Google Ads help pay the expense of maintaining this site

Click Here for the Neighborhood Transformation Website

Fair Use Disclaimer

Neighborhood Transformation is a nonprofit, noncommercial website that, at times, may contain copyrighted material that have not always been specifically authorized by the copyright owner. It makes such material available in its efforts to advance the understanding of poverty and low income distressed neighborhoods in hopes of helping to find solutions for those problems. It believes that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. Persons wishing to use copyrighted material from this site for purposes of their own that go beyond 'fair use' must first obtain permission from the copyright owner.
Miami Herald - July 24, 2006

"House of Lies" (part 2)

Nonprofit's connections, performance raises questions


By Debbie Cenziper

In a rundown office in the shadows of the Palmetto Expressway, a novice developer with a skeletal staff and a string of stalled projects is raking in millions of dollars to build homes for the poor.

Over five years, the MDHA Development Corp. received $16 million from Miami-Dade County, dozens of vacant lots, the deed to an apartment complex, county office equipment, loaner cars and staff time worth almost $500,000.

But of 17 affordable housing projects, the nonprofit has produced just one: a 100-unit apartment complex for the elderly that was months delayed and riddled with building breakdowns.

For that single, bungled project, the nonprofit is scheduled to receive a $900,000 developer's fee.

And the money keeps coming: The County Commission recently awarded the nonprofit another $2.5 million.

The flow of taxpayer dollars to the fledgling nonprofit is among the most troubling examples of what's gone wrong with public housing in Miami-Dade, and how politics and connections trump sound business judgment and fundamental county policy.

Since its founding, the nonprofit has been on the receiving end of an open checkbook, courtesy of the Miami-Dade Housing Agency and the County Commission.

Time and again, commissioners funneled money and land to the nonprofit through the Housing Agency, which bent the rules to deliver the cash quickly, no strings attached.

But instead of building badly needed homes for the poor, the nonprofit struck deals that benefited well-connected developers, former Housing Agency employees, a board member's business partner and a county commissioner's troubled social service agency, an investigation by The Miami Herald has found.


• County commissioners overlooked established developers to approve more than $30 million in loans to the nonprofit even as its projects were floundering.

• In charge of delivering the money, the Housing Agency transferred nearly one-third or $9.5 million for five building projects that years later still haven't produced any homes.

The advances violated one of the agency's most basic policies: no money until construction begins.

Complicating matters, the Housing Agency paid the money without demanding that the nonprofit sign loan documents, leaving the county with no collateral.

"What if they don't do the project? I have nothing," said Tawana Thompson, who oversees the Housing Agency's construction loan program.

• In one case, the Housing Agency wired $4 million to the nonprofit for unspecified "elderly housing projects." Four years later, the nonprofit hasn't even found land to start building. The money has not been returned.

• The nonprofit's key connection came from its first president and chairman, Rene Rodriguez, who had pull at the Housing Agency. He was running it while at the same time leading the nonprofit, a dual role established by county officials.

As the Housing Agency's director, Rodriguez ordered a series of payments to the nonprofit over the objections of his staff.

• Under Rodriguez's leadership, the Housing Agency also loaned the nonprofit cars, office space, equipment and staff time. When the Housing Agency sent a bill earlier this year to be reimbursed for $496,000, the nonprofit refused to pay.

• The County Commission and Housing Agency gave the nonprofit land, too: more than 60 county-owned lots. The Housing Agency department head who until recently oversaw land transfers was Emma Duffie, wife of the nonprofit's longtime board member, Alben Duffie.

• While the Housing Agency was delivering money, the nonprofit was striking questionable deals. In 2004, it shelled out $750,000 to partner on a building project with developer Oscar Rivero, even as he struggled with two other troubled housing projects. So far, the new project has never materialized.

Rivero was no stranger to the nonprofit. He and Duffie, the nonprofit's longtime board member, are among the investors involved in the construction of an office complex for the Housing Agency.

The year after the nonprofit paid the $750,000, Rivero, board chairman at the Miami Parking Authority, approved a parking garage deal for Duffie's development company.

The nonprofit defends its decisions and track record.

"The [nonprofit] is proud to have, in just a few years of operation, 10 projects under way for approximately 640 additional affordable housing units in Miami-Dade County," Executive Director Maria de Pedro-Gonzalez wrote in a letter to The Miami Herald.

But records and interviews show almost every project has been steeped in what builders call predevelopment, with permitting, zoning and financing issues. The nonprofit now has just one project under construction, but the work is being handled largely by its for-profit development partner.

When The Miami Herald contacted nonprofit Vice President Allen Fuller, he said he had no idea that projects were so far behind.

