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HomeMy WebLinkAboutSubmittal09/08/2005 15:21 3054162090 CITY OF MiAMi eUMM ) rAilat 1:151 t.4 U.B. Department of Housing and Urban Development Region IV, Miami Field Office BrickellPlaza Federal Building 909 SE First Avenue, Rm. 500 Miami, FL 33131.3042 :$ DEC ON Mrs. Barbara Gomez -Rodriguez Director Department of Community Development City of Miami 444 S.W. 2nd Avenue, 2"d Floor Miami, FL 33131-3028 Dear Mrs. Gomez -Rodriguez: SUBJECT: On -site Monitoring Review City of Miami — Model City Homeownership Zone HOME/CDBG Program Our office has conducted a review of the City of Miami's Model City Homeownership Zone Prograrn to determine compliance with applicable laws and regulations, and your community's continuing capacity to carry out the project. Monitoring was conducted by Nora E. Casal, Community Planning & Development Representative, who made several visits to your office and met with you and members of your staff. Due to the severity of the issues of this project the primary area covered by our monitoring was overall The Mode] City Homeownership Zone Program which was funded with CDBG and HOME. Verification of compliance consisted of a review of the City's internal documentation, PBS and Ts Relocation Compliance Report, HUD IDIS system, and interviews with City staff. At the exit conference, the HUD monitors discussed the results of the review and provided the City an opportunity to comment on our initial conclusions. Enclosed are the conclusions of our review. Our evaluation resulted in seven (7) findings. A finding is a Federal violation that requires a response within 30 days from the date of this letter. If you do not understand the basis for the findings or are unable to comply with the corrective measures within the required time -frame, please contact our office for additional information. As part of our review it was determined that a total of $4,475,188.29 was spent on this project. Of the $4,475,188.29, a total of $3,230,619.21 was HOME funds and $1,244,569.08 was CDBG. The City has repaid its HOME line of credit $1,815,133.I5. The $1,415,486.06 in HOME funds plus the additional $1,244,569.08 in CDBG funds remains outstanding. www.t3ud.gov SUBMITTED INTO THE °'""°"�' PUBLIC RECORD FOR ITEMEtiv.10N os-Oaaaa 09/06/2005 15:21 3054162090 CITY OF MIAMI COMM D PAGE 04/11 Please note that a review of two land acquisition files are still pending. Athalie Range and Word of Life may have potential conflict of interest issues that this office is awaiting information fromyour office. Several phone calls and e:mails have been made to the city awaiting a response on this issue. The last information that was verbally communicated to this office was that the legal department had determined that one of the files had a possible conflict of interest. Please submit to this office the information requested on this within 10 days from the date of this lener. We are aware that the City has already initiated actions to address some of the issues raised in the monitoring report. Our office will continue to provide technical assistance as needed. Thank you for the courtesies extended to Ms. Nora E. Casal during the review. We appreciate your staff's cooperation and assistance. If you have any questions relating to the review. you may contact Ms. Nora E. Casal, Community Planning development Representative at (305) 536-5678 ext. 2224 or via e-mail at nora e. casahud.gov Sincerely M " - ' . • iz-Hill Director Community Planning and Development Division Enclosures 09(08/2005 15:21 3054162i i I L 1 Y Ut '1 J. 4I 1 1 t,UIWI U rfRac. oL♦ aL t 8 MAY 2005 U.S. Department of Housing and Urban Development Region IV, Miami Feld Office Brlckoll Plaza Federal Building 909 SE First Avenue, Rm. 500 Miami, FL 33131.3042 Barbara Gomez -Rodriguez, Director Department of Community Development City of Miami 444 S.W. rd Avenue, 24d Floor Miami, FL 33131-3028 SUBJECT: Model City Homeownership Zone Program Monitoring Follow-up Dear Mrs. Rodriguez: Received - City of Miami Dept. of Community Development MAY 26 2V5 DIRECTOR'S OFFICE On December 23, 2004 this office issued a monitoring letter on The Model City Homeownership Zone Project. The City requested a 60-day extension which elapsed on April 22, 2005. To date this office is not in receipt of a response from the City. This monitoring letter sanctioned the city and seven findings were made. A finding is a Federal violation that requires a response within 30 days from the date of this letter. A total of $4,475,17929 in HOME and CDBG funds were imposed on the City due to these findings. To date the city has paid back $1,815,133.15 in HOME funds. If you have any questions on this matter, please contact Nora E. Casal, or Leticia Ibarra, Community Planning and Development Representative at 305-536-4431. www.dud.Rov Sincerely, Matf"a R. Ortiz -Hill Director Community Planning and Development Division, 4DD espanoLbud.sov July 20, 2005 Barbara Gomez -Rodriguez, Director Department of Community Development City of Miami 444 S.W. 2e° Avenue, 2°d Floor Miami, FL 33131-3028 US. Department of Housing and Urban Development Region IV, Miami Field Office Stickel! Plaza Federal Building 909 SE Fist Avenue, Rm. 500 Miami, FL 33131.3042 Received City Dept of Community Development Miami evelopment JUL 22 20Qt DIRECTOR'S OFFICE SUBJECT: Model City Homeownership Zone Program Monitoring Follow-up Dear Mrs. Rodriguez: On December 23, 2004, this office issued a monitoring letter on The Model City Homeownership Zone Project. The City requested a 60-day extension, which elapsed on April 22, 2005. On May 23, 2005, our office sent a follow-up letter regarding this issue. To date this office is not in receipt of a response from the City. This monitoring letter sanctioned the city and seven findings were made. A finding is a Federal violation that requires a response within 30 days tom the date of this letter. A total of $4,475,188.29 in HOME and CDBG funds were unposed on the City due to these findings. The city has paid back $1,815,133.15 in HOME funds leaving a balance of $1,415,486.06. An additional $1,244,569.08 in CDBO remains outstanding. If you have any questions on this matter, please contact Leticia Matra, Community Planning and Development Representative at 305-536-5678 x2304. Sincerely, Director Community Planning and Development Division, 4DD 09/0B/2005 15:21 3054162090 CITY OF MIAMI COMM D rAut norm CITY OF MIAMI ON-STTE MONITORING REVIEW MODEL CITY WO ZONE PROGRAM I. HUD Staff Conducting the Review NoraE. Casai, CPD Representative IT. Persons Interviewed During the Review Barbara Gomez -Rodriguez, Director Community Development City of Miami Daniel Rosemond, Assistant Director Community Development City of Miami 09/08/2005 15:21 3054162090 CITY OF MIAMI COMM D PAGE 0b/i PURPOSE OF EVALUATION The purpose of this review was to conduct an assessment of the City's progress according to the stated goals and objectives of the approved Consolidated Plan as well as compliance with the Federal applicable regulations. The visit included: a) review of City's records and other documents related to the program, and b) interviews with City staff. FINDINGS, CONCERNS, AND CORRECTIVE ACTIONS: RELOCATION MANAGEMENT The purpose of this review was to verify the adequacy of the City's compliance with Displacement and Relocation regulations as required by 24 CFR 92.353. The assessment was based on HOME client files reviewed at the City of Miami, and Model City Revitalization Trust Relocation Compliance Report prepared by PBS & J. Finding No. I — Relocation procedures CONDITION: This Finding was initially discussed at a meeting on October 11, 2003. The City failed to follow all of the Relocation requirements when it acquired properties in the Model City area. Specifically, not all of the individuals involved were paid just compensation. As a consequence of this infraction, the City requested that it hire a consultant to locate these individuals although it had originally contracted a consultant to conduct this same activity. CRITERIA: The City is not in compliance with the requirements for applying all elements of the relocation standards as outlined in 24 CFR 92.353 (a)(c) and (d) which state that at a minimum, the following regulations should be followed when dealing with the above mentioned requirements: (a) Minimizing displacement. Consistent with the other goals and objectives of this part, the participating jurisdiction must ensure that it has taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted with HOME funds. To the extent feasible, residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary, and affordable dwelling unit in the building/complex upon completion of the project. (b) Temporary relocation. (c) Relocation assistance for displaced persons (d) Optional relocation assistance. (e) Residential antidisplacement and relocation assistance plan. (f) Real property acquisition requirements. (g) Appeals. 09/08/2005 15:21 3054162090 CITY OF MIAMI CDMM D PAC -it Of/12 CAUSE: It appears that staff on board at the time of the acquisition did not take the necessary steps needed to ensure all applicable regulations were followed. EPFEECT: The City did not take the necessary steps needed to ensure that all persons affected were assisted. This resulted in the City contracting with another Consultant (PBS & J) to make an assessment of the relocation issues, which lead to additional expenses towards the Model City Homeownership Project. CORRECTIVE ACTION: As part of this corrective action the city submitted a work plan. On May 19, 2004, in order to certify the accuracy of the steps taken to ensure compliance, the city provided this office with documentation certifying that the City is in compliance with the relocation of past displacces. A review of city records and the Relocation Compliance Report, determined that the City has taken the necessary steps in order to locate displaced persons and provide them with the opportunity to receive adequate benefits as required within the applicable relocation regulations. Based on the above, this Finding is cleared. The City. however, must