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2009-189-1135 - NSP Home Liens City of Miami Gardens Agenda Cover Memo Council Meeting Date: October 14, 2009 Item Type: (Enter X in box) Resolution Ordinance Other X Fiscal Impact: (Enter X in box) Yes No Ordinance Reading: (Enter X in box) 1st Reading 2nd Reading Public Hearing: (Enter X in box) Yes No Yes No X Funding Source: (Enter Fund & Dept) N/A Advertising Requirement: (Enter X in box) Yes No Contract/P.O. Required: (Enter X in box) Yes No RFP/RFQ/Bid #: X N/A Sponsor Name Danny Crew, City Manager Department: Community Development Short Title: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MIAMI GARDENS, FLORIDA, AUTHORIZING THE CITY MANAGER, IN CONSULTATION WITH THE CITY ATTORNEY, TO NEGOTIATE AND/OR RELEASE CITY CODE ENFORCEMENT LIENS ON HOMES PURCHASED BY THE CITY FOR THE NEIGHBORHOOD STABILIZATION PROGRAM; PROVIDING FOR THE ADOPTION OF REPRESENTATIONS; PROVIDING AN EFFECTIVE DATE Staff Summary: Background The City of Miami Gardens received an allocation of $6,866,119.02 from the Neighborhood Stabilization Program (NSP). The City submitted its plan of activities to be carried out to the U.S. Department of Housing and Urban Development (HUD). The City’s plan was approved and the contract was executed on March 4, 2009. The City has 18 months to expend or encumber the program funds from the date of contract execution. One of the activities proposed in the City’s approved plan is to purchase abandoned and foreclosed homes, rehabilitate them and resell them to eligible buyers. The City’s proposes to purchase approximately 25 homes meeting the plan criteria, which includes purchasing them at a discount of 1% less than the appraised market value. ITEM J-13) CONSENT AGENDA RESOLUTION Code Enforcement Liens 1515 NW 167 Street, Building 5 Suite 200 Miami Gardens, Florida 33169 To ensure compliance with the NSP time constraints (18 months from contract execution), Council approved amending Ordinance Number 2005‐10‐48 on January 14, 2009, which authorized the City Manager to execute any and all purchase and sale agreements for homes being purchased for the NSP. On June 24, 2009, the same Ordinance was further amended authorizing the City Manager to execute all agreements with contractors who will be awarded to provide rehabilitation services for the homes being purchased for the NSP. Current Situation Since the execution of our contract with HUD on March 4, 2009, the City has acquired seventeen (17) houses, of which six (6) are currently undergoing rehabilitation. In order to achieve this level, however, Staff has had to submit purchase contracts on more than properties, competing against investors and other buyers. Once a purchase contract is submitted, staff has a very limited time frame to make a purchase decision. In many instances, the properties under consideration have amassed significant Code Enforcement liens. The City’s efforts to address outstanding liens, and consequently purchase of the property, would be more effective if administrative authority were granted to the City Manager to negotiate and/or waive said liens. Currently, the authority to either release or reduce liens rests with the Special Master. However, because of their defined hearing schedules, staff is unable to meet purchase commitment deadlines imposed by the holders of title. Despite knowledge of the NSP, lenders are required to accept immediate cash offers in order to mitigate the declining value of their portfolios. The existence of liens on a property affect the City’s ability to negotiate the purchase of the home, limiting the City Manager to either purchase the property with the existing liens or rescind the City’s offer. The City’s NSP plan allows for the purchase of homes with existing liens, the remedy of the violations and any other repairs deemed necessary to make the homes marketable. Staff has made an effort to purchase homes that are less desirable to other buyers, mainly due to the conditions and the existing violations and/or liens. However, it should be noted that private investors or buyers are not required to adhere to such requirements. Moreover, during the foreclosure process, many of the City’s liens are extinguished and therefore not recovered by the City. Authorizing the City Manager, in consultation with the City Attorney, the authority to negotiate and/or release the liens, would allow for more effective and timely negotiation of the purchase , and possibly allow the City to recover a reasonable portion of the lien amount. Proposed Action: Staff recommends that City Council approve the proposed resolution authorizing the City Manager, in consultation with the City Attorney, to negotiate and/or release Code Enforcement Liens on homes purchased for the Neighborhood Stabilization Program. Attachment: None