HomeMy WebLinkAboutR-82-0824r
RESOLUTION NO. 8 2- 8 2 4
A RESOLUTION APPROVING REVISED PROGRAM
GUIDELINES, ATTACHED HERETO AND INCORPO-
RATED BY REFERENCE, FOR THE OVERTOWN
MULTI -FAMILY REHABILITATION LOAN PROGRAM,
AND AUTHORIZING THE CITY MANAGER TO
IMPLEMENT THE PROGRAM IN ACCORDANCE
HEREWITH.
WHEREAS, in recognition of the continued need to pro-
vide safe and sanitary rental housing units affordable to
low and moderate income families in the Overtown Community
Development Target -Area, the amount of $550,000 has been
allocated from the Eighth Year CDBG Program to the Overtown
Multi -Family Rehabilitation Loan Program; and
WHEREAS, certain revisions to the program's implementa-
tion guidelines are necessary to secure the continued parti-
ci.nation of property owners and private lenders in the pro-
gram.
NOW, THEREFORE BE IT RESOLVED BY THE COMMISSION OF THE
CITY OF MIAMI, FLORIDA:
Section 1. The revised Overtown Multi -Family Reha-
bilitation Loan Program, attached hereto and incorporated by
reference, is hereby approved.
Section 2. The City Manager is hereby authorized to
implement the program in accordance with said guidelines.
PASSED AND ADOPTED this 9TH
ATTEST:
C�ALPW
G. ONGIEClerk
PREPARED AND APPROVED BY:
L E. MAXWEL
s istant City Attorney
day of SEPTEMBER , 1982.
MAURICE A. FERRE
MAURICE A. FERRE, Mayor
APPROVED AS TO FORM AND CORRECTNESS:
SE R. GARCIA-PEDROSA
ity Attorney
CITY COMMISSION
MEETING OF
SEP 9 1982
No mm "L...g.2..- 8 2
mom............................
2
Howard V. Gary
City Manager
iL: August 20, 1982
Dena Spillman, Director
Department of Community Development
Overtown Multi -Family
Rehabilitation Loan Program
Guidelines
City Commission Agenda Item
September 9, 1982
It is recommended that the City
Commission approve revised program
guidelines for implementation and
administration of the Overtown
Multi -Family Rehabilitation Loan
Program.
In response to the need to increase the number of safe and
sanitary rental housing units affordable by low and moderate
income Families in the Overtown Community Development Target Area,
CDBG funds in the amount of $355,000 were allocated for
multi -family rehabilitation loans in the Sixth CD Year and
$330,000 in the Seventh CD Year. Additionally, $550,000 has been
allocated for the current CD Year.
As standard procedure, guidelines and implementation policies were
formulated in - order to provide administrative consistency with
desired program objectives. Based upon the prior two years
experience, certain revisions to the guidelines have been proposed
that will increase the effectiveness and efficiency of the Program.
The proposed revisions include implementing a sliding scale loan
interest rate from 5 to 11 percent. In the past, a fixed rate of
3 percent (3%) was charged. For each loan, the interest rate
charged will be dependent upon several factors, ie. rent to be
charged after rehab; owner's equity; owner's return on investment.
In order to encourage maximum private investment, a 3 percent (3°0)
rate has been proposed for those property owners who contribute
at least 50 percent (50%) towards the total cost of rehabilitation.
A further revision to the current guidelines is the eligibility
of non-profit housing cooperatives to obtain refinancing of
existing mortgages as part of the overall rehabilitation loan.
Also, a Management Plan is to be submitted by each owner. The
Management Plan will include a proposed form of lease and
certification of no evictions without legal cause for a six (6)
month period prior to date of application.
Staff recommends that these program guidelione revisions be adopted
to move the program forward. Proposed guidelines are attached.
DS:wh
82-82
LI
CITY OF MIA^1 I
OVLRTOtvN MULTI -FA I I LY REHAB I mTAT I ON
LOAN PRO GRALN
GUIDELINES
PROGRAM PU,\'I'O.`;E AND OBJF.(.'I'1VI S
TI-,e )vertown Rehabilitation Program is designed to assist
owners of multi -- family rental housing in financ1ng the
rehribi 1 itation of their property. In gener:•31., the program seeks
to achieve the following objectives:
I. To provido standard affordable rent:31 housing units for
low income families;
2. To assist in creating a positive climate for private
sector reinvestment in Overtown; and,
3. To improve the physical appearance c)f Overtown.
DEFINITIONS
Apr)raisal - An estimate of the valtie of a property prepared by
a processional appraiser.
