Construction on an affordable senior housing project west of Cutler Bay is set to start in June, nearly five years after the developer leased the land and subsequently got into trouble on other projects with federal prosecutors.

Pinnacle Housing Group LLC is building Caribbean Village on 3.4 acres of public land at the northeast corner of Caribbean Boulevard and Southwest 110th Court.

The project will have a seven-story, 123-unit apartment building, up to 5,000 square feet of retail and commercial space and at least 150 parking spots for bus riders. The first phase is to be finished by the end of 2019, said Mitchell Friedman, a Pinnacle Housing partner.

The project is progressing after Pinnacle and some of its principals came under fire last year for using their DAXC LLC affiliate to inflate costs on other affordable housing developments. The higher costs allowed the company to qualify for higher subsidies and keep the profits.

Pinnacle paid $5.2 million under a deferred prosecution agreement with the federal government, which breaks down to a $1 million fine plus forfeiture.

The Florida Housing Finance Corp. in March 2017 sought a two-year ban on Pinnacle subsidy requests, and an automatic suspension took effect in May 2017. Pinnacle appealed to the Third District Court of Appeal, which refused to lift the temporary ban.

Later in 2017 following administrative proceedings and litigation, Pinnacle and the Florida Housing Finance Corp. reached a settlement. Among other things, the agreement allowed Pinnacle to apply for project financing in the next two fiscal years. If it's awarded subsidies, it would be subject to lower profit margins and heightened audit scrutiny, according to an FHFC representative.

“The settlement agreement effectively eliminates Pinnacle profitability on projects for the following two years, which is a deterrent to them applying for funding. If they are awarded any projects, not only will profitability be reduced in terms of allowable fees, but there will be heightened auditing to ensure that there is not impermissible profiting from any back channels,” Taylore Maxey, FHFC press secretary, said in an email.

The suspension of funding for planned Pinnacle projects, including Caribbean Village, also was considered but didn't go through, according to media reports.

The project is receiving funding through the Florida Housing Finance Corp. in the form of a $5 million low-interest loan and another $5 million from the Miami-Dade County Building Better Communities bonds, according to Friedman.

Pinnacle lost several million dollars in financing, however, when there was a cutback in public money going to affordable housing in general, Friedman said.

That resulted in a reduction in the planned number of units and how many would be reserved for extremely low income residents as opposed to those with low income, according to Friedman.

To qualify to live in Caribbean Village, residents can't earn more than 60 percent of the area median income, he said. In addition, some units will be designated for people making as low as 28 percent of the median.

Originally, 20 percent of the units were to go to extremely low income people, but Pinnacle now wants to decrease that to 5 percent, according to county records.

“There's been an overall cutback in dollars going to affordable housing. That retraction affected everyone's development and consequently also affected Caribbean Village,” Friedman said.

A second phase is planned, but Pinnacle will proceed after nailing down a financing plan, he said.

Pinnacle also wants to decrease the rent it pays the county for the first phase of the project from the previously agreed, one-time payment of nearly $430,000 down to $195,000, according to county records.

That's because of unforeseen costs including infrastructure, Friedman said.

The County Commission still must vote on the requested reductions in rent and unit allocation.

 

TRANSIT ORIENTED

Caribbean Village touches on two of the crises plaguing the county — a lack of affordable housing and growing traffic congestion.

Studies have shown housing is unaffordable for those who work here while luxury condominiums are sold to foreigners seeking a safe haven for their wealth, transactions that push up housing prices.

At Caribbean Village, rents will range from $487 for one-bedroom units to $1,063 for two-bedroom units.

At the same time, public transit use is being promoted. The Caribbean Village site is next to a county bus stop, and the county busway runs along the southeast side of the project.

“The elderly are being underserved from an affordable housing perspective in south Dade,” Friedman said. “We all know that some of the elderly don't have the availability of a car, so being next to a busway would certainly help them.”