Urban-renewal 'millions' yield little

Federal and state investigators are asking where the $70 million Miami paid out to rehabilitate the Overtown community has gone. BY OSCAR CORRAL ocorral@herald.com

Politicians have poured more than $70 million of taxpayer money in the past decade into one of Miami's poorest neighborhoods, the Overtown area, but the community has little to show for it, a Herald investigation has found.

Promised affordable housing has not been built. Empty lots dot areas where multifamily buildings once stood. Homelessness is on the rise. Money intended for redevelopment has been squandered.

• Almost every investor who got a city loan to rehabilitate multifamily housing in the past 20 years went into default. Some of those rehabilitated buildings have now been demolished, and the city has had mixed results in recovering its money.

• The city's Community Redevelopment Agency, charged with reviving parts of the historic black community, has spent almost $35 million in the past decade without financially spearheading a single major housing development. Only five of its 36 proposed projects have been completed.

• St. John Community Development Corp., one of the largest nonprofit builders and property owners in Overtown, has not completed a single low-income housing unit during the past 10 years and is not expected to finish any new housing projects before 2004. In the past decade, the city gave St. John $1.7 million in funding for its projects, but the corporation spent only about $300,000 before the city pulled the money, city records show.

Miami City Manager Joe Arriola acknowledges that Overtown has been neglected, but pledges the city will change its approach.

''I think prior leadership totally failed Overtown,'' Arriola said. ``There was a lot of talk and promises, and as far as I'm concerned, they are broken promises.''

The area's seemingly unstoppable decline is disheartening, says Karen Cartwright, an Overtown activist who does volunteer gardening at Williams Park.

''I haven't seen anything over here that can account for the amount of money I've heard Overtown has received,'' Cartwright said. ``Who benefited? Because it isn't the people in Overtown. The housing is inadequate. The parks are in no condition to say they got money. Where did the money go?''

It's a question also being asked by state and federal investigators. In July, prosecutors from the U.S. Attorney's office subpoenaed stacks of financial documents, housing contracts and more from the CRA and the city's finance department. Two weeks earlier, Miami-Dade County prosecutors handed the city a similar subpoena. Investigators are trying to determine whether the money was used improperly.

One of the city's most extensive efforts to rehabilitate Overtown housing took place from the mid-1980s to the mid-1990s, when it doled out $25 million in loans from its share of federal dollars to investors to rehabilitate and/or buy multifamily housing around the city.

Investors targeting Overtown got about 20 of the 60 loans. Of those 20, 17 went into default. Many of the investors say poor market conditions, such as the area's crime and poverty rates, worked against them.

City building permits -- a barometer of how money gets spent on a project -- show that some of the investors spent less than the loan amounts on construction.

In at least two cases, the city sank hundreds of thousands of dollars into rehabilitating six Overtown buildings that were then demolished with taxpayer dollars because they had become hazards.

The investors in those two projects, U.S. Magistrate Judge Patrick White and partner Ozzie Black and political consultant Alberto Lorenzo, have not paid most of it back. Including interest and late fees, Miami says Lorenzo owes $1,232,324, while White and Black owe about $192,000.

Some of the investors who defaulted on city loans for housing rehabilitation in Overtown continued to get funding or business from the city. Among them: The Urban League of Greater Miami, which borrowed $418,929 from the city in 1988 to rehabilitate four apartment buildings.

It defaulted on its loan in 1997 after honoring the debt for several years, but continued to get $16,500 annually in federal housing grants until 1999, city records show.

After years of negotiating with the city, the Urban League recently settled most of the loan, and now owes only $12,540.

Urban League President and Overtown activist T. Willard Fair said the organization was a victim of Overtown's bad market conditions.

''We could not find anybody who was willing to rent out the properties for a period of time,'' Fair said.

Miami has been trying to recoup loan money from investors, in some instances for as long as 10 years. City lawyers have sued several on behalf of taxpayers, including Lorenzo, who ran the campaigns of Miami Mayor Manny Diaz and Miami Commissioner Johnny Winton.

Some of the defaulted loans have been resolved through foreclosure or debt restructuring, but 13 investors still owe about $2.5 million.

Barbara Rodriguez-Gomez, director of the city's department of community development since March, said that settling the remaining delinquent loans is a top priority. She said she hopes to have them resolved by year's end by persuading the debtors to settle through debt restructuring, payback or foreclosure, among other methods.

The sharpest criticism in Overtown lately has been directed at the Community Redevelopment Agency, formed about 20 years ago to help pull the area out of economic doldrums.

Most of the 36 projects proposed by the agency in the last five years -- among them a business remodeling program, construction of a 39-unit apartment building and parking for the nightclub district -- have not been started.

Four of the five completed are parking lots along Third Avenue that are rarely used.

Longtime CRA Chairman Arthur E. Teele Jr., the Miami commissioner who represents Overtown, acknowledges that redevelopment has been slow, but says it is not through lack of effort.

