Miami Herald's report on new DIA CEO's past performance

[thelakelander]

Just getting back into Jax from attending the Vanguard conference in Cleveland.  I know the JBJ had a blurb on this the other day, but I was wondering if people had actually read the Miami Herald's reporting about our new DIA CEO? If so, what's your view? 

Yesterday morning, a few economic development guys from cities across the country were ribbing me on if Jaxsons knew how to use Google searches.

Miami Herald I-Team Exclusive
POVERTY PEDDLERS

Projects produce few jobs

Created to fight poverty, the Miami-Dade Empowerment Trust squandered millions of dollars on insider deals, pet projects and bad loans.

BY SCOTT HIAASEN AND JASON GROTTO
shiaasen@MiamiHerald.com

On Aug. 23, 2005, a chartered Gulfstream jet landed in Miami carrying a famous passenger: music mogul Sean "Diddy'' Combs.

Diddy flew in to host MTV's Video Music Awards at the AmericanAirlines Arena, where the hip-hop impresario known for his vast fortune and extravagant tastes handed his diamond-studded wristwatch to a fan in the crowd. Another luxury plane took him back to New Jersey the following night.

The round-trip flight cost more than $87,000, including $1,070 for in-flight catering.

But Diddy didn't pay the bill. Neither did MTV.

A nonprofit poverty agency picked up the tab -- using tax dollars set aside to help Miami-Dade County's poorest residents.

That agency, the Miami-Dade Empowerment Trust, was founded by county leaders in 1999 to take aim at the backbreaking poverty in nine designated "empowerment zones'' - among the most destitute neighborhoods in Florida.

As part of the largest federal poverty initiative in decades, the trust received $68 million in federal, state and local grants to pursue a broad and ambitious plan that included financing affordable housing, providing job training and improving social services.

Its central mission in revitalizing the county's poorest areas, however, is to create jobs by luring new businesses and supporting existing employers with grants and low-interest loans.

But for nearly a decade, the trust has squandered millions of tax dollars on risky ventures, bad loans and insider deals - in many cases without creating a single job - a Miami Herald investigation has found.

The newspaper examined 164 trust projects intended to boost businesses and found that six of every 10 dollars spent - a total of $9.2 million - went to questionable deals, failed companies and projects that yielded no jobs.

While the agency has started several children's programs, provided needed housing and helped some businesses stay afloat, it also steered nearly $1 million to companies tied to County Hall lobbyists, a well-known campaign donor, a county commissioner's sister and a city mayor. Some deals went to the trust's own board members.

The agency paid for a series of lavish block parties. It bankrolled a wannabe pop singer and a group of aspiring hip-hop producers. It purchased eight large fiberglass roosters.

All along, the trust filed exaggerated and misleading progress reports with the U.S. Department of Housing and Urban Development - heralding successes that never happened and erasing failures.

HUD didn't notice. Although the agency was supposed to monitor the trust's progress, HUD inspectors failed to conduct periodic reviews, visiting the trust offices only once in eight years.

Now, with the national empowerment zone program set to expire in 2009, the local communities targeted by the trust - including Liberty City, Overtown and Allapattah - continue to struggle, with no improvement in the poverty level this decade, according to census and demographic data compiled by a private research firm.

Meanwhile, only a fraction of the promised jobs ever arrived. To this day, the trust can't say how many.

"If they had properly spent all the federal funds that have come down here to fight poverty, our streets would be paved in gold," said Annette Eisenberg, a community activist who sits on an Empowerment Trust advisory board. "The record is so bad, I'm really ashamed to be a part of it."

The Miami Herald spent a year culling through thousands of agency records, court files and other documents in a first-ever examination of a federal empowerment zone program, uncovering top-to-bottom mismanagement and waste that went largely unnoticed both in County Hall and in Washington.

Among the findings:

• The trust operated like an open checkbook, often handing out grants and loans without receiving invoices to support the costs. The agency can't account for at least $3.3 million in expenses because of shoddy record-keeping and lax monitoring.

In some cases, businesses double- and triple-billed the trust for the same expenses without anyone noticing.

