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HomeMy WebLinkAboutExhibit 1EXHIBIT 'A' City of Miami Repayment Agreement with HUD REPAYMENT PLAN a) HOPWA: Movers, Inc. resale of Sugar Hill Apartments: S935,555.20 City to use all avenues at its disposal to seek the repayment of the amount from Movers, Inc. •Notwithstanding, within eighteen (18) months, the City hopes to reimburse its HOPWA line of credit in an amount of $935,555.20 being the total amount disbursed for the Sugar Hill Apartments project. b) HOME: i. Model City project land banking and consulting fee disallowance: $2.6 million The City will make $250,000 payment for fiscal year 2009, $ 450,0D0 for fiscal year 201 D and a final payment of $1.9 million in the third year to the Cityrs HOME line of credit ii. City employees down payment program conflict of interest $87,685 The City will make the $87,685 payment within 120 days of approval by HUD. c) CDBG: Downtown Facade Improvement Program: $404,583.55 This - -payment will -be -made -within '120-days-of approval nfthe-plan:. �/L r �9-357ci W7WR "B" FUNDING APPROVAL AND GRANT AGREEMENT FOR NEIGHBORHOOD STABILIZATION PROGRAM (NSP) FUNDS AS AUTHORIZED AN-D APPROPRIATED UNDER THE HOUSING AND ECONOMIC RECOVERY ACT OF 2008 (PUBLIC LAW 110-289, JTJLY 30, 2008) NSP GR&NTEE: City of Miami NSP GRANT NUMBER: B-08-A1N-12-0016 NSP GRANT AMOUNT: S12,063,702 NSP APPROVAL DATE: January 8, 2009 This Grant betwthe Deparfarnt ofHou are^ Urban Development (HUD) _h.z_City of Mazui (Gra,rrP)_ismale pursuant to the mithoriry_ef s° ions 2301 _?304 of the .._ Housing and Economic Recovery Act of 2008 (Public Law 110-289 (hilly 30, 2008)) (I-iTRA). The program established puru i to section 2301-2304 is }mown as the `Neidaborhood Stabilization Promrm'' or `NSP.` The Notice of Allocations, Application Procures, Reollatnry'Waivers Granted to and Alterative Re iremean for Redevelopm ofp..baadoned and Foreclosed Home; Under the Ha si nc and Economic Recovery Act, 2008_publish i d_13_FR B_330 (October 6, 2008) (Notice); HA; the C tev's subniSsion for NSP assistance (Gran` Submission); the HUD regulations at 24 Lrtt § Psi 570 (as modified by the Notice and as now in effete and as may be am l from. time to time) (Regilriions); and this Fundina A_pprovaL; ?rale:ino any s ec al conditions, constitrite part of the Grant Ageement Subject to the provisions of tbi s Grant Agreement HUD will make NSP Grant Funds in the amount of 512,G63,702 available to the Grantee tipon exe-mT ion of th+a Grant AP:recment by the parties. The Granter shall have 18 months from the date ofHUD's execmion of this Grant At eezaent to obliE#P the NSP Grant Amormtpursuant to the require ,entq ofHERA and the Notice. The Giasiiee shall have 48 months from the date ofHUD 's execution of this Grant Agreement to expend the NSP Grant Amount prsuant to the requirements of the Notice. The NSP Grant Funds may be used to pay eligible costs arising from elidble uses incurred after. the NSP Approval Date provided the activities to which such costs are related are casied on in compliance with all applicable requirements. Pre -award planting and general ariminis alive costs may not be paid with funding assistance except as Remitted in the Notice; the Notice limits such costs to those incwied on or after September 29, 2008. Other pre-awn,.-d costs may not be paid with funding assistance except as permitted by 24 CFR § S70.200(h); for purposes of NSP, such costs are limited to those incurred on or after the t1Rte that the NSP substantial amendment was received by HUD. The Grantee agrees to assume ail of the ics,insib lilies for environmental review, deosionmaking, and actions, as specified and required in regulations issued by the Secretary ptns;tant to Section ) 04(g) of Title I of the Housing and Community Development A as amended (42 U.S.C. 5304) and published in 24 CFR § Part 58. The Grantee further acknowledges its responsibility for adherence to the Grant Agreement by sub -recipient entities to which it makes funding assistance hereunder available. This Grant Agreement may be amended only with the prior written approval of HUD. In consideing proposed amendments to this Grant Agreement, HUD shall review, among other thin, whether the amendment is otherwise consistent ccith HERA, the Notice, and the Regulations. The Grant= may amend its Grantee Submission; however, such amFmriTnents, including substantial amendments as