''The most difficult area is Overtown,'' Teele said. ``We have expended very few dollars there other than to construct the parking lots, which are necessary infrastructure.''

Under a new executive director, Frank Rollason, the agency has started several projects, including the Ninth Street Mall, a pedestrian walkway that will eventually stretch from Interstate 95 to Biscayne Boulevard, and sidewalk repairs.

But some business owners within the CRA, which includes the Omni District, complain that the agency has wasted resources.

''They waste more money probably on letterhead and stamps than what it would cost to make this area turn around: consultants here, consultants there, consultants everywhere,'' said Eugene Rodriguez, owner of the Ice Palace and Big Time Productions Film studios, as well as several other properties in the Omni area.

St. John Community Development Corp. has received about $2.7 million in commitments from Miami over the past decade to build housing and to kick-start economic development.

City records show it only spent about $300,000 of the initial $1.7 million before the city decided to take the money away in 2000 because of its lack of productivity. St. John countered that it couldn't move on projects because the city and the CRA constantly threw up obstacles. For example, St. John claims the city stonewalled one development in Overtown by refusing to deed the land to it.

It has not completed any low-income housing units, though it does plan a project for next year. The city now has pledged an additional $1 million for its future projects as part of a lawsuit settlement.

''We have about 15 scattered sites we own in Overtown, each of them under development plan,'' said Leonard Turkel, St. John first vice chairman.

In fact, St. John has reduced the housing stock in Overtown by demolishing slum buildings without replacing them. For example, the CDC in the last three years demolished a dozen Overtown buildings that were donated to it because it found them to be in slum conditions. The CDC plans to replace those buildings.

It's not alone. The city and other investors have also added to the housing shortage by demolishing derelict buildings instead of rebuilding.

The 150 buildings demolished in Overtown in the past decade, either by the city or by investors, sit on prime real estate at the edge of downtown Miami. The demolitions have displaced more than 1,000 people, a Herald analysis shows.

''I think we learned from our experience, and you don't want to go pouring good money after bad,'' said Carlos Gimenez, Miami's city manager from 2000 until 2003. ``Some of these dilapidated buildings needed to be torn down.''

These repeated failures have left parts of the neighborhood a virtual wasteland.

Homelessness is on the rise after dipping in the late 1990s, climbing from 52 homeless people on the streets of Overtown in 1999 to 170 as of November, according to figures from the Miami Homeless Assistance Program. One of every 55 people in the area has no place to live.

More than half of Overtown's residents live below the official poverty line, which is estimated to be about $18,200 a year for a household of two adults and two children.

And the area's population dropped 14 percent from 1990 to 2000, from 11,350 to 9,755.

Arriola insists that current plans to turn the area around will work because they are led by private industry.

``We are going to develop it the right way. I guarantee it. I got my name and the mayor's name and reputation riding on this one.''

Many of the investors say poor market conditions, such as the area's crime and poverty rates, worked against them.

Let's see, you get special $$ to help redevelop a known depressed area, and then blame the poor conditions for failure?

In fact, St. John has reduced the housing stock in Overtown by demolishing slum buildings without replacing them. For example, the CDC in the last three years demolished a dozen Overtown buildings that were donated to it because it found them to be in slum conditions. The CDC plans to replace those buildings. It's not alone. The city and other investors have also added to the housing shortage by demolishing derelict buildings instead of rebuilding. The 150 buildings demolished in Overtown in the past decade, either by the city or by investors, sit on prime real estate at the edge of downtown Miami.

Looks to me like they want to sit on the properties til the growth of the downtown area ups the property values. They'd rather wait and develop office parks with multiple lucrative leases than build housing for the poor.

''They waste more money probably on letterhead and stamps than what it would cost to make this area turn around: consultants here, consultants there, consultants everywhere,'' said Eugene Rodriguez, owner of the Ice Palace and Big Time Productions Film studios, as well as several other properties in the Omni area.

That was a no-brainer.
That's why incentives to build or rewards for completed projects are better than just giving the money away.

This reminds me of the Sopranos episode where they screw HUD(?) by defaulting on loans for minority housing.

The Perps:

In order from left to right:

Jeanette Stanley (St. John CDC), Cynthia Perry (St. John CDC), Charles Dabney (LISC), Philip Bacon, Kimba King, Dorothy Fields (Black Archives), Bill Mauzy (BAME), Daniella Levine (Human Services Coalition), Brenda Marshall (TPL), Cordella Ingram (LISC), Rev. Henry Nevin (St. John CDC)

http://www.overtown.org/

Exactly. Here, BMW has gotten lots of breaks tax-wise, but they are a huge boon to the local economy. Construction and renovation bring jobs, it's deplorable so much time and money has been wasted in that area. These companies that default or waste loans should be severely penalized. Both because they deserve it, and to discourage that behavior.

And the area's population dropped 14 percent from 1990 to 2000, from 11,350 to 9,755.

A race against time. Obviously they underestimated what it would take to fix the place up.

They probably need triple the funds to do it right. And they've got to do it quickly before the all the poor people move away.

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