C7J - Fund Workforce Housing Analysis for Byron Carlyle

Resolutions - C7 J

COMMISSION MEMORANDUM

RECOMMENDATION

The Administration recommends the Mayor and City Commission accept the recommendation of the NBCRA to fund the analysis of the Byron Carlyle workforce housing project and financing options, in preparation for issuance of an RFP for the development of the Byron Carlyle Cultural Center. Further, the Administration requests the authority to reengage AMS Research and Planning, Denham Wolf, and Hilltop Securities in this work, up to the amount of $190,000.

BACKGROUND/HISTORY

The Byron Carlyle Theater complex is located at 500 71st Street, between Byron Avenue and Carlyle Avenue, where it opened in 1968 as Twin Cinemas hosting first-run movies. The City purchased the Byron Carlyle Theater (the Theater) from the WBC Broadcasting Corporation in 2001 and partially renovated it to spur economic development and bolster North Beach arts and culture. In 2014, the City executed a Management Agreement with Living Arts Trust d/b/a 0 Cinema, who occupied the Theater's western portion. The remaining eastern portion remained vacant and unutilized. The poor condition of the building required it to be permanently closed and has remained so since October 31, 2019.

At the March 13, 2024, City Commission meeting, the Mayor and City Commission approved at the request of Commissioner Bhatt, the referral of item (C4 D) to the FERC to discuss the programming for the new Byron Carlyle G.O. Bond project for a multi-purpose cultural arts space and possibly workforce housing and/or other uses that are compatible with a cultural arts center and the surrounding neighborhood and to consider the various options for financing construction and funding models for the project. Additionally, on April 3, 2024, the Mayor and City Commission approved a dual referral of item C4 H to FERC and the Land Use and Sustainability Committee (LUSC) to conduct a detailed review of the two (2) different models for the proposed Byron Carlyle cultural center.

This item was presented and discussed at the May 1, 2024, LUSC meeting. A motion was made to recommend moving forward with the Cultural Arts Center with some level of workforce housing. Two board members voted in favor of the motion and two against, citing they would like

to have more information on the impact of the workforce housing. Some questions considered were how the Project could affect parking and traffic, as well as if there are ways to ensure residents of the building work in the area to avoid additional congestion. The item moved to the June 26, 2024, Commission meeting with an unfavorable recommendation from LUSC.

At the G.O. Bond Oversight Committee meeting held on May 9, 2024, the Committee moved with a 7/0 vote to include workforce housing, including artist housing, as part of the Byron Carlyle Theater Project, utilizing $4 million of G.O. Bond funds available in Tranche 2 (for workforce housing) (LTC# 184-2024).

Subsequently, the North Beach CRA Advisory Committee adopted at their May 14, 2024, meeting, a unanimous motion, supporting, in concept, the Byron Carlyle redevelopment incorporating the workforce housing component, prioritizing artistic and cultural workers, provided that there are no short-term rentals and/or micro-units (LTC # 199-2024). The Committee also discussed the CRA's requirement to use a minimum 10% of its budget toward the creation of workforce housing and identified the Byron Carlyle project as a way to do so without the added burden of purchasing additional land.

On May 24, 2024, the FERC discussed this item and recommended in favor of proceeding with the project incorporating workforce housing with no micro-units and no short-term rentals. It was also discussed that there should be further deliberation on the qualifications for those seeking to live in the workforce housing created. The FERC further recommended to return this item to Commission for discussion.

At the June 26, 2024, Commission meeting, the Mayor and City Commission unanimously approved the Byron Carlyle Project to proceed with the inclusion of workforce housing. Additionally, the body authorized the continued engagement of AMS Planning and Research for the additional amount of $160,000.00, waiving by a 5/7ths vote the formal competitive bidding requirement, finding such waive to be in the City’s best interest.

At the Commission meeting held on Dec 11, 2024, a Referral (C4 U) was made to FERC to discuss the status of the Byron Carlyle Project and the structure for the contemplated RFP.

At the January 24 FERC meeting, the Administration presented three (3) sample building programs of differing scales and costs, described in the Analysis below. The Committee unanimously recommended the option titled “Scenario #2” to be used by AMS for the financial modeling of a typical operating year.

Also at the Jan 24 FERC meeting a motion was made to continue the discussion on the unit size and affordability of the Byron Carlyle’s Workforce Housing component.

At the May 7 FERC meeting, the Committee passed amotion to have this item return to the May 2025 Commission meeting with a favorable recommendation for a referral to the North Beach CRA Advisory Committee to discuss utilizing North Beach CRA workforce housing budget to fund the consulting proposal. The referral passed on consent.

The North Beach CRA voted unanimously at their June 17 th meeting to recommend the use of up to $190,000 from the CRA’s workforce housing budget for fund the AMS study on how to optimize the Byron Carlyle workforce housing, identify financing options, and create a scope of work for a future RFP.