defined in 24 CFR § Part 91, still be subject to the requirements of 24 Ctit § Part 91 (or any successor regulation) and any revisions HUD tray make to the Notice (or any successor Notice or regulaiion)- The Gra nr shall at all times ma;n t pin an up-to-date copy of is Grant Submission, inchuline of amm.dments approved by HUD, on is Interziet website as required by the Notice. Further, the Game shall mainformation on all drawdoµns, deposits_ and expenditures of grant finatds and prosr--t income under this Fundina Approval- and Gant Agrrvuuent and any other ..re nrds required.b52.4.CF11.5.7Da05,mis_files an,-1 eh211-,a1-e4Brh information available. far andit._..___.._. _ or inspwtion. by duly authorized representatives ofHLTD, HU 's Office of to Inspeaor General or the Comptroller General of the United States_ The Grant chaff submit info,na ion oh pa -fern -lance resurmImf as established by the Secretay for activities umdetak n �ithNS:P a.d fads_ The Granter is advised that providins false; fithtious or nislf ri;no i-.formation with respect to NSP Grant Fnnds may result in criminal, civil or iveprose'tion trader 18 USC §I001, 18 USC §1343, 31 USC §3729, 31 USC.§3801 or another applicable sire. Close-out of his grant shall be subject to the provisions of 24 CFR § 570.5Q9 or such close- out Mstractions as may hereafter be issued by HUD spe---ificefy for NSP wan. (1) Special Condition is attached to this Grant Agreement This NSP Grant Agreement is binding with respect to HUD in accordance Kith its terms upon the execution by HUD in the space provided above; subject to execution on behalf of the Grantee_ The United States Department of The City of Miami Housing and Urban Development Signature ofAuthorized Official SimPture of Authorized Official Maria R. Ortiz Name of Authorized Official Director PEDRO-HERNANDEZ Name of _A_utbatized OEcial CITY MANAGER . Title of _Arithori zft-1 015cial Title ofAoiized Offiri"1 - - 09 3-13-09 Date of-Si_patire Grant.,—, Tax Iderriiication Numba- Specia) Conditions to Fir:ding Approval and Grant Ant For Neighborhood Stabilization Program (NSP) Funds Atr_horized and Appropriated by under the Housing and Economic R=overy Act of 100.3 (Public 1.2w 130-2E9, July 30,250S) NSP GRANTEE: City of Miami NSP GRANT NUND3ER: B-08-K^T-12-0016 NSP GRANT AMOUNT: S12,063,702 NSP APPROVAL DATE: January 8, 2.009 Special Condition #1: 1. Ptusuant to 24 CFR § 85.12 (a) (1) (2) (4) or (5), a special condinon applies to this Grant Acreement due to past performance in the CDBG prost—ir:171 The City of Miami_ qi-ir.0 submit documentation describins how past CDBG _pm-formance issues have beea resolved or are now being resolved and explsin. how the-y will not impact the adruinistranon of the NSF pro. Om' records show that there are several outstaneir mouitorina liir9irgs fht--t require resolution in the Citys HOPWA, HOME. and CDBG proar.-trns la addition, the City bPs severai ou nthngisues rezardina non compliance; sktie it had am-eed to reimburse its Tine of Credit as idennfied below: HOPWA The amount of '5935,556.20 for the unauthorized sell of the Sugar Hill Apartments property, b) HOME: The remaining banof S 2.6 million for the Model Ctty occurrence; and S87,685.00 for ineligible down payment assistance in a Conflict of interest issue. c) CDBG: In FY 2006 the amount of 6404,553.56 for ineligible areas of assistance in the Miarni Downtown area. The Citvmust submit a plan of action to our aloe a.ddressina the above idm.ated issues_ starinz how it will resolve this deficiencies and a time frame for conroleton. The City must also indicate how the nastperfon:nance issues will not impact its adroithstralion Of the NSP nrostram. If the Citv of Miami. fails to subnait such documentation. within 60 days from the date HUD simed this Grant Aereemeri HUD mav thereafter withhold authority to incur wirlitonal oblia-ations of NSP Grant Funds or tnIce other actions authorized under 24C1-.R. 85.12(b). AFFORDABLE HOUSING GUIDELINES BACKGROUND OF THE AFFORDABLE HOUSING TRUST FUND A housing trust fund is a distinct fund established by legislation, ordinance or resolution to receive dedicated revenues, which can only be spent on affordable housing. Generally, affordable housing trust funds are established to provide financial resources to facilitate the development of housing for low to moderate income households. Affordable Housing Trust funds have proven to be an effective