Miami Herald's "House of Lies" exposes a crisis but then moves on | News | Miami | Miami New Times | The Leading Independent News Source in Miami, Florida


Miami Herald's "House of Lies" exposes a crisis but then moves on

Miami Herald's House of Lies exposes a crisis but then moves on
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On a recent rainy afternoon, Barbara Tuitt sits on the covered front porch of her tidy four-bedroom house in Little Haiti. A poster of Jesus Christ hangs on the tan wall behind her as she explains how tens of thousands of taxpayer dollars were wasted on her behalf. Six years ago, the Trinidad native says, she put down $5,700 of her own money for a house in Overtown. Though the City of Miami paid developers $1.4 million for construction of several homes, including hers, only the walls and roof were finished. The next year, Miami's housing chief ordered her incomplete place torn down because the money had run out. That cost the public even more.

"It was such a waste," she says. "All they had to do was install the electrical wiring."

Tuitt's misadventure in affordable housing was one of dozens highlighted in the Miami Herald's Pulitzer Prize-winning 2006 series, "House of Lies." Those eight articles, including multiple graphics and photos, were truly astounding. Politically connected developers and nonprofit community organizations, the newspaper showed, had received hundreds of millions of dollars to do nothing. Three prominent builders were indicted on grand theft charges. The U.S. Department of Housing and Urban Development (HUD) even took control of the county's housing agency for nine months.

One problem. Like many great journalistic projects, the whole thing was quickly forgotten or shrugged off by authorities.

Here's where the major pieces of that investigation stand today:

• Charges were recently dismissed against one of the three people criminally charged in the scandal, Juan Delgado. This makes it likely that his codefendant, former Miami mayoral candidate Raul Masvidal, will soon go free.

• Developer Oscar Rivero, the mastermind of a $4 million scheme to defraud the government, is working a comfy desk job at the pricey Biltmore Hotel after a two-year jail term.

• Federal auditors recently concluded the Miami-Dade Public Housing Agency had improperly spent $3.6 million related to affordable housing grants. They ordered the money repaid.

• And, worst of all, Miami New Times has discovered that county commissioners are doling out multimillion-dollar no-bid grants to politically connected developers through an affordable housing slush fund financed with property tax dollars.

Since the award-winning series ended, housing regulators and Miami's major daily newspaper have dropped the ball. County leaders haven't fixed much in the way of providing housing for the poorest residents, and the Herald has published little about that fact. And need remains high. In 2009, the most recent year available, 22,275 people needed government assistance to find a place to live, county figures show.

Even more people probably need help today, says Marcos Feldman, an analyst with the Research Institute on Social and Economic Policy at Florida International University. Affordable housing developers have raised rents during the recession. "Low-cost rental apartments are drastically undersupplied," he says. "These shortfalls need to be addressed urgently."

Meanwhile, the culprits who profited from the scandals profiled in "House of Lies" have escaped any real punishment. The most important one, Rivero, was a disbarred lawyer and son of a Hialeah bus driver. He parlayed his time as an aide to former Miami-Dade Mayor Alex Penelas into positions on public boards around town and work in the lucrative business of affordable housing. In 2002, Rivero received more than $4 million in grants and loans to build 120 homes in depressed areas of Miami and South Miami. The Herald's series exposed how Rivero had failed to build the projects while amassing more than $4.9 million in personal real estate, including an 11,000-square-foot estate that featured a wine cellar and elevator, among other ostentatious amenities.

Rivero was arrested for grand theft in August 2006. To avoid more charges, he pleaded guilty two years later and promised to cooperate with public-corruption prosecutors against others implicated in "House of Lies," including former Miami-Dade housing director Rene Rodriguez and ex-county commissioner Dorrin Rolle. However, there have been no subsequent indictments that have mentioned Rivero's testimony. He went to prison November 11, 2008, and was released January 26, 2010. He was required to build seven homes with Habitat for Humanity, which he did, according to the nonprofit's chief executive, Mario Artecona.

After his release, Rivero secured a job in the executive offices of the Biltmore. The hotel's president and owner, Gene Prescott, did not return a phone call to explain why he hired the ex-con. Asked for an interview, Rivero declined. "No, thanks," he said.

Masvidal and Delgado seem to be faring even better than Rivero. Both men were charged with grand theft and organized scheme to defraud. Prosecutors alleged Delgado aided Masvidal, a well-known philanthropist and former banker, in a scheme to bilk the county of $3.2 million in public money for a county office building that was never completed. Delgado, who was the general contractor, doctored bills so that Masvidal, the developer, could hide the personal purchase of a $150,000 watermelon sculpture, the Herald series showed.

