MIAMI BEACH, FLA. - Harding Village
finally opened last December, a year behind schedule and
more than $1 million over budget.
Affordable housing developers across the country
struggled to pay for the rising cost of construction in
2006. But Carrfour Supportive Housing, an affordable
housing developer based in Miami, also had to overcome
unexpected opposition to its project that sprang up after
work on it had started, forcing the developers to put down
their hammers and hire a lawyer.
To pay for the delays, Carrfour had to raise a lot of
In late 2003, workers began to turn an old hotel on the
northern, less flashy end of Miami Beach into 92
single-room occupancy apartments, including 74 housing
units for people who were recently homeless. Supportive
housing gives homeless people a permanent place to live
along with services ranging from substance abuse counseling
to mental health services.
But over the next year, parents of children attending a
nearby Catholic school began to protest the project. Bowing
to the parents, city officials revoked Harding
Village’s building permits, stopping work while
they reconsidered the structure as an
“institutional” use instead of a
Eventually, Miami Beach decided that the work could go
ahead, provided that Carrfour surrounded the buildings with
a 6-foot-high concrete wall.
“While we waited, prices went sky
high,” said Stephanie Berman, Carrfour’s
interim president. As 2004 stretched into 2005, the
condominium boom and hurricane reconstruction lured workers
away to higher-paying jobs and the cost of building
materials swelled (see sidebar on page 25).
The rising prices put pressure on the general
contractor, a local nonprofit that had never completed a
job this big. The nonprofit eventually had to leave the
project in the fall of 2005. Even though it meant well, the
organization simply could not pay to keep enough workers at
Carrfour scrambled to find a new general contractor.
Florida Housing, which helped finance Harding Village, had
given projects affected by hurricanes in 2005 an extra year
to finish. But even with that extra time, the new Dec. 31,
2006, deadline for Harding Village loomed closer and
It cost roughly $9 million to develop Harding Village.
That’s more than $1 million over the original
budget, including nearly $500,000 to hire the second
contractor and another $400,000 in unexpected legal
Carrfour’s troubles with Harding Village are
extreme, but the developer is hardly alone. A growing
number of affordable housing developers are asking state
officials to reserve supplemental low-income housing tax
credits to help them fill the gaps in their budgets.
Carrfour couldn’t ask for more tax credits,
because the developer had missed the application deadline
once it discovered the hole in its budget.
So like many other developers, Carrfour looked for soft
financing that would only require the firm to make payments
on the loan when the property is making money.
Affordable housing properties now operate on such narrow
margins that they can rarely afford to take out harder
loans to fill gaps in their budgets, according to Jess
Lawhorn, senior vice president for Wachovia Community
Development Finance. Wachovia provided the bridge financing
to Harding Village, and stayed with the loan throughout its
extended construction period.
The Department of Housing and Urban Development provided
a $1 million soft mortgage through its Supportive Housing
Program. In exchange, 48 of the apartments at Harding
Village are reserved for tenants with some kind of
disability, ranging from substance abuse to mental health
The city of Miami’s Housing for People with
AIDS program provided a $296,000 mortgage. In exchange,
eight units at Harding Village are reserved for tenants
The Department of Veterans Affairs (VA) also provided a
$188,000 mortgage. Carrfour applied for this loan three
times before the VA finally relented. In exchange, 20 of
the apartments at Harding Village are reserved for
Finally, Carrfour has effectively surrendered its entire
$571,000 developer fee to finish this project. Most
for-profit developers would have walked away from a deal
like this long ago.
But Carrfour believes there are now 300 homeless people
living in Miami Beach, often camped in the shadow of the
island’s new, super luxury condominium high-rises,
and has hopes that Harding Village will finally lure 74 of
them to come inside.