• Trust board members and other insiders also benefited personally. More than $400,000 went to six companies tied to board members and members of its advisory councils, records show.

One member of a trust advisory board received a $50,000 business loan just three months after he filed for bankruptcy -- then his company double-billed the trust for $3,500, records show.

• The trust managed a $12.3 million loan portfolio without heeding basic practices to safeguard taxpayers' money: Background checks were incomplete or, in some cases, nonexistent. Collateral was sometimes forgotten. Some loans were handed out without even an application.

The result: 47 percent of the loans approved by the trust board since 2000 were either overdue or written off through May, with some loans delinquent for more than four years. In a few cases, the trust couldn't even find the borrowers.

• Along the way, the trust has steered money to projects benefiting political insiders.

In one case, the trust swooped in with an 11th-hour loan to save the home of former lobbyist William Perry III from foreclosure. Another $200,000 loan went to a company co-owned by lobbyist Sandy Walker -- the sister of former assistant county manager and current county commissioner Barbara Jordan.

• The breakdowns went largely unnoticed by the trust's 18-member board, which approved most of the agency's grants, loans and contracts with scant debate. Over the past eight years, the volunteer board has approved 446 resolutions and rejected none, records show. All but five of its votes were unanimous.

• Despite its mistakes, the trust told HUD that it has brought about 1,900 new jobs to Miami-Dade's poorest communities. Yet, the agency has no records to support that claim. A Miami Herald review of 15 of the trust's reports to the feds this year could confirm only eight of 310 claimed jobs.

The trust's president, Aundra Wallace, refused requests to be interviewed for this report. Board Chairman T. Willard Fair said he needed to more time to research the matter before answering questions; however, he did not respond to subsequent emails and phone messages.

full article: http://www.miamiherald.com/multimedia/news/povped/part4/#storylink=cpy

[CityLife]

I was wondering when you were going to post that...

After reading that article yesterday, I did some quick research on Wallace's work in Detroit. From my quick research, I'd say that he's the type of guy that should be hired to be Director of Housing and Neighborhoods, not the DIA. Most of his work seems to revolve around affordable housing and neighborhood stabilization type work. Not big picture downtown redevelopment initiatives. In Detroit his organization takes on foreclosed homes, rehabs them, and then tries to find home buyers. I don't know where the DIA CRA boundaries will be drawn, but there is little to no housing stock to be repaired...and there seems to be no way to measure if his efforts in Detroit are in any way successful.

I know if I was a mayor that built a campaign on Downtown redevelopment, and who has been criticized for not doing much; I'd be scared to put my faith in an unproven hire like Wallace...who oh by they way just so happens to have worked in two of the more corrupt cities in the US.

Here are some stories about the neighborhood level redevelopment work Wallace has done in Detroit:

http://www.mlive.com/business/detroit/index.ssf/2013/01/detroit_land_bank_authority_to.html

http://www.freep.com/article/20120822/NEWS01/308220037/Detroit-s-Boston-Edison-neighborhood-welcomes-new-homeowner-to-rehabilitated-house

http://www.michiganradio.org/post/slowly-bing-plans-detroit-neighborhoods-move-forward

[thelakelander]

^I've been away from the computer for most of the week, so I didn't get a chance to really read the report until I was stuck in Dulles, waiting for a delayed connecting flight out of Chicago last night.  It echos what some of the other guys across the country were telling me over coffee.

Yes, both Wallace and Hanna are Housing and Neighborhoods guys, based on their resumes. However, I believe the DIA board had them on their short list for other qualities they possessed that some may believe outweigh their specific experience in relation to downtown revitalization.

[vicupstate]

Good thing the contract isn't signed yet.  I would start the whole process over.  There are two sides to every story, but their is WAY too much smoke for their not to be at least a small fire, IMO.  This is too important of a position for a bad pick. 

It seems that Wallace might have been taking credit for work others did in the DOWNTOWN Detroit area, while he worked in other parts of the city.

