Black-Owned Miami Beach Hotel Goes Belly Up

The Royal Palm Hotel on 16th

Street and Collins Avenue was supposed to be a beacon of atonement for

Miami-Dade County's racist past.

In 1989, county officials snubbed South

African leader Nelson Mandela when he visited Miami. African Americans across

the country boycotted Miami-Dade, costing the area tens of millions in lost

tourism dollars. So Miami

Beach came up with a plan in 1993 to loan $10 million to a black developer to

build the city's first black-owned convention center hotel and provide

management opportunities for blacks in the hospitality industry. In 1995, Miami

Beach selected R. Donahue Peebles, a charismatic Washington D.C. developer who

got his start doing deals with former D.C. Mayor Marion Barry.

Fifteen years later, the Royal Palm is an albatross and

its mission destroyed by hubris, lawsuits, and poor management. During the

project's construction phase, Peebles bickered with the city over alleged

defects in the building's structure. After the hotel opened in 2002, the

developer refused to pay his rent until the city commission in 2004

renegotiated his deal to allow him to convert some of the Royal Palm rooms into

condo-hotel units.

That allowed Peebles to sell the hotel's majority interest

to investors Guy Mitchell and Robert Falor for $127 million in 2005. Peebles

reportedly made a $48 million profit.

But the condo-hotel concept never took and the Royal Palm began missing loan payments. In 2007, Peebles -- who remained a minority owner -- sued Mitchell and Falor citing mismanagement. He won, and a circuit court judge gave Peebles management control over the Royal Palm. But it was too late.

South Florida Business Journal reported on April 1 that the hotel is set to be auctioned off on May 27 after its owner, Royal Palm Senior Investors LLC, lost a $142.7 million foreclosure judgment to Wachovia Bank and Credit Suisse First Boston. Peebles did not return Riptide's call requesting comment.

However, Marilyn Holifield, an attorney with Miami law firm Holland & Knight, which helped organize the black boycott, says the Royal Palm will always serve as "a monument to the boycott and the goodwill of our community."

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Francisco Alvarado was born in Nicaragua and grew up in Miami, giving him unique insight into the Magic City and all its dark corners. An investigative reporter with a knack for uncovering corruption, Alvarado made his bones as a staff writer at Miami New Times and remains in dogged pursuit of the next juicy story.