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❑ mh ROYAL PALM HOTEL MIRED IN DISCORD 03/20/2002
THE MIAMI HERALD
Copyright (c) 2002, The Miami Herald
DATE: Wednesday, March 20, 2002 EDITION: Final
SECTION: Local PAGE: 1B LENGTH: 128 lines
ILLUSTRATION: color photo: 2 photos: Before and after development shots of
Royal Palm building (Both a) ; map: Royal Palm Crowne Plaza location
SOURCE/CREDIT LINE: BY NICOLE WHITE, nwhite@herald.com
ROYAL PALM HOTEL MIRED IN DISCORD
The 422-room Royal Palm Crowne Plaza in Miami Beach, the nation's first
black-owned convention-style hotel, last week received the green light to open
for business - five years and nine months after the city awarded the contract
for its development.
But the fresh paint, the terrazzo compass-rose in the lobby and the
black-and-white photos of the original hotel that adorn each guest room tell
nothing of the behind-the-scenes wrangling that still dogs the project.
In short, a hotel that was born of discord remains mired in discord.
Developer R. Donahue Peebles contends he has had to 'jump over hurdles"
to build something everyone agreed was vital.
He says Miami Beach, which was a partner on the deal with a $10 million
loan, should share in the extra cost that turned a $60 million project into a
$80 million one, by giving him a credit reducing his annual payments to the
His rationale: Peebles argues the city misled him about the condition of
the old hotel on the site - then required him to tear it down and build an
exact replica.
According to Peebles, a 1993 engineer's report detailing the "critical"
condition of the building was not included in the requests for proposals sent
out to developers in 1996. And a city employee said publicly in 1996 that the
building could be restored.
The city's building department then condemned the hotel just two months
after its ground-breaking in 1998.
"It was obstacle after obstacle after obstacle, " said Peebles. There was,
he said, "a concerted effort on the part of this city to see me fail. "
City Manager Jorge Gonzalez says he can't address Peebles' specific charges
because the city is still examining the record. But he says the city acted in
good faith and wants Peebles to succeed.
"Our policy was to build an African-American-owned hotel, operate it and
be successful, " Gonzalez said. "We did the first two. How does he know if
he'll succeed when it's not even opened yet?"
Gonzalez, who became manager in 2000, says that as far he knows, Peebles
signed a contract accepting the building "as is. " The city also maintains
that Peebles has not paid hundreds of thousands of dollars in back rent, a
claim Peebles disputes.
AFTER '93 BOYCOTT
The Royal Palm was the cornerstone of a plan in 1993 to end a black tourism
boycott that followed county politicians' snub of South African leader Nelson
Mandela. As part of that settlement, Miami Beach agreed to help finance a
convention-quality hotel owned and operated by an African-American majority.
The city bought the old Royal Palm in 1995 and awarded the development
contract to Peebles in 1996.
Peebles says the selection process was a clear indication of things to
come. "I got treated like an outlaw, " he said. "I was held to this
unreasonable standard. "
ALLEGATIONS
During the developers' presentations, Peebles says he was told by retired
banker Arthur Courshon, head of the city's developer selection committee, that
if he won the competition, the two would have "a very interesting time
negotiating. "
Peebles claims that Courshon, the former chairman of Jefferson Bank and the
man who had negotiated the sale of the old hotel to the city, was determined
to give him trouble because he had favored the plan proposed by a competing
developer, Hyatt Regency. That team included Steve Zack, for whom Courshon
later went to work at the law firm of Zack, Sparber, Kosnitzky, Spratt &
Brooks.
Courshon says he's not surprised that Peebles is trying to get a credit.
"It's consistent with what he is always trying to do, he puts up little
and keeps trying to get more, " Courshon said. "I can tell you he wanted the
moon and I wouldn't give it to him. "
Courshon also denies favoring the Hyatt team, saying he "bent over
backwards to work with [Peebles] . "
As for the condition of the building, Courshon said that during the
negotiation, he told Peebles and the city that there was a chance the hotel
would need to be demolished: "He absolutely knew that there might be a
possibility that the building would come down. "
Peebles denies that the two ever had such a conversation. He notes that the
city issued a permit to restore the building before signing the lease - not to
demolish it.
A key question: Was the 1993 report that detailed the precarious condition
of the building shown to prospective developers?
Courshon says he can't remember. Gonzalez and City Attorney Murray Dubbin
say they don't know. That's one of the things that the city's outside counsel
will try to determine.
Peebles says the report, by engineer Herbert Gopman for the building's
previous owner and given to the city, surfaced only after he signed the
contract.