tool in many municipalities throughout the United States for producing affordable housing. The City of Miami Affordable Housing Trust .fund was established to receive financial contributions from private developers who desire to take advantage of the floor area bonus provisions allowed in the City of Miami Zoning Ordinance in exchange for financial contributions to. the Affordable Housing Trust fund. The Zoning Ordinance allows for an increase in the floor area permitted uses for new developments located in special districts provided that the developer contributes an approved specified amount to the Affordable Housing Trust fund for every square foot of increase. STUDY ON AFFORDABLE HOUSING TRUST FUNDS In an effort to effectively develop local policy and strategies that address the demand for affordable housing as well as, to establish a program management system for its Affordable Housing Trust Fund, the City of Miami Department of Community Development requested a study conducted by Florida International University. The purpose of the Study was to provide program guidelines and recommendations based on best practice case study examples. The study included an assessment of fourteen (14) cities housing trust fund programs from across the country that had been in operation for many years and have proven successful in producing and preserving affordable housing. The study focused on three specific.areas of program management: (1) target market (2) program administration and (3) program revenue. TARGET MARKET The Studies' affordability gap analysis concluded the following: (1) Homeownership Housing: Homeownership becomes more feasible with the support of manageable levels of gap financing for individuals with household income up to 150% of the area median income. (2) Rental Housing: The high proportion of the workforce that fall below 80 percent of the AMI will require the formulation and design of rental housing production and preservation programs. The affordability gap for this large segment of the local workforce is extreme. Clearly, given the current shortage of affordable rental housing in the City and the persistent lack of production, there is a need to target the Affordable Housing Trust fund and other public and private resources to meet this pressing need. -1- PROGRAM ADMINISTRATION Administrative staff capacity is essential for the effective management of housing trust funds. The Study found that the administrative costs associated with a City's management of the Affordable Housing Trust fund range from 5%- 10%. Based on this recommendation, the City will utilize 10% of the Affordable Housing Trust Fund for administrative costs. Administrative staff is responsible for: developing request for proposals (RFPs), document preparation, loan underwriting, determining eligibility and affordability, loan monitoring, and servicing, marketing and providing education to developers and beneficiaries of the trust funds. The Administrative staff will work closely with local banking institutions, as well as for- profit and not -for -profit developers in the implementation of the Affordable Housing Trust Fund program. PROGRAM REVENUE In order to ensure the on -going solvency of the fund, Affordable Housing Trust funds receive revenue from dedicated sources including but not limited to fees from developers associated with Floor Area increases, interest paid on loans and any other appropriations as determined by legislation action of the City Commission. PURPOSE AND USE OF AFFORDABLE HOUSING TRUST FUND MONIES The Affordable Housing Trust fund shall be used solely for housing programs and the Trust's administrative support, to meet the housing needs of the community. Housing programs will include providing assistance to for -profit and not -for -profit developers, existing homeowners and first time homebuyers. All projects requesting Affordable Housing Trust Fund funding assistance must be approved by the Housing and Commercial Loan Committee (HCLC). HCLC recommendations can be appealed to the City of Miami Commission. In an appeal process the City Commission will make the final determination. PROCESS OF APPLYING FOR AFFORDABLE HOUSING TRUST FUNDS The City of Miami Department of Community Development will award Affordable Housing Trust funds through the following processes: 1. The issuance of a request for proposals (an RFP process); or 2. City Commission approval; or 