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Business Review June 11, 2008
could bring rookie developer out of default
By: Paola Iuspa-Abbott
In South Florida’s tumultuous real estate market, even subsidized
housing projects aren’t immune to foreclosures.
Yet, Roberto Godoy may be one of the luckiest rookie developers in
Miami. City officials are considering using millions of taxpayers’
dollars to rescue him from a construction loan that is in default.
SunTrust Bank last month cut a deal with city officials, letting them
buy the troubled $2.99 million mortgage for $3 million. The city wasn’t
the loan guarantor but agreed in principle to the deal to save the
affordable housing project. Miami city commissioners will debate the
agreement at a meeting in City Hall on Thursday.
The 32-unit condo building at 1475 W. Flagler St. will target
low-income families buying a home for the first time.
Miami attorney Steven Mishan, who represented SunTrust, said the
negotiations were amicable, and both parties stand to get what they
wanted. The bank gave the city a “courtesy” discount of about $125,000
for averting the foreclosure, Mishan said.
Since 2002, the city has sunk almost $1.5 million of federal funds into
the project. Miami-Dade County added close to $1.8 million.
SunTrust lent Godoy’s Model Housing Cooperative $2.99 million in March
2005. Godoy — a longtime immigration lawyer who had never built a
project before — began lobbying county and city commissioners for
federal money in the late 1990s.
In the late 1970s and early 1980s, the politically connected Godoy led
the Miami-Dade Republican Party. He was replaced by Jeb Bush, who went
on to become Florida’s governor. Godoy also served as commissioner of
the now-defunct Miami-Dade Fire and Rescue Service Board, he said.
But the political world did not prepare the novice developer to deal
with the cost of lengthy construction, due in part to delays in federal
funding and in part to construction defects that had to be corrected.
The five-story building was to be completed in September 2005, but
construction didn’t start until mid-June 2005. That was when Miami
Mayor Manny Diaz and former Miami Community Development Director
Barbara Gomez-Rodriguez attended the groundbreaking ceremony for the
project, named Villas Dr. Godoy, under a blistering noon sun. Diaz and
Gomez-Rodriguez lauded Godoy’s effort to build homes for the poor.
Then, choking back tears, Godoy told the crowd the project was to honor
his late father, who had bought the land in the early 1990s to build
“All he did before dying in 1995 was talk about building condos for the
less fortunate,” Godoy said this week. “It was his dream … and my
Except for some fire safety equipment that still needs to be installed,
the building is almost ready.
Larry Spring, Miami’s financial chief officer, said the city’s
Community Development Department tries to stay away from inexperienced
developers seeking subsidies. He said the department has undergone
numerous changes since Godoy began his project. In 2007, the department
got a new director, new staff and new underwriting practices to
allocate public subsidies, he said.
“We have elevated our underwriting standards,” Spring said.
Spring said the bailout was needed to protect the city’s investment. If
the mortgage was foreclosed, the city would have had to pay the federal
government back the $1.5 million that went into the project. Also, the
city would have lost a chance to bring affordable housing to East
Little Havana. The two- and three-bedroom condos will sell for from
$112,350 to $209,000.
Spring said he was surprised SunTrust moved to foreclose on an
affordable housing project.
“It is very unusual for a bank to put a city and county in a buy-out
position,” said Spring, who was vice president of TotalBank from 1996
until 2003, when he joined the city.
Mishan, the bank’s attorney, wrote in an April 15 letter that SunTrust
no longer trusted Godoy’s ability to “either control the project or
complete it on his own.”
The city plans to recoup the $3 million when the units are sold. Godoy
will remain at the helm of the project, with the city owning the first
mortgage. The federal government will forgive the $1.5 million invested
in the project after the condos are sold.
Real estate consultant Saul Cimbler said it makes sense for the city to
try to save its investment as a second mortgage holder.
“It is not unusual for a second position to buy a first mortgage to
protect” its interest, he said.
Godoy doesn’t expect to make any money selling the condos. But he hopes
to make close to $250,000 by selling nearly 1,200 square feet of office
space on the ground floor, he said.
Godoy, 74, can’t wait for the project to be over.
“It took too long … too many headaches,” he said. “I would never do
anything like this again. It is time to retire.”