HomeMy WebLinkAboutR-82-0825RESOLUTION NO. 8 2- 8 2 5
A RESOLUTION APPROVING PROGRAM GUIDE-
LINES, ATTACHED HERETO AND INCORPORATED
BY REFERENCE, FOR THE COMMUNITY DEVELOP-
MENT TARGET AREA -WIDE 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 Community Development
Target Areas, the amount of $1,323,656 has been allocated
from the Eighth Year CDBG Program to the Target Area -Wide
Rehabilitation Loan Program; and
WHEREAS, in order to implement the Program and secure
the participation of the private sector it is necessary to
formulate Program guidelines.
NOW, THEREFORE BE IT RESOLVED BY THE COMMISSION OF THE
CITY OF MIAMI, FLORIDA:
Section 1. The Target Area -Wide Rehabilitation Loan
Program guidelines, attached hereto and incorporated by
reference, is hereby approved.
Section 2. The City Manager is authorized to imple-
ment the Program in accordance with said guidelines.
PASSED AND ADOPTED this 9TH day of SEPTEMBER , 1982.
MAURICE A. FERRE
MAURICE A. FERRE, Mayor
TEST:
RALPR G. ONGIE
ity Clerk
PREPARED AND APPROVED BY:
040( C. ;�j �
EL E. MA)CWELL
Assistant City Attorney
APPROVED AS TO FORM AND CORRECTNESS:
t /auk.
SE R. GARCIA-PEDROSA
ity Attorney
CITY COMMISSION '
MEETING OF
SE P 9 1982
�m82-82
.M...M...........MM�1RlI)
471
Howard V. Gary l v August 20, 1.982
City Manager
Community Development Target -
Area hide
\ / Guidelines
Dena Spillman, Director City Commission Agenda Item
Department of Community Development September 9, 1982
It is recommended that the City
Commission approve program
guidelines for implementation and
administration of the Community
Development Target Area 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 Community Development Target Areas, CDBG
funds in the amount of $1,323,656 has been allocated by the City
Commission for the current CD Year. This amount includes $86,000
of expected program income in the form of monthly loan repayments.
In order to ensure administrative consistency with program
objectives, specific guidelines for the implementation of the
Program have been proposed.
-� Owners of multi -family buildings located within the City's
Community Development Target Area boundaries will be encouraged to
submit applications for rehabilitation assistance. CDBG monies
will be used to provide long-term loans (up to 20 years) at
interest rates between 3 percent (3%) and 11 percent (11%). The
actual rate will be determined by such factors as: the owner's
equity; rents to be charged after rehab; owner's return -on -
investment. To encourage maximum private sector investment, the
interest rate will be fixed at 3 percent (3'/.) for those owners who
invest at least 50 percent (50%) towards the total cost of
rehabilitation.
Program guidelines, selection criteria and administration will be
similar to the Overtown Multi -family Rehabilitation Loan Program
in order to achieve maximum program administrative efficiency.
Staff recommends that these program guidelines be adopted. Program
guidelines are attached.
DS:wh
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CITY OF MIAMI
CO�IMUN ITY DEVELOI'MEN'r TARGET AREAS
MULTI -FAMILY REHAB I1,ITATION WAN PROGRAM
GUIDELINES
PROGRAM PURPOSE AND OBJECTIVES
The Multi-Familv Rehabilitation Loan Program is designed to
assist owners of multi -family rental housing in Communitv
Development Target Areas by providing an opportunity to
rehabilitate their properties, thereby increasing the number of
standard and affordable rental housing units in the City of
Miami. The Program is also intended to assist in creating a
more positive climate for private sector reinvestment in those
neighborhoods.
DEFINITIONS
Appraisal - An estimate of the value of a property prepared by
a professional appraiser.
Dwellin Unit - A residential space containing at .; minimum, a
bathroom, kitchen or kitchenette and a living irea/bedroom.
EE _iit�ty�� - The current market value of the property less all
indebtedness secured by subject property, ie. mortgages, liens,
etc.
Income - The gross amount received t rom al 1 sources bv_ each
memTer of the household including all wages, pensions, social
security, interests, rents, dividends, etc.
Multi -Family Dwellin - A residential property containing five
or more dwelling units.
owner - The individual or group holding, valid legal title to
EFie --property .
Property Rehabilitation Standards (PRS) - The minimum standards
required for rehabilitation are the City of Miami Minimum
Housing Code and the South Florida Building Code, where
applicable.
