Beating Whitey

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

On a Thursday afternoon a few weeks before Christmas, real estate developer R. Donahue Peebles sat at his desk in the Coral Gables office of his firm, Peebles Atlantic Development Corp. Linen drapes softened the sunlight entering his spacious windows, but obscured the view of the lush green skyline. "Don," as most people know him, was his usual self: charming, affable, and brazenly outspoken.

Leaning back in his chair, a wily smile on his face, Peebles boasted about how he'd started his company from zero and built it into a business with a $300 million real estate portfolio at the tender age of 42. "One thing I have a reputation for is this -- I'm willing to fight for what I believe in and what I want," Peebles said. His baby-brown eyes were unflinching. "You don't get where I am by being passive. You don't get where I am by being a quitter.... You fight."

And since he set foot on Miami Beach in 1995, Don has been engaged in an eight-year-long bare-knuckle brawl with his former business partners, city bureaucrats, and politicians in his quest to build the now-open Royal Palm Crowne Plaza Resort, the nation's first black-owned convention hotel, nestled on Fifteenth Street at Collins Avenue. Miami black leaders wanted their own Stephen Muss, and initially at least Miami Beach white leaders agreed. The problem, though, as the man said, is that you must be careful of what you wish for. And the race issue complicated matters even more, because Peebles is so adept at exploiting it, maddeningly telling home truths about accepted "white" practices that he gets blasted for following ...

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
Saul Gross calls Peebles a litigious and disingenuous man
Steve Satterwhite
Saul Gross calls Peebles a litigious and disingenuous man
Simon Cruz isn't caving to the Peebles pressure, despite what Miami Beach insiders think
Steve Satterwhite
Simon Cruz isn't caving to the Peebles pressure, despite what Miami Beach insiders think
Neisen Kasdin says he stood up to Don Peebles and got burned
Steve Satterwhite
Neisen Kasdin says he stood up to Don Peebles and got burned
A poster for the Hampton House, subject of a December 18 benefit at the Royal Palm; attendees included state Sen. Gwen Margolis (left), Don Peebles, and Miami-Dade County Commission Chairwoman Barbara Carey-Shuler
A poster for the Hampton House, subject of a December 18 benefit at the Royal Palm; attendees included state Sen. Gwen Margolis (left), Don Peebles, and Miami-Dade County Commission Chairwoman Barbara Carey-Shuler

The Royal Palm project was born of a 1993 compromise between Miami-Dade County and Miami Beach elected officials, tourism boosters, and local black activists that ended a local black tourism/business boycott being supported by doers and shakers around the nation. The thousand-day boycott began after county and City of Miami officials, under pressure from conservative Hispanic political leaders, snubbed anti-apartheid leader Nelson Mandela in 1990 for lauding Fidel Castro and Yasser Arafat. The effects of the boycott were horrendous for the Beach and the county, costing the community an estimated $55 million in lost tourism revenue, and so city officials issued a call for a competitive bid in 1995 for a black developer to renovate and operate a hotel aimed primarily at the conventioneer business. As reparations.

Miraculously, in 1996 they gave Don the rights to the project, over Eugene Jackson, founder of Atlanta-based Unity Broadcasting Network, who was partnered with the Hyatt Corporation. In addition the city fronted Peebles a ten-million-dollar loan to buy the Royal Palm and Shorecrest hotels, two historical Art Deco properties that make up the Crowne Plaza resort.

Since then Peebles has allegedly edged his D.C.-based business partners Jeffrey E. Thompson and Cecile Barker out of the deal, blamed everyone but himself for the four-year delay and millions in cost overruns on the Royal Palm, allegedly refused to pay his contractors for completed work, and -- after the year 2000 -- refused to come up with any further lease payments to the City of Miami Beach until he gets a new deal on the $80 million project.

Since Don blames the city for the problems -- he says officials never informed him about the extent of structural problems at the Royal Palm, or of the petroleum-contaminated soil there -- he isn't responsible for $15.8 million in construction delays and additional costs. Consequently Peebles wants them to allow him to sell the smaller Shorecrest as a time-share condominium; this would place the asking price on the 150 rooms in question at about $330,000 each. At those prices, Don could pay the city back the $4.5 million used to purchase the Shorecrest, cover the additional "problem," and make a little profit into the bargain ...