"That's shocking to me," he said. "They're still stuck in predevelopment?"

Ward Towers, an affordable housing complex for the elderly. (Raul Ruberia/Miami Herald) Photo gallery


Fearing that Miami's runaway home prices were stranding the low-income elderly in homes they couldn't afford, county commissioners in 2000 took a bold step: They created a private nonprofit to build a stateof-the-art apartment building.

With 100 apartments, Ward Towers would be the first public housing complex built in Miami-Dade since the mid-1970s.

To help pay for it, the county decided to apply for affordable housing dollars from the state. Government agencies aren't eligible, so commissioners created the MDHA Development Corp. to do it.

The nonprofit would oversee the construction of Ward Towers and become its owner. But within months, the nonprofit morphed into one of the busiest developers in Miami-Dade.

Again and again, county commissioners tossed projects to the group, bypassing a slate of experienced developers never given the chance to bid for the work.

There was the Pinkston Drive building project: $2 million.

Smathers Plaza: $3 million.

Senator Villas: $2.8 million.

Gran Via Apartments: $4.5 million.

Though the nonprofit was new, it had one crucial asset: connections.

When the nonprofit was created, county staff members chose its leaders. There was no competitive process, and years later, there is no paperwork to track how the appointments were made. Named to the board: then-Assistant County Manager Barbara Jordan, Rodriguez, Deputy Housing Agency Director Alphonso Brewster, lobbyist Duffie and Florida International University Professor Pamela Elfenbein.

County officials said the idea was to create a quasigovernment development group that would act as an arm of the Housing Agency.

In reality, they created a private entity with a direct pipeline to some of the most powerful officials in Miami.

With Rodriguez as the county's top housing official and president of the newly formed nonprofit, it was poised to benefit from the Housing Agency's staff, equipment, and most importantly, the county's pot of money for affordable housing.

It began with a simple request.

In 2001, Rodriguez directed the Housing Agency to cut a check for $2,500 so the nonprofit could open a bank account.

Over the next few months, Rodriguez would direct two more transfers worth $3 million, in part, to cover unexpected costs at Ward Towers -- the nonprofit's lone, troubled project.

In 2004, records show, he ordered the agency to advance $1.5 million to the nonprofit for another project, a 12-unit apartment complex for the elderly. That directive and others like it would cross a line that would put taxpayers' money at risk with few people even aware of it.

The agency's own affordable housing contract states, "In no event shall the county provide advance . . . funding to the developer."

The contract also demands that developers submit detailed invoices and receipts before any money is disbursed. In this case, the nonprofit submitted a 15-word letter to the Housing Agency and walked off with $1.5 million.

The single sentence: "This serves as a request and invoice for $1,501,000 on behalf of MDHA Development Corp."

That was in April 2004. So far, nothing has been built.



One of the most questionable advances came in 2002, when the Housing Agency forwarded $6 million to the nonprofit for little more than a lofty idea: the development of three housing projects for seniors.

"Demand for elderly affordable housing is critical at the national and local levels, primarily because people live longer," county commissioners wrote in the resolution authorizing the money.

The nonprofit had purchased no land to build on. Yet the money was transferred, free and clear, with no loan documents ever signed. Housing officials, in fact, couldn't have gotten documents even if they had bothered to ask because the nonprofit didn't own any land to put up for collateral.

Other developers must provide stacks of paperwork, much like a home closing, showing land title, proof of building insurance, names of architects and contractors and financial statements. The Housing Agency records a mortgage against the property. Even then, the agency generally doesn't transfer money before construction.

Not so with the nonprofit, which, four years after receiving the $6 million, still hasn't found land for two of the three projects.

"Nothing has materialized," said Executive Director de Pedro-Gonzalez.

The nonprofit continues to hold on to the $4 million earmarked for the two projects.

Brewster, who replaced Rodriguez as head of the Housing Agency, demanded last year that the nonprofit return $1 million so another developer could launch a project. Nonprofit officials refused, saying that's an order that can only come from the County Commission.



Thompson, who helped handle the cash advances and contracts as head of the Housing Agency's construction loan department, said she questioned the decisions but ultimately succumbed to Rodriguez, her boss. She said Rodriguez directed the agency to forward the money.

"We didn't close any of those loans," she said. "The director, I assumed he had the authorization. He directed that the funds be transferred to the Development Corp."

Rodriguez did not respond to The Miami Herald's calls and letters requesting interviews.

In correspondence to his staff at the Housing Agency, however, Rodriguez justified the transfers by citing the resolutions passed by the County Commission. Those resolutions called for the "allocation and transfer'' of funds, but did not specify when the money should be paid.