It noted that the condition of the building "should be considered
critical. " It further stated that if "the more advanced conditions are not
addressed, localized failures will eventually result. In summary, this
structure appears to be in poor condition and in need of major repair. "
NO DOCUMENTATION
The city could provide no documentation to The Herald showing whether
repairs were made to the building between the 1993 report and the March 15,
1996, report included in the package sent to potential developers.
When a member of the committee selecting the developer questioned the
soundness of the structure in a May 1996 meeting, William Cary, the city's
director of Design, Preservation and Neighborhood Planning Division, said
inspectors had spent five days scouring the building "from the roof to the
undersides of the first floor slabs. "
According to a tape of the meeting, Cary said the inspection found that the
structure could be restored, although he noted the $725, 000 estimate for
repairs was quite conservative.
Peebles said he saw only the 1996 report that used the $725,000 estimate
for interior and exterior work. That report also said the interior of the
building would have to be gutted to make a complete evaluation of its
condition.
Peebles said he spent more than $5.7 million above the $725, 000 estimate to
tear down the building and build an exact replica, and another $7.1 million in
interest, insurance and other costs tied to the demolition.
When he broke ground on the property in August 1998, his own tests on the
building showed exceptionally high chlorine from salty ocean air had
penetrated the building's structure and caused severe damage. His engineers
said the building was beyond repair.
The city's building official Phil Azan issued an "unsafe structure"
notice for the old hotel in October of that year. In November, the city
granted a demolition permit,
Attorney Victor Diaz, attorney and a member of the Historic Preservation
Board at the time of the demolition, to this day wonders why no one working
for the city was held accountable for the building's deterioration.
"I don't know whether Peebles is right or the city is right . . . but
somebody should be held accountable, " said Diaz.
Added Diaz: "The one player in this mess who is clearly without blame is
the taxpayer of Miami Beach. "
CAPTION: TRANSFORMED: The task of changing the old Royal Palm, left, into a
modern resort, right, was obstacle-filled, says developer R. Donahue Peebles.
KEYWORDS:
TAG: 0203210156
18 of 68, 10 Terms
mh CONSTRUCTION BEGINS FOR 08/05/1998
THE MIAMI HERALD
Copyright (c) 1998, The Miami Herald
DATE: Wednesday, August 5, 1998 EDITION: Final
SECTION: Business PAGE: 7B LENGTH: 47 lines
ILLUSTRATION: photo: R. Donahue Peebles shows model Royal Palm Crowne hotel
(a)
SOURCE/CREDIT LINE: By BARBARA De LOLLIS Herald Staff Writer
CONSTRUCTION BEGINS FOR
BLACK-OWNED ROYAL PALM HOTEL
R. Donahue Peebles, chairman of Peebles Atlantic Development Corp. , broke
ground Tuesday on the $64 million, 422-room Royal Palm Crowne Plaza. The
resort, planned as part of the settlement that ended Miami's three-year black
tourism boycott, is scheduled to open in December 1999.
The project is being built at 15th Street and Collins Avenue on Miami Beach
with $40 million in construction loans from Union Planters Bank and Ocean
Bank, and GMAC Commercial Mortgage is providing a $42 million long-term
financing. Miami Beach added $10 million, and Crowne Plaza $6 million, out of
a total $9 million investment.
When it opens, the resort will be Miami Beach's first
African-American-owned hotel, a fact that Peebles believes will help attract
convention business to the beach. The hotel is being marketed jointly with the
800-room Loews hotel scheduled to open next door in October.
Peebles noted that when San Francisco Mayor Willie Brown tried to woo the
NAACP convention to his city, he lost it to Atlanta, a city perceived as "a
mecca of economic equality. " With a black-owned hotel, Miami Beach could gain
an advantage when marketing itself to conventions and groups with a social
conscience, Peebles said.
"It's a tremendous asset to say we have one of the few
African-American-owned hotels, " he said. "That sends a message. . .that's
good for business. "
The same message will also help attract minorities to the hospitality
industry, he said. While Peebles has postponed hiring a general manager
because of delays starting construction, he has said he intends to hire an
African-American. At least a quarter of the resort's senior managers will be
African-American executives, he said.
Peebles also is developing a hotel in Fort Lauderdale and recently entered
a contract to buy the private oceanfront Bath Club for about $9 million. He
plans to develop a five-star resort on the club's 5.3 acres. He abandoned a
plan to build a hotel in downtown Miami on Biscayne Boulevard between 10th and
11th streets, saying that a hotel there -- despite the American Airlines Arena
being built across the street -- could not command adequate room rates.
