Funds used outside the poverty zones

from The Miami Herald

The anti-poverty trust went beyond the nine neighborhoods it was supposed to serve and loaned money to a variety of outside businesses.

BY SCOTT HIAASEN
shiaasen@MiamiHerald.com

The Miami-Dade Empowerment Trust was founded to target nine specific neighborhoods with millions of dollars in federal and local anti-poverty money.

But over the years, the trust routinely bankrolled projects outside the empowerment zone boundaries, often at the urging of County Hall.

About $3.6 million has gone from the trust to nearly a dozen businesses or agencies outside the empowerment neighborhoods, records show.

These deals include $200,000 to the Hialeah Chamber of Commerce, a $150,000 loan to a North Miami television production company, and a $150,000 loan to an acupuncture clinic in North Miami Beach -- more than seven miles from the nearest empowerment boundary.

The publisher of Image, a Christian youth magazine, was expected to move from South Miami-Dade to the Overtown empowerment area after receiving $25,000 in grants, records show. Instead, the company moved to Georgia. Owner Fatima Hall declined to comment.

An international free-trade foundation in the ritzy Biltmore Hotel in Coral Gables received $300,000 -- but it never did anything for the empowerment zones.

FEW RESTRICTIONS

Instead of using federal dollars -- which must primarily benefit the empowerment zones -- the trust financed many of these deals with county money, records show. While some county grants to the trust were for specific projects, millions of dollars have flowed to the agency with few restrictions since 2000.

County Manager George Burgess said he didn't know why county tax dollars were leaving the confines of the empowerment zones, or whether the county imposed restrictions on all grants to the trust.

Steering money outside the empowerment zones runs counter to the intent of the program, said Bruce Nissen, a professor with Florida International University's Research Institute on Social and Economic Policy.

''The purpose of an empowerment zone is to empower a certain community,'' Nissen said. ``How could that possibly empower the community?''

Trust officials refused to comment.

The U.S. Department of Housing and Urban Development selected Miami-Dade for the empowerment zone program based largely on the high levels of poverty in nine Miami-Dade neighborhoods: Allapattah, East Little Havana, Liberty City, Melrose, Overtown, Wynwood, Florida City, Homestead and Miami's Central Business District.

HUD allows the trust to finance projects outside the empowerment zones, but federal rules say that any projects receiving HUD money must primarily benefit the zones -- with jobs set aside for zone residents, for example.

COMMISSIONERS' ROLE

County commissioners, however, imposed no such restrictions when they approved $770,000 from a county-backed Empowerment Trust fund for three companies outside the zones: $500,000 to the Haitian Broadcasting Network, a Miami radio broadcaster; $170,000 to a Carol City diaper store; and $100,000 to the North Miami Beach acupuncture clinic. All three ventures failed.

County officials also steered $300,000 through the trust to the Florida FTAA Foundation in the Biltmore Hotel between 2003 and 2006, records show. The foundation's director, Brian Dean, said he was unsure why the county money came through the trust. His agency has no programs that specifically target empowerment zone neighborhoods.

The FTAA Foundation is aimed at promoting Miami as the headquarters for the Free Trade Area of the Americas pact. Much of the nonprofit's spending has gone toward trade missions or other travel, including a trip to President Bush's second inauguration, records show.

''I cannot speak to the rationale'' of the trust funding, said Dean, who joined the foundation last year. ``I presume there is one.''

County officials believed the FTAA headquarters would help bring jobs to the empowerment zones, said Victoria Mallette, spokeswoman for Miami-Dade Mayor Carlos Alvarez. But today there is no headquarters -- the FTAA talks have been stalled since 2005.

DATA ON JOBS LACKING

The trust's files often don't show whether its projects have created any jobs, let alone whether the jobs went to empowerment zone residents.

A $150,000 loan was awarded to Bato Productions, a television production company, to create eight new jobs. The company had an office in the Wynwood empowerment zone when the loan was approved in 2004, but the office moved to North Miami the next year, said co-owner Tamara Philippeaux.

Philippeaux said she has hired two new staffers and four part-timers with the loan -- not the eight first promised. She doesn't recall ever being asked whether her employees lived in an empowerment zone.

''I don't think that ever came up,'' she said.

Philippeaux said she provided the trust with receipts for cameras and other equipment she bought with the loan -- although the trust could not produce any receipts when asked for all paperwork on the deal.

NO EMPLOYEES

Records show that Hidden Curriculum Education, a tutoring company, was supposed to hire new workers as part of a $100,000 business loan in 2004. The company opened an office in Liberty City, but owner Rozalia Williams moved out because she didn't feel safe there at night, records show.

Williams now runs the company from her condo on South Ocean Drive in Hollywood. Last year, Williams reported to the trust that her company had no employees, records show. She did not return phone calls seeking comment.

DEFAULT ON A LOAN

The trust's loans to the HealingEdge Wellness Center in 2003 were designed to help start up the ''alternative healing'' and accupuncture clinic in North Miami Beach. The business closed, defaulting on a $100,000 trust loan, records show.

The trust loaned the company $50,000 more, but the agency could not explain what happened to that loan, or provide evidence that it was repaid.

The owner of HealingEdge, Josette Zamor, has not returned phone calls.

The trust told HUD that it provided job training for 100 people and placed 25 in jobs with a $200,000 loan to the Hialeah Chamber of Commerce -- also outside the empowerment zones. But the trust has no records to show that any jobs were created.