AGENDA REQUEST AGENDA ITEM NO: VI.4. Unfinished Business BY Neighborhood and Development Services. December 7, Manager Hadsell SUBJECT:

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1 AGENDA REQUEST AGENDA HEADING: Unfinished Business BY Neighborhood and Development Services Originating Department COMMISSION MEETING DATE: December 7, 2015 Timothy Litchet Department Head AGENDA ITEM NO: VI.4. Community Development General Manager Hadsell Presenter SUBJECT: Approval Re: Amendment to Sales Agreement with Harvest Tabernacle of Sarasota, Inc. COMMISSION PRIORITIES: Quality of Life EXPLANATION: On March 18, 2013, the City Commission approved a Purchase and Sale Agreement with Harvest Tabernacle for $32,000. The properties were transferred to Harvest Tabernacle and a mortgage equal to the sales price is held by the City with no payments due until the properties are sold, no longer leased to eligible families or 30 years, whichever occurs first. Included in that agreement is a requirement that Harvest Tabernacle was to build homes on the properties and lease the homes within 2 years (October 31, 2015). The properties were to be leased to families earning less than 50% of the Area Median Income, as adjusted by family size. Harvest Tabernacle did not construct or rehabilitate the homes as provided in the sales agreement. Harvest Tabernacle is now asking for a 30 month extension (until April 30, 2018) to build on these lots. A letter from Reverend Minor requesting this extension is attached. A staff memo with more detail is also attached. ADMINISTRATION'S RECOMMENDATION: To amend the sales agreement with Harvest Tabernacle of Sarasota, Inc. (Harvest Tabernacle) executed on March 21, 2013 to extend the time that Harvest Tabernacle has to construct or rehabilitate four (4) homes until April 30, APPROVAL SUMMARY:

2 AGENDA REQUEST Approval Department Head Approval Legal Review / Approval Deputy City Manager Approval City Manager Approval City Auditor and Clerk Approval Required Date Completed Y 11/17/2015 Y 11/19/2015 Y 11/23/2015 Y 11/23/2015 Y 11/24/2015 Completed By Timothy Litchet Robert Fournier Marlon Brown Marlon Brown Pamela Nadalini Status APPROVED APPROVED APPROVED APPROVED APPROVED 2

3 ADDITIONAL EXPLANATION: AGENDA REQUEST ADDITIONAL ADMIN RECOMMENDATION: FUNDING SOURCE: AMOUNT: HOUSING IMPACT (Per House): NEW CONSTRUCTION: REHABILITATION: $ 0 $ 0 SUPPORT DEPARTMENTS: - COMMISSION ACTION: Final Action Motion: Motion By: AGENDA DISPOSITION Second By: Vote: 3

4 SARASOTA Office of Housing & Community Development INTEROFFICE MEMORANDUM TO: Mayor and City Commission THROUGH: Thomas Barwin, City Manager Marlon Brown, Deputy City Manager Timothy Litchet, Director, Neighborhood and Development Services FROM: RE: Donald Hadsell, Housing and Community Development Amendment to Sales Agreement with Harvest Tabernacle of Sarasota, Inc. DATE: December 7, 2015 RECOMMENDATION: To amend the sales agreement with Harvest Tabernacle of Sarasota, Inc. (Harvest Tabernacle) executed on March 21, 2013 to extend the time that Harvest Tabernacle has to construct or rehabilitate four (4) homes until April 30, BACKGROUND: The Office of Housing and Community Development (OHCD) administers housing programs to assist lower income residents with down payment and rehabilitation assistance using federal and state funds. The federal and state guidelines allow this assistance to be given as grants, however the City and County have loaned these funds to families so that it may receive repayments on these loans that could assist other Sarasota County residents. To protect the program s interest, a mortgage is placed on the property. The Interlocal Agreement forming OHCD states that the City of Sarasota is the lead entity for the HOME Investment Partnership, the Neighborhood Stabilization Program 2 (NSP2) and the State Housing Initiatives Partnership Programs. Because the City is the lead entity, the mortgages for these programs are in favor of the City, regardless of whether the property is located in the City or the County. When property owners default on their mortgage, the city attempts to take title to the property. The City and County Commissions have established guidelines for how the Page 1 of 7

5 properties are to be sold. Priority is given to nonprofit agencies who agree to build homes on the properties. The City took title to four parcels located in the unincorporated county. The addresses are: th Street (2 parcels) 2 vacant lots th Street 1 vacant lot 2401 Booker Avenue 1 vacant home on a lot Staff attempted to use the policy guidelines that were approved by the City Commission on August 21, 2006 to market these properties to nonprofit organizations that would build homes on the vacant lots and rehabilitate or demolish and reconstruct the parcel with the existing home. These efforts were unsuccessful as the guidelines require the sales price to be the actual cost to acquire the property plus the amount of the outstanding lien. With prices having decreased, the actual values of the properties, with the exception of 2401 Booker Avenue, were less than the amount of the outstanding lien. The outstanding liens for the properties were $11, for th Street; $17, for th Street (2 parcels); and $7, for 2401 Booker Avenue, for a total of $36, The only group that was willing to purchase the lots and rebuild on them was Harvest Tabernacle, however they were unwilling to pay more than the value of the properties at the time. The vacant lots were valued at approximately $8,000, based upon sales comparables as provided to OHCD by the City Purchasing Division. The property assessor had the two vacant lots at th Street assessed for $3,250 each and the vacant lot at th Street assessed for $5,400. The parcel at 2401Booker Avenue, the parcel with the deteriorated single family home, was appraised and the value was determined to be $9,000. Staff recommended that the four (4) parcels be sold to Harvest Tabernacle for a total of $32,000. That exceeded the value of the properties at that time. On March 18, 2013, the City Commission approved a Purchase and Sale Agreement with Harvest Tabernacle for $32,000. The properties were transferred to Harvest Tabernacle and a mortgage equal to the sales price is held by the City with no payments due until the properties are sold, no longer leased to eligible families or 30 years, whichever occurs first. Included in that agreement is a requirement that Harvest Tabernacle was to build homes on the properties and lease the homes within 2 years (October 31, 2015). The properties were to be leased to families earning less than 50% of the Area Median Income, as adjusted by family size. Page 2 of 7