ensure that any future activities that require relocation compliance meet all applicable rules and regulations. In addition, this office will continue to monitor the City's relocation policies on any future relocation activities. LAND AOCUISITION Finding No. 2 — Land Banking CONDITION: In the City of Miami's 1999 Consolidated/Action Plan the City proposed to develop over 1.000 new affordable housing units in the, first two years of the Five -Year Consolidated Plan. With the intent to build affordable housing, the city acquired several properties/vacant lots with HOME funds in the amount of $3,230,619.21. A total of 28 land acquisition files were reviewed. The exact number of properties were not able to be deciphered due to poor recordkeeping. These properties were purchased between Program Years 2000 through 2002 without starting construction within the subsequent 12 month period. (1) CRITERIA: The regulations at 24 CFR 92.2, in pan states "If the project consists of rehabilitation or new construction (with or without acquisition) the participating jurisdiction (or State recipient or subrecipient) and project owner have executed a written festally binding agreement under which HOME assistance will be provided to the owner for an identifiable project under which construction can reasonably be expected to start within twelve months of the agreement date. If the project is owned by the participating jurisdiction or State recipient, the project has been set up in the disbursement and information system established by HUD, and construction can reasonably be expected to start within twelve months of the project set-up date. (ii)(A) If the project consists of acquisition of standard housing and the participating jurisdiction (or State recipient or recipient) is acquiring the property with HOME funds, the participating jurisdiction (or State recipient or subrecipient) and property owner have executed a legally binding contract for sale of an identifiable property title will be 09/08/2005 15:21 3054162090 CITY OF MIAMI COMM D PAGE 8/12 transferred to the participating jurisdiction (or State recipient or subrecipient) within six months of the date of the contract.". CAUSE: It appears that the City's expectations of it's ability to acquire and construct homes within the time period described in the Consolidated Plan was not reasonable. EFFECT: The City has spent over $2 million for acquisition expenses which to date have not tnet the City's plan to develop affordable housing units for it's residents. The city purchased several properties with the intent of building affordable homes. The time that has transpired between land acquisition and commencement of construction due to delays is not within the twelve month period as defined in the regulations. As stated above, no identifiable project is under construction, thus converting the expenditure into an ineligible activity not meeting a national objective. As a result, HUD funds must be repaid. CORRECTIVE ACTION: The City submitted a letter stating that the City Commission has approved $1,815,133.15 from the Homeland Defense/Neighborhood Improvement Bond Oversight Board to refund its HOME line of credit for the acquisitions that transpired. Currently, a review of IDIS activity no. 815 is showing a total of $3,230,619,21 drawndown, of which $1,815,133.15 was paid back leaving a remaining balance of $1,415,486,06 to be paid back to the City's HOME line of credit. Additionally, the City should amend its Consolidated Plan and/or Annual Action Plan to reflect the cancellation/amendment of this project. The City has indicated that it plans to go forward initially with the construction of thirteen (13) single-family homes. Due to the city's poor recordkeeping the City should ensure that a system is in place to track the acquisition of real property, Please provide a copy of the City's system as soon the implementation of this system is completed and a report on properties acquired. Finding No. 3 — Properties acquired above Property value CONDITION: As part of the Model City Homeownership Zone Project, the City purchased several properties from Miami -Dade County's list of lands that far exceeded the assessed value. For example, the City purchased a property assessed at $938,000, and appraised for $825,000 but the City paid $995,905.21. To date these properties are still vacant and the city has not met its plan to develop affordable housing units for its residents. CRITERIA: The City is not in compliance with ensuring that it took the appropriate steps to determine reasonable costs as stated in OMB Circular No. A-87 C-2(axb)(cXd)e) Basic Guidelines — Reasonable costs which states "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when governmental units or components are predominantly federally -funded". CAUSE: The City did not make sound judgments on the purchase of these properties even though a memorandum dated December 21, 2000 from the City Attorney advised, "...that the outstanding real estate taxes/tax deed amount far exceeds the assessed value of several of the parcels. With