Swerdlow Moves Ahead With Housing on Disputed Miami Overtown Block 55
Sawyer’s Landing originally was planned as a mix of market-rate and affordable units, but the latest concept is for an all-affordable development and a Target store.
Developer Michael Swerdlow is moving forward with an affordable housing-retail project in Miami’s Overtown neighborhood after a partial win in a lawsuit against him by a would-be site developer.
Swerdlow, CEO of Swerdlow Group, is set to start construction early next year on Sawyer’s Landing with 578 affordable housing units including 85% reserved for residents 62 and older and a 251,000-square-foot retail segment anchored by Target.
Swerdlow is partnering with SJM Partners Inc., with offices in Delray Beach and Virginia, and Alben Duffie on the 3.44-acre development at 249 NW Sixth St., steps from Brightline’s MiamiCentral station.
It’s a disputed property called Block 55 as affiliates of prominent Black developer Don Peebles and entrepreneur Barron Channer sued Swerdlow in April after the city ended the Peebles-Channer camp’s previously granted development rights and awarded them to Swerdlow and his Downtown Retail Associates LLC.
Peebles and Channer alleged backroom deals between Swerdlow and the city’s Southeast Overtown/Park West Community Redevelopment Agency, which sought developers, push them out a fairly won right.
A Swerdlow Group affiliate, Block 55 Owner LLC, bought the vacant lot for $10 million from the CRA on Sept. 2, according to Miami-Dade County deeds.
That’s the same day Miami-Dade Circuit Judge Michael Hanzman issued summary judgment in favor of Swerdlow on a breach of contract claim.
Peebles and Channer alleged the CRA pushed them to enter a membership interest purchase and sale agreement with Swerdlow to sell their stake even though they won the solicitation to develop. The CRA isn’t a defendant.
They listed two breach of contract counts, saying Swerdlow broke confidentiality and noncircumvention clauses. The second count valued at $160 million was based on a provision saying Swerdlow can’t finalize a transaction with the CRA within 18 months of terminating the agreement.
Hanzman concluded there was no breach because the agreement was terminated June 13, 2016, putting the expiration at Dec. 13, 2017. Swerdlow took steps toward a deal with the CRA but didn’t close a transaction until after the 18-month window closed.
“It is also undisputed that defendants did not ‘enter into’ or ‘consummate’ a transaction with the CRA prior to that time. While defendants obviously took steps in anticipation of ‘entering into a transaction,’ nothing in the contract proscribed such preparatory steps/action,” Hanzman wrote. “Nothing prevented plaintiffs from insisting on a provision that would have restricted defendants ability to take any steps in furtherance of pursuing a transaction during this restrictive period.”
Swerdlow attorney Alan Kluger, who is working on the case with Steve Silverman, declined comment. Kluger and Silverman are shareholders at Kluger Kaplan in Miami.
Peebles-Channer attorney Glen Waldman wasn’t disheartened by the order, saying trial will be sought on the remaining counts, including a breach of contract count valued at $15 million, fraud, tortious interference and conspiracy.
“This is one of several counts in the lawsuit for breach, and we remain very confident in the ultimate result for us,” said Waldman, partner at Waldman Barnett in Miami.
Waldman, who said he hopes for a trial in mid-2021, refuted past allegations by Kluger that the complaint is trying to stop Swerdlow’s project. Development is good news, and if it weren’t for CRA delays and backroom deals, Peebles and Channer already would have built.
“It was never our intent to stop the project. We want the project to go forward,” Waldman said. “The people of Overtown have waited way too long for this.”
When the complaint was filed, Kluger said Swerdlow’s lender walked away. Fresh financing was recently obtained when Swerdlow, SJM and Duffie secured a $25 million acquisition and predevelopment loan from Sawyer’s Lender LLC.
An amended complaint said Peebles-Channer affiliate Overtown Gateway Partners LLC won CRA solicitation in 2013 for Block 55 and Block 45 at 152 NW Eighth St., but the CRA delayed agreements and votes. The CRA pushed Overtown Gateway to give up Block 45 while talking in the background with Swerdlow about developing Block 55 even though he didn’t respond to the solicitation.
“It was a 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 complaint said. Swerdlow terminated the agreement with OGP affiliates, and the CRA ended development rights to Block 55.
Summarizing OGP court filings, Hanzman said Peebles didn’t trust Swerdlow and heavily negotiated the agreement. If Peebles was so distrustful, he could have negotiated a clause saying Swerdlow couldn’t take any steps toward a deal with the CRA for 18 months following the agreement’s termination but didn’t. The agreement only stipulated no deal was to close, and none did.
Hanzman issued an order June 17 denying summary judgment to Swerdlow on the other breach of contract count and denying Peebles’ and Channer’s motion to dismiss the counterclaim.
Peebles gained fame as a developer in the District of Columbia. In South Florida, he built the Royal Palm Crowne Plaza Resort, the first major Miami Beach hotel developed and owned by an African American. Also in Miami Beach, he developed The Lincoln office building and The Residences at The Bath Club luxury condominiums.
Sawyer’s Landing is projected to provide an economic jolt in the historically Black Overtown neighborhood.
“These needed housing units, along with retail options that will serve the surrounding area, will deliver a direct, positive impact to our community in the form of new jobs, new tax revenue,” Swerdlow said in a news release.