"I am a hard-nosed businessman, and I'm not really going to take any bullshit from people just to get along," Don continued, recalling his public spat with former Miami Beach Mayor Neisen Kasdin (whom Peebles accuses of double-crossing him): "If I feel I've been wronged, or that I am not being treated fairly, then I'm going to fight back."

"When you are not in favor of his agenda, rightfully or wrongfully so, Don goes on the attack," Kasdin affirmed.

And since what Don does is no different from what other real estate developers have done since the arrival of South Florida pioneers Carl Fisher, Henry Flagler, and the descendants of Hamilton Disston, early in the Twentieth Century, it's increasingly hard to find fault with him. He's just "working the system" to push through lucrative real estate deals. The only difference is that Peebles is shameless in admitting that he works within a corrupt system to achieve his goals, and that whites are slower to openly criticize him for fear of being called prejudiced.

"He's playing the white man's game perfectly and a lot of people are taking offense at that," said a long-time Miami Beach real estate investor who did not want to be identified. "They don't like the idea that a black man is impudently working the system, and not being a hypocrite about it, as they are."

City Commissioner Saul Gross, who certainly doesn't fall into the above category, said that what he doesn't appreciate about Peebles is his litigiousness: "His style is to say he's going to sue you, or that he's going to come after you if he doesn't get his way," Gross said. "That's not a nice way to do business."

"With Don, you never know where you stand," agreed Broward County Commissioner John Rodstrom, who has also dealt with him. "He's constantly changing the terms."

"Don is a great gentleman, a great talker, and a great manipulator," said Joe Fontana, a Beach resident whom Peebles financially supported in his losing race for city commissioner against Luis Garcia. "But I disagree with his heavy-handed approach, like refusing to pay the city its lease. And he always has a different story to tell -- he tells people one thing to get what he wants, then down the road, he'll end up doing something else. His tactics aren't good for Miami Beach."

Other people have nothing but the utmost respect for Don because he doesn't pull any punches. "Don's slick and charming, but you have to love that he's surprisingly straightforward," said Michael Sasser, the former editor of the Miami Beach SunPost, a weekly newspaper known for assailing local government and the private deals it cuts.

"He's always up-front," said Adolfo Henriques, chairman of Union Planters Bank in Miami, which provided Peebles with $40 million in construction financing for the Royal Palm. "He's not afraid to tell people when they're wrong."


Don Peebles began his career in his hometown of Washington, D.C., where he worked as a legislative page on Capitol Hill, learning early that "America's business is business!" as Calvin Coolidge used to say. He attended Rutgers University in Newark, New Jersey, to study medicine, but found real estate was his true calling. After a year in college, Peebles returned to D.C. in 1982 and went to work for his mother, Yvonne Poole, a prominent real estate broker in Washington. Mother Poole also introduced Don to realpolitik as practiced in the Democratic Party: "I had a lot of high expectations," Peebles recalled, with the trademark unflinching smile. "I worked hard to achieve everything I have."

In 1983 Don capitalized on his close friendship with the city's infamous mayor, Marion "Night-train" Barry, who appointed Peebles to the city's powerful Board of Equalization and Review, a property assessment appeals board on which his mother had sat until 1980. (First elected in 1978, Barry had a reputation for cronyism and was driven from office after being videotaped using crack cocaine with a prostitute in a D.C. hotel in January 1989 -- his famous line was: "Bitch set me up!" The mayor was convicted, released in 1992, and elected mayor again in 1994.) But Don had gotten his time in, chairing the board from 1984 until 1988. Then he resigned in order to use his political experience in a tax assessment appeals business. He represented property owners before his old board, in a minor-league version of what Sen. Robert Dole and former Secretary of State Henry Kissinger had done for serious influence and profit in their national and global spheres. In the late Eighties, Peebles convinced Barry to lease office space from him in a blighted area. "Washington had a strong-mayor government with one person with the full authority to make a decision," Peebles related. "So I only had one party to deal with."

