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RESOLUTION APPROVING THE RECOMMENDATION OF SURTAX FUNDING FOR THE MIAMI-DADE COUNTY REQUEST FOR APPLICATIONS (RFA) FY 2009 MID YEAR CYCLE UPON COMPLETION OF A SUBSIDY LAYERING REVIEW AND SUBJECT TO THE DEVELOPER�S FINANCIAL VIABILITY AS DETERMINED UPON COMPLETION OF THE SUBSIDY LAYERING REVIEW; AND FURTHER AUTHORIZING THE COUNTY MAYOR OR THE COUNTY MAYOR�S DESIGNEE TO EXECUTE ANY NECESSARY AGREEMENTS

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WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum, a copy of which is incorporated herein by reference,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board authorizes the recommendation of $23,196,180 in funding for the Request for Applications (RFA) of FY 2009 Mid-Year from the Documentary Stamp Surtax (Surtax) program; and further authorizes the County Mayor or the County Mayor�s designee to award funding to developments in ranked order as outlined in the accompanying memorandum in order to fully expend the $23,196,180. Finally, the Board authorizes the County Mayor or the County Mayor�s designee, following approval by the County Attorney�s Office, to execute agreements, contracts, and amendments on behalf of Miami-Dade County; to shift funding sources for this program activity without exceeding the total amount allocated to that agency; to shift funding to different affiliated agencies without exceeding the total allocated to the project, and to exercise amendment, modification, renewal, cancellation and termination clauses on behalf of Miami-Dade County, Florida.

HEADER
Date:

To: Honorable Chairman Dennis C. Moss
and Members, Board of County Commissioners

From: George M. Burgess
County Manager

Subject: Funding Recommendations for the FY 2009 Documentary Surtax Mid-Year RFA Cycle

STAFF RECOMMENDATION
It is recommended that the Board of County Commissioners (Board) approve funding recommendations for the FY 2009 Mid-Year Request for Applications (RFA) to allocate $23,196,180 in Documentary Surtax (Surtax) funds for the construction and rehabilitation of affordable rental housing as part of the FY 2009 Mid-Year Funding Cycle. It is further recommended that awards be contingent upon the completion of a subsidy layering review process that includes an update to the awardee(s) current financial viability.

MANAGER'S BACKGROUND
SCOPE
The impact of this resolution is to allocate the Surtax funds for a minimum of ten separate projects under Category 2 (gap financing). A thorough breakdown for each project is attached in Exhibit 2 with such information as previous County funding, number of units, total development cost, type of activity, current start of construction, and Commission District.

Category 1 applicants will compete under the Florida Housing Finance Corporation (FHFC) 2009 Universal Cycle for housing credits. Until the process is complete, the successful applicants and respective locations for Miami-Dade County are unknown. The FHFC award cycle is expected to be completed during the fall of 2009. The developers who requested a local minimum contribution ($300,000) to compete for the tax credits are listed in Exhibit 1, with the number of associated units and Commission District location.

FISCAL IMPACT/FUNDING SOURCE
When the Board authorized the issuance of the FY 2009 Mid-Year RFA (Resolution R-289-09) on March 17, 2009, it was anticipated that there would be a total of $24.5 million in Surtax funds available for award under the FY 2009 Mid-Year Funding Cycle, of which $1.5 million has been set aside for successful local government match developers (Category 1) and the remaining $23 million is recommended for gap financing for the development and rehabilitation of rental housing units (Category 2).

Under this item, $1.5 million is allocated to successful Category 1 applicants and only $21,696,810 is allocated to Category 2 applicants.

MONITORING
Upon Board approval of the award process, the County will enter into contracts with those firms awarded Surtax funds within 30 days of the effective date of the resolution. OCED construction managers will perform monthly site inspections while project managers perform desk audits to ensure developers comply with contractual requirements and language. Some of the requirements include appropriate insurance, the filing of annual audits, sufficient construction progress, quarterly reporting, loan closing, draw requests schedules and a construction timeline.

