Don Peebles, Michael Swerdlow and a rendering of the Block 55 Project at 249 Northwest Sixth Street (Wikipedia, Swerdlow Group)
Eight years ago, Don Peebles was poised to build a commercial project in Miami’s Overtown neighborhood. Now, as a different developer is building on the same site, Peebles has suffered another defeat in his legal battle over the property.
Miami-Dade Circuit Judge Michael Hanzman this week struck Peebles’ affiliate Overtown Gateway Partners’ claim for a $15 million payout tied to allegations it was swindled out of its development rights.
It’s the latest loss for Overtown Gateway – which is also tied to real estate investor and Peebles’ joint venture partner, Barron Channer – in its claims against the current site developer.
In March 2020, it sued that developer, Michael Swerdlow, his Downtown Retail Associates affiliate, and his project partner, Alben Duffie.
Overtown Gateway last September lost a $90 million claim in the same suit.
Meanwhile, Swerdlow is progressing on his Sawyer’s Landing project with 578 senior affordable apartments, a Target and an Aldi on part of the site Overtown Gateway was slated to develop.
Swerdlow did not return a request for comment, but his attorney touted the judge’s order as another win.
Peebles and Channer declined comment. Overtown Gateway attorney Glen Waldman said the ruling is disappointing, but pointed out it is not the end of the dispute. He plans to appeal and pursue remaining “viable” claims in the suit for up to $160 million.
Roots of battle
The roots of the battle began in 2013 when Overtown Gateway won a solicitation by Miami’s 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 Swerdlow and Duffie, through backroom deals with the CRA, its former board chair, and current and former executive directors, maneuvered to swoop in to take over development. The CRA and its leaders alleged to have participated in the scheme are not being sued.
From 2013 to 2016, at the direction of former CRA board chair Keon Hardemon — who was alleged to have favored Swerdlow — the CRA delayed vital approvals Overtown Gateway needed to proceed and pressured it to sell its development rights to Swerdlow, according to Peebles affiliate’s 2020 complaint.
As Swerdlow and Duffie kept indicating to Peebles partner Channer that they had the CRA’s blessing for their project, CRA Executive Director Cornelius Shiver “strongly encouraged” Channer to strike a deal to sell development rights to Swerdlow’s Downtown Retail, the suit says.
In a meeting at a Miami Design District pizzeria, Shiver told Channer Overtown Gateway would have “issues coming to agreements” with the CRA over the lots. In another meeting in Coconut Grove, Shiver told Channer that Hardemon had directed the CRA to end talks with Overtown Gateway.
The suit also claims a former CRA executive director told Channer the CRA will only accept architectural drawings by Downtown Retail, another way Overtown Gateway was allegedly being pushed to strike a deal to sell its development rights.
Feeling strong-armed and like it had no other choice, Overtown Gateway affiliates entered a Membership Interest Purchase and Sale Agreement (MIPSA) with Downtown Retail in 2016, according to the complaint. Overtown Gateway also entered the contract as a way not to lose the funds and effort it had put into its development attempts up to that date.
Under the MIPSA, Downtown Retail was to purchase the development rights for $15 million, but it broke this contract because it was not allotted the extra due diligence time it wanted to close, according to Swerdlow’s countersuit.
In the recently failed $15 million claim, Overtown Gateway argued the sale agreement had confidentiality provisions, banning Swerdlow from discussing with the CRA Blocks 45 and 55 or any pending agreements related to the lots behind Overtown Gateway’s back. But he did, and as a result the CRA broke Overtown Gateway’s rights to the land, Overtown Gateway alleges in its suit.
Hanzman disagreed, saying other reasons played a role in Overtown Gateway’s loss of its rights to the lots. For one, the CRA ended talks over “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 over the approval delays. The CRA said this was “the straw that broke the camel’s back” and indicated Overtown Gateway might be getting ready to sue the CRA, prompting it to end development discussions, according to the judge’s order.
The CRA and Overtown Gateway reached a mutual understanding to end the “Block 45” development. Both “voluntarily” signed a termination agreement, citing failure to timely complete documents, Hanzman wrote. Channer also said in court it was an “amicable arrangement.”
The judge found that the MIPSA confidentiality provision said that Overtown Gateway would only have a claim if Swerdlow’s allegedly secret talks with the CRA were the sole reason Overtown Gateway lost its development rights. Because other reasons were at play, Overtown Gateway’s claim failed, Hanzman wrote.
The CRA approved Sawyer’s Landing in 2018, but the project is being built only on “Block 55.” In their countersuit, Swerdlow and Downtown Retail denied wrongdoing and MIPSA violations.
“Block 45,” which reverted to Miami-Dade County under a separate agreement with the city, remains vacant.
Hardemon, who now is a county commissioner, denied having any role in Peebles’ loss of the lots. He added that it is notable he and the CRA were not sued.
“It seems that this developer failed to produce and wishes to place 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 is using scandalous language to injure my reputation so as 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 economically struggling Overtown in the spotlight.
The neighborhood, known as Miami’s original Black district, was a flourishing cultural hub known for its music scene in the first half of the 20th century. The construction of I-95 in the 1960s, and later of I-395, destroyed long-time residents’ homes, and gentrification followed.
Cornelius Shiver, executive director of the CRA, says the agency is turning the tide, and Swerdlow’s Sawyer’s Landing is part of a new chapter for Overtown.
Miami city commissioners have approved $7.5 million in local government financial assistance to the affordable housing portion of Swerdlow’s project.
Swerdlow bought “Block 55” last September for $10 million and scored a $25 million construction loan.
Overtown Gateway’s lawsuit is premised on baseless allegations and is a push to derail Sawyer’s Landing, Shiver said.
“The fact that the judge in his infinite wisdom has struck those counts vindicates the CRA in those vicious and false allegations,” he said. “Even better news is the Block 55 development proceeded notwithstanding this lawsuit. … We are planning jobs here. We are hiring people.”
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