In August 1995, however, Don's relationship with Barry burned him. The city council, in a rare move against Barry, balked at a $48 million plan to lease two office buildings from Peebles. The council objected that Barry was giving away a no-bid deal to his buddy Don. To distance himself from the experience, Peebles headed for Miami Beach in December 1995 for a vacation with his gorgeous blond wife and former model Katrina, and his son, R. Donahue Peebles III. (Last year Katrina, who posed for advertisements touting Peebles's properties, gave birth to their second child, Chloe Alexandra. The couple are well known in Miami's philanthropic circles, donating their time and money to various causes, including the Miami City Ballet and the Concert Association of Florida. Don has also given $60,000, through the Miami-based Visitors Industry Council, to fund scholarships and mentorships for minorities seeking managerial positions in the hotel and restaurant industries.)

Don decided to stay in town after he read an article in the Miami Herald's Neighbors section about the City of Miami Beach's second shot at luring a black developer for a convention center hotel on South Beach. (The city had failed once before, when the HFC Group failed to get financing in 1994.) Don was instantly intrigued by the proposition and assembled a team of all-black investors: Motown Record Company chairman Clarence Avant and two D.C. businessmen, Jeffrey E. Thompson and Cecile Barker.

Avant bowed out of the deal, however. He preferred to invest his money in more liquid assets, Peebles related. "He saw that the return on his investment was going to take longer than we had originally anticipated." On the flip side, Don's business relationship with Thompson and Barker soured. Don sued both men in D.C. Superior Court in June 1997 in order to forfeit their interests in the Royal Palm project. He accused his former partners of not making payments and bouncing checks. Barker countersued Peebles in Miami-Dade Circuit Court. In his lawsuit, he alleged Peebles was acting in his own interests rather than those of the partnership, and that Don had mixed partnership funds with accounts belonging to his other businesses. The complaint says Peebles was "engaged in self-dealing" by using joint monies to buy an interest in a racehorse, Sir Irish's Secret, and pay for a lavish $10,000 birthday party for himself. The ex-partners settled last year and Don says he came out on top. "It didn't cost my company a single penny," Don alleged recently. "In fact, they had to pay me."

Meanwhile Peebles quickly learned doing business with Miami Beach government is a lot tougher than doing business in Marion Barry's D.C. He now had to negotiate with committees made up of private citizens, government bureaucrats, and local politicians to push a deal through. Thus, he realized he had to appease several interests to further his own. "To survive here, you have to be a good wind checker, because you never know when and where the political winds will shift," Don observed.

A good example is when he won the rights to the Royal Palm deal in 1996. The first thing he did was hire Michael Milberg, a Beach real estate consultant with close ties to former Mayor Neisen Kasdin. Milberg is Kasdin's best friend, and was his campaign manager during his two successful mayoral runs in 1997 and 1999. (Kasdin was a commissioner from 1991 to 1996.) Milberg, who later partnered with Peebles on a one-time city public parking garage deal, had also represented the previous owners of the Royal Palm when it was originally sold to the city. The city commission, with Kasdin leading the charge, picked Peebles by a 4-to-3 vote over the aforesaid team led by Eugene Jackson and the Hyatt Corporation, even though a selection committee appointed by then-City Manager José Garcia Pedrosa had voted for Jackson's group as more qualified:

"Don presented the best bid, the highest minimum lease payments to the city, he had control of Shorecrest and had the best-thought-out proposal," said Kasdin, who had a bitter falling-out with Peebles later in 1999. "That is why I voted for him and advocated on his behalf after he won the bid."

His political astuteness notwithstanding, Peebles did offer the city $490,000 a year in lease payments plus twenty percent of the hotel's gross revenues over $11 million upon its opening. Peebles was also shrewd enough to obtain an option to buy the Shorecrest, the Royal Palm's neighbor, to enhance his bid. The city, as part of the deal, paid $5.5 million for the land beneath the Royal Palm property and $4.5 million for the land under the Shorecrest site on Don's behalf. Peebles signed a 99-year lease that requires him to pay back the city's ten-million-dollar loan in 25 years. After that, he assumes total ownership.

