Miami-Dade County

Lax Miami-Dade oversight of Carlisle housing deal draws scrutiny

It’s like a stealth deal at County Hall, despite happening in plain sight.

Earlier this month, Miami-Dade commissioners rubber-stamped the transfer of four affordable-housing projects from Carlisle Development Group, which is under federal criminal investigation, to another local builder — who hired some key Carlisle staffers to oversee the multi-million dollar projects.

Much was at stake because the projects were partly financed with $48 million in taxpayer and other government funds.

The unanimous vote came after the Carlisle Development Group, suspected of defrauding the U.S. government over affordable-housing subsidies, had struck a deal to sell the four rental-apartment projects to Atlantic|Pacific. Though far bigger than Carlisle, Miami-based Atlantic|Pacific has much less experience developing low-income housing, with a greater reputation for building market-rate apartments.

What was not disclosed at County Hall was that Carlisle had to sell the four projects because it could not obtain private financing while it was being investigated by a federal grand jury in Miami, according to sources familiar with the agreement.

The county commission’s resolution — sponsored by Commissioner Audrey Edmonson, a favored recipient of Carlisle campaign donations — did not spell out how many millions Miami-Dade taxpayers had riding on the four projects. Nor did her resolution address the fact that Carlisle’s chief operating officer, Kenneth Naylor, and several other company employees were brought on by Atlantic|Pacific to oversee the projects.

Indeed, the commission asked only superficial questions, without inquiring about the propriety or terms of the Carlisle deal.

The resolution simply asked Mayor Carlos Gimenez’s administration to conduct “due diligence” research into Atlantic|Pacific to ensure the company is strong enough financially to take on the Carlisle projects and to ask two federal agencies to approve the handoff. The mayor said his office insisted on probing the deal and requiring the Federal Transit Administration and the U.S. Department of Housing and Urban Development to sign off.

“Normally we’d say OK,” Gimenez said in an interview, referring to the transfer. But Edmonson’s resolution gave his office pause.

“The administration was not comfortable with that. We wanted to know exactly what that assignment is. Who are those folks? Does it pass muster with us? Does it pass muster with [the feds]?” he said.

“We’re going to make sure there’s no cloud over it.”

His office can advise the commission to reconsider the deal if it finds irregularities.

Edmonson said in an interview she requested the due-diligence review and OK from the feds. “I asked for all of that to be done,” said Edmonson, who did not attend the meeting Sept. 4 when the commission voted 10-0 to approve the developer’s transfer of the four projects to Atlantic|Pacific.

At an earlier committee meeting Aug. 26, she asked Deputy Mayor Russell Benford if the administration backed the resolution. Yes, Benford said, with the “heightened” requirements for further research and federal approval. There was no other discussion.

The lack of commission scrutiny has raised questions outside County Hall about whether it should consider turning to other proven affordable-housing developers to complete the four government-subsidized projects that Carlisle cannot finish.

Edmonson said when Carlisle informed her of the sale to Atlantic|Pacific, she wanted to transfer the projects to the new developer quickly to avoid delays that could place federal funding at risk — and to ensure the projects did not languish during the investigation.

“If these projects are delayed too much longer, we could lose that money, and then the project would never happen — which has occurred over and over and over in the African-American community,” she said.

She had “no idea” the company was struggling to obtain financing, though she said she asked Carlisle that question.

“That’s something that I posed to them as well — if there were coming problems,” she said. “They said no but they said it could come up.”

Last month, Atlantic|Pacific agreed to purchase Carlisle’s affordable-housing division, with little fanfare. As part of that deal, Atlantic|Pacific would acquire the four projects — the Seventh Avenue Transit Village in Liberty City, the Northside Transit Village in North-Central Dade, Island Living in Overtown and Lincoln Gardens in Brownsville — while Carlisle would retain 25 existing local developments, managing 2,855 rental apartments, according to the county.

In announcing the deal in August, Atlantic|Pacific provided no financial details, including whether and how Carlisle stood to profit from the county-subsidized projects. And when an A|P news release noted that Naylor would head the developer’s new affordable-housing division, it did not mention that he is Carlisle’s current chief operating officer.