3. To Projects requesting financing that qualified under a prior RFP process. Regardless of the process, all project funding must obtain approval by the Housing and Commercial Loan Committee as to the terms and conditions of the loan. A project presented to the Housing and Commercial Loan Committee can be appealed to the City Commission as to the terms and conditions imposed by the HCLC. In an appeal process the City Commission will make the final determination. PROGRAMS -2- DEFINITIONS 1. Forgivable Loan — Funds provided in the form of a loan that is forgiven when certain conditions are met. 2. Rent Regulatory Agreement — A written and recorded document limiting the borrower's rent levels by unit size and renter income. 3. Multifamily Project — A residential property containing five (5) or more dwelling units. 4. Loan Term and Interest Rate — Loans will be amortized for a period of up to thirty (30) years, with an interest rate of 0% to 3%. Terms will be negotiated individually by project as per the feasibility study of the project. 5. Available Cash Flow — The City will use the State of Florida's definition of Available Cash Flow which is defined as cash flow of a development as calculated in the statement of cash flows prepared in accordance with generally accepted accounting principles and as adjusted for items including but not limited to extraordinary fees and expenses, payments on debt subordinate to the superior loan(s) and capital expenditures. 6. Re -Sale Provision — The borrower is required to sell the unit to another income eligible borrower approved by the City. 7. Share on Gain- The City shill be entitled to a pro- rated share in any gain by a borrower when affordability restrictions are violated. The amount of gain is determined by the numbers of years the borrower resides in the unit which is a percentage pre approved by the City Commission through resolution_ 8. 150 % of Area Median Income — Applicant's household income can not exceed the limits specified below: (See chart) # of persons in the household 1 2 3 4 150% income limit $70,781 $80,813 $90,938 $101,063 * Households in excess of 4 members will be calculated using the same income limit as reflected in the table " Income limits are established by HUD and are subject to change on a yearly basis -3- 9. Maximum Subsidy- See chart below # of bedrooms 1 2 3 Non -Elevator Building $57,917 $69,849 $89,409 Elevator Building $60,597 $73,686 $95,325 ASSISTANCE FOR HOMIEBUYERS Assisting low income homebuyers in the purchase of a home by providing down payment, closing costs and/ or second mortgage financial assistance for the purchase of a newly constructed or existing residential property within the City of Miami. First Time Homebuyers are eligible to receive this assistance in the form of a forgivable loan, after the affordability period of thirty (30) years. Resale restrictions apply. HOMEOWNERSHIP POLICY- BUYERS Repayment Requirements 1. In the case of sale or transfer of the property, the borrower will be required to sell the unit to an income eligible borrower approved by the City. 2. In the case of sale or transfer of the unit the City will share in the gain realized by the borrower. a. 0 to 3 years — City receives 10D% of the City's pro rata share of the gain generated. b. 3 — 20 years — On the 3'd year, City receives 85% of the City's pro rata share of the gain generated and borrower receives 15%. Thereafter, the borrower receives an additional 5% of the City's prorated share per year reducing the City's share by the same percentage until year 20. c. Year 20 and above: The borrower receives 100% of the gain. The above gain sharing proposal will terminate in foreclosure; however, the city will require lenders to provide us a right of first refusal to purchase the loan at a negotiated price. 