A collection of two-story buildings with orange stucco walls sits on a quiet lot along Miami’s busy Northeast Second Avenue. A few blocks west, single-story white homes with air-conditioning units wedged in windows and clotheslines in courtyards cluster underneath Interstate 95.
These are some of Miami’s public housing complexes, built from the 1940s to the 1970s along a mile stretch in the Little River neighborhood, and now primed for their next era.
Over the next eight years, Swerdlow Group plans over 20 new buildings, ranging from 15 to 27 stories, with 5,730 units: 314 replacing all existing public housing units and reserved for current tenants at low rents, and the balance affordable and workforce housing.
“It’s a very large undertaking,” said Michael Liu, of Swerdlow.
Swerdlow’s project is through the Department of Housing and Urban Development’s Rental Assistance Demonstration program. Designed for local governments to modernize aging public housing, RAD gives developers something, too.
They get to redevelop public housing, bump up densities, stack subsidies and lease the sites, securing a long-term supply of the rare, expensive commodity — land — often at deep discounts.
“A lot of these properties are prime. They are good sites,” Liu said of Swerdlow’s Little River sites that sit on a combined 35 acres. “If you had to buy private sector-owned property near these areas, absolutely the cost would be through the roof.”
Across the U.S., cities have adopted the program to various extents, with mixed outcomes. New York’s leading the way with 40,000 units and another 22,000 in the pipeline, even though opponents grumble that the program privatizes public land.
In Miami-Dade, the real estate industry and county officials can barely contain their excitement. Finally, they say, this is an answer to the county’s notorious reputation as the epicenter of the affordability crisis, and a win for all. The county gets lease payments and cash flows from new projects, long-overlooked neighborhoods get spillover investment, tenants get new apartments at their current rents, and residents across Miami-Dade get a boost in the supply of affordable units. Developers — crucially — get access to land where they can build, build, build.
It’s such a win that doubters are few and supporters are many. Most public housing tenants and groups that typically oppose gentrification have softened their resistance to simpler asks: deeper affordability and that promises to residents about returning at low rents are kept.
The federal program launched more than a decade ago, but the boom comes after the county’s attempts sputtered for years amid bureaucratic delays, competitive solicitations and project reviews.
Then, the bottleneck broke.
Over the past year, more than half a dozen projects sailed past commissioners for public housing complexes across the county, promising roughly 10,000 new units total, according to The Real Deal’s analysis of Miami-Dade records. The county has identified 7,718 public housing units for RAD projects, with 2,831 already redeveloped, Miami-Dade officials said.
Miami-Dade developers have felt the crush of higher interest rates and a supply overhang for luxury and market-rate apartments, defined by slower lease ups, more concessions and a drop in rents, due to hefty completions in recent years. That makes RAD a welcome outlet. Demand for below-market-rate units is ensured and since construction is primarily financed with low-interest government loans and grants, developers avoid expensive private debt.
Nationwide, queasiness lingers around whether Trump will follow through on his ideas to cut federal housing subsidies. RAD’s racked up a dubious track record in some cities. Yet, Miami-Dade and a slew of developers have pressed on with projects promising the biggest wave of affordable and workforce housing construction in the county’s history.
Out with the old
Public housing, built from the Great Depression through the 1970s, is a relic, with many complexes in disrepair or associated with crime.
Rent collections are low and local subsidies rare, leaving public housing reliant on federal Section 9 appropriations for management and capital improvements. But the funding is discretionary, competing with mandated spending and doesn’t come close to meeting needs.
This year, Congress budgeted $8.4 billion, including $3.2 billion in the capital fund. Yet, the nonprofit Council of Large Public Housing Authorities says the nationwide public housing stock needs $169.1 billion in capital work, while Miami-Dade pegs its price to fix deteriorating buildings at $2 billion.
“Regardless of which party is in power, whether it’s in Congress or the White House, no one has the appetite to allocate that kind of money for public housing,” Liu said. He is an ex-HUD public housing assistant secretary and a former Miami-Dade public housing department director.
HUD has tried various approaches, but some were defunded and others are grants that still fall short of needs. RAD, which was introduced in 2012 but only gained traction in 2018 when it was retooled to increase rent subsidies, opens the door to private money.
Miami-Dade and a slew of developers [are pressing] on with projects promising the biggest wave of affordable and workforce housing construction in the county’s history.
