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HomeMy WebLinkAboutExhibit•. City of Miami action Flan FY2008-2009 City of Miami Depertnent of Community Development NSP SubstantialAmendment # 2008.1 December,1, 2008 THE NSP SUBSTANTIAL AMENDMENT Jurisdiction(s): City of Miami Jurisdiction Web Address: www.miamiowcom/communitydevelopment/ pages/reports A. AREAS OF GREATEST NEED NSP Contact Person: George Mensah Address: 444 SW 2 Avenue, 2 Floor Miami, FL 33130 Telephone: 305-416-1978 Fax: 305-416-2090 Email: gmensah@miamigov.com The Neighborhood Stabilization Program ("NSP") was created to provide emergency assistance to state and local governments to acquire and redevelop foreclosed upon properties that might otherwise become sources of abandonment and blight within our communities. The NSP provided a grant to the City of Miami ("City") to purchase foreclosed upon or abandoned homes and to rehabilitate, redevelop and resell, these properties in order to stabilize neighborhoods and stem the decline of house values of neighboring homes. This program is authorized under Title 111 of the Housing and Economic Recovery Act ("HERA") of 2008. The City was awarded $12,063,702 in Community Development Block Grant ("CDBG") dollars to implement this new program. In response to the unveiling of this new federal program, the City conducted a special Housing -Market Foreclosure Assessment' to identify those areas most affected by the current housing crisis. The first factor taken into consideration was the geographical distribution of home foreclosure proceedings within the City as illustrated in Graph 1 below. Note that the number of proceedings is fairly balanced and scattered across City boundaries showing that the housing foreclosure problem is spread over the entire City and not only in certain pockets as it was originally thought. In addition, the City plotted census block information where the total number of homes financed by sub -prime mortgages exceeded 50 percent of the total number of loans issued for the area (Graph 2). In this case, we found that the sub -prime market is indeed located in areas of lower economic prosperity were predatory lending is usually found. This new information coupled with a third dataset composed of a combination of factors including fallen home values, unemployment rate, percentage of loans that are of high cost, and the number of addresses vacant for at least 90 days assisted the City in defining the "Areas of Greatest Need" (Graph 4). 1 The data file for this study was obtained from HUD's website at www.huduser.orq/. The City utilized the "Estimated Foreclosure Abandonment Risk Score" to assess the high or low risk for a neighborhood to have foreclosed and/or abandoned homes, Federal Reserve Home Mortgage Disclosure Act ("HMDA") data regarding sub -prime mortgage loans made between 2004 through 2006, and data on on -going foreclosure procedures within the City to arrive to its conclusions. Graph 1. - Properties undergoing foreclosure proceedings. City of Miami Foreclosure Status Legend • Le PCMGns • Salk Owned Graph 2. - Areas with high concentration of Subprime mortgages. Homes Finanaced by Subprime Mortgages Legend CO Tracts with nare than 50% High Cost Loans (HCL) FY2008-2009 Action Plan Amendment Amendment # 2008.I 2 FY2008-2009 Action Plan Amendment Amendment # 2008.1 Graph 3. - Foreclosure Risk Levels based on home values, unemployment rate, % of high cost loans. Foreclosure Risk Levels City of Miami vr- .- �T may-- aJ `i ri::1_i_I:_L..�it Legend Foreclosure Risk Levels 6 -, rim 9 r ra Foreclosure risk is rated 1 to 10 (10 representing t0 0 highest level based on fallen home values, unenlplo/anent rate, percentage of bans that are high cost bans, and the number of addresses vacant for at least 90 days. Graph 4. - Areas of Greatest Need based on foreclosure risk levels, concentration of sub -prime mortgages, and foreclosure statuses. City of Miami Areas of Greatest Need 1'I Legend Foreclosure Risk Level 6 • us needens 7 • gunk Owned LJ6 9 eywri • rae' . u — to ® Tracts with more than 50% High Cost Loans (HCL) Foreclosure risk is rated 1 to 10 (10 representing the highest level based on fallen home values, unemployement rate, percentage of bans that are high cost bans, and the number of addresses vacant for al least 90 days. 3 FY2008-2009 Action Plan Amendment Amendment 0 2008.1 Statistics show South Florida as one of the top 5 regions in the United States that was hit the hardest by the current housing foreclosure and financial crises. Within the past five years, property values sky rocketed as a result of a buying frenzy inspired both by investors trying to take advantage of appreciating housing market conditions and of homebuyers eager to be able to share in part of the American dream at any cost, lured by attractive, but deceiving financial instruments private lenders set in place to profit from the appreciating market. These facts paired with a large sub -prime mortgage loan market and a stagnant economy with high unemployment rates contributed to the large number of foreclosure proceedings we encounter today in the City of Miami. Many homeowners found themselves with mortgages that exceeded the equity on their properties. Based upon the data and projections utilized, arguably, over 95% of the City of Miami could be considered under "great need" for some financial relief: Nevertheless, it is clear that the concentration of high foreclosure risk factors, sub -prime mortgage loans, and actual cases under foreclosure proceedings is located north of the Miami River as illustrated in Graph 4 above. As such, the City has catalogued this area and other pockets around the City that show similar trends as the "Areas of Greatest Need." These areas will be targeted by the City and will be given priority in the allocation of NSP funding. Table '1.below shows the census tracts and census blocks that comprise the Areas of Greatest Need. Table 1. - Areas of Greatest Need Census Percent of Low, Census Low/Mod Low, Block People <= Mod, Block - Population Mod, Group 120 AMI Middle Group - Middle Eligible Eligible 1401.4 81.0% YES 1401.5 94.3% YES 1401.6 93.0% YES 1402.1 