Dwe 1 I Lng Unit - A residential space cont_a Lni ng at a ;;iLnimum, a
at room, Ic hen or kitchenette and a living area/bedroom.
Equity_ - The current market value of the property less all
in`dcltedness secured by subject property, .io. mortgages, liens,
etc.
Income - The dross amount received from all sources by each
men. er of the household including all wages, pensions, social
security, interests, rents, dividends, etc.
Multi-FamilyDwellin - A residential property containing five
or more dwelling units.
Owner - The individual or group holding; valid legal title to
L7c- property.
Property Rehabilitation Standards ( IRS) - The minimum standard.
require for re hahi litation are tie Ci ty of Miami. Minimum
Ilousing Code and the South Florida Building Code, where
applicable.
Rehabi 1 i Cation I.oan - Funds advanced to the property owner in
tie Corm of a loan for the purpose of improving the property.
All such funds advanced are Secured by a mortgage instrument.
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Re11t Reg!_,III t1)1•', AI'reV1?'Lilt - A n't'i Ltn(I r(2cOrdt'(I docLime nt
Lm]1:ilig the orroworTs rate of rt'Liirn on Invc ric,nt and
establishing rent levels by unit size [or a specified period
Of t i. ire e .
Return on lnvesti'ient - '1'11 ' Of IlL't inc( i1C` reCui"n0d
from the rehabilitation investor.;nt in retaLLon to the owner's
equity' in the prorerty and file owner's c;i!-di i.nv:,�.tmenL Ln the
rehabilitation project.
Specif icnLions and Cost E�;_t_imate - t1 stc;tom(11C 1,,:sed on a
prope rL inspect Lkin 1-epurt� i Lc li ii i1,ti a I l reii ahi 1 i t.ii ion rk
to be done on a proporty, including an esL icilite of the cost
to repair/correct c�ich item.
PROGRAM DESIGN
Pursuant to the Park West/Overtown Redevelopment flan as adopted
by the i•liami City Ccmmission on June 212, �)0�, within the
Overtown Community Development Target Area, financial assistance
will be m:aO:c avai Table to owners of mul Li -family structures
in order to bring their properties up to the Property
Rehabilitation Standards. Upon completion of rehabilitation.
rent levels shall be subject to a dulyrecorded Kent Regulatory
Agreement fnr a specified period of time.
FINANCING
Community Dove Iopr.;cnt Block Grant funds wi 1 1 he used to provide
di rect 1 M.; interest loans to owners of mu L i -, aini. 1 y ' rental
properly for rehabilitation financing.
Rehabilitation Loan Interest - Di rect loans
wi 1 l be
1-,lade . .
avai a c Lo finance e T i)le rehabi.l..LtaLion
costs.
l.o; n '
interest will be computed on a sliding scale between
three
(3`")
percent and eleven (11%) perc(-nt. rjiLr of
interest
will
be based upon: 1 ) The amount cf di rect f in:incing provide.-'. by
the owner through private and/or other governmenLal sources;
2) the rate ofreturn on invesLmont; 3) the
proposed
rent
schedule; and 4) rho per unLL rehal)iliLation cost.
An
owner
financin fifty (50iper cent or more of
the cost
of
r(:habilitat i.on from other public or private
sources
shall
receive an interest rate of three (3'%) per cent.
Repayment Period - The loan repayment term shall be up to a
maximum o. t� wenLy (20) years. There is no penalLy for prepayment
of the loan balance.
Refinancing -
The refinancing
of
existing mortgages may only
econsidered
as part of the
total
loan amount in applications
submitted by
not -for -profit
housing cooperatives. Requests
for mortgage
refinancing will
be
considered on an individual
basis, based
upon Lhe extent
to which such action will assist
in the fulfillment
of the Prog,ram's
objectives.
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Funding and Management of Escrow AccounL - The Ci tv, at time of
c wing, wi establish an escro�-. account for the borrower, to
provide construction financing.
1. Disbursements from the project escro,.ti acenunt will be
made for the fol l o;ai.ng purprses :
a) To ma1c0 progress and f i n.ii 1)L,yme11ts to the
contractor:
b) To pay t2xpeils,25 i TIC ide:lt:1 l tv L iv;i: of �
c) To close_ out the cscrow account by appropriate
disbursing funds remaIIII MV in the
account.