Under the program, Section 9 public housing funding switches to project-based Section 8 subsidies. This means the rent for the same public housing unit is increased to close to market levels, with tenants still paying 30 percent of their income but the Section 8 voucher bridging the gap. For developers, that’s key.
“That allows you to borrow more money from a bank,” Miami RAD developer David Burstyn said.
Under the Trump administration, federal Section 8 funding has been threatened and distributions were delayed last year, though ultimately the program was funded in this year’s budget.
“There’s been some talk that it’s going to decrease but it has not,” Burstyn said. “When you are having an affordable housing crisis in Miami, which is the epicenter of the country, I do believe that the government knows that this would be catastrophic if the program was reduced down here.”
In New York and Chicago, developers in RAD typically enter long-term management agreements for properties, and they primarily rehabilitate buildings. Even though RAD’s premised on the notion the private sector would be a better caretaker of properties than the government, an investigation by The City found many New York projects still have code violations.
In Miami-Dade, while a few developers renovate existing structures, most tear them down and rebuild bigger. They lease public housing land from the county under 75-year or 99-year terms. The county, as a project partner, will get a share of the developer fee and a cut of each project’s cash flows. At some projects, revenue will also go toward neighborhood cultural and historic preservation nonprofits.
Developers must replace every existing public housing unit with a project-based Section 8 unit and work with the county to find tenants temporary homes. To finance the higher density, they tap low-income housing tax credit equity, state loans at 1 percent and government loans both federal and local. Project blueprints include commercial and community spaces and, on some sites, market-rate units and for-sale homes.
The planned outcome: taller buildings, more residents, streets abuzz with shoppers and diners, reshaped neighborhoods.
Developers’ gold rush
At the site of Rainbow Village and Gwen Cherry, public housing complexes that once had 136 apartments, multifamily developer Housing Trust Group will wrap up construction of a seven-story building next year, the first phase of a roughly 1,000-unit project in the north edge of Miami’s Overtown neighborhood, where it bleeds into the booming Wynwood district.
“We love the location. It’s centrally located. This is in the path of development,” Housing Trust Group CEO Matthew Rieger said.
Affordable housing development is largely relegated to south Miami-Dade, a remote area with plenty of cheap land. But finding a site in the heart of Miami?
“It’s impossible, really,” Rieger said. “If we want to provide affordable housing near where the jobs are, we have to do jobs like this.”
To fund the $185 million, 310-unit first phase, Housing Trust Group turned to $70 million in low-income housing tax credits, a $15 million state loan, a $52 million construction loan and $57 million permanent loan.
“You do get a huge advantage when you go to lever up the amount of debt you can put on a property when it’s a RAD conversion,” Rieger said. “RAD takes existing public housing, and it lets you really make it pencil out.”
Navigating the complexities of subsidies is an art few can master, said Rebel Cole, a real estate and finance professor at Florida Atlantic University.
“So you are going to see the same players day after day after day,” he said.
Miami-Dade’s RAD roster is a directory of top affordable-housing developers: Swerdlow, which in addition to Little River, plans a south Miami-Dade project; Pinnacle and Smith & Henzy, focusing on West Little River; Redwood Dev Co, with projects on tap in Lemon City, Little River and Brownsville; and Related Urban Development, which is building in Little Havana.
Related Urban, an arm of the Pérez family’s Related Group and the county’s affordable housing titan, is also building the 22-acre River Parc on the Miami River, the county’s largest under-construction RAD project.
The complex, originally with 800 units, now has over 1,100 units in four new buildings and three renovated structures. Related recently tapped another program to maximize capacity. Under Florida’s Live Local Act, which allows for bigger buildings if 40 percent of units are affordable or workforce, the firm wants to add 1,038 units on vacant lots on the site.
North of that, in Brownsville, is the Annie Coleman public housing complex — a cluster of 1965-built taupe and beige two-story buildings darkened in places from grime and moisture. Some buildings have rusting railings, others vacant and boarded-up units. The site includes an empty lot where similar-looking buildings were demolished in 2019 due to deterioration and crime.
In their place, Integra plans five- to 10-story, chalk-white structures with breeze blocks and murals of lush tropical scenes. On the ground level will be townhomes, a food hall, a library, a community room, courtyards, gyms and a youth arts center.
“It’s not just [about] the land,” said Integra’s Jake Morrow. “It’s also the difference we are making.”