Now Don thought the worst was behind him. But what transpired next would become "one of the most hysterically ridiculous cluster-fucks in Miami Beach," opined Michael Sasser, the former SunPost editor: "Anyone who enters into a business relationship with Miami Beach is going to get a bad deal." After months of tense talks with the city's chief negotiator, former banker and local attorney Arthur Courshon -- a member of the old Jewish/WASP establishment who clearly didn't like him -- Peebles encountered problems that would plague the Royal Palm from 1997 through 2002, when the work was completed. Peebles blames the ornery Courshon, who chaired the selection committee and was vociferous in his support of Jackson's team, and city officials for prolonging negotiations and concealing information that would have indicated structural defects and soil contamination -- which led to the $15.8 million in cost overruns. Peebles claimed city officials never allowed him to inspect the project site before finalizing the deal. Furthermore, Peebles believed Courshon was unlikely to deal him a fair hand. Not only did Courshon back Jackson, he later went to work for the cable mogul's Miami law firm, Zack & Kosnitzky, after Courshon and his partners sold their Jefferson Bank to Colonial Bank of Alabama. Tellingly, Jefferson also held the mortgage note on the Royal Palm before it was sold to the city. So Don bit the bullet and didn't press for a thorough inspection of the premises. "It was a risk I had to take in order to move forward," Peebles laments now.

In earlier interviews with the Miami Herald and Daily Business Review, Courshon countered that Peebles had ample opportunity to inspect, but never bothered to do so. Today he doesn't want to talk about the subject: "I'm tired of Don Peebles," the retired banker told New Times.

However, Peebles insists the city misled him with a 1994 engineering report that stated the Royal Palm only needed about $725,000 in interior repair work, when in fact decades of saltwater corrosion had effectively destroyed its interior. The damage was so severe, it turned out, city inspectors in 1997 -- after Peebles took control -- actually condemned the property!

In any case, after a lengthy battle with the city's Historic Preservation Board, Peebles won the right to demolish the old hotel by erecting an exact replica in its place. This of course caused him to miss his initial grand opening in 1998, delaying it until May 2002, at an additional cost of $15.8 million. The city proffered a settlement in 1999, offering to defer as much as $3.8 million in payments during the first ten years of Peebles's 99-year lease with Miami Beach, though he is required to pay back the $10 million in 25 years.

But Peebles turned it down because he would have ended up paying the city an additional $4.5 to $8 million, due to accrued interest.


While the city looks culpable in the Royal Palm/Shorecrest affair, Don did fail at other attempts to form public-private partnerships in New Orleans, San Francisco, and Broward County. In New Orleans, Don couldn't reach an agreement with the city's aviation board to build a $55 million hotel at the airport in 1997. He came up empty in San Francisco, too, losing a bid in 1997 to build a condo/hotel on the corner of Mission and Third streets on the old Jack London waterfront. In Broward, Don never reached agreement with the County Commission to build and operate a black-owned convention center hotel in Fort Lauderdale, despite four years of haggling. He was initially brought in as a financial backer of National Baptist Convention USA, a Lauderdale-based nonprofit group that was supposed to build the hotel in 1997. But Peebles took over the entire project; the commission refused to do business with the nonprofit after it was discovered that former County Commissioner Sylvia Poitier had provided the group with a loan.

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.

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."

In December Gonzalez reported that both sides appeared close to a settlement. This would allow Don to convert the Shorecrest into a time-share condo-hotel, which is what he wants. In exchange, Don would agree to pay the city $4.5 million plus eight percent interest after the closing of the first unit sale. The proposed settlement also calls for Peebles to pay back only fifty percent of the rent, or $326,664, from November 2000 through April of last year, plus the full rent due since May of 2002, which totals $285,833. "Quite candidly, I prefer cash," Don said of the pending compromise. "But the city doesn't want to part with cash, so we came up with a creative solution to resolve these claims and move forward."

One sticking point remains: the number of hotel rooms Peebles can make available for conventions. In an effort to boost Miami Beach's convention business, the city required the Loews to prioritize 650 of its 800 rooms for conventioneers. The city also required the RP and the Shorecrest to prioritize 350 rooms for the same reason. But if Don gets to convert the Shorecrest into a time-share, his combined convention room total would decline to 272 rooms.

"I've told Don that I am not willing to change the convention center agreement," Gonzalez said, adding that he asked the developer to find a way to make the Shorecrest rooms available during conventions. "Peebles's counteroffer is to leave it at 272 rooms and call it a day. I'm not sure I am ready to do that because the city also has to look out for the best interests of the convention center, keeping it competitive as possible."

