Michael Swerdlow’s planned Block 55 in Overtown is in jeopardy. Swerdlow lost Terra as a partner to build the Target-anchored mixed-use project, and had to delay closing this week on a final development agreement with Miami’s Southeast Overtown/Park West Community Redevelopment Agency.
The setbacks came days after three entities tied to developer Don Peebles sued Swerdlow, his company Downtown Retail Associates, and his business partner Alben Duffie for allegedly sabotaging a previous deal to redevelop the city-owned site where Block 55 would be built.
Swerdlow and his partner’s Overtown Gateway Partners is seeking $175 million in damages, including $160 million in alleged lost profits and $15 million from the previously proposed deal between Swerdlow and the Peebles partnership that fell apart.
A spokesperson for Terra president David Martin confirmed the company had backed out of Block 55, but would not give a reason why. In addition to Target, the project would include a grocery store, offices and 556 apartments with 154 set aside for senior affordable housing.
Cornelius Shiver, the Overtown CRA’s executive director, said “it is not overlooked” that Peebles’ lawsuit was filed shortly before the closing date as an attempt to derail Block 55. “Site plans have been approved, the project is fully funded and leases with Target and Aldi have been signed,” Shiver said. “Whether or not this lawsuit is baseless in facts or the law surely will be determined at a later date, but right now, everything is on hold.”
Although not parties to the lawsuit, the complaint identifies Shiver and two other city officials, including Miami Commissioner Keon Hardemon, of purposely killing a development agreement Peebles and his business partner Baron Channer, through their company Overtown Gateway Partners, had tried to finalize with the Overtown CRA in 2016.
In that proposal, Overtown Gateway Partners offered to build a mixed-use project with ground-floor retail and 500 to 600 apartments at 249 Northwest 6th Street.
At the time, Overtown Gateway Partners walked away from the deal after failing to reach an agreement with the Overtown CRA during two years of negotiations. “The plaintiffs mutually agreed on the default in exchange for the return of their deposit,” Shiver said.
Glen Waldman, an attorney representing Overtown Gateway Partners and the two other Peebles entities, said his clients are confident they have a strong case. “What happened here was just wrong on many levels and caused significant damage to not only those involved in the entity which sought to bring relief to the people of Overtown, but to the people of Overtown as well,” Waldman said. “The complaint seeks very substantial damages which we believe are merited.”
Alan Kluger, the lawyer for Downtown Retail Associates, said Peebles and Channer were unable to fulfill their obligations to develop the Block 55 site and adjoining parcel known as Block 45. Kluger said Downtown Retail Associates subsequently won a separate bidding process to develop Block 55.
“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,” Kluger said.
According to the lawsuit, Commissioner Hardemon and his uncle Billy Hardemon, a local lobbyist, were influencing Shiver, who was at the time an Overtown CRA employee, and then-executive director Clarence Woods to slow down the negotiations with Overtown Gateway Partners. The lawsuit alleges Hardemon did not want the agreements with Peebles and Channer to move forward, preferring to give the development rights to Swerdlow and Duffie, a former Miami-Dade County housing official who was “good friends and professional collaborators with Billy Hardemon.”
In an emailed statement to The Real Deal, Hardemon denied the allegations. “It seems that this developer failed to produce, and wishes to place the blame elsewhere,” Hardemon said. “I had no role whatsoever in the demise of their development plan.”
The lawsuit alleges that in 2015 Overtown Gateway Partners began negotiating with Swerdlow to sell him the development rights to Block 55 for a retail project. At the time, according to the lawsuit, Shiver allegedly met with Channer at Harry’s Pizzeria in Miami’s Design District to deliver a message: “Shiver made it clear to Channer that OGP would have issues coming to agreements with the CRA for both Blocks 45 and 55 based on Keon Hardemon’s dislike for Peebles and the preference to work with Swerdlow and Duffie,” the lawsuits states.
Shiver allegedly encouraged Channer to cut a deal with Swerdlow. Subsequently, Overtown Gateway Partners entered into a purchase and sale agreement to flip Block 55 to Swerdlow for $15 million plus out-of-pocket predevelopment costs. However, the Swerdlow deal fell apart in June 2016 and three months later Overtown Gateway Partners and the Overtown CRA parted ways. The lawsuit alleges that Hardemon instructed Woods and Shiver to end negotiations with Overtown Gateway Partners.