90.8% YES 1402.2 89.0% YES 1402.3 100.0% YES 1501.1 92.9% YES - 1501.2 98.3% YES 1501.3 96.5% YES 1501.4 r 100.0% YES 1703.1 87.0% YES 1703.4 92.2% YES 1802.1 75.9% YES 1802.2 81,0% YES 1802.3 80.3% YES 1901.1 97.5% YES 1901.2 86.0% YES 1901.3 94.3% YES 1901.4 78.8% YES 1901.5 92.0% YES 1903.4 86.3% YES 1903.5 93.0% YES 1903.6 96.2% YES 1903.7 98 2% YES 1904.1 91.8% YES 1904.2 90.7% YES 2500.1 2500.2 2500.3 2500.4 2500.5 2600.1 2600.2 2600.3 2600.4 2800.1 2800.2 2800.3 2900.1 2900.2 2900.3 3003.1 3003.2 3003.3 3004.1 3004.2 3100.1 3100.2 3100.3 3400.1 3400.2 3400.3 78.5% YES 94.0% YES 79.6% YES 87.6% YES 27.3% NO 96.3% YES 89.7% YES 93.6% YES 98.0% YES 98.5% YES 14.0% NO 97.8% YES 60.3% YES 74.7% YES 60.3% YES 93.8% YES 91.2% YES 88.1% YES 72.8% YES 92.9% YES 91.5% YES 73.0% YES 93.0% YES 97.0% YES 98.9% YES 56.5% YES 4 FY2008-2009 Action Plan Amendment Amendment # 2008.1 1904.3 91.4% YES 3400.4 83.0% YES V_ 1904.8 87.2% YES 3601.1 98.0% YES 2001.1 93.6% YES 3601.2 99.7% YES 2001.2 90.4% YES 3601.3 100.0% YES %2001.3 83.4% YES 5001.1 75.1 % YES 2001.4 94.9% YES 5001.2 81.6% YES 2003.3 89.2% YES 5001.3 72.4% YES 2003.4 96.4% YES 5001.4 83.9% YES 2004.1 93.0% YES 5001.5 71.9% YES 2004.2 90.7% YES 5001.6 67.8% YES 2202.1 80.3% YES 5002.1 86.9% YES 2202.2 82.7% YES 5002.3 82.5°/o YES 2202.3 90.4% YES 5100.1 87.5% YES 2202.4 67.5% YES 5100.2 82.6% YES 2202.5 72.5% YES 5100.3 75.2% YES 2202.6 82.5% YES 5100.4 88.5% YES 2300.1 78.2% YES 5100.5 95.5% YES 2300.2 83.9% YES 5100.6 84.8% YES 2300.3 78.2% : YES 5401.1 89.9% YES 2300.4 81.3% YES 5401.2 85.4% YES 2300.5 90.8% YES 5401.3 ' 86.1 % YES 2300.E 93.0% YES 5401.4 79.3% YES 2401.1 84.6% YES 5401.5 • 89.8% YES 2401.3 97.3% YES 7200.1 64.4% YES 2401.4 91.6% YES 7200.2 89.3% YES • 2401.5 86.8% YES Source. HUD NSP data Table 1 above shows the census block' groups where more than 51 percent of the population in the area had incomes at or less than-120% of the Area Median Income (2000). This dataset assisted City staff to evaluate the eligibility of the census block's area benefit for low-, moderate - and middle income households:' 5 FY2008-2009 Action Plan Amendment Amendment # 2008.1 B. DISTRIBUTION AND USES OF FUNDS HUD's definition of an assisted household is "one that will receive benefits through the investment of federal funds, either alone or in conjunction with the investment of other public or private funds." A renter is benefited if the household or person takes occupancy of affordable housing that is newly acquired, newly rehabilitated, or newly constructed, and/ or receives rental assistance through a budget authority. A homebuyer is benefited if a home is purchased during the year. An existing homeowner is benefited if the home's rehabilitation is completed. Under all of these three scenarios of assistance, the dwelling unit must, at a minimum, satisfy Housing Quality Standards. One of the major challenges the City faces for the successful implementation of this program is household eligibility. Financial institutions are being more fiscally conscious when issuing new mortgage loans after witnessing the collapse of global financial markets in recent days due in part to the housing crisis the country is experiencing sparked by the overwhelming amount of bad debt accumulated. The NSP target market makes it even more challenging as the City deals with a clientele whose income levels make homeownership difficult to attain. The current financial crisis adds an additional tier to the already complex task the City has. Creative methods of leveraging and layered financing have allowed the City to be successful in offering programs that allow for low -to moderate -income families to achieve the American dream of homeownership. Solid partnerships with private lenders helped the City build the foundations for programs that provide lasting, life -changing events for our residents, such as owning their own house for their well being and that of their children. The success of the City's current First Time Homebuyer program is reflected in the fact that only one homebuyer out of over 300 residents who received assistance through the program in the past 5 years endured foreclosure proceedings due to a death in the family. NSP funds will be distributed through the implementation of five different strategies that cover different areas of housing and address both the rental and the homeownership market. The City is confident that a combination of these strategies will provide much needed relief to City neighborhoods most affected by the foreclosure crisis. Additionally, the City will work in conjunction with the private ncll public sectors to fine-tune such strategies to ensure an efficient. implementation of the NSP program. To be effective, strategies need to be well defined and target a specific clientele. The City recognizes that not all strategies are going to be effective to all income levels; as such, the implementation of different strategies, for renters and ready -to -be homeowners, is what will create the right balance and permit the City to assist more low-, moderate-, and middle -income residents. The City is firm in its commitment to affordable housing and clearly understands and accepts its role in the implementation of the NSP program. As such, it has taken a pro -active approach and has projected its efforts through different strategies that will benefit the ones that need housing the most while stabilizing neighborhoods in the process. Priority in applying these strategies will be placed in the areas identified as of "greatest need". Currently, the Department of Community Development is in the process of gathering data and information regarding abandoned and foreclosed upon homes in those areas and it is bringing aboard a specialized team of industry professionals to assess, negotiate, manage, and monitor the progress of the NSP program. Along with a team of City underwriters, inspectors, and housing managers, the City is moving forward with the implementation of this program as the timeframe for committing NSP dollars is very demanding. Comment [GM1]: Let's rewrite this paragraph since it defeats whatever we have to say about our strategies FY2008-2009 Action Plan Amendment Amendment # 2008.1 The City will implement the following activities, or a combination thereof, in order to provide housing opportunities to low-, moderate- and middle- income households and to maintain or improve the value of properties in the areas of greatest need. Table 2 shows the estimated amount of funding allocated to each strategy and the estimated number of units that will result from the successful completion of each activity. Table 2. — NSP activities to be implemented Activity/ Strategy Estimated Estimated Amount Units A. Establish financing mechanisms for purchase and redevelopment of $2,100,000 21 foreclosed upon homes and residential properties. 