6 There were a number of benefits to the City transferring the properties to Harvest Tabernacle. Homes on two of the properties were demolished using NSP2 funds and federal law requires the city to construct housing within 10 years after the grant is formally closed out. The NSP2 grant is still open so the 10 year period has not commenced. However, the eventual leasing of the property will enable the City to comply with federal law. Normally, the City / County would use State Housing Initiatives Partnership and/or NSP2 funds to finance any new construction on the properties. Harvest Tabernacle was to obtain private financing for the homes. This was to allow homes to be built on the properties without any further OHCD funds. Finally, because the properties were transferred to Harvest Tabernacle, the City has not had the responsibility to mow and maintain these properties. On July 9, 2013, a first amendment to the Purchase and Sale Agreement between Harvest Tabernacle and the City was approved by the City Commission. This extended the closing date due to several title defects that were identified. Those title defects were cured during the extension period. Harvest Tabernacle did not construct or rehabilitate the homes as provided in the sales agreement. Harvest Tabernacle is now asking for a 30 month extension (until April 30, 2018) to build on these lots. A letter from Reverend Minor requesting this extension is attached. Staff is recommending that the City Commission grant the extension as requested. Page 3 of 7

7 SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT made and entered into this 7 th day of December, 2015, by and between the City of Sarasota, Florida, a municipal corporation, hereinafter referred to as Seller, and Harvest Tabernacle of Sarasota, Inc., a Florida not for profit Corporation, hereinafter referred to as Buyer. WHEREAS, Seller and Buyer entered into a Purchase and Sale Agreement dated March 21, 2013, hereinafter referred to as the AGREEMENT, by which Seller agreed to sell and Buyer agreed to buy four parcels of real property; and WHEREAS, Seller and Buyer entered into a First Amendment to Purchase and Sale Agreement dated July 9, 2013 to enable the Buyer to remedy the title defects found on the property; and WHEREAS, Seller and Buyer desire to enter into this Second Amendment so as to extend the date that all new homes must be completed. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL COVENANTS CONTAINED HEREIN, IT IS AGREED AS FOLLOWS: 1. Section 8, Conditions Precedent to Closing is hereby amended so as to provide that Construction or Rehabilitation of the four residential dwelling units shall be completed no later than April 30, Except as expressly set forth herein, all of the terms, covenants and conditions of the Agreement are hereby ratified and confirmed by Seller and Buyer and each, by the execution of this Second Amendment to Purchase and Sale Agreement signifies their intent to be bound thereby. IN WITNESS WHEREOF, this Second Amendment to Purchase and Sale Agreement has been signed and sealed in duplicate by the respective parties hereto. ATTEST: CITY OF SARASOTA, FLORIDA By: Pamela M. Nadalini, MBA, CMC City Auditor and Clerk By: Willie Charles Shaw, Mayor Approved as to form and correctness: By: City Attorney Date signed by City of Sarasota Page 4 of 7

8 Witnesses as to execution on behalf of Harvest Tabernacle of Sarasota, Inc. HARVEST TABERNACLE OF SARASOTA, INC. Witness By: James W. Minor, President Print Name Witness Print Name Page 5 of 7

9 I October 30,201_5 Donald Hadsell Director, Sarasota office of Housing and community Development 111 South Orange Avenue Sarasota, Florida Re: Development Extension Mr. Hadsell, We are formally requesting a thirty month development extension for the following properties: h Street Lot 6,25th Street th Street 2401 BookerAve roperties in a timely fashion but have not been iod due to the extensive multi unit remodeling n this same community. We have completed a nnishedwith a illtff:: ::1 pride ourselves ce and quali tuna work (which th e. tve_have z great like minded relationship with both Sabal pal beria Bank. They are both invested into seeing this neighborhood revitajized.and h to be a vital pari of our community efforts through providing financing. Because position and financial histoy with these two financial institutions, we bef,eve that obtaining financing in a timely fashion to build within the requested extension is all but assured. The banks are also motivated by the Community Reinvestment Act (CRA) credits that they obtain through being z part of projects like these. T!"t: completed units and homes will be used to supply some of the incredible demand for affordable housing opportunities. our mission has always been and will continue to be foi someone to go from homeless to homeowner and provide all of t,using opportunities 1 in between. These properties will play an importanl lo_le in that process as many toot i"g to take the final step in "t-. their journeywith an affordable rental and/or home ownershio. pasron DnN & EsrRelu Mrlon 209 NORTH Lrr',rE Ave, Snnnsorn,FLz+zzt offrce (s+r)rs:-:sse FAX (g+r) :ro-osos PnsronJlv & Peccy Mrruon Page 6 of 7

10 HARVESTTAB.COM I Thank you for your consideration and review of this extension and know that our plan is ro start construction on the above mentioned properties within the 30 month time period. Pending your review and consideration, Harvest Tabernacle of Sarasota, Inc STOR Jttvt & PeCcY Mtruon 209 NoRTH Lrve Avr, SaRasora,FLz+z=t Pnsron Dar.l & EsrRrlla Mlruon Page 7 of 7 offrce (r+r) rs:-:sse FAX (:+r) :ro-oto: