, FHC proposes to use the $33,000 in profit realized from the conversion to purchase and convert additional rental properties to cooperative ownership. In summary, the proposal presented by FHC has conceptual merit, but is speculative in that the most important element in the proposed conversion, cooperative financing, is not in place. Furthermore, FHC is proposing, in essence, to recycle the proceeds of the requested acquisition grant as described above, not pass the grant on to the members of the cooperative to be formed for the property in question in the form of reduced share costs. In weighing the above factors, should the City Commission decide in favor of providing the requested grant to FHC, staff recommends the provision of the grant to FHC be subject to a legally binding contract executed by and between the City and FHC requiring repayment of the grant by FHC to the City in the event FHC is unable to effect cooperative conversion of the property in question within twelve months of the date of acquisition of the property. Further, it is recommended that any proceeds accruing to FHC from the conversion of the property to cooperative ownership, only be used in connection with capital costs for subsequent conversions approved by the City Commission, or revert to the City. 3 3 f�1 Housing44L - o � ors a' ® "The Voice of the P�+vp/e % pClu a��no " 900 S.W. 22 Ave. • Miami. fionda 3 �1�RT oh f9.9750 Board of Directors BY -Hand Honorary Chairman Petal R. Bernd March 16, 1987 President Carlos Roddgws-0uesads Commission City of Miami Miami, Florida Vice Presidents Atteni Mr. Cesar Odio, City Elsa Na/lederes Manager. PW.Ido aka Gentlemen: Secretary AOb'iO God" Sr. We hereby request to be included in next Commission Meeting scheduled for March 26, 1987 to appear in the Agenda under "Personal Appearances" in represen- vice-secretary tation of Florida Housing Cooperative, Inc., to re - Pedro A do twin st the final approval of the allocation of $30, 000 Mueth Year C. D. Funds), held in abeyance under motion Trestxw M-86-370 of May 79 1986 for the property located at Agustin Reyes 626 S.W.' 4th Avenue, Miami, Florida. - Sincerely, VKWTNMWW Directors: Carlos Rodriguet Quesada Sergio Comopiio President Mine L. Godoy _ ? Roberto Godoy Secretary . am