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
Miami SunPost - December 9, 2007
Why spend millions building affordable housing projects when existing condominiums can be purchased for less money?
By Erik Bojnansky
As television and still cameras readied to fire, developers and
politicians lined up on top of a mound of dirt in Little Havana on the
morning of Nov. 19 with shovels in hand.
"Wait, you need hard hats," yelled Kelly Penton, the city of Miami's
communications director. The officials dutifully put on the white,
plastic headgear. "Look up, look up, look up," instructed official city
photographer Jorge Perez. "One, two, three."
Miami Mayor Manny Diaz, District 3 Commissioner Joe Sanchez and state
Rep. Carlos Lopez-Cantera posed alongside CODEC Inc. President Guarion
Diaz on the future site of La Palma Apartments, an affordable housing
complex for those ages 62 and older. The photo op didn't just
commemorate the groundbreaking of the 90-unit rental housing project at
1040 S.W. First St., it memorialized what could be the end of an era
and the beginning of the city of Miami's latest venture ' landlord to
the working class ' if one Miami commissioner has his way.
Since 2000, the city of Miami has invested $50.2 million, along with
another $718.3 million from state and federal sources, to construct
4,580 affordable condos and apartment buildings. This year alone, the
city of Miami devoted $269 million in city, county, state and federal
funds to multifamily projects. Mayor Diaz wants to invest a total of $1
billion in affordable housing for low- and median-income families '
those who make less than $50,000 a year ' by 2010.
For example, public money subsidized La Palma Apartments' entire $12.7
million construction bill. The U.S. Department of Housing and Urban
Development paid $11 million, Miami-Dade County paid $1 million and the
city of Miami paid $740,999 via federal affordable housing grants to
build the project on vacant land that property owner Lopez-Cantera sold
to CODEC Inc., a nonprofit community housing organization.
"This property was ' owned by my family for more than 70 years,"
Lopez-Cantera said. The state representative claimed the family had
many offers to sell, "but we chose to stay with CODEC" because it would
benefit the community, he said.
However, District 2 Commissioner Marc Sarnoff believes the city can
obtain the units it needs to house the indigent, workers and upwardly
mobile professionals faster and for far less money by taking advantage
of the slumping real estate market. Instead of paying developers $350 a
square foot to build affordable housing projects in "lousy" and
sometimes remote locations, Sarnoff said the city should buy up condos
now under construction near restaurants, shops and the Metrorail for
$175 per square foot or less.
"You can buy existing units and usually they are in pretty good
locations ' on the water or by mass transit ' at $150 or $180 a square
foot," said Peter Ehrlich, a real estate investor who consults for
Sarnoff's office. "It is considerably less expensive than what the
taxpayers are paying for these affordable housing projects."
Sarnoff, who proposed the plan during a Nov. 9 Miami City Commission
meeting, said he wanted to "start the conversation" and prompt Miami
officials to think about new ways to provide affordable housing for
teachers, city employees and service workers.
"I'm just trying to make the city realize that there is a market
condition that exists that government does not take advantage of,"
"We have the opportunity to create 'mixed income' neighborhoods," which
would alleviate congestion and save on gas consumption, he said.
"Imagine the service workers, the clerical workers, the mail room
workers who currently work on Brickell Avenue, all living on Brickell
Avenue? They could walk to work."
There are plenty of units in the city of Miami that can be purchased
for less than $225,000, or even $150,000, according to a survey by the
city's Department of Community Development. There are currently 752
residences, ranging from 380 to 1,550 square feet, on the market for
between $100,000 and $250,000. Eighty of those, ranging from 337 to
1,075 square feet, cost between $100,000 and $150,000.
Because of the recent development boom, Sarnoff said an additional
19,000 condominium units will be completed in the next two years in
what is already an over-saturated market ' especially in such urban
areas as the Civic Center and Health District, Edgewater and Wynwood,
the Upper Eastside, Brickell and downtown.
"We are in part of a 20-year cycle where it costs more to build
something than to buy something already in the market, and this does
not happen very often," Ehrlich said. "There are a lot of bargains."
While Sarnoff is discussing his idea with county and state officials,
including Lopez-Cantera, exactly how the city would go about investing
in real estate still hasn't been worked out.
The city could either provide more assistance to low-income buyers who
wish to purchase units below $225,000, or purchase units outright and
either rent them or sell them to low- or moderate-income individuals at
affordable rates, Sarnoff said.
"You buy them and then you sell [them] to workforce housing," he offered. "We could form a corporation."
Community Development already has a program to provide low-interest
loans and grants to low- and moderate-income single-family homebuyers.
In fact, since 2000, the city has invested and leveraged $57.5 million
to help buyers purchase 511 houses under $225,000. Yet, no such program
exists for Miamians who want to purchase condominiums at those rates.