What's more, Gonzalez explained, the city has begun efforts to expand the convention center by adding a ballroom and meeting space. "So how can we justify taking away rooms when we need to be adding more rooms?" he reasoned. "Is it a deal-breaker? I don't know. That is a policy decision of the city commission."

On the other side of the MacArthur Causeway, shopping inside a whimsical candle store in Coral Gables, Commissioner Simon Cruz was visibly annoyed by the suggestion that he and city bureaucrats are succumbing to Peebles's pressure. Cruz, along with Gonzalez, is part of the city's negotiations team. "There are a lot of people out there who will criticize any deal we do with Don," Cruz bristled. "I am not concerned with that. My job is to make sure we cut the best deal possible. I take offense to anyone who thinks I'm caving ..."

Cruz emphatically pointed out that he, along with Commissioner Saul Gross, voted to stop negotiations with Don until he paid up the rent he owed the city. But Cruz offered that getting into a legal dispute with Peebles over the Royal Palm's construction problems isn't worth the hassle. "We have created a lot of goodwill, particularly with the black community," he rationalized. "After going through all these initiatives to get a black-owned hotel, it is very shortsighted to draw hard lines and throw the baby out with the bath water. We've worked too hard to create a diversified community to just blow it at the end."


The hairs on the back of Neisen Kasdin's head stand up at the very mention of Don Peebles. The former Miami Beach mayor and the developer have no love for each other, even though Kasdin pushed hard on the Miami Beach Commission to award Peebles the Royal Palm project in 1996. Their political alliance deteriorated in the summer of 1998, a year before Kasdin ran for his second term as mayor. What ensued between them would go down as one of the nastiest political brawls in recent history.

It began after Peebles bought the Bath Club, a low-rise private club at 5937 Collins Ave., in the middle of mid- and high-rise condos that had fallen on hard times in the Eighties and Nineties. Peebles wanted to bump the zoning density up a notch so he could preserve the existing historic structure and build a condo and thirteen-story resort-hotel tower on the same site. But when he approached commissioners about getting the increase at the September 29, 1999, commission meeting, Kasdin told Peebles he wouldn't support Bath Club plans until the developer sought input from residents in the surrounding community. Condo residents were against the idea of a new high-rise that would increase traffic and obscure oceanfront views. At that point, Peebles decided to financially and publicly support Marty Shapiro against Kasdin in the 1999 Miami Beach mayoral race. "I was going to remain neutral and not support either of them," Peebles recalled during the interview at his Coral Gables office.

At an October 20, 1999, city commission meeting, Don dropped a bomb on Kasdin, accusing the mayor of voting against his Bath Club proposal because he had given campaign contributions to Shapiro. He then accused Kasdin of privately supporting the Bath Club, but changing his mind after Don refused to back Neisen's re-election bid.

In reality, it was an old-fashioned political backstabbing by both men. Don expected Neisen's loyalty on his disputes with the city, and Kasdin wanted Peebles's personal and financial loyalty. What resulted was a Miami-Dade State Attorney's Office investigation into both men's alleged misdeeds. Shortly after the commission meeting, the SAO looked at Don's accusations against Neisen. Kasdin, who wasn't buckling under Peebles's pressure, countered by telling the SAO that Don was funneling campaign contributions to Shapiro through the Miami Beach Council of Condominiums.

On January 20, 2000, assistant state attorney Joe Centorino, who heads the SAO's public corruption unit, closed out the investigation against Kasdin. Later that year, on December 11, he closed it against Peebles. In both cases, the SAO could not build a case due to a lack of cooperation by witnesses.

In the Kasdin investigation, Peebles, after initially agreeing to meet with him, stood up Centorino, who'd wanted to take testimony. Eventually Don, through his legal counsel, informed Centorino that he would only come in under subpoena, according to an SAO close-out memorandum. "Without the voluntary cooperation and testimony of Donahue Peebles ... there is no basis for the investigation. I recommend this preliminary inquiry be closed," Centorino wrote on January 20, 2000.