1. Equity sharing program 2. Down payment assistance program B. Purchase and rehabilitate homes and residential properties that have $4,500,000 90 been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties. C. Establish land banks for homes that have been foreclosed upon, $2,851,000 38 D. Demolish blighted structures. $700,000 Included under strategy "C" E. Redevelopment of demolished or vacant properties. $706,332 5 Administration $1,206,370 TOTAL: C. DEFINITIONS AND DESCRIPTIONS Blighted Structure $12,063,702 154 Policy LU-1.2.1 of the City of Miami's Comprehensive Plan defines "blighted neighborhoods' as areas characterized by the prevalence of older structures with major deficiencies and deterioration, high residential vacancies, widespread abandonment of property, litter and poor maintenance of real property. In addition, Slum is defined by Florida Statutes as an area which there is a predominance of buildings, residential or commercial; that are either deteriorated, dilapidated or by reason of obsolescence, is a detriment to the public health, safety, morals, or welfare. Florida Statutes define "blight" as an area determined by the local government to have the characteristics of a slum area or one or more of the following characteristics: 1. Predominance of defective or inadequate street layout. 2. Faulty lot layout in relation to size, adequacy, accessibility, or usefulness. 3. Unsanitary or unsafe conditions. 4. Deterioration of site or other improvements. 5. Inadequate and outdated building density standards. 6. Tax or special assessment delinquency exceeding the fair value of the land. 7. Inadequate transportation and parking facilities; and 8. Diversity of property ownership or defective or unusual conditions of title. The City uses a combination of the two definitions above to define a "blighted structure." 7 FY2008-2009 Action Plan Amendment Amendment 1 2008.1 Affordable Rents The City defines "affordable rents" as rental payments that do not place unnecessary burden to households. The City of Miami will use HUD's income and rent limits which are updated on an annual basis to ensure that housing provided through the NSP program is affordable. Affordable means that monthly rents or mortgage payments including taxes and insurance do not exceed 30% of the monthly gross income of eligible households as indicated in the table below: Table 3. - Affordable Rents Household Income Level Affordable Rents Low Income and below Moderate Income Middle Income AM/ = Area Median Income Equal to 30% of the FY2008 Income Limits for 50% of HUD AMI Equal to 30% of the FY2008 Income Limits for 80% of HUD AMI Equal to 30% of the FY2008 Income Limits for 120% of HUD AMI However, for a homebuyer, the City will not limit an individual household's ability to devote more than 30 percent of its income for housing, if the mortgage lender(s) is satisfied that the household can afford mortgage payments in excess of the 30 percent benchmark. In such a situation, the total monthly debt obligation as a percentage of monthly 'income cannot be more than 45 percent. In the case of rental housing, the City will ensure that rents do not exceed those rental limits adjusted for bedroom size. Affordability Period The City will ensure that NSP-assisted properties remain affordable to households with incomes IO or below 120 percent of AMI. The City will adhere to, HOME program standards at a minimum and may choose to apply longer affordability periods for some of its strategies. The City monitors affordability of all its projects and activities on an annual basis and ensures that housing units that were assisted with federal funding remain affordable for the full affordability period. Housing Rehabilitation Standards For rehabilitation purposes, all materials and workmanship shall conform to the requirements of the South Florida Building Code. In addition, the Department of Community Development ensures that all repairs necessary to bring the house to a decent, safe, and sanitary condition are performed Foreclosed A property "has been foreclosed upon" at the point that, under state or local law, the mortgage or tax foreclosure is complete. HUD generally will not consider a foreclosure to be complete until after the title for the property has been transferred from the former homeowner under some type of foreclosure proceeding or transfer in lieu of foreclosure, in accordance with state or local taw. Comment [GM2J: Lets be specific with the affordability period. FY2008-2009 Action Plan Amendment Amendment 2003.1 Abandoned A home is abandoned when mortgage or tax foreclosure proceedings have been initiated for that property, no mortgage or tax payments have been made by the property owner for at least 90 days, AND the property has been vacant for at least 90 days. Current market appraised value The current market appraised value means the value of a foreclosed upon home or residential property that is established through an appraisal made in conformity with the appraisal requirements of the URA at 49 CFR 24.103 and completed within 60 days prior to an offer made for the property by a grantee, sub -recipient, developer, or individual homebuyer. Land Bank A land bank is a governmental or nongovernmental nonprofit entity "established, at least in part, to assemble, temporarily manage, and dispose of vacant land for the purpose of stabilizing neighborhoods and encouraging re -use or redevelopment of urban property. For the purposes of the NSP, a land bank will operate in a specific, defined geographic area.