ANALYSIS

The maximum allowable rents for workforce housing units are based on Area Median Income (AMI), as reported by the United States Department of Housing and Urban Development (HUD). Allowable total household income limits for workforce housing are defined as approximately 60%

to 140% AMI, adjusted for size of household. The maximum rent is then calculated to be 30% of the top income for that bracket.

Example for a one-person household at 120% AMI: AMI in Miami-Dade County (2024): $79,400 Maximum allowable income at 120% AMI: $79,400 x 1.2 = $95,280 (HUD Actual $95,400) Maximum allowable rent at 120% AMI: $95,400 x 0.3 = $28.620/year or $2,385/month

Example for a one-person household at 80% AMI: AMI in Miami-Dade County (2024): $79,400 Maximum allowable income at 80% AMI: $79,400 x .8 = $63,520 (HUD Actual $63,600) Maximum allowable rent at 80% AMI: $63,600 x 0.3 = $19,080/year or $1,590/month

Most of the Workforce Housing developments examined in this exercise have an allotment of units available for applicants ranging from 60% AMI through 140% AMI.

Currently, the City of Miami Beach Municipal Code (Sec. 142-276) limits the minimum size of any workforce housing unit to 400 square feet.

As part of the Byron Carlyle development RFP, the City could choose to impose limits, beyond those already governing new workforce housing units. If this is the case, it would be beneficial to model the workforce housing project to better understand how those requirements would affect the financing and the future subsidy of the Cultural Center. Modeling the workforce housing component would inform the City as to what the trade-offs would be, and at what point the project may no longer be viable to a private developer. Understanding these limitations before issuing an RFP would help the City make optimal decisions that leverage its assets to meet its goals in the development deal. Not fully understanding the financial implications of these desired terms may lead to an unsuccessful RFP process for several reasons. First, the requirements set forth by the City could be too onerous and make this project cost prohibitive to a private developer, leading to few or no respondents to the RFP. Secondly, an RFP that does not clearly lay out the critical requirements of the project may lead to proposals that are so far off from the desired goals of the project that the two may be irreconcilable.

Learning of the potential need to define the workforce housing component, AMS Planning and Research has brought two firms to the attention of the City. The first, Denham Wolff specializes in advising non-profit organizations on how to craft real-estate development projects that uphold the organization’s priorities while best leveraging their assets. Denham Wolff would model the Byron Workforce housing component to find the terms that best balance the needs of the Cultural Center with the affordability of the workforce housing and financing requirements. These values would be made part of the RFP and not left to the discretion of the responding developers. Additionally, because of their experience with these types of development projects, part of their scope will be to advise on what developers could be targeted with this RFP.

Based on the work from AMS and Denham Wolff, Hilltop Securities can work to specify the financing model(s) that would work best to fund the part of the project not paid for through the GO Bond. This would give the City the flexibility to choose from financing options that best serve the objectives of the project, instead of solely relying on a private developer financing model which may require the City to compromise its interests.

Based on the knowledge gained from their continued involvement with the Byron Carlyle Project and their decades of expertise in the development of cultural centers, the Administration believes that AMS is uniquely positioned to execute this scope of work in an expeditious and thorough manner. Therefore, it is the belief of the Administration that the waiving of a formal bid process by a 5/7 th vote would be most efficient in moving the project forward.

FISCAL IMPACT STATEMENT

The 2022 G.O. Bond for Arts and Culture has appropriated $30,570,000 (split over two tranches) for the redevelopment of the Byron Carlyle Theater: $10,590,000 in tranche 1 and $19,980,000 in tranche 2. This project also qualifies to receive part or all of an additional $4,000,000 available for workforce housing through the 2022 G.O. Bond for Art and Culture.

The cost of the AMS/Denham Wolff/Hilltop Securities scope of work will be between $160,000 and $190,000, to be paid for out of the North Beach Community Redevelopment Authority (NBCRA) workforce housing budget.

Does this Ordinance require a Business Impact Estimate? (FOR ORDINANCES ONLY)

If applicable, the Business Impact Estimate (BIE) was published on: See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

FINANCIAL INFORMATION

CONCLUSION

The Administration recommends the Mayor and City Commission accept the recommendation of the NBCRA to fund the analysis of the Byron Carlyle workforce housing project and financing options, in preparation for issuance of an RFP for the development of the Byron Carlyle Cultural Center. Further, the Administration requests the authority, through a 5/7 th vote waiving a formal bid process, to engage AMS Research and Planning, Denham Wolf, and Hilltop Securities in this work, up to the amount of $190,000.

Applicable Area

North Beach

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? No

If so, specify the name of lobbyist(s) and principal(s):

Department

Facilities and Fleet Management

Sponsor(s)

Commissioner Tanya K. Bhatt

Co-sponsor(s)

Condensed Title

Accept NBCRA Rec/Fund Workforce Housing Analysis for Byron Carlyle Project. (Bhatt) FF 5/7

Previous Action (For City Clerk Use Only)