3. Forgivable {ban after the affordability period of 30 years Minimum/ Maximum Subsidy Maximum as defined by Maximum Subsidy Chart (above on Page 4) Affordability Period 30 Years Security Affordability period to be enforced by a restrictive covenant that will run with the land as well as a mortgage. Income Household income cannot exceed 150% of median income Minimum Down Payment $500.00 -4- Type of Assistance Down payment assistance and closing costs Maximum Purchase PriceNalue of Property $300, 000 ASSISTANCE FOR DEVELOPERS: (1) HOMEOWNERSHIP DEVELOPMENTS Assisting developers with the construction. of new affordable homeownership units. Units can be condominiums, town homes or single family scattered site developments. The financial assistance will be a forgivable loan converted to a second mortgage for the buyers once project is completed. Second mortgage to buyers will have the same terms as the Homeownership Policy- Buyers, as approved by City Commission. There is a 30 year affordability period Resale :estrictions and Share on Gain provisions apply. HOMEOWNERSHIP POLICY -DEVELOPER Repayment Requirements Forgivable Loan converted to a forgivable second mortgages for the buyers once project is completed. In the case of a Developer default (incomplete project) full payment of construction loan and accrued default interest at the maximum rate allowed by law. In addition, the developer and all principals with a minimum of 10% share in the development will be barred from participating in any City of Miam; Housing programs for a minimum of five (5) years. Second mortgage to buyer will have the same terms as the Homeownership Policy- Buyers, as approved by the City Commission. Minimum/ Maximum Subsidy Maximum as defined by the Maximum Subsidy chart (above on Page 4) Affordability Period 30 year affordability period for the second mortgages. Security There will be a restrictive covenant and mortgage on the property. Upon completion of the project, the total debt of the developer is transferred in pro rata share to each assisted unit. In the event of a developer default, the restrictive covenant will remain on the property and applicable interest rates will be due. Developer Fee Up to16% of total project costs. Disbursements based on percentage of construction completion. Minimum Ratio of City Funds to other Funds in the Project 1:2 Desirable on a project by project basis Type of Assistance Construction soft costs and hard costs or set -aside for homebuyer assistance after completion. Maximum Purchase PriceNalue of Property $300, 000 Income Household income cannot exceed 150% of median income - 5 - (2) RENTAL DEVELOPMENTS Assisting developers with the construction, rehabilitation, preservation or refinancing of multifamily developments containing five (5) or more units. The financial assistance will be in the form of a loan conditioned on a cash flow analysis of the project as defined by the City. A mortgage will be placed on the property and a rent regulatory agreement controlling the allowable rent. The rent regulatory agreement would restrict the rent amounts, preserving the unit as an affordable housing unit. Repayment Requirements Loan Terms will include an interest rate between zero (0) to three (3) percent determined by the City on a project by project basis based on the project's feasibility study. A thirty (3D) year affordability period will be required. Minimum/Maximum Subsidy $1,000 per unit/ Maximum as defined by the Maximum Subsidy chart Affordability Period 20 years Security Recorded mortgage on the property. In addition, affordability period to be enforced by a restrictive covenant that will run with the land. In the case of phased developments, the covenant will run with the land making up all phases of the development. In the case of a developer default, the restrictive covenant will continue throughout the affordability period. Default penalties i. Full payment of construction loan (total disbursed amount) and accrued default interest at the maximum rate allowed by law depending on loan amount. ii. Developer and all principals with a minimum of 10% share in the development will be barred from participating in any City of Miami programs for a minimum of five (5) years iii. Recorded covenant will not be removed upon sale of the property. Service Charge . 1.% of City Loan up to, a .maximum of $15,000 will be due and payable as good faith commitment fee for for -profit developers, 30 days after funding approval. No commitment fee for non -profits Program Income Gross income received by the project directly generated from the useof funds. When program income is generated by housing, the income shall be prorated to reflect the percentage of funds used. Type of Assistance Construction soft costs, hard cost (predevelopment), or first mortgage refinancing Maximum Rent Fair Market Rent Miscellaneous 1. Income of renters must be al or below 80% of Area Median Income as published by HUD 2. Annual compliance monitoring for duration of affordability period. -6-