- It will purchase properties that have been abandoned or foreclosed upon and maintain, assemble, facilitate redevelopment of, market, and dispose of the land -banked properties. If the land bank is a governmental entity, it may also maintain abandoned or foreclosed property that it does not own, provided it charges the owner of the property the full cost of the service or places a lien on the property for the full cost of the service. 9 FY2008-2009 Action Plan Amendment Amendment N 2008.1 D. LOW INCOME TARGETING The estimated amount cif funds appropriated or otherwise made available under the NSP to be used to purchase and redevelop abandoned or foreclosed upon homes or residential properties for housing individuals or families whose incomes do not exceed 50 percent of area median income is approximately $4,500,000. This amount equals to about 37.3 percent of funds allocated for households whose incomes do not exceed 50 percent of area median income. In this way, the City will be meeting the statutory requirement by allocating over 25 percent of NSP funding toward housing individuals and families whose income do not exceed 50 percent of area median income. Activity/ Strategy Estimated Target Low Amount Income A. Establish financing mechanisms for purchase and redevelopment $2,100,000 Partially of foreclosed upon homes and residential properties. 1. Equity sharing program 2. Down payment assistance program B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties. C. Establish Land banks for properties that have been foreclosed upon. D. Demolish blighted structures. E. Redevelopment of demolished or vacant properties. F. Administration 4,500,000 Yes 0 $700,000 No $706,332 No $1, 206, 370 $2,851,000 Total NSP Funding $12,063,702 For more detailed information regarding the activities/ strategies listed above, please refer to Section G in this amendment. E. ACQUISITIONS & RELOCATION All acquisitions made by the City of Miami will follow and meet all federal requirements for acquiring properties utilizing federal funds and will comply with all of the Uniform Relocation Act mandates. The City of Miami will take all precautions not to demolish any low- and moderate - income housing unit as these types of projects usually involve relocation costs, which would divert funding from other activities that could potentially achieve similar or better results without having to involve occupied low -and moderate -income housing or any public housing structures. However, should it become necessary for the City to demolish such housing, all eligible residents will be relocated in accordance with Section 104 or the Uniform Relocation Act. 10 FY2008-2009 Action Plan Amendment Amendment N 2008.1 F. PUBLIC COMMENT The Department of Community Development duly advertised to the general public through a newspaper of general circulation the availability of the NSP substantial amendment and solicited comments from City residents. The comment period, as defined by NSP regulations, is of 15-days. As of today, no comments have been received. The NSP substantial amendment was available through the Department's website and at the offices of the Department of Community Development located at 444 SW 2 Avenue, 2 Floor, Miami, FL 33130 from October 29, 2008 to November 13, 2008. 11 FY2008-2009 Action Plan Amendment Amendment # 2008.1 G. NSP INFORMATION BY ACTIVITY Strategy "A" Establish financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential properties: Providing or improving permanent residential structures that will be occupied by a household whose income is at or below 120% of area median income (LMMH). (2) Activity Type: Providing or improving permanent residential structures that will be occupied by a household whose income is at or below 120% of area median income. (3) National Objective: LMMH (4) Projected Start Date: February 2009 (5) Projected End Date: August 2010 (6) Responsible Organization: City of Miami Department of Community Development 444 SW 2 Avenue, 2 Floor, Miami, FL 33130 Contact Information: Alfredo Duran, Deputy Director Phone* 305-416-2080; email: aduran@miamigov.com (7) Location Description: Areas of Greatest Needs and other areas within City limits as determined by the Department of Community Development. (8) Activity Description: This strategy shall provide homeownership opportunities within the location description defined above. The, City wilt be targeting households who do riot exceed 120% of the area median income adjusted for family size: The City realizes that there may be households that may not qualifyfor this strategy as they may be affectedby the current tighter financial restrictions imposed by private lending institutions. 1) Equity Sharing Program Provide shared -equity investment of, no less than 20% of the purchase price to homebuyers purchasing a property in the City of Miami. The buyer locates an abandoned and/ or foreclosed upon residential property within City limits, meets with the bank holding title to the property and utilizes private lenders to be pre -qualified for a mortgage loan. The City of Miami inspects the property to ensure compliance with housing standards and underwrites the shared -equity investment based on all financial commitments provided to the homeowner. The City will process applications on a first - come, first -ready, first -serve basis taking in consideration any pre -established priority based on the "Areas of Greatest Need" assessment. If the City of Miami inspector determines that the property has code violations and/or is not meeting Housing Quality Standards as per 24 CFR 982.401, then the property must be purchased AND rehabilitated through the City's NSP-funded rehabilitation program before the buyer can start occupying such property. 