Meanwhile, the SAO's investigation into Peebles's alleged bankrolling of Shapiro through the council also hit a brick wall when a main witness abruptly failed to cooperate. According to a December 11, 2000, close-out memo, Henry Kay, president of the council (and widely known as the generalissimo of Miami Beach's Condo Commandos, a contingent of Beach activists who live in high-rises along Collins Avenue's Condo Canyon), confirmed that Peebles had contributed $2500 to the council's funds, but that the money came with "no strings attached." Kay, according to the memo, recalled that someone, maybe even Peebles, had asserted that the council's actions supporting Kasdin's opponents did not violate any campaign finance laws. Throughout the investigation, Kay maintained his position that the council did not funnel money from Peebles to Shapiro.

From his Coral Gables office three years later, Peebles said he didn't meet with the SAO because he wasn't interested in causing Kasdin or his family problems. Besides, Peebles ended up getting his zoning change on the Bath Club, even after Kasdin won a second term in office. In fact Kasdin actually voted for the zoning change. So there was no reason to keep the political donnybrook going.... No one ever accused either man of being impractical.

At the downtown Miami office of Gunster Yoakley, where Kasdin now earns his keep as a zoning lawyer, he revealed that Don came after him because he told Peebles he had no desire to renegotiate the deal on the Royal Palm. Kasdin said he was the first person to tell Don he bought the building "as is" when Peebles met with him and then-City Manager Sergio Rodriguez in 1998, requesting a multimillion-dollar credit on his ten-million-dollar loan with the city. "Don's problem is that I was one of the few people who could say no to him and he couldn't live with that," Kasdin asserted, adding that Peebles has shown no evidence that the city should renegotiate with him.

"Nothing has come to my attention that shows the facts are different today than they were at the time he first approached [us] three years ago. He is a businessman who wants to maximize his profits. It's up to the city to adhere to what was agreed upon."

Peebles just laughed when presented with Kasdin's account: "Kasdin arranged a meeting with me and Sergio Rodriguez and Steve Horwitz [a former assistant city manager]," Peebles said. "But he didn't say no. In fact, he encouraged Rodriguez to resolve the contaminated soil and structural issues on the Royal Palm. Now, I wouldn't put it past Kasdin to stab me in the back by going to Rodriguez when I wasn't around and telling him not to renegotiate the deal! Neisen Kasdin lacks the courage to stand up and tell people no."

But Kasdin stands by his story. "I'd be happy to hook myself up to a polygraph," he offered. "The proof is that Don never pursued renegotiating during my second term." Rodriguez, who served as city manager from 1997 until 1999, when he left to become the University of Miami's vice president of real estate, supported Kasdin's story. "I remember Peebles came on different occasions asking to renegotiate because of cost overruns and delays," Rodriguez said. "My recommendation was always that the contract was as is. He complained about the Loews Hotel receiving all these enticements and so on, but he had an agreement with the city he had to live up to." (Rodriguez did offer Don the $3.9 million in deferred lease payments, but Peebles declined.)


On November 13, 2002, Peebles was on hand for the city commission's regularly scheduled meeting for a progress report on his negotiations with Miami Beach. On the agenda was an item proffered by Commissioner Saul Gross to ban lobbyists from raising campaign contributions for candidates for elected office. Gross was in for a long morning as Peebles teamed up with his lobbyists, Sylvester Lukis and Alfred Balsera, jokingly referred to as "The Syl and Freddie Show," to derail Saul's noble attempt to reform Beach politics.

In a sobering, eye-opening monologue, Peebles spoke at length about single-handedly raising large amounts of cash for political campaigns. The real sphere of influence on the Beach, Don revealed, are people like himself: real estate developers. Don explained that lobbyists were nothing more than tools, mere vehicles who make phone calls and set up meetings with elected officials when they are too lazy to do it themselves. Never batting an eye, Don told commissioners that he has no problem funneling campaign contributions through various entities he controls. Don also doesn't have a problem strong-arming people who work for him to donate to political campaigns. "Now, let's be realistic," Peebles said hypothetically. "When I call up the general contractor who I am paying $65 million to build a building for me and tell him Saul Gross is a nice guy and I would like you, your company, and your employees to each contribute $500 to his campaign, I dare them to tell me no.... Or I'll get on my intercom, call up my comptroller, and ask him how many limited partnerships and entities do we have? He tells me 30 or so. I tell him to cut a check from each of them and give it to Commissioner Luis Garcia's campaign. That is the power of real estate in this city."