CUTLINESAL DIAZ /Herald Staff
AL DIAZ /Herald Staff MODELING THE MODEL: R. Donahue Peebles shows the
model for the Royal Palm Crowne Plaza on Tuesday. The hotel is being marketed
jointly with the 800-room Loews hotel scheduled to open next door in October.
TAG: 9808070091
27 of 68, 11 Terms
mh WASHINGTON MOVER SHAKES UP THE BEACH 06/03/1996
THE MIAMI HERALD
Copyright (c) 1996, The Miami Herald
DATE: Monday, June 3, 1996 EDITION: FINAL
SECTION: BUSINESS PAGE: 7BM LENGTH: 165 lines
ILLUSTRATION: photo: R. Donahue Peebles, (a) , model of their proposed
Royal Palm Crowne Plaza Resort (a)
SOURCE/CREDIT LINE: DALE K. DUPONT Herald Business Writer
MEMO: PROFILE
WASHINGTON MOVER SHAKES UP THE BEACH
The way R. Donahue Peebles saw it, the numbers spoke for themselves.
"I was blown away we were ranked No. 2. We had the best- financed team, "
Peebles told the Miami Beach City Commission last week during an occasionally
tense presentation about the hotel project he'd like to build.
"We were ranked No. 1 in every financial category. We're the only team
that has a firm, legally binding loan commitment. We can put our money where
our mouth is. "
Peebles was in familiar territory. He knows numbers and government well.
For 17 years, he has operated in Washington, D.C. , as a real estate appraiser,
property tax appeal specialist and commercial property owner.
He and his team are in the running to build a major black- owned hotel in
South Beach. Another development group narrowly won the first round of the
competition -- the five- member review panel's one-point scoring edge was
based on design. The commission is expected to make a final decision
Wednesday.
Though an unfamiliar face in South Florida, Peebles is well-known in the
nation's capital.
A political fund-raiser for local and national Democratic candidates, he
is referred to in the Washington press as a friend and protege of D.C. Mayor
Marion Barry. But in the last election, Peebles said, he supported another
candidate.
At 36, he's described as sharp, charming, skillful and ambitious. His
business and political ventures have made news.
•
Brian Connolly, managing director of Faislon Associates, a large owner and
operator of commercial real estate in a triangle that includes Florida, Dallas
and the District of Columbia, said Peebles has been a force in the downtown
Washington marketplace for years.
Peebles, a "politically savvy individual, " knows how the city and federal
governments operate and could "take that knowledge and parlay it into some
opportunities, " Connolly said.
Big plans for the Beach
Peebles estimates his net worth at more than $30 million and figures he
started his first project with an initial investment of $30,000.
Married and with a 2-year-old son, he recently moved out of Washington to
the wealthy Maryland suburb of Potomac. He left "because I felt my tax dollars
were not being well-spent. It wasn't a place where the quality of life was
improving."
The investment team he put together for the 252-room, $30 million Royal
Palm Crowne Plaza Resort includes Clarence Avant, chairman of Motown Records;
Cecil Barker, founder of the Maryland-based Orbiting Astronomical Observation,
an information systems company; Jeffrey Earl Thompson, president of Thompson,
Cobb, Bazilio & Associates, a public accounting firm in Washington; and the
HCF group, made up of four local investors.
HCF was awarded the rights to the project in 1994 but lost them when it
couldn't get financing. Peebles said he is putting in over $1 million himself.
"I have never sold a commercial real estate asset, " he told the
commission. "I have never defaulted on a loan. I'm a long- term player in the
real estate business. "
Miami Beach is offering $10 million in incentives for the project, which
is part of the accord that ended the black tourism boycott of 1993.
In addition to the financing, Peebles stressed his proposal had "100
percent African-American ownership, which we believe responds to the spirit of
the project, " and would provide a better return to the city.
Whether he wins the hotel rights or not, Peebles said he would like to
develop other local projects. He has a vacation residence in Miami Beach, and
while visiting over the Christmas holidays drove up and down Collins Avenue,
looking at property.
"I have no hobbies, " Peebles said. "What I do in my spare time is look at
properties."
The Shorecrest question
One that caught his eye was the Shorecrest, a neighboring property to the
Royal Palm site, both on the 1500 block of Collins. The city owns the Royal
Palm site, but Shorecrest is privately owned.
In negotiating over the Shorecrest, Peebles said the topic of the Royal
Palm hotel project came up. He thought he was well- suited for it, he said.
In addition to the 252-room Royal Palm, Peebles has proposed a 152-room
all-suite tower on the Shorecrest site.