2) Down Payment Assistance Program Provide zero percent (0%) deferred loans to homebuyers purchasing a property in the City of Miami. The buyer locates an abandoned and/or foreclosed upon residential 12 FY2008-2009 Action Plan Amendment Amendment W 2008.1 property within City limits, meets with the bank holding title to the property and utilizes private lenders to be pre -qualified for a mortgage loan. The City of Miami inspects the property to ensure compliance with housing standards and underwrites the loan based on all financial commitments provided to the homeowner. The City will process applications on a first -come, first -ready, first -serve basis taking in consideration any pre -established priority based on the "Areas of Greatest Need" assessment. If the City of Miami inspector determines that the property has a code violation(s) and/or is not meeting the safe, sound, and sanitary standards, then the property must be purchased and rehabilitated through a City program before the owner can start occupying said premises. The following are eligibility requirements that apply to both the Equity Sharing and the Down Payment Assistance Programs described above. Eligible Properties: Abandoned or foreclosed upon single family residences, townhomes, and/ or condominiums. The property must be located within the City of Miami and must meet Housing Quality Standards as per 24 CFR 982.401. If the property is not meeting such standards, the property must undergo rehabilitation under the NSP-funded rehabilitation program. Eligible Buyers: The household income must be less than or equal to 120% of HUD's Area Median Income, adjusted for family size; the buyer must be able to afford a monthly payment based on income and debt; and the buyer must contribute at least $500 of personal funds toward the downpayment/ closing, costs, The buyer must not hold title to another residential property at time of closing. Sales Price: Homes must be purchased at a discount from the current market appraised value of the property, taking into consideration its current condition. The appraisal shall be completed within 60 days prior to an offer made for the property by the homebuyer. Loan Terms (Down Payment Assistance Program Only): The maximum amount of assistance shall be the amount necessary to meet the lender's underwriting criteria. The Loan will carry a 0% non -amortizing rate for a 30-year deferred payment period Payment of principal will be forgiven at the end of maturity period provided that the homeowner resided in the house as their primary residence. Security: The loan will be secured by a mortgage on the property. First Mortgage Restrictions: Term of the loan must be 30 years. fixed interest rate & cannot exceed more than 150 basis points over Freddie Mac's weekly average 30-year rate, as published in the Primary Mortgage Market Survey ("PMMS"); no prepayment penalties; Total percentage charged for Discount, Origination & Broker fees must not exceed 2 points; all other lending fees must be reasonable and cannot exceed $500 or 0.5% of the loan amount, whichever is less. Resale Restrictions: If the owner sells and/ or transfer the house prior to the end of the City's mortgage term, the following provisions will apply: 1. The sale of the property must be pre -approved by the City, and the new buyers must meet the program's income limits in effect at the time AND the sales price must not 13 (9) FY200S-2009 Action Plan Amendment Amendment tl 2008.1 exceed the maximum affordable sales price in effect at the time. 2. Applicable to Down Payment Assistance Program Only. For any "early" sale or transfer2, the City shall share in any gain realized, based on its pro -rated share of participation in the original purchase. Furthermore, if the sale occurs within the first 3 years, the City shall keep 100% of its pro -rated share of the "gain", from year 3 up to year 20, the City's share of its pro -rated "gain" shall decrease by 5% every year, while in turn, the owner's share shall increase by 5% each year. At year 20 up to the City's loan maturity, the owner shall retain 100% of the City's gain. 3. Applicable to the Equity Sharing Program Only. For any "early" sale or transfer', the City shall share in any gain realized, based on its pro -rated share of participation in the original purchase. 4. The above shared gain proposal terminates in the event of a foreclosure, with the lender required to provide the City the right of first refusal to purchase the loan at a negotiated price. In the case of a foreclosure, the City will recapture any amount of net proceeds available for the sale of the property4. These same restrictions apply to the Equity Sharing Program. NSP-Funded Rehabilitation Program The objective of this program is to prevent moderately declining neighborhoods in the City from further deteriorating by supporting the principles by which the NSP program was created and by providing an avenue to achieve decent, safe, and sanitary conditions. Eligible rehabilitations All repairs necessary to bring the house to a decent, safe, and sanitary condition. Eligible properties Abandoned or foreclosed upon single family residences, townhomes, and/ or condominiums with a buyer applying through Strategy A.1 or A.2 as explained above. The property must be located within the City of Miami. Total Budget: $2,100,000 (10) Performance Measures: 21 Housing units The following are projected numbers. The City will try to target this program to all income levels with the understanding that will be extremety challenging to have a low- income (or below) household, under current financial conditions, qualify for a mortgage loan. Strategy "B" Income Level Projected Housing Units Less than 50 percent AN 1 Between 51-80 percent AMI 5 Between 81-120 percent AM! 15 'Any pro -rated share of participation (program income) received prior to July 30, 2013 shall be reinvested on NSP eligible activities. If the program income is realized after July 30, 2013, such gain shall be returned to the treasury. Any pro -rated share of participation (program income) received prior to July 30, 2013 shall be reinvested on NSP eligible activities. If the program income is realized after July 30, 2013, such gain shall be returned to the treasury. ° Any pro -rated share of participation (program income) received prior to July 30, 2013 shall be reinvested on NSP eligible activities. If the program income is realized after July 30, 2013, such gain shall be returned to the treasury. 