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Miami Herald - 1/08/05 -

HUD wants Miami to pay back $2.6M

In the latest setback in the effort to build affordable housing in Miami's Model City, the federal government wants its money back -- for the second time.


During the past few years, Miami has spent millions to boost homeownership in the city's struggling Model City neighborhood, buying dozens of properties and paying consulting companies to help guide the process.

But, as of today, the city still hasn't built a single house, and the federal government -- the primary source of money for the revival effort -- wants its money back. Again.

In a letter recently delivered to Miami leaders, the U.S. Department of Housing and Urban Development requested the city pay back roughly $2.6 million in federal grant money that has been used in an area known as the Model City Community Revitalization District.

Miami already returned $1.8 million in Model City-slated money last year because HUD complained city-owned properties were sitting vacant for too long.

Among other things, HUD monitors are criticizing the city for how it acquired properties, questioning some professional services payments, and saying Miami failed to focus on a stated goal: to build affordable housing in one of Miami's poorest neighborhoods.

''The city has spent over $2 million for acquisition expenses, which to date have not met the city's plan to develop affordable housing units for its residents,'' the report states.

Barbara Gomez-Rodriguez, head of the city Community Development Department, which oversees the spending of HUD money, could not be reached Friday.

City leaders say they will return the money, although they hope to ask for it back in the future.

Both Miami politicians and members of the Model City Trust that oversees the program have long been frustrated by the lack of progress in building homes. To a large extent, each side has blamed the other for slowing down the process.

City Commission Chairman Joe Sanchez suggested Friday the best remaining option might be to eliminate the trust altogether. But Marva Wiley, president/CEO of the Model City Trust, sees most of HUD's criticisms as directed at the city, not the trust.

The Model City home project was conceived as part of the city's 1999 consolidated plan to construct more than 1,000 affordable homes in the neighborhood within the first two years. In 2002, a quasi-independent agency called the Model City Homeownership Trust was created to oversee the project.

The city purchased or put under contract for purchase dozens of properties. It seized and tore down slum apartment buildings, and relocated hundreds of tenants out of the area. But no homes have been built.

Sanchez said HUD's recent criticisms left him with little patience for dealing with the trust. ''In government, if something is not working, you get rid of it,'' Sanchez said.

Eliminating the trust would not necessarily destroy the redevelopment plans -- the city could carry those on itself -- but it would nonetheless be controversial, and members of the trust would likely not disappear quietly.

Wiley said her agency has been threatened with dissolution but survived.

''In May 2003 I was told the project was irretrievably broken,'' Wiley said. ``I was told to scale it back.''

The HUD letter, for its part, faults decisions made by both city administrators and the Model City Trust Board.

The money HUD is asking Miami to pay back breaks down into two main categories:

? $1.4 million used to buy properties because construction did not start within 12 months after they were acquired, a stipulation for using HUD money.

? $1.2 million used for professional services that have not created affordable housing -- such as a consultant brought in to study charter schools in the area.

While those professional services may not have created housing, some were related to predevelopment activities, including appraisals and infrastructure assessments.

Wiley defended the charter school study as a necessary expense, saying it was in fact an overall assessment of schools in the area to help potential homeowners.

''It's a critical factor when people decide where they would relocate to,'' Wiley said. ``It does have to do with the marketing piece, being able to attract people to the neighborhood.''

City Commissioner Johnny Winton said HUD knew money was going to such expenses in the past and didn't object. ''If this is all so bad . . . why wasn't it in the first letter HUD wrote asking for their money back?'' Winton said. Some of the property purchases cited by HUD were made in the program's early stages, when former Community Development Director Gwendolyn Warren was running the trust. She declined comment on Friday.