Rehabilitation Loan - Funds advanced to the property owner in
the form ot a oan for the purpose of improving the property.
All such funds advanced are secured by a mortgage instrument.
Rent RegulatorRegulatorX Agreement - A written and recorded document
limiting theborrower's rate of return on investment and
establishing rent levels by unit size for a specified period of
time.
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Return on Investment - The percentage of net income returned
from the rehabilitation investment in relation to the owner's
equity in the property and the owner's dish investment in the
rehabilitation project.
Specifications and Cost Estimate - A statement based on a
pr perty inspection report itemizing all rehabilitation work
Lo he done on a property, including an estimate of the cost
to ropaLr/correcL each item.
PRDC CAM DESIGN
F
7
thin Community Development Target Are;ts, 'inancial assistance
11
IF
:i1 1 be :Wade available to owners of multi -family structures
in order to bring their properties up to the Property
Rch.ir. i 1 i tat i on Standards . Upon compl et i ,mi of rehabilLta t icon,
rant levels shall be subject to a duly recorded Rent Regulacor.v
.agreement for a specified period of time.
—
P 1'NAyC 1 N'G
-:ommunity Development Block Grant funds :ill be used to provide
_ direct low interest loans to owners of multi -family rental
property for rehabilitation financing.
Rehab iIitation Loan Tnterest - Direct loans will be made
avnT)e to finance eligible rchahilitati_cn costs. Loan
interest will be computed on a sliding scale between three (3°")
percent and ele\,en percent. The rate of interest will
be based upon: 1) 'The amount of direct financing provided by
the owner through private and/or other governmental sources;
2) thO rate of return on investment; 3) the proposed rent
schedule; and 4) the per unit rehabilitation cost. An owner
financing fifty (50",) per cent or more of the cost. of
rehabilitation from other public or p-rivate sources shall
rcc,2ive an interest rate of three ('3M per cent.
�(Tavmert Period - The loan repgymont tern shall be up to a
maximum o twenty (20) years. There is no penalty for prepayment
Of the loan balance.
Refinancin - The refinancing of existing mortgages may only
be con -tired as part of the total loan amoi.int in application;
submitted by not -for -profit housing cooperatives. Requests for
mortgage refinancing will be considered on an individual basis,
hased upon the extent to which such action will assist in the
fulfillment of the Program's objectives.
Funding and Management of Escrow Account - The City, at time
oL 5ing, will esta is an escrow acount for the borrower,
to provide construction financing.
1. Disbursements from the project escrow account will be
made for the following purposes:
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a) To make progress and final payments to the
contractor;
b) To pay expenses incidental to closing;
c) To close out the escrow account by appropriate
disbursing of unuti.lized funds remaining in the
account.
2. Progress Payments to contractor - Upon receipt of a
contractor's invoice for a progress payment, the City
shall determine if the work has been performed
satisfactorily, and draw payment from the escrow
account.
3. Final Pavments to contractor - When all �.aork is found
to be satisfactorily accomplished in accordance with
the specifications and upon receipt of all release of
liens, warranties, etc., the Cit,: will draw final
payment.
In the event of a dispute between the -,,)plicant 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 incl,.icie me(:i.at ion to the
protection of both the �IppIicant and t,1c contractor.
Mediation will be provided by the City who .ill inspect the
work and determine if it has been perfo rmed in accordance with
the contract and in a workmanlike manner. If the work has not
been completed properly, the contractor will be ordered to make
the necessary corrections before receiving final payment. If
the contractor does make corrections as requested and the
work is deemed satisfactory by the City, final pavment shall be
authorized to be disbursed to the contractor. 11, on the other
hand, the contractor fails to make the necessary corrections
prior to the expiration of his contract, the City shall assist
the applicant in obtaining another contractor to make the
corrections. Once corrections are made to the 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 payment shall only be made upon receipt
of the appropriate release of liens documents.
MANACI?MCNT
Applicants shall submit a management plan. Such plan shall
include a proposed form of lease. Also to be submitted is a
certification of no evictions without cause for a six (6) month
period prior to date of application.
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Rent Regulatory Agreement - A Rent Regulatory Agreement shall
e executed at time of loan settlement in order to limit the
rate of return to the borrower through increased rents caused
by the rehabilitation of the property. The maximum allowable
rate of return on investment will be twenty (20'.) percent. The
Agreement will be in effect over the first four years of the
loan, 'commencing upon completion of rehabilitation. The rent
schedule shall be based on the following criteria:
1. No displacement of existing tonants shall occ>>r due tn
an increase in rents above the tenants' affordability
range (i.e. over 30'. of gross family income).