14 FY2008-2009 Action Plan Amendment Amendment # 2008.1 Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties. (2) Activity Type: Providing or improving permanent residential structures that will be occupied by a household whose income is at or below 120% of area median income. (3) National Objective: LMMH (4) Projected Start Date: February 2009 (5) Projected End Date: August 2010 (6) Responsible Organization. City of Miami Department of Community Development 444 SW 2 Avenue, 2Floor, "Miami, FL 33130 Contact Information: Alfredo Duran, Deputy Director Phone #: 305-416-2080; email: aduran@miamigov.com (7) Location Description: Areas of Greatest Needs and other areas within City limits as determined by the Department of Community Development. (8) Activity Description: Purchase and Rehabilitation Program of Multi -Family Units This program allows for the City to purchase5jpi provide assistance fully or in partially for the purchase of abandoned and/or foreclosed upon multi -family structures and rehabilitate them, if necessary, to meet the requirements of the South Florida Building Code. This activity may be designated as a rental activity, homeownership activity or a combination of both. All units, or a pro-rata share of them, shall be rented to low income families whose income does not exceed 50% of HUD's Area Median Income adjusted for family size. (9) Total Budget: $4,500,000 (10) Performance Measures: 90 Housing units The following are projected numbers. The City will target this program to low and moderate income households. Income Level Projected Housing Units Less than 50 percent AMI 80 Between 51-80 percent AMI 10 Between 81-120 percent AMI - $ If the City chooses to determine the discount for each purchase transaction through the use of a methodology, the average purchase discount shall be at least 10%, taking into consideration likely `carrying costs' if the City were not to sell the property. If not, the minimum average discount shall be at least 15%. 15 Comment [GM3]: I don't think this note is needed. Let's discuss. FY2008-2009 Action Plan Amendment Amendment it 2008.1 Strategy "C" Land Banking (2) Activity Type: Area Benefit. Benefits all residents of a primarily residential area in which at least 51 percent of the residents have incomes at or below 120% of area median income; OR providing or improving permanent residential structures that will be occupied by a household whose income is at or below 120% of area median income. (3) National Objective: LMMA or LMMH (4) Proiected Start Date: February 2009 (5) Proiected End Date: August 2010 (6) Responsible Organization: City of Miami Department of Community Development 444 SW 2 Avenue, 2 Floor, Miami, FL 33130 Contact Information: Alfredo Duran, Deputy Director Phone #: 305-416-2080; email:: aduran@miamigov.com (7) Location Description: Areas of Greatest Needs and other areas within City limits as determined by the Department of Community Development. (8) Activity Description: The City will purchases properties that have beenforeclosed upon and will provide the proper maintenance to such property/ land in an effort to protect the surrounding property values from devaluating:' This strategy shall be utilized whenever applicable with Strategy "D". (9) Total Budget: $2,851,000 (10) Performance Measures' ` 38 Housing units The following are projected numbers. The City will target this program to low and moderate income households. Income Level Projected Housing Units Less than 50 percent AMI `Between 51-80 percent AMI Between 81-120 percent AMI 10 10 18 4 If the City chooses to determine the discount for each purchase transaction through the use of a methodology, the average purchase discount shall be at least 10%, taking into consideration likely 'carrying costs' if the City were not to sell the property. If not, the minimum average discount shall be at least 15%. 16 FY2008-2009 Action Plan Amendment Amendment # 2008.1 Strategy "D" Demolition (2) Activity Type: Area Benefit. Benefits all residents of a primarily residential area in which at least 51 percent of the residents have incomes at or below 120% of area median income; OR providing or improving permanent residential structures that will be occupied by a household whose income is at or below 120% of area median income. (3) National Objective: LMMA or LMMH (4) Projected Start Date: February 2009 (5) Projected End Date: August 2010 (6) Responsible Organization: City of Miami Department of Community Development 444 SW 2 Avenue; 2 Floor, Miami, FL 33130 Contact Information: Alfredo Duran, Deputy Director Phone #: 305-416-2080; email: aduran@miamigov.com (7) Location Description: Areas of Greatest Needs and other areas within City limits as determined by the Department of Community Development. (8) Activity Description: The City of Miami will utilize NSPtunding to demolish "blighted structures" within City limits. (9) Total Budget: $700,000 (10) Performance Measures: 38 Housing units (included in Strategy C) The following are projected numbers. The City will target this program to low and moderate • income households. Income Level Projected Housing Units Less than 50 percent AMI 10 Between 51-80 percent AMI 10 Between 81-120 percent AMI 18 17 FY2008-2009 Action Plan Amendment Amendment # 2008.1 Strategy "E" Redevelopment of Demolished or Vacant Properties (2) Activity Type: Providing or improving permanent residential structures that will be occupied by a household whose income is at or below 120% of area median income. (3) National Objective: LMMH (4) Projected Start Date: February 2009 (5) Projected End Date: August 2010 (6) Responsible Organization: City of Miami Department of Community Development 444 SW 2 Avenue, 2 Floor, Miami, FL 33130 Contact Information: Alfredo Duran, Deputy Director Phone #,' 305-416-2080; email: aduran@miamigov.com (7) Location Description: Areas of Greatest Needs and other areas within City limits as determined by the Department of Community Development. (8) Activity Description: The City of Miami will acquire' abandoned properties or properties that have been foreclosed upon and demolish the sub -standard unit, if applicable, and reconstruct a new housing unit on