Federal prosecutors have asked Miami-Dade County to provide records of all affordable housing projects funded through a $137 million bond program that helps finance rental apartments for low-income people, according to a wide-ranging subpoena obtained Friday by the Miami Herald.
Authorities are focusing on how major affordable housing developers used public money to pay for the construction of more than 30 projects throughout the county, from Aventura to Homestead, and to determine whether there was any theft of government money, according to sources familiar with probe.
Among the developers whose county-funded projects are listed on the subpoena: Carlisle Development Group, Biscayne Housing Group, Pinnacle Housing Group, Related Urban Development Group, the Cornerstone Group and Carrfour Supportive Housing.
A spokesman for Miami-Dade said the county is responding to the grand jury subpoena request from the U.S. attorney's office, which set a June 29 deadline to turn over the records on bond-funded developments. He also said Mayor Carlos Gimenez, all 13 county commissioners and other senior officials were notified about the request.
"We're under the impression that this is a very broad investigation into several developers" who received bonds for their projects, county spokesman Michael Hernández said Friday. "We think the bond funds were distributed appropriately."
More than a dozen developers are responsible for projects on the subpoena list, including several smaller community development corporations. The Miami Herald reported Thursday that federal investigators have singled out one development by the affordable housing arm of the Related Group, a housing project in Miami called Edificio Piñeiro, according to sources familiar with the investigation.
Several developers behind projects named in the subpoena have already been dealt with by prosecutors amid a long-running investigation into South Florida's affordable housing industry.
Over the previous two years, executives with Carlisle and Biscayne pleaded guilty to bilking millions of dollars from a federal tax-credit program that finances the construction of low-income apartments in South Florida and other costly regions. Earlier this year, a Pinnacle-affiliated contractor also was charged with stealing federal tax credits for four projects and settled the criminal case with a $5.2 million payment to the U.S. government.
The subpoena does not explain what investigators are looking for, or include any allegations. But sources familiar with the investigation say prosecutors are investigating whether any of the remaining South Florida developers misrepresented construction costs through wholly owned contractors and subcontractors, and reaped profits that should have been returned to the county to spend on other affordable housing projects.
The Related Group -- South Florida's biggest condo developer and parent company of Related Urban Development Group -- told the Miami Herald it is aware of the federal investigation and has cooperated with lead prosecutor Michael Sherwin. Related's vice chairman, Adolfo Henriques, said the developer delivered the project under initially estimated costs. He stressed that "all of the fees paid to Related Urban Development Group and its affiliates were completely appropriate."
According to the subpoena, Related received bond allocations for two affordable housing projects in Miami: $5.5 million for Edificio Piñeiro, 1176 SW 20th Ave., and $3.16 million for Porto Allegre, 126 SW Eighth St.
The Cornerstone Group, based in Hollywood, also received bond funds for two low-income projects: $2 million for Villa Capri, 14500 SW 280th St., in the Homestead area, and about $10.6 million for the Waterford Apartments, at West Dixie Highway and 195th Street, in the Aventura area.
Carrfour, a nonprofit developer specializing in affordable housing for the homeless, received close to $15 million in bond money for Verde Gardens, a 145-unit project for the homeless and formerly homeless at the Homestead Air Force Base.
A Cornerstone spokesperson said the company has not been contacted by the U.S. Attorney's Office and was unaware of the probe. A Carrfour spokesman declined to comment.
As previously reported by the Herald, the county's $137 million bond fund for affordable housing -- drawn from its 2004 general obligation bond -- is a major source of interest to prosecutors and federal agents. The money was divided evenly among the county's 13 commissioners, each of whom received $10.6 million.
For example, the money for Edificio Piñeiro, a 34-unit senior apartment complex, was provided by Commissioner Bruno Barreiro. The funds for Waterford Apartments were supplied by Commissioner Sally Heyman. All allocations were made after approval by a majority of the Board of County Commissioners.
Developers who receive the funds are paid on a reimbursement basis, unless they seek and receive approval for advance funds. Jose Galan, division director of the county's Internal Services Department, which oversees the release of bond funds for housing, said any unused bond money is to be returned to the county.