regard to these parcels, eminent domain may be a preferable, less costly alternative for effectuating 09/08/2005 15:21 3054162090 CITY OF MIAMI COMM D PAGE 09/12 regard to these parcels, eminent domain may be a preferable, less costly alternative for effectuating the acquisition....". EFFECT: Due CO the City's negligence several properties were acquired above the assessed value and are still vacant. Consequently, the HOME program must be reimbursed for these expenditures. CORRECTIVE ACTION: Please provide assurance that the City has a system in place to assure cost reasonableness when making purchases. When the City complies with Finding 2, this Finding will be resolved. Finding No. 4 — Financial Records CONDITON: During the monitoring review, this office was unable to determine exactly what services were being reimbursed due to documentation not being in the file or available for review. The file only contained the City's "Request for Drawdown Only" form and no additional documentation, yet payment/reimbursement was made. CRITERIA: The City is not in compliance with the requirements outlined in 24 CFR 85.20 (6) under Source Documentation, which states that accounting records must be supported by such source documentation as cancelled checks, paid bill, payrolls, time and attendance records, contract and subgrant award documents, etc. CAUSE: The City did not have a system in place to ensure that appropriate disbursement of payments was made. EFFECT: The City paid for services that may or may not have been performed and thus deemed ineligible. CORRECTIVE ACTION: The City must implement a system for reimbursement that includes at a minimum, the requirements outlined in 24 CFR 85.20 (6) under Source Documentation. At a minimum all invoices should have the appropriate backup (support documentation) before payments are disbursed. ,PROCUREMENT Findine No. S — Procurement Process CONDITION: The City had no records to support the selection process of the professional services contracts (appraisers, consultants, etc.) utilized for the Model City's Project. Current staff indicated that the procurement process occurred prior to them corning on board. CRITERIA; The City of Miami is not in compliance with the guidelines as described in the regulations outlined in 24 CFR 85.36, Procurement. 09/09/2005 15:21 3054162090 CITY OF MIAMI COMM D PAGE 10/12 CAUSE: The City has indicated that the turnover of staff at the city caused there to "misplace" the documentation needed to ensure adequate procurement procedures were taken. EFFECT: Because of the violations the City did not ensure fair and open competition. CORRECTIVE ACTION: The City must ensure that the documentation is maintained to support the process taken on any procurement activity. This process must have at a minimum the applicable criteria as outlined in 24 CFR 85.36 (a) through (i). The city should provide a copy of its procurement process in place at this time, PROFESSIONAL SERVICES Finding No. 6: CONDITION: A review of the city's vouchers on professional services disclosed several activines that are questionable regarding eligibility and/or meeting a national objective. For example, the city paid a consultant to conduct an assessment of Charter Schools as part of the Model City Homeownership project which is not related to affordable housing. In another case a consultant was hired to perform "specialized defined tasks for the Model City Trust" which includes "Lobbying efforts for the pursuit of any state or federal legislative items...". This clearly is another example of why funds have to be repaid regarding the City not meeting a national objective. CRITERIA: The City of Miami is not in compliance with the regulations outlined in 24 CFR 570.207 Ineligible activities "The general rule is that any activity that is not authorized under the provisions of §570.201-570.206 is ineligible to be assisted... In addition, the regulations at 24 CFR 92.214 Prohibited activities (a)(9) "HOME funds may not be used to... Pay for any cost that is not eligible under §92.206 through 92.209". Also, OMB Circular No. A-87 (CXa) 1. Factors affecting allowability of costs. "To be allowable under Federal awards, costs must meet the following general criteria. (a). Be necessary and reasonable for proper and efficient performance and administration of federal awards..". CAUSE: it appears that the City of Miami was paying/reimbursing for items that do not appear to be eligible and/or necessary for the type of activity that was being pursued with the Model City Homeownership Project. Although the City's intent was to provide affordable housing for low income persons, the only persons who benefited from this activity was the providers of the professional services. EFFECT: Due to the City's negligence in assuring that activities were eligible the City paid for ineligible activities and consequently those expenditures must be repaid. CORRECTIVE ACTION: The City disbursed S 1,244,569.08 (Activity 1123) since 2002 through 2003 on professional services that have not created any affordable housing or met a national objective. This office is requesting reimbursement of all funds expended on professional services, with the exception of the funds spent on the relocation assessment conducted by PBS & 3. 