Don Peebles Loses $ 15 Million Claim Over Overtown Development Site

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Don Peebles, Michael Swerdlow and a render of the Block 55 project at 249 Northwest Sixth Street (Wikipedia, Swerdlow Group)

Eight years ago, Don Peebles was about to build a commercial project in the Miamis Overtown neighborhood. Now, as another developer builds on the same site, Peebles has suffered yet another defeat in their legal battle over ownership.

Miami-Dade Circuit Judge Michael Hanzman this week struck down the claim of Peebles affiliate Overtown Gateway Partners for a $ 15 million payment linked to allegations he was cheated of his rights to development.

It’s the latest loss for Overtown Gateway, which is also linked to real estate investor and Peebles joint venture partner Barron Channer in its claims against the site’s current developer.

In March 2020, she sued this developer, Michael Swerdlow, his subsidiary Downtown Retail Associates, and his project partner, Alben Duffie.

Overtown Gateway lost a $ 90 million claim in the same lawsuit last September.

Meanwhile, Swerdlow is making progress on its Sawyers Landing project with 578 affordable senior citizen apartments, a Target and an Aldi on part of the site Overtown Gateway was to develop.

Swerdlow did not return a request for comment, but his lawyer presented the judges’ order as another victory.

Peebles and Channer declined to comment. Overtown Gateway attorney Glen Waldman said the decision was disappointing, but stressed that this was not the end of the dispute. He plans to appeal and pursue viable claims remaining in the lawsuit up to $ 160 million.

Roots of battle

The roots of the battle began in 2013 when Overtown Gateway won a solicitation from the Miamis Southeast Overtown / Park West Community Redevelopment Agency to develop Block 45 at 152 Northwest Eighth Street and Block 55 at 249 Northwest Sixth Street.

Overtown Gateway alleges that Swerdlow and Duffie, through behind-the-scenes deals with the CRA, its former chairman of the board, and current and former executive directors, have maneuvered to jump in to take over the development. The CRA and its leaders alleged to have participated in the scheme are not prosecuted.

From 2013 to 2016, under the leadership of former CRA board chairman Keon Hardemon, who allegedly favored Swerdlow, the CRA delayed the vital approvals Overtown Gateway needed to proceed and lobbied him. to sell its development rights to Swerdlow, according to the 2020 complaint from Peebles affiliates.

As Swerdlow and Duffie kept telling Peebles partner Channer that they had ARC’s blessing for their project, ARC Executive Director Cornelius Shiver urged Channer to wrap up. an agreement to sell the development rights to Swerdlows Downtown Retail, according to the lawsuit.

During a meeting at a Miami Design District pizzeria, Shiver said Channer Overtown Gateway would have problems making deals with the CRA on the lots. At another meeting in Coconut Grove, Shiver told Channer that Hardemon asked the CRA to end talks with Overtown Gateway.

The lawsuit also claims that a former executive director of the ARC told Channer that the ARC would only accept architectural drawings from Downtown Retail, another way Overtown Gateway was allegedly pressured into a deal to sell its rights. of development.

Feeling strong and like they had no other choice, Overtown Gateway affiliates entered into a Membership Interest Buy and Sell Agreement (MIPSA) with Downtown Retail in 2016, according to the complaint. Overtown Gateway also entered into the contract so as not to lose the funds and effort it had put into its development attempts up to that date.

Under MIPSA, Downtown Retail was to purchase the development rights for $ 15 million, but it broke that contract because it did not have the additional due diligence time it wanted to close, according to the counter action. by Swerdlows.

In the recently rejected $ 15 million claim, Overtown Gateway argued that the sale agreement contained confidentiality provisions, prohibiting Swerdlow from discussing with ARC Blocks 45 and 55 or any related pending agreement. to lots behind Overtown Gateways. But it did and, as a result, the CRA severed Overtown Gateways’ rights to the land, Overtown Gateway alleges in its lawsuit.

Hanzman disagreed, saying other reasons played a role in the loss of his rights to the lots by Overtown Gateways. On the one hand, the CRA ended discussions on Block 55 because of a letter it received from Overtown Gateway, Hanzman wrote.

In the letter, Overtown Gateway accused the CRA of inappropriate and illegal conduct during the approval timelines. The ARC said it was the straw that broke the camel’s back and indicated that Overtown Gateway may prepare to sue the ARC, prompting it to end development talks, according to the order. judges.

The ARC and Overtown Gateway reached a mutual agreement to end the development of Block 45. The two voluntarily signed a termination agreement, citing the fact that the documents were not completed on time, Hanzman wrote. Channer also said in court that it was an out-of-court settlement.

The judge found that MIPSA’s confidentiality provision stated that Overtown Gateway would only have a claim if Swerdlows had secret talks with the CRA were the only reason Overtown Gateway lost its development rights. Because other reasons were at play, the Overtown Gateways claim failed, Hanzman wrote.

The CRA approved Sawyers Landing in 2018, but the project is only built on Block 55. In their counter-suit, Swerdlow and Downtown Retail have denied wrongdoing and MIPSA violations.

Block 45, which returned to Miami-Dade County under a separate agreement with the city, remains vacant.

Hardemon, who is now the county commissioner, denied having played a role in the loss of the lots by Peebles. He added that it is notable that he and the CRA have not been prosecuted.

It appears that this developer has failed to produce and wants to lay the blame elsewhere, Hardemon said in an emailed statement. If he had a cause of action against me or the CRA, he would have filed it. Instead, he uses outrageous language to damage my reputation in order to provide an excuse as to why he failed. Instead, he should take responsibility for his own actions.

Overtown in the spotlight

The tiff puts real estate development in the spotlight in the economically struggling city of Overtown.

The neighborhood, known as Miami’s Original Black Quarter, was a thriving cultural center known for its music scene in the first half of the 20th century. Construction of I-95 in the 1960s, and later of I-395, destroyed the homes of longtime residents, and gentrification followed.

Cornelius Shiver, executive director of the ARC, says the agency is turning the tide and Swerdlows Sawyers Landing is part of a new chapter for Overtown.

Miami City Commissioners have approved local government funding of $ 7.5 million for the affordable housing portion of the Swerdlows Project.

Swerdlow bought Block 55 last September for $ 10 million and secured a $ 25 million construction loan.

The Overtown Gateways trial is based on baseless allegations and is a push to derail Sawyers Landing, Shiver said.

The fact that the judge, in his infinite wisdom, struck out these charges justifies the CRA in these vicious and false allegations, he said. Even better news is that development of Block 55 has continued despite this lawsuit. We are planning work here. We hire people.

Contact Lidia Dinkova

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