2. Rents shall be established at levels commensurate with
prevailing rents for comparable units in the
neighborhood.
3. dotal net income shall represent a reason,,.ble return on
investment not to exceed twenty E 207,) per cent.
;4A I VERS
The Director of the Department of Community Development shall
have tho luthori.ty to waive any program requirement to further
the purposes and objectives of the Community Development Program
of the 'City of Miami.
PRQCRA.",l E iGTPI1.ITY
Eligible Properties - To be eligible under the program proposals
must meet t e toilowing criteria:
L. ?Multi -family dwellings, cooperatives and cundominiums.
2. Structures in substandard condition (not meeting
(P.R.S.).
3. Structures located wi.thi_n Community Development 'target
Areas.
I:: igi1-le ApplicantF-
1. The owner of the subject property.
2. Investor/owner (individual, not -for -profit corporation,
private corporation, partnership).
Eligible Improvements - Owners are required to make repairs to
meet the City ot Miami Mininum Housing Code and the South
Florida Building Code, where applicable. General property
improvements (non code required) may be undertaken to the
extent feasible.
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All applicable Federal, State and local Fair Housing, Labor,
Environmental and City-wide Ilistoric Preservation regulations
shall be a program requirement. _
Eligible Costs - The following items are eligible to be included in the rehabilitation loan:
1. The actual. cost of rehabilitation necessary to bring _
the property to the South Florida Building Code or the
City of Miami (,Iinimum Housing Code, as applicable. This
is the mandatory minimum work required for any loan.
2. The cost of rehabilitation to correct or remove
incipient violations, including all physical conditions
of the property which, if not repaired, would
deteriorate into actual violation of the P.R.S. within
two vears.
3. The cost of general property improvements (G.P.I.).
Such improvements shall not be the mrijor focus of the
loan, and will usually be Luss thr. :, forty (40�;) pc -::ent
of the cast of rehaH l i tatic�n. i . ['. I . ' ;; ITMV be included
only if the minimum improvements required 3re_, satisfied
first.
4. The cost of rehahi i.i tatic?'► to cuiIvert i nroperLv, if
�tll.owed by the City of Miami Zoning Ordinaricc, by
increasing or decre,ising the of units on the
property.
5. The cost of building permits and related fees required
to carry out the proposed rehabili.tatioll work.
6. A contingency reserve not to exceed 10`, of the cost of
rehabilitati.on.
REHABILLTATTON CRITERIA AND EVALUATION
Proposals shall he accepted during the .advertised submission
period. Submitted applications would ')e processed in the order
i.n which they are received, and will be evaluated and ranked
according to the following criteria:
1. Per unit rehabilitation cost (cost effectiveness) by
unit size and type.
2. Proposed rent schedule after rehabilitation by unit
size and type.
3. Utilization of funds from other government programs
such as Section 8 Moderate Rehabilitation Program,
Section 312 Loan Program, etc.
4. Portion of the rehabilitation cast to be financed from
_ private sources. .
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5. Impact of proposed rehabilitation upon adjacent
properties and the neighborhood Ln general.
6. Proposed project is in an area of concentrated
investment of community development funds.
7. No evidence of overt disinvestment on thc part of the
. property owner.
S. Owner's demonstrated management capabilities and
proposed management plan.
APPLICATION AND PROCESSTN , PROC'EDURT':S
l.i stL., below are the step-bv-step precedures to b` followed
for each application:
i. Interested applicants will. answer the RFP (placed in
newspapers of general circulation) by making an
appointment with Citv staff.
City staff will interview interested applicants and
will explain program requirements. Applicants willbe
provided with program guidelines and preliminary
application.
3. City staff will conduct an inspection of the subject
property and provide the applicant with a list of items
.j be repaired or replaced.
4. City staff will prepare construction proposal documents.
5. Applicant will obtain cost estimates from at least
three (3) licensed contractors.
6. City staff will review with the applicant the submitted
specifications and cost estimates to reach final.
agreement on the scope of rehabilitation and selection
of contractor.
7. City staff will calculate interest rate and portion
of the rehabil.itati.on cost to be financed through th,a
program.
8. City will prepare the Rent Regulatory Agreement and
the security instruments for the loan. These document
will be executed at loan closing and recorded.
9. City will establish an escrow account and will conduct
program inspections for progress payments and final
inspections. Progress and final payment draws will be
authorized by the City after inspections and disbursed
from the escrow account.
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