County’s choice
Over 99 years, Miami-Dade expects $522 million in revenue from Annie Coleman alone, including a ground lease for $12.2 million — an amount negotiated with Integra and not based on independent land appraisals. Commissioners waived appraisals for RAD projects.
This has raised criticism.
“How do you determine what you’re going to lease it for if they waived the appraisal?” said Frank Schnidman, a retired Florida Atlantic University economic development and urban planning professor. “What if the land is worth 10 times more?”
In negotiating their payments to the county, developers have to fit in their returns, too, meaning that the value of the land is getting based off their spreadsheets, not an independent assessment, Schnidman said.
“What they [developers] are doing is going backwards,” he said. “They peg to what it is to meet a 20 percent rate of return.”
Most sites have by-right zoning for the bigger buildings, but Schnidman said the county still has regulatory authority whether new development will overwhelm sewer, stormwater and roads capacity.
“If the county is a financial partner, how does that affect the staff that is burdened with the responsibility to do the permitting?” Schnidman asked.
Miami-Dade officials said HUD must approve all land leases and allows below-market deals if the lower cost is offset by benefits, namely the replaced public housing units and construction of additional apartments. Partnering on projects allows the county to receive the funds needed to support staff overseeing developments and ensuring compliance, and the county can claw back land if a developer fails to deliver, officials added.
Ultimately, Miami-Dade can’t afford renovations without RAD, real estate attorney Javier Fernandez said.
Developers “are really committed to improving communities but they also need to make profit,” he said. “The public is getting value. Is it getting as much value as it could? I think that’s a fair question.”
Developers counter that they take on all the risk, including construction and insurance costs and bank financing. They front all the capital for architects and planning.
“We are responsible for paying out of pocket before we have a shovel in the ground,” Redwood’s Burstyn said. “The county is going to make a lot more money than if they were just going to contribute the land at a higher basis.”
Tenant protections
But Miami-Dade’s biggest issue isn’t whether it negotiated the best deal. Higher on the hierarchy is solving the affordability crisis, said developer Ellen Buckley.
For decades, many in the county shelled out more than half of their income on housing, as the state has no rent controls. This was exacerbated over the past six years, as Miami became a magnet for well-heeled out-of-staters, creating unprecedented apartment demand and record rents.
That state of affairs has led tenants and worker nonprofits to push for more protection during RAD approvals. They have asked for responsible subcontractors and for allocations to area businesses and economic development trusts.
Swerdlow agreed to heat protections for construction crews at its Little River project and a slew of other community benefits. Still, some groups also called out the project for consisting of mostly workforce units for those earning up to 120 percent of the area median income, or $104,160 annually for a one-person household, much more than what many Miamians make.
Public housing residents, by contrast, are focused on follow-through from government and developers. All the promises sound so good, said Jenny Luna, who lives in one of the Little River properties Swerdlow will redevelop.
“Really, I want it in writing,” Luna, 50, said.
The county takes its time fixing issues at her unit, including backed-up plumbing last year, and it still hasn’t provided her with an alternative unit after she made her request two years ago, she said. So, she’s skeptical.
“If they really do what they say they are going to do, that’s nice,” she said. “If they move us back in, that’s a good thing.”
Supersized
In Little River, Swerdlow plans to start construction of its first 22-story, 325-unit building, including 144 RAD replacement units, in July, Liu said. By the fall, it hopes to lock in financing for the second building with 366 units, including 170 RAD replacements.
The project will have about 2,000 units for households earning up to 60 percent of the AMI and the balance for those earning up to 120 percent of the AMI, though splits are still being worked out.
That’s not all. Separately, Swerdlow is partnering with Nashville-based AJ Capital, which owns many of the properties interspersed between the public housing, on the connectivity, zoning and design aspects of the project. AJ Capital may develop over 2,000 market-rate units on its sites.
Spanning about 70 acres, the area now is home to industrial buildings, churches, convenience stores, aging single-family homes and mid-rise apartments. Swerdlow renderings show towers in pastel pink, yellow and green with a large public green space in the center.
Swerdlow’s project will have more than 300,000 square feet of commercial space and a new $35 million Tri-Rail station, marking movement on the commuter line’s yearslong effort to expand on existing tracks.
This part of Little River is in “a real need of investment after going [through] many, many decades of disinvestment,” Liu said. “If you know the area, you know it hasn’t been the best place in town.”
