Beating Whitey

Developer Donahue Peebles is as handsome, smooth, articulate, & nasty as he needs to be

Yet things didn't prosper under Peebles, either. The deal fell apart before either party signed in a very bitter public dispute. It featured Don and a cadre of Broward black activists, such as Roosevelt Walters, head of Broward's NAACP chapter, and Andy Ingraham, president of the National Association of Black Hotel Owners, Operators and Developers. On the other side was the predominantly white Broward County Commission, whose members such as John Rodstrom and Suzanne Gunzberger dared to question Peebles's credentials as a developer. In 2001 county commissioners grew tired of Don's inability to secure financing for the project and voted to kill the deal. That battle, like many of Don's squabbles, ended in litigation, with Peebles suing the county for four million dollars to recoup his out-of-pocket expenses. This complaint is still pending before a Broward County Circuit Court judge. "The guy is a moving target," assessed Rodstrom. "We could never get him to sign [his deal]. We were in perpetual negotiations."

Now Don is looking to get his money back from his overblown Miami Beach project. First he sued Clark Construction Group, the general contractor that built the Royal Palm, in Miami federal court last year for breach of contract. Don alleges the contractor failed to complete and deliver the work on time. The lawsuit claims delays have caused more than $17 million in damages (up $1.2 million over the original $15.8 million claim), including increasing the cost of the construction loan and losing revenue from cancellation of hotel events. Clark countersued Peebles and his architecture firm, Arquitectonica, alleging Don's company and the architects were responsible for the delays. Clark also seeks $17 million in damages. The contractor, and subcontractors, have additionally filed liens on the Royal Palm and Shorecrest properties, seeking to collect $8.7 million in unpaid work.

Steve Satterwhite
Peebles opened the Royal Palm Crowne Plaza Resort in 2002, after years of haggllng with the city over lease terms and millions in extra costs
Steve Satterwhite
Peebles opened the Royal Palm Crowne Plaza Resort in 2002, after years of haggllng with the city over lease terms and millions in extra costs

Also, Don is once again badgering city officials to give him a better deal on the Royal Palm. His current deal calls for him to repay $10 million over 25 years on the 99-year lease arrangement, giving the city $490,000 annually plus 11 percent of gross revenues. Don wants to be able to sell the Shorecrest as a time-share condominium, offering the 150 units at $330,000 each, in order to recoup his $15 million and turn a profit. As an incentive, he promises to pay the city the $4.5 million he owes on the Shorecrest in five years, instead of a quarter-century.

After a year of marathon negotiations, Don and the city appear to be close to a compromise. Privately, several Beach insiders say the city commission and the administration are caving to Peebles out of fear that telling him to go walk it off will result in negative racial publicity for discriminating against a black businessman. Others say commissioners are afraid to take Peebles on in case he bankrolls opponents in the next election cycle, as he did earlier against Kasdin.

Whatever the case, the city commission voted to negotiate with Peebles in May. It then voted 4-to-2 on October 23 to continue negotiating even though the developer hadn't made lease payments since November 2000. To date, he owes the city more than $900,000. He freely admits that he hasn't paid, in protest.

"I've heard the stories about us not paying rent," Don scoffed. "You know, they're almost slanderous. For the last five years, the city has owed me on the contaminated soil and on the RP structural problems. So I stopped paying rent."

As usual, it doesn't take long for Peebles to draw comparisons between his deal with the city and the sweetheart arrangement the city and the Tisch family, developers of the Loews Hotel, had. Loews, an 800-room convention hotel built in 1998 just north of the Royal Palm, "got a $60 million investment from the city, half of which they don't have to pay back," Don complained. "No one says a word about that. But I try and renegotiate my deal on RP, which only got a $10 million loan, and it's like I'm trying to move mountains! I'm actually doing the city a favor by offering a settlement." Loews received a $29 million loan from the city, which it can pay back in 99 years. In addition, Loews received $31 million in tax credits. (Its executives, including chairman Jonathan Tisch, declined to be interviewed for this story.)

Peebles-bashers like Kasdin will point out that the Tisch family got a better deal based on their track record and proven booking system. The company owns and operates seventeen luxury resorts in the U.S. and Canada. They're also part of Miami Beach lore -- builders of the Hotel Americana, now known as the Sheraton Bal Harbour: "But doesn't that run contrary to the theory of affirmative action?" Don demanded. "I thought the theory was to create an opportunity for minorities in an industry not known for giving us [chances]? So if that's so, there's no compelling reason to treat us differently from Loews."

City Manager Jorge Gonzalez sat on a swivel chair next to a round table in his office on the fourth floor of Miami Beach City Hall. From the window behind him, the Royal Palm pierced the majestic Collins Avenue skyline. Gonzalez, who came to Miami Beach in 2000, believes that Peebles has a legally binding contract with the city that clearly states he bought the RP "as is." But from a policy standpoint, the young city manager reasoned, the city commission's intent was to have a successful black-owned convention center hotel. "Assuming that there were cost overruns and delays, then he might not be successful as an operator," Gonzalez rationalized. "But helping him be successful doesn't mean giving away the store."

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