BACKGROUND
The 2009 Mid-Year RFA attempted to synchronize the award of funding with the 2009 Universal Application Cycle at FHFC so that proposed affordable housing developments could compete for a FHFC housing tax credit subsidy. In order for these applicants, identified under Category 1, to compete in the FHFC Universal Cycle, a local government contribution is required. Additionally, the 2009 Mid-Year RFA included funding for applicants that had previously received tax credits or other public funding and still required �gap� funding to complete their affordable rental housing developments (Category 2).

Category 1
In order to be eligible for housing tax credits, a developer must set aside a portion of the total units for eligible low- or very low-income residents. Rents for housing tax credit units are restricted as set by the US Department of Housing and Urban Development (US HUD) in order to ensure that units are affordable to eligible families.

This year�s mid-year RFA included a local government match funding of $300,000 per development. The successful 2009 threshold applicants were expected to compete for tax credits under the FHFC Universal Cycle commencing in May 2009, but a Rule challenge was filed on April 27, 2009 which effectively stopped the opening of the 2009 Universal Application Cycle. FHFC intends to litigate this rule challenge as expeditiously as possible. Once the rule challenge is settled, a new timeline, with new cycle opening and closing dates will become available and the process will continue. At which time, applicants that received the local match will be able to move forward under the 2009 Universal Cycle.

After meeting all regulatory, financial and threshold criteria at FHFC, projects will be subjected to a lottery system. Final determination of the successful lottery participants occur in the late summer/early fall, at which time the County�s local government match contribution is retained by applicants that receive a tax credit award. The County reviewed 47 requests for a local government match contribution; all developments, except one which withdrew its application, were tentatively awarded a match. The County anticipates that only five Miami-Dade County applicants will be successful in receiving tax credits under this year�s cycle. Those who are successful will keep their local match while those who are not will have their local match automatically rescinded. Exhibit 1 lists the 46 applicants competing for FHFC tax credits.

Category 2
Gap financing is defined as the final funding required to make a project viable. Monies are needed to either finish construction or to finalize the project�s financing package. Price gaps usually occur due to increases in costs of labor and construction, or long term operating costs. In the past, the County awarded funds regardless of whether the FHFC awarded tax credits. Because the awarded funds were not linked to the tax credit program, the County left funding commitments open and depended on the developers to finalize the project financing. In some cases, commitments were left open for years. Presently, gap financing is recommended only for developments that have already received FHFC tax credits or other public funding and are considered �shovel ready.� Due to the current economic climate, the recommendations for award will be subject to the Subsidy Layering Review (SLR) process which includes an updated financial review to ensure the development is financially feasible.

The County received 14 applications for a requested amount of $31,528,624. However, one applicant failed to reach threshold and is therefore ineligible to receive funding. The scoring criteria, made part of the RFA, rated each applicant based on financial feasibility and leveraging, experience, readiness to proceed, caring for special needs residents, site control and other related factors. Based on available funding of $23 million of Surtax for Category 2, the top ten applicants are recommended for full funding at a total of $21,696,810 million. The last three applications, in ranked order, are not recommended for award as the available funding is exhausted at this point. A detailed scoring report and funding recommendation is attached as Exhibit 2.

In the event that an applicant is unable to execute a contract, these awarded funds will be made available to the �next-in-line� projects that applied but were not funded. The funding for the next-in-line projects shall come from this reallocation plus any savings generated by the SLR analysis now standard practice for all housing awards. Should a funding allocation become feasible for the next-in-line applicants, staff will return to the Board with an appropriate recommendation. The �next-in-line� applicants are listed on Exhibit 2.

LOAN TERMS FOR TAX CREDITS
Loan terms will be consistent with those established in conjunction with the credit underwriting firms performing the subsidy layering reviews. The terms are based on cash flow, income and operating expenses and similar to those implemented by the State of Florida.

COMMITMENT FEE
A nonrefundable commitment fee of one percent of the award amount will be charged to the successful applicants. Not-for-profit entities with IRS 501(c) (3) determinations that have a joint venture where the not-for-profit is a financial beneficiary of 51 percent or more of the development are excluded, in accordance with Resolution R-1174-86. The fee must be paid by the successful applicant(s) to Miami-Dade County within thirty (30) days of contract execution.

Fees associated with credit underwriting will be paid by the County and returned at the time of the first draw for funds by the developer.

Attachments



______________________________
Cynthia W. Curry
Senior Advisor to the County Manager