09/08/2005 15:21 3054162090 CITY OF MIAMI COMM D rAUL 11/1L This finding will be cleared upon evidence that the City has reimbursed its line of credit to the appropriate program accounts. SUBRECIPIENT AGREEMENTS Finding No. 7— Ititer-logal Agreement between the City of Miami and the Model City Community Revitalization District Trust CONDITION: Several phone conversations and meetings have transpired between City of Miami, Model City Trust, and HUD to discuss an agreement with the Model City Trust based on an existing inter -local agreement between the City of Miami and The Model City Trust. As a result a letter was sent to the City of Miami dated January 28, 2004 advising the City of the minimum provisions required for a sub -recipient agreement since the Inter -local agreement did not contain the required provisions. The regulations specify that the City must enter into an agreement with an entity before disbursing any CDBO or HOME funds. To date the city has not provided evidence of an agreement. The City's records indicate that there was a subrecipient relationship between the City and the Model City Trust yet no subrecipient agreement exists to allow the disbursement of CDBG or HOME funds. CRITERIA: The City of Miami is not in compliance with the regulations outlined in 24 CFR 92.504 and 24 CFR 570.503. Sec. 92.504 Participating jurisdiction responsibilities; written agreements; on -site inspection, states "Thc participating jurisdiction is responsible for managing the day to day operations of its HOME program, ensuring that HOME funds are used in accordance with all program requirements and written agreements, and taking appropriate action when performance problems arise. The use of State recipients, subrecipients, or contractors does not relieve the participating jurisdiction of this responsibility. The performance of each contractor and subrecipient must be reviewed at least annually. (b) Executing a written agreement. Befo disbursing any HOME funds to any entity, the participating jurisdiction must enter into a written agreement with that entity. Before disbursing any HOME funds to any entity. a State recipient, subrecipient, or contractor which is administering all or a part of the HOME program on behalf of the participating jurisdiction, must also enter into a written agreement with that entity. The written agreement must ensure compliance with the requirements of this part". The contents of the agreement may vary depending upon the role the entity is asked to assume or the type of project undertaken. However, please be advised of the following minimum provisions that must be included: (I) Use of HOME funds. The regulations at 24 CFR 92.504 outlines the city's responsibility's to ensure written agreements contain at least the minimum requirements. They include the following: I. Program Income 2. Uniform administrative requirements. 3. Other program requirements. 4. Affirmative marketing. 5. Requests for disbursement of funds. 09/08/2005 15:21 3054162090 CITY OF MIAMI COMM D PAGE 1'1/12 6. Reversion of assets. 7. Records and reports 8. Enforcement of the agreement. If the subrecipient provides HOME funds to for -profit owners or developers, nonprofit owners or developers, subrecipients, homeowners, hornebuyers, tenants receiving tenant -based rental assistance, or contractors, the subrecipient must have a written agreement which meets the following: 1. Affordability. 2. Project requirements. 3. Property standards. 4. Other program requirements. 5. Records and reports. 6. Enforcement of the agreement. 7. Requests for disbursement of funds. 8. Duration of the agreement. 9. Conditions for religious organizations. CFR 24 Part 570.503 also specifies that " before disbursing any CDBG funds to a subrecipient, the recipient shall sign a written agreement with the subrecipient...". The following minimum requirements must be contained in an agreement: 1. Statement of work 2. Records and reports. 3. Program income. 4. Uniform administrative requirements. 5. Other program requirements. 6. Conditions for religious organizations. 7. Suspension and termination. 8. Reversion of assets. CAUSE: The City was not clear as to the minimum requirements of a subrecipient agreement as is relates to an inter -local agreement. EFFECT: The City is in violation of the regulations due to the fact that they did not execute a written agreement that included the required provisions. CORRECTIVE ACTION: The City of Miami must ensure that a written agreement is executed before disbursing funds to an entity. In regards to this finding the City has expressed its intention of amending its Plan of building 1000 homes. Please submit to this office the City's proposal of building single-family homes for low and moderate -income persons in that area. This Finding will remain open until an activity is completed and a national objective has been met.