My fear with this whole thing has been that with the election just around the corner, the best qualified candidates didn't even apply, because if Brown isn't re-elected, they will be out of a job in just a short while after being hired. [and as a Democrat in a GOP city, his re-election is no sure thing].

Brown wasted too much time getting the DIA structure in place, thus delaying this hiring decision until now. 

[cline]

So did the DIA use the same search firm as Rutgers University?

[CityLife]

Lake, went back and scanned through your updates from the live blog of the DIA hearing. You posted this:

"The DIA has to create a new CRA plan. Wallace's experience with Florida CRAs includes making a master plan for a development in a CRA in Homestead, FL."

Do you recall what he was talking about? Because the Homestead CRA was created in 1993 and Wallace was a paralegal with Equifax in Atlanta until 1996. Also didn't appear to be any examples of projects in Homestead in Wallace's lengthy bio.

[thelakelander]

Yes.  He didn't work on creating the CRA.  He worked on some development that was built within that existing CRA.  Sort of like one building a house in Riverside and that being their experience with the Zoning Overlay.  There will definitely be some learning on the fly.  However, I can only assume, the DIA expects the consultant selected for the the CRA to guide them in the right direction.

[mbwright]

The truth is out there somewhere.  I do agree, he is not the what Jax needs to most effectively move forward.  Too much corruption, but then Jax is not exactly squeaky clean.

[thelakelander]

^Ultimately, he will be directed by the DIA Board.  In any event, I don't think he will make or break downtown. Only time will tell.

[Cheshire Cat]

I really have concerns about the experience and background of this proposed director for the DIA.  His professional/political experience is questionable in my view.  It is true we don't know whether or not he will make or break our downtown but it seems to me that all the to do about a new DIA and moving forward with inspiration and steam downtown make it imperative that the person in the directors seat not only have great experience in urban development but an understanding of the personality and politics of Jacksonville.  It is beginning to look like there is more behind the curtain here and I would hope before a contract is signed, some of the questions raised about past performance claims are revisited.

[CityLife]

^Ultimately, he will be directed by the DIA Board.  In any event, I don't think he will make or break downtown. Only time will tell.

If the DIA Board is willing to settle for a potentially questionable candidate, are they really going to be able to properly guide him? There are some good, smart people on the DIA board, but they have day jobs. They aren't going to be able to hold his hand, and they definitely won't be able to babysit him. Ultimately, this person will have control of day to day operations, will have insider knowledge, will direct a substantial amount of public money into projects, and will be working with developers and financiers.

You're right though, no one person can make or break downtown...but that doesn't mean we should potentially set ourselves up for mediocrity.

[icarus]

I really have concerns about the experience and background of this proposed director for the DIA.  His professional/political experience is questionable in my view.  It is true we don't know whether or not he will make or break our downtown but it seems to me that all the to do about a new DIA and moving forward with inspiration and steam downtown make it imperative that the person in the directors seat not only have great experience in urban development but an understanding of the personality and politics of Jacksonville.  It is beginning to look like there is more behind the curtain here and I would hope before a contract is signed, some of the questions raised about past performance claims are revisited.

+1

[simms3]

I predicted this.  Didn't know (or forgot) he was also associated with Miami (which might be more corrupt than Detroit).  I believe my statement was:

Disappointed.  I'm skeptical of anyone that comes out of Detroit.

Only time will tell.

[thelakelander]

You're right though, no one person can make or break downtown...but that doesn't mean we should potentially set ourselves up for mediocrity.

You'll get no argument from me on this issue.

[Cheshire Cat]

^Ultimately, he will be directed by the DIA Board.  In any event, I don't think he will make or break downtown. Only time will tell.

If the DIA Board is willing to settle for a potentially questionable candidate, are they really going to be able to properly guide him? There are some good, smart people on the DIA board, but they have day jobs. They aren't going to be able to hold his hand, and they definitely won't be able to babysit him. Ultimately, this person will have control of day to day operations, will have insider knowledge, will direct a substantial amount of public money into projects, and will be working with developers and financiers.

You're right though, no one person can make or break downtown...but that doesn't mean we should potentially set ourselves up for mediocrity.

I agree!