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Front Page » Top Stories » Federal Agency Freezes 30 Million In Credit To Miami

Federal Agency Freezes 30 Million In Credit To Miami

Written by on October 24, 2002

By Paola Iuspa
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The US Department of Housing and Urban Development shut down its $30.7 million line of credit to the City of Miami, freezing funds committed to land acquisition, housing aid, child care, the homeless and the elderly.

The federal agency said Miami has failed to conduct environmental reviews for some HUD projects.

While the decision stalls funds for about 150 city programs, not all require such studies. The agency Tuesday began reviewing city files to determine which programs are exempt. Compliant programs will have funds reinstated, agency officials said.

"I met today with HUD officials and gave them a list of agencies that need to get paid this week," said Dan Fernandes, community development department interim director.

"They agreed they would make those files a priority," he said, referring to programs not needing reviews. He said most social services programs do not require environmental reviews but still should have documented reasons for exemption.

The environmental reviews are meant to show how any HUD-funded program will affect a neighborhood or whether needed land is contaminated.

In an Oct. 17 letter, Jack Johnson, HUD director of community planning and development, demanded the city’s files for projects started after January 2000. Federal officials said programs missing the reviews will not get funds until the paperwork is brought into compliance.

"I am confident that the staff we have now in community development will get the funds back as soon as possible," City Manager Carlos Gimenez said Tuesday. "Someone will be accountable for this after I get to the bottom. I just learned about this today."

HUD’s investigation into Miami’s applications for existing federal assistance comes a month after Mayor Diaz promised to fight poverty in his city, ranked the poorest of its size in the US. How quickly the full $30.7 million will again be accessible to the city is unclear.

"That will be up to the city," a HUD official said Tuesday. He said as soon as the city provides all proper requirements for each program the credit line will be reopened.

"We want to start clearing our invoices as soon as possible to avoid any delay" in providing social services, Mr. Fernandes said.

Normally and until last week, the federal government automatically refunded to the city expenses incurred by HUD-approved programs. Now, before any money is released for a new project, the city must present an environmental study.

The city was planning to annually receive $12.8 million in Community Development grants, $12.2 million in Housing Opportunities for Persons with AIDS, $5.4 million in Home Investment Partnership Program and $350,000 in Emergency Shelter grants. Programs also include assisting nonprofit groups building affordable housing and providing small loans to business owners improving their shops.

Agency officials will restart automatically disbursing funds to the city when Miami implements a program that guarantees environmental studies for each HUD-assisted project, according to a letter dated Oct. 17. But for now, "This procedure will continue until the city demonstrates, to HUD’s satisfaction, a proficiency in conducting environment reviews," officials wrote.

Mr. Fernandes said his department started the reviews right after HUD froze $10 million in June because the city was buying land without following environmental review procedures.

To recoup that money, his office hired a person last summer to work on those reports.

"Before, we did not have this system in place," he said. "Environmental reviews were not being done. It was a communication problem because we thought Miami-Dade County was doing the reviews."

He said the county and the city often help finance the same programs.

Federal officials said they warned Miami of its lack of compliance last December and while the city made improvements, projects are still missing environmental reviews.

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