Enter the Housing Agency, which simply advanced much of the money in violation of its own policies and over staff objections.

Assistant County Attorney Terrence Smith, who has overseen legal matters at the Housing Agency for six years, said he was not consulted about the transfers. He also said he was unaware that money changed hands without signed loan documents.

"That's left entirely up to the department," he said.

Jordan, now a county commissioner who served on the nonprofit board when it was created, said she did not know when money was wired. But she said county staff members assumed construction would start immediately.

"It's really a dismal report when you look at the fact that construction has not started," she told The Miami Herald. "We have a serious problem."

In all, the County Commission approved more than $30 million in loans for the nonprofit. Of that, the Housing Agency transferred $16 million: Most went to the advances in question, the rest to Ward Towers, the nonprof it's only completed building project.

In recent months, the Housing Agency has refused to give the nonprofit the rest of the money until projects have started and loan documents are signed.

What happened to the $9.5 million in advances is largely unclear: In five years, the county manager and County Commission have never demanded an audit.
Marta Bido with daughter Carmen, 16, right, both of whom suffer from muscular dystrophy. Bido applied for affordable housing but three years later, it still hasn't been built. (Chuck Fadely/Miami Herald) Photo gallery
Marta Bido video



The Miami Herald's review of the group's accounting reports and project files shows tens of thousands of dollars went to "soft'' costs and salaries not construction:

• After Rodriguez resigned from the nonprofit's board in 2004, he stayed on as a $5,500-a-month consultant. Over seven months, he collected almost $40,000.

• The nonprofit in 2005 gave Executive Director de Pedro-Gonzalez, who had worked at the Housing Agency under Rodriguez, a $120,000-a-year annual salary. The nonprofit also agreed to $700 a month for insurance and a car allowance, and $150 a month as an "executive benefit."

• That same year, the nonprofit paid $25,000 to Rivero, the troubled builder, to draft forms used for competitive bidding. At least $15,000 was paid to Masvidal Partners, run by Raul Masvidal. Masvidal is a developer and business partner to Duffie, the nonprofit's longtime board member.

Another $2,000 was paid to the nonprofit Black Business Association, also headed by Duffie, for a table at two annual galas.

• Overall, architects took in more than $700,000; lawyers, more than $200,000; accountants, more than $45,000.

The payments came at a time when most of the projects taken on by the nonprofit were falling behind, delayed by permitting or zoning problems, land shortages, funding gaps and negotiations with co-developers, according to the nonprofit.

"It takes a lot to develop affordable housing," de Pedro-Gonzalez said.

Said the nonprofit's attorney, Mitchell Bierman, "Actually, the track record is stellar to have completed one project and have another one under construction."

But the nonprofit's struggles have affected hundreds of Miami-Dade residents, including Marta Bido, who worked for decades as a bookkeeper until muscular dystrophy forced her off the job. At 53, she collects disability, but her rent is $650 and going up every year.

From a friend, Bido learned about a new building by the nonprofit called the Gran Via Apartments.

She called the nonprofit and signed up. But construction hasn't started more than three years later, though County Commissioner Joe Martinez staged an upbeat groundbreaking in 2004.

Nonprofit Executive Director de Pedro-Gonzalez said a co-developer was recently selected for the project, which so far has been awarded $4.5 million from county commissioners.



Even as its projects fell behind, the nonprofit in 2004 took on another: Sunset Pointe Apartments.

Board members decided to partner with Rivero, who was already struggling with two other affordable housing projects that were months behind schedule.

Sunset Pointe called for a 46-unit complex for the elderly in South Miami with all the amenities "normally associated with affordable housing properties developed by [Rivero]." It would be built across from a rundown public housing complex, offering residents a chance to move into newer homes.

Despite Rivero's track record, the nonprofit kicked in $750,000 to a newly formed Sunset Pointe limited liability company.

"It was to ensure the project got done," de Pedro-Gonzalez said.

Rivero told the nonprofit he would use the money, in part, to repay a $284,000 loan his development group had made to the new company; the rest would help pay for the land.

But like the rest of the nonprofit's projects, Sunset Pointe is delayed. Zoning issues are to blame, de PedroGonzalez said.

Rivero would not answer specific questions about the project, but said in a written statement that Sunset Pointe and his other projects "ideally would be closer to completion at this time, however, extenuating circumstances . . . have delayed the delivery of units."

The lack of progress and unquestioned deals mystify other developers.

"There is a political clique, and if you're not in that clique, you're just like everyone else in town and you follow the rules," said longtime developer Jerry Flick, who is building affordable homes on inner-city urban lots. "But if you're in that clique, you profit."