Sarnoff also suggested that Miami imitate the Miami Beach Community
Development Corporation's "scattered site" program, in which the
nonprofit group, using public funds, purchases units in different
buildings throughout Miami Beach and rents them to low-income families
and individuals, senior citizens on fixed incomes and those with
Karen Mock, a Majestic Properties real estate agent, said there is
plenty of "attainable housing" as large as 1,800 square feet in the
city of Miami for less than $250,000, or $150 per square foot, because
many of the development boom buyers can't afford their mortgages. So
now, she said, they must rent out their units or sell.
So far, reactions to Sarnoff's proposal have been mixed.
"Well, if it works for the developer and works for the city then it could work," said Joel Krieger of Ingletto Realty.
Although Mayor Diaz said he's "open to anything that provides
affordable housing," he opined that the plan still "needs a lot of
Others aren't so enthusiastic.
"I don't think the condo developers should be bailed out," said
Bernadette Armand, project coordinator for the Overtown-based Power U
Center for Social Change.
Aside from assisting Sarnoff's office in gathering research for his
presentation, the Department of Community Development, which is
responsible for overseeing Miami's affordable housing efforts, has been
cold to the idea.
"We don't have enough funds to purchase the number of units necessary
to make an impact on affordable housing," Assistant Community
Development Director George Mensah said.
Of an annual $35 million budget, Community Development says it has only
$3.2 million in state and federal funding available in fiscal year
2008-09 to build houses.
Currently, the city uses nonprofit developers known as community
housing development organizations, which are allowed to partner with
for-profit developers, to build its affordable housing projects.
In the case of La Palma, CODEC bought a vacant parcel from
Lopez-Cantera's family and partnered with Peninsula Housing Development
Inc. to build the publicly funded rental project, where seniors
dependent on Social Security checks can live in one-bedroom units for
only 30 percent of their monthly income. That means residents earning
only $300 a month will pay only $90 a month in rent, according to
Community Development spokesperson Christine Bermudez-Sola.
Community Development also has funded rental and condominium projects
that require developers to keep units below a certain price for low-
and moderate-income individuals and families in exchange for a subsidy.
To be eligible for low-income housing, applicants must make less than
80 percent of $45,200 a year, the average median income of the Miami
region as defined by the U.S. Department of Housing and Urban
Development. Individuals would have to earn less than $33,200 a year;
families of eight would have to earn less than $62,650 a year.
To meet workforce housing requirements, however, applicants must earn
less than 120 percent of the $45,200 average median annual income.
That's less than $49,800 a year for individuals and $93,975 a year for
families of eight.
Still, Ehrlich said the city needlessly funnels too much money to
community housing development organizations for affordable housing
"They [the city] are paying up to $350 a square foot, and some
[projects] are in really bad locations" that "developers find
attractive for warehousing poor people," Ehrlich said. For example,
YMCA Carver Station, an affordable housing and preschool complex being
developed on a five-acre site at Interstate 95 and 71st Street, is
located near "busy railroad tracks," a busy expressway and a Florida
Power and Light electrical substation.
Krieger, a Realtor selling condo units at Highland Park Lofts in the
Civic Center and Health District for around $169,000, said the city
should avoid being in a position where it has to own or manage
"Government is not the best manager," he said. Instead, it should "let the developer make it happen."
Armand of Power U said that while she welcomes discussions about
affordable housing, she believes Miami officials are more interested in
helping builders than the needy.
For example, she and many other Overtown residents fear that Sawyer's
Walk, a mixed-use condominium that Crosswinds plans to develop on city
land in Overtown, will gentrify an area where residents make less than
$20,000 a year.
Though the current real estate market "can't sustain" the project,
Miami officials continue to fight to keep the Crosswinds deal alive,
Armand said. "It tells me that the city of Miami is not operating
through logic ' it is operating to pander to developers," she said.
Her sentiments reflect two recent affordable housing scandals involving both the city and the county.
A 2006 Miami Herald investigation revealed that Miami-Dade County's
housing agency gave land and money to developers who never constructed
public housing. Several developers were arrested in relation to the
scandal and the State Attorney's Office is now investigating the
department's former director, Rene Rodriguez.
Then, in June 2007, the Herald and Victor Igwe, Miami's auditor
general, found that the city of Miami gave millions in public funds to
five developers who also failed to build affordable housing. The Herald
also found out that the Department of Community Development's then
director, Barbara Gomez, funneled $1 million in contracts to one of her
ex-husbands, Ruben Santana, soon after he was released from prison.
(Her more recent ex-husband was Rodriguez, the county housing agency's
former director.) She also continued to fund a social service agency
that employed her son, Ruben Santana Jr. Gomez was fired from the city
in July and lost her pension.
Commissioner Sanchez also is concerned about the appearance of such a
plan. "How do we assure the public that this is not a bailout for
developers who are oversaturated with units?" he asked during the Nov.
9 City Commission meeting.
Still, many agree that the city of Miami could benefit from mixed-income neighborhoods.
In Montgomery County, Md., developers are required to set aside some
future units for low- and moderate-income individuals, Ehrlich said,
and Chicago also is looking to create mixed-income housing.
"We think Miami is the only city we know of that is building these vertical poor-people housing [projects]," he said.
Comments? E-mail email@example.com.