It was reported that the firm from Atlanta was almost granted a $56 million loan from Miami-Dade County. Fortunately, this deal was halted after it was discovered that the company already had issues with returning the government loans.
The Florida Housing Finance Corporation in 2010 flunked American Opportunity Foundation, a developer from Atlanta, as it was noticed that they had a history of defaulting. This wasn’t all as it was reported that the firm was rejected “due to past defaults, assignments, bankruptcies or foreclosures.” Soon after that, it was reported that 22 loans of 80 that were connected with them were in default, and as a result state regulators reported that “AOF is not considered an acceptable general partner.”
Bloomberg News did their own investigation, and they found that 14 of 18 loans were problematic plus a loan that was taken for a property in Texas in 2014. Total of 1,700 apartments located in San Antonio, Houston, Dallas were left without state funding that caused increase od rents for about 22 percent at one property.
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All these reports weren’t enough for Miami-Dade County to stop loans to the AOF and one of the companies connected to it. The Housing Finance Authority of Miami-Dade County gave $17.5 million for rehabilitation of 151-unit housing complex in Hadley Gardens. In the latest round of loans, they want $56 million so they could redevelop three more properties that were acquired by the firm.
The loan proposal was set to be debated by the county commission, but after few questions from the press, it was all halted. When asked why the county is even considering this option, as the firm had a history of defaults, Mike Hernandez, a spokesperson for Mayor Carlos Gimenez responded by saying that the request has been pulled.
We tried to contact the representative of the American Opportunity Foundation, Kathy Walker, but she didn’t respond to our calls.
In theory, business with construction and these loans could work very well. Both state and city housing authorities can give loans to firms that would create affordable properties for those with lower incomes. It can happen that borrowers default and that the companies go out of the business which can cause the burden of the bad business to be transferred to the residents. Usually, those projects are stopped or significantly slowed down while the rents are increased as there is no more money granted by the city or state.