2. Progress Payments to contractor - Upon receipt of a
coat-, actol - s iilv,?.l ce for a propross payment. the City
shall determine if the w(;r1c h�tis been performed
satisfactorily. anti drziw pavt-,,2nt. fro^ the escrow
account.
3. Final Payments to contractor - When all work is found
to be sati sfac'.ori 1 y accompl i.shed in accordance with
the specifications and upon receipt of all release of
liens, warranties. etc., the City will draw final
payment.
In the event of a dispute betc•:een the applicant and the
contractor with respect to rehabilitation work, the City shall
take appropriate action in accordance with the provisions of
the rehabilitation contract.
Such appropriate action shall include mediation to assure the
protection of both the applicant and the contractor.
Mediation will be provided by the City who will inspect the
work and determi.ne if it has been performed in accordance with
the contract and in a workmanlike manner. if the work has not -
been completed i-)roperly, the contractor will be ordered to make
the necessary corrections before receiving final payment. If
the contractor does ma�:e corrections as requested and the
work is deemed satisfactory by the City, final payment shall be
authorized to be disbursed to the contractor. If. on the other
hand, the contractor fai Ls to 111,11(e tale necessary corrections
prior to the e\pirati.on of hi:; conLr:ict, tl:c, City shall assist
the .applicant in oht1ininIg ,mother contractor to make the
corrections. Once corrections are made to Lhe satisfaction of
the City, the contractor that failed to perform shall be paid
the balance of the funds earned by him remaining in the escrow
account after the new contractor has been paid for the
corrective work. Such p:3yment shall only be made, upon receipt
of the appropriate release of liens documents.
82-824
J
i C
MANAGEMENT
Applicants Shall submit a management plan. Such plan shall,
include a proposed fors: of louse. Also co In, suhmiteed is a
cart i L icati()n of ne evict ions w thorn cause for a six (6) month
peri& prior to date of application.
Rent Rogiilatory Azreement - A Rent RegLfl itory Agreement shrill.
.,e 0—m-ecuLed at time ol: loan sett] emont in ord? -,r to l i_mi t the
race of return to the bnrrok,er thrc,ugh increased rants caused
by the rehabilitation of the property. The maximurin a11owable
r:ltc of return on investment will be L enty (207) percent . The
Agreement will l)r in offect (Ivor the f i rc,t fou - Yc,117s of the
1 o,in. commencing upon compl et ion of reh<:bi 1 i tat ion. The rent
schedule shall be based on the following criteria:
1. No displacement of existing tenants shill occur due
to an increase in rents above the tenants' affordability
range (i . e . over 30; of gross family income) .
2. PQnts shall be established at levels COM--;en',ur,►te Vith
hrc�vail.ing �ellts for cr,r,rhnr:rhlc till i"s in the
neighborhood.
3. Tot.11 net: incomo shal l represent a reaso)nn':`1c return
on investment not to excood twenty (200 per cent.
NA I VEKS
The Director of L h(' Depw rWont of t,ort^ qw l t v 1)0v _ l opm!';lt sh:.1 l
ha,. , Lhc nuthority to c;ai.ve ar y pro),,ram rcrlui.r01101:C to further
the purposes and objectives of. the COM.MLlnity Developmel:; Program
of thy, City of Miami.
PROGRAM FLIGIBILKY
Eligible Properties - To be ell-i1)1 e under the program,
proposals shall b consistent with the Park West/Overtown
Rodevelo mont flan, as adopted by the Ciission on
.Jirnc, , I 98T erne must. meet Lhe fo Iowing criteria:
I. Multi -family dwellings, cooperative~ and condominiums.
2. Structures in substandard condition (not meeting
P.R.S. ).
3. Structures located within the Ovorto n Community
Development Target Area.
Eligible Applicants
1. The owner of the subject property.
2. investor/owner (individual, not -for -profit curhoratiun,
private corporation, partnershhp).
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El.ii;ihle Imorovemerts - Owners are required to male repairs to
meet tTe c:i tv of ;1i ani Mi Ii rium Ilou, i ng Coda and the South
l:loI- idn BU11dinI" Code, there appI icahle. Goneral property
improvements (non code reclui reel) m:ihe undo. rtakeIi to the
extent fcasihle.
