Peebles Files $585M Suit Calling 'Shenanigans' On Miami Project That Slipped Away
Developer Don Peebles is suing a business rival, accusing him of conspiring with Miami city officials to ice Peebles out of a project in Miami's historically black neighborhood, Overtown. His lawsuit hints at backroom dealing and alleges criminal activity by one city Community Redevelopment Agency.
But the defendants say Peebles backed out of the deal voluntarily, has a litigious history and is only suing because rival developer Michael Swerdlow has been successfully moving forward on the project and Peebles now wants a cut.
Last week, three companies owned by Peebles and a partner, Barron Channer, filed suit against Swerdlow, Downtown Retail Associates and DRA Managing Member Alben Duffie alleging breach of contract, tortious interference and conspiracy, asking for $585M in damages across five counts.
The dispute stems from two pieces of land, called Block 45 and Block 55, in Overtown that Peebles had won bidding rights to develop.
Peebles' deal to develop Block 45 collapsed in 2016, and he never finalized the deal to build on Block 55.
"Had the shenanigans intrigue and games played to deny these projects from moving forward under the auspices of OGP not happened, both projects would have been completed long ago," the lawsuit says.
DRA subsequently won a request for proposals to develop Block 55 property and announced plans in February to develop the land as a 1.5M SF mixed-use property with 556 apartments and 355K SF of retail anchored by a Target.
Financing on the Block 55 project was supposed to have closed by Tuesday, but a spokesperson for Terra Group, which had agreed to partner with Swerdlow on the development, said that the company has since backed out.
“Like many lawsuits filed by Don Peebles over the years, this claim is without merit," attorney Alan Kluger, who represents defendant Downtown Retail Associates, said in a statement. "Peebles and Barron Channer made an early attempt to develop the Block 45 and Block 55 sites in 2013, but they were unable to fulfill their obligations ... and their plans were ultimately terminated ... Seeing that Peebles and Channer have no legitimate claim against Downtown Retail Associates, their 11th hour attempt at litigation is nothing more than a brazen act to extract dollars from the pockets of Block 55’s development team.”
Peebles is a prominent developer who has built some 10M SF nationwide since 1983, including the Bath Club on Miami Beach. Over 30-plus years, Swerdlow has developed some 15M SF of real estate projects in South Florida, including the Dolphin Mall and Las Olas Riverfront.
In 2013, Peebles and Channer, through companies collectively known as OGP, won bidding on separate requests for proposals to develop the two parcels. On Block 45, which was owned by Miami-Dade County but turned over to the city's Overtown/Park West Community Redevelopment Agency, OGP planned to develop 350 apartments, a 150-room hotel, office and retail, and earn net proceeds of $70M. Brightline built its downtown train station on part of that parcel.
On the neighboring Block 55, which was owned by the city and also controlled by the CRA, OGP intended to develop 500 to 600 apartments, plus retail, and reap $90M.
According to the lawsuit, the development plan for Block 45 could not be finalized until the CRA approved a grant agreement and two restrictive covenants.
OGP alleges that then-CRA board chair and current Miami City Commissioner Keon Hardemon, his cousin Billy Hardemon (described as a lobbyist) and then-CRA leaders Clarence Woods and Cornelius Shiver conspired to intentionally stall OGP's project. Twice in 2014, votes on the ancillary documents were put on the agenda for a CRA vote, and both times Hardemon took them off, the suit says.
The lawsuit describes a series of private meetings at restaurants and hotels. At one, Shiver "made it clear that OGP would have issues" with the CRA because of "Keon Hardemon's dislike for Peebles and the preference to work with Swerdlow and Duffie," the lawsuit alleges. Duffie is a former county housing official.
Peebles' suit claims Shiver suggested OGP cut a deal with Swerdlow to hand over its development rights. Peebles said OGP reluctantly followed that advice. He and Swerdlow signed confidentiality agreements, a nonbinding letter of intent, and a Membership Interest Purchase and Sale Agreement. If their deal went through, Swerdlow would pay $15M plus predevelopment costs and take over the project.
But OGP alleges Swerdlow's team instead discussed confidential details with CRA reps while stalling the deal with OGP multiple times. The CRA terminated negotiations with OGP over Block 45 in May 2016.
Shiver, who is now the executive director of the CRA, called the lawsuit's allegations "false and scandalous." The agency is not named as a defendant in the suit, he pointed out.
"Plaintiffs defaulted on the essential terms of their development agreement on Block 45," Shiver said. "In fact, the plaintiffs mutually agreed on the default in exchange for the return of their deposit. As to Block 55, the plaintiffs never acquired any development rights to the parcel."
At the time the deal fell apart, news reports characterized it as Peebles backing out. Channer was quoted as saying it was partly due to the fact that land would revert to the county if construction didn't start by a certain deadline, and Woods said Peebles' group had trouble getting financing.
The lawsuit says the CRA used the dead Block 45 deal as leverage to push OGP to negotiate with Swerdlow on Block 55.
"It was quid pro quo: if OGP gave Block 45 back to the CRA nicely, then OGP could keep block 55, but only if it did a deal with Swerdlow," the suit says. This "raised the specter of troubling and possibly illegal actions being demanded by OGP."
OGP called Commissioner Keon Hardemon's behavior "shameful" and said in the suit that the ordeal "raises very serious questions civilly and potentially criminally."
"Certain people, one of whom is an elected official, have put their own personal gain, likes and vendettas before that of the public good," the lawsuit says.
The CRA ultimately issued a new RFP for Block 55, which DRA won. In contrast to OGP's three-year ordeal, they had development agreements in place with the CRA within six months, the lawsuit says.
Block 45 reverted to county ownership. Atlantic Pacific Communities has leased that land and plans to develop it with 600 apartments and 25K SF of retail. In the meantime, the coronavirus exploded in the U.S. and disrupted all kinds of government and business functions, as well as most people's everyday lives.
Peebles' team "failed to produce and wishes to place the blame elsewhere," Keon Hardemon said. "I had no role whatsoever in the demise of their development plan."
Billy Hardemon said he was only involved as an observer — "a community activist-type guy" — and was saddened to be mentioned in the lawsuit. Neither of the Hardemons is a defendant.
"Keon was truly the good guy in this transaction" who supported Peebles winning the original RFP, Billy Hardemon said.
"Jesus, [Peebles] is fucking doing this on a pandemic like this? I'm the wrong person to blame for your deal not happening," he continued. "It looked like Peebles was going to make $15M. That's what it looked like to me. And I was happy for that! Are you kidding me? How he fucked that up, I don't know."
A 2016 grand jury report slammed Miami CRAs for being used essentially as slush funds for commissioners' pet projects. Keon Hardemon has been scrutinized in the past for family members allegedly peddling influence.
An attorney for OGP, Glen Waldman, said that despite the assertion of possible criminality, the plaintiffs hadn't referred the matter to law enforcement.
"We'll see what discovery uncovers and take it from there," Waldman said.
Peebles declined to comment and Channer did not return a request for comment. Efforts to reach Swerdlow and Duffie were unsuccessful as of press time.