This past October 6, Miami-Dade Judge Dennis Murphy threw out the case against Delgado, ruling that the statute of limitations had run out and that parts of the prosecution's case were unconvincing. The State Attorney's Office plans to appeal the ruling, but if it stands, Delgado's dismissal will help bolster the defense of Masvidal, who is awaiting trial.

And at county hall, little has changed from the days before the series was published. "House of Lies" also showed how the county had squandered nearly $35 million in federal funds that were supposed to be used for the redevelopment project. But during the time HUD controlled the housing agency in 2008, former Mayor Carlos Alvarez and county commissioners bickered with federal officials over reform. In the end, the county agreed to only turn over management of Section 8 rental assistance to a private company and finish redeveloping a paltry 175 homes in Liberty City — where 850 African-American families had once lived.

That's not all. This past January, commissioners learned that Miami-Dade government must repay $3.6 million in federal grants to HUD. A 2009 audit concluded that county officials couldn't show how grants distributed in 2007 were being used to create jobs, improve housing for low-income and moderate-income people, and provide meals to elderly residents. Commissioners balked at repayment, alleging Miami-Dade taxpayers weren't responsible for the mess.

Yet some commissioners have shown no restraint in handing out property tax money to favored affordable housing developers, including those who donate to their campaigns. In 2004, Miami-Dade voters approved a $2.9 billion general obligation bond program that – among other things – set aside about $137 million for affordable housing projects in each of the 13 commission districts. These funds are administered through the county's capital improvement office and not the housing agency, so affordable housing safeguards put in place after "House of Lies" don't apply.

Three times since 2009, commissioners have doled out grants from the $137 million pot to developers of their choosing without bids or much oversight. The first deal came before the county commission on January 22, 2009, when Commissioner Barbara Jordan wanted to give a $7.5 million loan to Georgia Ayers Development LLC to construct a 72-unit apartment building in Opa-locka. The entity is owned by the Biscayne Housing Group, a local development company specializing in affordable housing. County commissioners voted 12-1 to approve Jordan's proposal. That loan was later changed to a grant. Jordan did not respond to a request for comment.

Seventeen months later, the county commission voted 10-1 to approve Commissioner Jose "Pepe" Diaz's request for a $10 million grant for Consolidated Real Estate Investments, whose owners are developing an apartment for senior citizens in Sweetwater. The same year, Diaz was running for re-election, and Consolidated's principals, Raul and Nidia Rodriguez, each donated the $500 maximum to the commissioner's campaign. The couple gave another $5,000 through companies they own. Diaz did not respond to a list of questions about the grant emailed to his spokeswoman, Olga Vega.

Katy Sorenson, who was a county commissioner representing parts of South Dade from 1995 until last year, was the only elected official to vote against both deals. At the time, Sorenson, who is now president of the Good Government Initiative, informed her colleagues that awarding millions of dollars to developers without competitive bidding would create the appearance that elected officials were doling out patronage.

"The idea of just giving away general obligation money didn't make sense to me," Sorenson says. "I thought it was better to have developers compete for the dollars. That way you avoid any questions about these deals being a political fix, which undermines the public's trust in government."

Commissioners appear to have dismissed Sorenson's concerns. They have continued approving no-bid deals. This past July 19, the county commission voted 11-0 to approve Commissioner Bruno Barreiro's request to award a $3.7 million grant for construction of a 24-unit senior citizens apartment project by the Related Group. The Miami-based real estate conglomerate is owned by Miami Dolphins Chairman Stephen Ross and powerhouse Democratic Party fundraiser Jorge Perez. Related and Ross Perez Holdings each gave $500 to Barreiro in 2010.

Barreiro insists it was no sweetheart deal. "I looked at developers who have done work in my district who can turn projects around fast," he says. "That is why I picked Related."

The Related Group finished the project earlier this year, but only one-third of the building is set aside for affordable housing.

Herald managing editor Rick Hirsch notes that in the years since the public housing investigation, the newspaper has done four other award-winning investigative series, although none about public housing. The struggling daily also lost Debbie Cenziper, the reporter who wrote "House of Lies," to the Washington Post. "We will stay on top of the housing issue going forward," Hirsch insists.

Tuitt, the Trinidadian lady whose house was torn down before she could move in, has found a home in Little Haiti. She avoided City of Miami bureaucracy. "These days it is even harder for poor people to qualify to own their own home," she says. "No one sticks up for us. It's a shame."

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