Based on Peebles's testimony, city commissioners quickly moved to table Gross's ordinance until it included a ban on real estate interests. "I thought his remarks were disingenuous," Gross said during a recent interview at his commission office. "I think he was trying to deflect attention away from the real issue: the undue influence of certain lobbyists in the city."

Some of Peebles's business peers were taken aback by Don's remarks. "I respect Don as a businessman," said Craig Robins, another politically astute Miami Beach real estate developer. "Yet it's interesting that the real estate developer who's had the most issues go before the city commission would claim the deals he's reached with the city are part of a corrupt process."

Kasdin put it more succinctly: "Who do you think is going to be influenced more? A guy who gets thousands of dollars from various sources, or the guy who gets most of his campaign money from one individual?"

Characteristically, Peebles admitted that a reason he spoke against Gross's lobbyist ordinance was to defend Lukis and Balsera. "One problem with politics that I don't like is that when anyone is under fire, rightfully or wrongfully, their friends don't come to their defense," Peebles declared. "I thought [Syl and Freddie] were getting a bum rap and were attacked unfairly by people who should know better."

And how can anyone expect Don to turn his back on Syl and Freddie, considering that the three men form part of the clique (which includes Quik Park magnate Jacob "Hank" Sopher) that put David Dermer into office in 2001. At the start of that election cycle, Peebles threw his support behind Nancy Liebman. He admits pumping around $50,000 to her campaign during the first weeks of her run, before Elaine Bloom entered the race. When the former state representative made her move, all bets were off. "He supported me, but I think he sensed I could never beat Elaine," recalled Liebman, who remains a dogged Peebles loyalist. "He had to protect his interests and I understood that."

To this day, some Beach insiders believe Peebles propped up Liebman so Dermer could be in a better position to win her support against Bloom, who had the financial muscle of Miami Beach's business community behind her. The speculation was fueled by Peebles's alliance with Lukis and Balsera, who raised tens of thousands of dollars for Dermer. "The whole development community thought they pulled a coup by bringing Elaine in," Liebman chortled. "They thought they were going to win. Well, hah!"

After Liebman threw her support behind Dermer during the mayoral runoff, Peebles, through various entities and partnerships, contributed at least $4200 to David Dermer. According to campaign finance reports, 900 F Street Corporation, 919 East Street Association LLC, 2100 Martin Luther King Association, and Quality Maintenance Service, all Peebles-controlled entities, each gave $500 to Dermer for the runoff. The four also list a familiar address, 100 SE Second St., Suite 4650, in downtown Miami, which happens to be the old business address of Peebles Atlantic Development Corp. Later, one-time Peebles associate Scott Robins gave Dermer another $1000 through Lincoln Plaza Partners and Lincoln Management LLC. Development Managers International Inc., a partnership between Peebles and Robins (who did not return phone calls for this article), donated $500, and Peebles Atlantic vice president Michele Kohler gave $200 to Dermer.

Don, however, scoffed at the notion that somehow his fundraising prowess has bought him political influence on the Beach. "I think the supporter of a political candidate who gets elected should only expect to gain access in order to present his views and provide a level playing field," Peebles righteously opined. "With someone like me, who happens to be controversial, high-profile, and attracts a lot of media attention, it's hard for politicians to give me a level playing field because the easy way out is to go with whatever the mood of the public is, or which way the political winds are blowing. I don't expect Dermer, Cruz, or any of the commissioners to vote for my interests because I supported them. I don't believe money buys influence. It's unethical and unsophisticated to think like that."


Since opening the Royal Palm in May of last year, Don Peebles has been on a whirlwind public relations campaign to crown himself America's most successful black developer. The story followed the similar refrain of how Peebles had overcome obstacle after obstacle in his six-year quest to build the Royal Palm. Publications from the Boston Globe to Forbes to Jet magazine heaped portions of regurgitated acclaim upon Don and the black-owned convention hotel on Miami Beach, a moniker Don now proclaims is a disservice to him, his company, and his employees: "From day one, the media and community leaders have called it 'the black-owned hotel' or the 'African-American' hotel," Peebles intoned dramatically. "It's always referred to in the context of race. No one calls it the second largest hotel on South Beach. No one calls it an architectural masterpiece by Arquitectonica. Yet, the fact that it is black-owned is some big issue."

