Miami Mayor Manny Diaz, on the Herald's housing agency investigation: 'A very narrow side of the story.' (Roberto Koltun/El Nuevo Herald)
Published: June 5, 2007
Housing deals blasted; mayor defends agency
Some housing activists and city leaders have called for an overhaul of Miami's housing agency, but the mayor defended the program.

Housing activists and some Miami leaders harshly criticized the city's housing agency Monday, saying breakdowns and questionable deals are undermining one of the city's most important lifelines to the poor.

Reacting to a Miami Herald investigation Sunday revealing failures in the Department of Community Development, some called for an overhaul of the housing office while one requested a criminal investigation into a loan program that doled out millions to developers who failed to deliver the projects they promised -- and in some cases never returned the money.

''We've got to stop the shenanigans that go on at City Hall,'' said City Commissioner Marc Sarnoff. ``Enough is enough. Good government demands better than this.''

In a prepared statement to Miami residents Monday, Mayor Manny Diaz defended the city's affordable housing record, saying ``their government has not failed them.''

Diaz said the newspaper's report presented ``a very narrow side of the story.''

''I am proud of our accomplishments to ensure that affordable housing will continue to be produced in historic numbers, and I think we have shown results,'' he said. ``We are committed to continue reforming a once-broken system.''


Among the newspaper's findings: The city shelled out millions of dollars to developers who did not produce the homes they promised; nearly a dozen borrowers have been in default for years, including at least four who have owed for a decade or more; the city struck a deal with a developer that allowed the mayor's campaign manager to walk away from a $1 million debt without paying a dime.


The investigation showed that as the need for affordable housing became more acute in Miami -- with thousands of people trapped in decrepit homes -- mismanagement, waste and chronic project delays plagued the agency charged with creating housing for the working poor.

''There are a lot of problems with the city, and incompetence is one of them,'' said longtime housing advocate Charles Elsesser, an attorney at Florida Legal Services.

``Another is a sense of arrogance, that they don't realize that there is a problem. This sense that they know everything that they need to know and have nothing to learn.''

Another cloud looms over the housing agency: a soon-to-be-released report by the city auditor general that's expected to be highly critical of the department.

City commissioners ordered the audit last year in the wake of The Miami Herald's House of Lies series, which exposed wrongdoing in the county's housing agency, including millions of dollars squandered on dead projects.

At least one commissioner who called for the audit, Joe Sanchez, said he didn't want to weigh in on the city's housing problems until the auditors release their report.

But Commissioner Tomás Regalado, a frequent Diaz critic, says he wants the state attorney's office to investigate. ''Somebody has to pay for the irregularities that were committed,'' he said.

Ed Griffith, a spokesman for the Miami-Dade state attorney's office, said several investigations into affordable housing deals are ongoing, but he declined to comment on any city-related probes.

The mayor insists there's no crisis, saying the city's housing program has improved since he took office in 2001 and has built more affordable units under his watch than under his predecessors.

Diaz acknowledged the housing program was a ''mess'' when he assumed office, saying it had a ``horrible loan portfolio filled with unpaid loans dating back decades.''

But he said the loan default rate has been reduced from 36 percent in 1998 to about 14 percent today.

But in January, records show, the default rate was 27 percent -- with $16 million owed to the city.

After The Miami Herald and city auditors began questioning the outstanding loans, the city granted extensions to a host of borrowers, which reduced the default rate even though almost no money was actually returned.

Diaz says no loans issued since he was elected are in default.

But records show at least five loans granted during his tenure were in default as recently as January before they were extended.

While those loans are no longer technically in default, no money has actually been repaid, records show.

The mayor's four-page statement did not address the controversial deal struck by Housing Director Barbara Gomez with developer Salomon Yuken that allowed Diaz's campaign manager, Alberto ''Al'' Lorenzo, to avoid paying a $1 million debt from past projects.


That deal was strongly condemned by Sarnoff, who said it ``smacks of political cronyism.''

Lorenzo is among Miami's most influential political consultants and lobbyists.

In addition to the mayor, his clients have included State Attorney Katherine Fernández Rundle and several state representatives.

Gomez said Lorenzo never asked her to arrange the deal with Yuken that let him off the hook with his debt, and Lorenzo said Monday he wants to put the issue behind him.

''It hurts when you do nothing wrong and you get criticized for that thing over and over,'' he said. ``How many times are you going to pay for that?''


Reached Monday evening, Diaz declined to talk about issues that were not in his statement -- including the deal involving Lorenzo.

Denise Perry, director of Power U Center for Social Justice, says the current administration is glossing over the depth of the problems.

``The mayor and his team are not taking accountability for what's been happening here. The fact that they're saying that most of this didn't happen on their watch shows that they really don't understand the problem.''

Miami Herald staff writer Debbie Cenziper contributed to this report.

Web design by Shawn Greene/Miami Herald