the same lot. Under this program, the City will purchase or provide assistance for the purchase of the property to be reconstructed, demolish the structure, and build a brand new unit to be sold to a low -moderate or middle income household. The buyer utilizes one of the participating lenders to bepre-qualified for a mortgage loan. The City of Miami underwrites the loan based on the first mortgage lender s commitment. The City only accepts applications from participating lenders and they are processed on a first -come first -ready, first -serve basis taking in consideration any pre -established priority based on the "Areas of Greatest Need" assessment. Eligible Buyers: The household income must be less than or equal to 120% of HUD's Area Median Income, adjusted for family size; the buyer must be able to afford a monthly payment based on income and debt; and the buyer must contribute at least $500 of personal funds toward the downpayment/ closing costs. The`buyer must not hold title to another residential property at time of closing. Sales Price: The City of Miami shall sell the home in an amount not to exceed the total cost of the combined purchase and redevelopment of the property. The City will purchase abandoned or foreclosed upon properties at a discount from the current market appraised value, taking into consideration the home's current condition and work with the buyer to find the home that best fits the buyer's needs. Loan Terms: The maximum amount of assistance shall be the amount necessary to meet the lender's underwriting criteria. The loan will carry a 0% non -amortizing rate for a 30-year deferred payment period. Payment of principal will be forgiven at the end of maturity period provided that the homeowner resided in the house as their primary residence. r If the City chooses to determine the discount for each purchase transaction through the use of a methodology, the average purchase discount shall be at least 10%, taking into consideration likely `carrying costs' if the City were not to sell the property. If not, the minimum average discount shall be at least 15%. 18 FY2008-2009 Action Plan Amendment Amendment # 2008.1 Security: The loan will be secured by a mortgage on the property. First Mortgage Restrictions: Term of the loan must be 30 years. fixed interest rate & cannot exceed more than 150 basis points over Freddie Mac's weekly average 30-year rate, as published in the Primary Mortgage Market Survey ("PMMS")• no prepayment penalties; Total percentage charged for Discount, Origination & Broker fees must not exceed 2 points; all other lending fees must be reasonable and cannot exceed $500 or 0.5% of the loan amount, whichever is greater. First Mortgage Restrictions: Term of the loan must be 30 years. fixed interest rate & cannot exceed more than 150 basis points over Freddie Mac's weekly average 30-year rate, as published in the Primary Mortgage Market Survey ("PMMS")• no prepayment penalties; Total percentage charged for Discount, Origination & Broker fees must not exceed 2 points; all other lending fees must be reasonable and cannot exceed $500 or 0.5% of the loan amount, whichever is less. Resale Restrictions: If the owner sells and/ or transfer the house prior to the end of the City's mortgage term, the following provisions will apply: 1. The sale of the property must be pre -approved by the City, and the new buyers must meet the program's income limits in effect at the time AND the sales price must not exceed the maximum affordable sales price in effect at the time. 2. For any "early" sale or transfer , the City shall share in any gain realized, based on its pro -rated share of participation in the original purchase. Furthermore, if the sale occurs within the first 3 years, the City shall keep 100% of its pro -rated share of the "gain', from year 3 up to year 20, the City's share of its pro -rated "gain" shall decrease by 5% every year, while in turn, the owner's share shall increase by 5% each year. At year 20 up to the City's loan maturity, the owner shall retain 100% of the City's gain. 3. The above shared gain proposal terminates in the event of a foreclosure, with the lender required to provide the City the right of first refusal to purchase the loan at a negotiated price. In the case of a foreclosure, the City will recapture any amount of net proceeds available for the sale of the property'. (9) Total Budget::$2,100,000 (10) Performance Measures: 5 Housing units The following are projected numbers. The City will target this program to low and moderate income households. Income Level Projected Housing Units Less than 50 percent AMI Between 51-80 percent AMI Between 81-120 percent AMI ° Any pro -rated share of participation (program income) received prior to July 30, 2013 shalt be reinvested on NSP eligible activities. If the program income is realized after July 30, 2013, such gain shall be returned to the treasury. 19 FY2008-2009 Action Plan Amendment Amendment # 2008.1 NSP Substantial Amendment Checklist For the purposes of expediting review, HUD asks that applicants submit the following checklist along with the NSP Substantial Amendment and SF-424. Contents of an NSP Action Plan Substantial Amendment Jurisdiction(s): City of Miami Jurisdiction Web Address: www.miamiqov.com/communitvdevelopment/ pages/reports NSP Contact Person: George Mensah Address: 444 SW 2 Avenue, 2 Floor Miami, FL 33130 Telephone: 305-416-1978 Fax: 305-416-2090 Email: gmensah@miamigov.com The elements in the substantial amendment required for the Neighborhood Stabilization Program are: A. AREAS OF GREATEST NEED Does the submission include summary needs data identifying the geographic areas of greatest need in the grantee's jurisdiction? Yes® NoD. Verification found on page 4 5 . B. DISTRIBUTION AND USES OF FUNDS Does the submission contain a narrative describing how the distribution and uses of the grantee's NSP funds will meet the requirements of Section 2301(c)(2) of HERA that funds be distributed to the areas of greatest need, including those with the greatest percentage of home foreclosures, with the highest percentage of homes financed by a subpnme mortgage related loan, and identified