"You're getting two hotels for the price of one with us, " he told the
commission.
Peebles said he has a contract to purchase the Shorecrest for $5 million,
with an Oct. 1 closing date. He said he intends to develop the property. But
if he doesn't win the Royal Palm bid, then there's room to talk.
"If the city really needs the land, and they have an appropriate use, and
they're willing to pay me a fair price for the property, then I'm sure we'll
be able to work something out," Peebles said.
He and Mayor Seymour Gelber had an uneasy exchange over the Shorecrest
and whether his ownership would stymie another hotel project that might want
both sites. Peebles said he didn't want to be a spoiler.
"Any one of those teams could have gone out and bought it, " he said. "Why
am I the bad person? My objective is to win it fairly on the merits."
"You are hanging the sword of Damocles over our head, " Gelber said.
"We're in America, and I bought some property fair and square, " Peebles
said.
Jimmy Wilson, an economic development consultant in Hunt Valley, Md. ,
said Peebles' purchase of the Shorecrest site "was a very smart move" because
the land is crucial for developing the property.
Wilson, who worked for the Rouse company and was in charge of leasing
Bayside in Miami, also praised the possibility of a "Motown Cafe" on the site.
"When I found out somebody aligned
himself with Motown, I thought that was smart, too, " he said.
Real estate and politics
Motown chief Avant said he's known Peebles for seven or eight years. They
met through mutual friends in Washington.
When Peebles told him about the hotel project, "I listened, " Avant said.
"I think it's interesting. It's something certainly Afro-Americans should be
concerned about in terms of an investment. "
Peebles did his homework, Avant said, sending him reams of documents on
the project. "I believe in him, " Avant said. "He's a very nice guy."
Peebles' first taste of real estate and politics came early. His mother
was in the real estate business, and during his last two years of high school,
he was a page on Capitol Hill, where he met local and national politicians. He
attended
college briefly.
His mother was also on the city's tax appeals board until 1980. The year
before, he said, he began working as an appraiser. The real estate market had
soured, "so appraisal was the way to have a good income stream, " Peebles said.
"Valuation is the key to understanding real estate development projects. "
Several years later, Mayor Marion Barry appointed him to the board. Peebles
started his first commercial office project in 1987 with the promise of a
long-term lease from the city. Peebles says he now has more than one million
square feet of commercial office space in over a dozen properties in D.C.
The properties are in limited partnerships and various stages of
development. "I made my money developing office buildings, " Peebles said.
Another lucrative endeavor was a tax assessment appeals business Peebles
started after he left the board as chairman in 1988.
A player in Miami?
Among the people he helped with appeals was Nick Antonelli, a Washington
real estate and parking magnate.
"Myself and some friends of mine gave him a lot of work to do," Antonelli
said. Asked how much Peebles saved him, Antonelli said, "Quite a bit. He got
things down to the honest level."
Antonelli called Peebles "an honest, up-front guy" and said he "joined
him in a couple of real estate deals. "
An article in The Washington Post last year said Peebles "has made a name
for himself as the man to see to lower your D.C. tax assessment" and said he
was "generally regarded as one of the most influential businessmen around. "
In their recent book Dream City (--) Race, Power and the Decline of
Washington, D.C. , Harry S. Jaffe and Tom Sherwood have a reference to Peebles
in 1986 that describes him as "an aspiring young wheeler-dealer the mayor had
appointed to the influential real estate tax review commission. "
Barry's office did not respond to a written request for an interview.
As a business person, Peebles is a "smaller niche player in the
marketplace, " Connolly said. His niche: "opportunities dealing with the public
sector."
Peebles' properties are in "decent, good business neighborhoods, but
older buildings in need of rehabilitation, " Connolly said.
Peebles said he also is looking outside Washington for projects. He said
the hotel "is going to be a profitable venture. "
After Peebles was peppered with questions by the commission last week,
Arthur Courshon, head of the Miami Beach hotel negotiating committee, got up
to ask some more. In the midst of the talk about parking and finances was this
brief volley:
"If you are the winner, you and I are going to have a very interesting
time negotiating, " Courshon said."
"I'm looking forward to it, " Peebles replied.
"So am I," said Courshon.
Herald researchers Mike Clark and Ruth Golden contributed to this report.
cutlines
CHUCK FADELY / Herald Staff
RISING HIGH: R. Donahue Peebles, above, and his team are competing to
build a major black-ownedhotel on South Beach. The model of their proposed
Royal Palm Crowne Plaza Resort, above right.
KEYWORDS: BIOGRAPHY PEEBLES
TAG: 9602060249