All applicable federal, state and Ioc;'I l"ziir i1Ousirg, Labor.
E.nvironm,eiltal and Ci tv-1,'ide Iii Storlc PreserVat ion rc g,1:1:1'=bins
shall he a program requirement.
Eligibl Cost. - T'he fcllo•.tiing itt�r^: are cl icihie to he in_l�_idod
in the re -l"M itation loan:
1 . The actu,=tl cost of rehabi 1 i tc,,tion necessary to brin"
the propert-y to the South Florida Building; Code or the
City of Miard Minimum Housing Code, as applicable. "phis
is the mand.ltory minimum work regiiired for arid• Loan.
2. The cost of rehabilitation to correct or remove
incipient violations, inclr_idinp, .ill physical conditions
of the property which, if not repaired, would
deterioraLo into actual violcition of the P.R.S. within
two years.
3. The cost of general property improvements (G.1'.I.).
Such improvements shall not be the major focus of the
loan, and will usually he loss than, forty (40") percent
of the cost of rehabilitation. G.P.l.'s may be included
only if the minimum improvements required are satisfied
first.
4. The cost of rehabilitation to increase or decrease the
number of units in the property, if allowed by the Citv
of i%tiami Zoning Ordinance.
5. The cost of building permits anci.related fees required
to carry out the proposod rehahi1it:ition work.
h. A contingency roserve not Co exceed 10 of the cast of.
rehabilitation.
RI:{lAlilLl'rA' 10N' CRITERIA AND E:VALLWI'IUN
Proposals shall be accepted during the advertised suhmi:,sion
period. Submittal applications will be processed in Clio order
in which thev are received, abd will he evaluated and ranked
according to the following criteria:
1.. Per unit re ha1)iIitatioil cotit (cost effectiveness) by
unit size and type.
2. Proposed rent schedule after rehabilitation by unit
size and type.
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6
4
'. UtiIir.,ition of funds from ��thcr i;overnmcnt: pr(�i;rans
such as Section 8 Moderate Rehab iIitation Program,
Seel ioit 312 Wit 1'ruL;r:im, cte.
1. Portion of the rchabili.tati_on cost to be ffinanced from
Private sources.
5, Impact of proposed reh.-3hi_litation upon adjacent
properties and the neighborhood in general.
�a. Proposed project is in an area of concentrated
investrierat of community CICVCIup;r,cnt t'unds.
No evidence of overt di s i nve mrcrit on the part of the
property c"".ner.
I Owner 's demonstrated ;".ana C;;,c'il' cap) !I)i.I i ties 2nd
prcposed mranag,ement plan.
AI'1'LIC,�T10;� AND I'RUCE:;S[�G 1'k(�Cr�DC`1zI:S
1.i tit k`(I ho1 gare the stet)-hy tep I)1"( C'.`dlireS to b" foI 1 C.-'eod
for (each .applicat-lon:
1. Interested applicants wiI1 ans%%,or the RFP (placed in
newspapi2rs of general circulation) by snaking an
uppointc,ent with Cite staff.
2. City stair wi 11 interview interested appl.i.cants and
wi.II explain program requirements. Applicants will be
1)ro idc,l with program giiLdcli11US and prc1i;:Tin.1ry
application.
3. City staff Wi11 conduct an inspection of the subject
Property and provide the appl iccant with a list of ite^is
to be repaired or replaced.
4. City staf t- will prepare construction proposal documLTits.
S. Appl.i.cant will obtain cost estimates from at least
three ( 3 ) 1. i tensed cot -it rractors .
6. Ci ty staf i wi.l 1 reviCW wi th the, app) i cant tho submitted
specifications .in(i cost estimates to reach final
,agreement on the scope of rehabiIit;ition and selection
of contractor.
7. City staff will cal c►il.,Le interest rate sand portion
Of thc' relld hi 1 i teat ion east to ho f i nanced through the
program.
3. City wil.l prepare the Rent kegulatory Agreement and
the security instrumont5 for the loan. These documents
will be executed at 10:111 clusinl; and recorded.
9. City will establish an escrow account. and will conduct
program inspections for progress payments and final
6 82-824
ins,poct ion,, . Progre,4s ;end f i im I Imvr,ent draws wi I I be
authorized by the Citv ciftrr inspect inns ;)nd disbursed
from the (2sc!:ow account.
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