Affordable housing: A bus stop dispute costs $20 million

Updated 3:25 p.m. Sept. 21. With note from FHFC at bottom.

By John Dorschner
    Imagine you could choose a good place in Dade for affordable housing -- a place near a lot of jobs but without many inexpensive apartments.
    Imagine the choice was between 700 block of West Flagler -- a short walk from downtown and not far from Brickell -- or 3600 NW 36th Avenue, on the edge of Allapattah and Brownsville, a considerable distance from large work centers though on major transportation routes. 
     Last Friday, in a meeting in Coral Gables, a powerful but little known entity, the board of the Florida Housing Finance Corporation, followed its own detailed criteria and decided on the Allapattah location, based on the definition of what constitutes a bus stop.
    The board controls the little-publicized but highly valuable low income housing tax credits -- money usually put up by America's corporations to lower their tax bills.
    The board's decision was to allot $20-million-plus to either 745 Rio at Flagler, which wants to build at 700 W. Flagler, or Pinnacle Heights, which wants to build on NW 36th Avenue.
                         
           Usually only criminal cases get publicity

     The tax credits rarely attract public attention. An exception was the recent spate of stories concerning recent criminal cases involving Carlisle Development Group and Biscayne Housing Group, accused of stealing $7 million in tax credits by using phony accounting.
    Even without fraud, payoffs can be substantial.  Both Pinnacle and Rio at Flagler told the housing board they were seeking developer fees of about $3 million.
    Dade's needs for affordable housing are clearly huge. About 495,000 households in Miami-Dade spend more than 30 percent of their income on housing -- that's too much for low-income families to have enough for groceries and other necessities, according to federal guidelines.
    Doling out the funds for affordable housing, however, is a complex manner.
    UPDATED PARAGRAPH: In Florida, developers go through an application process in which their submissions are scored on a variety of measures, including how close the projects are to mass transit, grocery stores, medical services and the like. Larger applications that qualify and tie in the scoring are then selected via a lottery, with FHFC generally  funding two projects a year in Miami-Dade.
    On Friday, the board, appointed by Gov. Rick Scott, was asked to decide a legal dispute: Miami-based Pinnacle accused Rio at Flagler, which is owned by a national firm, Royal American Development, of misstating the nature of a local bus stop. Pinnacle objected because if Rio lost, its own project would rise in the lottery standings and get funded.
     The specific issue: FHFC scorers award two points for projects being close to a regular bus stop. Six points are awarded for proximity to a "Public Bus Transfer Stop." 

Lawyer Michael Donaldson faces board of the powerful Florida Housing Finance Corp.

    Rio claimed it was entitled to six points for being a bus transfer stop, which by FHFC definition is a place where at least three bus routes stop at certain periodic intervals. Pinnacle said it should be entitled only to two points for a regular bus stop.
    Hanging in the balance was about $20 million in funding.
    An administrative law judge ruled in Pinnacle's favor.
    On Friday, Michael Donaldson, a Tallahassee lawyer, appeared before the board to appeal, declaring that the stop did indeed qualify as a transfer location. He brought along a large photograph of the bus stop sign.
    Route 6, Donaldson acknowledged, did not qualify because it did not stop at that location frequently enough. But Route 208 through Little Havana did, as did the two Route 11s listed on the bus sign.
    Donaldson maintained that the two Route 11s were different routes, as listed on the sign, because one went to the Mall of Americas and the other to FIU.
    Hugh Brown, an FHFC lawyer, said staff had checked with Miami-Dade's transit department, which stated Route 11 was one route, not two.
    Donaldson objected: "There is the real world, and then there is the Florida Housing world." He said the board had the authority to override the judge's decision and make a commonsense decision. “I've been dealing with bus stops for years, and I've never seen a situation like this.”

    Board members agonized for some minutes. Several noted that the FHFC always followed local governments' statements and definitions. To do otherwise in this case would start "a very slippery slope," said John Hawthorne.
    The board decided to disqualify the Rio bid, leaving Pinnacle the winner.
    In the public comment period, Doug Mayer, president of Miami's  Stone Soup Development, told the board that it would be fairer to smaller and nonprofit developers if the board abandoned their lottery system and awarded funds based strictly on a scoring system, such as Maryland and Virginia do.
    About 100 attended the Gables meeting, many of them affordable housing developers who sat through the hour-long meeting, then chatted with board members and staffers.
    The board generally meets once a year in Miami-Dade.
   
     Updated note: After morning publication, FHFC's communications director, Cecka Rose Green, sent an email saying the original version of this story placed too much emphasis on the use of the lottery: "The lottery is the last of several criteria used to rank the applications (when there is a scoring tie). ... There is a complete application process that is scored prior to a lottery coming into play."