TAMPA — Federal authorities may be investigating the Related Group, but the South Florida company remains the developer of choice for the Tampa Housing Authority as it moves ahead with a major West River urban renewal project.
Just days after the Miami Herald reported that federal agents are scrutinizing the finances of a Related affordable housing project in South Florida, the Housing Authority's governing board voted unanimously Wednesday to partner with the Miami-based firm on the renovation of Mary Bethune High Rise Apartments, an eight-story senior residential tower just west of downtown Tampa.
Related also is the authority's choice as lead developer for the majority of West River, its signature 120-acre mixed housing and retail development planned on the west side of the Hillsborough River.
"This was a surprise and a disappointment knowing the investigation has reached a company like Related," said Leroy Moore, the Housing Authority's chief operating officer. "They're an incredibly strong company."
Moore said the authority has until the beginning of the construction phase to pull back if more troubling findings emerge. Even so, authority attorneys ran the decision to use Related by a local agent with the Office of the Inspector General before Wednesday's vote.
"He said there isn't any reason for us not to proceed," said Ricardo Gilmore, an attorney for the Housing Authority.
Federal investigators have subpoenaed financial records for about 30 affordable housing projects in Miami-Dade County subsidized through a taxpayer bond program, according to the Herald. The investigation is to determine if government funds were misused.
It includes at least one built by Related Urban Development Group, the affordable housing arm of Related.
The subpoenas follow a series of convictions of prominent South Florida developers for their part in a multimillion dollar kickback scheme where contractors overinflated estimates of affordable housing projects in order for developers to get additional federal tax credits.
Related already has several local residential developments planned in St. Petersburg's Edge District, at the site of the former Tampa Tribune building on the Hillsborough River, and in the Gandy Boulevard area.
Its officials told the Tampa Bay Times on Wednesday that the new subpoenas are the result of finding fraud in the affordable housing sector and that the investigation is industrywide and not targeted at Related.
"Given recent events involving other companies in our industry, we understand that they are taking a close look at the entire affordable housing sector," spokesman Bruce Rubin said in a statement. "We believe this is the right thing to do, and we have been working cooperatively with them."
The city of Tampa worked with the Housing Authority on the plan for West River. Mayor Bob Buckhorn said investigators are casting a wide net to try to find affordable housing fraud, and he has no qualms about Related's involvement with the renewal project.
"They are a world-class developer," he said. "If I had more developers like Related in the city, I would be very, very happy."
The Housing Authority already has had one brush with the South Florida affordable housing scandal.
It hired the Siltek Group to build two residential blocks in its Encore project on the edge of downtown Tampa. It later emerged that Siltek project manager Rene Sierra was one of the contractors who conspired with developers to inflate estimates.
In December, he was sentenced to three years of probation, including six months of home detention with electronic monitoring for his part in the scheme. He was also ordered to repay $1.2 million to the government.
The rehabilitation of the 150-unit Mary Bethune, which is now empty, could begin in the first quarter of 2018, Moore said. Built in 1966, it will cost an estimated $70,000 per unit to bring it up to date.
Contact Christopher O'Donnell at firstname.lastname@example.org or (813) 226-3446. Follow @codonnell_Times.