by the grantee as likely to face a significant rise in the rate of home foreclosures? Yes® NoO. Verification found on page 1,6.7 . Note: The grantee's narrative must address the three stipulated need categories in the NSP statute, but the grantee may alsoconsider other need categories. C. DEFINITIONS AND DESCRIPTIONS For the purposes of the NSP, do the narratives include: • a definition of 'blighted structure" in the context of state or local law, Yes® No0. Verification found on page 7 . • a definition of "affordable rents," Yes® No0. Verification found on page 8 . • a description of how the grantee will ensure continued affordability for NSP assisted housing, Yes® NoD. Verification found on page 8 . • a description of housing rehabilitation standards that will apply to NSP assisted activities? Yes® NoD. Verification found on page 8 . D. INFORMATION BY ACTIVITY Does the submission contain information by activity describing how the grantee will use the funds, identifying: 20 FY2008-2009 Action Plan Amendment Amendment # 2008,1 • eligible use of funds under NSP, Yes® NoE. Verification found on page 11-18 . • correlated eligible activity under CDBG, Yes® No[]. Verification found on page 11-18 . • the areas of greatest need addressed by the activity or activities, Yes® Not]. Verification found on page 11-18 . • expected benefit to income -qualified persons or households or areas, Yes® No0. Verification found on page 11-18 . • appropriate performance measures for the activity, Yes® NoQ. Verification found on page 11-18 . • amount of funds budgeted for the activity, Yes® NoEl. Verification found on page 11-18 . • the name, location and contact information for the entity that wilt carry out the activity, Yes® NoQ. Verification found on page 11-18 . • expected start and end dates of the activity? Yes® NoQ. Verification found on page 11-18 . E. SPECIFIC ACTIVITY REQUIREMENTS Does each activity narrative describe the general terms under which assistance will be provided, including: If the activity includes acquisition of real property,'' • the discount required for acquisition of foreclosed upon properties, Yes® Nop. Verification found on page 14, 15, 17 . If the activity provides financing • the range of interest rates (if any), Yes® NoS. Verification found on page 12 17 . If the activity provides housing, • duration or term of assistance, Yes® NoQ. Verification found on page 12. 17 • tenure of beneficiaries (e.g., rental or homeownership), Yes® No[]. Verification found on page 12, 17, 18 . • does it ensure continued affordability? Yes® NoL. Verification found on page 11, 14, 17 . • does the applicant indicate which activities will count toward the statutory requirement that at feast 25% of funds must be used to purchase and redevelop abandoned or foreclosed upon homes or residential properties for housing individuals and families whose incomes do not exceed 50% of area median income? • Yes® Nol. Verification found on page 12, 17, 18 . F. Low INCOME TARGETING • Has the grantee described how it will meet the statutory requirement that at least 25% of funds must be used to purchase and redevelop abandoned or foreclosed upon homes or 21 FY2008-2009 Action Plan Amendment Amendment # 2008.1 residential properties for housing individuals and families whose incomes do not exceed 50% of area median income? Yes® No[]. Verification found on page 10 . • Has the grantee identified how the estimated amount of funds appropriated or otherwise made available will be used to purchase and redevelop abandoned or foreclosed upon homes or residential properties for housing individuals or families whose incomes do not exceed 50% of area median income? Yes® NoE]. Verification found on page 14 . Amount budgeted = $4,500,000 G. DEMOLISHMENT OR CONVERSION OF LOW- AND MODERATE -INCOME UNITS Does grantee plan to demolish or convert any low- and moderate -income dwelling units? Yes® Nola (If no, continue to next heading) Verification found on page 16 . Does the substantial amendment include: • The number of low- and moderate -income dwelling units -Le., s 80% of area median income —reasonably expected to be demolished or converted as a direct result of NSP- assisted activities? Yes® No[]. Verification found on page 16 . • The number of NSP affordable housing units made available to low- , moderate-, and middle -income households-i.e.,' 5 120% of area median income —reasonably expected to be produced by activity and income level as provided for in DRGR, by each NSP activity providing such housing (including a proposed time schedule for commencement and completion)? Yes® NolD. Verification found on page 13,14,' 15, 18 . • The number of dwelling units reasonably expected to be made available for households whose income does not exceed 50 percent of area median income? Yes® Nola. Verification found on page 13, 14, 15, 18 . H. PUBLIC COMMENT PERIOD Was the proposed action plan amendment published via the grantee jurisdiction's usual methods and on the Internet for no less than 15 calendar days of public comment? YesZ Now. Verification found on page 10 . • Is there a summary of citizen comments included in the final amendment? Yes® No Verification found on page 10 1. WEBSITE PUBLICATION The following Documents are available on the grantee's website: • SF 424 Yes® NoD. • Proposed NSP Substantial Amendment Yes® NoD. • Final NSP Substantial Amendment Yes® Nol. • Subsequent NSP Amendments Yes® No[]. Website URL: www.miamiqov.com/communitydevelopment/pages/Reports/ K. CERTIFICATIONS The following certifications are complete and accurate: (1) Affirmatively furthering fair housing Yes® Nola (2) Anti -lobbying Yes® No❑ 22 (3) Authority of Jurisdiction (4) Consistency with Plan (5) Acquisition and relocation (6) Section 3 (7) Citizen Participation (8) Following Plan (9) Use of funds in 18 months (10) Use NSP funds s 120 of AMI (11) No recovery of capital costs thru special assessments (12) Excessive Force (13) Compliance with anti -discrimination laws (14) Compliance with lead -based paint procedures (15) Compliance with laws FY2008-2009 Action Plan Amendment Amendment N 2008.1 Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ Yes® No❑ 23