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HomeMy WebLinkAbout2013-049-1845 - RUDG-The Commons Litigation  1515  NW  167  Street, Building  5  Suite  200    Miami  Gardens, Florida  33169    City of Miami Gardens Agenda Cover Memo Council Meeting Date: February 13 , 2013 Item Type: (Enter X in box) Resolution Ordinance Other X Fiscal Impact: (Enter X in box) Yes No Ordinance Reading:(Enter X in box) 1 st Reading 2 nd Reading X Public Hearing:(Enter X in box) Yes No Yes No X Funding Source: Neighborhood Stabilization Program Funds 3 Advertising Requirement:(Enter X in box) Yes No X Contract/P.O. Required: (Enter X in box) Yes No RFP/RFQ/Bid #: X Strategic Plan Related (Enter X in box) Yes No Strategic Plan Priority Area: Enhance Organizational Bus. & Economic Dev Public Safety Quality of Education Qual. of Life & City Image Communication Strategic Plan Obj./Strategy: (list the specific objective/strategy this item will address) N/A X Sponsor Name Dr. Danny Crew, City Manager Department:Community Development  Short  Title:  A RESOLUTION OF THE CITY CO UNCIL OF THE CITY OF MIAMI GARDENS, FLORIDA, DIRECTING THE CITY ATTORNEY TO CEASE PENDING FORECLOSURE LITIGATION WITH RUDG-THE COMMONS; AUTHORIZING THE CITY MANAGE R AND THE CITY ATTORNEY TO NEGOTIATE A NEW DEVELOPER’S AGREEMENT WITH RUDG-THE COMMONS FOR A MIXED-USE CO MMERCIAL DEVELOPMENT; PROVIDING FOR THE ADOPTION OF REPRESENTATIONS; PROVIDING FOR AN EFFECTIVE DATE. Staff  Summary: Background: As  Council  is  aware, the  City  was  allocated  $1,940,337  in  NSP3  Funds.  This  specific  grant  required  that  the  funds  be  leveraged  and  that  the  required  housing  units  be  developed  in  targeted  areas.  The  two  neighborhoods  listed  in  the  City’s  NSP3  Plan  were  Rainbow  Park  &  Riverdale.  In  order  to  seek  leveraging  of  awarded  funds, the  City  issued  a  formal  Request  for  Proposals. Three  (3) proposals  were  received. As  a  result, one  of  the  applicants  awarded  funding  was  RUDG ‐The  Commons, LLC.  The  City  Council     1515  NW  167  Street, Building  5  Suite  200    Miami  Gardens, Florida  33169   awarded  $1,150,000.00  tothis  developer  for  the  construction  of  189  units  for  elderly  residents.  The  parcels  on  which  this  housing  project  was  to  be  constructed  is  located  on  the  west  side  N.W. 27  Avenue, just  south  of  207  Street. The  City  entered  into  a  Developer’s  Agreement  with  RUDG  – The  Commons  on  December  19, 2011, for  the  acquisition  of  the  lots  on  which  the  multi ‐family  elderly  housing  was  to  be  built.   Unfortunately, RUDG ‐The  Commons, LLC  was  not  able  to  secure  the  gap  funding  necessary  to  completely  finance  the  project.  Consequently, they  defaulted  on  the  Developer’s  Agreement  with  the  City. In  light  of  the  agreement  default, City  Staff  sent  formal  correspondence  requesting  repayment  of  the  $1,150,000.00.  The  developer  sought  an  alternative  remedy  to  proceed  with  the  initially  proposed  site  development.  On  November  15, 2012  City  Staff  met  with  the  developer  who  requested  a  phasing  of  the  total  project  and  an  additional  time  extension.  However, the  alternative  proposal  reflected  a  significant  reduction  in  unit  count  of  the  elderly  housing  units.  Upon  review  of  the  developer’s  proposal, City  Staff  did  not  feel  that  adequate  assurances  were  in  place  to  ensure  a  completion  of  the  project  within  a  reasonable  time  frame.  Consequently, Staff  rejected  the  developer’s  project  phasing  alternative.   