By Noreen Marcus, FloridaBulldog.org
A nonprofit that’s trying to build a controversial low-income housing tower in downtown Fort Lauderdale has spent $4.32 million to buy most of the townhomes in a neighboring development – acquisitions that appear aimed at squelching opposition to the nonprofit’s plans for the area.
The independent owners at Villa Tuscany, 500 SE 7th St., are nervous about what the AIDS Healthcare Foundation (AHF) has in mind for their low-rise housing community. Property records show that during the last two years AHF has purchased nine of the development’s 17 townhomes. Most recently, in a sale that closed on Dec. 13, AHF paid $525,000, the highest price to date. The lowest was $459,000.
Los Angeles-based AHF is the largest provider of HIV/AIDS medical care in the world, with activities in 43 countries and more than 2,000 employees, according to its website. Founded in 1987, the foundation reported more than $1 billion in revenues in 2017.
The Villa Tuscany owners are deeply concerned because their five-member homeowners’ association (HOA) board is now controlled by AHF’s southern regional bureau chief, Michael Kahane, and two other outsiders. State corporate records list Kahane as board “director.”
“We’re hoping that they say, listen, we have nothing nefarious that we want to do to you, but their actions say something totally different, so we’re scared,” said a Villa Tuscany resident who declined to be identified for this story.
The resident described “bully” tactics designed to pressure owners into selling, like claiming their homes’ market value has declined so steeply that letting AHF buy them out is their only viable option.
The Sun-Sentinel reported last year that AHF took out full-page newspaper ads to attack critics of its high-rise, low-income apartment building. Today, residents fear the takeover of their board by AHF is another aggressive strategy to remove a potential impediment.
‘No hidden agenda’
In an interview with Florida Bulldog, Kahane denied the nonprofit has been aggressive in its dealings with Villa Tuscany residents.
“Every single person came to us and said, ‘I would like to sell,’” Kahane said, adding that he couldn’t speculate about what impelled them to act.
Kahane said the board takeover shows only careful stewardship of the nonprofit’s assets. “By owning the majority of the units we have the largest financial stake, so we’re protecting our investment,” he said. “Trust me, I have no desire to be on the board of a homeowners association.
“There’s no hidden agenda.”
Kahane said AHF plans to rent some of the townhomes and use others to accommodate visiting employees.
Nice airbnb if you can get it. The suggestion that AHF staffers — not clients — will benefit from the $4.32 million stake raises questions about a strict IRS rule against “inurements.”
Tax regulators prohibit all foundations, both private and public like AHF, from passing around benefits, or, inurements, to insiders, individuals or organizations. They want to make sure that tax-exempt groups serve the public interest exclusively. The penalty for a serious violation can be loss of a group’s tax-exempt status.
For example, the Donald J. Trump Foundation learned about inurements the hard way when the New York Attorney General’s Office forced it to shut down. The office’s investigation followed media reports of foundation payments for a portrait of President Trump and other items unrelated to its stated charitable mission. In 2019 a judge ordered Trump to honor a $2-million settlement for misusing the foundation to serve his own purposes.
Kahane, an attorney, seemed unfamiliar with the term “inurement.” But he had a complicated answer to the question of how investing in luxury townhomes furthers AHF’s core goal. He said the foundation started out focusing on AIDS healthcare but its mission has expanded to include emergency response and housing, since homelessness is a public health issue.
The need for affordable and especially low-income housing is acute in Fort Lauderdale, Kahane noted. In order to win city approval for its 15-story tower, AHF must try to mollify neighbors like the Villa Tuscany owners who oppose the project, he said.
“If folks don’t want to live next to us, we don’t want to force ourselves upon them,” Kahane said. “We were urged by the city to provide Villa Tuscany folks with a solution.”
Hence the buyouts. In other words, according to Kahane, the city made AHF do it.
Tough times for tower
Fort Lauderdale Mayor Dean Trantalis doesn’t go along with that explanation.
“Whenever any new development is proposed for a particular site, we always encourage the developer to speak with the neighboring community to ensure the impact is going to be compatible with the area,” Trantalis said. “So if they interpret that as being, buy up the neighborhood so you don’t have any opposition, I don’t know if that’s fair. We clearly did not do that.”
The housing proposal has not yet made it to Trantalis and the city commission. It’s stuck in court, after zoning officials, backed by the city attorney, rejected a revised proposal. Kahane said in addition to pursuing that appeal, AHF plans to file a federal civil rights lawsuit charging the city with bias against low-income people and AIDS patients.
The proposed tower site near Villa Tuscany is across the street from the AHF’s existing office campus and walk-in clinic. First AHF wanted a building with 650 “micro-units” and enough extras to qualify as a Social Service Residential Facility (SSRF).
Apartments or more?
However, the zoning code for that area doesn’t allow SSRFs. AHF returned to the housing authority with a revised site plan for a 500-unit building and no room for services. Though AHF called this an apartment building, the zoning administrator still deemed it an SSRF and rejected the proposal.
Residents of nearby Rio Vista successfully opposed the project before the city’s Board of Adjustment. Sun-Sentinel columnist Fred Grimm accused them of using the SSRF label as a “canard.” It was really a case of NIMBY (not in my back yard), Grimm wrote.
Kahane agreed. “It’s all a ruse to allow developers and affluent people who are opposed to this development to keep it from being built,” he said. “It’s going to be built.”
Back at Villa Tuscany, resident Jill Younis bemoaned the loss of community that the AHF tower battle has caused.
Neighbors who were once friends no longer speak; there’s suspicion that some, seeking better deals, go behind others’ backs, Younis said. “We’re the collateral damage here.”