Miami Beach

After years of missteps, Miami Beach nonprofit fights to hold onto affordable housing

Miami-Dade County recently took over Madison Apartments, an affordable housing building at 259 Washington Avenue in Miami Beach. Madison Apartments is among the buildings at the center of a dispute between the county and Miami Beach Community Development Corporation.
Miami-Dade County recently took over Madison Apartments, an affordable housing building at 259 Washington Avenue in Miami Beach. Madison Apartments is among the buildings at the center of a dispute between the county and Miami Beach Community Development Corporation.

In Miami Beach, an island known for its luxury real estate, affordable apartments are few and far between. The low-wage workers who clean the city’s hotels and work in its restaurants often struggle to find a place to live, as do elderly residents on a fixed income.

In recent months, the city’s affordable housing landscape has become even more complicated. A dispute between Miami-Dade County and a nonprofit that operates hundreds of subsidized apartments has created a tug-of-war over a dozen buildings across the island.

Years of mismanagement at the Miami Beach Community Development Corp. — resulting in a six-figure operating deficit, maintenance problems and a host of other issues — have left the nonprofit struggling to stay afloat. Some residents complain about damaged roofs, leaks and broken air-conditioning units. The county’s public housing department recently took over two of the group’s properties and wants to acquire 12 more. Most of the properties were purchased with county loans.

“We have given MBCDC years, years to clean up their act,” said Michael Liu, director of the county’s Department of Public Housing and Community Development. “We can’t wait on any more plans. They’ve proven that they don’t really have the capacity to do what they’re supposed to do.”

But the community development group wants to hold onto its properties, which include 12 affordable housing buildings in Miami Beach and two in Little Havana. The organization recently cleaned house, and its new leadership argues that the nonprofit needs time to right the ship. The organization also claims that the county has “interfered” with recent efforts to solve its financial problems and that low-income Miami Beach residents would be better served by a local nonprofit.

“We’re a small, local, citizen-run, resident-run nonprofit,” said Jeff Feldman, the vice chair of the organization’s board. “We have personal touch and we have connection to each of the residents. And that’s really the most important thing for us.”

All of this has created uncertainty for some of the island’s most vulnerable residents. More than 80 percent of the renters in the nonprofit’s buildings are elderly, disabled, or both, and more than half make less than $10,000 a year.

“There are people who are worried,” said Margarita Barrera, an elderly resident of Madison Apartments, an affordable housing building in South Beach that the county recently took over. Barrera, who has lived in the building for nearly 20 years, said even though the county has promised to keep the rent subsidized, some of her neighbors are concerned about the building’s future.

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A hole in the ceiling of a Crespi Park apartment previously managed by the Miami Beach Community Development Corporation. Miami-Dade County has since taken control of the building. Courtesy of Miami-Dade County

Other residents said they were happy that the county had taken over the building’s operations.

“It’s affecting us positively,” said Rodolfo Gonzalez, a retiree who lives with his wife, daughter and two grandchildren. “The administration we had before didn’t take us into consideration. They didn’t resolve maintenance problems.”

Gonzalez and his wife, Ivette Rosario, said that it took weeks of repeated calls and emails to get the community development organization to fix leaks around their windows, which left the carpet wet every time it rained.

At the other building the county recently took over, Crespi Park Apartments in North Beach, the roof was badly in need of repairs and one of the units was infested with insects and mold. (The organization said the renter hadn’t paid rent in close to a year and had changed the locks, preventing repairmen from entering, but the county said that the tenant had stopped paying rent because of the lack of maintenance.)

Miami Beach Community Development Corp. doesn’t deny that it was mismanaged in the past and that some of its buildings need repairs.

For years, the nonprofit was the main recipient of millions of dollars in grants that the city of Miami Beach got from the U.S. Department of Housing and Urban Development, or HUD, to provide affordable housing to residents. Then, in 2013, Miami Beach reviewed the organization’s finances and found serious irregularities, including evidence that funds had been spent on unauthorized or ineligible activities. Amid the scandal, the executive director resigned, two city officials quit and a third was fired.

Miami Beach was left on the hook for the misspent funds. City officials negotiated a more than $1 million settlement agreement with HUD, which Miami Beach only recently finished paying. As part of its cleanup efforts, the city also took over five of the community development group’s properties and stopped giving the nonprofit HUD funds.