On  December  12, 2012, City  Staff  obtained  Council  approval  to  authorize  the  City  Attorney  to  terminate  the  Developer’s  Agreement  and  to  proceed  with  foreclosure  action  on  the  6.83  parcel  of  land. Current  Situation: In  an  effort  to  avoid  time  consuming  and  costly  litigation, the  developer  reached  out  to  City  Staff  in  late  December  in  hopes  that  another  alternative  could  be  crafted  in  lieu  of  the  originally  proposed  project.  Staff  advised  the  developer  of  its  contractual  obligation  to  HUD.  Staff  also  shared  that  reducing  the  proposed  number  of  new  elderly  housing  units  significantly  lowered  the  value  of  the  overall  site  development.  Moreover, given  the  location  of  the  site, the  highest  and  best  use  for  the  land  may  very  well  be  commercial  development  rather  than  multi ‐family  housing. The  Developer  met  with  City  Staff  on  January  15, 2013  and  expressed  their  interest  in  working  with  the  City  to  bring  an  amicable  solution  forward  for  The  Commons  project. A  new  site  plan  was  conceptually  discussed.  The  new  project  would  consist  primarily  of  mixed ‐use  commercial  development  on  the  6.83  acres  of  land, but  would  also  contain  a  housing  component  on  the  North  West  corner  of  the  site.   The  housing  component  would  be  comprised  of  24  townhomes  that  would  be  developed  for  homeownership.  The  revised  project  proposal  would  require  a  new  site  plan   from  the  one  originally  approved.   The  project  will  be  developed  in  two  phases: Phase  one  will  concentrate  on  building  24  townhomes  to  be  sold  to  first  time  homebuyers.  This  will  allow  the  City  to   fulfill  its  contractual  requirements  to  HUD  for  the  NSP3  program. It  is  noteworthy  that  in  the  development  of  the  24  townhouses, RUDG ‐The  Commons, LLC  will  be  required  to  provide  homebuyer  subsidy  in  order  to  aassist  income  eligible  buyers  to  purchase  each  of  the  units.  This  will  allow  the  developer  to  satisfy  its  leveraging  requirement  as  outlined  in  the  City’s  original  RFP. Phase  two  will  concentrate  on  the  development  of  the  mixed  use  commercial  component.  The  development  of  the  2 nd  phase  will  require  a  new  site  plan  approval  by  the  City  Council. At  th  is  juncture, City  Staff  recommends  that  the  Council  accept  RUDG ‐The  Commons, LLC’s  revised  proposal.  A  new  Developer’s  Agreement  will  be  drafted, replacing  the  previously  executed  document.  In  it, Staff  will  insure  that  new  performance  benchmarks  are  included, along  with  an  updated  project  timeline.  A  restrictive  covenant  will  remain  on  the  land  as  security  for  the  City  to  ensure  that  the  agreed  upon  development  takes  place.  It  should  be  noted  that  with  the  development  of  the  mixed ‐use  commercial  component, the  City  will  require  the  developer  to  implement  a  local  hiring  emphasis  during  construction.  This  will  aid  the  City  in  being  able  to  report  to  HUD  a  job  creation  activity  as  part  of  the  use  of  the  NSP3  Funds. The  attached  resolution  requests  Council  to  direct  the  City  Attorney  to  cease  foreclosure  action  on  this  property.  The  resolution  further  requests  Council  approval  to  authorize  the  City  Manager  and  the  City  Attorney  to  develop     1515  NW  167  Street, Building  5  Suite  200    Miami  Gardens, Florida  33169   and  negotiate  the  specific  technical  terms  of  a  new  Developer’s  Agreement.  Said  new  agreement  will  be  brought  back  to  City  Council  for  its  approval  at  a  later  time.   Proposed  Action:  That  City  Council  approve  the  attached  resolution   Attachment:   Original  Developer’s  Agreement  – December  19 th , 2011   Draft  of  New  Developer’s  Agreeement