The Don sermon has just started rolling. "I pick up newspaper stories or magazine articles that think they are being friendly to me by calling me one of the most successful black developers in the country," he said incredulously. "I've never once heard anyone refer to the Loews Hotel as the Jewish-owned convention hotel. It's that kind of thinking that explains why there was a black boycott in the first place. That kind of thinking is why we have strained race relations here. Defining me as an African-American developer doesn't do justice to me, my company, or my employees."

Don's new attitude reared its ugly head last month, when he decided to cancel First Friday happy hour and the Funk Jazz Lounge brunch, two Royal Palm events that were popular with local blacks. Peebles also fired the hotel's general manager, Jesse Stewart, and sales director, Velton Showell. Both men are black. Suzan MacDowell, marketing promoter for the once-a-month brunch for WHQT-FM (Hot 105), the radio station that stages the event, says Stewart had wanted to continue the brunch, but after he was let go, she was informed that Peebles didn't want it anymore. "The sense we got is that they didn't want black people," she said. "That was my underlying feeling."

What bothers MacDowell is that Peebles has worn the "black" developer label like a cape since he opened the hotel last May. MacDowell remembers Peebles beaming triumphantly when he announced black activist and local attorney H.T. Smith was the hotel's first overnight guest. And at a December 18 benefit for Miami's Hampton House Motel held at the Royal Palm, Don took credit for his involvement in the restoration effort of the landmark building, famous for being a cultural and social epicenter of black Miami during segregation. The dinner was in honor of several people involved in the Hampton House preservation effort, including Peebles and Miami-Dade County Commission Chairwoman Barbara Carey-Shuler; both sit on the Historic Hampton House Community Trust, which is working the county to buy the historic building for $450,000.


Recently Peebles, who is donating his company's development services to fix Hampton House and convert it into a possible community center and museum, was walking down the central hallway of the Royal Palm to the building's main meeting room. As usual, he was dressed impeccably in a dark blue designer power suit. His heels clicked efficiently on the hotel's terrazzo floor. "So Don," I asked him, "if you really don't want to be labeled a black developer, why did you get involved with the Hampton House thing?"

He didn't miss a beat. "Well, as an African-American businessperson, I thought it was very disheartening that such a small project could not get going," Peebles said, his voice brimming with confidence. "Given the symbolism of the Royal Palm being built here on Miami Beach, where 40 years ago African-Americans couldn't stay [as guests] and had to [sleep] at the Hampton House, I thought there was no one better suited to help them get it done than me."

We were standing in front of a three-paneled polyurethane mural depicting the Royal Palm's history, including Don's involvement in its revival. I pressed him: "Then why did you cancel the Friday happy hour and the Sunday brunch? Don't you have an obligation to support something the local black community was beginning to turn into a social ritual?"

Don gave me an icy stare and retorted: "I have a responsibility to the African-American community, but not to a promoter who charged ten dollars a head and threatened to go to the press if I canceled his event! I don't acquiesce to blackmail. People are so quick to bring race into a business issue that it undermines the African-American community's efforts for all of us to have equal opportunity."

Standing under the soft glow of the 1940s retro-flying-saucer-shaped light fixtures traveling the hotel's hallways, you could sense Peebles's political winds shifting in every direction. Yesterday calling him a black developer was an insult. Today he is the Miami Beach version of baseball's Jackie Robinson, the first to bust the barriers. The only constant is his ability to sway: "From day one, we've faced low expectations," he went on. "That somehow we are less able than our counterparts and, therefore, it is a lot riskier to do business with us. The city treated the Royal Palm like some social program with no economic benefit. I've endured my share of knocks, but I set a standard in breaking barriers on behalf of African-Americans."

He didn't actually say it, but his look expressed: 'Yeah, I'm talking two ways -- you all right with that?'

And despite my many misgivings about SoFla's Donald-Trump-with-a-social-conscience-in-the-making, I felt myself considering how things are routinely done in Miami and Miami Beach... And saying, 'Yeah, Don. I know what you mean.'

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