“We are excited to welcome a leading affordable housing company to the A|P family,” company COO Randy Weisburd said in the news release, which boasted that the developer employs 650 people and manages 23,000 residential units in Florida, California, Texas and other states.

Edmonson said she knew Naylor and other Carlisle staffers were joining Atlantic|Pacific, but the important thing was that neither of the company’s two principals who are known to be under investigation were part of the new team.

As for the deal’s financial terms, that is not the county’s concern, Edmonson said. She blamed Carlisle competitors and “money-hungry” critics who don’t live in neighborhoods desperate for affordable housing for trying to cast doubt on the transfer.

“It doesn’t matter to me if they sold it for $1 or $25 million — that’s not the county’s business,” she said. “[The transfer] would only appear rushed to those people who are out there who would like to see these projects not happen.”

The projects

All together, Miami-Dade government has committed or begun spending nearly $38 million in county funds for the four projects, along with allocating more than $10 million in direct federal subsidies, according to Miami-Dade’s department of public housing and community development.

Only one project, the first phase of the Northside Transit Village, is under construction, which began in June. It is the largest, with 438 units to be built on county land leased to Carlisle by the Metrorail station at 3150 NW 79th St.

The main source of financing is $7.5 million from HUD’s Neighborhood Stabilization Program. In addition, the county has committed $4 million in bonds approved by voters in 2004, plus $2.75 million from a surtax on real-estate transfers. Carlisle also applied for $10.5 million in “non-competitive” tax credits for low-income housing.

The Seventh Avenue Transit Village, which has been plagued by delays, has received nearly $17 million in county commitments, $3 million from the FTA and $1.4 million from the city of Miami. The 161-unit project would rise on county land leased to Carlisle at Northwest 62nd Street and Seventh Avenue.

The transit villages have been envisioned as public-transportation hubs, with the Seventh Avenue project including a bus terminal. Carlisle was expected to provide some amount of private financing for both developments.

A third project, Lincoln Gardens, would modernize an existing housing site by adding 95 “garden-style” units on county property at 4771 NW 24th Ct. to be leased to Carlisle. The county anticipates the project will be funded using $12.3 million in bonds, plus private financing and $7.8 million in possible federal tax credits.

The newest project, Island Living Apartments, calls for building 70 units on county land at 1201 NW 3rd Ave. With plans still in early stages, the only funding committed so far is $1.4 million in the real-estate surtax.

What prompted Carlisle to unload the four affordable-housing projects to Atlantic|Pacific? A federal grand jury has been investigating allegations that Carlisle and its chief executive officer, Matthew S. Greer, the scion of a prominent Miami-Dade family, and others associated with the company bilked the U.S. government’s tax-credit program designed to promote affordable-housing development.

The grand jury is focusing on Greer, retired Carlisle CEO and founder Lloyd J. Boggio, and a general contractor, Michael K. Runyan, president of BJ&K Construction Services, according to a subpoena obtained by the Miami Herald.

Prosecutors also are examining Carlisle’s joint venture with another developer, Biscayne Housing Group.

Until the investigation was reported by the Herald in May, Carlisle was known as the state’s biggest and the nation’s third-largest affordable-housing developer, with more than 80 completed projects valued at $1.4 billion.

The federal investigation into Carlisle started in late 2011 when two senior executives quit and went to the U.S. attorney’s office with their allegations of fraud. The executives, who worked under Greer, are cooperating with the U.S. attorney’s office.

Carlisle is suspected of padding construction costs of rental apartments to generate higher government-issued tax credits — then splitting the resulting unlawful profits with Fort Lauderdale contractor BJ&K and possibly others, according to sources familiar with the probe being investigated by the Internal Revenue Service and FBI. Those credits are sold to investors, who receive deductions on their tax returns, to help pay for the construction costs of low-income housing.

Carlisle issued a statement Saturday, saying, “it is cooperating fully with the investigation and working diligently to resolve this matter as quickly as possible.

“All of the facts are not in as we believe that the government’s investigation was prompted by incomplete and inaccurate information provided by two disgruntled former Carlisle employees,” said the developer’s attorney, Jeff Marcus, a former federal prosecutor.

“As the investigation unfolds, we are confident that we will be vindicated.”