In the latest step of a federal investigation into the Related Group’s affordable housing arm, the U.S. Attorney’s Office is now looking into whether Related reduced costs on a Miami project by hiring subcontractors who failed to pay their taxes.
The Miami Herald reported that 11 of Related’s 15 subcontractors for Edificio Piñeiro, 34-unit senior apartment complex in Miami’s Shenandoah neighborhood, used independent contractors instead of in-house workers. Doing that would let the companies avoid paying costly employment taxes like Social Security and Medicare because outside contractors pay their own taxes. It can reduce payroll costs by 20 percent, the Herald reported.
Federal authorities have been investigating South Florida’s biggest developer as part of an expanding probe into South Florida’s affordable housing industry that involves at least a dozen publicly subsidized developments by other developers.
The workers hired as outside contractors for the Shenandoah project would typically be considered in-house employees, including laborers, painters and bricklayers, according to the Herald.
Related’s subcontractors stated they treated workers as independent contractors via identical letters to Donna Milo, a supervisor and aunt of Related Urban president Albert Milo. Her company, Donna E. Milo, Inc., was hired to manage construction at Edificio Piñeiro. She told the Herald that she didn’t have much knowledge about the subcontractors’ tax arrangements.
A spokesperson for Related told the newspaper that its subcontractors “paid workers in full compliance with the law,” and that it’s working with prosecutors on a “industry-wide review of the affordable housing sector.” [Miami Herald] – Katherine Kallergis