“The substantive issue is that they haven’t shown the fiscal capacity to manage any funds,” said Maria Ruiz, Miami Beach’s director of Housing and Community Services.

The problems didn’t end there.

In 2015, the nonprofit got the county’s permission to sell several units in a North Beach building in order to fix its financial problems. But the county hasn’t been able to determine how an estimated $350,000 from the sales was used.

“We have no idea what they did with the money,” said Liu. “I’m not sure they know what they do with the money.”

Monica Matteo-Salinas, the nonprofit’s board chair, said in an email that the organization is having its accountants review records and that it appears from a preliminary review that the funds were used to cover some operating costs and fund some building reserves.

Then in 2017, according to the county, the nonprofit tried to convert the Crespi Park Apartments in North Beach to market-rate apartments without the county’s permission, which would have violated the group’s agreement with the county. (Shahrzad Emami, an attorney for the nonprofit and the director for affordable housing and community development at Legal Services of Greater Miami, said the organization wanted to convert the apartments into workforce housing, which would have cost more than affordable but less than market-rate housing.)

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Insects in a Crespi Park apartment previously managed by the Miami Beach Community Development Corporation. Miami-Dade County has since taken control of the building. Courtesy of Miami-Dade County

The community development group was also behind on loan payments to the county for the Madison Apartments, according to Liu. (The nonprofit said that the county had agreed to extend the loan, giving the nonprofit more time to make payments, and then later sent the organization a default letter.)

In response to these issues, the county recently took control of the properties and told residents to pay rent to Miami-Dade. The county doesn’t own the properties, but is now managing them through a property management company.

Given these issues and the nonprofit’s annual operating deficit of more than $100,000, Miami-Dade has urged the organization to turn over all its properties so the county can ensure that they continue to be affordable units.

“Frankly, I think the sooner they recognize their capacity problems the better for the people who live there,” Liu said. “If they really care, they would understand that we’re not some private sector for-profit entity that’s going to gobble up Miami Beach property to make a profit. We’re the county government.”

But the community development group argues that the organization has been completely revamped and should be given more time to solve its financial problems. Most of the organization’s board members have served for less than two years and the board recently brought in a new interim executive director. Unlike in the past, the new board is mainly composed of development and affordable housing experts, said Matteo-Salinas.

In recent months, the community development group has taken a number of steps to get the organization back on track, including cutting positions to save money, attempting to refinance the Madison Apartments loan in order to pay off the county, commissioning an independent review of the organization’s finances and looking for a property management company. It also tried to negotiate a joint venture agreement with a development company in order to renovate the properties and cover the nonprofit’s operating deficit.

But Matteo-Salinas said that these efforts have been stymied by the county. The organization blames the county for the failure of negotiations to launch a joint venture with Housing Trust Group. The deal fell through shortly after the development company met with county officials to discuss the proposal. Miami Beach Community Development Corp. says the county also “interfered” with its search for a property management company and with plans to refinance the Madison Apartments and delayed the paperwork it needed to close on a loan to fix the roof at Crespi Park and pay back the county.

“We’ve been doing incredible things” in recent months, Matteo-Salinas said. “We can really do this. We just need the county to stop sabotaging us.”

Liu denied that the county had interfered with the nonprofit’s efforts. Housing Trust Group declined to comment on its discussions with the community development group, citing a nondisclosure agreement.

County and Miami Beach officials are skeptical that the nonprofit can fix its finances. “In all fairness I think that this organization was given tremendous leeway from both the city and the county to try to turn itself around,” Ruiz said. “They made very poor strategic decisions and at the end of the day what really matters is that we have to secure these affordable units.”

Last week, the organization asked Miami Beach commissioners to intervene in the nonprofit’s dispute with the county. The commission urged the county to give the nonprofit 90 days to get its house in order and to allow city staff to participate in discussions with the organization.

The community development corporation plans to meet with city staff on Wednesday to go over the independent financial report it commissioned and determine whether the nonprofit should give some of its properties to the county.

In the meantime, residents in the Madison Apartments are unsure how the dispute will affect them.

Maria Perez, a hotel housekeeper who lives in the building with her disabled husband, said that so far the change has only meant that she has to send her rent checks to the county instead of the nonprofit. She said she hopes that no matter who ends up operating the building, she’ll be able to stay in her subsidized unit, which is just a short walk away from her job.

“The important thing is that they don’t kick us out,” she said.

Miami Herald staff writer Douglas Hanks contributed to this report